<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
February 6, 1996
To Our Shareholders:
We are pleased to submit to you the annual report for Cohen & Steers Realty
Shares, Inc. for the year ended December 31, 1995. The net asset value per share
at that date was $34.62. In addition, a distribution of $0.57 per share
(including a regular $0.43 per share distribution plus a $0.14 extra
distribution representing additional income earned during the year) was declared
for shareholders of record December 26, 1995 and paid on December 27, 1995.
1995 REVIEW
The year just ended can best be characterized as one in which balance
returned to nearly every aspect of the real estate and real estate securities
markets. The total investment return of REITs in 1995 was both satisfactory and
above their long-term record; for the past ten years REITs have produced average
annual total returns of 10.3%. The Fund's total return for 1995 based on income
and change in net asset value was 11.1%. In addition, returns from direct real
estate were the highest in seven years.
Many investors, however, have expressed disappointment over recent REIT
performance because it lagged, by a considerable margin, the unusually high
returns registered by the stock (+37.6%) and long-term bond (+34.2%) markets.
While many observers have gone to great lengths to try to explain the
performance of REITs relative to other financial market assets, we believe that
REIT returns were very much in line with what should be rationally expected.
Importantly, in our opinion, 1995 performance substantiated the low correlation
between REIT returns and interest rates and it further demonstrated the low
volatility that is characteristic of REITs. The low 'beta' of REITs in general,
and our portfolio in particular, would imply relative returns that are in line
with those achieved in 1995.
The performance of REITs in 1995 reflects the balanced supply/demand
situation which exists in today's real estate markets between both landlords and
tenants and buyers and sellers of property. Vacancy rates for most major
property types have declined and market rents have risen as the economy has
grown and new development has been held in check. This improvement in real
estate conditions has resulted in the return of liquidity to the real estate
markets, an increase in transactions and, therefore, a reversion of investment
returns to a more normal level. Naturally, investment returns were not uniform
among the various property sectors as shown in the table below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 TOTAL INVESTMENT RETURNS OF MAJOR SECTORS*
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
All Equity REITs.............................. 15.3% Office REITs.................................. 38.8%
Apartment REITs............................... 12.3 Self Storage REITs............................ 34.9
Health Care REITs............................. 24.9 Shopping Center REITs......................... 5.1
Hotel REITs................................... 30.8 S&P 500 Index................................. 37.6
Industrial REITs.............................. 15.9 Long-term Treasury............................ 34.2
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
*Source: National Association of Real Estate Investment Trusts, Inc.
- --------------------------------------------------------------------------------
1
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
Our underperformance of the NAREIT Equity REIT Index in 1995 was a direct
result of our heavier than average weighting in owners of shopping centers. At
the beginning of the year we had expected the economy to experience moderate
growth which would translate into a good year for owners of retail properties.
Although the companies in our portfolio actually did experience healthy cash
flow growth, uncertainties surrounding the retail environment, particularly
towards year end, caused the share price performance of shopping center owners
to lag that of most other property types. We were also somewhat overweighted in
the apartment sector. Again, our companies experienced strong cash flow growth
but fears of increasing development activity suppressed the share prices of many
apartment-owning REITs.
The better performing sectors during 1995 tended to be either somewhat less
mainstream areas or ones which have a limited number of companies available in
the public market but are enjoying extremely strong fundamentals. These include
owners of office, hotel and self-storage facilities. Of the $1.0 billion in
initial public offerings of REITs underwritten during 1995, over 80% were in the
storage and hotel sectors. Most of the balance of the $5.7 billion of common
equity raised by REITs during 1995 was in the form of secondary stock offerings,
essentially by the better-positioned companies that used the proceeds primarily
to retire debt or finance property acquisitions. Here too, on the underwriting
side, balance was restored to the REIT market as equity offerings were completed
by high-quality companies and in amounts that satisfied but did not overwhelm
demand.
In summary, 1995 represented a year of great balance with regard to real
estate fundamentals, the supply and demand for properties, and the supply and
demand for REIT shares. This, in turn, led to investment returns which were in
line with historic trends.
1996 OUTLOOK
While we have maintained that interest rates alone do not exert the most
influence on REIT share prices, we believe that as we start 1996, the single
most important element in both the real estate and REIT picture is the
prevailing level of interest rates. With long-term treasury bond rates at around
the 6% level and credit readily available, we believe the real estate industry
is faced with a financing opportunity not seen in decades. Whereas the last time
interest rates were at this level (more than two years ago) REITs began a period
of below-average performance, the financial market and valuation conditions were
considerably different than they are today, as shown in the following table.
