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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
October 16, 2002
To Our Shareholders:
We are pleased to submit to you our report for the period ended
September 30, 2002. The net asset value per common share at that date was
$13.68. In addition, during the quarter, three $0.105 per share monthly
dividends were declared and paid to common shareholders.
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 - 9.2%. This compares
to the NAREIT Equity REIT Index's* total return of - 9.1%. For the period
February 28, 2002 (commencement of operations) through September 30, 2002, the
fund's total return was - 1.8%, compared to NAREIT's 1.2%.
REITs faced a difficult third quarter, experiencing a negative quarterly
return for the first time in a year and their worst quarterly performance in
four years. Their poor performance was accompanied by one of the worst quarters,
years and three-year periods in stock market history. Further, the bond bull
market continued unabated as interest rates fell to generational lows -- once
again dispelling the perception of the relationships among stocks, REITs and
interest rates. The declines in interest rates and share prices appear to be the
result of growing concern about the strength of the economic recovery and the
resulting impact on corporate profitability. Indeed, earnings expectations based
on both bottom-up and top-down analyses of the major stock market indexes have
declined continuously over the past several months. With potential third-quarter
earnings disappointments deflating share values, including those of REITs, there
appeared to be few places to escape from the bear market in equities. Even with
their disappointing absolute performance, however, REITs still outpaced the
broader equity market by a wide margin.
In the third quarter, negative sentiment spread to the REIT sector for the
first time in years. Slow job growth and rising corporate and individual
bankruptcies have begun to take a toll on the credit-worthiness of many users of
space, both commercial and residential. Whereas interest rates are at
generational lows, they have failed to stimulate the type of growth that would
be consistent with historical precedent. This has caused some to wonder whether
the United States is entering a 'Japan-like' economic environment, in which we
experience an unprecedented long-term economic slowdown that cannot be reversed
through the use of central bank monetary policy. Also weighing heavily on
investors' minds is the prospect of war against Iraq, which many fear could
cause the existing slow growth climate to revert into a new recession.
Just as much of corporate America is having trouble increasing prices, many
landlords too are now in a situation, for the first time in years, where they
cannot raise rents. Many markets are experiencing declines in rents and
landlords are increasing concessions in order to retain or attract tenants.
While a decline in new construction
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
(with the exception of apartments) is a positive for fundamentals in the future,
the more important factor is that a shortage of tenants for most property types
in most major markets has developed.
There are exceptions, of course, though very few. Most notable is retail
real estate, which has been the strongest sector due to the enduring strength of
the consumer. Evidence of this sector's strength can be found in stable
occupancy rates, strong sales per square foot performance, and moderate net
rental growth. Retail REITs, consequently, have had the best earnings growth
this year -- as well as the best stock price performance -- though fears of a
retrenchment in consumer spending are causing some analysts to question the
sustainability of retail REITs' earnings growth. Other companies that have
outperformed have done so by virtue of acquisition opportunities, refinancing
events or new developments. Most sectors and companies, however, have struggled
to maintain occupancies and rents. As we close in on the final months of 2002,
earnings expectations have been uniformly reduced for both this year and 2003.
Some sectors, such as apartment, are not expected to experience a recovery until
late 2003 or early 2004.
Finally, with the phenomenon of all time low interest rates seemingly unable
to ignite a stronger economy, the dreaded prospect of deflation is getting more
attention. With respect to real estate, this environment has created
crosscurrents that we believe have never before existed. The sluggish economy,
which is precipitating pressure on rents and occupancies, should logically
result in a withdrawal of credit to real estate and declining property values.
Nevertheless, credit remains quite plentiful for real estate buyers and owners.
Thus, offsetting lower real estate operating income has been lower financing
costs. Further, because investors' return expectations are significantly lower
than in recent memory, many investors are finding the potential for a bond-like
return in the mid to high single digits, with a call on some future growth,
quite attractive. The net result has been stable property values despite eroding
fundamentals. We do not believe that this situation can persist -- either
fundamentals have to improve or property values are bound to eventually fall.
