RMR Hospitality & Real Estate Fund NCSR Certified annual shareholder report (management investment company)

QuickLinks -- Click here to rapidly navigate through this document

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: 811-21502

RMR HOSPITALITY AND REAL ESTATE FUND
(Exact name of registrant as specified in charter)

400 CENTRE STREET
NEWTON, MASSACHUSETTS 02458
(Address of principal executive offices)(Zip code)


(Name and Address of Agent for Service)		Copy to:
Adam D. Portnoy, President RMR Hospitality and Real Estate Fund 400 Centre Street Newton, Massachusetts 02458		Thomas A. DeCapo, Esq. Skadden, Arps, Slate, Meagher & Flom LLP One Beacon Street Boston, Massachusetts 02108
		Christina T. Simmons, Esq. State Street Bank and Trust Company 4 Copley Place, 5^th Floor Boston, Massachusetts 02116
Registrant's telephone number, including area code: (617) 332-9530 Date of fiscal year end: December 31 Date of reporting period: June 30, 2008

Item 1. Reports to Shareholders.

SEMI ANNUAL REPORT
JUNE 30, 2008

RMR Real Estate Fund
RMR Hospitality and Real Estate Fund
RMR F.I.R.E. Fund
RMR Preferred Dividend Fund
RMR Asia Pacific Real Estate Fund
RMR Asia Real Estate Fund
RMR Dividend Capture Fund

ABOUT INFORMATION CONTAINED IN THIS REPORT:

•: PERFORMANCE DATA IS HISTORICAL AND REFLECTS HISTORICAL EXPENSES AND HISTORICAL CHANGES IN NET ASSET VALUE. HISTORICAL RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS.
•: IF RMR ADVISORS HAD NOT WAIVED FEES OR PAID ALL OF EACH FUND'S ORGANIZATIONAL COSTS AND A PORTION OF EACH FUND'S OFFERING COSTS, EACH FUND'S RETURNS WOULD HAVE BEEN REDUCED.
•: PLEASE CONSIDER THE INVESTMENT OBJECTIVES, STRATEGIES, RISKS, CHARGES AND EXPENSES BEFORE INVESTING IN ANY OF THE FUNDS. AN INVESTMENT IN EACH FUND'S SHARES IS SUBJECT TO MATERIAL RISKS, INCLUDING BUT NOT LIMITED TO THOSE DESCRIBED IN EACH FUND'S PROSPECTUS, THE REGISTRATION STATEMENTS AND OTHER DOCUMENTS FILED WITH THE SEC. EACH FUND'S DECLARATION OF TRUST CONTAINS PROVISIONS WHICH LIMIT OWNERSHIP OF FUND SHARES BY ANY PERSON OR GROUP OF PERSONS ACTING TOGETHER AND LIMIT ANY PERSONS ABILITY TO CONTROL A FUND OR TO CONVERT A FUND TO AN OPEN END FUND. FOR MORE INFORMATION ABOUT ANY OF OUR FUNDS PLEASE VISIT WWW.RMRFUNDS.COM OR CALL OUR INVESTOR RELATIONS GROUP AT (866)-790-3165.

NOTICE CONCERNING LIMITED LIABILITY

THE AGREEMENTS AND DECLARATIONS OF TRUST OF RMR REAL ESTATE FUND, RMR HOSPITALITY AND REAL ESTATE FUND, RMR F.I.R.E. FUND, RMR PREFERRED DIVIDEND FUND, RMR ASIA PACIFIC REAL ESTATE FUND, RMR ASIA REAL ESTATE FUND AND RMR DIVIDEND CAPTURE FUND, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, ARE DULY FILED IN THE OFFICE OF THE SECRETARY, CORPORATIONS DIVISION, OF THE COMMONWEALTH OF MASSACHUSETTS, PROVIDE THAT THE NAMES "RMR REAL ESTATE FUND", "RMR HOSPITALITY AND REAL ESTATE FUND", "RMR F.I.R.E. FUND" , "RMR PREFERRED DIVIDEND FUND", "RMR ASIA PACIFIC REAL ESTATE FUND", "RMR ASIA REAL ESTATE FUND" AND "RMR DIVIDEND CAPTURE FUND" REFER TO THE TRUSTEES UNDER THE AGREEMENTS AND DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF ANY OF THE FUNDS SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, ANY OF THESE FUNDS. ALL PERSONS DEALING WITH ANY OF THE FUNDS IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THAT FUND WITH WHICH HE OR SHE MAY DEAL FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

RMR Funds June 30, 2008
		August 27, 2008

To our shareholders,

We are pleased to present you with our 2008 semi-annual report for our seven closed end funds:

•: RMR Real Estate Fund (AMEX: RMR), which began operations in December 2003, beginning on page 2;
•: RMR Hospitality and Real Estate Fund (AMEX: RHR), which began operations in April 2004, beginning on page 20;
•: RMR F.I.R.E. Fund (AMEX: RFR), which began operations in November 2004, beginning on page 38;
•: RMR Preferred Dividend Fund (AMEX: RDR), which began operations in May 2005, beginning on page 56;
•: RMR Asia Pacific Real Estate Fund (AMEX: RAP), which began operations in May 2006, beginning on page 72;
•: RMR Asia Real Estate Fund (AMEX: RAF), which began operations in May 2007, beginning on page 87; and
•: RMR Dividend Capture Fund (AMEX: RCR), which began operations in December 2007, beginning on page 102.

We invite you to read through the information contained in this report and to view our website at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

RMR Real Estate Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Real Estate Industry Fundamentals. Despite a slowing economy and negative sentiment regarding the direction of the financial markets, real estate fundamentals remained stable during the first half of 2008. Occupancy levels held up and rents continued to increase, albeit at a slower pace. Property sales, however, slowed substantially as a result of tighter lending standards and wide differences between buyers and sellers regarding valuations. With limited transactions taking place, it is hard to estimate how much commercial property values have declined. Some estimates put the figure somewhere between negative 10% to negative 15%. What is clear, however, is that property values are no longer at levels seen in early 2007. Over the next six to twelve months, we expect downward pricing pressure to continue on commercial real estate.

For the balance of the year, we believe the economy will likely continue to struggle due to higher food and energy prices, lack of employment growth and a weak housing market. Lending will continue to be restricted, hampering overall economic growth as financial institutions continue to strengthen their balance sheets.

Real Estate Industry Technicals. Throughout the first half of the year, the REIT market continued to exhibit high volatility. REITs started the year on a negative note, down almost 12% in mid-January, and rebounded sharply during March and April (up 6% during each month) following the Fed's and J.P. Morgan's rescue of Bear Stearns. Concern about additional write-offs from financial institutions sent the REIT market, along with other financial services companies, into negative territory during the month of June. REITs were down 11% in June and finished the first half of the year down 3.5%. Despite the volatility, REIT dedicated funds saw $3 billion of inflows during the first six months of the year, an encouraging sign after outflows of more than $9 billion from the period March to December 2007.

Fund Strategies, Techniques and Performance

Our primary investment objective is to earn and pay a high level of current income to our common shareholders by investing in real estate companies, including REITs. Our secondary investment objective is capital appreciation. There can be no assurances that we will meet our investment objectives.

During the six months ended June 30, 2008, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV), was negative 8.1%. During that same period, the total return for the MSCI US REIT Total Return Index (an unmanaged index of REIT common stocks) was negative 3.5% and the total return for the Merrill Lynch REIT Preferred Index (an unmanaged index of REIT preferred stocks) was 7.6%. We believe these two indices are relevant to us because

our investments, excluding short term investments, as of June 30, 2008, included 61.9% REIT common stocks and 22.5% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 common stocks) total return for the six months ended June 30, 2008 was negative 11.9%.

Our investment allocation to the apartment REITs contributed positively to the fund's performance, perhaps because this subsector has benefited from a downturn in the housing market, which has resulted in more people renting rather than buying homes. Our holdings in the hotel real estate subsector detracted from performance based on expectations of lower earnings growth.

Recent Developments

Recently, credit markets, including the market for auction rate securities, such as the Fund's $50 million of preferred shares, have experienced a liquidity crisis. To date, no auctions for the Fund's preferred shares have failed; however, an affiliate of the Fund's lead broker dealer for its preferred shares has purchased a significant amount of the Fund's preferred shares in the auctions. Please see the notes to the financial statements for more information.

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce its expenses and otherwise enhance value for the Fund's shareholders. To this end, on August 26, 2008 we filed a preliminary joint proxy statement / prospectus with the Securities and Exchange Commission in connection with a proposed combination of the Fund with two other closed end RMR funds (RMR Hospitality and Real Estate Fund and RMR F.I.R.E. Fund). Both are managed by our advisor, RMR Advisors, Inc. If the combinations receive all shareholder approvals that are required and proceed, all three funds will become one new fund, RMR Real Estate Income Fund, a newly formed Delaware statutory trust which also will be managed by our advisor. The process of seeking approvals and completing the proposed combinations may take several months, and the combinations may or may not occur for various reasons.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

August 27, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008)*

REITs
Health care		19	%
Hospitality		18	%
Diversified		15	%
Others, less than 10% each		32	%

	Total REITs	84	%
Other		16	%

	Total investments	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

RMR Real Estate Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Common Stocks – 110.5% Real Estate Investment Trusts – 101.3%
	Apartments – 12.8%
		Apartment Investment & Management Co.	14,615	$	497,787
		Associated Estates Realty Corp.	40,000		428,400
		AvalonBay Communities, Inc.	14,000		1,248,240
		BRE Properties, Inc.	10,000		432,800
		Equity Residential	49,000		1,875,230
		Essex Property Trust, Inc.	6,000		639,000
		Home Properties, Inc.	88,800		4,267,728
		Mid-America Apartment Communities, Inc.	5,000		255,200
		Post Properties, Inc.	5,000		148,750

					9,793,135

	Diversified – 23.1%
		CapLease, Inc.	56,000		419,440
		Colonial Properties Trust	10,000		200,200
		Duke Realty Corp.	70,000		1,571,500
		DuPont Fabros Technology, Inc.	7,500		139,800
		Franklin Street Properties Corp.	3,000		37,920
		Lexington Corporate Properties Trust	383,800		5,231,194
		Liberty Property Trust	29,000		961,350
		Mission West Properties, Inc.	5,000		54,800
		National Retail Properties, Inc.	352,700		7,371,430
		Vornado Realty Trust	19,000		1,672,000
		Washington Real Estate Investment Trust	300		9,015

					17,668,649

	Health Care – 25.9%
		Cogdell Spencer, Inc.	16,500		268,125
		HCP, Inc.	39,080		1,243,135
		Health Care REIT, Inc.	162,600		7,235,700
		LTC Properties, Inc.	20,000		511,200
		Medical Properties Trust, Inc.	94,520		956,542
		Nationwide Health Properties, Inc.	242,154		7,625,429
		OMEGA Healthcare Investors, Inc.	96,000		1,598,400
		Universal Health Realty Income Trust	13,000		390,000

					19,828,531

	Hospitality – 6.6%
		Ashford Hospitality Trust, Inc.	185,500		857,010
		Entertainment Properties Trust	22,000		1,087,680
		FelCor Lodging Trust, Inc.	49,700		521,850
		Hersha Hospitality Trust	129,300		976,215
		LaSalle Hotel Properties	17,200		432,236
		Sunstone Hotel Investors, Inc.	25,000		415,000
		Supertel Hospitality, Inc.	161,000		798,560

					5,088,551

See notes to financial statements and notes to portfolio of investments.

	Industrial – 10.1%
		AMB Property Corp.	4,000	$	201,520
		DCT Industrial Trust, Inc.	64,500		534,060
		EastGroup Properties, Inc.	14,000		600,600
		First Industrial Realty Trust, Inc.	211,240		5,802,763
		ProLogis	11,000		597,850

					7,736,793

	Manufactured Homes – 1.8%
		Sun Communities, Inc.	75,900		1,383,657

	Mortgage – 0.6%
		Alesco Financial, Inc.	19,000		38,000
		Anthracite Capital, Inc.	2,000		14,080
		Gramercy Capital Corp.	37,388		433,327

					485,407

	Office – 9.4%
		Brandywine Realty Trust	102,400		1,613,824
		Corporate Office Properties Trust	15,500		532,115
		Highwoods Properties, Inc.	55,000		1,728,100
		Mack-Cali Realty Corp.	26,500		905,505
		Maguire Properties, Inc.	48,000		584,160
		Parkway Properties, Inc.	55,000		1,855,150

					7,218,854

	Retail – 7.6%
		Cedar Shopping Centers, Inc.	75,000		879,000
		Equity One, Inc.	10,000		205,500
		Glimcher Realty Trust	109,400		1,223,092
		Kimco Realty Corp.	5,000		172,600
		Pennsylvania Real Estate Investment Trust	12,000		277,680
		Ramco-Gershenson Properties Trust	9,000		184,860
		Realty Income Corp.	54,600		1,242,696
		Simon Property Group, Inc.	15,000		1,348,350
		Tanger Factory Outlet Centers, Inc.	5,000		179,650
		Urstadt Biddle Properties, Inc.	8,900		130,474

					5,843,902

	Specialty – 0.6%
		Getty Realty Corp.	32,600		469,766

See notes to financial statements and notes to portfolio of investments.

	Storage – 2.8%
		Public Storage, Inc.	3,000	$	242,370
		Sovran Self Storage, Inc.	26,900		1,117,964
		U-Store-It Trust	65,000		776,750

					2,137,084

Total Real Estate Investment Trusts (Cost $87,577,719)					77,654,329

	Other – 9.2%
		Abingdon Investment, Ltd. (a) (b)	550,000		3,256,000
		American Capital Strategies, Ltd.	23,500		558,595
		Brookfield Properties Corp.	10,000		177,900
		Iowa Telecommunication Services, Inc.	50,500		889,305
		Las Vegas Sands Corp. (c)	18,000		853,920
		MCG Capital Corp.	41,000		163,180
		Seaspan Corp.	48,200		1,157,764

Total Other (Cost $10,153,829)					7,056,664

Total Common Stocks (Cost $97,731,548)					84,710,993

Preferred Stocks – 43.8%
Real Estate Investment Trusts – 36.9%
	Apartments – 1.1%
		Apartment Investment & Management Co., Series G	32,800		813,440

	Diversified – 2.1%
		Colonial Properties Trust, Series D	60,000		1,410,000
		Duke Realty Corp., Series O	8,000		190,960

					1,600,960

	Health Care – 5.8%
		Health Care REIT, Inc., Series G	20,000		638,400
		OMEGA Healthcare Investors Inc., Series D	160,000		3,840,000

					4,478,400

	Hospitality – 22.4%
		Ashford Hospitality Trust, Series A	107,900		1,902,277
		Ashford Hospitality Trust, Series D	100,000		1,772,000
		Eagle Hospitality Properties Trust, Inc., Series A (b)	28,000		280,000
		Entertainment Properties Trust, Series D	111,800		2,158,858
		FelCor Lodging Trust, Inc., Series A (d)	83,000		1,589,450
		FelCor Lodging Trust, Inc., Series C	39,600		766,260
		Hersha Hospitality Trust, Series A	92,000		1,895,200
		LaSalle Hotel Properties, Series D	100,000		1,959,000
		Strategic Hotels & Resorts, Inc., Series A	75,000		1,335,000
		Strategic Hotels & Resorts, Inc., Series B	64,500		1,161,000
		Sunstone Hotel Investors, Inc., Series A	129,100		2,388,350

					17,207,395

See notes to financial statements and notes to portfolio of investments.

	Industrial – 0.6%
		First Industrial Realty Trust, Series J	20,000	$	420,000

	Office – 1.6%
		Corporate Office Properties Trust, Series H	2,000		43,940
		Corporate Office Properties Trust, Series J	22,000		477,400
		Kilroy Realty Corp., Series E	500		11,490
		Kilroy Realty Corp., Series F	30,000		660,750

					1,193,580

	Retail – 3.3%
		Cedar Shopping Centers, Inc., Series A	88,600		2,161,840
		Glimcher Realty Trust, Series F	20,000		399,800

					2,561,640

Total Real Estate Investment Trusts (Cost $33,795,564)					28,275,415

	Other – 6.9%
		Hilltop Holdings, Inc., Series A	280,000		5,320,000

Total Other (Cost $6,016,675)					5,320,000

Total Preferred Stocks (Cost $39,812,239)					33,595,415

Other Investment Companies – 9.4%
		Alpine Total Dynamic Dividend Fund	126,200		1,877,856
		Cohen & Steers Premium Income Realty Fund, Inc.	31,950		480,528
		Cohen & Steers REIT and Preferred Income Fund, Inc.	38,426		733,937
		Cornerstone Strategic Value Fund, Inc.	2,500		13,625
		Eaton Vance Enhanced Equity Income Fund II	30,100		516,516
		LMP Real Estate Income Fund, Inc.	80,160		1,226,448
		Neuberger Berman Real Estate Securities Income Fund, Inc.	150,731		1,409,335
		The Zweig Total Return Fund, Inc.	220,568		974,910
		Ultra Real Estate ProShares	400		11,240

Total Other Investment Companies (Cost $9,642,697)					7,244,395

Short-Term Investments – 0.4%
	Other Investment Companies – 0.4%
		Dreyfus Cash Management, Institutional Shares, 2.66% (e) (Cost $310,743)	310,743		310,743

Total Investments – 164.1% (Cost $147,497,227)					125,861,546

Other assets less liabilities – 1.1%					834,092
Preferred Shares, at liquidation preference – (65.2)%					(50,000,000	)

Net Assets applicable to common shareholders – 100%				$	76,695,638

See notes to financial statements and notes to portfolio of investments.

Notes to Portfolio of Investments

(a): Rule 144A securities. Securities restricted for resale to Qualified Institutional Buyers (4.2% of net assets).
(b): As of June 30, 2008, the Fund held securities fair valued in accordance with policies adopted by the board of trustees aggregating $3,536,000 and 2.8% of market value.
(c): As of June 30, 2008, this security had not paid a distribution.
(d): Convertible into common stock.
(e): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

RMR Real Estate Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $147,497,227)		$	125,861,546
	Cash			300
	Dividends and interest receivable			1,022,051
	Other assets			4,339

		Total assets		126,888,236

Liabilities
	Advisory fee payable			66,304
	Distributions payable – preferred shares			40,160
	Accrued expenses and other liabilities			86,134

		Total liabilities		192,598

Preferred shares, at liquidation preference
	Auction preferred shares, Series T; $.001 par value per share; 2,000 shares issued and outstanding at $25,000 per share liquidation preference			50,000,000

Net assets attributable to common shares			$	76,695,638

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 6,824,000 shares issued and outstanding		$	6,824
	Additional paid-in capital			96,475,287
	Undistributed net investment income			77,834
	Accumulated net realized gain on investment transactions			1,771,374
	Net unrealized depreciation on investments			(21,635,681	)

Net assets attributable to common shares			$	76,695,638

Net asset value per share attributable to common shares (based on 6,824,000 common shares outstanding)			$	11.24

See notes to financial statements.

RMR Real Estate Fund

Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due, net of foreign taxes withheld of $420)			$	5,486,414
	Interest				19,053

		Total investment income			5,505,467

Expenses
	Advisory				575,125
	Audit and legal				317,816
	Preferred share remarketing				63,082
	Administrative				46,627
	Shareholder reporting				43,693
	Custodian				40,616
	Compliance and internal audit				17,344
	Trustees' fees and expenses				8,900
	Other				41,631

		Total expenses			1,154,834
	Less: expense waived by the Advisor				(169,154	)

		Net expenses			985,680

			Net investment income		4,519,787

Realized and unrealized loss on investments
	Net realized loss on investments				(235,896	)
	Net change in unrealized appreciation/(depreciation) on investments				(9,995,006	)

	Net realized and unrealized loss on investments				(10,230,902	)

	Distributions to preferred shareholders from net investment income				(1,020,580	)

		Net decrease in net assets attributable to common shares resulting from operations		$	(6,731,695	)

See notes to financial statements.

RMR Real Estate Fund
Financial Statements – continued

Statements of Changes in Net Assets


				Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007

Increase (decrease) in net assets resulting from operations
	Net investment income			$	4,519,787		$	7,481,138
	Net increase from payments by affiliates				—			2,070
	Net realized gain (loss) on investments				(235,896	)		3,140,623
	Net change in unrealized appreciation/(depreciation) on investments				(9,995,006	)		(41,493,993	)
	Distributions to preferred shareholders from:
		Net investment income			(1,020,580	)		(1,161,670	)
		Net realized gain on investments			—			(1,482,830	)

			Net decrease in net assets attributable to common shares resulting from operations		(6,731,695	)		(33,514,662	)

	Distributions to common shareholders from:
		Net investment income			(3,412,000	)		(6,354,978	)
		Net realized gain on investments			—			(8,111,902	)

			Total decrease in net assets attributable to common shares		(10,143,695	)		(47,981,542	)
Net assets attributable to common shares
	Beginning of period				86,839,333			134,820,875

	End of period (including undistributed/(distributions in excess of) net investment income of $77,834 and $(9,373), respectively)			$	76,695,638		$	86,839,333

Common shares issued and repurchased
	Shares outstanding, beginning of period				6,824,000			6,824,000
		Shares issued			—			—

	Shares outstanding, end of period				6,824,000			6,824,000

See notes to financial statements.

