UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-7154
Cohen & Steers Total Return Realty Fund, Inc.
(Exact name of registrant as specified in charter)
757 Third Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Robert H. Steers
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: December 31, 2002
Item 1. Reports to Stockholders.
The registrant's annual report to shareholders, for the period ended December
31, 2002, is hereby included.
Item 9. Controls and Procedures.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 10. Exhibits.
(b) (1) Certification, dated as of February 26, 2003, of Robert H. Steers,
principal executive officer of the registrant.
(b) (2) Certification, dated as of February 26, 2003, of Martin Cohen, principal
financial officer of the registrant.
(b) (3) Certification, dated as of February 26, 2003, of Robert H. Steers, chief
executive officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) (4) Certification, dated as of February 26, 2003, of Martin Cohen, chief
financial officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
By: /s/ Robert H. Steers, Chairman
Date: February 26, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Robert H. Steers, Chairman, Secretary and principal executive officer
Date: February 26, 2003
By: /s/ Martin Cohen, President, Treasurer and principal financial officer
Date: February 26, 2003
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
February 7, 2003
To Our Shareholders:
We are pleased to submit to you our report for the quarter and year ended
December 31, 2002. The net asset value at that date was $13.52. In addition,
during the quarter, three $0.08 per share monthly dividends were declared and
paid.
INVESTMENT REVIEW
For the quarter, Cohen & Steers Total Return Realty Fund had a total return,
based on income and change in net asset value, of 0.6%. This compares to the
NAREIT Equity REIT Index's(a) total return of 0.4%. For the year ended December
31, 2002, the fund's total return was 7.8%, compared to NAREIT's 3.8%.
For the third year in a row, REITs produced positive absolute returns in a
financial market environment that most equity investors found both challenging
and discouraging. Stock market losses over the past three years reached historic
proportions as expectations for stronger economic growth and, more importantly,
corporate profit growth dimmed continuously throughout the year.
The best performing REIT sectors were those that experienced the highest
earnings growth. Regional mall REITs had a total return of 24.6%, shopping
centers were up 17.8%, and the relatively healthy industrial sector rose 17.4%.
The worst performers were the office and apartment sectors, which returned
- 6.3% and - 6.2% respectively. For the second year in a row small
capitalization REITs outdistanced larger companies by roughly 9% to 2%, a
phenomenon that in our opinion was more the result of declining interest rates
than superior fundamentals.
The fund's best performing investments were in the regional mall sector
(27.3%), the shopping center sector (23.6%) and the diversified sector (17.7%).
The common theme among these sectors was the continued resilience of the
consumer even as the economy continued to weaken throughout the course of the
year. Generationally low interest rates translated into a mortgage refinancing
boom, putting more money in consumers' pockets, clearly a good sign for the
retail industry. Conversely, this same phenomenon had dramatically negative
implications for the apartment sector, as home affordability increased and the
rate of home ownership reached its highest level in history. As a result, the
fund's apartment investments experienced a total return of - 6.7% during the
year. However, we maintained an underweight position in the apartment sector
during the year, so the fund actually benefited (on a relative basis) from its
investment in the apartment sector. Our holdings in the office sector provided a
similar relative benefit, although in the case of this underperforming sector,
what helped our
---------
(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 TOTAL RETURN REALTY FUND, INC.
performance most was our stock selection, as the fund's office investments
generated a total return of 1.6% vs. - 5.4% for the overall office sector.
While REIT share prices escaped the throes of the bear market for the year
as a whole, their fundamentals did not. By year end, prices started catching up
with earnings prospects. In the first half of the year, REITs had a 13.5% total
return. By midyear, however, fears of a return to recession, a decline in
earnings expectations, and the growing threats of war shook even REIT investors'
confidence. Toward year end, these fears became justified as vacancy rates began
to rise at a significant rate. Deterioration was experienced in all sectors with
the exception of retail. Consequently, REIT prices retreated, declining by 13.4%
in the four months from July through October. The prospect of a delayed recovery
in real estate fundamentals (and therefore, REIT earnings) until as late as 2004
dictated this correction in prices. Throughout the second half of the year,
earnings estimates for almost all REITs decayed to the point where a modest
decline in REIT industry earnings is expected for 2003.
For the first time in 10 years, expectations of a decline in earnings also
precipitated fears of weakening dividend safety. In fact, two multifamily REITs
reduced their dividends in the fourth quarter. It is expected by many that
several more such cuts, particularly in the apartment sector, are in the offing
this year. Again, the speed with which fundamentals deteriorated for some of
these companies was alarming. At year end 2001, REIT free cash flows covered
dividends by a ratio of 1.5, whereas by year end 2002 this ratio declined to
1.3. We believe it is unlikely to go much lower and, as a result, any notion of
widespread dividend cuts is totally unwarranted in our view. Despite this
cyclical downturn, we believe that our portfolio companies are extremely well
capitalized, well managed and well positioned for a cyclical recovery.
