COHEN & STEERS REALTY SHARES INC, N-30D, 1997-08-26

COHEN & STEERS REALTY SHARES INC
N-30D, 1997-08-26

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COHEN & STEERS REALTY SHARES, INC.

July 21, 1997

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, 1997. The net asset value
per share at that date was $47.15. In addition a regular quarterly dividend of
$0.47 was declared for shareholders of record June 23, 1997 and paid on June 24,
1997.

MID-YEAR REVIEW

Real estate securities have experienced a somewhat erratic period thus far
in 1997. By mid-year, however, the Fund's 6.7% return based on income and change
in net asset value is in line with our mid-teens annual total return
expectation. This is also consistent with the long-term returns that REITs have
traditionally provided.

In April, REITs suffered their largest monthly price decline since
November, 1994 (-3.4%), primarily the result of the supply imbalance caused by a
flood of equity issuance. In the first half of this year, REITs raised $9.7
billion in common equity, a record for any six month period. With supply
pressures abating and a continuation of strong real estate fundamentals, REITs
posted strong returns in both May (+2.9%) and June (+4.9%), which more than
erased April's decline. This strong rebound was consistent throughout all
mainstream property sectors.

Also helping performance in the spring were the very strong earnings
reported by REITs. Most reported profits above consensus expectations, and the
companies in our universe reported average per share growth of approximately 10%
compared to last year's first quarter. Initial indications appear to us that a
similar pattern is likely to emerge when second quarter earnings are announced
in the next several weeks. This confirms our expectation that the REIT industry
is still in a high growth phase which justifies improved valuations and share
pricing that anticipates expanding earnings and asset values.

An important recent development is that the long-term debt market appears
to be becoming much more accommodating to the REIT industry. Whereas for the
past several years, most REITs were able to borrow money for only five to seven
year terms, the more credit worthy companies are now issuing ten to twenty year
fixed-rate debt. Further, the cost of this debt has declined significantly due
to the combination of lower interest rates and a narrowing of spreads from
benchmark rates. This lower cost of debt is enhancing REITs' returns on equity
and the longer maturity is much better suited to the long-term nature of REIT
assets.

INVESTMENT OUTLOOK

We believe that the rate of earnings growth for the industry as a whole is
likely to slow somewhat over the next several years as the real estate cycle
enters into a mature phase. This will happen as three previously wide gaps begin
to close: the gap between existing occupancy rates and full occupancy; the gap
between existing rental rates and market rates; and the gap between the market
value of many properties and their replacement cost. Occupancies and rental
rates have risen as the robust national economy over the past six years, against
a backdrop of limited new construction, has engendered a strong real estate
recovery. This improvement in fundamentals has

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COHEN & STEERS REALTY SHARES, INC.

fostered a substantial return of capital to the industry from both public and
private market sources, thereby increasing real estate values.

Despite this already strong rebound, we do not believe that the real estate
cycle has by any means passed its peak or that the industry is headed for a
reversal of the positive trends now in place. We believe, however, that the
return to equilibrium conditions warrants a change in investment strategy, which
we have now almost completely executed. This strategy emphasizes the following
four themes.

1. STRONG INTERNAL GROWTH PROSPECTS. We are highly focused on companies
that own properties where the above-mentioned gaps are still relatively
wide, thereby permitting increases in occupancies and/or rents.
Similarly, we have identified those few companies that can still
purchase property at a meaningful discount to replacement cost. Many of
these companies are in the Office sector, particularly owners of central
business district office buildings, and it is for this reason that our
weighting in this sector is very high. In addition, most REITs have a
distinct advantage in the acquisition of office properties due to the
tax deferral that their operating partnership structure can offer
potential sellers.

2. PROTECTED OR UNIQUE MARKETS. These companies occupy a strong position
in markets with significant barriers to entry due to the requirement of
special expertise, or where there is a shortage of space that cannot be
easily created. They include several developers of apartment communities
in densely populated areas where special expertise is required to obtain
zoning and building permits. In the Office sector, many urban markets
tend to be protected due to high density, a scarcity of land, strict
building codes, and unusual operating complexity.