RMR Real Estate Fund
Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


				Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007			Year Ended December 31, 2006			Year Ended December 31, 2005			Year Ended December 31, 2004			For the Period December 18, 2003(a) to December 31, 2003

Per Common Share Operating Performance (b)
Net asset value, beginning of period				$	12.73		$	19.76		$	15.63		$	16.61		$	14.35		$	14.33(c	)

Income from Investment Operations
Net investment income (d)					.66(e	)		1.10			.99			.64			.47			.10
Net realized and unrealized appreciation/(depreciation) on investments					(1.50	)(e)		(5.62	)		4.69			(.08	)		3.11			(.05	)
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income				(.15	)(e)		(.17	)		(.23	)		(.10	)		(.05	)		—
	Net realized gain on investments				—(e	)		(.22	)		(.12	)		(.14	)		(.05	)		—

Net increase (decrease) in net asset value from operations					(.99	)		(4.91	)		5.33			.32			3.48			.05
Less: Distributions to common shareholders from:
			Net investment income		(.50	)(e)		(.93	)		(.79	)		(.54	)		(.53	)		—
			Net realized gain on investments		—(e	)		(1.19	)		(.41	)		(.76	)		(.57	)		—
Common share offering costs charged to capital					—			—			—			—			—			(.03	)
Preferred share offering costs charged to capital					—			—			—			—			(.12	)		—

Net asset value, end of period				$	11.24		$	12.73		$	19.76		$	15.63		$	16.61		$	14.35

Market price, beginning of period				$	11.03		$	17.48		$	13.15		$	14.74		$	15.00		$	15.00

Market price, end of period				$	10.07		$	11.03		$	17.48		$	13.15		$	14.74		$	15.00


Total Return (f)(g)
Total investment return based on:
		Market price (h)			(4.47	)%		(26.19	)%		43.77	%		(1.96	)%		6.42	%		0.00	%
		Net asset value (h)			(8.11	)%		(26.28	)%		35.27	%		2.10	%		24.73	%		0.14	%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of:
	Net investment income, before total preferred share distributions (d)				10.56	%(e)(i)		6.16	%		5.60	%		4.02	%		3.22	%		27.45	%(i)
	Total preferred share distributions				2.38	%(i)		2.18	%		1.97	%		1.47	%		0.67	%		0.00	%(i)
	Net investment income, net of preferred share distributions (d)				8.18	%(e)(i)		3.98	%		3.63	%		2.55	%		2.55	%		27.45	%(i)
	Expenses, net of fee waivers				2.30	%(i)		1.47	%		1.50	%		1.50	%		1.69	%		2.40	%(i)
	Expenses, before fee waivers				2.70	%(i)		1.82	%		1.86	%		1.87	%		2.05	%		2.65	%(i)
Portfolio Turnover Rate					2.51	%		51.01	%		36.20	%		22.15	%		35.52	%		17.49	%
Net assets attributable to common shares, end of period (000s)				$	76,696		$	86,839		$	134,821		$	106,670		$	113,357		$	95,776
Preferred shares, liquidation preference ($25,000 per share) (000s)				$	50,000		$	50,000		$	50,000		$	50,000		$	50,000		$	—
Asset coverage per preferred share (j)				$	63,348		$	68,420		$	92,411		$	78,335		$	81,679		$	—

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at December 18, 2003, reflects the deduction of the average sales load and offering costs of $0.67 per share paid by the holders of common shares from the $15.00 offering price. We paid a sales load of $0.68 per share on 6,660,000 common shares sold to the public and no sales load or offering costs on 7,000 common shares sold to affiliates of the RMR Advisors for $15.00 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A (8) to the financial statements, these amounts are subject to change to the extent 2008 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): The impact of the net increase from payments by affiliates is less than $0.005/share.
(g): Total returns for periods of less than one year are not annualized.
(h): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(i): Annualized.
(j): Asset coverage per share equals net assets attributable to common shares plus the liquidation preference of the preferred shares divided by the total number of preferred shares outstanding at the end of the period.

See notes to financial statements.

RMR Real Estate Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on July 2, 2002, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a diversified closed-end management investment company. The Fund had no operations prior to December 18, 2003, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

The accompanying June 30, 2008 financial statements have been prepared without audit. The Fund believes that disclosures made are adequate to make the information presented not misleading. In the opinion of the Fund's management, all adjustments, which include normal recurring adjustments considered necessary for a fair presentation, have been included. The Fund's operating results for this interim period are not necessarily indicative of the results that may be expected on an annual basis in the future.

(3) Use of Estimates

Preparation of these financial statements in conformity with accounting principles generally accepted in the United States requires the Fund's management to make estimates and assumptions that may affect the amounts reported in the financial statements and related notes. The actual results could differ from these estimates particularly for reasons described in Note A (8), and for other reasons.

(4) Portfolio Valuation

Investment securities of the Fund are valued at the latest sales price whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of the closing bid and ask prices on that day. Securities traded primarily on the NASDAQ Stock Market, or NASDAQ, are normally valued by the Fund at the NASDAQ Official Closing Price, or NOCP, provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., eastern time, unless that price is outside the range of the "inside" bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Some fixed income securities may be valued using pricing provided by a pricing service. Any of the Fund's securities which are not readily marketable, which are not traded or which have other characteristics of illiquidity are valued by the Fund at fair value as determined in good faith under the supervision of the Fund's board of trustees. Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same type outstanding. Short term debt securities with less than 60 days until maturity may be valued at cost plus interest accrued, which approximates market value.

(5) Fair Value Measurements

investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. FAS 157 established a three tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk; for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized broker quotes, company financial information and other market indicators to value the securities whose prices were not readily available.

The following is a summary of the inputs used as of June 30, 2008, in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	122,325,546
Level 2 – Other significant observable inputs		280,000
Level 3 – Significant unobservable inputs		3,256,000

Total	$	125,861,546

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:

	Investments in Securities Characterized as Level 3
Balance as of 12/31/07	$	4,378,000
Accrued discounts/premiums		—
Realized gain/loss and change in unrealized appreciation/depreciation		(1,122,000	)
Net purchases/sales		—
Net transfers in and/or out of Level 3		—

Balance, as of 06/30/08	$	3,256,000

Net change in unrealized appreciation/depreciation from investments still held as of 06/30/08	$	(1,122,000	)

(6) Securities Transactions and Investment Income

Securities transactions are recorded on a trade date basis. Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on an identified cost basis.

(7) Taxes

The Fund has qualified and intends to qualify in the future as a "regulated investment company" and to comply with the applicable provisions of subchapter M of the Internal Revenue Code of 1986, as amended, so that it will generally not be subject to federal income tax. However, the Fund may be subject to a 4% excise tax to the extent the Fund does not distribute substantially all taxable earnings each year.

Some foreign governments may subject the Fund's investment income and securities sales to withholding or other taxes. For the six months ended June 30, 2008, $420 of foreign taxes has been withheld from distributions to the Fund and has been recorded as a reduction of dividend income

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On July 11, 2008, the Fund declared regular monthly distributions of $0.10 per common share payable in July, August and September 2008. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry-forwards, it is the policy of the Fund not to distribute such gains. Distributions to preferred shareholders are determined as described in Note D.

The Fund has substantial investments in real estate investment trusts, or REITs, which are generally not subject to federal income taxes. Distributions that the Fund receives from REITs can be classified as ordinary income, capital gain income or return of capital by the REITs that make these distributions to the Fund. However, it is not possible to characterize distributions received from REITs during interim periods because the issuers do not report their tax characterization until subsequent to year end. Final characterization of the Fund's 2008 distributions to shareholders is also dependent upon the magnitude or timing of the Fund's securities transactions prior to year end. Therefore it is likely that some portion of the Fund's 2008 investment income and distributions to shareholders will be recharacterized as long term capital gain and return of capital for financial statement and federal income tax purposes subsequent to year end and reflected accordingly in the Fund's year end financial statements.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	147,497,227

Gross unrealized appreciation	$	7,678,991
Gross unrealized depreciation		(29,314,672	)

Net unrealized appreciation/(depreciation)	$	(21,635,681	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by real estate companies and REITS. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry due to economic, legal, regulatory, technological or other developments affecting the United States real estate industry.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors, Inc., or RMR Advisors, to provide the Fund with a continuous investment program, to make day-to-day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors is compensated at an annual rate of 0.85% of the Fund's average daily managed assets. Managed assets means the total assets of the Fund less liabilities other than any indebtedness entered into for purposes of leverage. For purposes of calculating managed assets, the liquidation preference of preferred shares is not considered a liability.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets from December 18, 2003, until December 18, 2008. The Fund incurred net advisory fees of $405,971 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $169,154 for the six months ended June 30, 2008.

RMR Advisors also performs administrative functions for Fund pursuant to an administration agreement with the Fund. RMR Advisors has entered into a subadministration agreement with State Street Bank and

Trust Company, or State Street, to perform substantially all fund accounting and other administrative services. Under the administration agreement, RMR Advisors is entitled to reimbursement of the cost of providing administrative services. The Fund reimbursed RMR Advisors for $46,627 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

Each trustee who is not a director, officer or employee of RMR Advisors and who is not an "interested person" of the Fund as defined under the 1940 Act is considered to be a "disinterested trustee". Disinterested trustees are each paid by the Fund an annual fee plus attendance fees for board and committee meetings. The Fund incurred $8,900 of trustee fees and expenses during the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $7,409 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $3,398,213 and $6,311,719 respectively. Brokerage commissions on securities transactions amounted to $12,718 during the six months ended June 30, 2008.

Note D

Preferred Shares

The Fund's 2,000 outstanding Series T auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the 1940 Act, of at least 200%, the preferred shares will be subject to redemption in an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 4.13% per annum as of June 30, 2008.

preferred shares would not have been able to sell their preferred shares in the auctions. There can be no assurance that this or any other affiliate of the Fund's lead broker-dealer would purchase Fund preferred shares in any future auction of Fund preferred securities or that the Fund will not have any auction for its preferred securities fail. If an auction of the Fund's preferred shares should fail, the dividend rate for the next succeeding dividend period is set according to a pre-determined formula, and the resulting rate may be higher than the rate which the Fund would otherwise pay as a result of a successful auction. In addition, if an auction fails, holders of the Fund's preferred shares may not be able to sell their preferred shares in that auction. If auctions for the Fund's preferred shares fail, or if market conditions generally frustrate the Fund's ability to enhance investment results through the investment of capital attributable to its outstanding preferred shares, such factors may necessitate a change in the form and/or amount of investment leverage used by the Fund. The Fund has no current intention to change the form or degree of investment leverage that it uses. The use of alternative forms of leverage and/or a reduction in the degree of investment leverage used by the Fund in its investment program could result in reduced investment returns for common shareholders as compared to the returns that historically have been achieved by the Fund through the use of preferred share leverage in favorable market conditions. The Fund proactively manages compliance with asset coverage and other financial ratio requirements applicable to the preferred shares. In order to facilitate compliance with such requirements, and without further notice of its intention to do so, the Fund may from time to time purchase or otherwise acquire its outstanding preferred shares in the open market, in other nondiscriminatory secondary market transactions, pursuant to tender offers or other offers to repurchase preferred shares, or in other permissible purchase transactions, and also may from time to time call or redeem preferred shares in accordance with their terms.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal			Votes for		Votes withheld		Votes abstained
Common and Preferred Shares
	Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting.		6,299,696		95,660		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

RMR Hospitality and Real Estate Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Hospitality Industry Fundamentals. Operating fundamentals for hotels experienced a greater than previously anticipated slowdown during the first half of the year. Coming into the year, industry-wide expectations for annual growth in revenue per available room, or RevPar, were in the range of 5% to 7%. However, with a slowing economy, higher fuel costs and planned reduced airline capacity, RevPar expectations are now generally flat for the full year 2008.

Fund Strategies, Techniques and Performance

Our primary objective is to earn and pay to our common shareholders a high level of current income by investing in hospitality and real estate companies. Our secondary objective is capital appreciation. There can be no assurance that we will achieve our investment objectives.

During the six months ended June 30, 2008, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV), was negative 8.7%. During that same period, the total return for the MSCI US REIT Total Return Index (an unmanaged index of REIT common stocks) was negative 3.5% and the total return for the Merrill Lynch REIT Preferred Index (an unmanaged index of REIT preferred stocks) was 7.6%. We believe these two indices are relevant to us because our investments, excluding short term investments, as of June 30, 2008, included 51.4% REIT common stocks and 30.8% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 common stocks) total return for the six months ended June 30, 2008 was negative 11.9%.

As a result of the Fund's erosion in NAV and income from its investments during 2007 and 2008, the Fund's Board decided to lower the distribution rate to common shareholders in April in an effort to bring the distribution more in line with the Fund's earnings potential. During the past two years, the Fund's performance also has been impacted by the cost of litigation with a shareholder. This litigation has since been resolved.

Recent Developments

The Fund had recently been involved in litigation with one of its shareholders. The parties to this litigation entered into a settlement agreement in June 2008, and on July 1, 2008, the court granted the parties' joint motion to dismiss this litigation, effectively ending the litigation and its continuing costs to the Fund.

Recently, credit markets, including the market for auction rate securities, such as the Fund's $28 million of preferred shares, have experienced a liquidity crisis. To date, no auctions for the Fund's preferred shares have failed; however, an affiliate of the Fund's lead broker dealer for its preferred shares has purchased a significant amount of the Fund's preferred shares in the auctions. Please see the notes to the financial statements for more information.

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the the Fund's Board of Trustees is currently considering actions to reduce its expenses and otherwise enhance value for the Fund's shareholders. To this end, on August 26, 2008 we filed a preliminary joint proxy statement / prospectus with the Securities and Exchange Commission in connection with a proposed combination of the Fund with two other closed end RMR funds (RMR Real Estate Fund and RMR F.I.R.E. Fund). Both are managed by our advisor, RMR Advisors, Inc. If the combinations receive all shareholder approvals that are required and proceed, all three funds will become one new fund, RMR Real Estate Income Fund, a newly formed Delaware statutory trust which also will be managed by our advisor. The process of seeking approvals and completing the proposed combinations may take several months, and the combinations may or may not occur for various reasons.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

August 27, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008)*


Hospitality real estate	34	%
Health care real estate	15	%
Office real estate	10	%
Diversified real estate	10	%
Others, less than 10% each	31	%

Total investments	100	%

REITs	85	%
Other	15	%

Total investments	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

RMR Hospitality and Real Estate Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Common Stocks – 98.0%
Real Estate Investment Trusts – 89.9%
	Apartments – 5.7%
		Apartment Investment & Management Co.	25,539	$	869,858
		Associated Estates Realty Corp.	5,600		59,976
		BRE Properties, Inc.	6,000		259,680
		Equity Residential	8,000		306,160
		Essex Property Trust, Inc.	2,000		213,000
		Home Properties, Inc.	7,500		360,450

					2,069,124

	Diversified – 15.2%
		CapLease, Inc.	41,404		310,116
		Colonial Properties Trust	55,900		1,119,118
		Cousins Properties, Inc.	14,400		332,640
		Franklin Street Properties Corp.	3,000		37,920
		iStar Financial, Inc.	6,000		79,260
		Lexington Corporate Properties Trust	128,800		1,755,544
		Liberty Property Trust	20,000		663,000
		Mission West Properties, Inc.	3,000		32,880
		National Retail Properties, Inc.	56,850		1,188,165
		Washington Real Estate Investment Trust	300		9,015

					5,527,658

	Health Care – 19.4%
		Care Investment Trust, Inc.	6,900		65,067
		HCP, Inc.	16,770		533,454
		Health Care REIT, Inc.	61,640		2,742,980
		LTC Properties, Inc.	10,000		255,600
		Medical Properties Trust, Inc.	36,020		364,522
		Nationwide Health Properties, Inc.	86,000		2,708,140
		OMEGA Healthcare Investors, Inc.	7,700		128,205
		Universal Health Realty Income Trust	7,600		228,000

					7,025,968

	Hospitality – 15.1%
		Ashford Hospitality Trust, Inc.	140,000		646,800
		Entertainment Properties Trust	18,800		929,472
		FelCor Lodging Trust, Inc.	39,500		414,750
		Hersha Hospitality Trust	38,100		287,655
		Host Hotels & Resorts, Inc.	44,000		600,600
		LaSalle Hotel Properties	31,199		784,031
		Strategic Hotels & Resorts, Inc.	12,000		112,440
		Sunstone Hotel Investors, Inc.	23,000		381,800
		Supertel Hospitality, Inc.	267,130		1,324,965

					5,482,513

See notes to financial statements and notes to portfolio of investments.

	Industrial – 10.8%
		AMB Property Corp.	1,000	$	50,380
		DCT Industrial Trust, Inc.	16,600		137,448
		EastGroup Properties, Inc.	6,000		257,400
		First Industrial Realty Trust, Inc.	104,160		2,861,275
		ProLogis	11,000		597,850

					3,904,353

	Manufactured Homes – 0.8%
		Sun Communities, Inc.	15,450		281,654

	Mortgage – 0.6%
		Gramercy Capital Corp.	14,696		170,327
		JER Investors Trust, Inc.	10,000		63,000

					233,327

	Office – 9.3%
		Brandywine Realty Trust	49,400		778,544
		Corporate Office Properties Trust	11,500		394,795
		Douglas Emmett, Inc.	8,300		182,351
		Highwoods Properties, Inc.	40,900		1,285,078
		Parkway Properties, Inc.	22,200		748,806

					3,389,574

	Retail – 10.2%
		Cedar Shopping Centers, Inc.	22,000		257,840
		Developers Diversified Realty Corp.	2,000		69,420
		Equity One, Inc.	3,000		61,650
		Glimcher Realty Trust	27,400		306,332
		Pennsylvania Real Estate Investment Trust	44,000		1,018,160
		Ramco-Gershenson Properties Trust	12,000		246,480
		Realty Income Corp.	54,200		1,233,592
		Simon Property Group, Inc.	3,000		269,670
		Tanger Factory Outlet Centers, Inc.	5,000		179,650
		Urstadt Biddle Properties, Inc.	2,900		42,514

					3,685,308

	Specialty – 1.4%
		Getty Realty Corp.	34,000		489,940

	Storage – 1.4%
		Sovran Self Storage, Inc.	4,100		170,396
		U-Store-It Trust	29,100		347,745

					518,141

Total Real Estate Investment Trusts (Cost $38,412,413)					32,607,560

See notes to financial statements and notes to portfolio of investments.

	Other – 8.1%
		Abingdon Investment, Ltd. (a)(b)	200,000	$	1,184,000
		American Capital Strategies, Ltd.	3,500		83,195
		Brookfield Properties Corp.	5,000		88,950
		DHT Maritime, Inc.	16,000		160,480
		Iowa Telecommunication Services, Inc.	20,800		366,288
		MCG Capital Corp.	11,000		43,780
		Seaspan Corp.	33,400		802,268
		Wyndham Worldwide Corp. (c)	11,000		197,010

Total Other (Cost $3,924,354)					2,925,971

Total Common Stocks (Cost $42,336,767)					35,533,531

Preferred Stocks – 54.4%
Real Estate Investment Trusts – 53.9%
	Apartments – 1.5%
		Apartment Investment & Management Co., Series U	24,000		558,000

	Diversified – 2.5%
		Digital Realty Trust, Inc., Series A	15,000		346,200
		Duke Realty Corp., Series O	4,000		95,480
		LBA Realty LLC, Series B	30,000		468,750

					910,430

	Health Care – 6.9%
		Health Care REIT, Inc., Series F	40,000		936,000
		Health Care REIT, Inc., Series G	20,000		638,400
		LTC Properties, Inc., Series F	40,000		922,800

					2,497,200

	Hospitality – 32.3%
		Ashford Hospitality Trust, Series A	46,000		810,980
		Ashford Hospitality Trust, Series D	70,000		1,240,400
		Eagle Hospitality Properties Trust, Inc., Series A(b)	28,000		280,000
		FelCor Lodging Trust, Inc., Series C	60,000		1,161,000
		Hersha Hospitality Trust, Series A	52,000		1,071,200
		Host Marriott Corp., Series E	100,000		2,500,000
		Innkeepers USA Trust, Series C	27,000		333,450
		LaSalle Hotel Properties, Series D	50,000		979,500
		LaSalle Hotel Properties, Series E	62,200		1,299,980
		LaSalle Hotel Properties, Series G	10,000		184,400
		Strategic Hotels & Resorts, Inc., Series A	10,000		178,000
		Strategic Hotels & Resorts, Inc., Series C	40,000		768,000
		Sunstone Hotel Investors, Inc., Series A	50,000		925,000

					11,731,910

See notes to financial statements and notes to portfolio of investments.

