<PAGE>
COHEN & STEERS
REALTY SHARES
757 THIRD AVENUE
NEW YORK, NY 10017
[GRAPHIC OMITTED]
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COHEN & STEERS
--------------
REALTY SHARES
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------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
<PAGE>
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COHEN & STEERS REALTY SHARES, INC.
July 20, 2000
To Our Shareholders:
We are pleased to submit to you the semi-annual report for the quarter and
six months ended June 30, 2000. The net asset value at that date was $39.50. In
addition, a regular quarterly dividend of $0.47 was declared for shareholders of
record on June 22, 2000 and was paid on June 23, 2000.
MID-YEAR REVIEW
For the quarter, Cohen & Steers Realty Shares had a total return, based on
income and change in net asset value, of 8.2%. This compares to the NAREIT
Equity REIT Index* total return of 10.5%. For the six months ended June 30,
2000, the Fund's total return was 9.7% which compares to the NAREIT Equity REIT
Index total of 13.2%.
Stated simply, the first half of this year has been full of encouraging news
and positive statistics for REIT investors. The group has made what we believe
is a significant bottom and has registered its best absolute and relative
returns in years. For example, the second quarter's absolute total return was
the best since the third quarter of 1997, and relative to the major stock market
averages, REITs turned in their best performance since the first quarter of
1993.
This turnabout was precipitated by a host of technical and fundamental
factors. In our view, it is clear now that REITs were substantially oversold by
the end of last year, and therefore due for a bounce. In addition, the
volatility and price decline in technology stocks, which had been the market
standouts over the past two years, tilted investor sentiment more towards 'old
economy' investments, including REITs. More important, in our opinion, was that
the combination of strong underlying real estate fundamentals and exceptional
valuations were just too compelling for investors to ignore any longer. REIT
earnings grew at a healthy rate in the first quarter, surprising many Wall
Street analysts and reflecting the continued strengthening of most property
markets. Whereas most analysts were expecting average cash flow per share growth
in the 7% range, the industry recorded average growth in the 9% range. Further,
income growth for many companies with properties in the strongest markets
actually reaccelerated in the first half of the year, soaring to the low-teens.
As these earnings were reported, most realty stocks reacted very favorably.
In the meantime, construction activity in nearly all property types peaked
in the early part of the year and has since begun to decline substantially.
Thus, it appears that the rally in REIT shares also reflects expectations for a
continuation of what has been an ideal economic and financial market environment
for property owners. Assuming that the Federal Reserve is successful in
engineering an economic slowdown but with no recession, a so-called 'soft
landing,' we would not expect to see a material rise in construction activity
for the foreseeable future. This would enable property markets to continue to
enjoy positive supply/demand conditions.
Our underperformance relative to the real estate averages can be attributed
primarily to two factors. We have made a commitment to owners of health care
facilities such as nursing homes, assisted living facilities and hospitals,
based on our belief that their fundamentals would be turning around in the very
near future. Unfortunately, while we continue to see signs of a turnaround, we
have been a bit early in this sector, where share prices have continued to lag
the averages. In addition, our holdings in the Real Estate Services sector
behaved more in line with the stock market in general. While this sector
contributed to our superior relative performance last year, the opposite has
been true so far in 2000. Although these two factors have restrained our
relative
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1
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COHEN & STEERS REALTY SHARES, INC.
performance so far this year, it is our hope that they will begin to make a
positive contribution to our returns over the next several quarters.
Our current holdings reflect our continued favorable view of the Office and
Apartment sectors, which together comprise over 50% of the portfolio. We believe
that office owners operating in high barrier-to-entry markets with long lease
terms have substantial embedded earnings growth. We are of the view that
apartment owners positioned in robust economic regions should benefit from
increased demand driven by those economies as well as favorable demographic
trends. We are maintaining our position in the Health Care sector as operators
undergo financial and operational restructuring and as the number of elderly
continually increases. We are maintaining our under-weighting in the Retail
sector based on our view that slowing retail sales and the increased use of the
Internet will cause profit margins of traditional retail tenants to erode.
