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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
April 21, 2004
To Our Shareholders:
We are pleased to submit to you our report for the quarter ended March 31,
2004. The net asset value at that date was $20.79. During the quarter, three
$0.11 per share monthly dividends were paid. In addition, on March 2, 2004, the
fund announced an increase in its next three monthly dividends to $0.115 per
share, payable on April 30, 2004, May 28, 2004 and June 30, 2004. The new
dividend represents an increase of approximately 4.5% 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 14.82%. This compares
with the NAREIT Equity REIT Index's(a) total return of 12.0%.
The overall equity market was generally choppy during the first quarter, as
the broad market averages showed little change. In contrast, REITs performed
well, driven by continued investor appreciation for the potential for REITs to
continue to provide current income, lower volatility, competitive total returns,
portfolio diversification and, most importantly in our opinion, the improving
visibility and breadth of U.S. economic growth. Following the quarter-end,
however, bond and stock markets, particularly REITs, had a decidedly negative
response to the strong March jobs report. As more fully discussed in the
'Investment Outlook' section below, we believe that this is a temporary
correction driven by valuation concerns of some investors and exacerbated by
short-term technical factors. We believe that REIT valuations and growth
prospects are more attractive now than at any time over the past several months.
Approximately two and a half years into an economic recovery, we believe the
impact is being felt broadly across the income-producing property markets in
many parts of the United States as demand for space is increasing and rents are
stabilizing. In our view, the resultant acceleration in REIT cash flow growth
rates is what has been driving stock prices since last year. After a modest
earnings decline in 2003, our forecast is for earnings growth to accelerate to
mid-single digit growth this year and high single digit growth next year.
The leadership patterns of recent quarters held during the first quarter.
The regional mall group, continuing to enjoy the best fundamentals of any
property type in our opinion, was the best performing sector with a 22.7% total
return. Health care, a more interest rate sensitive sector, benefited from a
further decline in interest rates and delivered 16.6%. Shopping centers'
continued earnings consistency helped drive them to a 15.5% total return.
Apartments, hotels and office lagged with 4.3%, 6.8% and 9.0% total returns,
respectively.
The fund's best performing investments during the quarter were in the
regional mall (22.7% total return) and health care (18.1%) sectors, while the
worst performing sector for the fund was the apartment sector, which had a 7.1%
total return. Ventas Inc., continuing where it left off from last year, was the
fund's best performing stock, contributing a total return of 26.5% during the
quarter. Other standouts included Newcastle Investment Corp, Glimcher Realty
Trust, Macerich Company and Mills Corp., all of which provided total returns in
excess of
-------------------
(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.
20%. Laggards during the quarter were Equity Office Properties, Camden Property
Trust and Home Properties, each of which had a total return of less than 3%.
Taking a more thematic approach toward examining the determinants of
performance within the REIT sector during the first quarter, we have observed
that cash flow growth has been the dominant driver. We found a meaningful
correlation between current cash flow growth rate and first quarter stock price
performance. In our view, those companies that are facing positive property
fundamentals and those that have the ability to deploy capital at attractive
yields (whether through acquisitions or redevelopment of existing real estate,
or through ground-up development) also tend to have an attractive cost of both
equity and debt capital. This has enabled many of these companies to expand
their portfolios even more profitably. This activity, of course, often has the
potential to result in a very positive effect on growth in both net asset value
and earnings.
Not surprisingly, the stock prices of many of the aggressive acquirers of
property have appreciated the most during the first quarter. Skeptics may
observe that property prices look expensive by historical standards. However, we
expect the economic recovery to continue and therefore do not believe that there
will be a better buying opportunity a year from now if our forecast for stronger
job growth, increased occupancies, and higher rents is realized.
The converse of this has been true for companies on the opposite side of
this trend. Companies that have viewed the current pricing of real estate assets
as expensive or even somewhat irrational have opted to be net sellers of
assets -- de-leveraging and waiting for a better buying opportunity. The
practitioners of this strategy have been rewarded with anemic stock price
appreciation. The market's judgment appears to be that these companies have
foregone an opportunity to boost earnings and create value.
