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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
April 9, 2003
To Our Shareholders:
We are pleased to submit to you our report for the quarter ended March 31,
2003. The net asset value per share at that date was $12.93. During the quarter,
three $0.105 per share monthly dividends were declared and paid. In addition, on
March 6, 2003, the fund announced an increase in its next three monthly
dividends to $0.11 per share, payable on April 30, 2003, May 30, 2003 and June
30, 2003. The new dividend represents an increase of approximately 4.8% in the
monthly rate.
INVESTMENT REVIEW
For the quarter, Cohen & Steers Quality Income Realty Fund had a total
return, based on income and change in net asset value, of -0.1%. This compares
with the NAREIT Equity REIT Index's(a) total return of 0.7%.
The recent quarter-end represents the third anniversary of the longest
period in which REITs outperformed the broader stock market. They did so by a
record margin, as shown in the following table.
ANNUALIZED TOTAL RETURN PERFORMANCE
Periods ended 3/31/03
NAREIT S&P 500 NASDAQ
------ ------- ------
1 year................. -3.5% -24.8% -27.0%
2 years................ 8.9% -13.2% -14.3%
3 years................ 13.7% -16.1% -33.4%
Despite the fact that the NAREIT index was up just 0.7% during the quarter,
several underlying trends emerged that may portend changing leadership. As has
been the case for several quarters, the total return leaders were the shopping
center (8.3% total return), regional mall (7.0%), and industrial (2.7%) sectors.
Laggards in the quarter once again included hotel (-20.5%) and apartment
(-1.4%), but also included health care (-6.5%). During the month of March,
changing trends were even more distinct as office was the single best performing
sector, while health care was the worst.
With respect to office stocks, we believe that their valuations and
depressed level of share prices have influenced recent performance. Meanwhile,
there continues to be a strong bid in the private market for quality office
assets, which we believe supports our estimates of asset values. In addition, we
are beginning to detect that
-------------------
(a) The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly traded REITs that invest predominantly in the equity
ownership of real estate. The index is designed to reflect the performance
of all publicly traded equity REITs as a whole.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
vacancy rates are in the process of peaking in some important markets. With our
predicted resumption of economic growth in the second half, that important
indicator may actually improve very shortly.
We believe that the performance of the health care sector is the result of
two factors. Foremost is that it appears that federal, state and local budget
deficits are having a negative influence on reimbursement rates, thereby
diminishing the profitability of facility operators and the growth prospects of
the health care REITs. In addition, we suspect that investors may perceive the
decline in interest rates -- which helped drive excellent returns from health
care REITs over the past two years -- as beginning to reverse. During the
quarter, we selectively reduced our health care weight, and we expect to
continue to do so opportunistically going forward.
As was the case with many sectors of the financial markets, REITs
experienced volatility during the first three months of the year based on
quickly changing expectations with respect to economic growth, interest rates
and events leading up to the war in Iraq. REITs were also subject to some unique
factors. Perhaps most significant were the varied interpretations and
expectations of the Bush administration's proposal to eliminate the double
taxation of corporate dividends. Since the proposal would not be a positive for
REITs -- because REITs already don't pay taxes -- the market's initial reaction
was that the proposal would have to be a negative. After some reflection,
however, it has become clearer that the complexities of the proposed new rules
make perceived advantages to non-REIT companies very hard to quantify and rely
upon, perhaps even magnifying the benefits of the reliable, high dividend yields
provided by REITs. Following the president's proposal, for example, two
companies currently taxed as C corporations (Capital Trust and Catellus
Corporation) announced their intentions to convert to REIT status, providing
further evidence of REITs' continuing appeal.
One issue that continues to be of paramount importance to investors in all
asset classes is the future course of the U.S. economy. Once the Iraq war is
behind us (and as long as there are no further geopolitical crises), the
performance of stocks, bonds and real estate will depend entirely on a
resumption of economic and job growth. Since fiscal and monetary policies could
hardly be more accommodative than they are now, our assumption is that this
stimulus will shortly work its way into the system and that the United States
will be able to avert an economic crisis. Based upon the stock market's strong
rally as the war began (with REITs fully participating), we suspect that
investors are more confidently anticipating second half 2003 growth.