INVESTMENT OUTLOOK
After nearly three years of superior investment performance, which were the
result of strong real estate conditions, the REIT rally appears to have stalled
in the third quarter. This seems to have coincided with the reality that real
estate fundamentals are succumbing to the same economic issues that are
impacting much of corporate America. Nonetheless, we are not of the belief that
a new bear market in REITs is in the offing. On the contrary, we believe that
the massive monetary and fiscal stimulus that has been injected into the U.S.
economy will result in renewed growth. This, in fact, is already becoming
evident in many economic statistics. Although job growth has been slow, our
reading of economic history suggests that this is normal in the early stages of
a recovery. Meanwhile, vacancy rates have stabilized for many major property
types, new construction has plummeted (with the notable exception of the
apartment sector) and the real estate industry as a whole has remained on very
sound financial footing. This is especially true for most publicly traded REITs,
which have taken
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
advantage of favorable debt markets to strengthen their balance sheets.
Consequently, we believe REITs today are poised to fully participate in any
coming economic upturn.
Many people who watch the stock market closely and have been discouraged by
the bear market that has been plaguing it for nearly three years seem to be
among the most pessimistic about the U.S. economy. In retrospect, however, the
bursting of the stock market bubble that began in 2000 has simply served to
correct an extreme overvaluation of stock prices -- perhaps the greatest that
ever existed. These valuations could not have been sustained no matter what the
economic growth rate. Unfortunately, this process coincided with a major
cyclical decline in the economy and profits, which worsened valuations and
deepened this corrective process. While the decline in stock prices may not yet
be complete, with the major averages at or below five year lows, we have
certainly come a long way toward unwinding many excesses.
In contrast to stocks, REITs began the year 2000 having already undergone a
nearly two-year correction from a modestly overvalued level in early 1998. With
earnings and dividends growing steadily for the past three years, price
appreciation has barely kept pace with earnings growth. As a result, REITs today
are near the lowest level of their historic valuation range with respect to
price/cash flow multiples and discounts from net asset values. In addition, REIT
dividend yields are at all-time-wide spreads relative to fixed income
instruments. While these discounted valuations may at first appear to be
consistent with weakening fundamentals, we believe they have been overdone given
our expectation of a stabilizing (if not expanding) economy.
The only major strategic change we have made in the recent quarter is that
we have taken a substantial underweight position in the apartment sector due to
the combination of a deteriorating supply and demand situation and relative
valuation. The low interest rate environment -- which has made single family
housing very affordable and increased the propensity to own rather than
rent -- has decreased demand for rental housing. Exacerbating this has been slow
job growth and household formations due to the weak economy. Whereas this
weakening in demand rationally would be expected to cause a contraction in the
supply of new apartments, construction almost nationwide has continued unabated.
The reason: low capitalization rates for apartments and the low cost of
borrowing have reduced developers' hurdle rates, and capital is still plentiful
from both banks and government sponsored lenders. The resulting rise in vacancy
rates has precipitated a decline in rents (as well as an increase in free rent
and other concessions), which is undermining the economics of the industry. In
short, landlords of apartments have little or no pricing power -- and little
prospect of this changing. In addition, apartment REIT valuations have persisted
at levels that are above both their historical levels and the REIT averages.
In our view, with REITs selling at an average current yield of 7%, and with
an average dividend payout ratio that is below 70%, the industry is as
attractively valued as ever. Furthermore, unlike many other investments in which
the value of a company's assets can evaporate literally overnight, REITs own
hard assets whose value has permanence, produces cash income and has growth
potential. In the uncertain environment that pervades the
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
financial markets today, we believe that REITs represent excellent value and the
ability to add meaningfully to any portfolio's diversification and return
potential.
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
* 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 REITs as a whole.