Though still under-weighted, we favor Regional Malls over Community Centers as
certain mall operators have implemented value-added strategies to offset the
loss of market share to the Internet.
INVESTMENT OUTLOOK
We believe that one of the strongest determinants of the direction of REIT
share prices is the direction of the underlying property values, which in turn
influences REIT net asset values (NAVs) per share. When the market expects
property values and NAVs to rise, such as they did in the mid 1990's, REIT share
prices can rise strongly and even sell at a premium to the then current NAVs. We
believe that in the bear market of 1998-99, the reverse took place, whereby the
market expected NAVs to decline, due to concerns about deflation and its impact
on hard assets, as well as the prospect of increased construction at the tail
end of the economic cycle. In short order, REITs began to trade at a meaningful
discount from NAV. This expected decline in NAVs, however, never took place. The
near-absence of capital in the REIT industry and the capital market discipline
imposed on all property market participants effectively attenuated construction
and development activity.
Without capital, nearly all REITs were forced to adopt self-financing
business plans and recycle capital through property sales in order to enhance
shareholder value. Share buybacks became very common and, naturally, purchases
of shares at a discount to NAV increased the NAV of the remaining shares. There
continues to be nearly no new common equity financing in the industry. In the
meantime, real estate fundamentals at the property level have remained very
strong. The growing economy has caused the demand for space to exceed supply in
many markets, and this has resulted in higher occupancy levels and stronger rent
growth than nearly anyone could have imagined.
Consequently, we believe that NAVs are on the rise once again. Current and
prospective NAV growth is coming from several sources. If one assumes that the
capitalization rates (earnings yield) for most property types remain unchanged,
then property values should rise in line with operating income growth. Since we
expect industry-wide growth in operating income of 6% this year, this would
imply a commensurate growth in property values. Further, because most REITs
employ fixed-rate debt financing, the growth in earnings and NAV per share is
magnified. In addition, because of the inflation that has been experienced in
land, materials and labor costs for the real estate industry, the replacement
values for many properties are rising. If one adds to this the fact that many
REITs own properties in prime locations that cannot be duplicated, it is easy to
see the potential for continued value creation.
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2
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COHEN & STEERS REALTY SHARES, INC.
One further factor that we would expect to have a material impact on REIT
share valuations is dividend yield. If the Federal Reserve is successful in
slowing the growth of the economy, we would expect this ultimately to lead to a
leveling off or even a reduction in long-term interest rates, as well as the
yields on U.S. Treasury and high-grade corporate bonds. At the same time,
investor sentiment for higher yielding or 'junk' bonds has turned negative as
the performance in this sector has deteriorated over the past few years. We
believe this could be beneficial overall for REITs, as yield-oriented investors
look for other income producing alternatives. Moreover, since the percentage of
cash flow that the average REIT is paying out to investors is at a historically
low level, under our forecast REITs generally should continue to be able to
maintain significant dividend income returns.
Ironically, in what we consider to be a positive sign, the flow of money
into real estate mutual funds has been remarkably low this year; less than $400
million flowed into these funds, whose total assets are about $8 billion. While
this is a reversal of the outflows experienced last year, it is well below the
levels experienced in the prior bull market. Considering the extraordinary
relative performance of the sector during the first six months and the velocity
at which capital flows in this day and age, we would have expected a much higher
level of investor attention. The reason we find this encouraging is that this
'quiet recovery' in our view is typical of what many sectors experience at the
beginning of a reversal and this may indicate that we are still in the early
phases of this upturn.
Nonetheless, the question most asked of us lately is 'is it too late to
invest in REITs?' While their strong absolute and relative performance clearly
places REITs in a somewhat less undervalued position than they were six months
ago, we believe the growth in earnings and asset values so far this year
justifies much of their price appreciation. In addition, even after this price
increase, relative to stocks, bonds and their own underlying asset values, we
believe that REITs remain solidly undervalued. Thus, we remain optimistic about
the future of REITs and will continue to seek attractive returns for our
investors.