INVESTMENT OUTLOOK
The investment performance of REITs over the past 18 months has marked a
sharp change in attitudes of a broad range of investors. While we have never
been proponents of analyzing funds' flows in order to gauge or predict
investment performance, there is now convincing evidence that new sources of
demand for REIT shares are having a strong influence on valuations. Emerging
data suggest that significant capital is now flowing to the REIT industry, much
of which we believe is permanent. This is in contrast to the late 1990s, when
investor capital flowed into and out of the sector primarily as a result of
changing price and profit momentum.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
Since Equity Office Properties became the first REIT to be added to the S&P
500 Index in October 2001, 17 other REITs have been added to this and two other
major S&P indexes, creating demand for at least $3.6 billion worth of shares
from index funds. Once these shares are purchased, they remain in these funds,
subject to fund inflows and outflows, unless the company is deleted from the
index. Based on the market capitalization of REITs relative to the broader
market, it is our belief that there will be a continual increase in the number
of REITs being added to these indexes. An additional source of permanent demand
for REIT shares is the growing number of closed-end mutual funds that invest
exclusively in REITs. These funds have a fixed capital structure -- their shares
trade on major stock exchanges, and they do not allow for redemptions or
liquidation. Therefore, these funds must remain fully invested in REITs. Over $4
billion has been raised within this structure and we expect more new funds to be
created in the near future.
One further source of demand for REIT shares is an array of retirement
accounts. Whereas during the 1990s less than 1% of retirement accounts (such as
401k plans) offered real estate options, it is now estimated that nearly 10% of
such plans include REIT mutual funds in their menus. It is our understanding
that this number is increasing steadily, with many prominent financial
institutions recently adopting the REIT option. In addition, a growing number of
financial planners and advisors have accepted REITs as an asset class that
deserves representation in investor portfolios. While we cannot estimate what
proportion of open-end mutual fund inflows are from such sources, we are
confident that the combination of these accounts, along with numerous
individuals and advisors who adhere to asset allocation models, will continue to
make significant ongoing contributions to the REIT asset class. Over the past 18
months, over $3 billion of cash has flowed into open-end REIT mutual funds.
REITs have also become a popular component of the real estate allocations of
other retirement accounts such as defined benefit plans. Based on the readings
from various institutional investment services, it is estimated that a further
$4 billion has been committed to REITs over this same time frame.
Finally, with share prices of some REITs trading well below net asset value,
more and more companies are opting to repurchase their shares rather than make
new investments. Indeed, because property prices have held up extremely well,
many REITs have become net sellers of property, using the cash proceeds to
retire debt, fund share repurchase and, in some cases, just sit on the cash in
anticipation of future acquisition opportunities. We estimate that there have
been over $1.5 billion of share repurchases over the past year and a half.
Offsetting this is the issuance of approximately $6.5 billion of common equity
by other REITs during the same period.
Adding these flows together, as shown below, we estimate that $10.2 billion
of incremental demand for REIT shares has been created. In relation to the $160
billion equity market capitalization of the equity REIT universe, of which a
large percentage is held by insiders and founding families, we consider this to
be a significant proportion. While it may be difficult to extrapolate this trend
into the future, our belief is that the factors underlying this trend will
remain prominent in the near future.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
RECENT DEMAND FOR REIT SHARES
Index additions................. $ 3.6 billion
Closed-end funds................ 4.2
Open-end funds.................. 3.4
Defined benefit plans........... 4.0
Share repurchases............... 1.5
Equity issuance................. (6.5)
------
NET DEMAND...................... $ 10.2 BILLION
While the underlying demand for REITs may be substantial, the returns they
generate will primarily be dependent on the course of real estate fundamentals.
As we mentioned, a stronger economy that brings with it a resumption of job
growth will be required in order for occupancies and rents to improve in almost
every property type. In light of the economic stimulus currently in place and
increased stimulus that may be provided by the tax reduction proposal now being
considered by Congress, we believe it would be unprecedented if there were not a
resumption of strong economic growth.
Anticipating a strengthening economy, our investment strategy continues to
emphasize the office, industrial and regional mall sectors. Despite headlines
that suggest aggravated conditions in the office market, new construction has
declined precipitously. This suggests to us that once demand begins to increase,
both occupancies and rents will once again begin to grow. The industrial and
mall sectors will also be direct beneficiaries of an improved economy. We have
reduced our exposure to the health care sector due to its slower growth
potential as well as its high sensitivity to interest rates. We remain cautious
on the apartment sector due to a continued high level of construction, despite
the decline in demand resulting from the strength of single-family housing.