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2002 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD(1)
----------- ------------ --------
EQUITIES 154.67%
COMMON STOCK 115.53%
DIVERSIFIED 3.14%
Colonial Properties Trust........................... 457,100 $ 16,537,878 7.30%
------------
HEALTH CARE 16.69%
Health Care Property Investors...................... 516,500 22,002,900 7.70
Health Care REIT.................................... 982,825 26,880,264 8.56
Nationwide Health Properties........................ 1,410,300 24,045,615 10.79
Ventas.............................................. 1,124,400 15,010,740 7.12
------------
87,939,519
------------
INDUSTRIAL 3.42%
First Industrial Realty Trust....................... 501,300 15,535,287 8.78
Keystone Property Trust............................. 150,000 2,496,000 7.81
------------
18,031,287
------------
OFFICE 37.90%
Arden Realty........................................ 552,300 13,061,895 8.54
Boston Properties................................... 313,800 11,673,360 6.56
Brandywine Realty Trust............................. 779,400 17,575,470 7.80
CarrAmerica Realty Corp............................. 291,900 7,347,123 7.95
Crescent Real Estate Equities Co.................... 936,300 14,699,910 9.55
Equity Office Properties Trust...................... 1,188,500 30,687,070 7.75
Highwoods Properties................................ 944,300 22,096,620 10.00
Mack-Cali Realty Corp............................... 774,200 24,875,046 7.84
Prentiss Properties Trust........................... 853,800 24,708,972 7.74
Vornado Realty Trust................................ 834,543 32,922,721 6.69
------------
199,648,187
------------
OFFICE/INDUSTRIAL 8.10%
Kilroy Realty Corp.................................. 142,600 3,381,046 8.35
Liberty Property Trust.............................. 758,200 23,504,200 7.74
Reckson Associates Realty Corp. -- Class B.......... 663,800 15,765,250 10.91
------------
42,650,496
------------
RESIDENTIAL -- APARTMENT 12.82%
Apartment Investment & Management Co. -- Class A.... 331,400 12,874,890 8.44
Gables Residential Trust............................ 431,000 11,512,010 9.02
Home Properties of New York......................... 383,000 12,447,500 7.38
Post Properties..................................... 453,800 11,789,724 12.01
Summit Properties................................... 259,800 5,040,120 9.79
United Dominion Realty Trust........................ 871,700 13,868,747 6.98
------------
67,532,991
------------
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2002 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD(1)
----------- ------------ --------
SHOPPING CENTER 33.46%
COMMUNITY CENTER 17.01%
Developers Diversified Realty Corp.................. 1,747,378 $ 38,459,790 6.91%
Federal Realty Investment Trust..................... 441,200 11,912,400 7.19
Kimco Realty Corp................................... 90,000 2,799,000 6.69
Kramont Realty Trust................................ 1,293,300 19,140,840 8.78
Urstadt Biddle Properties -- Class A................ 544,000 6,408,320 6.96
Weingarten Realty................................... 297,147 10,875,580 6.07
------------
89,595,930
------------
REGIONAL MALL 16.45%
Glimcher Realty Trust............................... 281,300 5,271,562 10.25
Macerich Co......................................... 1,280,757 39,677,852 7.10
Mills Corp.......................................... 1,198,900 35,559,374 7.38
Taubman Centers..................................... 432,400 6,153,052 7.17
------------
86,661,840
------------
TOTAL SHOPPING CENTER............................... 176,257,770
------------
TOTAL COMMON STOCK (Identified
cost -- $626,900,623)........................ 608,598,128
------------
PREFERRED STOCK 39.14%
HEALTH CARE 0.14%
Health Care Property Investors, 8.70%, Series B..... 10,000 256,000 8.52
Health Care Property Investors, 8.60%, Series C..... 18,800 471,316 8.58
------------
727,316
------------
HOTEL 9.79%
FelCor Lodging Trust, 9.00%, Series B(3)............ 1,004,800 24,517,120 9.22
Innkeepers USA Trust, 8.625%, Series A.............. 80,300 1,866,975 9.29