- --------------------------------------------------------------------------------
2
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
OCTOBER 1993 DECEMBER 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
30-year Treasury Yield............................................................. 5.96% 5.96%
10-year Treasury Yield............................................................. 5.43% 5.58%
S&P 500 Dividend Yield............................................................. 2.68% 2.24%
Equity REIT Dividend Yield......................................................... 6.16% 7.37%
divided by 30-year Treasury Yield............................................ 1.04 1.24
divided by 10-year Treasury Yield............................................ 1.13 1.32
divided by S&P 500 Yield..................................................... 2.30 3.29
S&P 500 P/E Ratio.................................................................. 24.20 17.51
Equity REIT Market Capitalization.................................................. $27.6 billion $46.7 billion
Assets in Real Estate Mutual Funds................................................. $1.0 billion $2.2 billion
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The last time long-term interest rates were at today's level equity REITs
had completed almost three years of exceptional returns and were trading at
valuation levels, based on dividend yields, which were unsustainably high on an
absolute basis, albeit still attractive relative to the stock and bond markets.
In contrast, at the end of 1995 equity REIT yields were considerably higher on
an absolute basis; relative to stocks and bonds REITs were trading at an
historically low valuation level. In our opinion, one important difference is
that although interest rates were quite low in 1993, there was not a great
amount of mortgage debt available to the real estate industry. In addition,
because many REITs were newly formed, the credit markets were not yet fully open
to these companies. Currently, because of the return to health of the real
estate industry, mortgage lenders are once again actively making loans and the
commercial mortgage-backed securities market is enjoying significant growth.
Further, the maturation of the REIT industry over the past several years has
opened the credit markets to many companies for a wide spectrum of corporate
debt instruments. In 1995, REITs raised approximately $2.6 billion in such
capital, nearly double what was raised in 1994.
With income returns (or 'capitalization rates') on property purchases
higher today than they were in 1993 and debt financing now more readily
available, we believe that the current environment for acquisitions is the most
advantageous in a generation. We believe that a continuation of the present low
interest rate environment is likely to precipitate a great deal of acquisition
activity and eventually cause property values to rise. Low interest rates are of
particular benefit to the REIT industry today which, unlike in 1993, is much
larger, more mature, dominated by strong and proven companies and better
accepted by investors at large. While the cost of equity financing may vary
based on the way it is computed, we believe that there is no calculation which
can show that cost to be less expensive than the cost of debt capital. It is
therefore our belief that those companies which either fail to take advantage of
today's borrowing opportunity or choose to sell equity in anything but a
judicious manner will find that their stock prices suffer as a result.
- --------------------------------------------------------------------------------
3
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
In summary, in our opinion there are three important underpinnings that the
low current interest rate environment provides to the REIT industry. Mortgage
interest rates, which are influenced by long-term bond yields, and are well
below the income returns available in the property markets, provide an
exceptional financing opportunity for acquisitions and therefore a strong
foundation for property values. Second, those companies that properly take
advantage of current financing opportunities may be expected to enjoy an
increase in their growth rates and share prices. And third, because REIT
dividend yields are currently significantly higher than other financial market
yields this should attract investors and provide strong support for REIT share
prices.
Our investment strategy for 1996 will focus on our ability to invest in
those sectors that we believe show the strongest fundamentals along with those
companies whose valuations have declined to what we consider to be unwarranted
levels. We anticipate a continuation of moderate economic growth due to what
appears to be a bias towards monetary stimulus by the Federal Reserve and a lack
of excesses in the economy. As a result, we believe that our holdings in the
shopping center sector are likely to achieve healthy profit growth. In addition,
consolidation of the retail industry may well provide the stronger companies
with uncommon re-leasing, upgrading and acquisition opportunities. Further, with
Wall Street almost unanimously negative on the shopping center sector, we
believe that nearly all the bad news has been adequately factored into share
prices. Similarly, apartments are likely to be our next highest weighting due to
the continuing improvement that we expect to see in rental rates. Although there
is some apartment construction taking place, it is at a rate which we believe
cannot meet the underlying demand for rental housing. We are increasingly
attracted to the office sector, which has been the last major property type to
stage a recovery and where high-quality acquisition opportunities may still be
plentiful. We also expect both occupancy and rent growth to accelerate in the
next five years in the office sector.
