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 | 811-21677 |
|
Cohen & Steers International Realty Fund, Inc. |
(Exact name of registrant as specified in charter) |
|
280 Park Avenue, New York, NY | | 10017 |
(Address of principal executive offices) | | (Zip code) |
|
Adam M. Derechin Cohen & Steers Capital Management, Inc. 280 Park Avenue New York, New York 10017 |
(Name and address of agent for service) |
|
Registrant’s telephone number, including area code: | (212) 832-3232 | |
|
Date of fiscal year end: | December 31 | |
|
Date of reporting period: | December 31, 2007 | |
| | | | | | | |
Item 1. Reports to Stockholders.
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
February 8, 2008
To Our Shareholders:
We are pleased to submit to you our report for the year ended December 31, 2007. The net asset values per share at that date were $16.17, $16.13, and $16.19 for Class A, Class C and Class I shares, respectively. In addition, a distribution was declared for shareholders of record on December 28, 2007 and paid on December 31, 2007 to all three classes of sharesa. The distribution was as follows:
| | | Total
Distribution | | Ordinary
Income | | Short-Term
Capital Gain | | Long-Term
Capital Gain | |
| Class A | | $ | 1.160 | | | $ | 0.705 | | | $ | 0.304 | | | $ | 0.151 | | |
| Class C | | $ | 1.129 | | | $ | 0.674 | | | $ | 0.304 | | | $ | 0.151 | | |
| Class I | | $ | 1.178 | | | $ | 0.723 | | | $ | 0.304 | | | $ | 0.151 | | |
The total return, including income and change in net asset value, for the fund and the comparative benchmarks were:
| | | Six Months Ended
December 31, 2007 | | Year Ended
December 31, 2007 | |
| Cohen & Steers International Realty Fund—Class A | | | –6.24 | % | | | –4.64 | % | |
| Cohen & Steers International Realty Fund—Class C | | | –6.52 | % | | | –5.23 | % | |
| Cohen & Steers International Realty Fund—Class I | | | –6.05 | % | | | –4.32 | % | |
| S&P/Citigroup BMI World Property Index (ex.-U.S.)b | | | –6.04 | % | | | –1.55 | % | |
| S&P 500 Indexb | | | –1.37 | % | | | 5.49 | % | |
The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and the principal value of an investment will fluctuate and shares, if redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Total returns of the fund current to the most recent month-end can be obtained by visiting our Web site at cohenandsteers.com. Performance quoted does not reflect the deduction of the maximum 4.5% initial sales charge on Class A shares or the 1% maximum contingent deferred sales charge on Class C shares. If such charges were included, returns would have been lower.
a Please note that distributions paid by the fund to shareholders are subject to recharacterization for tax purposes. The final tax treatment of these distributions is reported to shareholders after the close of each calendar year.
b The S&P/Citigroup BMI World Property Index (excluding U.S.) is an unmanaged portfolio of approximately 341 constituents from 23 countries. The S&P 500 Index is an unmanaged index of common stocks that is frequently used as a general measure of stock market performance.
1
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Investment Review
European and Asian property market performance diverged by a wide margin in 2007, although volatility was a common thread uniting the two regions. European markets were rattled by the credit and liquidity crises that emerged when financial institutions disclosed their exposure to securities backed by U.S. subprime mortgages. Most of Asia Pacific, on the other hand, was positively correlated with China and appeared to be "decoupled," at least temporarily, from the economic influence of the United States. Japan was an exception, as its export-based economy was hurt by the yen's appreciation against the dollar.
The crises crossed the Atlantic
Credit and liquidity crises came to define the year in many markets around the world. The impact in Europe was felt in September when the Bank of England (BOE) stepped in to rescue Northern Rock PLC. A residential lender that borrowed heavily from the capital markets, Northern Rock saw its access to capital essentially cut off. The bank's difficulties contributed to a crisis of confidence that saw financial institutions become reluctant to lend to businesses and to each other.