	Office – 8.5%
		Alexandria Real Estate Equities, Inc., Series C	60,000	$	1,476,000
		SL Green Realty Corp., Series D	70,000		1,610,000

					3,086,000

	Retail – 2.2%
		Cedar Shopping Centers, Inc., Series A	32,000		780,800

Total Real Estate Investment Trusts (Cost $23,265,491)					19,564,340

	Other – 0.5%
		Hilltop Holdings, Inc., Series A	9,600		182,400

Total Other (Cost $201,581)					182,400

Total Preferred Stocks (Cost $23,467,072)					19,746,740

Debt Securities – 12.8%
	Hospitality – 12.8%
		American Real Estate Partners LP, 8.125%, 06/01/2012	2,000,000		1,920,000
		FelCor Lodging LP, 8.50%, 06/01/2011 (d)	1,600,000		1,564,000
		Six Flags Operations, Inc., 12.25%, 07/15/2016 (a)	1,232,000		1,136,520

Total Debt Securities (Cost $4,815,623)					4,620,520

Other Investment Companies – 9.9%
		Alpine Total Dynamic Dividend Fund	69,100		1,028,208
		Cohen & Steers Premium Income Realty Fund, Inc.	16,962		255,108
		Cohen & Steers REIT and Preferred Income Fund, Inc.	14,500		276,950
		Eaton Vance Enhanced Equity Income Fund II	22,700		389,532
		LMP Real Estate Income Fund, Inc.	39,379		602,499
		Neuberger Berman Real Estate Securities Income Fund, Inc.	66,952		626,001
		The Zweig Total Return Fund, Inc.	94,700		418,574

Total Other Investment Companies (Cost $4,657,275)					3,596,872

See notes to financial statements and notes to portfolio of investments.


Company			Shares or Principal Amount	Value

Short-Term Investments – 0.7%
	Other Investment Companies – 0.7%
		Dreyfus Cash Management, Institutional Shares, 2.66% (e) (Cost $267,571)	267,571	$	267,571

Total Investments – 175.8% (Cost $75,544,308)					63,765,234

Other assets less liabilities – 1.4%					516,037
Preferred Shares, at liquidation preference – (77.2)%					(28,000,000	)

Net Assets applicable to common shareholders – 100%				$	36,281,271

Notes to Portfolio of Investments

(a): Rule 144A securities. Securities restricted for resale to Qualified Institutional Buyers (6.4% of net assets).
(b): As of June 30, 2008, the Fund held securities fair valued in accordance with policies adopted by the board of trustees aggregating $1,464,000 and 2.3% of market value.
(c): A hospitality company.
(d): Also a Real Estate Investment Trust.
(e): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

RMR Hospitality and Real Estate Fund

Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $75,544,308)		$	63,765,234
	Cash			370
	Dividends and interest receivable			735,591
	Other assets			3,812

		Total assets		64,505,007

Liabilities
	Advisory fee payable			33,464
	Distributions payable – preferred shares			32,278
	Accrued expenses and other liabilities			157,994

		Total liabilities		223,736

Preferred shares, at liquidation preference
	Auction preferred shares, Series Th; $.001 par value per share; 1,120 shares issued and outstanding at $25,000 per share liquidation preference			28,000,000

Net assets attributable to common shares			$	36,281,271

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 2,485,000 shares issued and outstanding		$	2,485
	Additional paid-in capital			46,967,809
	Undistributed net investment income			39,496
	Accumulated net realized gain on investment transactions			1,050,555
	Net unrealized depreciation on investments			(11,779,074	)

Net assets attributable to common shares			$	36,281,271

Net asset value per share attributable to common shares (based on 2,485,000 common shares outstanding)			$	14.60

See notes to financial statements.

RMR Hospitality and Real Estate Fund
Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due, net of foreign taxes withheld of $210)			$	2,678,693
	Interest				252,996

		Total investment income			2,931,689

Expenses
	Advisory				290,194
	Audit and legal				641,534
	Administrative				46,512
	Preferred share remarketing				35,325
	Custodian				29,951
	Compliance and internal audit				17,344
	Shareholder reporting				15,067
	Trustees' fees and expenses				8,900
	Other				45,248

		Total expenses			1,130,075
	Less: expense waived by the Advisor				(85,351	)

		Net expenses			1,044,724

			Net investment income		1,886,965

Realized and unrealized gain (loss) on investments
	Net realized gain on investments				56,318
	Net change in unrealized appreciation/(depreciation) on investments				(4,760,956	)

	Net realized and unrealized loss on investments				(4,704,638	)

	Distributions to preferred shareholders from net investment income				(607,454	)

		Net decrease in net assets attributable to common shares resulting from operations		$	(3,425,127	)

See notes to financial statements.

RMR Hospitality and Real Estate Fund

Financial Statements – continued

Statements of Changes in Net Assets


				Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31 2007

Increase (decrease) in net assets resulting from operations
	Net investment income			$	1,886,965		$	1,567,243
	Net increase from payments by affiliates				—			1,036
	Net realized gain on investments				56,318			1,434,411
	Net change in unrealized appreciation/(depreciation) on investments				(4,760,956	)		(18,455,574	)
	Distributions to preferred shareholders from:
		Net investment income			(607,454	)		(318,275	)
		Net realized gain on investments			—			(1,138,397	)

			Net decrease in net assets attributable to common shares resulting from operations		(3,425,127	)		(16,909,556	)

	Distributions to common shareholders from:
		Net investment income			(1,240,015	)		(1,274,968	)
		Net realized gain on investments			—			(5,186,032	)

			Total decrease in net assets attributable to common shares		(4,665,142	)		(23,370,556	)
Net assets attributable to common shares
	Beginning of period				40,946,413			64,316,969

	End of period (including undistributed net investment income of $39,496 and $0, respectively)			$	36,281,271		$	40,946,413

Common shares issued and repurchased
	Shares outstanding, beginning of period				2,485,000			2,485,000
		Shares issued			—			—

	Shares outstanding, end of period				2,485,000			2,485,000

See notes to financial statements.

RMR Hospitality and Real Estate Fund

Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007			Year Ended December 31, 2006			Year Ended December 31, 2005			For the Period April 27, 2004(a) to December 31, 2004

Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	16.48		$	25.88		$	21.88		$	22.94		$	19.28	(c)

Income from Investment Operations
Net investment income (d)			.76	(e)		.63			1.08			1.13			.71
Net realized and unrealized appreciation/(depreciation) on investments			(1.90	)(e)		(6.84	)		4.95			(.19	)		3.95
	Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(.24	)(e)		(.13	)		(.30	)		(.16	)		(.06	)
	Net realized gain on investments		—	(e)		(.46	)		(.23	)		(.11	)		(.01	)

Net increase (decrease) in net asset value from operations			(1.38	)		(6.80	)		5.50			.67			4.59
Less: Distributions to common shareholders from:
	Net investment income		(.50	)(e)		(.51	)		(.85	)		(.96	)		(.65	)
	Net realized gain on investments		—	(e)		(2.09	)		(.65	)		(.65	)		(.10	)
Common share offering costs charged to capital			—			—			—			—			(.04	)
Preferred share offering costs charged to capital			—			—			—			(.12	)		(.14	)

Net asset value, end of period		$	14.60		$	16.48		$	25.88		$	21.88		$	22.94

Market price, beginning of period		$	14.38		$	22.95		$	18.21		$	19.98		$	20.00

Market price, end of period		$	13.04		$	14.38		$	22.95		$	18.21		$	19.98


Total Return (f)(g)
Total investment return based on:
	Market price (h)		(6.06	)%		(28.11	)%		35.54	%		(0.73	)%		3.93	%
	Net asset value (h)		(8.68	)%		(28.15	)%		25.89	%		2.54	%		23.16	%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of:
	Net investment income, before total preferred share distributions (d)		9.33	%(e)(i)		2.72	%		4.50	%		5.04	%		4.96	%(i)
	Total preferred share distributions		3.00%	(i)		2.53	%		2.23	%		1.20	%		0.50	%(i)
	Net investment income, net of preferred share distributions (d)		6.33%	(e)(i)		0.19	%		2.27	%		3.84	%		4.46%	(i)
	Expenses, net of fee waivers		5.17%	(i)		5.40	%		3.13	%		1.80	%		1.86%	(i)
	Expenses, before fee waivers		5.59%	(i)		5.77	%		3.49	%		2.14	%		2.18%	(i)
Portfolio Turnover Rate			7.67	%		41.36	%		45.70	%		23.95	%		20.83	%
Net assets attributable to common shares, end of period (000s)		$	36,281		$	40,946		$	64,317		$	54,377		$	57,005
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	28,000		$	28,000		$	28,000		$	28,000		$	17,000
Asset coverage per preferred share (j)		$	57,394		$	61,569		$	82,426		$	73,551		$	108,830

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at April 27,2004, reflects the deduction of the average sales load and offering costs of $0.72 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load and offering cost of $0.90 per share on 2,000,000 common shares sold to the public and no sales load or offering costs on 480,000 common shares sold to affiliates of RMR Advisors for $20 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A (8) to the financial statements, these amounts are subject to change to the extent 2008 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): The impact of the net increase in payments by affiliates is less than $0.005/share.
(g): Total returns for periods of less than one year are not annualized.
(h): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results.
(i): Annualized.
(j): Asset coverage per share equals net assets attributable to common shares plus the liquidation preference of the preferred shares divided by the total number of preferred shares outstanding at the end of the period.

See notes to financial statements.

RMR Hospitality and Real Estate Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Hospitality and Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on January 27, 2004, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a diversified closed-end management investment company. The Fund had no operations until April 27, 2004, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

(5) Fair Value Measurements

the investment. FAS 157 established a three tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk; for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized broker quotes, company financial information and other market indicators to value the securities whose prices were not readily available.

The following is a summary of the inputs used as of June 30, 2008, in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	62,301,234
Level 2 – Other significant observable inputs		280,000
Level 3 – Significant unobservable inputs		1,184,000

Total	$	63,765,234

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:

	Investments in Securities Characterized as Level 3
Balance as of 12/31/07	$	1,592,000
Accrued discounts/premiums		—
Realized gain/loss and change in unrealized appreciation/depreciation		(408,000	)
Net purchases/sales		—
Net transfers in and/or out of Level 3		—

Balance, as of 06/30/08	$	1,184,000

Net change in unrealized appreciation/depreciation from investments still held as of 06/30/08	$	(408,000	)

(6) Securities Transactions and Investment Income

(7) Taxes

Some foreign governments may subject the Fund's investment income and securities sales to withholding or other taxes. For the six months ended June 30, 2008, $210 of foreign taxes have been withheld from distributions to the Fund and recorded as a reduction of dividend income.

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On July 11, 2008, the Fund declared regular monthly distributions of $0.083 per common share payable in July, August and September 2008. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry-forwards, it is the policy of the Fund not to distribute such gains. Distributions to preferred shareholders are determined as described in Note D.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	75,544,308

Gross unrealized appreciation	$	3,372,742
Gross unrealized depreciation		(15,151,816	)

Net unrealized appreciation/(depreciation)	$	(11,779,074	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by hospitality and real estate companies and REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the hospitality and real estate industries due to economic, legal, regulatory, technological or other developments affecting the United States hospitality and real estate industries.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets from April 27, 2004 until April 27, 2009. The Fund incurred net advisory fees of $204,843 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $85,351 for the six months ended June 30, 2008.

services. Under the administration agreement, RMR Advisors is entitled to reimbursement of the cost of providing administrative services. The Fund reimbursed RMR Advisors for $46,512 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $6,388 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $5,612,914 and $5,182,518 respectively. Brokerage commissions on securities transactions amounted to $11,870 during the six months ended June 30, 2008.

Note D

Preferred Shares

The Fund's 1,120 outstanding Series Th auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the 1940 Act, of at least 200%, the preferred shares will be subject to redemption in an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 4.15% per annum as of June 30, 2008.

assurance that this or any other affiliate of the Fund's lead broker-dealer would purchase Fund preferred shares in any future auction of Fund preferred securities or that the Fund will not have any auction for its preferred securities fail. If an auction of the Fund's preferred shares should fail, the dividend rate for the next succeeding dividend period is set according to a pre-determined formula, and the resulting rate may be higher than the rate which the Fund would otherwise pay as a result of a successful auction. In addition, if an auction fails, holders of the Fund's preferred shares may not be able to sell their preferred shares in that auction. If auctions for the Fund's preferred shares fail, or if market conditions generally frustrate the Fund's ability to enhance investment results through the investment of capital attributable to its outstanding preferred shares, such factors may necessitate a change in the form and/or amount of investment leverage used by the Fund. The Fund has no current intention to change the form or degree of investment leverage that it uses. The use of alternative forms of leverage and/or a reduction in the degree of investment leverage used by the Fund in its investment program could result in reduced investment returns for common shareholders as compared to the returns that historically have been achieved by the Fund through the use of preferred share leverage in favorable market conditions. The Fund proactively manages compliance with asset coverage and other financial ratio requirements applicable to the preferred shares. In order to facilitate compliance with such requirements, and without further notice of its intention to do so, the Fund may from time to time purchase or otherwise acquire its outstanding preferred shares in the open market, in other nondiscriminatory secondary market transactions, pursuant to tender offers or other offers to repurchase preferred shares, or in other permissible purchase transactions, and also may from time to time call or redeem preferred shares in accordance with their terms..

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal			Votes for		Votes withheld		Votes abstained
Common and Preferred Shares
	Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting.		1,984,910		213,309		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

Note F

Litigation and Legal Fees

The Fund had recently been involved in litigation with its shareholder, Bulldog Investors General Partnership. The purpose of this litigation was to enforce provisions of the Fund's declaration of trust which generally limits ownership of the Fund to not more than 9.8% of the Fund's outstanding shares. The parties to this litigation entered into a settlement agreement in June 2008, and on July 1, 2008 the court granted the parties' joint motion to dismiss this litigation, effectively ending the litigation. During the six month period ended June 30, 2008, the Fund incurred approximately $401,133 of expenses in connection with the Bulldog litigation and related matters.

RMR F.I.R.E. Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Financial Services Industry Fundamentals. The financial markets are in disarray. The Fed has engaged in various activities to provide support to these markets. For example, since the beginning of the year, it has lowered the federal funds rate 225 basis points to 2%, injected liquidity into the market by introducing three new lending facilities and orchestrated the rescue of Bear Stearns in mid March. Equity markets recovered in April partly because market participants believed that the Fed would serve as a backstop for financial institutions. Inflation, however, continued to remove billions of dollars from the economy because of higher food and gas prices; it appears that the anticipated boost to the economy from the government's recent federal income tax rebate program instead went mostly to pay for the higher cost of living.

The housing market continued to deteriorate in the first half of the year despite the Fed's efforts to inject liquidity into the financial markets and the government's tax rebates to the boost consumer spending. Banks with exposure to the housing market in the form of mortgage backed securities and other derivatives have been plagued with write-downs because the values of these securities have continued to decline. Financial Industry capital adequacy ratios have also deteriorated, forcing banks to raise expensive capital to shore up their balance sheets. In an effort to preserve capital, banks have been reluctant to lend, adding more downward pressure to an already weak economy.

Real Estate Industry Fundamentals. Despite a slowing economy and negative sentiment regarding the direction of the financial markets, real estate fundamentals remained relatively stable during the first half of 2008. Occupancy levels held up and rents generally continued to increase, albeit at a slower pace. Property sales, however, slowed substantially as a result of tighter lending standards and wide differences between buyers and sellers regarding valuations. With limited transactions taking place, it is hard to estimate how much commercial property values have declined. Some estimates put the figure somewhere between negative 10% to negative 15%. What is clear, however, is that property values are no longer at levels seen in early 2007.

rescue of Bear Stearns. Concern about additional write-offs from financial institutions sent the REIT market, along with other financial services companies, into negative territory during the month of June. REITs were down 11% in June and finished the first half of the year down 3.5%. Despite the volatility, REIT dedicated funds saw $3 billion of inflows during the first six months of the year, an encouraging sign after outflows of more than $9 billion from the period March to December 2007.

Fund Strategies, Techniques and Performance

Our investment objective is to provide high total returns to our common shareholders through a combination of capital appreciation and current income. There can be no assurance that we will achieve our investment objective.

During the six months ended June 30, 2008, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV), was negative 16.1%. During the same period, the S&P 500 Financial Sector Index (an unmanaged index of financial services common stocks) total return was negative 29.7%, the total return for the MSCI US REIT Total Return Index (an unmanaged index of REIT common stocks) was negative 3.5% and the Merrill Lynch REIT Preferred Index (an unmanaged index of REIT preferred stocks) was 7.6%. We believe these three indices are relevant to us because our investments, excluding short term investments, as of June 30, 2008, included 12% financial services stocks, 35% REIT common stocks and 43% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 common stocks) total return for the six months ended June 30, 2008 was negative 11.9%.

The fund's negative performance during the first half of the year was greatly influenced by our concentration in financial institutions, which were down significantly in the first half of the year. As a result of the Fund's erosion in NAV and income from its investments during 2007 and into 2008, the Fund's Board decided to lower the distribution rate to common shareholders in April in an effort to bring the distribution more in line with the Fund's earnings potential. Also, in August of 2008 we redeemed $3.5 million of our outstanding preferred shares in order to maintain leverage ratios in light of the decline in the Fund's NAV.

Recent Developments

Recently, credit markets, including the market for auction rate securities, such as the Fund's $12.5 million preferred shares, have experienced a liquidity crisis. To date, no auctions for the Fund's preferred shares have failed; however, an affiliate of the Fund's lead broker dealer for its preferred shares has purchased a significant amount of the Fund's preferred shares in the auctions. Please see the notes to the financial statements for more information.

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce expenses and otherwise enhance value for the Fund's shareholders. To this end, on August 26, 2008 we filed a preliminary joint proxy statement / prospectus with the Securities and Exchange Commission in connection with a proposed combination of the Fund with two other closed end RMR funds (RMR Real Estate Fund and RMR Hospitality and Real Estate Fund). Both are managed by our advisor, RMR Advisors, Inc. If the combinations receive all shareholder approvals that are required and proceed, all three funds will become one new fund, RMR Real Estate Income Fund, a newly formed Delaware statutory trust which also will be managed by our advisor. The process of seeking approvals and completing the proposed combinations may take several months, and the combinations may or may not occur for various reasons.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

August 27, 2008

RMR F.I.R.E. Fund
June 30, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008) *

Banks & Thrifts		6	%
Other Financial Services		6	%
Hospitality REITs		16	%
Apartment REITs		13	%
Healthcare REITs		12	%
Diversified REITs		11	%
Other REITs less than 10%		26	%
Other		10	%

	Total investments	100	%

Real Estate		78	%
Financial Services		12	%
Other		10	%

	Total investments	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's total net assets.


Company			Shares	Value

Common Stocks – 90.4%
Financial Services – 16.8%
	Banks – 9.4%
		Bank of America Corp.	10,000	$	238,700
		Fifth Third Bancorp	3,000		30,540
		First Commonwealth Financial Corp.	28,000		261,240
		First Horizon National Corp.	11,400		84,702
		Firstmerit Corp.	12,800		208,768
		FNB Corp.	28,500		335,730
		KeyCorp	7,000		76,860
		National City Corp.	12,400		59,148
		Regions Financial Corp.	4,000		43,640
		Trustco Bank Corp. NY	23,400		173,628
		U.S. Bancorp	1,000		27,890

					1,540,846

	Thrifts – 2.5%
		Beverly Hills Bancorp, Inc.	58		98
		Flagstar Bancorp, Inc.	25,000		75,250
		IndyMac Bancorp, Inc.	5,500		3,410
		New York Community Bancorp, Inc.	18,200		324,688

					403,446

	Other Financial Services – 4.9%
		American Capital Strategies, Ltd.	2,000		47,540
		Centerline Holding Co.	44,200		73,814
		Fannie Mae	13,000		253,630
		Friedman Billings Ramsey Group, Inc. *	54,000		81,000
		MCG Capital Corp.	32,000		127,360
		Visa, Inc. – Class A(a)	2,730		221,976

					805,320

Total Financial Services (Cost $8,472,515)					2,749,612

Real Estate – 66.0%
	Apartments – 7.0%
		AvalonBay Communities, Inc. *	3,000		267,480
		BRE Properties, Inc. *	4,000		173,120
		Home Properties, Inc. *	300		14,418
		Mid-America Apartment Communities, Inc. *	9,600		489,984
		UDR, Inc. *	9,000		201,420

					1,146,422

See notes to financial statements and notes to portfolio of investments.

	Diversified – 11.1%
		CapLease, Inc. *	15,000	$	112,350
		Colonial Properties Trust *	15,780		315,915
		Cousins Properties, Inc. *	6,900		159,390
		Duke Realty Corp. *	7,500		168,375
		DuPont Fabros Technology, Inc. *	2,500		46,600
		Franklin Street Properties Corp. *	3,000		37,920
		iStar Financial, Inc. *	16,000		211,360
		Lexington Corporate Properties Trust *	56,400		768,732
		National Retail Properties, Inc. *	143		2,989

					1,823,631

	Health Care – 15.2%
		Care Investment Trust, Inc. *	8,550		80,627
		HCP, Inc. *	8,850		281,518
		Health Care REIT, Inc. *	11,904		529,728
		Healthcare Realty Trust, Inc. *	18,500		439,745
		Medical Properties Trust, Inc. *	24,365		246,574
		Nationwide Health Properties, Inc. *	26,400		831,336
		OMEGA Healthcare Investors, Inc. *	5,000		83,250

					2,492,778

	Hospitality – 5.5%
		Ashford Hospitality Trust, Inc. *	51,000		235,620
		DiamondRock Hospitality Co. *	14,000		152,460
		FelCor Lodging Trust, Inc. *	14,359		150,770
		Host Hotels & Resorts, Inc. *	10,000		136,500
		LaSalle Hotel Properties *	5,400		135,702
		Sunstone Hotel Investors, Inc. *	5,000		83,000

					894,052

	Industrial – 7.0%
		DCT Industrial Trust, Inc. *	5,200		43,056
		First Industrial Realty Trust, Inc. *	40,200		1,104,294

					1,147,350

Manufactured Homes – 3.0%
	Sun Communities, Inc. *		27,000		492,210

See notes to financial statements and notes to portfolio of investments.