Irrespective of when economic growth finally accelerates, we believe the
REIT industry overall remains extremely healthy, as it is strongly capitalized
and generates cash flow comfortably in excess of current dividends. Despite a
small handful of dividend cuts, 29 companies have already raised their dividend
payouts this year. As dividends tend to drive REITs' long-term returns, these
attractive dividend yields have the potential to make REITs even more popular
with investors, especially in an environment where many analysts are lowering
expectations for
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
most other asset classes. Consequently, we expect REITs to remain an important
and growing component of investors' portfolios.
Sincerely,
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
GREG E. BROOKS
GREG E. BROOKS
Portfolio Manager
Cohen & Steers is online at COHENANDSTEERS.COM
We have enhanced both the look and features of our Web site
to give you more information about our company, our funds
and the REIT market in general. Check out our interactive
Asset Allocation Tool, which allows you to hypothetically
add REITs to any portfolio to see how they impact expected
total returns and risk. Or try the Fund Performance
Calculator and see how our funds have performed versus the
S&P 500 Index or Nasdaq Composite. As always, you can also
get daily net asset values, fund fact sheets, portfolio
highlights, recent news articles and our overall insights on
the REIT market.
So visit us today at COHENANDSTEERS.COM
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
MARCH 31, 2003 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD(a)
----------- ------------ --------
EQUITIES 157.10%
COMMON STOCK 116.24%
DIVERSIFIED 13.00%
Colonial Properties Trust........................... 457,100 $ 15,120,868 8.04%
Crescent Real Estate Equities Co.................... 1,396,200 20,077,356 10.43
Vornado Realty Trust................................ 834,543 29,876,639 7.60
------------
65,074,863
------------
HEALTH CARE 15.75%
Health Care Property Investors...................... 535,200 17,848,920 9.96
Health Care REIT.................................... 969,625 25,404,175 8.93
Nationwide Health Properties........................ 1,459,100 18,749,435 14.32
Ventas.............................................. 1,452,800 16,852,480 9.22
------------
78,855,010
------------
INDUSTRIAL 4.00%
First Industrial Realty Trust....................... 465,600 13,185,792 9.68
Keystone Property Trust............................. 397,900 6,843,880 7.56
------------
20,029,672
------------
OFFICE 34.14%
Arden Realty........................................ 784,100 17,783,388 8.91
Brandywine Realty Trust............................. 1,140,900 25,099,800 8.00
CarrAmerica Realty Corp............................. 654,100 16,581,435 7.89
Equity Office Properties Trust...................... 1,438,600 36,612,370 7.86
Highwoods Properties................................ 980,100 20,033,244 11.45
Mack-Cali Realty Corp............................... 1,021,800 31,645,146 8.14
Prentiss Properties Trust........................... 853,800 23,137,980 8.27
------------
170,893,363
------------
OFFICE/INDUSTRIAL 9.17%
Kilroy Realty Corp.................................. 142,600 3,151,460 8.96
Liberty Property Trust.............................. 956,400 29,935,320 7.67
Reckson Associates Realty Corp. -- Class B.......... 663,800 12,844,530 13.39
------------
45,931,310
------------
-------------------
(a) Dividend yield is computed by dividing the security's current annual
dividend rate by the last sale price on the principal exchange, or market,
on which such security trades.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
----------- ------------ --------
RESIDENTIAL -- APARTMENT 13.54%
Archstone-Smith Trust............................... 637,900 $ 14,008,284 7.79%
AvalonBay Communities............................... 288,600 10,649,340 7.59
Camden Property Trust............................... 248,500 8,051,400 7.84
Gables Residential Trust............................ 514,700 13,773,372 9.01
Home Properties of New York......................... 383,000 12,715,600 7.35
Post Properties..................................... 214,000 5,168,100 7.45
Summit Properties................................... 183,800 3,400,300 7.30
------------
67,766,396
------------
SHOPPING CENTER 26.64%
COMMUNITY CENTER 13.53%
Developers Diversified Realty Corp.................. 999,778 24,144,639 6.79
Federal Realty Investment Trust..................... 441,200 13,399,244 6.39
Heritage Property Investment Trust.................. 170,300 4,266,015 8.38
Kramont Realty Trust................................ 1,293,300 19,399,500 8.67
Urstadt Biddle Properties -- Class A................ 544,000 6,517,120 7.01
------------
67,726,518
------------
REGIONAL MALL 13.11%
Glimcher Realty Trust............................... 368,200 7,069,440 10.00
Macerich Co......................................... 994,757 31,513,902 7.20
Mills Corp.......................................... 861,900 26,891,280 7.24
Taubman Centers..................................... 8,600 146,458 6.11
------------
65,621,080
------------
TOTAL SHOPPING CENTER............................... 133,347,598
------------
TOTAL COMMON STOCK (Identified
cost -- $620,259,743)........................ 581,898,212
------------
PREFERRED STOCK 40.86%
DIVERSIFIED 7.50%
Crescent Real Estate Equities Co., 6.75%,
Series A (Convertible)(b)........................ 1,888,900 36,134,657 8.83
Newcastle Investment Corp., 9.75%, Series B......... 56,000 1,402,800 9.74
------------
37,537,457
------------
HEALTH CARE 0.14%
Health Care Property Investors, 8.70%,
Series B......................................... 10,000 252,900 8.62
Health Care Property Investors, 8.60%,
Series C......................................... 18,800 472,632 8.55
------------
725,532
------------
-------------------
(b) 410,000 shares segregated as collateral for the interest rate swap
transactions (see Note 1).