With scarce capital becoming more expensive, commercial property transactions—and prices—declined, valuations dropped (cap rates expanded) and property stocks sold off. The high cost of debt also led to concerns about slowing economic growth, which put downward pressure on equities generally. Before year end, several European financial institutions—notably, Swiss Reinsurance Company, HSBC Holdings PLC, UBS and Barclays—would take significant write-downs tied to their exposure to asset-backed securities.
The U.K. declined
The United Kingdom's decline (–37.5% total return)1 began in January amid profit-taking from the late-2006 REIT-conversion rally. Two BOE interest-rate hikes and concerns that office property values would fall in an economic slowdown put additional downward pressure on prices. A 25 basis-point interest-rate cut by the U.K. central bank in December—the first in more than two years—may have signaled the beginning of a more accommodative monetary policy that could help economic growth and improve credit conditions.
London office rents increased throughout the year due to low vacancies, strong leasing activity and moderate new supply. The stock market, however, correctly anticipated that real estate asset values would decline, reversing the trend of the last several years. West End offices performed better than those in the City—the financial district—due to lower vacancies, minimal development activity and less reliance on financial services tenants.
The ECB targeted inflation
Europe's GDP growth in 2007 (3.0%) was accompanied by greater-than-targeted inflation (2.6%). The European Central Bank (ECB) took a hawkish stance against inflation and raised interest rates to 4.0% in the second quarter—its highest level in six years.
1 Country returns are in local currencies as measured by the S&P/Citigroup World Property Broad Market Index.
2
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
The decline in French property stocks (–18.8%) was attributable to the liquidity crunch and a diminished economic outlook. The Paris office sector, however, benefited from continued demand growth and limited supply. France's office market was also in a better position to ride out further erosion in the banking sector because of its modest reliance on financial services tenants.
Residential property shares in Germany (–38.7%) sold off as fundamentals for apartments were not as strong as the market expected. Norway (+8.7%) was the best performer among Europe's developed markets. Rising oil prices stimulated the energy-dependent economy, leading to higher valuations. Commercial property supply has been limited, and high construction costs kept supply tight.
Asia Pacific steered its own course
At times, Asia Pacific appeared largely immune to the credit crisis that paralyzed U.S. and European financial markets. However, evidence that the region was susceptible emerged in December when Centro Properties Group, an Australian LPT, was unable to refinance debt.
Hong Kong led the region, but China was the engine
Hong Kong (+57.2%) was the top performer in the region. Declining interest rates (the Hong Kong dollar is pegged to the U.S. dollar), falling unemployment and rising household income benefited residential developers. The office sector received a boost from China's decision to expand the Qualified Domestic Institutional Investor (QDII) program, which will allow mainland investors to invest in Hong Kong stocks. In response, several mainland financial institutions sought to establish offices or expand operations there.
Singapore (+8.9%) sold off over the second half of the year after the government introduced a policy initiative to increase office, residential and hotel property supply in an attempt to keep the country's cost of occupancy competitive with other markets in the region. This was followed by regulations preventing builders from offering deferred financing incentives to homebuyers, in an effort to moderate housing prices and discourage speculation.
Japan's recovery stalled
Japan (–13.2%) had positive returns early in the year on the belief that a sustained economic recovery was underway. Land prices, for example, rose nationally for the first time in 16 years. But property stocks—and equities in general—sold off as the prospect of global economic slowing created uncertainty about Japan's economy and corporate earnings. Property fundamentals in Japan were healthy nonetheless, particularly in the Tokyo office market.
Australia (–7.7%), a positive performer for most of the year, declined in December when Centro sold off on the announcement that it was unable to refinance A$2.7 billion of maturing debt, taken on to finance its aggressive acquisition program. Banks were unwilling to lend to the company because of its heavy reliance on off-balance sheet financing to acquire properties, its large debt load and its portfolio of second-tier American shopping centers.
3
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Centro's difficulties reverberated throughout the world, as it was the first major liquidity event to hit commercial real estate markets. There do not appear to be many similar refinancing situations, however.
Global Real Estate Securities Total Returns In Local Currencies
2007
Country returns are in local currencies as measured by the S&P/Citigroup World Property Broad Market Index.
