<PAGE>
<PAGE>
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COHEN & STEERS REALTY SHARES, INC.
July 24, 1996
To Our Shareholders:
We are pleased to submit to you the semi-annual report for Cohen & Steers
Realty Shares, Inc. for the six months ended June 30, 1996. The net asset value
per share at that date was $36.38. In addition, a regular quarterly dividend of
$0.47 was declared for shareholders of record on June 21, 1996 and paid on June
24, 1996.
MID-YEAR REVIEW
Real estate securities recorded a period of excellent absolute and relative
performance in the second quarter. For the first time since 1994, Equity REIT
returns matched those of common stocks as the S&P 500 Index and the NAREIT
Equity REIT Index both had a total return of 4.5%. In addition, these excellent
returns came amid a declining bond market; the total return of the Lehman
Brothers Government/Corporate Bond Index was 0.5%. For the quarter the Fund had
a total return of 6.0% and for the six month ended June 30, 1996 the Fund's
total return was 7.9%.
The best performing broad industry group during the quarter was Shopping
Centers, led by the Regional Mall sector. It was our heavy concentration in
owners of shopping centers that enabled us to outperform the NAREIT Equity Index
in the second quarter and the first half of the year. This group, which was
perhaps the most out-of-favor in all of the real estate industry at the
beginning of the year, staged a dramatic recovery due to the fast growing
economy and high levels of consumer confidence and spending. Also performing
well in the second quarter was the Office sector. As we mentioned in our
previous report, we continue to be very enthusiastic about office properties due
to the very favorable supply/demand situation for office space, and our heavy
weighting in this sector also enhanced our total return.
Capital-raising by REITs in the first half of 1996 approximated $3.4
billion in equity and $1.2 billion in debt. With modest capital appreciation the
stock market capitalization of all equity REITs rose by 12% to $64.9 billion at
June 30, compared to $58.1 billion six months earlier. There were no initial
public offerings of REITs so far this year and, in fact, there was a net
reduction of 5% in the number of existing equity REITs to 169 at June 30, from
178 at the beginning of the year. This is the result of an ongoing consolidation
of the industry with capital increasingly becoming more concentrated in the
hands of the largest companies. Often this capital is raised privately in an
offering limited to only the largest institutional investors. We were very
pleased to have made two substantial new investments in this manner during the
quarter.
This trend has raised several issues with regard to the influence of REITs
on the real estate industry in general and, in turn, the influence of investment
advisers on the REIT market. As we have mentioned in the past, the so-called
securitization of real estate over the past several years is the result of
investor recognition that capital market conditions must dictate the required
returns from all asset classes. This is unlike the situation that existed in the
1980s when the tax code allowed substantial tax relief for individuals owning
real estate even though that real estate may have been purchased on entirely
uneconomic terms. Similarly, real estate held directly by institutions was
valued on an appraisal system which often ignored economic realities of the
capital or real estate
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1
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COHEN & STEERS REALTY SHARES, INC.
markets. In this period, a handful of firms dominated the real estate
syndication and investment advisory businesses. Along with highly imprudent
lending standards on the part of financial institutions, these factors strongly
contributed to speculation and an unprecedented boom in construction that ended
in what was perhaps the greatest real estate depression of all time. By the
early 1990's the real estate industry was in need of a complete financial
overhaul and recapitalization that was largely accomplished through the public
markets. The U.S. Government liquidated several hundred billion dollars of
assets seized from financial institutions. In the process, over 100 companies
came public and together with the already-existing companies raised over $50
billion in equity and debt.
This transformation from private to public ownership was painful for many
property owners and their real estate advisers but resulted in what is a much
more rational allocation of capital in the real estate industry. The current
consolidation of the industry is a logical extension of that allocation process,
with the best-managed and best-positioned companies enjoying healthy market
valuations and ready access to low-cost capital. These companies continue to
acquire property from private hands at a steady and substantial pace. These
entities, both public and private, which are not efficient employers of capital
are either liquidating their portfolios or merging with those that are.