In other developments in 2002, net inflows into REIT mutual funds, at $3.4
billion, plus another $2.3 billion in closed-end REIT funds, were the highest
since 1998 and were consistent throughout the year. This was in contrast to the
persistent flow out of other equity mutual funds. However, despite favorable
investor sentiment REITs raised very little equity capital. There was only one
sizable initial public offering of note, made by Heritage Property Investment
Trust, and $5.8 billion was raised in all other REIT common stock offerings.
Even though interest rates reached and remained at generational lows, REITs in
aggregate did not borrow more in 2002 than in 2001. We believe this lack of
appetite for capital is the result of a shortage of compelling investment
opportunities coupled with a strong investment and capital markets discipline.
Property prices generally rose throughout the year, the result of the strength
of demand for realty investments by those who remained unfazed by moderating
rental income growth. This permitted REITs to transact a record volume of
property sales while at the same time validating our belief that, in general,
REIT stocks continue to trade at discounts to the value of their underlying
assets.
INVESTMENT OUTLOOK
As has been our outlook for the past year, we believe that economic growth
will continue at a moderate pace over the coming quarters and well into 2004.
With unprecedented fiscal and monetary stimulus already in the
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
system, recently introduced additional stimulus, a weakening dollar and the
upcoming presidential election in 2004, this case has only grown stronger.
Perhaps the largest uncertainties that remain ahead are the war on terror (which
will likely last for a long time) and the potential war in Iraq (which, if it
happens, could be fairly short). Our sense is that these concerns are already
discounted in REIT share prices and perhaps the overall stock market as well.
Nonetheless, they will likely increase the popularity of a more conservative,
income-oriented approach to investing that emphasizes absolute returns -- an
approach that we believe will favor REITs.
Currently, we face two misperceptions in our industry. The first is that
REIT share prices are disconnected from real estate and REIT fundamentals. On
the contrary, the previously noted REIT market decline in the second half of
last year most likely discounted currently weak fundamentals. We believe that
REIT share prices remain connected with net asset values, which have been buoyed
by the robust private market. Looking forward, the key to investment success in
2003 will be to accurately project the outlook for profit growth in 2004.
Because real estate is an asset class that has considerable visibility, any
profit recovery will be evident well in advance. In our opinion, the key factors
are economic and job growth, and how they translate into improving health for
real estate markets. Just as there was a collapse in demand for space in the
past two years, we expect to see an improvement in demand as the economic
recovery continues to unfold. Because the supply of new space has been
relatively low for many property types, our expectation is that as the year
progresses we will see sequential improvement in occupancy rates, rental rates
and profits for just about every sector of the REIT industry. If the economy
responds as strongly as we expect, real estate fundamentals in some sectors may
potentially recover as fast as they deteriorated last year.
The second misperception is that if stocks do well in 2003, REITs will not.
History simply does not corroborate this assertion and the diversification
benefits of REITs are extant irrespective of the stock market cycle. Whereas
many analysts have tried to predict REIT performance relative to the stock
market, we believe that this is simply not an appropriate comparison. In
addition, the stock market debacle of the past three years has disillusioned
many investors and encouraged greater investment in what are viewed as more
predictable asset classes, such as real estate. The continued demand for
property investments has stabilized private market values, and there are a
growing number of institutional and individual investors seeking to increase
their exposure to the real estate asset class. The proven success of the REIT
format has attracted much of this capital to the public market. Early estimates
indicate that in 2002 REITs garnered over 20% of institutional investor real
estate commitments, more than double that in 2001. Real estate values should
hold up as long as the economy grows, interest rates do not soar, and the demand
for property investment remains strong -- all of which we expect to happen.
Finally, with interest rates and total return expectations generally very low,
achieving one's investment objective primarily through current income, rather
than significant capital appreciation, may well attract even more investors to
REITs.
The persistent strength of real estate prices has left REITs with very
limited new investment opportunities in many sectors. One result is that we have
seen a return to substantial share buybacks by many REITs. In addition, if REIT
share prices languish, we would fully expect that REITs themselves would be
targets of opportunistic
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
investors. Indeed, toward the close of last year, Simon Property Group, the
nation's largest owner of shopping centers, launched a hostile acquisition
campaign for Taubman Centers. While the outcome of this contest is still
undecided, it is representative of the discounts from asset value at which many
public companies today are selling. We believe that for the companies with the
best quality properties, anything more than a modest discount from NAV will
invite corporate action to close that gap, thereby mitigating a great deal of
downside risk.
In terms of portfolio positioning, we enter 2003 with our largest absolute
and relative weighting in the office sector. The major office owners today are
among the most undervalued in our universe, with excellent balance sheets that
afford them significant financial flexibility. They are selling at the greatest
discounts from net asset value, even greater discounts from replacement cost,
and have high dividend yields that we believe are adequately covered by cash
flows. We are maintaining an underweight position in the apartment sector
because of the persistence of new construction despite continually declining
demand. It is unlikely that we will change this view until we see a meaningful
improvement in the employment picture, preferably coupled with a slowdown in the
surge of single-family home ownership. Our expectations for a stronger economy
warrant a significant representation in both the regional mall and industrial
sectors. We are continuing to avoid the hotel sector until the companies are in
a position to begin paying normalized dividends again.