Performance hindered by overweights in the U.K. and Germany
Our portfolio trailed the benchmark in 2007. Our overweight in the United Kingdom, Germany and Italy detracted from performance; however stock selection in Italy and the United Kingdom enhanced returns. In our view, U.K. REITs are among the world's most attractively valued real estate securities, particularly prime offices in the West End. Stock selection in Japan lifted performance and more than offset our underweight there. Our underweight in Australia detracted from performance, although stock selection was positive.
Our overweight in Hong Kong was a positive contributor to performance, although stock selection detracted somewhat, as we did not fully participate in Hong Kong initial public offerings by mainland China homebuilders. In our view, homebuilding is a riskier business model than ownership of commercial properties that have recurring cash flows. Our underweight and stock selection in Austria also lifted returns; investors sold Austrian property company shares as poor structures and corporate governance began to affect returns to shareholders. U.S. dollar investors benefited from the effects of a favorable exchange rate.
Investment Outlook
A recovery in international property share prices is likely to hinge on how quickly and completely the global economy works through the liquidity and credit crises that escalated in 2007. As happened in the United States, continental Europe and the United Kingdom will likely experience further declines in real estate asset values, although, in our opinion, not to the degree that they saw in 2007.
4
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
We believe that investor sentiment in the U.K. is bottoming out and that we are seeing the beginnings of constructive drivers for stocks. The BOE's 25 basis-point interest-rate cut on December 6 was a positive first step. While we are cognizant of the proposed additions to the City's office sector, particularly the 2009-2011 pipeline, it is our view that the credit crisis will likely postpone some of the new construction.
European property shares, while very inexpensive relative to real estate values, face continued concerns about the EU economy, as fighting inflation, rather than spurring growth, is the ECB primary focus. Nevertheless, in mid-December, the ECB joined the BOE, the U.S. Federal Reserve and other global central banks to pump record amounts of funds into the markets in an attempt to stimulate interbank and commercial lending.
Rate cuts by the Federal Reserve and inflation in 2008 are likely to stimulate Hong Kong's economy, which will probably lead to asset price inflation. Residential developers should benefit from that economic scenario as lower borrowing costs typically spur home purchases. We nevertheless believe that landlords represent the better value, as they have been largely overlooked and are attractively valued.
The stocks of landlords had sold off on concerns about new office supply coming on line in the non-core East Kowloon section, beginning in 2008; two major tenants in the business district (Central) were lured to a new development. While rental growth in Central may slow, demand is still strong, particularly from financial institutions, and supply is expected to remain tight until 2010.
Ultimately, we anticipate that the Chinese government's restrictive monetary and regulatory measures to control real estate speculation will succeed in slowing the white-hot economy. Share prices of richly valued mainland-based residential developers may come under pressure. We will selectively take advantages of opportunities, as we believe in China's long-term growth story.
We are less bullish on Singapore than we have been in the past because of the government's intention to increase office, residential and hotel supply with the goal of keeping the country cost-competitive with its neighbors. We are closely monitoring these initiatives and their effect on property fundamentals.
Japanese property stocks and J-REITs are cheap following this year's correction. If the global financial markets stabilize, Japanese real estate securities may regain the momentum they had going into 2007.
Centro will weigh on Australia for a while, even though its complex financing structure is an anomaly. We are cautious about the LPTs because of rising inflation, the likelihood of continued monetary tightening and a preponderance of portfolio assets in Europe and the United States. The domestic market, in our opinion, features strong demand growth and limited capacity.
Generally, 2008 is likely to be characterized as a year in which 2007's monetary tightening gives way to easing. Likewise, we believe investors will come to recognize that property stocks represent a significant buying opportunity in 2008, as economies benefit from lower interest rates and investors have more confidence in asset values. In this environment, we remain more focused than ever on companies with strong managements, solid balance sheets and properties in the most desirable locations.
5
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Sincerely,
 | |  | |
|
| MARTIN COHEN | | ROBERT H. STEERS | |
|
| Co-chairman | | Co-chairman | |
|
 | |  | |
|
| JOSEPH M. HARVEY | | JAMES S. CORL | |
|
| Portfolio Manager | | Portfolio Manager | |
|
 | |  | |
|
| W. JOSEPH HOULIHAN | | GERIOS J.M. ROVERS | |
|
| Portfolio Manager | | Portfolio Manager | |
|
The views and opinions in the preceding commentary are as of the date stated and are subject to change. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice and is not intended to predict or depict performance of any investment.