INVESTMENT OUTLOOK
As discussed, a very strong March increase in U.S. nonfarm payrolls was
announced on April 2, 2004, well in excess of consensus expectations (308,000
new jobs created versus an expectation of 120,000). The bond and stock markets
reacted negatively to the news, as did REITs, due to concerns that the Federal
Reserve would raise interest rates. REIT stock prices declined in the week
following the release of the jobs report as investors took profits from a group
of stocks that had appreciated without interruption for the past 14 months.
While REITs have demonstrated little correlation with interest rates over longer
periods of time, it appears that in the short term, the extreme bond market
activity has negatively impacted REITs. The more defensive sectors such as
shopping centers and health care underperformed, while the more cyclical sectors
such as office and apartments declined less.
We believe that this has been a temporary correction in the REIT market
driven by valuation concerns by some investors as well as by short-term
technical factors. Ironically, if strong job growth continues in the coming
months, as we expect, real estate fundamentals should respond very favorably,
especially in the apartment and office sectors where job growth is the single
greatest determinant of demand for space.
We continue to maintain a positive outlook for the U.S. economy. At this
time, in our opinion, all the pre-conditions for strong job growth are in place.
Corporate profits have staged a dramatic recovery and are at an all-time high as
a percentage of GDP. Therefore, it is increasingly profitable for firms to hire
the next incremental worker. The recently reported declines in weekly initial
jobless claims to three-year lows and the spike in the monthly change in nonfarm
payrolls to the highest levels in four years have finally begun to demonstrate
that this is occurring.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
Though not widely understood, we believe that job growth has actually been
occurring for some time. Many of the companies that we invest in are on the
front lines of the consumer and corporate economy. A number of the office and
apartment companies that we speak with have observed improved leasing activity
for their portfolios that would contradict the virtually nonexistent rate of job
growth implied by the official government statistics until recently. Thus, we
believe that a normal cyclical economic recovery is in the process of unfolding.
In addition, the supply/demand dynamic in most real estate markets is turning
more positive. Many real estate companies are adding value, in our view, by
making real estate investments in a profitable and disciplined fashion. As a
result of the historically low interest rate environment of the last few years,
many REITs were able to improve their balance sheets in a way that gives these
companies better potential for an attractive spread between property yields and
their blended cost of capital. As a result, our forecast is that cash flow
growth rates for REITs should begin to accelerate in 2004 after declining in
2003.
With earnings visibility improving, our forecast is for a resumption of
meaningful dividend increases in the next year or two. This is an important
factor to consider when assessing how REITs react to rising interest rates.
Unlike fixed income securities, REITs have the potential to increase their
dividends as the economy expands and companies see their earnings increase,
which can help to offset rising rates. During the last economic expansion, for
example (the period from 1992 through 2001), REITs increased their dividends on
average by about 7% per year.
With the recent pullback, REITs are now back to trading closely in line with
their underlying net asset values. As a result, we believe REIT valuations are
now more attractive than at any time over the past several months. Thus, while
market activity could continue to be choppy over the near term, we believe that
REIT fundamentals are poised to continue to improve, which should be positive
for dividends and share prices over the intermediate and longer term.
Sincerely,
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
GREG E. BROOKS
GREG E. BROOKS
Portfolio Manager
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
OUR LEVERAGE STRATEGY
The bond market reacted to the strong March jobs report
released on April 2nd by turning in its worst single day in
20 years, with the yield on the 10-year Treasury bond
increasing from 3.9% to 4.2%. While we do not attempt to
predict what future interest rates will be, it has been our
philosophy to utilize interest rate swap transactions to
seek to reduce the interest rate risk inherent in our
utilization of leverage. In this period of significant
interest rate volatility, and with the possibility that
interest rates could trend higher in the near term, we want
to take the opportunity to review our leverage strategy.