LaSalle Hotel Properties, 10.25%, Series A(3)....... 1,000,000 25,200,000 10.16
------------
51,584,095
------------
INDUSTRIAL 0.04%
Centerpoint Properties Trust, 8.48%, Series A....... 8,300 211,069 8.34
------------
OFFICE 10.16%
CarrAmerica Realty Corp., 8.55%, Series C........... 46,600 1,175,718 8.48
Crescent Real Estate Equities Co., 6.75%, Series A
(Convertible)(3)................................. 1,888,900 36,455,770 8.76
HRPT Properties Trust, 8.75%, Series B.............. 120,000 2,984,400 8.81
Highwoods Properties, 8.625%, Series A(2)........... 13,195 12,883,268 8.83
------------
53,499,156
------------
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2002 (UNAUDITED)
NUMBER DIVIDEND
OF SHARES VALUE YIELD(1)
----------- ------------ --------
OFFICE/INDUSTRIAL 0.17%
PS Business Parks, 9.25%, Series A.................. 10,800 $ 280,476 8.89%
PS Business Parks, 8.75%, Series F.................. 4,100 105,534 8.51
ProLogis, 8.54%, Series C(2)........................ 4,000 200,040 8.54
ProLogis, 8.75%, Series E........................... 13,000 336,700 8.46
------------
922,750
------------
RESIDENTIAL -- APARTMENT 6.34%
Apartment Investment & Management Co., 8.75%,
Series D......................................... 8,600 208,636 8.99
Apartment Investment & Management Co., 10.10%,
Series R......................................... 950,000 24,842,500 9.56
BRE Properties, 8.08%, Series B..................... 97,600 2,508,320 7.86
Home Properties of New York, 9.00%, Series F........ 196,300 5,280,470 8.36
Mid-America Apartment Communities, 8.875%,
Series B......................................... 21,800 545,000 8.88
------------
33,384,926
------------
SHOPPING CENTER 12.50%
COMMUNITY CENTER 7.20%
Commercial Net Lease Realty, 9.00%, Series A........ 25,000 650,000 8.65
Developers Diversified Realty Corp., 8.60%,
Series F......................................... 1,039,400 26,504,700 8.43
Federal Realty Investment Trust, 8.50%, Series B.... 310,300 8,036,770 8.22
New Plan Excel Realty Trust, 8.625%, Series B....... 110,100 2,758,005 8.62
------------
37,949,475
------------
OUTLET CENTER 0.12%
Chelsea Property Group, 8.375%, Series A(2)......... 14,000 654,150 8.97
------------
REGIONAL MALL 5.18%
CBL & Associates Properties, 8.75%, Series B........ 430,000 22,639,500 8.32
Rouse Capital, 9.25%, Series Z...................... 30,000 768,000 9.02
Simon Property Group, 8.75%, Series F............... 30,000 799,500 8.22
Taubman Centers, 8.30%, Series A.................... 127,600 3,062,400 8.67
------------
27,269,400
------------
TOTAL SHOPPING CENTER............................... 65,873,025
------------
TOTAL PREFERRED STOCK (Identified
cost -- $200,260,557)........................ 206,202,337
------------
TOTAL EQUITIES (Identified
cost -- $827,161,180)........................ 814,800,465
------------
PRINCIPAL
AMOUNT
----------
COMMERCIAL PAPER 1.16%
United Bank of Switzerland Financial, 1.88%,
due 10/01/02 (Identified cost -- $6,102,000)... $6,102,000 6,102,000
---------- ------------
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
SEPTEMBER 30, 2002 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
---------- ------------
SHORT-TERM U.S. GOVERNMENT 0.11%
United States Treasury Bill, 1.55%, due
10/03/2002(3)
(Identified Cost -- $599,948).................. $ 600,000 $ 599,948
---------- ------------
TOTAL INVESTMENTS (Identified
cost -- $833,863,128) .......................... 155.94% 821,502,413
LIABILITIES IN EXCESS OF OTHER ASSETS ............ (2.79)% (14,696,368)
------ ------------
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) ........................................ (53.15)% (280,000,000)
------ ------------
NET ASSETS -- COMMON STOCK (Equivalent to $13.68 per share
based on
38,510,867 shares of capital stock
outstanding) ................................... 100.00% $526,806,045
------ ------------
------ ------------
-------------------
(1) 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.
(2) Security trades infrequently. The fund prices this security at fair value
using procedures approved by the fund's board of directors.