	Mortgage – 4.9%
		Alesco Financial, Inc. *	142,400	$	284,800
		Anthracite Capital, Inc. *	15,000		105,600
		Gramercy Capital Corp. *	14,394		166,826
		JER Investors Trust, Inc. *	10,000		63,000
		Newcastle Investment Corp. *	26,500		185,765

					805,991

	Office – 6.3%
		BioMed Realty Trust, Inc. *	7,000		171,710
		Boston Properties, Inc. *	2,000		180,440
		Brookfield Properties Corp.	5,000		88,950
		Parkway Properties, Inc. *	300		10,119
		SL Green Realty Corp. *	7,000		579,040

					1,030,259

	Retail – 4.3%
		CBL & Associates Properties, Inc. *	3,000		68,520
		Developers Diversified Realty Corp. *	3,000		104,130
		Equity One, Inc. *	3,000		61,650
		Glimcher Realty Trust *	19,300		215,774
		Realty Income Corp. *	200		4,552
		Simon Property Group, Inc. *	2,000		179,780
		Tanger Factory Outlet Centers, Inc. *	2,000		71,860

					706,266

	Specialty – 1.0%
		Getty Realty Corp. *	4,000		57,640
		Resource Capital Corp. *	15,588		112,390

					170,030

	Storage – 0.7%
		U-Store-It Trust *	8,900		106,355

Total Real Estate (Cost $16,533,329)					10,815,344

	Other – 7.6%
		Abingdon Investment, Ltd. (b)(c)	100,000		592,000
		Iowa Telecommunication Services, Inc.	37,500		660,375

Total Other (Cost $1,631,150)					1,252,375

Total Common Stocks (Cost $26,636,994)					14,817,331

See notes to financial statements and notes to portfolio of investments.

Preferred Stocks – 85.9%
Real Estate – 80.7%
	Apartments – 17.4%
		Apartment Investment & Management Co., Series U *	32,500	$	755,625
		Apartment Investment & Management Co., Series V *	27,700		631,560
		Apartment Investment & Management Co., Series Y *	65,000		1,467,700

					2,854,885

	Diversified – 10.4%
		Cousins Properties, Inc., Series B *	20,000		435,600
		Digital Realty Trust, Inc., Series A *	20,000		461,600
		Duke Realty Corp., Series O *	4,000		95,480
		LBA Realty LLC, Series B *	45,000		703,125

					1,695,805

	Health Care – 6.6%
		Health Care REIT, Inc., Series F *	26,900		629,460
		OMEGA Healthcare Investors Inc., Series D *	19,000		456,000

					1,085,460

	Hospitality – 24.2%
		Ashford Hospitality Trust, Series D *	32,000		567,040
		Eagle Hospitality Properties Trust, Inc., Series A * (c)	14,000		140,000
		Entertainment Properties Trust, Series B *	40,000		839,600
		FelCor Lodging Trust, Inc., Series C *	64,000		1,238,400
		Grace Acquisition I, Inc., Series B * (c)	50,000		500,000
		Host Marriott Corp., Series E *	10,000		250,000
		Strategic Hotels & Resorts, Inc., Series A *	10,000		178,000
		Strategic Hotels & Resorts, Inc., Series B *	13,700		246,600

					3,959,640

	Manufactured Homes – 0.8%
		Hilltop Holdings, Inc., Series A	6,900		131,100

	Mortgage – 5.9%
		Anthracite Capital, Inc., Series D *	6,000		85,200
		Gramercy Capital Corp., Series A *	20,000		349,800
		HomeBanc Corp., Series A *	10,000		100
		MFA Mortgage Investments, Inc., Series A *	13,800		274,758
		RAIT Investment Trust, Series B *	20,300		263,900

					973,758

	Office – 4.7%
		Alexandria Real Estate Equities, Inc., Series C *	31,600		777,360

See notes to financial statements and notes to portfolio of investments.

	Retail – 10.7%
		CBL & Associates Properties, Inc., Series D *	10,000	$	204,300
		Glimcher Realty Trust, Series F *	26,500		529,735
		Glimcher Realty Trust, Series G *	41,000		674,450
		Taubman Centers, Inc., Series G *	15,000		351,000

					1,759,485

Total Real Estate (Cost $16,810,622)					13,237,493

	Financial Services – 5.2%
		Corts-UNUM Provident Financial Trust	38,000		847,780

Total Financial Services (Cost $982,300)					847,780

Total Preferred Stocks (Cost $17,792,922)					14,085,273

Other Investment Companies – 12.7%
		Alpine Total Dynamic Dividend Fund	29,960		445,805
		Cohen & Steers Premium Income Realty Fund, Inc.	13,350		200,784
		Cohen & Steers REIT and Preferred Income Fund, Inc.	8,000		152,800
		Cornerstone Strategic Value Fund, Inc.	32,528		177,278
		Eaton Vance Enhanced Equity Income Fund II	13,100		224,796
		LMP Real Estate Income Fund, Inc.	12,411		189,888
		Neuberger Berman Real Estate Securities Income Fund, Inc.	45,507		425,490
		The Zweig Total Return Fund, Inc.	60,850		268,957

Total Other Investment Companies (Cost $2,878,562)					2,085,798

Short-Term Investments – 0.7%
	Other Investment Companies – 0.7%
		Dreyfus Cash Management, Institutional Shares, 2.66% (d) (Cost $118,450)	118,450		118,450

Total Investments – 189.7% (Cost $47,426,928)					31,106,852

Other assets less liabilities – 7.9%					1,290,686
Preferred Shares, at liquidation preference – (97.6)%					(16,000,000	)

Net Assets applicable to common shareholders – 100%				$	16,397,538

Notes to Portfolio of Investments

*: Real Estate Investment Trust, or REIT.
(a): As of June 30, 2008, this security had not paid a distribution.
(b): Rule 144A securities. Securities restricted for resale to Qualified Institutional Buyers (3.6% of net assets).
(c): As of June 30, 2008, the Fund held securities fair valued in accordance with policies adopted by the board of trustees aggregating $1,232,000 and 4.0% of market value.
(d): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

RMR F.I.R.E. Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $47,426,928)		$	31,106,852
	Cash			316
	Receivable for securities sold			997,715
	Dividends and interest receivable			375,464
	Other assets			4,674

		Total assets		32,485,021

Liabilities
	Advisory fee payable			17,050
	Distributions payable – preferred shares			12,819
	Accrued expenses and other liabilities			57,614

		Total liabilities		87,483

Preferred shares, at liquidation preference
	Auction preferred shares, Series W; $.001 par value per share; 640 shares issued and outstanding at $25,000 per share liquidation preference			16,000,000

Net assets attributable to common shares			$	16,397,538

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 1,484,000 shares issued and outstanding		$	1,484
	Additional paid-in capital			35,173,277
	Undistributed net investment income			219,668
	Accumulated net realized loss on investments			(2,676,815	)
	Net unrealized depreciation on investments			(16,320,076	)

Net assets attributable to common shares			$	16,397,538

Net asset value per share attributable to common shares (based on 1,484,000 common shares outstanding)			$	11.05

See notes to financial statements.

RMR F.I.R.E. Fund

Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due, net of foreign taxes withheld of $210)			$	1,604,608
	Interest				7,443

		Total investment income			1,612,051

Expenses
	Advisory				151,605
	Audit and legal				170,694
	Administrative				45,022
	Custodian				26,152
	Preferred share remarketing				25,233
	Compliance and internal audit				17,344
	Shareholder reporting				13,494
	Trustees' fees and expenses				8,465
	Other				34,037

		Total expenses			492,046
	Less: expense waived by the Advisor				(44,590	)

		Net expenses			447,456

			Net investment income		1,164,595

Realized and unrealized loss on investments
	Net realized loss on investments				(989,085	)
	Net change in unrealized appreciation/(depreciation) on investments				(3,000,615	)

	Net realized and unrealized loss on investments				(3,989,700	)

	Distributions to preferred shareholders from net investment income				(345,144	)

		Net decrease in net assets attributable to common shares resulting from operations		$	(3,170,249	)

See notes to financial statements.

RMR F.I.R.E. Fund

Financial Statements – continued

Statements of Changes in Net Assets


				Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007

Increase (decrease) in net assets resulting from operations
	Net investment income			$	1,164,595		$	2,324,696
	Net increase from payments by affiliates				—			1,036
	Net realized loss on investments				(989,085	)		(1,594,800	)
	Net change in unrealized appreciation/(depreciation) on investments				(3,000,615	)		(13,570,100	)
	Distributions to preferred shareholders from:
		Net investment income			(345,144	)		(585,177	)
		Net realized gain on investments			—			(449,891	)

			Net decrease in net assets attributable to common shares resulting from operations		(3,170,249	)		(13,874,236	)

	Distributions to common shareholders from:
		Net investment income			(869,624	)		(1,469,630	)
		Net realized gain on investments			—			(1,130,338	)
Capital shares transactions
	Cost of preferred shares repurchased				(2,000,000	)		(2,000,000	)

		Net decrease from capital transactions			(2,000,000	)		(2,000,000	)
	Liquidation preference of preferred shares repurchased				2,000,000			2,000,000

		Total decrease in net assets attributable to common shares			(4,039,873	)		(16,474,204	)
Net assets attributable to common shares
	Beginning of period				20,437,411			36,911,615

	End of period (including undistributed net investment income of $219,668 and $269,841, respectively)			$	16,397,538		$	20,437,411

Common shares issued and repurchased
	Shares outstanding, beginning of period				1,484,000			1,484,000
		Shares issued			—			—

	Shares outstanding, end of period				1,484,000			1,484,000

See notes to financial statements.

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited			Year Ended December 31, 2007			Year Ended December 31, 2006			Year Ended December 31, 2005			For the Period November 22, 2004 (a) to December 31, 2004

Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	13.77		$	24.87		$	22.07		$	23.99		$	24.03	(c)

Income from Investment Operations
Net investment income (d)			.78	(e)		1.57			1.71			1.28			.10
Net realized and unrealized appreciation/(depreciation) on investments			(2.68	)(e)		(10.23	)		3.49			(1.01	)		.17
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(.23	)(e)		(.39	)		(.47	)		(.28	)		(.02	)
	Net realized gain on investments		—	(e)		(.30	)		(.18	)		(.15	)		—

Net increase (decrease) in net asset value from operations			(2.13	)		(9.35	)		4.55			(.16	)		.25
Less: Distributions to common shareholders from:
	Net investment income		(.59	)(e)		(.99	)		(1.27	)		(1.09	)		—
	Net realized gain on investments		—	(e)		(.76	)		(.48	)		(.67	)		—
Common share offering costs charged to capital			—			—			—			—			(.04	)
Preferred share offering costs charged to capital			—			—			—			—			(.25	)

Net asset value, end of period		$	11.05		$	13.77		$	24.87		$	22.07		$	23.99

Market price, beginning of period		$	12.80		$	22.20		$	18.99		$	24.05		$	25.00

Market price, end of period		$	9.68		$	12.80		$	22.20		$	18.99		$	24.05


Total Return (f)(g)
Total investment return based on:
	Market price (h)		(20.57	)%		(36.29	)%		27.44	%		(14.00	)%		(3.80	)%
	Net asset value (h)		(16.12	)%		(39.40	)%		21.54	%		(0.64	)%		(0.17	)%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of:
	Net investment income, before total preferred share distributions (d)		11.90	%(e)(i)		7.41	%		7.42	%		5.64	%		3.92	%(i)
	Total preferred share distributions		3.53	%(i)		3.30	%		2.78	%		1.88	%		0.58	%(i)
	Net investment income, net of preferred share distributions (d)		8.37	%(e)(i)		4.11	%		4.64	%		3.76	%		3.34	%(i)
	Expenses, net of fee waivers		4.57	%(i)		2.68	%		2.39	%		2.63	%		3.45	%(i)
	Expenses, before fee waivers		5.03	%(i)		3.09	%		2.78	%		3.03	%		3.73	%(i)
Portfolio Turnover Rate			7.22	%		63.84	%		59.48	%		64.96	%		0.00	%
Net assets attributable to common shares, end of period (000s)		$	16,398		$	20,437		$	36,912		$	32,745		$	35,594
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	16,000		$	18,000		$	20,000		$	20,000		$	20,000
Asset coverage per preferred share(j)		$	50,621		$	53,385		$	71,140		$	65,931		$	69,493

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at November 22, 2004, reflects the deduction of the average sales load and offering costs of $0.97 per share paid by the holders of common share from the $25.00 offering price. We paid a sales load and offering cost of $1.125 per share on 1,280,000 common shares sold to the public and no sales load or offering costs on 200,000 common shares sold to affiliates of RMR Advisors for $25 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A (8) to the financial statements, these amounts are subject to change to the extent 2008 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): Total returns for periods of less than one year are not annualized.
(g): The impact of the net increase in payments by affiliates is less than $0.005/share.
(h): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(i): Annualized.
(j): Asset coverage per share equals net assets attributable to common shares plus the liquidation preference of the preferred shares divided by the total number of preferred shares outstanding at the end of the period.

See notes to financials statements.

RMR F.I.R.E. Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR F.I.R.E. Fund, or the Fund, was organized as a Massachusetts business trust on August 6, 2004, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a diversified closed-end management investment company. The Fund had no operations until November 22, 2004, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

Investment securities of the Fund are valued at the latest sales price whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of closing bid and ask prices on that day. Securities traded primarily on the NASDAQ Stock Market, or NASDAQ, are normally valued by the Fund at the NASDAQ Official Closing Price, or NOCP, provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., eastern time, unless that price is outside the range of the "inside" bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Some fixed income securities may be valued using pricing provided by a pricing service. Any of the Fund's securities which are not readily marketable, which are not traded or which have other characteristics of illiquidity are valued by the Fund at fair value as determined in good faith under the supervision of the Fund's board of trustees. Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same type outstanding. Short term debt securities with less than 60 days until maturity may be valued at cost plus interest accrued, which approximates market value.

(5) Fair Value Measurements

the investment. FAS 157 established a three tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk; for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three tier hierarchy of inputs is summarized in the three broad levels listed below.

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized broker quotes, company financial information and other market indicators to value the securities whose prices were not readily available.

The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	29,874,852
Level 2 – Other significant observable inputs		640,000
Level 3 – Significant unobservable inputs		592,000

Total	$	31,106,852

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:

	Investments in Securities Characterized as Level 3
Balance as of 12/31/07	$	796,000
Accrued discounts/premiums		—
Realized gain/loss and change in unrealized appreciation/depreciation		(204,000	)
Net purchases/sales		—
Net transfers in and/or out of Level 3		—

Balance, as of 06/30/08	$	592,000

Net change in unrealized appreciation/depreciation from investments still held as of 06/30/08	$	(204,000	)

(6) Securities Transactions and Investment Income

(7) Taxes

Some foreign governments may subject the Fund's investment income and securities sales to withholding or other taxes. For the six months ended June 30, 2008, $210 of foreign taxes has been withheld from distributions to the Fund and has been recorded as a reduction of dividend income

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On July 11, 2008, the Fund declared regular monthly distributions of $.098 per common share payable in July, August and September 2008. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry-forwards, it is the policy of the Fund not to distribute such gains. Distributions to preferred shareholders are determined as described in Note D.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	47,426,928

Gross unrealized appreciation	$	440,098
Gross unrealized depreciation		(16,760,174	)

Net unrealized appreciation/(depreciation)	$	(16,320,076	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares and preferred shares issued by F.I.R.E. companies. F.I.R.E. is a commonly used acronym for the combined financial services, insurance and real estate companies. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the F.I.R.E. industries due to economic, legal, regulatory, technological or other developments affecting the United States F.I.R.E. industries.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets from November 22, 2004, until November 22, 2009. The Fund incurred net advisory fees of $151,605 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $44,590 for the six months ended June 30, 2008.

Trust Company, or State Street, to perform substantially all fund accounting and other administrative services. Under the administration agreement, RMR Advisors is entitled to reimbursement of the cost of providing administrative services. The Fund reimbursed RMR Advisors for $45,022 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

Each trustee who is not a director, officer or employee of RMR Advisors and who is not an "interested person" of the Fund as defined under the 1940 Act is considered to be a "disinterested trustee". Disinterested trustees are each paid by the Fund an annual fee plus attendance fees for board and committee meetings. The Fund incurred $8,465 of trustee fees and expenses during the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $7,281 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $2,554,268 and $5,307,393 respectively. Brokerage commissions on securities transactions amounted to $6,083 during the six months ended June 30, 2008.

Note D

Preferred Shares

In December 2004, the Fund issued 800 Series W auction preferred shares with a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. On December 27, 2007 and January 17, 2008, the Fund redeemed a total of 160 preferred shares with a liquidation preference of $4,000,000. The Fund has further redeemed 40, 40 and 60 preferred shares on August 5, 2008, August 12, 2008 and August 19, 2008, respectively, with a total liquidation preference of $3,500,000. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the 1940 Act, of at least 200%, the preferred shares will be subject to redemption in an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 4.12% per annum as of June 30, 2008.

To date, no auctions for preferred securities of the Fund have failed to attract sufficient clearing bids. However, an affiliate of the Fund's lead broker-dealer for its preferred securities has purchased a significant amount of the Fund's preferred securities in the auctions. If this affiliate of the Fund's lead broker-dealer had not been supporting the Fund's auctions, the auctions likely would have failed and holders of the Fund's preferred shares would not have been able to sell their preferred shares in the auctions. There can be no assurance that this or any other affiliate of the Fund's lead broker-dealer would purchase Fund preferred shares in any future auction of Fund preferred securities or that the Fund will not have any auction for its preferred securities fail. If an auction of the Fund's preferred shares should fail, the dividend rate for the next succeeding dividend period is set according to a pre-determined formula, and the resulting rate may be higher than the rate which the Fund would otherwise pay as a result of a successful auction. In addition, if an auction fails, holders of the Fund's preferred shares may not be able to sell their preferred shares in that auction. If auctions for the Fund's preferred shares fail, or if market conditions generally frustrate the Fund's ability to enhance investment results through the investment of capital attributable to its outstanding preferred shares, such factors may necessitate a change in the form and/or amount of investment leverage used by the Fund. The Fund has no current intention to change the form or degree of investment leverage that it uses. The use of alternative forms of leverage and/or a reduction in the degree of investment leverage used by the Fund in its investment program could result in reduced investment returns for common shareholders as compared to the returns that historically have been achieved by the Fund through the use of preferred share leverage in favorable market conditions. The Fund proactively manages compliance with asset coverage and other financial ratio requirements applicable to the preferred shares. In order to facilitate compliance with such requirements, and without further notice of its intention to do so, the Fund may from time to time purchase or otherwise acquire its outstanding preferred shares in the open market, in other nondiscriminatory secondary market transactions, pursuant to tender offers or other offers to repurchase preferred shares, or in other permissible purchase transactions, and also may from time to time call or redeem preferred shares in accordance with their terms.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal			Votes for		Votes withheld		Votes abstained
Common and Preferred Shares
	Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting.		1,338,319		54,250		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

RMR Preferred Dividend Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Preferred Securities Market Overview. The issuance of non-REIT preferred securities during the first half of 2008 continued to be strong, particularly from financial institutions, as banks continued to improve their capital bases. This heavy issuance by the larger financial companies served to depress secondary market prices and precluded REITs from issuing preferred securities. Nevertheless, the REIT Preferred Index ended the first half of 2008 up 7.6%, outperforming the broader market indices.

Fund Strategies, Techniques and Performance

Our primary investment objective is to provide our common shareholders high current income. Our secondary investment objective is capital appreciation. There can be no assurance that we will achieve our investment objectives.

During the six months ended June 30, 2008, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV), was negative 6.4%. During that same period, the total return for the Merrill Lynch REIT Preferred Index (an unmanaged index of REIT preferred stocks) was 7.6%. We believe this index is relevant to us because our investments as of June 30, 2008, excluding short term investments, included 73% REIT preferred stocks. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 Stocks) total return for the six months ended June 30, 2008 was negative 11.9%.

The fund's negative performance during the first half of the year was greatly influenced by our concentration in the preferred securities of hotel REITs. This subsector witnessed a rapid deterioration in operating fundamentals in the first half of the year because of the slowdown in the U.S. economy and the expectation of its continuation. As a result of the Fund's erosion in NAV and income from its investments during 2007 and into 2008, the Fund's board of trustees decided to lower the distribution rate to common shareholders in April in an effort to bring the distribution more in line with the Fund's earnings potential. Also, in August we redeemed $5 million of our outstanding preferred shares because of the decline in the Fund's NAV.

Recent Developments

Recently, credit markets, including the market for auction rate securities such as the Fund's $17.5 million of preferred shares, have experienced a liquidity crisis. To date, no auctions for the Fund's preferred shares have failed; however, an affiliate of the Fund's lead broker dealer for its preferred shares has purchased a significant amount of the Fund's preferred shares in the auctions. Please see the notes to the financial statements for more information.