3. UNIQUE BUSINESS PLANS OR VALUE-ADDED STRATEGIES. We are attracted to
companies we believe are positioned to earn above-average profits by
employing techniques not available to (or not thought of by) their
competitors. There now exist a number of real estate companies that have
a recognized national brand name, and are maximizing rental revenues
while enjoying significant economies of scale. As many other companies
in our universe grow we expect them to become low cost providers of
products and services to their tenant bases, adding revenues which will
improve their profitability.

4. CONSOLIDATORS. Although the real estate cycle is maturing, the
industry remains highly fragmented and in dramatic need of better
management and further consolidation. For the first time in history,
REITs are attracting a substantial number of property owners wishing to
sell either for cash or an exchange of shares. The potential sellers
span the spectrum of individual and institutional owners. The largest,
best managed and best capitalized companies are the ones that are
positioned to make the most attractive acquisitions. These companies can
solidify their industry positions and achieve profit growth far
exceeding that of lesser competitors. The shares of these companies
will, in our opinion, maintain premium valuations that reflect their
competitive positions.

In addition to the four themes described above, we remain committed to our
normal qualitative and quantitative investment standards and are particularly
attuned to each company's dividend growth potential. With both interest rates
and inflation quite low, and the dividend yield of the stock market at an
all-time low, REITs

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COHEN & STEERS REALTY SHARES, INC.

may be ideal investment vehicles for many investors. If we are correct about the
current state of the real estate cycle, the income component of REIT returns
will be valued more highly and this may serve to offset generally slowing
industry growth. Therefore, we are very pleased to have identified companies
that have both substantial dividend yields and we believe are capable of
sustaining healthy growth in earnings and dividends.

As mentioned earlier, although we see the real estate cycle entering a
mature phase, it is by no means on the verge of a decline. The real estate
industry suffered perhaps its worst depression ever in the late 1980's and early
1990's and has emerged from that period in a much leaner and healthier position.
There simply is not a lot of new development taking place and the capital
flowing to the industry is nowhere near the amount that funded the overbuilding
of the 1980's. Further, this capital is primarily being used to purchase
existing properties rather than underwrite new development. Importantly, the
emergence of the public market as the principal allocator of capital to the
industry has introduced a measure of discipline that has never before existed.
As discussed above, we see no shortage of excellent investment opportunities and
we remain confident in our ability to earn satisfactory returns.

Sincerely,

<TABLE>
<S> <C>
/s/ MARTIN COHEN /s/ ROBERT H. STEERS

MARTIN COHEN ROBERT H. STEERS
President Chairman
</TABLE>

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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C> <C>
EQUITIES 96.46%
APARTMENT/RESIDENTIAL 16.53%
`D'Avalon Properties...................................... 2,722,800 $ 77,940,150
Bay Apartment Communities.............................. 718,000 26,566,000
BRE Properties......................................... 1,095,000 27,511,875
`D'Camden Property Trust.................................. 1,759,100 55,631,538
`D'Charles E. Smith Residential Reality................... 915,900 26,446,612
`D'Colonial Properties Trust.............................. 1,712,800 50,313,500
`D'Columbus Realty Trust.................................. 777,600 17,690,400
`D'Essex Property Trust................................... 1,335,700 42,909,363
Equity Residential Properties Trust.................... 565,300 26,851,750
`D'Irvine Apartment Communities........................... 1,231,800 36,184,125
Manufactured Home Communities.......................... 243,900 5,624,944
`D'Post Properties........................................ 1,137,900 46,156,069
`D'Sun Communities........................................ 992,900 33,324,206
--------------
473,150,532
--------------
DIVERSIFIED 3.34%
*Catellus Development Corp. ............................ 896,300 16,245,437
*Crescent Operating..................................... 382,640 4,591,680
Newhall Land & Farming Company......................... 1,567,900 33,905,838
*Security Capital U.S. Realty........................... 2,738,100 40,797,690
--------------
95,540,645
--------------
HEALTH CARE 2.84%
Healthcare Realty Trust............................... 396,100 11,041,287
Nationwide Health Properties.......................... 198,600 4,369,200
Omega Healthcare Investors............................ 352,500 11,522,344
*`D'Sunrise Assisted Living............................... 1,553,500 54,372,500
--------------
81,305,331
--------------
HOTEL 1.65%
*`D'Bristol Hotel Co. .................................... 1,225,800 47,193,300
--------------
INDUSTRIAL 5.72%
`D'CenterPoint Properties Corp. .......................... 1,621,500 51,482,625
`D'EastGroup Properties................................... 814,650 16,394,831
`D'Meridian Industrial Trust.............................. 1,006,000 23,641,000
Security Capital Industrial Trust...................... 1,474,400 31,699,600
`D'Weeks Corp. ........................................... 1,301,700 40,678,125
--------------
163,896,181
--------------
</TABLE>