Sincerely,
<TABLE>
<S> <C>
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
</TABLE>
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Cohen & Steers is now online at www.cohenandsteers.com. Visit our website
for daily NAVs, portfolio information, performance information, recent news
articles, literature and insights on the REIT market.
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* The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly-traded REITs that invest predominately in the equity
ownership of real estate. The index is designed to reflect the performance of
all publicly-traded REITs as a whole.
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3
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C>
EQUITIES 97.17%
APARTMENT/RESIDENTIAL 19.17%
Apartment Investment & Management
Co. -- Class A..................... 1,405,900 $ 60,805,175
Archstone Communities Trust........... 108,700 2,289,494
AvalonBay Communities................. 1,587,700 66,286,539
Charles E. Smith Residential Realty... 476,900 18,122,200
Equity Residential Properties Trust... 1,325,900 60,991,400
Essex Property Trust.................. 434,600 18,253,200
United Dominion Realty Trust.......... 207,800 2,285,800
--------------
229,033,808
--------------
HEALTH CARE 8.18%
Health Care Property Investors........ 1,649,600 44,951,600
*Manor Care............................ 1,442,000 10,094,000
Nationwide Health Properties.......... 2,232,800 31,119,650
*'D'Ventas................................ 3,641,100 11,606,006
--------------
97,771,256
--------------
HOTEL 8.20%
Host Marriott Corp. .................. 2,048,100 19,200,938
MeriStar Hospitality Corp. ........... 691,100 14,513,100
Starwood Hotels & Resorts Worldwide... 1,975,600 64,330,475
--------------
98,044,513
--------------
INDUSTRIAL 7.82%
AMB Property Corp. ................... 1,325,800 30,244,813
First Industrial Realty Trust......... 291,700 8,605,150
ProLogis Trust........................ 2,560,200 54,564,262
--------------
93,414,225
--------------
OFFICE 32.38%
Arden Realty Group.................... 1,991,200 46,793,200
Boston Properties..................... 562,800 21,738,150
**Brookfield Properties Corp. .......... 1,118,500 14,833,316
Cousins Properties.................... 255,900 9,852,150
Crescent Real Estate Equities Co. .... 772,700 15,840,350
Equity Office Properties Trust Co. ... 2,982,400 82,202,400
Highwoods Properties.................. 554,700 13,312,800
Mack-Cali Realty Corp. ............... 2,203,800 56,610,112
SL Green Realty Corp. ................ 920,800 24,631,400
Vornado Realty Trust.................. 2,910,300 101,132,925
--------------
386,946,803
--------------
</TABLE>
See accompanying notes to financial statements.
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4
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COHEN & STEERS REALTY SHARES, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- --------------
<S> <C> <C>
OFFICE/INDUSTRIAL 9.98%
'D'Prime Group Realty Trust.............. 844,100 $ 12,819,769
PS Business Parks..................... 413,300 9,919,200
'D'Reckson Associates Realty Corp. ...... 2,163,700 51,387,875
Spieker Properties.................... 982,100 45,176,600
--------------
119,303,444
--------------
REAL ESTATE SERVICES 2.52%
*CAIS Internet......................... 652,000 9,168,750
*Crescent Operating.................... 170,900 245,669
*FrontLine Capital Group............... 969,600 20,664,600
--------------
30,079,019
--------------
SHOPPING CENTER 8.92%
COMMUNITY CENTER 2.19%
Kimco Realty Corp. ................... 639,700 26,227,700
--------------
REGIONAL MALL 6.73%
General Growth Properties............. 1,110,200 35,248,850
Macerich Co. ......................... 759,000 16,745,438
Rouse Co. ............................ 577,900 14,303,025
Simon Property Group.................. 635,000 14,089,062
--------------
80,386,375
--------------
TOTAL SHOPPING CENTER................. 106,614,075
--------------
TOTAL EQUITIES (Identified
cost -- $1,115,213,991)........ 1,161,207,143
--------------
<CAPTION>
PRINCIPAL
AMOUNT
------
COMMERCIAL PAPER 1.85%
Tampa Electric Co., 6.81%, due 7/5/00
(Identified cost -- $22,132,265)... $22,149,000 22,132,265
--------------
TOTAL INVESTMENTS (Identified
cost -- $1,137,346,256)............. 99.02% 1,183,339,408
OTHER ASSETS IN EXCESS OF LIABILITIES... 0.98% 11,744,935
------ -------------
NET ASSETS (Equivalent to $39.50 per share
based on 30,258,999 shares of capital stock
outstanding)........................ 100.00% $1,195,084,343
------ --------------
------ --------------
</TABLE>
---------
* Non-income producing security.