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
----------- ------------ --------
HOTEL 8.57%
FelCor Lodging Trust, 9.00%, Series B............... 856,300 $ 15,404,837 12.51%
Innkeepers USA Trust, 8.625%, Series A.............. 80,300 1,846,900 9.39
LaSalle Hotel Properties, 10.25%, Series A(a)....... 1,000,000 25,650,000 9.98
------------
42,901,737
------------
INDUSTRIAL 0.43%
Centerpoint Properties Trust, 8.48%, Series A....... 8,300 210,488 8.36
Keystone Property Trust, 9.125%, Series D........... 75,000 1,957,500 8.74
------------
2,167,988
------------
OFFICE 3.39%
CarrAmerica Realty Corp., 8.55%, Series C........... 46,600 1,177,116 8.47
HRPT Properties Trust, 8.75%, Series B.............. 120,000 3,130,800 8.39
Highwoods Properties, 8.625%, Series A(b)........... 13,195 12,663,077 8.99
------------
16,970,993
------------
OFFICE/INDUSTRIAL 0.19%
PS Business Parks, 9.25%, Series A.................. 10,800 276,156 9.03
PS Business Parks, 8.75%, Series F.................. 4,100 106,395 8.44
ProLogis, 8.54%, Series C(b)........................ 4,000 210,625 8.11
ProLogis, 8.75%, Series E........................... 13,000 335,725 8.48
------------
928,901
------------
RESIDENTIAL -- APARTMENT 6.23%
Apartment Investment & Management Co., 8.75%,
Series D......................................... 8,600 213,710 8.81
Apartment Investment & Management Co., 10.10%,
Series R......................................... 950,000 25,070,500 9.47
Home Properties of New York, 9.00%, Series F........ 196,000 5,350,800 8.24
Mid-America Apartment Communities, 8.875%,
Series B......................................... 21,800 543,256 8.91
------------
31,178,266
------------
SHOPPING CENTER 14.41%
COMMUNITY CENTER 7.67%
Commercial Net Lease Realty, 9.00%, Series A........ 25,000 644,000 8.73
Developers Diversified Realty Corp., 8.60%,
Series F......................................... 1,039,400 26,764,550 8.35
Federal Realty Investment Trust, 8.50%,
Series B......................................... 310,300 8,191,920 8.07
New Plan Excel Realty Trust, 8.625%, Series B....... 110,100 2,764,611 8.60
------------
38,365,081
------------
-------------------
(a) 157,000 shares segregated as collateral for the interest rate swap
transactions (see Note 1).