Importantly, unlike the environment in which the real estate investment advisers
of the 1980's operated, access to capital by the public companies is not
unconstrained; their cost of capital is largely controlled by the financial
market's continual evaluation of their investment strategy and performance. This
effectively provides a governor on the flow of capital and may, in the long run,
attenuate the amplitude of the real estate cycle by preventing many of the
excesses of the past from repeating themselves. This has caused many to believe
that the REIT industry is embarking on a period of substantial growth and
prosperity over the coming years.
A situation that has inspired some comment and criticism pertains to the
role of the investment advisory community on REITs and, by definition, the real
estate industry. Some observers have drawn a parallel between the real estate
advisers of the 1980s and the investment advisers of today, suggesting that
these advisers exert undue control or influence over the REIT market. The facts,
however, indicate otherwise. There are a number of institutional advisers who
specialize in REIT investments who control approximately 6% of the shares of
equity REITs on behalf of pension and endowment funds. Roughly another 4% of the
shares is owned by about 30 mutual funds that specialize in this area of
investment. Some firms, such as Cohen & Steers, represent both categories of
investors. This combined 10% ownership of the shares is insignificant compared
to the 90% held by insiders and the balance of the investment community at
large. It is therefore our opinion that any concerns about the concentration of
ownership by any firm or group is totally unwarranted. On the contrary, we
believe that the public market mechanism is as efficient for REITs as it is for
any other market sector and we believe that this will contribute to the
continued growth of the industry.
OUTLOOK
While owners of shopping centers are not as undervalued as they were at the
beginning of the year, we continue to find good value in this sector,
particularly in companies with above-average prospects for internal
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2
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COHEN & STEERS REALTY SHARES, INC.
growth through occupancy and rental increases, and external growth through
acquisition. We believe, however, that any material change in the outlook for
continued growth in the economy would cause us to consider reducing our
weighting. In addition, we continue to add to our holdings in owners of office
buildings due to the persistence of the very favorable supply/demand situation
for office space. In our opinion, the expansion of the economy and the growth in
jobs augur well for continued vacancy rate declines and rental rate increases.
Interestingly, office buildings may be viewed as good defensive investments in
the event of an economic downturn. Office leases are primarily written for
multi-year periods, thereby making them less sensitive to short-term changes in
the economy or the fortunes of a particular tenant (provided that the tenant
does not go bankrupt). In addition, the office cycle has not progressed to the
point where speculative construction is feasible.
We believe that real estate securities continue to offer investors a high
level of current income and are enjoying another year of strong dividend growth.
Increasingly, they are attracting the attention of investors seeking these
characteristics as well as the low stock market sensitivity that provides
portfolio diversification. As a result, our portfolio currently appears headed
toward a year of satisfactory total returns.
Sincerely,
/s/ MARTIN COHEN /s/ ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
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3
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C>
EQUITIES 94.59%
APARTMENT/RESIDENTIAL 19.06%
Associated Estates Realty Corp. .......................... 578,800 $ 12,154,800
Avalon Properties......................................... 1,010,900 21,987,075
`D'Camden Property Trust..................................... 767,600 18,230,500
`D'Charles E. Smith Residential Realty....................... 509,300 12,223,200
`D'Colonial Properties Trust................................. 990,600 24,022,050
Columbus Realty Trust..................................... 516,300 10,003,313
Irvine Apartment Communities.............................. 840,100 16,907,013
Merry Land & Investment Co. .............................. 621,700 13,055,700
Oasis Residential......................................... 356,200 7,791,875
Post Properties........................................... 834,700 29,527,512
Security Capital Pacific Trust............................ 209,800 4,563,150
Summit Properties......................................... 479,400 9,408,225
Sun Communities........................................... 373,300 10,032,438
United Dominion Realty Trust.............................. 651,200 9,361,000
--------------
199,267,851
--------------
HEALTH CARE 3.07%
Health Care Property Investors............................ 416,700 14,063,625
Nationwide Health Properties.............................. 663,800 14,022,775
*Sunrise Assisted Living................................... 167,300 4,015,200
--------------
32,101,600
--------------
HOTEL 5.69%
*Bristol Hotel Co. ........................................ 342,800 11,141,000
Felcor Suite Hotels....................................... 415,900 12,684,950
Patriot American Hospitality.............................. 484,100 14,341,463
Starwood Lodging Trust.................................... 586,300 21,326,662
--------------
59,494,075
--------------
INDUSTRIAL 9.45%
`D'Centerpoint Properties Corp. ............................. 983,000 23,837,750
Duke Realty Investments................................... 604,000 18,271,000
Spieker Properties........................................ 1,486,600 40,509,850
`D'Weeks Corp. .............................................. 623,700 16,216,200
--------------
98,834,800
--------------
</TABLE>
See notes to financial statements.