'D' The Fund owns 5% or more of this company's outstanding shares (Note 5).
** Brookfield Properties Corp. is a Canadian company listed on the Toronto and
New York Stock Exchanges. The Toronto Stock Exchange is deemed the principal
exchange for valuation purposes. The market value of the Fund's position in
Canadian dollars on June 30, 2000 was $21,978,525 based on an exchange rate
of 1 Canadian dollar to 0.6749 U.S. dollars.
See accompanying notes to financial statements.
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5
<PAGE>
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified
cost -- $1,137,346,256) (Notes 1 and 5).............. $1,183,339,408
Cash.................................................... 131
Dividends receivable.................................... 7,505,036
Receivable for investment securities sold............... 6,440,109
Receivable for fund shares sold......................... 1,337,144
Other assets............................................ 13,623
--------------
Total Assets....................................... 1,198,635,451
--------------
LIABILITIES:
Payable for investment securities purchased............. 1,975,044
Payable to investment adviser........................... 831,477
Payable to administrator................................ 403,742
Payable for fund shares redeemed........................ 102,246
Payable for dividends declared.......................... 10,576
Other liabilities....................................... 228,023
--------------
Total Liabilities.................................. 3,551,108
--------------
NET ASSETS applicable to 30,258,999 shares of $0.001 par
value common stock outstanding (Note 4)................. $1,195,084,343
--------------
--------------
NET ASSET VALUE PER SHARE:
($1,195,084,343[div]30,258,999 shares outstanding)...... $ 39.50
--------------
--------------
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)......................... $1,161,414,781
Undistributed net investment income..................... 2,151,064
Accumulated net realized loss on investments sold....... (14,474,654)
Net unrealized appreciation on investments.............. 45,993,152
--------------
$1,195,084,343
--------------
--------------
</TABLE>
See accompanying notes to financial statements.
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6
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income (Note 1):
Dividend income (net of $20,429 of foreign withholding
tax and including $9,856,462 received from affiliated
issuers) (Note 5).................................... $36,492,263
Interest income......................................... 378,397
-----------
Total Income....................................... 36,870,660
-----------
Expenses:
Investment advisory fees (Note 2)....................... 5,206,221
Administration and transfer agent fees (Note 2)......... 954,274
Reports to shareholders................................. 109,136
Custodian fees and expenses............................. 70,256
Professional fees....................................... 62,093
Registration and filing fees............................ 25,667
Interest expense (Note 7)............................... 19,857
Directors' fees and expenses (Note 2)................... 16,828
Miscellaneous........................................... 178,177
-----------
Total Expenses..................................... 6,642,509
Reduction of expenses (Note 6).......................... (26,340)
-----------
Net Expenses....................................... 6,616,169
-----------
Net Investment Income....................................... 30,254,491
-----------
Net Realized and Unrealized Gain on Investments:
Net realized gain on investments (includes net realized
gain of $37,231,711 on sales of investments in
affiliated issuers) (Note 5)......................... 21,434,729
Net change in unrealized appreciation on investments.... 40,796,894
-----------
Net realized and unrealized gain on investments.... 62,231,623
-----------
Net Increase in Net Assets Resulting from Operations........ $92,486,114
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
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7
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COHEN & STEERS REALTY SHARES, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
----------- -----------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income................. $ 30,254,491 $ 85,429,677
Net realized gain/(loss) on
investments........................ 21,434,729 (74,867,037)
Net change in unrealized appreciation
on investments and foreign currency
forward contract................... 40,796,894 14,880,105
-------------- --------------
Net increase in net assets
resulting from operations...... 92,486,114 25,442,745
-------------- --------------
Dividends and Distributions to shareholders
from (Note 1):
Net investment income................. (28,103,427) (71,807,679)
Tax return of capital................. -- (12,406,847)
-------------- --------------
Total dividends and distributions
to shareholders................ (28,103,427) (84,214,526)
-------------- --------------
Capital Stock Transactions (Note 4):
Decrease in net assets from Fund share
transactions....................... (334,292,067) (409,574,675)
-------------- --------------
Total decrease in net assets..... (269,909,380) (468,346,456)
Net Assets:
Beginning of period................... 1,464,993,723 1,933,340,179
-------------- --------------
End of period (including undistributed
net investment investment income of
$2,151,064 at June 30, 2000)....... $1,195,084,343 $1,464,993,723
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to financial statements.