If there are any lingering doubts about REIT investment characteristics,
REITs' performance in 2002 should have laid them to rest. While some investors
may be tempted to become 'market timers' in response to the high volatility and
poor returns from stocks over the past several years, we believe that they would
be much better served by practicing portfolio diversification. The ability of
REITs to produce attractive absolute returns -- with the majority of returns
coming from income has earned them an important role in many investors'
portfolios.
THE TAXATION OF DIVIDENDS
The centerpiece of the Bush administration's recently announced economic
stimulus plan is to eliminate the double taxation of corporate dividends by
making them tax-free at the shareholder level. It is a proposal that, depending
on how it is adopted, could have wide ranging implications for the financial
markets and corporate dividend policies. Although details have not yet been
formulated, it is generally believed that REIT dividends would not be eligible
for this tax-exempt status because REITs do not pay taxes. It is also generally
believed that if REIT dividends remain subject to taxation, REITs would be
somewhat less tax-advantaged than they have been historically with respect to
some parts of the investor universe.
Without knowing the final details (such as whether there will be any
limitations on this exclusion), which indeed we may not know until a bill is
signed into law, it is very difficult to draw any firm conclusions. However,
there are a few points worth making. First, this provision would not remove any
of the intrinsic advantages that REITs currently enjoy -- it essentially leaves
them unchanged. Second is that the majority of shareholders at large, including
REIT shareholders, are already tax-exempt. For pension funds, endowments and
retirement accounts, as examples, the high dividends of REITs will remain at
least as attractive, if not more so, no matter what the tax
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
status is for other securities. And third, we believe the major determinant of
all security prices, including those of REITs, will be fundamentals. Thus,
whatever the outcome of this tax bill, our primary focus will continue to be the
analysis and assessment of real estate fundamentals, and the impact of these
fundamentals on REIT share prices.
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 recently 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 new
interactive Asset Allocation Tool, which allows you to 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 TOTAL RETURN REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2002
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD(a)
---------- ------------ --------
EQUITIES 97.33%
COMMON STOCK 72.99%
DIVERSIFIED 2.23%
Colonial Properties Trust................... 82,100 $ 2,786,474 7.78%
------------
HEALTH CARE 8.53%
Health Care Property Investors.............. 82,100 3,144,430 8.67
Health Care REIT............................ 33,500 906,175 8.65
Nationwide Health Properties................ 227,100 3,390,603 12.32
Ventas...................................... 281,700 3,225,465 8.30
------------
10,666,673
------------
INDUSTRIAL 4.77%
First Industrial Realty Trust............... 89,700 2,511,600 9.79
Keystone Property Trust..................... 89,500 1,518,815 7.66
ProLogis.................................... 76,800 1,931,520 5.65
------------
5,961,935
------------
OFFICE 26.30%
Arden Realty................................ 160,000 3,544,000 9.12
Brandywine Realty Trust..................... 232,900 5,079,549 8.07
CarrAmerica Realty Corp..................... 126,100 3,158,805 7.98
Crescent Real Estate Equities Co. .......... 228,400 3,800,576 9.01
Equity Office Properties Trust.............. 159,800 3,991,804 8.01
Highwoods Properties........................ 171,100 3,781,310 10.59
Mack-Cali Realty Corp....................... 142,800 4,326,840 8.32
Prentiss Properties Trust................... 141,100 3,990,308 7.92
Vornado Realty Trust........................ 32,600 1,212,720 7.31
------------
32,885,912
------------
OFFICE/INDUSTRIAL 6.48%
Kilroy Realty Corp.......................... 56,600 1,304,630 8.59
Liberty Property Trust...................... 135,600 4,331,064 7.51
Reckson Associates Realty
Corp.--Class B............................ 110,000 2,464,000 11.56
------------
8,099,694
------------
-------------------
(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. The dividend yield has not been audited by
PricewaterhouseCoopers LLP.