Visit Cohen & Steers online at cohenandsteers.com
For more information about any of our funds, visit cohenandsteers.com, where you'll find daily net asset values, fund fact sheets and portfolio highlights. You can also access newsletters, education tools and market updates covering REIT, utility and preferred securities sectors.
In addition, our Web site contains comprehensive information about our firm, including our most recent press releases, profiles of our senior investment professionals, and an overview of our investment approach.
6
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Performance Review (Unaudited)
Cohen & Steers International Realty Fund—Class A
Growth of a $10,000 Investment
Cohen & Steers International Realty Fund—Class C
Growth of a $10,000 Investment
Cohen & Steers International Realty Fund—Class I
Growth of a $1,000,000 Investment
7
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Performance Review (Unaudited)—(Continued)
Average Annual Total Returns—For Periods Ending December 31, 2007
| | | Class A Shares | | Class C Shares | | Class I Shares | |
| 1 Year (with sales charge) | | | –8.93 | %b | | | –6.18 | %c | | | — | | |
| 1 Year (without sales charge) | | | –4.64 | % | | | –5.23 | % | | | –4.32 | % | |
| Since Inceptiond (with sales charge) | | | 16.75 | %b | | | 18.01 | % | | | — | | |
| Since Inceptiond (without sales charge) | | | 18.72 | % | | | 18.01 | % | | | 19.14 | % | |
The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate and shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance information current to the most recent month-end can be obtained by visiting our Web site at cohenandsteers.com. The performance graph and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
The expense ratios for each class of shares as disclosed in the May 1, 2007 prospectuses were as follows: Class A—1.61%; Class C—2.26% and Class I—1.25%.
a The comparative indexes are not adjusted to reflect expenses or other fees that the SEC requires to be reflected in the fund's performance. The fund's performance assumes the reinvestment of all dividends and distributions. For more information, including charges and expenses, please read the prospectus carefully before you invest.
b Reflects a 4.50% front-end sales charge.
c Reflects a contingent deferred sales charge of 1%.
d Inception date of March 31, 2005.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Expense Example (Unaudited)
As a shareholder of the fund, you incur two types of costs: (1) transaction costs including sales charges (loads) on purchase payments and redemption fees, and (2) ongoing costs including management fees; distribution and/or service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2007—December 31, 2007.
Actual Expenses
The first line of the table below provides information about actual account values and expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) and redemption fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
9
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Expense Example (Unaudited)—(Continued)
| | | Beginning
Account Value
July 1, 2007 | | Ending
Account Value
December 31, 2007 | | Expenses Paid
During Period*
July 1, 2007–
December 31, 2007 | |
| Class A | |
| Actual (–6.24% return) | | $ | 1,000.00 | | | $ | 937.60 | | | $ | 7.37 | | |
| Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,017.59 | | | $ | 7.68 | | |
| Class C | |
| Actual (–6.52% return) | | $ | 1,000.00 | | | $ | 934.80 | | | $ | 10.53 | | |
| Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,014.32 | | | $ | 10.97 | | |
| Class I | |
| Actual (–6.05% return) | | $ | 1,000.00 | | | $ | 939.50 | | | $ | 5.72 | | |
| Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,019.31 | | | $ | 5.96 | | |
* Expenses are equal to the fund's Class A, Class C and Class I annualized expense ratio of 1.51%, 2.16%, and 1.17%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
10
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
DECEMBER 31, 2007
Top Ten Holdings
(Unaudited)
| Security | | Market
Value | | % of
Net
Assets | |
| Unibail-Rodamco | | $ | 237,870,220 | | | | 6.5 | % | |
| Mitsubishi Estate Co., Ltd. | | | 237,219,827 | | | | 6.4 | | |
| Land Securities Group PLC | | | 229,730,166 | | | | 6.2 | | |
| Cheung Kong Holdings Ltd. | | | 228,020,316 | | | | 6.2 | | |
| Mitsui Fudosan Co., Ltd. | | | 186,173,477 | | | | 5.1 | | |
| Henderson Land Development Company Ltd. | | | 151,095,455 | | | | 4.1 | | |
| Sun Hung Kai Properties Ltd. | | | 126,261,881 | | | | 3.4 | | |
| Derwent London PLC | | | 124,013,093 | | | | 3.4 | | |
| Hongkong Land Holdings Ltd. (USD) | | | 121,865,211 | | | | 3.3 | | |
| Westfield Group | | | 117,285,168 | | | | 3.2 | | |
Country Breakdown
(Based on Net Assets)
(Unaudited)
11
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
December 31, 2007
| | | | | Number
of Shares | | Value | |
| COMMON STOCK | | | 99.0 | % | | | | | | | | | |
| AUSTRALIA | | | 13.8 | % | | | | | | | | | |
| DIVERSIFIED | | | 6.1 | % | | | | | | | | | |
| DB RREEF Trust | | | | | | | 7,497,111 | | | $ | 13,165,680 | | |
| GPT Group | | | | | | | 25,651,629 | | | | 90,994,612 | | |
| Mirvac Group | | | | | | | 10,217,299 | | | | 53,827,811 | | |
| Stockland | | | | | | | 9,181,057 | | | | 67,877,235 | | |
| | | | | | | | 225,865,338 | | |
| INDUSTRIAL | | | 1.2 | % | | | | | | | | | |
| Macquarie Goodman Group | | | | | | | 10,387,016 | | | | 44,598,374 | | |
| OFFICE | | | 2.1 | % | | | | | | | | | |
| Commonwealth Property Office Fund | | | | | | | 39,986,010 | | | | 54,244,526 | | |
| Tishman Speyer Office Fund | | | | | | | 15,036,994 | | | | 21,455,258 | | |
| | | | | | | | 75,699,784 | | |
| SHOPPING CENTER | | | 4.4 | % | | | | | | | | | |
| CFS Gandel Retail Trust | | | | | | | 22,498,259 | | | | 46,225,768 | | |
| Westfield Group | | | | | | | 6,360,693 | | | | 117,285,168 | | |
| | | | | | | | 163,510,936 | | |
| TOTAL AUSTRALIA | | | | | | | | | | | 509,674,432 | | |
| AUSTRIA | | | 0.7 | % | | | | | | | | | |
| DIVERSIFIED | |
| CA Immobilien Anlagen AGa | | | | | | | 1,088,879 | | | | 24,357,537 | | |
| CANADA | | | 0.3 | % | | | | | | | | | |
| OFFICE | |
| Brookfield Properties Corp. | | | | | | | 572,929 | | | | 11,028,883 | | |
| FINLAND | | | 1.5 | % | | | | | | | | | |
| DIVERSIFIED | | | 0.7 | % | | | | | | | | | |
| Citycon Oyj | | | | | | | 5,124,035 | | | | 27,344,329 | | |
| OFFICE | | | 0.8 | % | | | | | | | | | |
| Sponda Oyj | | | | | | | 2,471,262 | | | | 29,519,103 | | |
| TOTAL FINLAND | | | | | | | | | | | 56,863,432 | | |
See accompanying notes to financial statements.