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8
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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>
FOR THE
SIX MONTHS ENDED FOR THE YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ----------------------------------------------------
PER SHARE OPERATING PERFORMANCE: (UNAUDITED) 1999 1998 1997 1996 1995
-------------------------------- ----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 36.91 $ 37.98 $ 50.18 $ 45.09 $ 34.62 $ 32.90
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income...................... 0.54 2.01 1.97 1.87 1.86 1.86
Net realized and unrealized gain/(loss) on
investments and foreign currency forward
contracts................................ 2.52 (1.10) (10.89) 7.40 11.04 1.69
-------- -------- -------- -------- -------- --------
Total from investment operations....... 3.06 0.91 (8.92) 9.27 12.90 3.55
-------- -------- -------- -------- -------- --------
Less dividends and distributions to
shareholders from:
Net investment income...................... (0.47) (1.69) (1.59) (1.88) (1.76) (1.33)
Net realized gain on investments........... -- -- (1.56) (2.30) (0.55) --
Tax return of capital...................... -- (0.29) (0.13) -- (0.12) (0.50)
-------- -------- -------- -------- -------- --------
Total dividends and distributions to
shareholders......................... (0.47) (1.98) (3.28) (4.18) (2.43) (1.83)
-------- -------- -------- -------- -------- --------
Net asset value, end of period................ $ 39.50 $ 36.91 $ 37.98 $ 50.18 $ 45.09 $ 34.62
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
-----------------------------------------------------------------------------------------------------------------------
Total investment return....................... 9.68%(1) 2.68% - 18.07% 21.16% 38.48% 11.13%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
-----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in millions).... $1,195.1 $1,465.0 $1,933.3 $3,433.0 $2,036.4 $ 793.1
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratios of expenses to average daily net
assets (before expense reduction)........ 1.08%(2) 1.07% 1.04% 1.06% 1.10% 1.16%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratios of expenses to average daily net
assets (net of expense reduction)........ 1.08%(2) 1.06% 1.03% 1.05% 1.08% 1.12%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Ratio of net investment income to average
daily net assets (before expense
reduction)............................... 4.93%(2) 5.15% 4.23% 4.02% 5.27% 6.01%
-------- -------- -------- -------- -------- --------
Ratio of net investment income to average
daily net assets (net of expense
reduction)............................... 4.93%(2) 5.16% 4.24% 4.04% 5.28% 6.05%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Portfolio turnover rate.................... 17.50%(1) 21.34% 30.18% 40.44% 33.23% 22.68%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
-------------------
(1) Not annualized.
(2) Annualized.
See accompanying notes to financial statements.
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9
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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 consistently followed by the Fund in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles. The preparation of the financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
income and expenses during the reporting period. Actual results could differ
from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day.
Securities not listed on the New York Stock Exchange but listed on other
domestic or foreign securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. ('NASDAQ') National
Market System are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by Cohen & Steers
Capital Management, Inc. to be over-the-counter, but excluding securities
admitted to trading on the NASDAQ National List, are valued at the mean of the
current bid and asked prices as reported by NASDAQ, the National 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. A portion of the Fund's dividend may
consist of amounts in excess of net investment income derived
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10
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COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
from non-taxable components of the dividends from the Fund's portfolio
investments. Net realized capital gains, unless offset by any available capital
loss carryforward, are distributed to shareholders annually. Distributions to
shareholders are recorded on the ex-dividend date.