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
SCHEDULE OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 2002
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
---------- ------------ --------
RESIDENTIAL--APARTMENT 10.35%
Apartment Investment & Management
Co.--Class A.............................. 92,900 $ 3,481,892 8.75%
Archstone-Smith Trust....................... 26,800 630,872 7.26
Camden Property Trust....................... 58,800 1,940,400 7.70
Gables Residential Trust.................... 133,900 3,338,127 9.67
Home Properties of New York................. 56,400 1,942,980 7.08
Post Properties............................. 41,200 984,680 7.53
Summit Properties........................... 35,100 624,780 7.58
------------
12,943,731
------------
SHOPPING CENTER 14.33%
COMMUNITY CENTER 3.57%
Developers Diversified Realty Corp.......... 55,600 1,222,644 6.91
Federal Realty Investment Trust............. 67,200 1,889,664 6.90
Kramont Realty Trust........................ 46,600 682,690 8.87
Urstadt Biddle Properties--Class A.......... 60,000 664,800 7.58
------------
4,459,798
------------
REGIONAL MALL 10.76%
CBL & Associates Properties................. 65,700 2,631,285 6.54
General Growth Properties................... 36,800 1,913,600 5.54
Glimcher Realty Trust....................... 66,100 1,173,275 10.82
Macerich Co................................. 110,500 3,397,875 7.41
Mills Corp.................................. 110,600 3,245,004 7.46
Taubman Centers............................. 67,500 1,095,525 6.41
------------
13,456,564
------------
TOTAL SHOPPING CENTER....................... 17,916,362
------------
TOTAL COMMON STOCK (Identified
cost--$85,345,280)................... 91,260,781
------------
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
SCHEDULE OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 2002
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
---------- ------------ --------
PREFERRED STOCK 24.34%
DIVERSIFIED 1.98%
Colonial Properties Trust, 8.75%,
Series A.................................. 98,800 $ 2,471,976 8.75%
------------
HEALTH CARE 2.77%
Nationwide Health Properties, 7.677%,
Series P.................................. 47,000 3,460,375 10.43
------------
HOTEL 0.17%
FelCor Lodging Trust, 9.00%, Series B....... 4,300 105,780 9.15
Host Marriott Corp, 10.00%, Series C........ 4,000 103,400 9.67
------------
209,180
------------
OFFICE 5.81%
Alexandria Real Estate Equities, 9.10%,
Series B.................................. 13,900 363,068 8.73
Crescent Real Estate Equities Co., 6.75%,
Series A (Convertible).................... 75,500 1,457,150 8.76
HRPT Properties Trust, 8.75%, Series B...... 52,800 1,348,512 8.57
Highwoods Properties, 8.625%, Series A...... 4,300 4,103,812 9.04
------------
7,272,542
------------
RESIDENTIAL--APARTMENT 5.61%
Apartment Investment & Management Co.,
9.00%, Series C........................... 44,000 1,097,800 9.02
Apartment Investment & Management Co.,
8.75%, Series D........................... 10,000 247,500 8.85
Apartment Investment & Management Co.,
9.375%, Series G.......................... 173,200 4,534,376 8.94
Apartment Investment & Management Co.,
10.10%, Series Q.......................... 25,000 662,500 9.55
Apartment Investment & Management Co.,
10.00%, Series R.......................... 18,100 475,125 9.52
------------
7,017,301
------------
SHOPPING CENTER 8.00%
COMMUNITY CENTER 0.03%
Developers Diversified Realty Corp., 8.60%,
Series F.................................. 1,600 41,280 8.33
------------
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
SCHEDULE OF INVESTMENTS--(CONTINUED)
DECEMBER 31, 2002
NUMBER VALUE DIVIDEND
OF SHARES (NOTE 1) YIELD
---------- ------------ --------
REGIONAL MALL 7.97%
CBL & Associates Properties, 8.75%,
Series B.................................. 13,000 $ 674,700 8.44%
Crown American Realty Trust, 11.00%,
Series A.................................. 55,400 3,066,390 9.94
Mills Corp., 9.00%, Series B................ 73,800 1,900,350 8.74
Mills Corp., 9.00%, Series C(a)............. 25,000 625,000 9.00
Ramco-Gershenson Property Trust, 9.50%,
Series B.................................. 11,600 297,540 9.28
Taubman Centers, 8.30%, Series A............ 139,500 3,396,825 8.54
------------
9,960,805
------------
TOTAL SHOPPING CENTER....................... 10,002,085
------------
TOTAL PREFERRED STOCK (Identified
cost--$28,047,721)................... 30,433,459
------------
TOTAL EQUITIES (Identified
cost--$113,393,001).................. 121,694,240
------------
PRINCIPAL
AMOUNT
----------
CORPORATE BOND 0.50%
Host Marriott, LP, 9.50%, due 01/15/07
(Identified cost--$600,622)............... $ 600,000 624,750
------------
COMMERCIAL PAPER 1.61%
United Bank of Switzerland Financial, 1.13%,
due 01/02/2003
(Identified cost--$2,020,937)............. 2,021,000 2,020,937
------------
TOTAL INVESTMENTS (Identified
cost--$116,014,560) ....................... 99.44% 124,339,927
OTHER ASSETS IN EXCESS OF LIABILITIES ........ 0.56% 696,421
----- ------------
NET ASSETS (Equivalent to $13.52 per share based on
9,249,159
shares of capital stock outstanding) ..... 100.00% $125,036,348
------ ------------
------ ------------
-------------------
(a) The fund prices this security at fair value using procedures approved by the
fund's board of directors.