Our leverage strategy involves issuing auction market
preferred stock (AMPS) to raise additional capital for the
fund, with an objective of increasing the net income
available for shareholders. As of March 31, 2004, AMPS
represented 30% of the fund's total capital. Considering
that AMPS have variable dividend rates, we seek to lock in
the rate on a majority of this additional capital through
interest rate swap agreements (where we effectively convert
our variable rate obligation to a fixed rate obligation for
the term of the swap agreements). Specifically, we have
fixed the rate on 70% of our borrowings at an average
interest rate of 4.9%, for an average remaining period of
3.2 years (when we first entered into the swaps, the average
term was 5 years). By locking in a large portion of our
leveraging costs, we have endeavored to adequately protect
the dividend-paying ability of the fund, which is one of the
reasons the fund has been able to increase its monthly
dividend on several occasions. The use of leverage increases
the volatility of the fund's net asset value in both up and
down markets. However, we believe that locking in a portion
of the fund's leveraging costs for the term of the swap
agreements partially protects the fund from any impact that
an increase in short-term interest rates may have as a
result of the use of leverage.
LEVERAGE FACTS
Leverage (as % of total assets)......... 30%
% Fixed Rate............................ 70%
% Variable Rate......................... 30%
Average Rate on Swaps................... 4.9%
Average Term on Swaps................... 3.2 years
Current Rate on AMPS.................... 1.1%
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
MARCH 31, 2004 (UNAUDITED)
DIVIDEND
NUMBER YIELD
OF SHARES VALUE (UNAUDITED)(a)
---------- -------------- --------------
EQUITIES 143.38%(b)
COMMON STOCK 114.08%
DIVERSIFIED 13.12%
Colonial Properties Trust........................ 582,300 $ 23,757,840 6.57%
Crescent Real Estate Equities Co................. 1,396,200 25,089,714 8.35
iStar Financial.................................. 400,500 16,941,150 6.60
Vornado Realty Trust............................. 663,443 40,125,033 4.70
--------------
105,913,737
--------------
HEALTH CARE 18.38%
Health Care Property Investors................... 1,190,400 33,688,320 5.90
Health Care REIT................................. 969,625 39,366,775 5.91
Nationwide Health Properties..................... 1,205,300 26,842,031 6.65
Ventas........................................... 1,766,500 48,543,420 4.73
--------------
148,440,546
--------------
HOTEL 1.99%
Hospitality Properties Trust..................... 346,400 16,072,960 6.21
--------------
INDUSTRIAL 4.47%
First Industrial Realty Trust.................... 614,500 24,272,750 6.94
Keystone Property Trust.......................... 484,900 11,787,919 5.43
--------------
36,060,669
--------------
MORTGAGE 2.83%
Newcastle Investment Corp........................ 678,528 22,866,393 7.12
--------------
OFFICE 32.09%
Arden Realty..................................... 826,800 26,730,444 6.25
Brandywine Realty Trust.......................... 1,140,900 34,854,495 5.76
CarrAmerica Realty Corp.......................... 1,010,600 34,259,340 5.90
Equity Office Properties Trust................... 1,314,400 37,973,016 6.92
Highwoods Properties............................. 670,400 17,571,184 6.49
HRPT Properties Trust............................ 635,400 7,180,020 7.08
Mack-Cali Realty Corp............................ 1,073,800 48,224,358 5.61
Maguire Properties............................... 604,800 15,482,880 6.25
Prentiss Properties Trust........................ 1,000,200 36,907,380 6.07
--------------
259,183,117
--------------
-------------------
(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.