See notes to financial statements.
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C> <C>
OFFICE 19.06%
Beacon Properties Corp. ............................... 1,228,900 $ 41,014,537
Boston Properties...................................... 841,300 23,135,750
Brandywine Reality Trust............................... 436,100 8,831,025
`D'Cali Realty Corp. ..................................... 3,130,800 106,447,200
`D'CarrAmerica Realty Corp. .............................. 2,538,700 72,987,625
`D'Cousins Properties..................................... 1,564,500 43,414,875
Crescent Real Estate Equities.......................... 3,826,400 121,488,200
`D'Highwoods Properties................................... 2,981,500 95,408,000
Trizec Hahn Corp. ..................................... 1,531,700 32,740,088
--------------
545,467,300
--------------
OFFICE/INDUSTRIAL 9.53%
`D'Kilroy Realty Corp. ................................... 1,137,300 28,716,825
`D'Prentiss Properties Trust.............................. 1,061,300 27,195,812
`D'Reckson Associates Realty Corp. ....................... 2,831,200 65,117,600
`D'Spieker Properties..................................... 3,230,500 113,673,219
`D'TriNet Corporate Realty Trust.......................... 1,149,500 38,005,344
--------------
272,708,800
--------------
SELF STORAGE 4.19%
`D'Public Storage......................................... 4,099,400 119,907,450
----------- --------------
SHOPPING CENTER 33.60%
COMMUNITY CENTER 13.62%
`D'Developers Diversified Realty Corp. ................... 2,028,000 81,120,000
`D'Federal Realty Investment Trust........................ 1,984,700 53,586,900
Glimcher Realty Trust.................................. 981,700 20,247,563
`D'Kimco Realty Corp. .................................... 1,826,100 57,978,675
`D'Regency Realty Corp. .................................. 592,800 16,153,800
`D'Vornado Realty Trust................................... 1,828,400 131,873,350
Weingarten Realty Investors............................ 684,200 28,907,450
--------------
389,867,738
--------------
FACTORY OUTLET CENTER 1.00%
`D'Chelsea GCA Realty..................................... 688,800 26,174,400
Horizon Group.......................................... 188,100 2,527,594
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28,701,994
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</TABLE>