While a return to normal and stable conditions in the real estate industry
is welcomed by most, it has resulted in a market environment which is more
competitive and efficient. We nonetheless remain confident in our investment
strategy and security selection criteria. Ultimately, we expect this to result
in superior investment results.
Sincerely,
<TABLE>
<S> <C>
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
Performance Review
The investment objective of Cohen & Steers Realty Shares, Inc. is total
return through investment in real estate securities. The Fund pursues its
investment objective by seeking both current income and capital appreciation.
Securities in the portfolio are selected by the adviser based on the outlook for
various property types and regions of the country, and fundamental research on
the individual companies. Among the investment criteria applied to individual
companies are organizational structure, management depth, track record of
profitability, balance sheet strength and growth potential.
The Fund's investment performance in 1995 was exceeded by that of its
benchmarks and the stock market in general. Real estate securities (and the
Fund) underperformed the stock market in general in 1995, in the adviser's view,
due to the slower than expected growth of the economy, particularly the retail
sector, and consequently, shopping center REITs. In comparison to real estate
securities benchmarks, the Fund's underperformance is attributable to its
heavier than average weighting in the underperforming shopping center REITs. The
Fund has also emphasized companies specialized in the ownership of apartments
which experienced strong cash flow growth but whose share prices were suppressed
due to fears of increasing development activity.
Notwithstanding the performance of the Fund in 1995, its cumulative return
since its inception in 1991 has comfortably exceeded that of its benchmarks and
has been competitive with that of the stock market in general.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1995
1 YEAR SINCE INCEPTION 7/2/91
-------- ----------------------
<C> <C>
Fund 11.13% 14.68%
NAREIT All 15.27% 12.76%
Wilshire 13.65% 8.03%
S&P 500 37.57% 15.13%
</TABLE>
<TABLE>
<CAPTION>
7/2/91 12/31/91 12/31/92
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cohen & Steers Reality Share, Inc. 10000.0 10112.0 10792.0 10962.0 11226.0 12111.0 12959.0 15615.0 15014.0 16523.0
Nareit All Reit Index 10000.0 10396.0 10823.0 10930.0 11170.0 11723.0 12142.0 14462.0 14056.0 15304.0
Wilshire Real Estate Securities Index 10000.0 9725.00 9906.00 10121.0 9692.00 9988.00 10680.0 12779.0 12176.0 13258.0
S&P 500 10000.0 10535.0 11418.0 11129.0 11340.0 11698.0 12287.0 12824.0 12887.0 13219.0
<CAPTION>
12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cohen & Steers Reality Share, Inc. 15389.0 16314.0 16517.0 16219.0 16669.0 16268.0 16996.0 17910.0 18523.0
Nareit All Reit Index 14394.0 14723.0 14935.0 14675.0 14515.0 14677.0 15645.0 16421.0 17173.0
Wilshire Real Estate Securities Index 12308.0 12585.0 12735.0 12542.0 12511.0 12558.0 13105.0 13726.0 14219.0
S&P 500 13526.0 13014.0 13068.0 13707.0 13704.0 15038.0 16474.0 17784.0 18854.0
</TABLE>
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate. When shares are redeemed, they may be worth
more or less than the original cost.
* Commencement of Operations.
`D' The Comparative indices are not adjusted to reflect expenses or other fees
that the SEC requires to be reflected in the Fund's performance. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The NAREIT Index of All REITs is comprised of 219 real estate investment
trusts. The Wilshire Real Estate Securities Index is comprised of 117
companies operating in the real estate industry and includes REITs. This
index does not include REITs with investments in health care facilities,
which as a group have produced investment returns in recent years higher
than the market as a whole. The Fund invests in REITs with investments in
health care facilities. The S&P 500 Index is an unmanaged list of common
stocks that is frequently used as a general measure of stock market
performance. For more information, including charges and expenses, please
read the prospectus carefully before you invest.