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2002
ASSETS:
Investments in securities, at value (Identified
cost--$116,014,560) (Note 1)......................... $124,339,927
Cash.................................................... 324
Dividends and interest receivable....................... 916,692
Receivable for investment securities sold............... 6,476
Other assets............................................ 4,038
------------
Total Assets....................................... 125,267,457
------------
LIABILITIES:
Payable for investment securities purchased............. 97,666
Payable to investment adviser........................... 73,825
Payable to administrator................................ 2,447
Other liabilities....................................... 57,171
------------
Total Liabilities.................................. 231,109
------------
NET ASSETS applicable to 9,249,159 shares of $0.001 par
value common stock
outstanding (Note 5)...................................... $125,036,348
------------
------------
NET ASSET VALUE PER SHARE:
($125,036,348[div]9,249,159 shares outstanding)......... $ 13.52
------------
------------
MARKET PRICE PER SHARE...................................... $ 14.19
------------
------------
MARKET PRICE PREMIUM TO NET ASSET VALUE PER SHARE........... 4.96%
------------
------------
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)......................... $113,478,440
Accumulated net realized gain on investments sold....... 3,232,541
Net unrealized appreciation on investments.............. 8,325,367
------------
$125,036,348
------------
------------
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
Investment Income (Note 1):
Dividend income......................................... $ 9,995,967
Interest income......................................... 89,810
-----------
Total Income....................................... 10,085,777
-----------
Expenses:
Investment advisory fees (Note 2)....................... 893,595
Reports to shareholders................................. 100,954
Professional fees....................................... 64,836
Directors' fees and expenses (Note 2)................... 40,270
Administration fees..................................... 27,808
Custodian fees and expenses............................. 26,890
Registration fees and filing fees....................... 25,000
Transfer agent fees and expenses........................ 24,960
Miscellaneous........................................... 23,585
-----------
Total Expenses..................................... 1,227,898
-----------
Net Investment Income....................................... 8,857,879
-----------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain on investments........................ 8,070,085
Net change in unrealized appreciation on investments.... (7,076,462)
-----------
Net realized and unrealized gain/(loss) on
investments..................................... 993,623
-----------
Net Increase in Net Assets Resulting from Operations........ $ 9,851,502
-----------
-----------
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 2002 DECEMBER 31, 2001
----------------- -----------------
Change in Net Assets:
From Operations:
Net investment income.................... $ 8,857,879 $ 8,276,158
Net realized gain/(loss) on
investments........................... 8,070,085 (2,499,611)
Net change in unrealized appreciation on
invesments............................ (7,076,462) 10,660,057
------------ ------------
Net increase in net assets resulting
from operations................... 9,851,502 16,436,604
------------ ------------
Dividends and Distributions to Shareholders
from (Note 1):
Net investment income.................... (6,959,063) (6,569,865)
Net realized gain on investments......... (1,919,755) --
Tax return of capital.................... -- (1,846,456)
------------ ------------
Total dividends and distributions to
shareholders...................... (8,878,818) (8,416,321)
------------ ------------
Capital Stock Transactions (Notes 5 and 6):
Increase in net assets from shares issued
in exchange for the net assets of
Cohen & Steers Realty Income Fund,
Inc................................... -- 24,638,520
------------ ------------
Total increase in net assets........ 972,684 32,658,803
Net Assets:
Beginning of year........................ 124,063,664 91,404,861
------------ ------------
End of year.............................. $125,036,348 $124,063,664
------------ ------------
------------ ------------
See accompanying notes to financial statements.
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
FINANCIAL HIGHLIGHTS
DECEMBER 31, 2002
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
financial statements. It should be read in conjunction with the financial
statements and notes thereto.