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce expenses and otherwise enhance value for the Fund's shareholders. These potential actions include combining the Fund with one or more other RMR closed end funds that have similar investment programs.

Thank you for your continued support. For more information, please view our website at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President
August 27, 2008

RMR Preferred Dividend Fund
June 30, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008)*

Hospitality real estate		28	%
Office real estate		13	%
Diversified real estate		9	%
Other, less than 10%		50	%

	Total investments	100	%

REITs		75	%
Other		25	%

	Total investments	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

RMR Preferred Dividend Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Preferred Stocks – 156.8% Real Estate Investment Trusts – 137.0%
	Apartments – 14.3%
		Apartment Investment & Management Co., Series G	56,400	$	1,398,720
		Apartment Investment & Management Co., Series T	10,000		232,500
		Associated Estates Realty Corp., Series B	39,800		923,360
		Mid-America Apartment Communities, Inc., Series H	41,400		989,046

					3,543,626

	Diversified – 15.4%
		Colonial Properties Trust, Series D	10,000		235,000
		Cousins Properties, Inc., Series B	17,000		370,260
		Digital Realty Trust, Inc., Series A	56,200		1,297,096
		Duke Realty Corp., Series O	4,000		95,480
		LBA Realty LLC, Series B	25,000		390,625
		Lexington Realty Trust, Series B	69,000		1,428,300

					3,816,761

	Health Care – 4.6%
		LTC Properties, Inc., Series F	4,000		92,280
		OMEGA Healthcare Investors Inc., Series D	43,200		1,036,800

					1,129,080

	Hospitality – 53.2%
		Ashford Hospitality Trust, Series A	58,000		1,022,540
		Ashford Hospitality Trust, Series D	7,200		127,584
		Eagle Hospitality Properties Trust, Inc., Series A (a)	95,000		950,000
		Entertainment Properties Trust, Series B	9,100		191,009
		Entertainment Properties Trust, Series D	30,000		579,300
		FelCor Lodging Trust, Inc., Series C	167,400		3,239,190
		Grace Acquisition I, Inc., Series B (a)	83,800		838,000
		Grace Acquisition I, Inc., Series C (a)	18,900		189,000
		Hersha Hospitality Trust, Series A	99,500		2,049,700
		Host Marriott Corp., Series E	15,000		375,000
		LaSalle Hotel Properties, Series E	70,000		1,463,000
		Strategic Hotels & Resorts, Inc., Series A	13,000		231,400
		Strategic Hotels & Resorts, Inc., Series B	39,100		703,800
		Strategic Hotels & Resorts, Inc., Series C	27,200		522,240
		Sunstone Hotel Investors, Inc., Series A	36,500		675,250

					13,157,013

	Mortgage – 13.3%
		Accredited Mortgage Loan REIT Trust, Series A	1,500		14,250
		American Home Mortgage Investment Corp., Series A	74,300		2,972
		Anthracite Capital, Inc., Series C	3,000		54,480
		Anthracite Capital, Inc., Series D	51,000		724,200
		Gramercy Capital Corp., Series A	20,000		349,800
		MFA Mortgage Investments, Inc., Series A	40,000		796,400
		Newcastle Investment Corp., Series B	28,000		413,000
		NorthStar Realty Finance Corp., Series A	20,000		280,000
		NorthStar Realty Finance Corp., Series B	36,000		475,200
		RAIT Financial Trust, Series C	12,700		177,800

					3,288,102

	Office – 23.9%
		Alexandria Real Estate Equities, Inc., Series C	60,000		1,476,000
		BioMed Realty Trust, Inc., Series A	35,000		700,000
		Corporate Office Properties Trust, Series G	5,900		139,181
		DRA CRT Acquisition Corp., Series A	40,060		671,005
		Kilroy Realty Corp., Series E	600		13,788
		Kilroy Realty Corp., Series F	44,100		971,302
		Parkway Properties, Inc., Series D	41,000		1,037,300
		SL Green Realty Corp., Series D	40,000		920,000

					5,928,576

See notes to financial statements and notes to portfolio of investments.


Company			Shares or Principal Amount		Value

Preferred Stocks – continued Real Estate Investment Trusts – continued
	Retail – 12.3%
		Cedar Shopping Centers, Inc., Series A		42,000	$	1,024,800
		Glimcher Realty Trust, Series F		30,000		599,700
		Glimcher Realty Trust, Series G		15,000		246,750
		Kimco Realty Corp., Series G		5,000		118,850
		Taubman Centers, Inc., Series G		45,000		1,053,000

						3,043,100

Total Real Estate Investment Trusts (Cost $44,168,292)						33,906,258

	Other – 19.8%
		Ford Motor Co., 6/15/43 Series		9,400		122,388
		General Motors Corp., 5/15/48 Series		26,100		324,423
		Great Atlantic & Pacific Tea Co., 8/01/39 Series		87,800		2,222,218
		Hilltop Holdings, Inc., Series A		97,200		1,846,800
		Red Lion Hotels Corp., 2/19/44 Series		15,925		394,940

Total Other (Cost $5,749,755)						4,910,769

Total Preferred Stocks (Cost $49,918,047)						38,817,027

Common Stocks – 9.4%
Real Estate Investment Trusts – 3.0%
	Diversified – 0.8%
		Colonial Properties Trust		9,800		196,196

	Health Care – 0.9%
		Care Investment Trust, Inc.		10,600		99,958
		Medical Properties Trust, Inc.		11,275		114,103

						214,061

	Mortgage – 1.1%
		Alesco Financial, Inc.		142,500		285,000

	Storage – 0.2%
		U-Store-It Trust		4,450		53,178

Total Real Estate Investment Trusts (Cost $1,967,837)						748,435

	Other – 6.4%
		Abingdon Investment, Ltd. (b)		150,000		888,000
		American Capital Strategies, Ltd.		10,700		254,339
		Iowa Telecommunication Services, Inc.		24,500		431,445

Total Other (Cost $2,462,395)						1,573,784

Total Common Stocks (Cost $4,430,232)						2,322,219

Debt Securities – 18.1%
		Ford Motor Co., 7.75%, 06/15/2043	$	2,210,000		1,160,250
		Ford Motor Co., 8.90%, 01/15/2032		557,000		356,480
		General Motors Corp., 8.375%, 07/15/2033		2,000,000		1,185,000
		Six Flags Operations, Inc., 12.25%, 07/15/2016		1,918,000		1,769,355

Total Debt Securities (Cost $5,840,942)						4,471,085

See notes to financial statements and notes to portfolio of investments.

Other Investment Companies – 4.3%
		Alpine Total Dynamic Dividend Fund	32,295	$	480,550
		Cornerstone Strategic Value Fund, Inc.	31,200		170,040
		LMP Real Estate Income Fund, Inc.	4,260		65,178
		Neuberger Berman Real Estate Securities Income Fund, Inc.	30,217		282,529
		The Zweig Total Return Fund, Inc.	17,750		78,455

Total Other Investment Companies (Cost $1,561,224)					1,076,752

Short-Term Investments – 0.8%
	Other Investment Companies – 0.8%
		Dreyfus Cash Management, Institutional Shares, 2.66% (c) (Cost $202,256)	202,256		202,256

Total Investments – 189.4% (Cost $61,952,701)					46,889,339

Other assets less liabilities – 1.5%					358,945
Preferred Shares, at liquidation preference – (90.9)%					(22,500,000	)

Net Assets applicable to common shareholders – 100%				$	24,748,284

Notes to Portfolio of Investments

(a): As of June 30, 2008, the Fund held securities fair valued in accordance with policies adopted by the board of trustees aggregating $2,865,000 and 6.1% of market value.
(b): Rule 144A securities. Securities restricted for resale to Qualified Institutional Buyers (10.7% of net assets).
(c): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements and notes to portfolio of investments.

RMR Preferred Dividend Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $61,952,701)		$	46,889,339
	Cash			211
	Dividends and interest receivable			510,226
	Other assets			3,697

		Total assets		47,403,473

Liabilities
	Distributions payable – preferred shares			35,001
	Advisory fee payable			12,078
	Accrued expenses and other liabilities			108,110

		Total liabilities		155,189
					��
Preferred shares, at liquidation preference
	Auction preferred shares, Series M; $.001 par value per share; 900 shares issued and outstanding at $25,000 per share liquidation preference			22,500,000

Net assets attributable to common shares			$	24,748,284

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 2,658,120 shares issued and outstanding		$	2,658
	Additional paid-in capital			48,894,295
	Distributions in excess of net investment income			(355,599	)
	Accumulated net realized loss on investment transactions			(8,729,708	)
	Net unrealized depreciation on investments			(15,063,362	)

Net assets attributable to common shares			$	24,748,284

Net asset value per share attributable to common shares (based on 2,658,120 common shares outstanding)			$	9.31

See notes to financial statements.

RMR Preferred Dividend Fund
Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due)			$	2,241,036
	Interest				347,434

		Total investment income			2,588,470

Expenses
	Advisory				211,460
	Audit and legal				175,960
	Administrative				45,022
	Preferred share remarketing				28,387
	Custodian				25,596
	Shareholder reporting				23,830
	Compliance and internal audit				17,344
	Trustees' fees and expenses				8,761
	Other				34,910

		Total expenses			571,270
	Less: expense waived by the Advisor				(136,827	)

		Net expenses			434,443

			Net investment income		2,154,027

Realized and unrealized loss on investments
	Net realized loss on investments				(2,303,462	)
	Net change in unrealized appreciation/(depreciation) on investments				(1,049,861	)

	Net realized and unrealized loss on investments				(3,353,323	)

	Distributions to preferred shareholders from net investment income				(476,019	)

		Net decrease in net assets attributable to common shares resulting from operations		$	(1,675,315	)

See notes to financial statements.

RMR Preferred Dividend Fund
Financial Statements – continued

Statements of Changes in Net Assets


				Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007

Increase (decrease) in net assets resulting from operations
	Net investment income			$	2,154,027		$	4,256,273
	Net realized loss on investments				(2,303,462	)		(6,417,769	)
	Net change in unrealized appreciation/(depreciation) on investments				(1,049,861	)		(13,284,067	)
	Distributions to preferred shareholders from:
		Net investment income			(476,019	)		(1,178,280	)
		Net realized gain on investments			—			(11,673	)

			Net decrease in net assets attributable to common shares resulting from operations		(1,675,315	)		(16,635,516	)

	Distributions to common shareholders from:
		Net investment income			(1,593,279	)		(3,518,321	)
		Net realized gain on investments			—			(46,460	)
		Return of capital			—			(1,170,113	)
Capital shares transactions
	Net proceeds from reinvestment of distributions				131,106			516,595

		Net increase from capital transactions			131,106			516,595

		Total decrease in net assets attributable to common shares			(3,137,488	)		(20,853,815	)
Net assets attributable to common shares
	Beginning of period				27,885,772			48,739,587

	End of period (including distributions in excess of net investment income of $355,599 and $440,328, respectively)			$	24,748,284		$	27,885,772

Common shares issued and repurchased
	Shares outstanding, beginning of period				2,646,538			2,613,188
		Shares issued			—			—
		Shares issued (reinvestment of distributions)			11,582			33,350

	Shares outstanding, end of period				2,658,120			2,646,538

See notes to financial statements.

RMR Preferred Dividend Fund
Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007			Year Ended December 31, 2006			For the Period May 25, 2005(a) to December 31, 2005

Per Common Share Operating Performance
Net asset value, beginning of period		$	10.54		$	18.65		$	17.53		$	19.09	(b)

Income from Investment Operations
Net investment income (c)(d)			.81	(e)		1.62			1.90			.93
Net realized and unrealized appreciation/(depreciation) on investments			(1.26	)(e)		(7.48	)		1.43			(1.22	)
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(.18	)(e)		(.45	)		(.35	)		(.14	)
	Net realized gain on investments		—	(e)		—	(f)		(.06	)		(.02	)

Net increase (decrease) in net asset value from operations			(.63	)		(6.31	)		2.92			(.45	)
Less: Distributions to common shareholders from:
	Net investment income		(.60	)(e)		(1.33	)		(1.55	)		(.77	)
	Net realized gain on investments		—	(e)		(.02	)		(.25	)		(.13	)
	Return of capital		—	(e)		(.45	)		—			—
Common share offering costs charged to capital			—			—			—			(.04	)
Preferred share offering costs charged to capital			—			—			—			(.17	)

Net asset value, end of period		$	9.31		$	10.54		$	18.65		$	17.53

Market price, beginning of period		$	11.80		$	20.75		$	16.35		$	20.00

Market price, end of period		$	9.01		$	11.80		$	20.75		$	16.35


Total Return (g)
Total investment return based on:
	Market price (h)		(16.92	)%		(35.90	)%		39.90	%		14.10	%
	Net asset value (h)		(6.37	)%		(35.94	)%		17.48	%		3.50	%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of:
	Net investment income, before total preferred share distributions (d)		15.74	%(e)(i)		10.40	%		10.47	%		8.22	%(i)
	Total preferred share distributions		3.48	%(i)		2.91	%		2.23	%		1.40	%(i)
	Net investment income, net of preferred share distributions (d)		12.26	%(e)(i)		7.49	%		8.24	%		6.82	%(i)
	Expenses, net of fee waivers		3.17	%(i)		1.88	%		1.45	%		1.54	%(i)
	Expenses, before fee waivers		4.17	%(i)		2.73	%		2.26	%		2.29	%(i)
Portfolio Turnover Rate			0.16	%		47.76	%		23.60	%		5.60	%
Net assets attributable to common shares, end of period (000s)		$	24,748		$	27,886		$	48,740		$	45,380
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	22,500		$	22,500		$	22,500		$	22,500
Asset coverage per preferred share (j)		$	52,498		$	55,984		$	79,156		$	75,422

(a): Commencement of operations.
(b): Net asset value at May 25, 2005, reflects the deduction of the average sales load and offering costs of $0.91 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load and offering cost of $0.94 per share on 2,237,500 common shares sold to the public and no sales load or offering costs on 67,500 common shares sold to affiliates of RMR Advisors for $20 per share.
(c): Based on average shares outstanding.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): As discussed in Note A (8) to the financial statements, these amounts are subject to change to the extent 2008 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(f): Amount is less than $.005/share
(g): Total returns for periods of less than one year are not annualized.
(h): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(i): Annualized.
(j): Asset coverage per share equals net assets attributable to common shares plus the liquidation preference of the preferred shares divided by the total number of preferred shares outstanding at the end of the period.

See notes to financial statements.

RMR Preferred Dividend Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Preferred Dividend Fund, or the Fund, was organized as a Massachusetts business trust on November 8, 2004, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a diversified closed end management investment company. The Fund had no operations until May 25, 2005, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

Investment securities of the Fund are valued at the latest sales price whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of closing bid and ask prices on that day. Securities traded primarily on the NASDAQ Stock Market, or NASDAQ, are normally valued by the Fund at the NASDAQ Official Closing Price, or NOCP, provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., eastern time, unless that price is outside the range of the "inside" bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Some fixed income securities may be valued using pricing provided by a pricing service. Any of the Fund's securities which are not readily marketable, which are not traded or which have other characteristics of illiquidity are valued by the Fund at fair value as determined in good faith under the supervision of the Fund's board of trustees. Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same type outstanding. Short term debt securities with less than 60 days until maturity may be valued at cost plus interest accrued, which approximates market value.

(5) Fair Value Measurements

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized broker quotes, company financial information and other market indicators to value the securities whose prices were not readily available.

The following is a summary of the inputs used as of June 30, 2008, in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	44,024,339
Level 2 – Other significant observable inputs		1,977,000
Level 3 – Significant unobservable inputs		888,000

Total	$	46,889,339

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:

	Investments in Securities Characterized as Level 3
Balance as of 12/31/07	$	1,194,000
Accrued discounts/premiums		—
Realized gain/loss and change in unrealized appreciation/depreciation		(306,000	)
Net purchases/sales		—
Net transfers in and/or out of Level 3		—

Balance, as of 06/30/08	$	888,000

Net change in unrealized appreciation/depreciation from investments still held as of 06/30/08	$	(306,000	)

(6) Securities Transactions and Investment Income

(7) Taxes

(8) Distributable Earnings

the issuers do not report their tax characterization until subsequent to year end. Final characterization of the Fund's 2008 distributions to shareholders is also dependent upon the magnitude or timing of the Fund's securities transactions prior to year end. Therefore it is likely that some portion of the Fund's 2008 investment income and distributions to shareholders will be recharacterized as long term capital gain and return of capital for financial statement and federal income tax purposes subsequent to year end and reflected accordingly in the Fund's year end financial statements.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	61,952,701

Gross unrealized appreciation	$	59,696
Gross unrealized depreciation		(15,123,058	)

Net unrealized appreciation/(depreciation)	$	(15,063,362	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in preferred securities issued by REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry due to economic, legal, regulatory, technological or other developments affecting the United States real estate industry.

(10) Common Shares

The Fund issued 11,582 common shares during the six months ended June 30, 2008 and 33,350 common shares during the year ended December 31, 2007, for a total consideration of $131,106 and $516,595 respectively, pursuant to its dividend reinvestment plan.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.55% of the Fund's average daily managed assets from May 25, 2005 until May 24, 2010. The Fund incurred net advisory fees of $74,633 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $136,827 for the six months ended June 30, 2008.

Trust Company, or State Street, to perform substantially all fund accounting and other administrative services. Under the administration agreement, RMR Advisors is entitled to reimbursement of the cost of providing administrative services. The Fund reimbursed RMR Advisors for $45,022 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

Each trustee who is not a director, officer or employee of RMR Advisors and who is not an "interested person" of the Fund as defined under the 1940 Act is considered to be a "disinterested trustee". Disinterested trustees are each paid by the Fund an annual fee plus attendance fees for board and committee meetings. The Fund incurred $8,761 of trustee fees and expenses during the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $6,227 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $100,000 and $78,214 respectively. Brokerage commissions on securities transactions amounted to $308 during the six months ended June 30, 2008.

Note D

Preferred Shares

In July 2005, the Fund issued 900 Series M auction preferred shares with a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. On August 15, 2008 and August 22, 2008, the Fund redeemed 40 and 160 preferred shares, respectively, with a total liquidation preference of $5,000,000. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the 1940 Act, of at least 200%, the preferred shares will be subject to redemption in an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 3.90% per annum as of June 30, 2008.

amount of the Fund's preferred securities in the auctions. If this affiliate of the Fund's lead broker-dealer had not been supporting the Fund's auctions, the auctions likely would have failed and holders of the Fund's preferred shares would not have been able to sell their preferred shares in the auctions. There can be no assurance that this or any other affiliate of the Fund's lead broker-dealer would purchase Fund preferred shares in any future auction of Fund preferred securities or that the Fund will not have any auction for its preferred securities fail. If an auction of the Fund's preferred shares should fail, the dividend rate for the next succeeding dividend period is set according to a pre-determined formula, and the resulting rate may be higher than the rate which the Fund would otherwise pay as a result of a successful auction. In addition, if an auction fails, holders of the Fund's preferred shares may not be able to sell their preferred shares in that auction. If auctions for the Fund's preferred shares fail, or if market conditions generally frustrate the Fund's ability to enhance investment results through the investment of capital attributable to its outstanding preferred shares, such factors may necessitate a change in the form and/or amount of investment leverage used by the Fund. The Fund has no current intention to change the form or degree of investment leverage that it uses. The use of alternative forms of leverage and/or a reduction in the degree of investment leverage used by the Fund in its investment program could result in reduced investment returns for common shareholders as compared to the returns that historically have been achieved by the Fund through the use of preferred share leverage in favorable market conditions. The Fund proactively manages compliance with asset coverage and other financial ratio requirements applicable to the preferred shares. In order to facilitate compliance with such requirements, and without further notice of its intention to do so, the Fund may from time to time purchase or otherwise acquire its outstanding preferred shares in the open market, in other nondiscriminatory secondary market transactions, pursuant to tender offers or other offers to repurchase preferred shares, or in other permissible purchase transactions, and also may from time to time call or redeem preferred shares in accordance with their terms.

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal			Votes for		Votes withheld		Votes abstained
Common and Preferred Shares
	Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting.		2,513,054		63,018		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

RMR Asia Pacific Real Estate Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Real Estate Industry Fundamentals. In 2008, we expect commercial real estate fundamentals in the Asia Pacific region to remain generally healthy due to limited new supply. Office market vacancy rates are expected to remain low in Hong Kong, Singapore and Tokyo. Although there may be some slowing in the second half of 2008 and early 2009 due to the declines in export industries, resilient national income growth in most countries, except for Japan, should lead to growing retail sales and rising rental values for retail property. The industrial real estate sector is robust due to the development of logistics networks in the emerging countries. Residential real estate prices are expected to increase in the longer term due to rising incomes and urbanization dynamics which is driving demand in China and India.

Economic growth for the remainder of 2008 is expected to remain strong relative to the rest of the world. For 2008, The International Monetary Fund expects 8.0% GDP growth for developing Asia and 1.5% for Japan. Rising inflation due to high food and energy prices and slowing exports may be short term risks to the rapid economic growth throughout the region.