(b) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD
----------- ------------ --------
OUTLET CENTER 0.14%
Chelsea Property Group, 8.375%, Series A(c)......... 14,000 $ 699,563 8.39%
------------
REGIONAL MALL 6.60%
CBL & Associates Properties, 8.75%,
Series B(d)...................................... 430,000 22,833,000 8.25
Mills Corp., 9.00%, Series B........................ 55,300 1,426,740 8.72
Mills Corp., 9.00%, Series C........................ 159,600 4,125,660 8.70
Rouse Capital, 9.25%, Series Z...................... 30,000 777,000 8.92
Simon Property Group, 8.75%, Series F............... 30,000 790,500 8.31
Taubman Centers, 8.30%, Series A.................... 127,600 3,101,956 8.56
------------
33,054,856
------------
TOTAL SHOPPING CENTER............................... 72,119,500
------------
TOTAL PREFERRED STOCK (Identified
cost -- $203,033,612)........................ 204,530,374
------------
TOTAL EQUITIES (Identified
cost -- $823,293,355)........................ 786,428,586
------------
PRINCIPAL
AMOUNT
----------
CORPORATE BOND 0.24%
Developers Diversified Realty Corp.,
7.50%, due 7/15/18 (Identified
cost -- $1,142,369)........................... $1,250,000 1,213,969
------------
COMMERCIAL PAPER 1.55%
United Bank of Switzerland Financial,
1.28%, due 4/1/03 (Identified
cost -- $7,775,000)........................... 7,775,000 7,775,000
------------
TOTAL INVESTMENTS (Identified
cost -- $832,210,724) .......................... 158.89% 795,417,555
LIABILITIES IN EXCESS OF OTHER ASSETS ............ (2.96)% (14,807,118)
LIQUIDATION VALUE OF TAXABLE AUCTION MARKET PREFERRED
SHARES: SERIES T, SERIES W, SERIES TH, AND SERIES F
(Equivalent to $25,000 per share based on 2,800
shares outstanding for each class) ............. (55.93)% (280,000,000)
------ ------------
NET ASSETS -- COMMON STOCK (Equivalent to $12.93
per share based on 38,712,775 shares of
capital stock outstanding) ..................... 100.00% $500,610,437
------ ------------
------ ------------
-------------------
(c) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
(d) 158,000 shares segregated as collateral for the interest rate swap
transactions (see Note 1).
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2003 (UNAUDITED)
NOTE 1. INVESTMENTS IN INTEREST RATE SWAPS
The fund has entered into interest rate swap transactions with Merrill Lynch
Derivative Products and UBS Warburg. Under the agreements, the fund receives a
floating rate of interest and pays a respective fixed rate of interest on the
nominal values of the swaps. The fund has segregated 158,000 shares of CBL &
Associates Properties, 8.75%, Series B, 410,000 shares of Crescent Real Estate
Equities Co., 6.75%, Series A, and 157,000 shares of LaSalle Hotel Properties,
10.25%, Series A as collateral for the interest rate swap transactions. Details
of the interest rate swap transactions at March 31, 2003 are as follows:
FLOATING RATE(a)
NOTIONAL FIXED (RATE RESET TERMINATION UNREALIZED
COUNTERPARTY AMOUNT RATE MONTHLY) DATE DEPRECIATION
------------ ----------- ------ --------------- ----------- --------------
Merrill Lynch Derivative
Products.................... $46,000,000 4.560% 1.337% 4/5/2005 $ (2,572,204)
Merrill Lynch Derivative
Products.................... $46,000,000 5.210% 1.337% 4/5/2007 $ (4,376,421)
Merrill Lynch Derivative
Products.................... $46,000,000 5.580% 1.337% 4/5/2009 $ (5,526,555)
UBS Warburg................... $24,000,000 4.450% 1.280% 4/15/2005 $ (1,300,455)
UBS Warburg................... $24,000,000 5.120% 1.280% 4/15/2007 $ (2,204,423)
UBS Warburg................... $24,000,000 5.495% 1.280% 4/15/2009 $ (2,778,645)
------------
$(18,758,703)
------------
------------
-------------------
(a) Based on LIBOR (London Interbank Offered Rate).
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
FINANCIAL HIGHLIGHTS(b)
MARCH 31, 2003 (UNAUDITED)
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
--------------------------- ---------------
NET ASSET VALUE:
Beginning of period: 12/31/2002............ $511,951,856 $13.25
Net investment income.................. $ 13,202,129 $ 0.34
Net realized and unrealized loss on
investments and interest rate swap
transactions........................ (12,450,129) (0.32)
Distributions from net investment
income to:
Common shareholders............... (12,182,269) (0.32)
Preferred shareholders............ (905,408) (0.02)
------
Capital stock transactions:
Distributions reinvested.......... 994,258
------------
Net decrease in net asset value............ (11,341,419) (0.32)
------------ ------
End of period: 3/31/2003................... $500,610,437 $12.93
------------ ------
------------ ------
AVERAGE ANNUAL TOTAL RETURNS(c)
(PERIODS ENDED MARCH 31, 2003) (UNAUDITED)
ONE YEAR SINCE INCEPTION (2/28/02)
-------- -------------------------
-5.58% -2.39%
REINVESTMENT PLAN
We urge shareholders who want to take advantage of this plan
and whose shares are held in 'Street Name' to consult your
broker as soon as possible to determine if you must change
registration into your own name to participate.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares of
its common stock in the open market.
-------------------
(b) Financial information included in this report has been taken from the
records of the fund without examination by independent accountants.