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 2002 2001 2000 1999 1998
-------------------------------- ------ ------- ------- ------- -----------
Net asset value, beginning of year............... $13.41 $ 12.35 $ 10.63 $ 12.35 $ 17.51
------ ------- ------- ------- -----------
Income from investment operations:
Net investment income........................ 0.96 0.97 0.94 1.01 1.17
Net realized and unrealized gain/(loss) on
investments................................ 0.11 1.08 1.74 (1.74) (3.36)
------ ------- ------- ------- -----------
Total from investment operations......... 1.07 2.05 2.68 (0.73) (2.19)
------ ------- ------- ------- -----------
Less dividends and distributions to shareholders
from:
Net investment income........................ (0.75) (0.77) (0.74) (0.83) (0.74)
Net realized gain on investments............. (0.21) -- -- -- (2.05)
Tax return of capital........................ -- (0.22) (0.22) (0.16) (0.18)
------ ------- ------- ------- -----------
Total from dividends and distributions to
shareholders........................... (0.96) (0.99) (0.96) (0.99) (2.97)
------ ------- ------- ------- -----------
Net increase/(decrease) in net assets.... 0.11 1.06 1.72 (1.72) (5.16)
------ ------- ------- ------- -----------
Net asset value, end of year..................... $13.52 $ 13.41 $ 12.35 $ 10.63 $ 12.35
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Market value, end of year........................ $14.19 $ 13.60 $11.875 $10.625 $ 12.81
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
---------------------------------------------------------------------------------------------------------
Total market value return(a)..................... 11.53% 23.34% 21.53% -10.18% -12.20%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Total net asset value return(a).................. 7.77% 16.82% 26.17% -6.77% -14.21%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
---------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in millions)............ $125.0 $ 124.1 $ 91.4 $ 78.7 $ 91.4
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Ratio of expenses to average daily net assets
(before expense reduction)..................... 0.96% 1.18% 1.16% 1.18% 1.14%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Ratio of expenses to average daily net assets
(net of expense reduction)..................... 0.96% 1.18% 1.15% 1.12% 1.12%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Ratio of net investment income to average daily
net assets
(before expense reduction)..................... 6.94% 7.39% 8.24% 8.61% 7.35%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Ratio of net investment income to average daily
net assets
(net of expense reduction)..................... 6.94% 7.39% 8.25% 8.67% 7.37%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
Portfolio turnover rate.......................... 30% 34% 31% 62% 76%
------ ------- ------- ------- -----------
------ ------- ------- ------- -----------
-------------------
(a) Total market value return is computed based upon the New York Stock Exchange
market price of the fund's shares and excludes the effects of brokerage
commissions. Dividends and distributions, if any, are assumed for purposes
of this calculation, to be reinvested at prices obtained under the fund's
dividend reinvestment plan. Total net asset value return measures the
changes in value over the year indicated, taking into account dividends as
reinvested.
See accompanying notes to financial statements.
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13
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers Total Return Realty Fund, Inc. (the fund) was incorporated
under the laws of the State of Maryland on September 4, 1992 and is registered
under the Investment Company Act of 1940 as amended, (the Act) as a closed-end,
nondiversified 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 accounting principles generally accepted in the
United States of America. 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 Quotations
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 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. Interest income is recognized on the accrual basis.
Discounts and premiums of securities purchased are amortized using the effective
yield basis over their respective lives.
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14
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid monthly. 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.
A portion of the fund's dividend may consist of amounts in excess of net
investment income derived from nontaxable 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.
Dividends from net investment 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.
Borrowings and Leverage: The fund may borrow for leveraging purposes when an
investment opportunity arises but the adviser believes that it is not
appropriate to liquidate any existing investments. The fund will only borrow
when the adviser believes that the cost of borrowing to carry the assets to be
acquired through leverage will be lower than the return earned by the fund on
its longer-term portfolio investments. Should the differential between interest
rates on borrowed funds and the return from investment assets purchased with
such funds narrow, the fund would realize less of a positive return, with the
additional risk that, during periods of adverse market conditions, the market
value of the fund's entire portfolio holdings (including those acquired through
leverage) may decline far in excess of incremental returns the fund may have
achieved in the interim.
NOTE 2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
adviser) serves as the investment adviser to the fund, pursuant to an advisory
agreement (the advisory agreement). The adviser is responsible for the actual
management of the fund's portfolio. The responsibility for making decisions to
buy, sell or hold a particular investment rests with the adviser, subject to
review by the board of directors and the applicable provisions of the Act. For
the services provided pursuant to the advisory agreement, the adviser is
entitled to receive a fee, computed daily and payable monthly at an annual rate
of 0.70% of the fund's average daily net assets. For the year ended
December 31, 2002, the fund incurred investment advisory fees of $893,595.
Director's 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 from the fund for their services.
Fees and related expenses accrued for nonaffiliated directors totaled $40,270
for the year ended December 31, 2002.
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15
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
year ended December 31, 2002, totaled $37,633,899 and $39,526,197, respectively.
NOTE 4. INCOME TAXES
The fund had no return of capital for the year ended December 31, 2002.
Short-term capital gains are reflected in the financial statements as realized
gains on investments but are typically reclassified as ordinary income for tax
purposes. The dividends and distributions to shareholders for tax purposes are
characterized as follows:
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
2002 2001
---- ----
Ordinary income................. $6,959,063 $6,569,865
Long-term capital gains......... 1,919,755 --
Tax return of capital........... -- 1,846,456
---------- ----------
$8,878,818 $8,416,321
---------- ----------
---------- ----------
At December 31, 2002, the cost of investments and net unrealized
appreciation for federal income tax purposes were as follows:
Aggregate cost.................................... $112,782,016
------------
Gross unrealized appreciation..................... $ 15,951,044
Gross unrealized depreciation..................... $ (4,393,133)
------------
Net unrealized appreciation....................... $ 11,557,911
------------
------------
Net investment income and net realized gains differ for financial statement
and tax purposes primarily due to return of capital and capital gain
distributions received by the fund on portfolio securities. To the extent such
differences are permanent in nature, such amounts are reclassified within the
capital accounts.