Dividends 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
ex-dividend 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. These differences are primarily due to
return of capital and capital gain distributions received by the Fund on
portfolio securities.
Federal Income Taxes: It is the policy of the Fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
'Adviser') serves as the Fund's investment adviser pursuant to an investment
advisory agreement (the 'Advisory Agreement'). Under the terms of the Advisory
Agreement, the Adviser provides the Fund with the day-to-day investment
decisions and generally manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the supervision of the Fund's Board of
Directors. For the services provided to the Fund, the Adviser receives a monthly
fee in an amount equal to 1/12th of 0.85% for the first $2.5 billion and 1/12th
of 0.75% thereafter of the average daily net assets of the Fund. For the six
months ended June 30, 2000, the Fund incurred $5,206,221 in advisory fees.
Administration Fees: The Fund has entered into an administration agreement
with the Adviser under which the Adviser performs certain administrative
functions for the Fund and receives a fee of 0.02% of the Fund's average daily
assets. For the six months ended June 30, 2000, the Fund paid the Adviser
$122,493 in fees under this administration agreement.
In addition, Cohen & Steers Realty Shares, Inc., Cohen & Steers
Institutional Realty Shares, Inc., Cohen & Steers Special Equity Fund, Inc.,
Cohen & Steers Equity Income Fund, Inc. and Cohen & Steers Realty Income Fund,
Inc. (the 'Funds') have entered into a fund accounting, transfer agency and
sub-administration agreement with The Chase Manhattan Bank ('Chase') pursuant to
which an affiliate of Chase performs administration functions for the Funds.
Chase receives a monthly sub-administration fee at the annual rate 0.08% on the
first $500 million of the Funds' average daily net assets and at lower rates on
the Funds' average daily net assets in excess of that amount.
--------------------------------------------------------------------------------
11
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Directors' Fees: Certain directors and officers of the Fund are also
directors, officers and/or employees of the Adviser. None of the directors and
officers so affiliated received compensation for their services as directors of
the Fund. For the six months ended June 30, 2000, fees and related expenses
accrued for non-affiliated directors totaled $16,828.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
six months ended June 30, 2000 totaled $211,362,364 and $568,304,776,
respectively.
At June 30, 2000, the cost and unrealized appreciation or depreciation in
value of the investments owned by the Fund, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost........................................... $1,137,346,256
--------------
Gross unrealized appreciation............................ $ 146,816,499
Gross unrealized depreciation............................ $ (100,823,347)
--------------
Net unrealized appreciation.............................. $ 45,993,152
--------------
--------------
</TABLE>
NOTE 4. CAPITAL STOCK
The Fund is authorized to issue 200 million shares of capital stock at a par
value of $0.001 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>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold....................... 6,959,827 $ 263,377,445 13,508,463 $ 512,840,372
Issued as reinvestment of
dividends................ 633,096 24,116,312 1,948,633 69,716,308
Redeemed................... (17,027,104) (621,785,824)* (26,674,342) (992,131,355)
----------- ------------- ----------- -------------
Net decrease............... (9,434,181) $(334,292,067) (11,217,246) $(409,574,675)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
---------
* Includes redemptions in-kind of $317,295,295. The proceeds were used
to make purchases in-kind in Cohen & Steers Institutional Realty
Shares, Inc.
NOTE 5. INVESTMENTS 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, 2000 totaled
$75,813,650.