(3) The fund has entered into interest rate swap transactions with Merrill Lynch
Derivative Products, AG and with UBS AG. 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 223,000
shares of FelCor Lodging Trust, 9.00%, Series B, 257,000 shares of LaSalle
Hotel Properties, 10.25%, Series A, 295,000 shares of Crescent Real Estate
Equities Co., 6.75%, Series A, and $6,102,000 of U.S. Treasury Bills, 1.55%,
due 10/1/02 as collateral for the interest rate swap transactions. Details
of the interest rate swaps at September 30, 2002 are as follows:
Counter-party: Merrill Derivative Products, AG
FLOATING RATE*
NOTIONAL FIXED (RATE RESET TERMINATION UNREALIZED
AMOUNT RATE MONTHLY) DATE DEPRECIATION
----------- ------ -------------- ------------- ------------
$46,000,000 4.560% 1.8200% April 5, 2005 $ (2,543,817)
$46,000,000 5.210% 1.8200% April 5, 2007 $ (4,239,226)
$46,000,000 5.580% 1.8200% April 5, 2009 $ (5,398,401)
------------
$(12,181,444)
------------
------------
Counter-party: UBS AG
FLOATING RATE*
NOTIONAL FIXED (RATE RESET TERMINATION UNREALIZED
AMOUNT RATE MONTHLY) DATE DEPRECIATION
----------- ------ -------------- -------------- ------------
$24,000,000 4.450% 1.8231% April 15, 2005 $(1,269,062)
$24,000,000 5.120% 1.8231% April 15, 2007 $(2,123,558)
$24,000,000 5.495% 1.8231% April 15, 2009 $(2,704,021)
-----------
$(6,096,641)
-----------
-----------
-------------------
* Based on LIBOR (London Interbank Offered Rate).
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COHEN & STEERS QUALITY INCOME REALTY FUND, INC.
FINANCIAL HIGHLIGHTS(4)
SEPTEMBER 30, 2002 (UNAUDITED)
NET ASSET VALUE
TOTAL NET ASSETS PER SHARE
--------------------------- ---------------
NET ASSET VALUE -- COMMON STOCK:
Beginning of period: 2/28/2002(5).......... $ 101,976 $14.57
Net investment income.................. $ 28,027,737 $ 0.73
Net realized and unrealized loss on
investments and interest rate swap
transactions........................ (30,722,298) (0.80)
Distributions from net investment
income to:
Common shareholders............... (24,220,179) (0.63)
Preferred shareholders............ (2,789,920) (0.07)
Offering and organization costs charged
to paid-in capital:
From issuance of common shares.... (1,151,459) (0.03)
From issuance of preferred
shares......................... (3,360,827) (0.09)
------
Capital stock transactions:
Sold.............................. 559,148,728
Distributions reinvested.......... 1,772,287
------------
Net increase/(decrease) in net asset
value.................................... 526,704,069 (0.89)
------------ ------
End of period: 9/30/2002................... $526,806,045 $13.68
------------ ------
------------ ------
-------------------
(4) Financial information included in this report has been taken from the
records of the fund without examination by independent accountants.
(5) Commencement of operations.
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.
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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
REITS
A, B, C AND I SHARES AVAILABLE
SYMBOL: CSRSX
SYMBOLS: CSEIX, CSBIX, CSCIX, CSDIX
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 COMPANIES ENGAGED IN THE REAL ESTATE OR CAPITAL APPRECIATION, INVESTING PRIMARILY IN
RELATED INDUSTRIES REITS
CONCENTRATED, HIGHLY FOCUSED PORTFOLIO OFFERS LOW TOTAL EXPENSE RATIO
SYMBOL: CSSPX 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
Robert H. Steers
Director and chairman
Martin Cohen
Director and president
Gregory C. Clark
Director
Bonnie Cohen
Director
George Grossman
Director
Richard J. Norman
Director
Willard H. Smith Jr.
Director
Greg E. Brooks
Vice president
Adam Derechin
Vice president and assistant treasurer
Lawrence B. Stoller
Assistant secretary
KEY INFORMATION
INVESTMENT MANAGER
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, NY 10017
(212) 832-3232
FUND SUBADMINISTRATOR AND CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
TRANSFER AGENT -- COMMON SHARES
Equiserve Trust Company
150 Royall Street
Canton, MA 02021
(800) 426-5523
TRANSFER AGENT -- PREFERRED SHARES
The Bank of New York
100 Church Street
New York, NY 10007
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
New York Stock Exchange Symbol: RQI
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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12
COHEN & STEERS
---------------------------------
QUALITY INCOME REALTY FUND
QUARTERLY REPORT
SEPTEMBER 30, 2002
COHEN & STEERS
QUALITY INCOME REALTY FUND
757 THIRD AVENUE
NEW YORK, NY 10017