12
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2007
| | | | | Number
of Shares | | Value | |
| FRANCE | | | 7.6 | % | | | | | | | | | |
| DIVERSIFIED | | | | | |
| Fonciere des Regions | | | | | | | 143,413 | | | $ | 18,189,481 | | |
| ICADE | | | | | | | 38,360 | | | | 5,721,154 | | |
Societe Immobiliere de Location pour L'Industrie et le
Commerce (Silic) | | | | | | | 133,703 | | | | 19,604,741 | | |
| Unibail-Rodamco | | | | | | | 1,085,221 | | | | 237,870,220 | | |
| | | | | | | | 281,385,596 | | |
| GERMANY | | | 1.2 | % | | | | | | | | | |
| APARTMENT | | | 0.1 | % | | | | | | | | | |
| Deutsche Wohnen AG | | | | | | | 88,669 | | | | 2,735,390 | | |
| DIVERSIFIED | | | 0.6 | % | | | | | | | | | |
| IVG Immobilien AG | | | | | | | 680,860 | | | | 23,472,748 | | |
| OFFICE | | | 0.5 | % | | | | | | | | | |
| Alstria Office AGa | | | | | | | 1,293,354 | | | | 19,382,223 | | |
| TOTAL GERMANY | | | | | | | | | | | 45,590,361 | | |
| HONG KONG | | | 24.6 | % | | | | | | | | | |
| DIVERSIFIED | | | 19.9 | % | | | | | | | | | |
| Cheung Kong Holdings Ltd. | | | | | | | 12,321,314 | | | | 228,020,316 | | |
| Chinese Estates Holdings Ltd. | | | | | | | 10,831,000 | | | | 19,696,768 | | |
| Great Eagle Holdings Ltd. | | | | | | | 18,138,626 | | | | 67,809,904 | | |
| Henderson Land Development Company Ltd. | | | | | | | 16,018,378 | | | | 151,095,455 | | |
| Hysan Development Company Ltd. | | | | | | | 27,922,190 | | | | 79,855,444 | | |
| Kerry Properties Ltd. | | | | | | | 2,336,231 | | | | 18,875,850 | | |
| Sino Land Co., Ltd. | | | | | | | 5,084,264 | | | | 17,996,472 | | |
| Sun Hung Kai Properties Ltd. | | | | | | | 5,952,324 | | | | 126,261,881 | | |
| Wharf Holdings Ltd. | | | | | | | 4,788,241 | | | | 25,115,943 | | |
| | | | | | | | 734,728,033 | | |
| HOTEL | | | 0.9 | % | | | | | | | | | |
| Shangri-La Asia Ltd. | | | | | | | 11,085,168 | | | | 35,185,819 | | |
| OFFICE | | | 3.3 | % | | | | | | | | | |
| Hongkong Land Holdings Ltd. (USD) | | | | | | | 24,669,071 | | | | 121,865,211 | | |
| REAL ESTATE OPERATIONS/DEVELOPMENT | | | 0.5 | % | | | | | | | | | |
| New World China Land Ltd. | | | | | | | 18,499,088 | | | | 16,773,354 | | |
| TOTAL HONG KONG | | | | | | | | | | | 908,552,417 | | |
See accompanying notes to financial statements.
13
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2007
| | | | | Number
of Shares | | Value | |
| ITALY | | | 1.5 | % | | | | | | | | | |
| OFFICE | | | 1.2 | % | | | | | | | | | |
| Beni Stabili S.p.A. | | | | | | | 39,500,999 | | | $ | 42,938,944 | | |
| SHOPPING CENTER | | | 0.3 | % | | | | | | | | | |
| Immobiliare Grande Distribuzione | | | | | | | 3,671,068 | | | | 10,922,427 | | |
| TOTAL ITALY | | | | | | | | | | | 53,861,371 | | |
| JAPAN | | | 19.2 | % | | | | | | | | | |
| DIVERSIFIED | | | 10.2 | % | | | | | | | | | |
| Heiwa Real Estate Co., Ltd. | | | | | | | 5,240,500 | | | | 33,305,778 | | |
| Kenedix Realty Investment Corp. | | | | | | | 9,209 | | | | 61,495,001 | | |
| Mitsubishi Estate Co., Ltd. | | | | | | | 9,833,400 | | | | 237,219,827 | | |
| Sumitomo Realty & Development Co., Ltd. | | | | | | | 950,000 | | | | 23,512,957 | | |
| Tokyo Tatemono Co., Ltd. | | | | | | | 2,167,000 | | | | 20,522,634 | | |