See notes to financial statements.
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<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C> <C>
COMMERCIAL PAPER 3.30%
Trans America Financial, 5.75%, 7/1/97
(Identified cost $94,415,000)......................... $94,415,000 94,415,000
--------------
TOTAL INVESTMENTS (Identified cost $2,360,469,368)........... 99.76% 2,855,402,276
OTHER ASSETS IN EXCESS OF LIABILITIES........................ 0.24% 6,927,638
------ --------------
NET ASSETS (Equivalent to $47.15 per share based on
60,712,558 shares of capital stock outstanding)........... 100.00% $2,862,329,914
------ --------------
------ --------------
</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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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified cost $2,360,469,368) (Notes 1 and 5)....... $2,855,402,276
Cash....................................................................................... 248
Receivable for fund shares sold............................................................ 10,563,018
Dividends receivable....................................................................... 11,262,056
Receivable for investment securities sold.................................................. 530,481
Other assets............................................................................... 23,017
--------------
Total Assets......................................................................... 2,877,781,096
--------------
LIABILITIES:
Payable for investment securities purchased................................................ 9,851,902
Payable for fund shares redeemed........................................................... 3,121,437
Payable to investment adviser.............................................................. 1,913,505
Payable to administrator................................................................... 290,453
Other liabilities.......................................................................... 273,885
--------------
Total Liabilities.................................................................... 15,451,182
--------------
NET ASSETS applicable to 60,712,558 shares of $.001 par value common stock outstanding (Note
4)............................................................................................ $2,862,329,914
--------------
--------------
NET ASSET VALUE PER SHARE:
($2,862,329,914[div]60,712,558 shares outstanding)......................................... $ 47.15
--------------
--------------
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)............................................................ $2,303,941,565
Distributions in excess of net investment income........................................... (2,261,641)
Accumulated net realized gain on investments sold.......................................... 65,717,082
Net unrealized appreciation on investments................................................. 494,932,908
--------------
$2,862,329,914
--------------
--------------
</TABLE>

See notes to financial statements.
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)

<TABLE>
<S> <C>
Investment Income:
Dividend income.............................................................................. $ 61,947,332
Interest income.............................................................................. 5,451,191
------------
Total Income........................................................................... 67,398,523
------------
Expenses:
Investment advisory fees (Note 2)............................................................ 10,870,868
Administrative and transfer agent fees (Note 2).............................................. 1,574,767
Custodian fees............................................................................... 277,193
Registration and filing fees................................................................. 329,234
Reports to shareholders...................................................................... 83,985
Professional fees............................................................................ 48,445
Directors' fees and expenses (Note 2)........................................................ 16,379
Miscellaneous................................................................................ 285,848
------------
Total Expenses......................................................................... 13,486,719
Reduction of expenses (Note 6)............................................................... (163,071)
------------
Net Expenses........................................................................... 13,323,648
------------
Net Investment Income.............................................................................. 54,074,875
------------
Realized and Unrealized Gain on Investments:
Net realized gain on investments............................................................. 41,845,180
Increase in unrealized appreciation on investments........................................... 75,854,816
------------
Net realized and unrealized gain on investments........................................ 117,699,996
------------
Net increase in net assets resulting from operations............................................... $171,774,871
------------
------------
</TABLE>

See notes to financial statements.
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- -----------------

<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income.................................... $ 54,074,875 $ 60,374,863
Net realized gain on investments......................... 41,845,180 31,989,185
Change in unrealized appreciation on investments......... 75,854,816 370,632,346
---------------- -----------------
Net increase in net assets resulting from
operations...................................... 171,774,871 462,996,394
---------------- -----------------
Dividends and Distributions From:
Net investment income.................................... (56,336,516) (57,513,352)
Net realized gain on investments......................... -- (23,648,701)
Tax return of capital.................................... -- (3,926,373)
---------------- -----------------
Total distributions to shareholders................ (56,336,516) (85,088,426)
---------------- -----------------
Capital Stock Transactions (Note 4):
Increase in net assets from Fund share transactions...... 710,512,974 865,386,543
---------------- -----------------
Total increase in net assets....................... 825,951,329 1,243,294,511
Net Assets:
Beginning of period...................................... 2,036,378,585 793,084,074
---------------- -----------------
End of period (including distributions in excess of net
investment income of $2,261,641 at June 30, 1997)..... $2,862,329,914 $ 2,036,378,585
---------------- -----------------
---------------- -----------------
</TABLE>