(c) Based on net asset value.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
PRIVACY POLICY
The fund is committed to maintaining the privacy
of its shareholders and to safeguarding their
personal information. The following is provided
to help you understand what personal information
the fund collects, how we protect that
information, and why in certain cases we may
share this information with others.
The fund does not receive any personal
information relating to shareholders who
purchase shares through an intermediary that
acts as the record owner of the shares. In the
case of shareholders who are record owners of
the fund, to conduct and process your business
in an accurate and efficient manner, we must
collect and maintain certain personal
information about you. This is the information
we collect on applications or other forms, and
from the transactions you make with us.
The fund does not disclose any personal
information about its shareholders or former
shareholders to anyone, except as required or
permitted by law or as is necessary to service
shareholder accounts. We will share information
with organizations, such as the fund's transfer
agent, that assist the fund in carrying out its
daily business operations. These organizations
will use this information only for purposes of
providing the services required or as otherwise
as may be required by law. These organizations
are not permitted to share or use this
information for any other purpose. In addition,
the fund restricts access to personal
information about its shareholders to employees
of the adviser who have a legitimate business
need for the information.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
MEET THE COHEN & STEERS FAMILY OF OPEN-END FUNDS:
FOR HIGH CURRENT INCOME: FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
EQUITY INCOME FUND REALTY SHARES
IDEAL FOR INVESTORS SEEKING A HIGH DIVIDEND IDEAL FOR INVESTORS SEEKING MAXIMUM TOTAL
YIELD AND CAPITAL APPRECIATION, INVESTING RETURN THROUGH BOTH CURRENT INCOME AND
PRIMARILY IN REITS CAPITAL APPRECIATION, INVESTING PRIMARILY IN
A, B, C AND I SHARES AVAILABLE REITS
SYMBOLS: CSEIX, CSBIX, CSCIX, CSDIX SYMBOL: CSRSX
FOR CAPITAL APPRECIATION; FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
SPECIAL EQUITY FUND INSTITUTIONAL REALTY SHARES
IDEAL FOR INVESTORS SEEKING MAXIMUM CAPITAL IDEAL FOR INVESTORS SEEKING MAXIMUM TOTAL
APPRECIATION, INVESTING IN A LIMITED NUMBER RETURN THROUGH BOTH CURRENT INCOME AND
OF REITS AND OTHER REAL ESTATE COMPANIES CAPITAL APPRECIATION, INVESTING PRIMARILY IN
CONCENTRATED, HIGHLY FOCUSED PORTFOLIO REITS
SYMBOL: CSSPX OFFERS LOW TOTAL EXPENSE RATIO
HIGHER MINIMUM PURCHASE REQUIRED
SYMBOL: CSRIX
FOR MORE INFORMATION ABOUT ANY COHEN & STEERS FUND
OR TO OBTAIN A PROSPECTUS PLEASE CONTACT US AT:
1-800-330-REIT, OR VISIT OUR WEB SITE AT COHENANDSTEERS.COM
THE PROSPECTUS CONTAINS MORE INFORMATION ABOUT EACH FUND INCLUDING ALL CHARGES AND EXPENSES,
AND SHOULD BE READ CAREFULLY BEFORE YOU INVEST.
COHEN & STEERS SECURITIES, LLC, DISTRIBUTOR
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT MANAGER
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 SUBADMINISTRATOR AND CUSTODIAN
Director State Street Bank and Trust Company
225 Franklin Street
Bonnie Cohen Boston, MA 02110
Director
TRANSFER AGENT -- COMMON SHARES
George Grossman Equiserve Trust Company
Director 150 Royall Street
Canton, MA 02021
Richard J. Norman (800) 426-5523
Director
TRANSFER AGENT -- PREFERRED SHARES
Willard H. Smith Jr. The Bank of New York
Director 100 Church Street
New York, NY 10007
Greg E. Brooks
Vice president LEGAL COUNSEL
Simpson Thacher & Bartlett
Adam Derechin 425 Lexington Avenue
Vice president and assistant New York, NY 10017
treasurer
Lawrence B. Stoller New York Stock Exchange Symbol: RQI
Assistant secretary Web site: cohenandsteers.com
This report is for shareholder
information. This is not a prospectus
intended for use in the purchase or sale
of fund shares. Past performance is of
course no guarantee of future results and
your investment may be worth more or less
at the time you sell.
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COHEN & STEERS
QUALITY INCOME REALTY FUND
757 THIRD AVENUE
NEW YORK, NY 10017
COHEN & STEERS
QUALITY INCOME REALTY FUND
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QUARTERLY REPORT
MARCH 31, 2003