Real estate companies in the region are generally conservatively financed. However, the credit tightening by lenders across the globe may be problematic for some Asia Pacific based real estate companies in 2008.

Real Estate Industry Technicals. We expect continued strong demand for real estate investments in the Asia Pacific region. High personal savings rates and attractive real estate yields are expected to lead to increasing values for real estate companies in the region, especially real estate companies that pay a regular dividend, such as REITs. With the exception of Australia, property yields in the region typically are 2-3% higher than long term government bond yields. The number of REITs in the region continues to grow, with several countries currently considering initiating REIT legislation, such as the Philippines, India and China.

Fund Strategies, Techniques and Performance

Our primary investment objective is capital appreciation. There can be no assurance that we will achieve our investment objective.

During the six months ended June 30, 2008, our total return on net asset value, or NAV, was negative 30.7%. During that same period, the total return for the EPRA NAREIT Asia Index (an unmanaged index of Asia Pacific real estate common stocks) was negative 24.2%. We believe this index is relevant to us because all our investments as of June 30, 2008, excluding short term investments, were in securities of real estate companies

in countries covered by this index. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 common stocks) total return for the six months ended June 30, 2008 was negative 11.8%.

Recent Developments

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce expenses and otherwise enhance value for the Fund's shareholders. These potential actions include combining the Fund with one or more other RMR closed end funds that have similar investment programs.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

August 27, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008)*

Diversified		57	%
Office		18	%
Hospitality		13	%
Others, less than 10%		10	%
Short term investments		2	%

	Total investments	100	%

Real Estate		98	%
Short term investments		2	%

	Total investments	100	%

Portfolio holdings by country (as of June 30, 2008)*

Hong Kong		36	%
Japan		33	%
Australia		16	%
Others, less than 10%		13	%
Short term investments		2	%

	Total	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

RMR Asia Pacific Real Estate Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Common Stocks – 94.4%
Australia – 15.8%
	Apartments – 1.0%
		Peet, Ltd.	124,040	$	247,335

	Diversified – 8.8%
		Abacus Property Group	285,000		314,197
		Charter Hall Group	345,000		348,924
		Dexus Property Group *	315,000		416,725
		FKP Property Group	49,000		230,172
		Mirvac Group *	106,000		300,786
		Valad Property Group	877,761		563,782

					2,174,586

	Office – 6.0%
		Commonwealth Property Office Fund *	655,000		775,475
		Cromwell Group	953,898		708,702

					1,484,177

Total Australia (Cost $5,529,498)					3,906,098

Hong Kong – 35.9%
	Diversified – 16.3%
		Agile Property Holdings, Ltd.	320,000		279,073
		China Overseas Land & Investment, Ltd.	292,000		461,373
		China Resources Land, Ltd.	336,000		465,395
		Hongkong Land Holdings, Ltd.	207,000		877,680
		Hysan Development Co., Ltd.	183,000		502,254
		Kerry Properties, Ltd.	45,500		238,959
		KWG Property Holding, Ltd.	433,000		310,982
		New World China Land, Ltd.	450,000		233,159
		Shun TAK Holdings, Ltd.	300,000		280,868
		The Wharf (Holdings), Ltd	92,000		385,238

					4,034,981

	Hospitality – 13.4%
		Regal Real Estate Investment Trust *	1,573,000		324,798
		Sun Hung Kai Properties, Ltd.	221,000		2,998,724

					3,323,522

	Office – 0.9%
		Champion Real Estate Investment Trust *	475,000		219,917

	Retail – 5.3%
		Hang Lung Properties, Ltd.	410,000		1,314,566

Total Hong Kong (Cost $9,482,179)					8,892,986

See notes to financial statements and notes to portfolio of investments.

Japan – 33.3%
	Diversified – 22.7%
		Aeon Mall Co., Ltd.	32,000	$	946,273
		Kenedix Realty Investment Corp. *	37		219,522
		Mitsubishi Estate Co., Ltd.	76,000		1,739,229
		Mitsui Fudosan Co., Ltd.	63,000		1,346,800
		Shoei Co., Ltd.	25,000		292,885
		Sumitomo Realty & Development Co., Ltd.	55,000		1,092,904

					5,637,613

	Office – 10.6%
		Japan Excellent, Inc. *	45		219,099
		Nippon Building Fund, Inc. *	56		659,227
		Nomura Real Estate Office Fund, Inc. *	24		180,591
		NTT Urban Development Corp.	665		870,509
		Orix REIT, Inc. *	30		182,229
		Tokyu REIT, Inc. *	63		512,021

					2,623,676

Total Japan (Cost $8,861,294)					8,261,289

Malaysia – 0.6%
	Diversified – 0.6%
		KLCC Property Holdings Berhad	191,000		158,996

Total Malaysia (Cost $175,892)					158,996

Philippines – 1.2%
	Diversified – 1.2%
		Filinvest Land, Inc.	8,000,000		124,736
		Megaworld Corp.	6,000,000		163,047

					287,783

Total Philippines (Cost $586,433)					287,783

Singapore – 7.6%
	Diversified – 7.6%
		Ascendas Real Estate Investment Trust *	352,000		571,769
		Capitaland, Ltd.	112,000		469,222
		CDL Hospitality Trusts *	216,000		279,416
		Singapore Land, Ltd.	26,000		119,055
		Suntec Real Estate Investment Trust *	230,000		229,907
		Yanlord Land Group, Ltd.	150,000		203,962

					1,873,331

Total Singapore (Cost $2,074,419)					1,873,331

Total Common Stocks (Cost $26,709,715)					23,380,483

See notes to financial statements and notes to portfolio of investments.

Warrants – 3.8%
India – 2.3%
		Ansal Properties & Infrastructure, Ltd., Macquarie Bank, Ltd., expiring 1/17/12 (a)	44,000	$	70,840
		DLF, Ltd., Macquarie Bank, Ltd., expiring 6/26/12 (a)	19,500		179,595
		Unitech, Ltd., Macquarie Bank, Ltd., expiring 6/24/08 (a)	83,000		330,340

Total India (Cost $1,187,188)					580,775

Taiwan – 1.5%
		Chong Hong Construction, Macquarie Bank, Ltd., expiring 5/13/08 (a)	87,000		220,980
		Farglary Land Development Co., Ltd.,Macquarie Bank, Ltd, expiring 1/17/12 (a)	45,000		140,400

Total Taiwan (Cost $434,569)					361,380

Total Warrants (Cost $1,621,757)					942,155

Short-Term Investments – 1.7%
	Other Investment Companies – 1.7%
		Dreyfus Cash Management, Institutional Shares, 2.66% (b) Cost $415,440)	415,440		415,440

Total Investments – 99.9% (Cost $28,746,912)					24,738,078

Other assets less liabilities – 0.1%					28,466

Net Assets – 100%				$	24,766,544

Notes to Portfolio of Investments

*: Company is organized as a real estate investment trust as defined by the laws of its country of domicile.
(a): As of June 30, 2008, this security had not paid a distribution.
(b): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

RMR Asia Pacific Real Estate Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $28,746,912)		$	24,738,078
	Cash			351
	Foreign currency, at value (cost $23,861)			23,854
	Dividends and interest receivable			150,355
	Other assets			122

		Total assets		24,912,760

Liabilities
	Advisory fee payable			16,449
	Payable for investment securities purchased			12
	Accrued expenses and other liabilities			129,755

		Total liabilities		146,216

Net assets			$	24,766,544

Composition of net assets
	$.001 par value per share; unlimited number of shares authorized, 1,755,000 shares issued and outstanding		$	1,755
	Additional paid-in capital			33,409,785
	Distributions in excess of net investment income			(2,682,542	)
	Accumulated net realized loss on investments and foreign currency transactions			(1,954,211	)
	Net unrealized depreciation on investments and foreign currency transactions			(4,008,243	)

Net assets			$	24,766,544

Net asset value per share (based on 1,755,000 common shares outstanding)			$	14.11

See notes to financial statements.

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due, net of foreign taxes withheld of $40,984)			$	408,073
	Interest				11,221

		Total investment income			419,294

Expenses
	Advisory				143,182
	Audit and legal				59,918
	Custodian				48,625
	Administrative				46,196
	Shareholder reporting				24,338
	Compliance and internal audit				17,344
	Trustees' fees and expenses				8,900
	Other				43,056

		Total expenses			391,559
	Less: expense waived by the Advisor				(35,796	)

		Net expenses			355,763

			Net investment income		63,531

Realized and unrealized loss on investments and foreign currency transactions
	Net realized loss on investments				(1,945,827	)
	Net realized loss on foreign currency transactions				(231	)
	Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions				(9,060,855	)

		Net decrease in net assets resulting from operations		$	(10,943,382	)

See notes to financial statements.

Statements of Changes in Net Assets


			Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31 2007

Increase (decrease) in net assets resulting from operations
	Net investment income		$	63,531		$	203,750
	Net realized gain (loss) on investments			(1,946,058	)		6,437,332
	Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions			(9,060,855	)		(1,965,895	)

		Net increase (decrease) in net assets resulting from operations		(10,943,382	)		4,675,187

	Distributions to common shareholders from:
		Net investment income		—			(6,911,460	)
		Net realized gain on investments		—			(3,565,890	)

		Total decrease in net assets		(10,943,382	)		(5,802,163	)
Net assets
	Beginning of period			35,709,926			41,512,089

	End of period (including distributions in excess of net investment income of $2,682,542 and $2,746,073, respectively)		$	24,766,544		$	35,709,926

Common shares issued and repurchased
	Shares outstanding, beginning of period			1,755,000			1,755,000
		Shares issued		—			—

	Shares outstanding, end of period			1,755,000			1,755,000

See notes to financial statements.

RMR Asia Pacific Real Estate Fund
Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited)			Year Ended December 31, 2007			For the Period May 25, 2006(a) to December 31, 2006

Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	20.35		$	23.65		$	19.08	(c)

Income from Investment Operations
Net investment income (d)			.04			.12			.21
Net realized and unrealized appreciation/(depreciation) on investments			(6.28	)		2.55			4.40

Net increase (decrease) in net asset value from operations			(6.24	)		2.67			4.61
Less: Distributions to common shareholders from:
	Net investment income		—			(3.94	)		—
	Net realized gain on investments		—			(2.03	)		—
Common share offering costs charged to capital			—			—			(.04	)

Net asset value, end of period		$	14.11		$	20.35		$	23.65

Market price, beginning of period		$	16.95		$	23.41		$	20.00

Market price, end of period		$	12.60		$	16.95		$	23.41


Total Return (e)
Total investment return based on:
	Market price (f)		(25.66	)%		(2.99	)%		17.05	%
	Net asset value (f)		(30.66	)%		11.80	%		23.95	%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of:
	Net investment income (d)		0.44	%(g)		0.45	%		1.64	%(g)
	Expenses, net of fee waivers		2.48	%(g)		1.78	%		2.25	%(g)
	Expenses, before fee waivers		2.73	%(g)		2.03	%		2.50	%(g)
Portfolio Turnover Rate			32.54	%		68.69	%		27.61	%
Net assets attributable to common shares, end of period (000s)		$	24,767		$	35,710		$	41,512

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at May 25, 2006, reflects the deduction of the average sales load and offering costs of $0.92 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load and offering cost of $0.94 per share on 1,710,000 shares sold to the public and no sales load or offering costs on 40,000 common shares sold to affiliates of the RMR Advisors for $20 per share.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): Total returns for periods of less than one year are not annualized.
(f): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results.
(g): Annualized.

See notes to financial statements.

RMR Asia Pacific Real Estate Fund

Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Asia Pacific Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on February 14, 2006, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a non-diversified closed-end management investment company. The Fund had no operations prior to May 25, 2006, other than matters relating to the Fund's establishment and registration of the Fund's common shares under the Securities Act of 1933.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

Investment securities of the Fund are valued at the latest sales price reflected on the consolidated tape of the exchange that reflects the principal market for such securities whenever that price is readily available on that day; securities for which no sales were reported on that day, unless otherwise noted, are valued at the average of the closing bid and ask prices on that day. Any of the Fund's securities which are not readily marketable, which are not traded or which have other characteristics of illiquidity are valued by the Fund at fair value as determined in good faith under the supervision of the Fund's board of trustees. Numerous factors may be considered when determining fair value of a security, including cost at date of purchase, type of security, the nature and duration of restrictions on disposition of the security and whether the issuer of the security being fair valued has other securities of the same type outstanding. Short-term debt securities with less than 60 days until maturity may be valued at cost plus interest accrued, which approximates market value.

Some foreign markets close before the close of customary trading sessions on the American Stock Exchange or AMEX (normally 4:00 p.m. eastern time). Occasionally, events occur after the principal foreign exchange on which the foreign securities trade has closed but before the AMEX closes and the Fund determines net asset value, or NAV, that could affect the value of the securities the Fund owns or cause their prices to be unreliable. If these events are expected to materially affect the Fund's NAV, the prices of such securities will be adjusted to reflect their estimated fair value as of the close of the AMEX, as determined in good faith under procedures established by the Fund's board of trustees.

(5) Fair Value Measurements

The Fund has adopted the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or FAS 157, effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market for the investment. FAS 157 established a three tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk; for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. When the S&P 500 Index fluctuates significantly from the previous day close, we believe that the closing price in the local market may no longer represent the fair value of foreign securities at the time of the U.S. market close. Accordingly, in such circumstances, we report holdings in such foreign securities at their fair values as determined by an independent security pricing service. The service uses a multi-factor model that includes such information as the issue's local closing price, relevant general and sector indices, currency fluctuations, depository receipts, and futures, as applicable. The model generates an adjustment factor for each security that is applied to the local closing price to adjust it for post closing events, resulting in the security's reported fair value.

The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	415,440
Level 2 – Other significant observable inputs		24,322,638
Level 3 – Significant unobservable inputs		—

Total	$	24,738,078

There were no investments in securities characterized as Level 3 as of December 31, 2007 or June 30, 2008.

(6) Securities Transactions and Investment Income

Securities transactions are recorded on a trade date basis. Dividend income is recorded on the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short-term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on the basis of identified cost.

(7) Taxes

Some Asia Pacific governments may subject the Fund's investment income and securities sales to withholding or other taxes. For the six months ended June 30, 2008, $40,984 of foreign taxes have been withheld from distributions to the Fund and recorded as a reduction of dividend income.

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to make distributions of its income at least annually in amounts at least equal to the amount necessary to maintain its status as a regulated investment company. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry-forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	28,746,912

Gross unrealized appreciation	$	1,240,212
Gross unrealized depreciation		(5,249,046	)

Net unrealized appreciation/(depreciation)	$	(4,008,834	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by Asia Pacific real estate companies and REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry or in the Asia Pacific region due to economic, legal, regulatory, technological or other developments affecting the Asia Pacific real estate industry and securities market.

(10) Foreign Securities Risk

As compared to U.S. securities, foreign securities may be issued by companies which provide less financial and other information, and which are subject to less developed and difficult to access legal systems, less stringent accounting, auditing and financial reporting standards or different governmental regulations. As compared to

U.S. securities markets, foreign securities markets may have different settlement procedures, may have higher transaction costs, may be conducted in a less regulated manner, are generally smaller and may be less liquid and more volatile than securities markets in the U.S. The value of foreign securities may also decline or be unstable because of political, social or economic events or instability outside of the U.S.

(11) Foreign Currency Transactions

The accounting records of the Fund are maintained in U.S. dollars. Portfolio securities and other assets and liabilities denominated in a foreign currency are translated daily into U.S. dollars at the prevailing rates of exchange. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the prevailing exchange rates on the respective transaction dates.

The Fund does not isolate the portion of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of investments. Such fluctuations are included in net realized and unrealized gain (loss) on investments. Net realized gain (loss) on foreign currency transactions represents net foreign currency gain (loss) from forward currency contracts, disposition of foreign currencies, currency gain (loss) realized between the trade and settlement dates on securities transactions, and the difference between the amount of dividends, interest and foreign withholding taxes recorded on the Fund's accounting records and the U.S. dollar equivalent amounts actually received or paid. Net unrealized foreign currency appreciation/(depreciation) arises from changes in the value of assets and liabilities, other than investments in securities, as a result of changes in exchange rates.

Note B

Advisory, Subadvisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors to provide the Fund with a continuous investment program, oversee the subadvisor and generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors is compensated at an annual rate of 1% of the Fund's average daily managed assets.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets from May 25, 2006 until May 25, 2011. The Fund incurred net advisory fees of $107,386 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $35,796 for the six months ended June 30, 2008.

RMR Advisors has entered into a subadvisory agreement with MacarthurCook Investment Managers Ltd., or MacarthurCook, to make day-to-day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors, and not the Fund, pays the subadvisor a monthly fee equal to an annual rate of 0.375% of the Fund's average daily managed assets. MacarthurCook has agreed to waive a portion of the fee payable by RMR Advisors such that until May 25, 2011, the fee payable will be equal to 0.25% of the Fund's average daily managed assets.

RMR Advisors also performs administrative functions for the Fund pursuant to an administration agreement with the Fund. RMR Advisors has entered into a subadministration agreement with State Street Bank and Trust Company, or State Street, to perform substantially all fund accounting and other administrative services. Under the administration agreement, RMR Advisors is entitled to reimbursement of the cost of

providing administrative services. The Fund reimbursed RMR Advisors for $46,196 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $10,865 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short-term securities) of $9,842,904 and $17,619,828 respectively. Brokerage commissions on securities transactions amounted to $47,995 during the six months ended June 30, 2008.

Note D

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal		Votes for		Votes withheld		Votes abstained
Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting.		1,480,071		39,471		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

Note E

Portfolio Management Changes

On July 17, 2008, Roberto Versace was appointed a co-portfolio manager for the Fund. Mr. Versace replaces Craig Turnbull who resigned from MacarthurCook on June 27, 2008. Craig Dunstan remains a co-portfolio manager for the Fund. Mr. Versace has been a Fund Manager at MacarthurCook since July 2007. From September 2005 to June 2007, Mr. Versace was employed by the global investment and advisory firm Babcock & Brown as part of its Global Real Estate Team. From September 2000 to June 2004, Mr. Versace was an analyst with Colonial First State Global Asset Management, the largest manager of Australian sourced funds.

RMR Asia Real Estate Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

Relevant Market Conditions

Real Estate Industry Fundamentals. In 2008, we expect commercial real estate fundamentals in the Asia region to remain generally healthy due to limited new supply. Office market vacancy rates are expected to remain low in Hong Kong, Singapore and Tokyo. Although there may be some slowing in the second half of 2008 and early 2009 due to decline in export industries, resilient national income growth in most countries, except for Japan, should lead to growing retail sales and rising rental values for retail property. The industrial real estate sector is robust due to the development of logistics networks in the emerging countries. Residential real estate prices are expected to increase in the longer term due to rising incomes and urbanization dynamics which is driving demand in China and India.

Economic growth in the remainder of 2008 is expected to remain strong relative to the rest of the world. For 2008, The International Monetary Fund expects 8.0% GDP growth for developing Asia and 1.5% for Japan. Rising inflation due to high food and energy prices and slowing exports may be short term risk to the rapid economic growth throughout the region.

Real estate companies in the region are generally conservatively financed. However, the credit tightening by lenders across the globe may be problematic for some Asia based real estate companies in 2008.

Real Estate Industry Technicals. We expect continued strong demand for real estate investments in the Asia region. High personal savings rates and attractive real estate yields are expected to lead to increasing values for real estate companies in the region, especially real estate companies that pay a regular dividend, such as REITs. Property yields in the region typically are 2-3% higher than long term government bond yields. The number of REITs in the region continues to grow, with several countries currently considering initiating REIT legislation, such as the Philippines, India and China.

Fund Strategies, Techniques and Performance

Our primary investment objective is capital appreciation. There can be no assurance that we will achieve our investment objective.

During the six months ended June 30, 2008, our total return on net asset value, or NAV, was negative 24.5%. During that same period, the total return for the EPRA NAREIT Asia Index (an unmanaged index of Asia Pacific real estate common stocks) was negative 24.2%. We believe this index is relevant to us because all our investments as of June 30, 2008, excluding short term investments, were in securities of real estate companies

Recent Developments

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce expenses and otherwise enhance value for the Fund's shareholders. These potential actions include combining the Fund with one or more other RMR closed end funds that have similar investment programs.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President

August 27, 2008

Portfolio holdings by sub-sector as a percentage of investments
(as of June 30, 2008)*

Diversified		69	%
Hospitality		11	%
Other, less than 10%		19	%
Short term investments		1	%

	Total investments	100	%

Real Estate		99	%
Short term investments		1	%

	Total investments	100	%

Portfolio holdings by country (as of June 30, 2008)*

Hong Kong		45	%
Japan		34	%
Singapore		11	%
Other, less than 10%		9	%
Short term investments		1	%

	Total	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

RMR Asia Real Estate Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Common Stocks – 95.0%
Hong Kong – 42.8%
	Diversified – 22.7%
		Agile Property Holdings, Ltd.	918,000	$	800,590
		China Overseas Land & Investment, Ltd.	600,000		948,027
		China Resources Land, Ltd.	1,015,000		1,405,880
		Henderson Land Development Co., Ltd.	104,000		648,228
		Hongkong Land Holdings, Ltd.	865,000		3,667,600
		Hysan Development Co., Ltd.	1,025,000		2,813,171
		Kerry Properties, Ltd.	195,000		1,024,111
		KWG Property Holding, Ltd.	1,060,000		761,294
		New World China Land, Ltd.	1,650,000		854,917
		Shun TAK Holdings, Ltd.	585,000		547,693
		The Wharf (Holdings), Ltd.	296,000		1,239,463

					14,710,974

	Hospitality – 14.5%
		Regal Real Estate Investment Trust *	2,166,000		447,242
		Sun Hung Kai Properties, Ltd.	659,000		8,941,896

					9,389,138

	Office – 1.2%
		Champion Real Estate Investment Trust *	1,735,000		803,277

	Retail – 4.4%
		Hang Lung Properties, Ltd.	880,000		2,821,508

Total Hong Kong (Cost $31,564,439)					27,724,897

Japan – 40.4%
	Diversified – 29.7%
		Aeon Mall Co., Ltd.	53,000		1,567,265
		Kenedix Realty Investment Corp. *	110		652,635
		Mitsubishi Estate Co., Ltd.	353,500		8,089,702
		Mitsui Fudosan Co., Ltd.	220,000		4,703,112
		Shoei Co., Ltd.	76,960		901,617
		Sumitomo Realty & Development Co., Ltd.	169,000		3,358,196

					19,272,527

See notes to financial statements and notes to portfolio of investments.