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4
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C>
OFFICE 19.04%
Beacon Properties Corp. .................................. 1,140,400 $ 29,222,750
`D'Cali Realty Corp. ........................................ 911,200 22,096,600
CarrAmerica Realty Corp. ................................. 787,500 18,900,000
Cousins Properties........................................ 1,410,100 27,673,213
Crescent Real Estate Equities............................. 1,160,900 42,663,075
Highwoods Properties...................................... 1,458,100 40,280,012
`D'Reckson Associates Realty Corp. .......................... 553,000 18,249,000
--------------
199,084,650
--------------
SHOPPING CENTER 38.28%
COMMUNITY CENTER 18.29%
Bradley Real Estate....................................... 101,000 1,464,500
`D'Developers Diversified Realty Corp. ...................... 1,290,300 41,128,313
Federal Realty Investment Trust........................... 1,188,300 26,736,750
`D'Glimcher Realty Trust..................................... 1,112,900 18,780,188
Kimco Realty Corp. ....................................... 1,431,300 40,434,225
Price REIT................................................ 381,600 12,354,300
Vornado Realty Trust...................................... 943,000 38,545,125
Weingarten Realty Investors............................... 304,000 11,780,000
--------------
191,223,401
--------------
FACTORY OUTLET CENTER 3.98%
`D'Chelsea GCA Realty........................................ 649,100 20,608,925
Horizon Group............................................. 622,900 12,769,450
Tanger Factory Outlet Centers............................. 356,200 8,281,650
--------------
41,660,025
--------------
</TABLE>
See notes to financial statements.
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5
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C>
REGIONAL MALL 16.01%
CBL & Associates Properties............................... 933,500 $ 20,887,063
DeBartolo Realty Corp. ................................... 1,912,100 30,832,612
`D'JP Realty................................................. 834,300 17,833,161
`D'Macerich Co. ............................................. 1,142,800 23,998,800
Rouse Co. ................................................ 1,875,600 48,531,150
Simon Property Group...................................... 303,400 7,433,300
`D'The Mills Corp. .......................................... 1,025,000 17,937,500
--------------
167,453,586
--------------
TOTAL SHOPPING CENTER..................................... 400,337,012
--------------
TOTAL EQUITIES (Identified cost $906,330,688)....... 989,119,988
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C> <C>
COMMERCIAL PAPER 6.36%
Ford Motor Credit Corp., 5.25%, 7/1/96
(Identified cost $66,526,000)......................... $66,526,000 66,526,000
--------------
TOTAL INVESTMENTS (Identified cost $972,856,688)............. 100.95% 1,055,645,988
LIABILITIES IN EXCESS OF OTHER ASSETS........................ (0.95)% (9,948,142)
------ --------------
NET ASSETS (Equivalent to $36.38 per share based on
28,742,643 shares of capital stock outstanding)........... 100.00% $1,045,697,846
------ --------------
------ --------------
</TABLE>
- ------------
* Non-income producing security.
`D' The Fund owns 5% or more of this company's outstanding voting securities
(Note 5).
See notes to financial statements.