During the year ended December 31, 2002, the fund decreased undistributed
net investment income by $1,898,816, decreased paid-in capital by $1,097,345 and
increased accumulated net realized gain on investments sold by $2,996,161.
For the year ended December 31, 2002, the fund utilized capital loss
carryovers of $8,292,835, including $1,403,404 acquired upon the acquisition of
Cohen & Steers Realty Income Fund, Inc.
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16
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. COMMON STOCK
At December 31, 2002, the fund has one class of common stock, par value
$0.001 per share, of which 100 million shares are authorized and 9,249,159
shares are outstanding at December 31, 2002. Cohen & Steers Capital Management,
Inc. owned 39,441 shares.
NOTE 6. FUND REORGANIZATION
On June 1, 2001, Cohen & Steers Total Return Realty Fund, Inc., (the
'Acquiring Fund') acquired all of the assets and assumed the liabilities of
Cohen & Steers Realty Income Fund, Inc. (the 'Acquired Fund') in a tax-free
reorganization approved by each Fund's shareholders. Under the reorganization
plan shareholders of the Acquired Fund received shares in the Acquiring Fund in
an amount equal to their holdings in the Acquired Fund. Shareholders of the
3,024,603 shares of the Acquired Fund received 1,850,059 shares of the Acquiring
Fund in the transaction on May 31, 2001.
Following is a summary of the net assets and unrealized appreciation as of
the reorganization date:
BENEFICIAL NET ASSET NET UNREALIZED
INTEREST SHARES VALUE PER APPRECIATION/
OUTSTANDING OUTSTANDING NET ASSETS SHARE (DEPRECIATION)
----------- ----------- ---------- ----- --------------
Acquired Fund
Cohen & Steers Realty Income
Fund, Inc................ 3,024,603 -- $ 24,638,520 $ 8.15 $ 2,486,833
Acquiring Fund
Cohen & Steers Total Return
Realty Fund, Inc......... -- 7,399,100 $ 98,539,066 $13.32 $ 9,888,952
Post Reorganization
Cohen & Steers Total Return
Realty Fund, Inc......... -- 9,249,159 $123,177,586 $13.32 $12,375,785
--------------------------------------------------------------------------------
17
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Cohen & Steers Total Return Realty Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Cohen & Steers Total Return Realty
Fund, Inc. (the 'Fund') at December 31, 2002, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2002 by correspondence with the custodian and brokers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
February 7, 2003
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18
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
AVERAGE ANNUAL TOTAL RETURNS (a)
(PERIODS ENDED DECEMBER 31, 2002) (UNAUDITED)
SINCE INCEPTION
ONE YEAR FIVE YEARS (9/27/93)
-------- ---------- ---------------
7.77% 4.77% 9.53%
-------------------
(a) Based on net asset value.
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
the 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 TOTAL RETURN REALTY FUND, INC.
DIVIDEND REINVESTMENT PLAN
The fund has a Dividend Reinvestment Plan (the plan). Each shareholder may
elect to have all distributions of dividends and capital gains automatically
reinvested in additional shares by Equiserve Trust Company (the plan agent), as
agent for shareholders pursuant to the plan. The plan agent will effect
purchases of shares under the plan in the open market. Shareholders who do not
participate in the plan will receive all distributions in cash paid by check
mailed directly to the shareholder of record (or if the shares are held in
street or other nominee name, then to the nominee) by the plan agent, as
dividend disbursing agent. Shareholders whose shares are held in the name of a
broker or nominee should contact the broker or nominee to determine whether and
how they may participate in the plan.
The plan agent serves as agent for the shareholders in administering the
plan. After the fund declares a dividend or makes a capital gain distribution,
the plan agent will, as agent for the participants, receive the cash payment and
use it to buy shares in the open market, on the New York Stock Exchange or
elsewhere, for the participants' accounts. The fund will not issue any new
shares in connection with the plan.
Participants in the plan may withdraw from the plan upon written notice to
the plan agent. Such withdrawal will be effective immediately if received not
less than ten days prior to a dividend record date; otherwise, it will be
effective for all subsequent dividend record dates. When a participant withdraws
from the plan or upon termination of the plan as provided below, certificates
for whole shares credited to his or her account under the plan will be issued
and a cash payment will be made for any fraction of a share credited to such
account, or the plan agent will sell the participant's shares and send the
participant the proceeds less a service fee and brokerage commissions.
The plan agent maintains each shareholder's account in the plan and
furnishes written confirmations of all transactions in the accounts, including
information needed by the shareholders for personal and tax records. Shares in
the account of each plan participant will be held by the plan agent on behalf of
the participant. Proxy material relating to shareholders' meetings of the fund
will include those shares purchased as well as shares held pursuant to the plan.