--------------------------------------------------------------------------------
12
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Affiliates, their investment income, and gain/(loss) from sales of
affiliates are as follows (in thousands):
SUMMARY OF TRANSACTIONS WITH AFFILIATES:
(Amount in thousands)
<TABLE>
<CAPTION>
BEGINNING PURCHASE SALE ENDING
EQUITIES SHARES SHARES SHARES SHARES
-------- --------- -------- ------ ------
<S> <C> <C> <C> <C>
*Mack-Cali Realty
Corp................ 3,180 -- 976 2,204
*Nationwide Health
Properties.......... 2,666 189 622 2,233
Prime Group Realty
Trust............... 1,391 -- 547 844
Reckson Associates
Realty Corp......... 3,345 -- 1,181 2,164
*Reckson Service
Industries.......... 1,371 -- 1,371 --
*SL Green Realty
Corp................ 1,414 -- 493 921
Ventas............... 4,718 -- 1,077 3,641
*Vornado Realty
Trust............... 4,865 -- 1,955 2,910
<CAPTION>
PURCHASE SALES GAIN/(LOSS) DIVIDEND
EQUITIES COST COST ON SALES INCOME
-------- -------- -------- ----------- --------
<S> <C> <C> <C> <C>
*Mack-Cali Realty
Corp................ -- 22,201 1,629 1,278
*Nationwide Health
Properties.......... 2,604 5,666 (2,757) 2,272
Prime Group Realty
Trust............... -- 10,745 (3,158) 648
Reckson Associates
Realty Corp......... -- 22,305 968 958
*Reckson Service
Industries.......... -- 1,412 29,154 --
*SL Green Realty
Corp................ -- 11,322 161 729
Ventas............... -- 3,702 (164) --
*Vornado Realty
Trust............... -- 52,610 11,399 3,971
------ -------- ------- ------
$2,604 $129,963 $37,232 $9,856
------ -------- ------- ------
------ -------- ------- ------
</TABLE>
---------
* As of June 30, 2000, no longer an affiliate.
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, 2000, the
Fund's expenses were reduced by $26,340 under this arrangement.
NOTE 7. BORROWINGS
The Fund, in conjunction with Cohen & Steers Institutional Realty Shares,
Inc., Cohen & Steers Special Equity Fund, Inc. and Cohen & Steers Equity Income
Fund, Inc., has entered into a Line of Credit Agreement with Chase Manhattan
Bank for $200,000,000. At June 30, 2000, the Fund had no loans outstanding.
During the six months ended June 30, 2000, the average daily balance of loans
outstanding was $4,518,182 at a weighted average interest rate of 6.715%. The
maximum amount of loans outstanding at any time during the six months ended
June 30, 2000 was $10,000,000 on May 24, 2000, which was 0.85% of total assets.
-------------------
AVERAGE ANNUAL TOTAL RETURNS
(PERIODS ENDED JUNE 30, 2000)
<TABLE>
<CAPTION>
One Year Five Years Since Inception (7/2/91)
-------- ---------- ------------------------
<S> <C> <C>
3.75 % 11.03% 12.42%
</TABLE>
--------------------------------------------------------------------------------
13
<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 SUB-ADMINISTRATOR AND TRANSFER AGENT
Director Chase Global Funds Services Co.
73 Tremont Street
George Grossman Boston, MA 02108
Director (800) 437-9912
CUSTODIAN
Jeffrey H. Lynford The Chase Manhattan Bank
Director One Chase Manhattan Plaza
New York, NY 10081
Willard H. Smith, Jr.
Director LEGAL COUNSEL
Simpson Thacher & Bartlett
Elizabeth O. Reagan 425 Lexington Avenue
Vice President New York, NY 10017
Adam Derechin DISTRIBUTOR
Vice President and Assistant Treasurer Cohen & Steers Securities, Inc.
757 Third Avenue
Lawrence B. Stoller New York, NY 10017
Assistant Secretary
NASDAQ Symbol: CSRSX
Website: www.cohenandsteers.com
Net asset value (NAV) can be found in the daily
mutual fund listings in the financial section of most
major newspapers under Cohen & Steers.
This report is authorized for delivery only to
shareholders of Cohen & Steers Realty Shares, Inc.
unless accompanied or preceded by the delivery of a
currently effective prospectus setting forth details of
the Fund. Past performance, of course, is no guarantee
of future results and your investment may be worth
more or less at the time you sell.
</TABLE>
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14
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as....................................'D'
The division sign shall be expressed as....................................[div]