	Office – 10.7%
		Japan Excellent, Inc. *	120	$	584,263
		Nippon Building Fund, Inc. *	210		2,472,101
		Nomura Real Estate Office Fund, Inc. *	71		534,247
		NTT Urban Development Corp.	1,400		1,832,651
		Orix REIT, Inc. *	80		485,944
		Tokyu REIT, Inc. *	127		1,032,170

					6,941,376

Total Japan (Cost $35,694,917)					26,213,903

Malaysia – 0.8%
	Diversified – 0.8%
		KLCC Property Holdings Berhad	616,000		512,784
		SP Setia Berhad	9,000		8,098

					520,882

Total Malaysia (Cost $718,304)					520,882

Philippines – 1.3%
	Diversified – 1.3%
		Filinvest Land, Inc.	23,500,000		366,410
		Megaworld Corp.	17,963,000		488,136

					854,546

Total Philippines (Cost $2,595,327)					854,546

Singapore – 9.7%
	Diversified – 9.7%
		Allgreen Properties, Ltd.	742,000		539,914
		Ascendas Real Estate Investment Trust *	1,020,000		1,656,830
		Capitaland, Ltd.	330,000		1,382,529
		CDL Hospitality Trusts *	835,000		1,080,152
		Singapore Land, Ltd.	105,000		480,798
		Suntec Real Estate Investment Trust *	640,000		639,741
		Yanlord Land Group, Ltd.	390,000		530,300

					6,310,264

Total Singapore (Cost $7,385,867)					6,310,264

Total Common Stocks (Cost $77,958,854)					61,624,492

See notes to financial statements and notes to portfolio of investments.

Warrants – 3.5%
India – 2.0%
		Ansal Properties & Infrastructure, Ltd., Macquarie Bank, Ltd., expiring 1/17/12 (a)	93,000	$	149,730
		DLF, Ltd., Macquarie Bank, Ltd., expiring 6/26/12 (a)	48,000		442,080
		Unitech, Ltd., Macquarie Bank, Ltd., expiring 6/24/08 (a)	180,000		716,400

Total India (Cost $2,583,216)					1,308,210

Taiwan – 1.5%
		Chong Hong Construction, Macquarie Bank, Ltd., expiring 5/13/08 (a)	210,000		533,400
		Farglary Land Development Co., Ltd.,Macquarie Bank, Ltd, expiring 1/17/12 (a)	142,000		443,040

Total Taiwan (Cost $1,152,937)					976,440

Total Warrants (Cost $3,736,153)					2,284,650

Short-Term Investments – 1.5%
	Other Investment Companies – 1.5%
		Dreyfus Cash Management, Institutional Shares, 2.66% (b) (Cost $967,888)	967,888		967,888

Total Investments – 100.0% (Cost $82,662,895)					64,877,030

Other assets less liabilities – 0.0%					14,825

Net Assets – 100%				$	64,891,855

Notes to Portfolio of Investments

*: Company is organized as a real estate investment trust as defined by the laws of its country of domicile.
(a): As of June 30, 2008, this security had not paid a distribution.
(b): Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

RMR Asia Real Estate Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $82,662,895)		$	64,877,030
	Cash			437
	Foreign currency, at value (cost $82,254)			82,230
	Dividends and interest receivable			116,831
	Other assets			5,777

		Total assets		65,082,305

Liabilities
	Advisory fee payable			43,142
	Payable for investment securities purchased			41
	Accrued expenses and other liabilities			147,267

		Total liabilities		190,450

Net assets			$	64,891,855

Composition of net assets
	$.001 par value per share; unlimited number of shares authorized, 4,755,000 shares issued and outstanding		$	4,755
	Additional paid-in capital			90,630,245
	Distributions in excess of net investment income			(1,104,072	)
	Accumulated net realized loss on investments and foreign currency transactions			(6,854,495	)
	Net unrealized depreciation on investments and foreign currency transactions			(17,784,578	)

Net assets			$	64,891,855

Net asset value per share (based on 4,755,000 common shares outstanding)			$	13.65

See notes to financial statements.

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due, net of foreign taxes withheld of $32,320)			$	782,733
	Interest				14,542

		Total investment income			797,275

Expenses
	Advisory				371,789
	Custodian				84,182
	Audit and legal				60,575
	Administrative				45,030
	Shareholder reporting				22,836
	Compliance and internal audit				17,344
	Trustees' fees and expenses				8,900
	Other				36,391

		Total expenses			647,047
	Less: expense waived by the Advisor				(92,947	)

		Net expenses			554,100

			Net investment income		243,175

Realized and unrealized gain (loss) on investments and foreign currency transactions
	Net realized loss on investments				(6,020,364	)
	Net realized loss on foreign currency transactions				(2,446	)
	Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions				(15,339,959	)

		Net decrease in net assets resulting from operations		$	(21,119,594	)

See notes to financial statements.

Statements of Changes in Net Assets


			Six Months Ended June 30, 2008 (unaudited)			For the Period May 25, 2007(a) to December 31, 2007

Increase (decrease) in net assets resulting from operations
	Net investment income		$	243,175		$	166,556
	Net realized loss on investments			(6,022,810	)		(681,238	)
	Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions			(15,339,959	)		(2,444,619	)

		Net decrease in net assets resulting from operations		(21,119,594	)		(2,959,301	)

	Distributions to common shareholders from:
		Net investment income		—			(1,664,250	)
Capital shares transactions
	Net proceeds from sale of common shares			—			90,535,000

		Net increase from capital transactions		—			90,535,000

		Total increase (decrease) in net assets		(21,119,594	)		85,911,449
Net assets
	Beginning of period			86,011,449			100,000

	End of period (including distributions in excess of net investment income of $1,104,072 and $1,347,247, respectively)		$	64,891,855		$	86,011,449

Common shares issued and repurchased
	Shares outstanding, beginning of period			4,755,000			5,000
		Shares issued		—			4,750,000

	Shares outstanding, end of period			4,755,000			4,755,000

(a) Commencement of operations.
See notes to financial statements.

RMR Asia Real Estate Fund
Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited)			For the Period May 25, 2007(a) to December 31, 2007

Per Common Share Operating Performance
Net asset value, beginning of period		$	18.09		$	19.06	(c)

Income from Investment Operations
Net investment income (d)			.05			.04
Net realized and unrealized appreciation/(depreciation) on investments			(4.49	)		(.62	)

Net decrease in net asset value from operations			(4.44	)		(.58	)
Less: Distributions to common shareholders from:
	Net investment income		—			(.35	)
Common share offering costs charged to capital			—			(.04	)

Net asset value, end of period		$	13.65		$	18.09

Market price, beginning of period		$	15.07		$	20.00

Market price, end of period		$	11.66		$	15.07


Total Return (e)
Total investment return based on:
	Market price (f)		(22.63	)%		(22.91	)%
	Net asset value (f)		(24.54	)%		(3.24	)%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares of: (g)
	Net investment income (d)		0.65	%		0.32	%
	Expenses, net of fee waivers		1.49	%		1.40	%
	Expenses, before fee waivers		1.74	%		1.65	%
Portfolio Turnover Rate			27.85	%		16.99	%
Net assets attributable to common shares, end of period (000s)		$	64,892		$	86,011

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at May 25, 2007, reflects the deduction of the average sales load and offering costs of $0.94 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load of $0.90 per share on 4,750,000 common shares sold to the public.
(d): Amounts are net of expenses waived by RMR Advisors.
(e): Total returns for periods of less than one year are not annualized.
(f): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results. Total return would have been lower if RMR Advisors had not contractually waived a portion of its investment advisory fee.
(g): Annualized.

See notes to financial statements.

RMR Asia Real Estate Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Asia Real Estate Fund, or the Fund, was organized as a Massachusetts business trust on January 18, 2007, and is registered under the Investment Company Act of 1940, or the 1940 Act, as amended, as a non-diversified closed-end management investment company. The Fund had no operations prior to May 25, 2007, other than matters relating to the Fund's establishment, registration of the Fund's common shares under the Securities Act of 1933, and the sale of 5,000 common shares for $100,000 to RMR Advisors, Inc., or RMR Advisors. On May 25, 2007, the Fund sold 4,750,000 common shares in an initial public offering. Proceeds to the Fund were $90,535,000 after deducting underwriting commissions and $190,000 of offering expenses.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

(5) Fair Value Measurements

•: Level – quoted prices in active markets for identical investments
•: Level – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The valuation techniques used by the Fund to measure fair value during the six months ended June 30, 2008 maximized the use of observable inputs and minimized the use of unobservable inputs. When the S&P 500 Index fluctuates significantly from the previous day close, we believe that the closing price in the local market may no longer represent the fair value of foreign securities at the time of the U.S. market close. Accordingly, in such circumstances, we report holdings in such foreign securities at their fair values as determined by an independent security pricing service. The service uses a multi-factor model that includes such information as the issue's local closing price, relevant general and sector indices, currency fluctuations, depository receipts, and futures, as applicable. The model generates an adjustment factor for each security that is applied to the local closing price to adjust it for post closing events, resulting in the security's reported fair value.

The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	967,888
Level 2 – Other significant observable inputs		63,909,142
Level 3 – Significant unobservable inputs		—

Total	$	64,877,030

There were no investments in securities characterized as Level 3 as of December 31, 2007 or June 30, 2008.

(6) Securities Transactions and Investment Income

(7) Taxes

Some Asian governments may subject the Fund's investment income and securities sales to withholding or other taxes. For the six months ended June 30, 2008, $32,320 of foreign taxes have been withheld from distributions to the Fund and recorded as a reduction of dividend income.

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to make distributions of its income at least annually in amounts at least equal to the amount necessary to maintain its status as a regulated investment company. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry forwards, it is the policy of the Fund not to distribute such gains.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	82,662,895

Gross unrealized appreciation	$	199,985
Gross unrealized depreciation		(17,985,850	)

Net unrealized appreciation/(depreciation)	$	(17,785,865	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by Asian real estate companies and REITs. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry or in the Asian region due to economic, legal, regulatory, technological or other developments affecting the Asian real estate industry and securities market.

(10) Foreign Securities Risk

(11) Foreign Currency Transactions

Note B

Advisory, Subadvisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors, to provide the Fund with a continuous investment program, oversee the subadvisor and generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors is compensated at an annual rate of 1% of the Fund's average daily managed assets.

RMR Advisors has contractually agreed to waive a portion of its annual fee equal to 0.25% of the Fund's average daily managed assets from May 25, 2007 until May 25, 2012. The Fund incurred net advisory fees of $278,842 during the six months ended June 30, 2008. The amount of fees waived by the Advisor was $92,947 for the six months ended June 30, 2008.

RMR Advisors has entered into a subadvisory agreement with MacarthurCook Investment Managers Ltd., or MacarthurCook, to make day-to-day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors, and not the Fund, pays the subadvisor a monthly fee equal to an annual rate of 0.375% of the Fund's average daily managed assets. MacarthurCook has agreed to waive a portion of the fee payable by RMR Advisors such that until May 25, 2012, the fee payable will be equal to 0.25% of the Fund's average daily managed assets.

100

providing administrative services. The Fund reimbursed RMR Advisors for $45,030 of subadministrative fees charged by State Street for the six months ended June 30, 2008.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $7,078 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $20,968,472 and $22,622,306 respectively. Brokerage commissions on securities transactions amounted to $92,271 during the six months ended June 30, 2008.

Note D

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal		Votes for		Votes withheld		Votes abstained
Election of John L. Harrington as an Independent Trustee until the 2011 annual meeting		4,564,949		21,446		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

Note E

Portfolio Management Changes

On July 17, 2008, Roberto Versace was appointed a co-portfolio manager for the Fund. Mr. Versace replaces Craig Turnbull who resigned from MacarthurCook on June 28, 2008. Craig Dunstan remains a co-portfolio manager for the Fund. Mr. Versace has been a Fund Manager at MacarthurCook since July 2007. From September 2005 to June 2007, Mr. Versace was employed by the global investment and advisory firm Babcock & Brown as part of its Global Real Estate Team. From September 2000 to June 2004, Mr. Versace was an analyst with Colonial First State Global Asset Management, the largest manager of Australian sourced funds.

101

RMR Dividend Capture Fund
June 30, 2008

To our shareholders,

In the pages that follow, you will find data summarizing our financial results for the six months ended June 30, 2008, and our financial position as of June 30, 2008.

I am pleased to report that the Fund has now completed its first six months of operation since its launch in December of 2007. Following the IPO, we raised an additional $10 million in auction rate preferred securities in February 2008, effectively leveraging the Fund 29%.

Relevant Market Conditions

Closed-End Fund Market.

The closed-end fund market remained volatile during the first half of 2008. Despite several attempts by the Fed to inject liquidity into the capital markets generally in the form of lower rates and new lending facilities, credit availability remained tight as banks reduced lending in an effort to conserve cash. The auction rate securities market which had been a major source of leverage to closed end funds, collapsed in February, as banks decided not support the auctions.

After reaching $27.6 billion in full year 2007, closed end IPOs dried up in the first half of 2008, with only one offering brought to the market in January for a total raise of $120 million.

Real Estate Industry Fundamentals.

Despite a slowing economy and negative sentiment regarding the direction of the financial markets, real estate fundamentals remained stable during the first half of 2008. Occupancy levels held up and rents continued to increase, albeit at a slower pace. Property sales, however, slowed substantially as a result of tighter lending standards and wide differences between buyers and sellers regarding valuations. With limited transactions taking place, it is hard to estimate how much commercial property values have declined. Some estimates put the figure somewhere between negative 10% to negative 15%. What is clear, however, is that property values are no longer at levels seen in early 2007.

Real Estate Industry Technicals.

Throughout the first half of the year, the REIT market continued to exhibit high volatility. REITs started the year on a negative note, down almost 12% in mid-January, and rebounded sharply during March and April (up 6% during each month) following the Fed's and J.P. Morgan's rescue of Bear Stearns. Concern about additional write-offs from financial institutions sent the REIT market, along with other financial services companies, into negative territory during the month of June. REITs were down 11% in June and finished the

102

first half of the year down 3.5%. Despite the volatility, REIT dedicated funds saw $3 billion of inflows during the first six months of the year, an encouraging sign after outflows of more than $9 billion from the period March to December 2007.

Fund Strategies, Techniques and Performance

Our primary objective is to earn and pay to our common shareholders a high current dividend income by investing in real estate companies and portfolio funds. Our secondary objective is capital appreciation. There can be no assurance that we will achieve our investment objectives.

During the six months ended June 30, 2008, our total return on net asset value, or NAV (including NAV changes and assuming a hypothetical reinvestment of distributions at NAV), was negative 5.7%. During that same period, the total return for the MSCI US REIT Total Return Index (an unmanaged index of REIT common stocks) was negative 3.5% and the total return for the Fund Data U.S. All Taxable ex-Foreign Equity Index (a market cap weighted Index of closed-end funds) was negative 5.9%. We believe these two indices are relevant to us because our investments, excluding short term investments, as of June 30, 2008, included 46% in REIT common stocks and 52% in common stocks of closed-end funds. The S&P 500 Index (an unmanaged index published as Standard and Poor's Composite Index of 500 common stocks) total return for the six months ended June 30, 2008 was negative 11.9%.

Recent Developments

Recently, credit markets, including the market for auction rate securities such as the Fund's $10 million in preferred shares, have experienced a liquidity crisis. To date, no auctions for the Fund's preferred shares have failed; however, an affiliate of the Fund's lead broker dealer for its preferred shares has purchased a significant amount of the Fund's preferred shares in the auctions. Please see notes to the financial statements for more information.

Because of the decline in NAV during the last 15 months and the Fund's relatively small size, the Fund's Board of Trustees is currently considering actions to reduce expenses and otherwise enhance value for the Fund's shareholders. These potential actions include combining the Fund with one or more other RMR closed end funds that have similar investment programs.

Thank you for your continued support. For more information, please view our website, at www.rmrfunds.com.

Sincerely,

Adam D. Portnoy
President
August 27, 2008

103

Portfolio holdings by sub-sector as a percentage of investments (as of June 30, 2008)*

Investment companies		52	%
Hospitality real estate		15	%
Office real estate		11	%
Others, less than 10% each		22	%

	Total investments	100	%

REITs		46	%
Investment companies		52	%
Other		2	%

	Total investments	100	%

*: These percentages represent the Fund's portfolio holdings by sub-sector as a percentage of total portfolio holdings and do not match with the percentages included in the Portfolio of Investments schedule which represent the Fund's portfolio holdings by sub-sector as a percentage of the Fund's net assets.

104

RMR Dividend Capture Fund
Portfolio of Investments – June 30, 2008 (unaudited)


Company			Shares	Value

Common Stocks – 70.7%
Real Estate Investment Trusts – 67.9%
	Diversified – 10.8%
		CapLease, Inc.	123,725	$	926,700
		Lexington Corporate Properties Trust	50,883		693,536
		National Retail Properties, Inc.	33,270		695,343

					2,315,579

	Health Care – 4.3%
		Medical Properties Trust, Inc.	91,053		921,456

	Hospitality – 15.6%
		Ashford Hospitality Trust, Inc.	148,030		683,899
		DiamondRock Hospitality Co.	90,000		980,100
		FelCor Lodging Trust, Inc.	70,945		744,922
		Hersha Hospitality Trust	121,200		915,060

					3,323,981

	Industrial – 3.8%
		First Industrial Realty Trust, Inc.	29,730		816,683

	Manufactured Homes – 4.1%
		Sun Communities, Inc.	48,317		880,819

	Mortgage – 1.8%
		Gramercy Capital Corp.	32,262		373,917

	Office – 6.2%
		Brandywine Realty Trust	15,000		236,400
		Parkway Properties, Inc.	32,000		1,079,360

					1,315,760

	Retail – 21.3%
		CBL & Associates Properties, Inc.	25,200		575,568
		Cedar Shopping Centers, Inc.	81,550		955,766
		Developers Diversified Realty Corp.	29,400		1,020,474
		Glimcher Realty Trust	54,100		604,838
		Pennsylvania Real Estate Investment Trust	14,500		335,530
		Ramco-Gershenson Properties Trust	51,251		1,052,695

					4,544,871

Total Real Estate Investment Trusts (Cost $17,394,989)					14,493,066

	Other – 2.8%
		DHT Maritime, Inc.	60,000		601,800

Total Other (Cost $657,282)					601,800

Total Common Stocks (Cost $18,052,271)					15,094,866

See notes to financial statements and notes to portfolio of investments.

105


Company			Shares	Value

Other Investment Companies – 75.0%
		Blackrock Enhanced Dividend Achievers Trust	80,766	$	810,083
		Blackrock Limited Duration Income Trust	56,150		859,095
		Blackrock Preferred and Equity Advantage Trust	49,836		759,002
		Cohen & Steers Advantage Income Realty Fund, Inc.	58,000		857,240
		Cohen & Steers Premium Income Realty Fund, Inc.	47,376		712,535
		Cohen & Steers REIT and Preferred Income Fund, Inc.	39,000		744,900
		Cohen & Steers REIT and Utility Income Fund, Inc.	65,384		1,146,836
		DWS Dreman Value Income Edge Fund, Inc.	79,070		1,058,747
		DWS RREEF Real Estate Fund II, Inc.	94,150		1,084,608
		Eaton Vance Enhanced Equity Income Fund	51,871		906,705
		Eaton Vance Enhanced Equity Income Fund II	20,100		344,916
		Eaton Vance Senior Floating-Rate Fund	20,000		286,000
		Flaherty & Crumrine/ Claymore Preferred Securities Income Fund, Inc.	55,744		777,072
		ING Global Equity Dividend & Premium Opportunity Fund	14,800		234,284
		LMP Capital and Income Fund, Inc.	60,144		929,225
		LMP Real Estate Income Fund, Inc.	52,172		798,232
		Neuberger Berman Real Estate Securities Income Fund, Inc.	84,540		790,449
		Nicholas-Applegate Convertible & Income Fund II	53,804		621,436
		Nuveen Floating Rate Income Fund	31,885		344,358
		Nuveen Real Estate Income Fund	3,700		54,760
		Pioneer Floating Rate Trust	53,431		735,745
		The Zweig Total Return Fund, Inc.	84,877		375,156
		Western Asset Emerging Markets Debt Fund, Inc.	45,473		786,228

Total Other Investment Companies (Cost $17,049,942)					16,017,612

Short-Term Investments – 0.4%
	Other Investment Companies – 0.4%
		Dreyfus Cash Management, Institutional Shares, 2.66% (a) (Cost $92,284)	92,284		92,284

Total Investments – 146.1% (Cost $35,194,497)					31,204,762

Other assets less liabilities – 0.7%					152,392
Preferred Shares, at liquidation preference – (46.8)%					(10,000,000	)

Net Assets applicable to common shareholders – 100%				$	21,357,154

Notes to Portfolio of Investments
(a) Rate reflects 7 day yield as of June 30, 2008.