See notes to financial statements.
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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, 1997 -----------------------------------------------------
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 1996 1995 1994 1993 1992
- ------------------------------------------ ---------------- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year........ $ 45.09 $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
------------- ---------- -------- -------- -------- -------
Income from investment operations
Net investment income................ 0.90 1.86 1.86 1.66 1.29 1.51
Net realized and unrealized gains on
investments........................ 2.10 11.04 1.69 0.98 4.24 3.55
------------- ---------- -------- -------- -------- -------
Total from investment
operations.................... 3.00 12.90 3.55 2.64 5.53 5.06
------------- ---------- -------- -------- -------- -------
Less distributions from:
Net investment income................ (0.94) (1.76) (1.33) (1.09) (1.27) (1.80)
Realized gains on investments........ 0.00 (0.55) 0.00 0.00 (1.64) (0.18)
In excess of net realized gains...... 0.00 0.00 0.00 0.00 (0.04) 0.00
Tax return of capital................ 0.00 (0.12) (0.50) (0.57) (0.24) (0.05)
------------- ---------- -------- -------- -------- -------
Total distributions............. (0.94) (2.43) (1.83) (1.66) (3.19) (2.03)
------------- ---------- -------- -------- -------- -------
Net asset value, end of year.............. $ 47.15 $ 45.09 $ 34.62 $ 32.90 $ 31.92 $ 29.58
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
-------------------------------------------------------------------------------------------------------------
Total investment return................... 6.70%(c) 38.48% 11.13% 8.31% 18.76% 20.09%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
-------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of year (in
millions).......................... $2,862.330 $2,036.379 $793.084 $458.098 $163.478 $49.481
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Ratios of expenses to average daily
net assets (before expense
reduction)......................... 1.05%(b) 1.10% 1.16% 1.26% 1.35% 1.77%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Ratios of expenses to average daily
net assets (net of expense
reduction)......................... 1.04%(b) 1.08% 1.12% 1.14% 1.18% 1.25%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Ratio of net investment income to
average daily net assets (net of
expense reduction)................. 4.20%(b) 5.28% 6.05% 5.71% 4.57% 5.92%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Ratio of net investment income to
average daily net assets (before
expense reduction)................. 4.19%(b) 5.27% 6.01% 5.59% 4.40% 5.40%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Portfolio turnover rate.............. 29.69%(b) 33.23% 22.68% 39.00% 65.28% 14.81%
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
Average Commission Rate(a)........... $ 0.0624 $ 0.0678 N/A N/A N/A N/A
------------- ---------- -------- -------- -------- -------
------------- ---------- -------- -------- -------- -------
</TABLE>

- ------------------------
(a) For fiscal years beginning on or after September 1, 1995, the Fund is
required to disclose the average commission rate per share it paid for
trades on which commissions were charged.
(b) Annualized.
(c) Total returns for periods of less than one year are not annualized.

See notes to financial statements.
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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.

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.

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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

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 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,
1997, the Fund incurred $10,870,868 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 the Fund and receives
a fee of .02% of the Fund's average daily net assets. For the six months ended
June 30, 1997, the Fund has paid the Adviser $256,366 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 $16,379 for
the six months ended June 30, 1997.

NOTE 3. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities, excluding short-term investments, for
the six months ended June 30, 1997 aggregated $1,091,449,110 and $349,579,927,
respectively.

- --------------------------------------------------------------------------------
12

<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)

At June 30, 1997, 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......................................................................... $2,360,469,368
--------------
Gross unrealized appreciation.......................................................... $ 496,779,356
Gross unrealized depreciation.......................................................... $ (1,846,448)
--------------
Net unrealized appreciation............................................................ $ 494,932,908
--------------
--------------
</TABLE>

NOTE 4. CAPITAL STOCK

The Fund is authorized to issue two hundred million (200,000,000) 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, 1997 DECEMBER 31, 1996
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Sold........................................ 29,808,834 $1,354,182,288 28,020,205 $1,072,865,893
Issued as reinvestment of dividends......... 1,043,253 48,464,890 1,840,925 4,067,867
Redeemed.................................... (15,301,837) (692,134,204) (7,606,587) (281,547,217)
----------- -------------- ---------- --------------
Net increase................................ 15,550,250 $ 710,512,974 22,254,543 $ 865,386,543
----------- -------------- ---------- --------------
----------- -------------- ---------- --------------
</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 in which the Fund holds 5%
or more of the outstanding voting securities) at June 30, 1997 aggregated
$2,169,018,624.