- --------------------------------------------------------------------------------
5<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
EQUITIES 95.73%
APARTMENT 23.94%
Associated Estates Realty Corp.............................. 610,400 $ 13,123,600
Avalon Properties........................................... 1,005,500 21,618,250
Camden Property Trust....................................... 655,000 15,638,125
Charles E. Smith Residential Realty......................... 500,800 11,831,400
Colonial Properties Trust................................... 596,000 15,198,000
Columbus Realty Trust....................................... 546,400 10,586,500
Equity Residential Properties Trust......................... 216,200 6,621,125
Merry Land & Investment..................................... 1,066,000 25,184,250
Oasis Residential........................................... 662,300 15,067,325
Post Properties............................................. 833,400 26,564,625
Security Capital Pacific Trust.............................. 364,200 7,192,950
Summit Properties........................................... 314,700 6,254,662
United Dominion Realty Trust................................ 996,100 14,941,500
------------
189,822,312
------------
HEALTH CARE 7.15%
Health Care Property Investors.............................. 702,300 24,668,287
Nationwide Health Properties................................ 761,800 31,995,600
------------
56,663,887
------------
HOTEL 4.81%
*Bristol Hotel Co........................................... 126,600 3,085,875
Felcor Suite Hotels......................................... 400,400 11,111,100
Patriot American Hospitality................................ 441,300 11,363,475
Starwood Lodging Trust...................................... 423,500 12,599,125
------------
38,159,575
------------
INDUSTRIAL 8.05%
Duke Realty Investments..................................... 491,200 15,411,400
Liberty Property Trust...................................... 778,700 16,158,025
Security Capital Industrial Trust........................... 268,300 4,695,250
Spieker Properties.......................................... 489,300 12,293,663
`D'Weeks Corp............................................... 609,400 15,311,175
------------
63,869,513
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
OFFICE 12.11%
Beacon Properties Corp...................................... 487,500 $ 11,212,500
Cali Realty Corp............................................ 732,200 16,016,875
Carr Realty Corp............................................ 338,100 8,241,187
Cousins Properties.......................................... 931,700 18,866,925
Crescent Real Estate Equities............................... 453,000 15,458,625
Highwoods Properties........................................ 531,100 15,003,575
Reckson Associates Realty Corp.............................. 383,100 11,253,563
------------
96,053,250
------------
SELF STORAGE 2.34%
Shurgard Storage Centers.................................... 262,200 7,079,400
Storage USA................................................. 351,900 11,480,737
------------
18,560,137
------------
SHOPPING CENTER 37.33%
COMMUNITY CENTER 17.02%
Bradley Real Estate......................................... 484,300 6,538,050
Developers Diversified Realty Corp.......................... 898,600 26,958,000
Federal Realty Investment Trust............................. 1,205,500 27,425,125
Kimco Realty Corp........................................... 1,207,200 32,896,200
Price REIT, Series B........................................ 386,500 10,725,375
Sizeler Property Investors.................................. 112,100 994,888
Vornado Realty Trust........................................ 784,000 29,400,000
------------
134,937,638
------------
FACTORY OUTLET CENTER 2.39%
Chelsea GCA Realty.......................................... 305,300 9,159,000
HGI Realty.................................................. 40,000 915,000
`D'Tanger Factory Outlet Centers............................ 356,200 8,905,000
------------
18,979,000
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
REGIONAL MALL 17.92%
CBL & Associates Properties................................. 589,700 $ 12,825,975
DeBartolo Realty Corp....................................... 1,609,400 20,922,200
Glimcher Realty Trust....................................... 1,105,400 19,068,150
`D'J.P. Realty.............................................. 834,300 18,250,313
Macerich Co................................................. 960,100 19,202,000
Rouse Co.................................................... 1,492,000 30,399,500
Simon Property Group........................................ 473,600 11,544,000
Taubman Centers............................................. 724,700 7,247,000
The Mills Corp.............................................. 125,300 2,130,100
Urban Shopping Centers...................................... 26,200 560,025
------------
142,149,263
------------
TOTAL SHOPPING CENTER....................................... 296,065,901
------------
TOTAL EQUITIES (Identified cost $710,748,829)......... 759,194,575
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER 3.48%
General Electric Capital Corp., 5.20%, 1/2/96
(Identified cost $27,645,007)........................... $27,649,000 27,645,007
------------
TOTAL INVESTMENTS (Identified cost $738,393,836)............... 99.21% 786,839,582
OTHER ASSETS, LESS LIABILITIES................................. .79% 6,244,492
------ ------------
NET ASSETS (Equivalent to $34.62 per share based on 22,907,765
shares of capital stock outstanding)........................ 100.00% $793,084,074
------ ------------
------ ------------
</TABLE>
- ------------
* This security did not pay a dividend in 1995. Dividends are expected to
commence in 1996.
`D' The Fund owns 5% or more of this company's outstanding voting securities
(Note 5).
See notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified cost $738,393,836) (Note 1).................. $786,839,582
Receivable for fund shares sold.............................................................. 4,458,419
Dividends receivable......................................................................... 4,982,953
Receivable for investment securities sold.................................................... 837,642
Unamortized organization costs and other assets (Note 1)..................................... 78,653
------------
Total Assets........................................................................... 797,197,249
------------
LIABILITIES:
Payable for investment securities purchased.................................................. 2,759,549
Payable to investment adviser................................................................ 554,672
Payable for fund shares redeemed............................................................. 381,140
Payable to administrator..................................................................... 182,493
Payable to custodian bank.................................................................... 25,644
Other liabilities............................................................................ 209,677
------------
Total Liabilities...................................................................... 4,113,175
------------
NET ASSETS applicable to 22,907,765 shares of $.001 par value common stock
outstanding (Note 4)............................................................................ $793,084,074
------------
------------
NET ASSET VALUE PER SHARE:
($793,084,074[div]22,907,765 shares outstanding)............................................. $ 34.62
------------
------------
NET ASSETS consist of:
Paid-in capital (Note 4)..................................................................... $736,108,375
Accumulated net realized gain on investments................................................. 8,529,953
Net unrealized appreciation on investments................................................... 48,445,746
------------
$793,084,074
------------
------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Investment Income:
Dividend income............................................................................... $39,748,746
Interest income............................................................................... 2,050,938
-----------
Total Income............................................................................ 41,799,684
-----------
Expenses:
Investment advisory fees (Note 2)............................................................. 4,956,723
Administrative and transfer agent fees (Note 2)............................................... 1,113,329
Registration and filing fees.................................................................. 192,366
Custodian fees................................................................................ 154,159
Reports to shareholders....................................................................... 109,943
Professional fees............................................................................. 99,483
Directors' fees and expenses (Note 2)......................................................... 29,000
Amortization of organization expenses (Note 1)................................................ 27,598
Miscellaneous................................................................................. 83,192
-----------
Total Expenses.......................................................................... 6,765,793
Reduction of expenses (Notes 2 and 6)......................................................... (248,601)
-----------
Net Expenses............................................................................ 6,517,192
-----------
Net Investment Income............................................................................... 35,282,492
-----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments.............................................................. (5,735,142)
Increase in unrealized appreciation on investments............................................ 41,783,548
-----------
Net realized and unrealized gain on investments......................................... 36,048,406
-----------
Net increase in net assets resulting from operations................................................ $71,330,898
-----------
-----------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income.................................. $ 35,282,492 $ 18,529,456
Net realized loss on investments....................... (5,735,142) (3,075,892)
Increase in unrealized appreciation on investments..... 41,783,548 3,511,446
----------------- -----------------
Net increase in net assets resulting from
operations.................................... 71,330,898 18,965,010
----------------- -----------------
Dividends and Distributions From:
Net investment income.................................. (25,186,847) (12,475,826)
Tax return of capital.................................. (9,488,813) (6,053,363)
----------------- -----------------
Total distributions to shareholders.............. (34,675,660) (18,529,189)
----------------- -----------------
Capital Stock Transactions (Note 4):
Increase in net assets from Fund share transactions.... 298,330,768 294,184,084
----------------- -----------------
Total increase in net assets..................... 334,986,006 294,619,905
Net Assets:
Beginning of year...................................... 458,098,068 163,478,163
----------------- -----------------
End of year............................................ $793,084,074 $458,098,068
----------------- -----------------
----------------- -----------------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991*
- ---------------------------------------------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 32.90 $ 31.92 $ 29.58 $ 26.55 $ 25.00
-------- -------- -------- ------- -------
Income from investment operations:
Net investment income......................... 1.86 1.66 1.29 1.51 0.88
Net realized and unrealized gains (losses) on
investments................................ 1.69 0.98 4.24 3.55 1.07
-------- -------- -------- ------- -------
Total from investment operations........ 3.55 2.64 5.53 5.06 1.95
-------- -------- -------- ------- -------
Less distributions from:
Net investment income......................... (1.33) (1.09) (1.27) (1.80) (0.40)
Realized gains on investments................. 0.00 0.00 (1.64) (0.18) 0.00
In excess of net realized gains............... 0.00 0.00 (0.04) 0.00 0.00
Tax return of capital......................... (0.50) (0.57) (0.24) (0.05) 0.00
-------- -------- -------- ------- -------
Total distributions..................... (1.83) (1.66) (3.19) (2.03) (0.40)
-------- -------- -------- ------- -------
Net asset value, end of period...................... $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------
Total investment return`D'.......................... 11.13% 8.31% 18.76% 20.09% 7.91%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions)....... $793.084 $458.098 $163.478 $49.481 $24.434
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratio of expenses to average daily net
assets(1).................................. 1.12% 1.14% 1.18% 1.25% 1.25%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratio of net investment income to average
daily net assets(1)........................ 6.05% 5.71% 4.57% 5.92% 7.48%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Portfolio turnover rate....................... 22.68% 39.00% 65.28% 14.81% 57.40%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
</TABLE>
- ------------------------
* For the period July 2, 1991 (commencement of operations) to December 31,
1991.