(b) Percentages indicated are based on the net assets of the fund.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
DIVIDEND
NUMBER YIELD
OF SHARES VALUE (UNAUDITED)
---------- -------------- ------------
OFFICE/INDUSTRIAL 8.87%
Kilroy Realty Corp............................... 142,600 $ 5,062,300 5.58%
Liberty Property Trust........................... 1,065,200 47,934,000 5.38
Reckson Associates Realty Corp................... 663,800 18,679,332 6.04
--------------
71,675,632
--------------
RESIDENTIAL -- APARTMENT 13.15%
AMLI Residential Properties Trust................ 77,000 2,175,250 6.80
Archstone-Smith Trust............................ 754,100 22,253,491 5.83
AvalonBay Communities............................ 307,200 16,459,776 5.23
Camden Property Trust............................ 366,600 16,478,670 5.65
Gables Residential Trust......................... 586,900 21,275,125 6.65
Home Properties.................................. 361,600 14,735,200 6.09
Mid-America Apartment Communities................ 309,400 11,488,022 6.30
Town & Country Trust............................. 50,000 1,360,000 6.32
--------------
106,225,534
--------------
SELF STORAGE 0.45%
Sovran Self Storage.............................. 87,300 3,646,521 5.77
--------------
SHOPPING CENTER 18.73%
COMMUNITY CENTER 6.44%
Cedar Shopping Centers........................... 200,000 2,838,000 4.51
Heritage Property Investment Trust............... 449,100 13,967,010 6.75
Kramont Realty Trust............................. 1,293,300 24,443,370 6.88
New Plan Excel Realty Trust...................... 65,800 1,799,630 6.03
Urstadt Biddle Properties -- Class A............. 544,000 8,976,000 5.21
--------------
52,024,010
--------------
REGIONAL MALL 12.29%
Glimcher Realty Trust............................ 605,200 16,400,920 7.08
Macerich Co...................................... 807,857 43,543,492 4.53
Mills Corp....................................... 737,400 39,296,046 4.47
--------------
99,240,458
--------------
TOTAL SHOPPING CENTER............................ 151,264,468
--------------
TOTAL COMMON STOCK (Identified
cost -- $658,475,296)..................... 921,349,577
--------------
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
DIVIDEND
NUMBER YIELD
OF SHARES VALUE (UNAUDITED)
---------- -------------- ------------
PREFERRED STOCK 29.30%
DIVERSIFIED 5.94%
Colonial Properties Trust, 8.125%, Series D...... 64,900 $ 1,780,856 7.40%
Crescent Real Estate Equities Co., 6.75%,
Series A (Convertible)(a)..................... 1,826,000 41,687,580 7.40
iStar Financial, 7.80%, Series F................. 94,600 2,454,870 7.51
iStar Financial, 7.65%, Series G................. 80,000 2,080,000 7.35
--------------
48,003,306
--------------
HEALTH CARE 0.42%
LTC Properties, 8.50%, Series E.................. 65,600 2,381,280 5.87
Omega Healthcare Investors, 8.375%, Series D..... 40,000 1,048,000 7.98
--------------
3,429,280
--------------
HOTEL 5.83%
FelCor Lodging Trust, 9.00%, Series B............ 652,500 16,586,550 8.85
Host Marriott Corp., 10.00%, Series A............ 7,000 183,050 9.56
Host Marriott Corp., 10.00%, Series B............ 14,100 363,921 9.69
Host Marriott Corp., 10.00%, Series C............ 30,700 844,250 9.09
Innkeepers USA Trust, 8.00%, Series C............ 56,000 1,428,000 7.84
LaSalle Hotel Properties, 10.25%, Series A....... 1,000,000 27,670,000 9.25
--------------
47,075,771
--------------
INDUSTRIAL 0.26%
Keystone Property Trust, 9.125%, Series D........ 75,000 2,066,250 8.28
--------------
MORTGAGE 0.20%
Newcastle Investment Corp., 9.75%, Series B...... 56,000 1,593,200 8.58
--------------
OFFICE 2.50%
HRPT Properties Trust, 8.75%, Series B........... 120,000 3,390,000 7.75
Highwoods Properties, 8.625%, Series A........... 13,195 14,065,045 8.09
Maguire Properties, 7.625%, Series A............. 106,600 2,749,214 7.41