Affiliates, their investment income, and gain (loss) from sales of
affiliates are as follows:

<TABLE>
<CAPTION>
INVESTMENT GAIN/(LOSS)
EQUITIES INCOME ON SALES
- ------------------------------------------------------------------------------------- ----------- -----------

<S> <C> <C>
General Growth Properties............................................................ $1,168,335 $ --
Essex Property Trust................................................................. 581,030 --
Colonial Properties.................................................................. 1,379,872 --
Weeks Corp........................................................................... 823,880 --
Developers Diversified Realty Corp. ................................................. 1,644,489 27,420
Charles E. Smith Residential Realty.................................................. 722,908 --
Kilroy Realty Corp. ................................................................. 734,468 --
Spieker Properties................................................................... 2,937,547 1,507,025
The Mills Corp. ..................................................................... 1,394,726 --
Cali Realty Corp. ................................................................... 2,375,820 297,659
</TABLE>

(table continued on next page)

- --------------------------------------------------------------------------------
13

<PAGE>

<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
(table continued from previous page)

<TABLE>
<CAPTION>
INVESTMENT GAIN/(LOSS)
EQUITIES INCOME ON SALES
- ------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
Centerpoint Properties Corp. ........................................................ $1,160,166 $ 160,100
Sunrise Assisted Living.............................................................. -- --
Highwoods Properties................................................................. 2,946,000 2,517,196
Reckson Associates Realty Corp. ..................................................... 504,060 --
Avalon Properties.................................................................... 1,922,876 --
Rouse Co. ........................................................................... 1,965,225 --
CBL & Associates..................................................................... 1,278,383 --
Meridian Industrial Trust............................................................ 317,115 --
Vornado Realty Trust................................................................. 2,295,168 --
Macerich Co. ........................................................................ 1,690,524 105,040
JP Realty............................................................................ 479,327 --
Sun Communities...................................................................... 1,027,091 --
Irvine Apartment Communities......................................................... 731,314 393,828
Taubman Centers...................................................................... 1,530,466 --
Camden Property Trust................................................................ 1,370,334 --
Urban Shopping Center................................................................ 964,859 --
EastGroup Properties................................................................. 268,835 --
Columbus Realty Trust................................................................ 614,304 --
Chelsea GCA Realty................................................................... 867,888 --
Federal Realty Investment Trust...................................................... 1,687,644 54,913
TriNet Corporate Realty Trust........................................................ 1,448,370 --
Cousins Properties................................................................... 1,031,990 1,873,823
Post Properties...................................................................... 1,325,303 --
Kimco Realty Corp. .................................................................. 1,434,953 478,993
----------- -----------
$42,625,270 $7,415,997
----------- -----------
----------- -----------
</TABLE>

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, 1997, the
Fund's expenses were reduced by $163,071 under this arrangement.

NOTE 7. BORROWINGS

The Fund has entered into a Line of Credit Agreement with Chase Manhattan
Bank for $100,000,000. At June 30, 1997, the par value of loans outstanding was
$0. During the six months ended June 30, 1997, the average daily balance of
loans outstanding was $0. The loan, if used, will be collateralized by the
Fund's portfolio.

- --------------------------------------------------------------------------------
14

<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.
3 Chase MetroTech Center
Willard H. Smith, Jr. Brooklyn, NY 11245
Director
LEGAL COUNSEL
Elizabeth O. Reagan Dechert Price & Rhoads
Vice President 30 Rockefeller Plaza
New York, NY 10112
Adam Derechin
Vice President 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>

- --------------------------------------------------------------------------------
15

COHEN & STEERS
REALTY SHARES
757 THIRD AVENUE
NEW YORK, NY 10017

[COHEN & STEERS LOGO]

SEMI-ANNUAL REPORT
JUNE 30, 1997

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 symbol shall be expressed as .................[div]