** Annualized.
`D' Total returns for periods of less than one year are not annualized.
(1) 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>
Ratios (to average daily net assets):
Expenses................................ 1.16% 1.26% 1.35% 1.77% 1.94%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Net investment income................... 6.01% 5.59% 4.40% 5.40% 6.78%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS
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 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 Directors deem 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.
Commercial paper instruments, 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.
- --------------------------------------------------------------------------------
13
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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. During the year ended December 31,
1995, the Fund decreased paid-in capital by $9,103,193, decreased undistributed
net investment income by $606,832 and increased accumulated net realized gains
on investments by $9,710,025. These differences are primarily due to return of
capital 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. 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 in 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 year ended December 31,
1995, the Fund incurred $4,956,723 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. However, the Adviser has voluntarily agreed to
- --------------------------------------------------------------------------------
14
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
limit the total operating expenses of the Fund, excluding expenses listed above,
to an annual rate of 1.25% of the average annual net assets of the Fund until
December 31, 1995. For the year ended December 31, 1995, no reduction of
expenses was required as a result of the limitation.
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 the Fund and receives
a fee of .02% of the Fund's average daily net assets. The Fund has paid the
Adviser $61,772 in fees under this and prior administrative agreements. For the
year ended December 31, 1995, CGFSC waived $117,113 of administrative fees.
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 $29,000 for
the year ended December 31, 1995.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for
the year ended December 31, 1995 aggregated $429,206,888 and $124,350,500,
respectively.
At December 31, 1995, 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......................................................................... $725,607,336
------------
Gross unrealized appreciation.......................................................... $ 72,742,979
Gross unrealized depreciaiton.......................................................... $(11,510,733)
------------
Net unrealized appreciation............................................................ $ 61,232,246
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold...................................... 15,202,637 $ 499,162,840 13,553,253 $ 448,861,740
Issued as reinvestment of dividends....... 794,839 26,664,507 416,846 13,794,953
Redeemed.................................. (7,012,384) (227,496,579) (5,169,130) (168,472,609)
---------- ------------- ---------- -------------
Net increase.............................. 8,985,092 $ 298,330,768 8,800,969 $ 294,184,084
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
</TABLE>
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 which the Fund holds 5% or
more of the outstanding voting securities) at December 31, 1995 aggregated
$42,466,488. The Fund earned $1,855,060 on dividend income from its 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 year ended December 31, 1995, the Fund's
expenses were reduced by $131,488 under this arrangement.
- --------------------------------------------------------------------------------
16
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholders and Board of Directors of
Cohen & Steers Realty Shares, Inc:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Cohen & Steers Realty Shares, Inc., as
of December 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the four years in
the period then ended and for the period from July 2, 1991 (commencement of
operations) to December 31, 1991. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Cohen & Steers Realty Shares, Inc. as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the four years in the period then ended and for the period from July 2, 1991
(commencement of operations) to December 31, 1991, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 8, 1996
- --------------------------------------------------------------------------------
17
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
[This page intentionally left blank]
- --------------------------------------------------------------------------------
18
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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.
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, MA 02108
Director (800) 437-9912
Jeffrey H. Lynford CUSTODIAN
Director The Chase Manhattan Bank, N.A.
770 Broadway
Elizabeth O. Reagan New York, NY 10003
Vice President
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>
- --------------------------------------------------------------------------------
19
<PAGE>
<PAGE>
COHEN & STEERS
REALTY SHARES
757 THIRD AVENUE
NEW YORK, N.Y. 10017
FIRST CLASS MAIL
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT NO. 56712
COHEN & STEERS
REALTY SHARES
ANNUAL REPORT
DECEMBER 31, 1995
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as `D'
The division sign shall be expressed as [div]