--------------
20,204,259
--------------
OFFICE/INDUSTRIAL 0.08%
PS Business Parks, 9.25%, Series A............... 10,800 271,188 9.20
PS Business Parks, 8.75%, Series F............... 4,100 111,561 8.05
ProLogis, 8.54%, Series C........................ 4,000 241,750 7.07
--------------
624,499
--------------
-------------------
(a) 410,000 shares segregated as collateral for the interest rate swap
transactions.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
DIVIDEND
NUMBER YIELD
OF SHARES VALUE (UNAUDITED)
---------- -------------- ------------
RESIDENTIAL -- APARTMENT 4.30%
Apartment Investment & Management Co., 8.75%,
Series D...................................... 5,530 $ 139,467 8.68%
Apartment Investment & Management Co., 10.10%,
Series R...................................... 950,000 25,460,000 9.33
Home Properties, 9.00%, Series F................. 196,000 5,537,000 7.96
Mid-America Apartment Communities, 8.30%,
Series H...................................... 138,100 3,632,030 7.91
--------------
34,768,497
--------------
SHOPPING CENTER 9.77%
COMMUNITY CENTER 4.99%
Commercial Net Lease Realty, 9.00%, Series A..... 25,000 690,000 8.15
Developers Diversified Realty Corp., 8.60%,
Series F...................................... 1,039,400 28,323,650 7.89
Federal Realty Investment Trust, 8.50%,
Series B...................................... 310,300 8,576,692 7.71
Urstadt Biddle Properties, 8.50%, Series C....... 24,000 2,676,000 7.62
--------------
40,266,342
--------------
OUTLET CENTER 0.10%
Chelsea Property Group, 8.375%, Series A......... 14,000 839,125 6.99
--------------
REGIONAL MALL 4.68%
CBL & Associates Properties, 8.75%, Series B(a).. 430,000 23,370,500 8.06
Glimcher Realty Trust, 8.75%, Series F........... 40,000 1,067,200 8.21
Glimcher Realty Trust, 8.125%, Series G.......... 40,000 1,036,000 7.84
Mills Corp., 9.00%, Series B..................... 55,300 1,539,552 8.08
Mills Corp., 9.00%, Series C..................... 159,600 4,428,900 8.11
Mills Corp., 8.75%, Series E..................... 84,000 2,301,600 7.99
Simon Property Group, 8.75%, Series F............ 30,000 829,200 7.92
Taubman Centers, 8.30%, Series A................. 127,600 3,218,072 8.25
--------------
37,791,024
--------------
TOTAL SHOPPING CENTER............................ 78,896,491
--------------
TOTAL PREFERRED STOCK (Identified
cost -- $212,219,339)..................... 236,661,553
--------------
TOTAL EQUITIES (Identified
cost -- $870,694,635)..................... 1,158,011,130
--------------
-------------------
(a) 158,000 shares segregated as collateral for the interest rate swap
transactions.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
---------- --------------
COMMERCIAL PAPER 0.32%
UBS Financial, 0.87%, due 04/01/04
(Identified cost -- $2,608,000)..................... $2,608,000 $ 2,608,000
--------------
TOTAL INVESTMENTS (Identified cost -- $873,302,635) ... 143.70% 1,160,619,130
LIABILITIES IN EXCESS OF OTHER ASSETS ................. (1.60)% (12,953,924)
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 Series T, Series W, Series TH
and Series F) ...................................... (34.67)% (280,000,000)
LIQUIDATION VALUE OF AUCTION MARKET PREFERRED SHARES:
SERIES M28 (Equivalent to $25,000 per share based
on 2,400 shares outstanding) ....................... (7.43)% (60,000,000)
------- --------------
NET ASSETS -- APPLICABLE TO COMMON SHARES
(Equivalent to $20.79 per share based on 38,856,074 shares of
capital stock outstanding) ......................... 100.00% $ 807,665,206
------- --------------
------- --------------
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
MARCH 31, 2004 (UNAUDITED)
NOTE 1. INVESTMENTS IN INTEREST RATE SWAPS
The fund has entered into interest rate swap transactions with Merrill Lynch
Derivative Products, UBS AG, Fleet Global Markets, and Royal Bank of Canada.