See notes to financial statements.

106

RMR Dividend Capture Fund
Financial Statements

Statement of Assets and Liabilities


June 30, 2008 (unaudited)

Assets
	Investments in securities, at value (cost $35,194,497)		$	31,204,762
	Cash			217
	Dividends and interest receivable			251,647
	Other assets			4,511

		Total assets		31,461,137

Liabilities
	Advisory fee payable			27,772
	Distributions payable – preferred shares			8,068
	Accrued expenses and other liabilities			68,143

		Total liabilities		103,983

Preferred shares, at liquidation preference
	Auction preferred shares, Series F; $.001 par value per share; 400 shares issued and outstanding at $25,000 per share liquidation preference			10,000,000

Net assets attributable to common shares			$	21,357,154

Composition of net assets
	Common shares, $.001 par value per share; unlimited number of shares authorized, 1,255,000 shares issued and outstanding		$	1,255
	Additional paid-in capital			23,700,745
	Undistributed net investment income			743,630
	Accumulated net realized gain on investment transactions			901,259
	Net unrealized depreciation on investments			(3,989,735	)

Net assets attributable to common shares			$	21,357,154

Net asset value per share attributable to common shares (based on 1,255,000 common shares outstanding)			$	17.02

See notes to financial statements.

107

RMR Dividend Capture Fund
Financial Statements – continued

Statement of Operations


Six Months Ended June 30, 2008 (unaudited)

Investment Income
	Dividends (cash distributions received or due)			$	1,794,235
	Interest				59,564

		Total investment income			1,853,799

Expenses
	Advisory				156,547
	Administrative				49,418
	Audit and legal				46,775
	Custodian				23,808
	Shareholder reporting				17,745
	Compliance and internal audit				17,344
	Trustees' fees and expenses				8,900
	Other				30,396

		Total expenses			350,933

			Net investment income		1,502,866

Realized and unrealized gain (loss) on investments
	Net realized gain on investments				814,114
	Net change in unrealized appreciation/(depreciation) on investments				(3,131,690	)

	Net realized and unrealized loss on investments				(2,317,576	)

	Distributions to preferred shareholders from net investment income				(172,044	)

		Net decrease in net assets attributable to common shares resulting from operations		$	(986,754	)

See notes to financial statements.

108

RMR Dividend Capture Fund
Financial Statements – continued

Statements of Changes in Net Assets


				Six Months Ended June 30, 2008 (unaudited)			For the Period December 18, 2007(a) to December 31, 2007

Increase (decrease) in net assets resulting from operations
	Net investment income			$	1,502,866		$	241,148
	Net realized gain on investments				814,114			87,145
	Net change in unrealized appreciation/(depreciation) on investments				(3,131,690	)		(858,045	)
	Distributions to preferred shareholders from:
		Net investment income			(172,044	)		—

			Net decrease in net assets attributable to common shares resulting from operations		(986,754	)		(529,752	)

	Distributions to common shareholders from:
		Net investment income			(838,340	)		—
Capital shares transactions
	Net proceeds from sale of common shares				—			23,872,000
	Net proceeds from sale of preferred shares				9,740,000			—

		Net increase from capital transactions			9,740,000			23,872,000
	Less: Liquidation preference of preferred shares issued				(10,000,000	)		—

		Total increase (decrease) in net assets attributable to common shares			(2,085,094	)		23,342,248
Net assets attributable to common shares
	Beginning of period				23,442,248			100,000

	End of period (including undistributed net investment income of $743,630 and $251,148, respectively)			$	21,357,154		$	23,442,248

Common shares issued and repurchased
	Shares outstanding, beginning of period				1,255,000			5,000
		Shares issued			—			1,250,000

	Shares outstanding, end of period				1,255,000			1,255,000

(a) Commencement of operations.

See notes to financial statements.

109

RMR Dividend Capture Fund
Financial Highlights

Selected Data For A Common Share Outstanding Throughout Each Period


		Six Months Ended June 30, 2008 (unaudited)			For the Period December 18, 2007(a) to December 31, 2007

Per Common Share Operating Performance (b)
Net asset value, beginning of period		$	18.68		$	19.14	(c)

Income from Investment Operations
Net investment income			1.20	(d)		.19
Net realized and unrealized appreciation/(depreciation) on investments			(1.92	)(d)		(.61	)
Distributions to preferred shareholders (common stock equivalent basis) from:
	Net investment income		(.14	)(d)		—

Net decrease in net asset value from operations			(.86	)		(.42	)
Less: Distributions to common shareholders from:
	Net investment income		(.67	)(d)		—
Common share offering costs charged to capital			—			(.04	)
Preferred share offering costs charged to capital			(.13	)		—

Net asset value, end of period		$	17.02		$	18.68

Market price, beginning of period		$	20.00		$	20.00

Market price, end of period		$	17.29		$	20.00


Total Return (e)
Total investment return based on:
	Market price (f)		(10.13	)%		0.00	%
	Net asset value (f)		(5.65	)%		(2.20	)%

Ratios/Supplemental Data:
Ratio to average net assets attributable to common shares (g) of:
	Net investment income, before total preferred share distributions		12.73	%(d)		30.71	%
	Total preferred share distributions		1.46	%		0.00	%
	Net investment income, net of preferred share distributions		11.27	%(d)		30.71	%
	Expenses		2.97	%		10.21	%
Portfolio Turnover Rate			97.60	%		0.00	%
Net assets attributable to common shares, end of period (000s)		$	21,357		$	23,442
Preferred shares, liquidation preference ($25,000 per share) (000s)		$	10,000		$	—
Asset coverage per preferred share (h)		$	78,393		$	—

(a): Commencement of operations.
(b): Based on average shares outstanding.
(c): Net asset value at December 12, 2007, reflects the deduction of the average sales load and offering costs of $0.90 per share paid by the holders of common shares from the $20.00 offering price. We paid a sales load of $0.94 per share on 1,200,000 shares sold to the public and no sales load or offering costs on 50,000 common shares sold to affiliates of RMR Advisors for $20.00 per share.
(d): As discussed in Note A (8) to the financial statements, these amounts are subject to change to the extent 2008 distributions by the issuers of the Fund's investments are characterized as capital gains and return of capital.
(e): Total returns for periods of less than one year are not annualized.
(f): Total return based on per share market price assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated; dividends and distributions, if any, are assumed to be reinvested at market prices on the ex-dividend date. The total return based on net asset value, or NAV, assumes the purchase of common shares at NAV on the first day and sales of common shares at NAV on the last day of the period indicated; distributions are assumed to be reinvested at NAV on the ex-dividend date. Results represent past performance and do not guarantee future results.
(g): Annualized.
(h): Asset coverage per share equals net assets attributable to common shares plus the liquidation preference of the preferred shares divided by the total number of preferred shares outstanding at the end of the period.

See notes to financial statements.

110

RMR Dividend Capture Fund
Notes to Financial Statements

June 30, 2008 (unaudited)

Note A

(1) Organization

RMR Dividend Capture Fund, or the Fund, was organized as a Massachusetts business trust on June 14, 2007, and is registered under the Investment Company Act of 1940, as amended, or the 1940 Act, as a non-diversified closed-end management investment company. The Fund had no operations prior to December 18, 2007, other than matters relating to the Fund's establishment, registration of the Fund's common shares under the Securities Act of 1933, and the sale of 5,000 common shares for $100,000 to RMR Advisors, Inc., or RMR Advisors. On December 18, 2007, the Fund sold 1,250,000 common shares in an initial public offering including 50,000 shares sold to affiliates of RMR Advisors. Proceeds to the Fund were $23,872,000 after deducting underwriting commissions and $48,000 of offering expenses. There was no underwriting commission or offering expenses paid on shares sold to the affiliates of RMR Advisors.

(2) Interim Financial Statements

(3) Use of Estimates

(4) Portfolio Valuation

111

(5) Fair Value Measurements

•: Level 1 – quoted prices in active markets for identical investments
•: Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)
•: Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The following is a summary of the inputs used as of June 30, 2008 in valuing the Fund's investments carried at value:

Valuation Inputs	Investments in Securities
Level 1 – Quoted prices	$	31,204,762
Level 2 – Other significant observable inputs		—
Level 3 – Significant unobservable inputs		—

Total	$	31,204,762

There were no investments in securities characterized as level 3 as of December 31, 2007, or June 30, 2008.

(6) Securities Transactions and Investment Income

112

accretion of discount on short term investments, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on an identified cost basis.

(7) Taxes

(8) Distributable Earnings

The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to pay a stable distribution amount to common shareholders on a monthly basis and distributions to Fund shareholders are declared pursuant to this policy. On July 11, 2008, the Fund declared regular monthly distributions of $0.167 per common share payable in July, August and September 2008. Distributions to shareholders are recorded on the ex-dividend date. The Fund's distributions may consist of ordinary income (net investment income and short term capital gains), long term capital gains and return of capital. To the extent the Fund's net realized capital gains, if any, can be offset by capital loss carry-forwards, it is the policy of the Fund not to distribute such gains. Distributions to preferred shareholders are determined as described in Note D.

The Fund has substantial investments in real estate investment trusts, or REITs, and closed end investment management companies which are generally not subject to federal income taxes. Distributions that the Fund receives from these investments can be classified as ordinary income, capital gain income or return of capital by the issuers that make these distributions to the Fund. However, it is not possible to characterize distributions received from these investments during interim periods because the issuers do not report their tax characterization until subsequent to year end. Final characterization of the Fund's 2008 distributions to shareholders is also dependent upon the magnitude or timing of the Fund's securities transactions prior to year end. Therefore it is likely that some portion of the Fund's 2008 investment income and distributions to shareholders will be recharacterized as long term capital gain and return of capital for financial statement and federal income tax purposes subsequent to year end and reflected accordingly in the Fund's year end financial statements.

Although subject to adjustments, the cost, gross unrealized appreciation and unrealized depreciation of the Fund's investments for federal income tax purposes as of June 30, 2008, are as follows:

Cost	$	35,194,497

Gross unrealized appreciation	$	32,576
Gross unrealized depreciation		(4,022,311	)

Net unrealized appreciation/(depreciation)	$	(3,989,735	)

(9) Concentration of Risk

Under normal market conditions, the Fund's investments are concentrated in income producing common shares, preferred shares and debt securities, including convertible preferred and debt securities, issued by real estate companies and REITs and common shares of closed end investment management companies. The value of Fund shares may fluctuate more than the shares of a fund not concentrated in the real estate industry due to

113

economic, legal, regulatory, technological or other developments affecting the United States real estate industry. Some of the closed end investment management companies in which the Fund invests may invest substantially all of their managed assets in one sector including real estate, and therefore carry the risk of that particular sector or industry group.

Note B

Advisory and Administration Agreements and Other Transactions with Affiliates

The Fund has an advisory agreement with RMR Advisors, Inc., or RMR Advisors, to provide the Fund with a continuous investment program, to make day-to-day investment decisions and to generally manage the business affairs of the Fund in accordance with its investment objectives and policies. Pursuant to the agreement, RMR Advisors is compensated at an annual rate of 1% of the Fund's average daily managed assets. Managed assets means the total assets of the Fund less liabilities other than any indebtedness entered into for purposes of leverage. For purposes of calculating managed assets, the liquidation preference of preferred shares is not considered a liability.

The Fund's board of trustees and separately the disinterested trustees authorized the Fund to make reimbursement payments to RMR Advisors for costs related to the Fund's compliance and internal audit programs. The Fund incurred $17,344 of compliance and internal audit expense during the six months ended June 30, 2008. The Fund also participates in pooled insurance programs with RMR Advisors and other funds managed by RMR Advisors and makes payments of allocated portions of related premiums. The Fund incurred $5,276 of insurance expense during the six months ended June 30, 2008.

Note C

Securities Transactions

During the six months ended June 30, 2008, there were purchases and sales transactions (excluding short term securities) of $40,012,692 and $26,979,939 respectively. Brokerage commissions on securities transactions amounted to $98,649 during the six months ended June 30, 2008.

114

Note D

Preferred Shares

The Fund's 400 outstanding Series F auction preferred shares have a liquidation preference of $25,000 per share plus an amount equal to accumulated but unpaid distributions. The preferred shares are senior to the Fund's common shares and rank on parity with any other class or series of preferred shares of the Fund as to the payment of periodic distributions, including distribution of assets upon liquidation. If the Fund does not timely cure a failure to (1) maintain asset coverage for the preferred shares as required by rating agencies, or (2) maintain asset coverage, as defined in the 1940 Act, of at least 200%, the preferred shares will be subject to redemption in an amount equal to their liquidation preference plus accumulated but unpaid distributions. The holders of the preferred shares have voting rights equal to the holders of the Fund's common shares and generally vote together with the holders of the common shares as a single class. Holders of the preferred shares, voting as a separate class, also are entitled to elect two of the Fund's trustees. The Fund pays distributions on the preferred shares at a rate set at auctions held generally every seven days. Distributions are generally payable every seven days, on the first business day following the end of a distribution period. The preferred share distribution rate was 4.15% per annum as of June 30, 2008.

115

Note E

Submission of Proposals to a Vote of Shareholders

The annual meeting of Fund shareholders was held on April 7, 2008. Following is a summary of the proposal submitted to shareholders for vote at the meeting and votes cast:

Proposal			Votes for		Votes withheld		Votes abstained
Common and Preferred Shares
	Election of John L. Harrington as Independent Trustee until the 2011 annual meeting.		1,040,290		700		—

The following trustees' terms of office as trustee continued after the Fund's annual meeting: Barry M. Portnoy, Gerard M. Martin, Frank J. Bailey and Arthur G. Koumantzelis.

116

RMR Real Estate Fund
RMR Hospitality and Real Estate Fund
RMR F.I.R.E. Fund
RMR Preferred Dividend Fund
RMR Asia Pacific Real Estate Fund
RMR Asia Real Estate Fund
RMR Dividend Capture Fund
June 30, 2008

For the purposes of the following, RMR Real Estate Fund (RMR), RMR Hospitality and Real Estate Fund (RHR), RMR F.I.R.E. Fund (RFR), RMR Preferred Dividend Fund (RDR), RMR Asia Pacific Real Estate Fund (RAP), RMR Asia Real Estate Fund (RAF) and RMR Dividend Capture Fund (RCR) are each referred to as a "Fund" or collectively as the "Funds".

Privacy Notice

Each Fund advised by RMR Advisors, Inc. recognizes and respects the privacy concerns of its shareholders. The Funds do not sell your name or other information about you to anyone. The Funds collect nonpublic personal information about you in the course of doing business with shareholders and investors. "Nonpublic personal information" is personally identifiable financial information about you. For example, it includes information regarding your social security number, account balance, bank account information and purchase and redemption history.

The Funds collect this information from the following sources:

•: Information we receive from you on applications or other forms;
•: Information about your transactions with us and our service providers, or others; and
•: Information we receive from consumer reporting agencies (including credit bureaus).

What the Funds disclose and to whom the Funds disclose information.

The Funds only disclose nonpublic personal information the Funds collect about shareholders as permitted by law. For example, the Funds may disclose nonpublic personal information about shareholders to nonaffiliated third parties such as:

•: To government entities, in response to subpoenas or to comply with laws or regulations.
•: When you, the shareholder, direct the Funds to do so or consent to the disclosure.
•: To companies that perform necessary services for the Funds, such as data processing companies that the Funds use to process your transactions or maintain your account.
•: To protect against fraud, or to collect unpaid debts.
•: In connection with disputes or litigation between the Funds and the concerned shareholders.

Information about former shareholders.

If you decide to close your account(s) or become an inactive customer, we will adhere to the privacy policies and practices described in this notice.

117

How the Funds safeguard information.

The Funds conduct their business through directors, officers and third parties that provide services pursuant to agreements with the Funds (for example, the service providers described above). The Funds do not have any employees. The Funds restrict access to your personal and account information to those persons who need to know that information in order to provide services to you. The Funds or their service providers maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.

Customers of other financial institutions.

In the event that you hold shares of the Funds through a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of your financial intermediary will govern how your non-public personal information will be shared with non-affiliated third parties by that entity.

Proxy Voting Policies and Procedures

A description of the policies and procedures that are used to vote proxies relating to each Fund's portfolio securities is available: (1) without charge, upon request, by calling us at (866)790-8165; and (2) as an exhibit to each Fund's annual report on Form N-CSR, which is available on the website of the U.S. Securities and Exchange Commission (the "Commission") at http://www.sec.gov. Information regarding how proxies received by each Fund during the most recent 12 month period ended June 30, 2008, have been voted is available (1) without charge, on request, by calling us at (866)790-3165, or (2) by visiting the Commission's website at http://www.sec.gov and accessing each Fund's Form N-PX.

Procedures for the Submission of Confidential and Anonymous Concerns or Complaints about Accounting, Internal Accounting Controls or Auditing Matters

The Funds are committed to compliance with all applicable securities laws and regulations, accounting standards, accounting controls and audit practices and have established procedures for handling concerns or complaints about accounting, internal accounting controls or auditing matters. Any shareholder or other interested party who desires to communicate with our independent trustees or any other trustees, individually or as a group, may do so by filling out a report at the "Contact Us" section of our website (www.rmrfunds.com), by calling our toll-free confidential message system at 866-511-5038, or by writing to the party for whom the communication is intended, care of our director of internal audit, RMR Funds, 400 Centre Street, Newton, MA 02458. Our director of internal audit will then deliver any communication to the appropriate party or parties.

Portfolio Holdings Reports

Each Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year on Form N-Q, which are available on the Commission's website at http://www.sec.gov. The Funds' Forms N-Q may also be reviewed and copied at the Commission's Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. Each Fund provides additional data on its website at www.rmrfunds.com.

Certifications

Each Fund's principal executive officer and principal financial officer certifications required by Section 302 of the Sarbanes-Oxley Act of 2002 and filed with the Fund's N-CSR are available on the Commission's website at http://www.sec.gov.

118




WWW.RMRFUNDS.COM

Item 2. Code of Ethics.

The information is only required for the annual report on Form N-CSR.

Item 3. Audit Committee Financial Expert.

The information is only required for the annual report on Form N-CSR.

Item 4. Principal Accountant Fees and Services.

The information is only required for the annual report on Form N-CSR.

Item 5. Audit Committee of Listed Registrants.

The information is only required for the annual report on Form N-CSR.

Item 6. Schedule of Investments.

The information required under Item 6 is included as part of the report to shareholders filed under Item 1 of this Form N-CSR.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The information is only required for the annual report on Form N-CSR.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

The information is only required for the annual report on Form N-CSR.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

During the six months ended June 30, 2008, there were no purchases made by or on behalf of the registrant or any "affiliated purchaser" as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange Act) (17 CFR 240.10b-18(a)(3)), of shares of the registrant's equity securities that are registered by the registrant pursuant to Section 12 of the Exchange Act.

Item 10. Submission of Matters to a Vote of Security Holders.

Effective February 20, 2008, no shareholder may give a notice to the registrant's secretary of a nomination to the registrant's board of trustees unless such shareholder holds a certificate or certificates, as the case may be, for all registrant shares owned by such shareholder, and a copy of each such certificate shall accompany such shareholder's notice to the secretary in order for such notice to be effective.

Item 11. Controls and Procedures.

(a): The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective, as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures.
(b): There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits.

(a): (2) Certifications of principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act are attached hereto.
(b): Certifications of principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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.


RMR HOSPITALITY AND REAL ESTATE FUND
By:		/s/ ADAM D. PORTNOY Adam D. Portnoy President Date: August 28, 2008

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/ ADAM D. PORTNOY Adam D. Portnoy President Date: August 28, 2008
By:		/s/ MARK L. KLEIFGES Mark L. Kleifges Treasurer Date: August 28, 2008

QuickLinks

Item 1. Reports to Shareholders.

Item 2. Code of Ethics.

Item 3. Audit Committee Financial Expert.

Item 4. Principal Accountant Fees and Services.

Item 5. Audit Committee of Listed Registrants.

Item 6. Schedule of Investments.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Item 10. Submission of Matters to a Vote of Security Holders.

Item 11. Controls and Procedures.

Item 12. Exhibits.

SIGNATURES

RMR Hospitality & Real Estate Fund (RHR) Inactive N-CSRCertified annual shareholder report (management investment company)