If shares are held in the name of a brokerage firm, bank, or other nominee,
shareholders should contact the nominee to see if it will participate in the
plan on their behalf. If shareholders wish to participate in the plan, but their
brokerage firm, bank or other nominee is unable to participate on their behalf,
they should request to reregister shares in their own name, which will enable
participation in the plan.
The plan agent's fees for the handling of reinvestment of dividends and
other distributions will be paid by the fund. Each participant will pay a pro
rata of brokerage commissions incurred with respect to the plan agent's open
market purchases in connection with the reinvestment of distributions. There are
no other charges to participants for reinvesting dividends or capital gain
distributions.
The automatic reinvestment of dividends and other distributions will not
relieve participants of any income tax that may be payable or required to be
withheld on such dividends or distributions.
Experience under the plan may indicate that changes are desirable.
Accordingly, the fund reserves the right to amend or terminate the plan as
applied to any distribution paid subsequent to written notice of the change sent
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20
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
to all shareholders of the fund at least 90 days before the record date for the
dividend or distribution. The plan also may be amended or terminated by the plan
agent by at least 90 days' written notice to all shareholders of the fund. All
correspondence concerning the plan should be directed to the plan agent at
Equiserve Trust Company, 150 Royall Street, Canton, MA 02021 (telephone:
800-426-5523).
ADDITIONAL INFORMATION
During the period, there have been no material changes in the fund's
investment objectives or fundamental policies that have not been approved by the
shareholders. There have been no changes in the fund's charter or by-laws that
would delay or prevent a change in control of the fund which have not been
approved by shareholders. There have been no changes in the principal risk
factors associated with the investment in the fund.
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21
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COHEN & STEERS TOTAL RETURN 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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22
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
INFORMATION ABOUT FUND DIRECTORS
NUMBER OF
PORTFOLIOS
OVERSEEN
WITHIN THE
POSITION(S) HELD TERM OF LENGTH OF PRINCIPAL OCCUPATION(S) FUND
NAME, ADDRESS AND AGE WITH FUND OFFICE TIME SERVED DURING PAST FIVE YEARS COMPLEX
-------------------------- ------------------ ----------- ----------- ----------------------- ----------
Robert H. Steers ......... Director, chairman Until next Since Chairman of Cohen & 8
757 Third Avenue and secretary election of inception Steers Capital
New York, New York directors Management, Inc., the
Age: 49 fund's investment
manager.
Martin Cohen ............. Director, Until next Since President of Cohen & 8
757 Third Avenue president and election of inception Steers Capital
New York, New York treasurer directors Management, Inc., the
Age: 54 fund's investment
manager.
Gregory C. Clark ......... Director Until next Since Private Investor. Prior 8
99 Jane Street election of inception thereto, President of
New York, New York directors Wellspring Management
Age: 55 Group (investment
advisory firm).
Bonnie Cohen ............. Director Until next 2001 to Consultant. Prior 8
1824 Phelps Place, N.W. election of present thereto, Undersecretary
Washington, D.C. directors of State, United States
Age: 60 Department of State.
George Grossman .......... Director Until next Since Attorney-at-law. 8
17 Elm Place election of inception
Rye, New York directors
Age: 49
Richard J. Norman ........ Director Until next 2001 to Private Investor. Prior 8
7520 Hackamore Drive election of present thereto, Investment
Potomac, Maryland directors Representative of
Age: 59 Morgan Stanley Dean
Witter.
Willard H. Smith, Jr. ... Director Until next 1996 to Director. Board member 8
7231 Encelia Drive election of present of Essex Property
La Jolla, California directors Trust, Inc., Highwoods
Age: 66 Properties, Inc. and
Realty Income
Corporation. Managing
director at Merrill
Lynch & Co., Equity
Capital Markets
Division from 1983 to
1995.
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23
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COHEN & STEERS TOTAL RETURN 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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24
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COHEN & STEERS TOTAL RETURN REALTY FUND, INC.
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT ADVISER
Director and chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and president (212) 832-3232
Gregory C. Clark FUND ADMINISTRATOR AND CUSTODIAN
Director State Street Bank and Trust Company
225 Franklin Street
Bonnie Cohen Boston, MA 02110
Director
George Grossman TRANSFER AGENT
Director Equiserve Trust Company
150 Royall Street
Richard J. Norman Canton, MA 02021
Director (800) 426-5523
Willard H. Smith Jr. LEGAL COUNSEL
Director Simpson Thacher & Bartlett
425 Lexington Avenue
Adam Derechin New York, NY 10017
Vice president and assistant treasurer
Lawrence B. Stoller New York Stock Exchange Symbol: RFI
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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25
COHEN & STEERS
------------------------
TOTAL RETURN REALTY FUND
ANNUAL REPORT
DECEMBER 31, 2002
COHEN & STEERS
TOTAL RETURN REALTY FUND
757 THIRD AVENUE
NEW YORK, NY 10017
STATEMENT OF DIFFERENCES
------------------------
The division sign shall be expressed as................................ [div]
The section symbol shall be expressed as............................... 'SS'