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
and 410,000 shares of Crescent Real Estate Equities Co., 6.75%, Series A as
collateral for the interest rate swap transactions. Details of the interest rate
swap transactions as of March 31, 2004 are as follows:
UNREALIZED
NOTIONAL FLOATING RATE(a) APPRECIATION/
COUNTERPARTY AMOUNT FIXED RATE (RESET MONTHLY) TERMINATION DATE (DEPRECIATION)
------------ ------ ---------- --------------- ---------------- --------------
Merrill Lynch Derivative Products $46,000,000 4.5600% 1.1000% April 5, 2005 $ (1,600,814)
Merrill Lynch Derivative Products $46,000,000 5.2100% 1.1000% April 5, 2007 (3,955,429)
Merrill Lynch Derivative Products $46,000,000 5.5800% 1.1000% April 6, 2009 (5,428,266)
UBS AG $24,000,000 4.4500% 1.0900% April 15, 2005 (802,253)
UBS AG $24,000,000 5.1200% 1.0900% April 15, 2007 (1,980,978)
UBS AG $24,000,000 5.4950% 1.0900% April 15, 2009 (2,714,395)
Fleet Global Markets $14,000,000 3.2125% 1.0975% October 22, 2008 (180,930)
Royal Bank of Canada $14,000,000 3.6800% 1.0900% October 22, 2008 (456,556)
------------
$(17,119,621)
------------
------------
-------------------
(a) Based on LIBOR (London Interbank Offered Rate). Represents rates in effect
at March 31, 2004.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (b)
MARCH 31, 2004 (UNAUDITED)
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
-------------------------- ---------------
NET ASSET VALUE:
Beginning of period: 12/31/03............... $716,083,687 $18.43
Net investment income................... $10,040,269 $ 0.30
Net realized and unrealized gain on
investments and interest rate swap
transactions......................... 95,329,086 2.41
Distributions from net investment income to:
Common shareholders..................... (12,822,504) (0.33)
Preferred shareholders.................. (965,332) (0.02)
----------- ------
Net increase in net asset value............. 91,581,519 2.36
------------ ------
End of period: 3/31/2004.................... $807,665,206 $20.79
------------ ------
------------ ------
AVERAGE ANNUAL TOTAL RETURNS (c)
(PERIODS ENDED MARCH 31, 2004) (UNAUDITED)
ONE YEAR SINCE INCEPTION (2/28/02)
-------- -------------------------
75.31% 35.77%
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.
A description of the policies and procedures that the fund uses to determine
how to vote proxies relating to portfolio securities is available (i) without
charge, upon request, by calling 1-800-330-7348, (ii) on our Web site at
cohenandsteers.com or (iii) on the Securities and Exchange Commission's Web
site at http://www.sec.gov.
-------------------
(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
ALSO AVAILABLE: COHEN & STEERS INSTITUTIONAL
REALTY SHARES (CSRIX) REQUIRES A HIGHER
MINIMUM PURCHASE, BUT OFFERS A LOWER TOTAL
EXPENSE RATIO
FOR TOTAL RETURN: FOR CAPITAL APRECIATION:
COHEN & STEERS COHEN & STEERS
UTILITY FUND SPECIAL EQUITY FUND
IDEAL FOR INVESTORS SEEKING MAXIMUM TOTAL IDEAL FOR INVESTORS SEEKING MAXIMUM CAPITAL
RETURN THROUGH BOTH CURRENT INCOME AND APPRECIATION, INVESTING IN A LIMITED NUMBER
CAPITAL APPRECIATION, INVESTING PRIMARILY IN OF REITS AND OTHER REAL ESTATE COMPANIES
UTILITIES CONCENTRATED, HIGHLY FOCUSED PORTFOLIO
SYMBOLS: CSUAX, CSUBX, CSUCX, CSUIX SYMBOL: CSSPX
FOR MORE INFORMATION ABOUT ANY COHEN & STEERS FUND
OR TO OBTAIN A PROSPECTUS PLEASE CONTACT US AT:
1-800-330-7348, OR VISIT OUR WEB SITE AT COHENANDSTEERS.COM
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE FUND CAREFULLY BEFORE
INVESTING. A PROSPECTUS CONTAINING THIS AND OTHER INFORMATION ABOUT THE FUND MAY BE OBTAINED BY
FOLLOWING THE INSTRUCTIONS ABOVE. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
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
Frank K. Ross The Bank of New York
Director 100 Church Street
New York, NY 10007
Willard H. Smith Jr.
Director LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
Greg E. Brooks 425 Lexington Avenue
Vice president New York, NY 10017
Adam Derechin New York Stock Exchange Symbol: RQI
Vice president and assistant treasurer
Web site: cohenandsteers.com
Lawrence B. Stoller
Assistant secretary 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, 2004