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6
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified cost $972,856,688) (Note 1)................ $1,055,645,988
Cash....................................................................................... 967
Receivable for fund shares sold............................................................ 21,648,225
Receivable for investment securities sold.................................................. 7,759,800
Dividends receivable....................................................................... 6,525,614
Unamortized organization costs and other assets (Note 1)................................... 91,445
--------------
Total Assets......................................................................... 1,091,672,039
--------------
LIABILITIES:
Payable for investment securities purchased................................................ 44,052,717
Payable for fund shares redeemed........................................................... 863,985
Payable to investment adviser.............................................................. 680,978
Payable to administrator................................................................... 254,233
Other liabilities.......................................................................... 122,280
--------------
Total Liabilities.................................................................... 45,974,193
--------------
NET ASSETS applicable to 28,742,643 shares of $.001 par value common stock
outstanding (Note 4).......................................................................... $1,045,697,846
--------------
--------------
NET ASSET VALUE PER SHARE:
($1,045,697,846[div]28,742,643 shares outstanding)......................................... $ 36.38
--------------
--------------
NET ASSETS consist of:
Paid-in capital (Note 4)................................................................... $ 942,719,292
Undistributed net investment income........................................................ 349,205
Accumulated net realized gain on investments............................................... 19,840,049
Net unrealized appreciation on investments................................................. 82,789,300
--------------
$1,045,697,846
--------------
--------------
</TABLE>
See notes to financial statements.
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7
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income:
Dividend income............................................................................... $28,677,175
Interest income............................................................................... 1,332,411
-----------
Total Income............................................................................ 30,009,586
-----------
Expenses:
Investment advisory fees (Note 2)............................................................. 3,773,526
Administrative and transfer agent fees (Note 2)............................................... 660,855
Custodian fees................................................................................ 105,927
Registration and filing fees.................................................................. 87,924
Reports to shareholders....................................................................... 48,220
Professional fees............................................................................. 38,091
Directors' fees and expenses (Note 2)......................................................... 14,256
Amortization of organization expenses (Note 1)................................................ 13,761
Miscellaneous................................................................................. 52,577
-----------
Total Expenses.......................................................................... 4,795,137
Reduction of expenses (Note 6 )............................................................... (58,592)
-----------
Net Expenses............................................................................ 4,736,545
-----------
Net Investment Income............................................................................... 25,273,041
-----------
Realized and Unrealized Gain on Investments:
Net realized gain on investments.............................................................. 11,310,096
Increase in unrealized appreciation on investments............................................ 34,343,554
-----------
Net realized and unrealized gain on investments......................................... 45,653,650
-----------
Net increase in net assets resulting from operations................................................ $70,926,691
-----------
-----------
</TABLE>
See notes to financial statements.
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8
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income.................................. $ 25,273,041 $ 35,282,492
Net realized gain (loss) on investments................ 11,310,096 (5,735,142)
Increase in unrealized appreciation on investments..... 34,343,554 41,783,548
----------------- -----------------
Net increase in net assets resulting from
operations.................................... 70,926,691 71,330,898
----------------- -----------------
Dividends and Distributions From:
Net investment income.................................. (24,923,836) (25,186,847)
Tax return of capital.................................. -- (9,488,813)
----------------- -----------------
Total distributions to shareholders.............. (24,923,836) (34,675,660)
----------------- -----------------
Capital Stock Transactions (Note 4):
Increase in net assets from Fund share transactions.... 206,610,917 298,330,768
----------------- -----------------
Total increase in net assets..................... 252,613,772 334,986,006
Net Assets:
Beginning of period.................................... 793,084,074 458,098,068
----------------- -----------------
End of period (including undistributed net investment
income of $349,205 at June 30, 1996)................ $ 1,045,697,846 $ 793,084,074
----------------- -----------------
----------------- -----------------
</TABLE>
See notes to financial statements.
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9
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COHEN & STEERS REALTY SHARES, 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>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 --------------------------------------------------
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 1995 1994 1993 1992 1991(A)
- --------------------------------------- ---------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55 $ 25.00
---------------- -------- -------- -------- ------- -------
Income from investment operations
Net investment income............. 0.95 1.86 1.66 1.29 1.51 0.88
Net realized and unrealized gains
(losses) on investments........ 1.75 1.69 0.98 4.24 3.55 1.07
---------------- -------- -------- -------- ------- -------
Total from investment
operations................ 2.70 3.55 2.64 5.53 5.06 1.95
---------------- -------- -------- -------- ------- -------
Less distributions from:
Net investment income............. (0.94) (1.33) (1.09) (1.27) (1.80) (0.40)
Realized gains on investments..... 0.00 0.00 0.00 (1.64) (0.18) 0.00
In excess of net realized gains... 0.00 0.00 0.00 (0.04) 0.00 0.00
Tax return of capital............. 0.00 (0.50) (0.57) (0.24) (0.05) 0.00
---------------- -------- -------- -------- ------- -------
Total distributions......... (0.94) (1.83) (1.66) (3.19) (2.03) (0.40)
---------------- -------- -------- -------- ------- -------
Net asset value, end of period......... $ 36.38 $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
- -------------------------------------------------------------------------------------------------------------
Total investment return(c)............. 7.88% 11.13% 8.31% 18.76% 20.09% 7.91%
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in
millions)...................... $1,045.698 $793.084 $458.098 $163.478 $49.481 $24.434
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
Ratios of expenses to average
daily net assets(e)............ 1.07%(b) 1.12% 1.14% 1.18% 1.25% 1.25%(b)
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
Ratio of net investment income to
average daily net assets(e).... 5.69%(b) 6.05% 5.71% 4.57% 5.92% 7.48%(b)
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
Portfolio turnover rate........... 39.83%(b) 22.68% 39.00% 65.28% 14.81% 57.40%(b)
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
Average Commission Rate(d)........ $ 0.0687 N/A N/A N/A N/A N/A
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
</TABLE>
- ------------------------
(a) For the period July 2, 1991 (commencement of operations) to December 31,
1991.
(b) Annualized.
(c) Total returns for periods of less than one year are not annualized.
(d) For fiscal years beginning on or after September 1, 1995, a portfolio is
required to disclose the average commission rate per share it paid for
trades on which commissions were charged.
(e) Net of expense reduction and fees waived. If such agreements had not been in
effect, the expense and net investment income ratios would have been:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ratios (to average daily net assets):
Expenses.................... 1.08%(b) 1.16% 1.26% 1.35% 1.77% 1.94%(b)
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
Net investment income....... 5.68%(b) 6.01% 5.59% 4.40% 5.40% 6.78%(b)
---------------- -------- -------- -------- ------- -------
---------------- -------- -------- -------- ------- -------
</TABLE>
See notes to financial statements.
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10
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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers Realty Shares, Inc. (the 'Fund') was incorporated under the
laws of the State of Maryland on April 26, 1991 and is registered under the
Investment Company Act of 1940, as amended, as an open-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 and disclosures on the
financial statements. Actual results could differ from those estimates.
Portfolio Valuation: Investment 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 the Adviser 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 Quotation 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 value 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
the ex-dividend date.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid quarterly. 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.
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11
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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Distributions will automatically be reinvested in full and fractional
shares of the Fund based on the net asset value per share at the close of
business on the payable date unless the shareholder has elected to have them
paid in cash.
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.
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. At
December 31, 1995, the Fund had, for federal income tax purposes, an unused
capital loss carryforward of $4,139,954 to be applied against future realized
gains, if any. If not applied, the capital loss carryforward will expire as
follows, $2,310,026 in 2002 and $1,829,928 in 2003.
Organization Costs: All costs incurred in connection with organizing and
establishing the Fund are being amortized on the straight-line basis over a
period of five years from the date on which the Fund commenced operations.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATIVE 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 .85% of the average daily net assets of the
Fund (approximately .85% on an annual basis). For the six months ended June 30,
1996, the Fund incurred $3,773,526 in advisory fees.
The Investment Adviser has agreed to reduce its fee and reimburse the Fund
for other expenses, to the extent necessary to comply with the most stringent
state expense limitation applicable to the Fund in which the Fund's shares are
sold. The most stringent limitation requires the Adviser to reduce or eliminate
its fee to the extent that aggregate operating expenses of the Fund (excluding
interest, taxes, brokerage and extraordinary expenses) exceed 2 1/2% of the
first $30 million of average annual net assets, 2% of the next $70 million of
average annual net assets and 1 1/2% of average annual net assets in excess of
$100 million.
Administrative Fees: The Fund has entered into an administrative agreement
with the Adviser and Chase Global Funds Services Company ('CGFSC') under which
the Adviser performs certain administrative functions for
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12
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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
the Fund and receives a fee of .02% of the Fund's average daily net assets. The
Fund has paid the Adviser $88,695 in fees under this administrative agreement.
Directors' Fees: Certain directors of the Fund are also directors, officers
and/or employees of the Adviser. None of the directors so affiliated received
compensation for their services as directors of the Fund with the exception of
out-of-pocket expenses relating to attendance at Board and committee meetings.
Similarly, none of the Fund's officers received compensation from the Fund. Fees
and related expenses accrued for non-affiliated directors totaled $14,256 for
the six months ended June 30, 1996.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for
the six months ended June 30, 1996 aggregated $348,904,088 and $167,842,652,
respectively.
At June 30, 1996, 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......................................................................... $972,856,688
------------
Gross unrealized appreciation.......................................................... $ 89,510,928
Gross unrealized depreciaiton.......................................................... $ (6,721,628)
------------
Net unrealized appreciation............................................................ $ 82,789,300
------------
------------
</TABLE>
NOTE 4. CAPITAL STOCK
The Fund is authorized to issue fifty million (50,000,000) shares of
capital stock, par value $.001 per share. The Board of Directors of the Fund may
increase or decrease the aggregate number of shares of common stock that the
Fund has authority to issue. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold...................................... 9,310,170 $ 327,551,779 15,202,637 $ 499,162,840
Issued as reinvestment of dividends....... 588,455 20,942,529 794,839 26,664,507
Redeemed.................................. (4,063,747) (141,883,391) (7,012,384) (227,496,579)
---------- ------------- ---------- -------------
Net increase.............................. 5,834,878 $ 206,610,917 8,985,092 $ 298,330,768
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
</TABLE>
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13
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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5. INVESTMENT IN AFFILIATES
The market value of investments in affiliates (as defined in the Investment
Company Act of 1940, 'Affiliated Companies' are those in which the Fund holds 5%
or more of the outstanding voting securities) at June 30, 1996 aggregated
$275,162,187. The Fund earned $8,951,925 in dividend income from investments in
affiliates.
NOTE 6. DIRECTED BROKERAGE ARRANGEMENTS
The Adviser has directed certain portfolio trades to brokers who paid a
portion of the Fund's expenses. For the six months ended June 30, 1996, the
Fund's expenses were reduced by $58,592 under this arrangement.
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14
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COHEN & STEERS REALTY SHARES, INC.
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT ADVISER
Director and Chairman Cohen & Steers Capital Management, Inc.
Martin Cohen 757 Third Avenue
Director and President New York, NY 10017
Gregory C. Clark (212) 832-3232
Director FUND ADMINISTRATOR AND TRANSFER AGENT
George Grossman Chase Global Funds Services Co.
Director 73 Tremont Street
Jeffrey H. Lynford Boston, MA 02108
Director (800) 437-9912
Willard H. Smith, Jr. CUSTODIAN
Director The Chase Manhattan Bank, N.A.
Elizabeth O. Reagan 770 Broadway
Vice President New York, NY 10003
LEGAL COUNSEL
Dechert Price & Rhoads
477 Madison Avenue
New York, NY 10022
NASDAQ Symbol: CSRSX
Net asset value (NAV) can be found in the daily mutual
fund listings in the financial section of most major
newspapers under the Fund's abbreviation 'C&SRlty'.
This report is authorized for delivery to other than
shareholders of Cohen & Steers Realty Shares, Inc. only
when accompanied or preceded by the delivery of a
currently effective prospectus setting forth details of
the Fund.
</TABLE>
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15
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[LOGO]
COHEN & STEERS
REALTY SHARES
757 THIRD AVENUE
NEW YORK, N.Y. 10017
SEMI-ANNUAL REPORT
JUNE 30, 1996
First Class Mail
U.S. Postage
PAID
Boston, MA
Permit No. 56712
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as `D'
The division sign shall be expressed as [div]