| | | | | | | | 376,056,197 | | |
| OFFICE | | | 6.8 | % | | | | | | | | | |
| DA Office Investment Corp. | | | | | | | 5,770 | | | | 37,394,083 | | |
| Daibiru Corp. | | | | | | | 928,800 | | | | 9,993,444 | | |
| Mitsui Fudosan Co., Ltd. | | | | | | | 8,559,000 | | | | 186,173,477 | | |
| Mori Hills REIT Investment Corp. | | | | | | | 1,426 | | | | 9,828,761 | | |
| Nomura Real Estate Office Fund | | | | | | | 319 | | | | 3,026,809 | | |
| NTT Urban Development Corp. | | | | | | | 2,382 | | | | 3,859,303 | | |
| | | | | | | | 250,275,877 | | |
| SHOPPING CENTER | | | 2.2 | % | | | | | | | | | |
| AEON Mall Co., Ltd. | | | | | | | 3,013,700 | | | | 79,581,211 | | |
| TOTAL JAPAN | | | | | | | | | | | 705,913,285 | | |
| NETHERLANDS | | | 1.8 | % | | | | | | | | | |
| DIVERSIFIED | | | 0.6 | % | | | | | | | | | |
| Eurocommercial Properties NV | | | | | | | 397,823 | | | | 20,531,794 | | |
| OFFICE | | | 0.4 | % | | | | | | | | | |
| VastNed Offices/Industrial NV | | | | | | | 500,881 | | | | 16,674,772 | | |
| SHOPPING CENTER | | | 0.8 | % | | | | | | | | | |
| Corio NV | | | | | | | 344,373 | | | | 27,893,382 | | |
| TOTAL NETHERLANDS | | | | | | | | | | | 65,099,948 | | |
See accompanying notes to financial statements.
14
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2007
| | | | | Number
of Shares | | Value | |
| NORWAY | | | 0.5 | % | | | | | | | | | |
| DIVERSIFIED | |
| Norwegian Property ASA | | | | | | | 1,489,477 | | | $ | 18,241,797 | | |
| SINGAPORE | | | 3.1 | % | | | | | | | | | |
| DIVERSIFIED | | | 2.0 | % | | | | | | | | | |
| CapitaLand Ltd. | | | | | | | 615,000 | | | | 2,678,836 | | |
| Keppel Land Ltd. | | | | | | | 11,725,000 | | | | 59,299,038 | | |
| Singapore Land Ltd. | | | | | | | 1,990,100 | | | | 11,060,335 | | |
| | | | | | | | 73,038,209 | | |
| OFFICE | | | 1.1 | % | | | | | | | | | |
| CapitaCommercial Trust | | | | | | | 23,808,000 | | | | 40,356,747 | | |
| TOTAL SINGAPORE | | | | | | | | | | | 113,394,956 | | |
| SWEDEN | | | 1.6 | % | | | | | | | | | |
| DIVERSIFIED | |
| Castellum AB | | | | | | | 2,931,952 | | | | 30,507,144 | | |
| Fabege AB | | | | | | | 2,832,263 | | | | 29,031,660 | | |
| | | | | | | | 59,538,804 | | |
| UNITED KINGDOM | | | 21.6 | % | | | | | | | | | |
| DIVERSIFIED | | | 12.7 | % | | | | | | | | | |
| British Land Co., PLC | | | | | | | 6,171,005 | | | | 116,083,846 | | |
| Hammerson PLC | | | | | | | 5,185,718 | | | | 105,807,595 | | |
| Helical Bar PLC | | | | | | | 2,696,346 | | | | 17,175,512 | | |
| Land Securities Group PLC | | | | | | | 7,663,179 | | | | 229,730,166 | | |
| | | | | | | | 468,797,119 | | |
| INDUSTRIAL | | | 2.8 | % | | | | | | | | | |
| Brixton PLC | | | | | | | 5,135,075 | | | | 30,128,998 | | |
| Segro PLC | | | | | | | 7,598,875 | | | | 71,093,721 | | |
| | | | | | | | 101,222,719 | | |
| OFFICE | | | 5.2 | % | | | | | | | | | |
| Derwent London PLC | | | | | | | 4,405,894 | | | | 124,013,093 | | |
| Great Portland Estates PLC | | | | | | | 7,363,018 | | | | 68,887,084 | | |
| | | | | | | | 192,900,177 | | |
See accompanying notes to financial statements.
15
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
December 31, 2007
| | | | | Number
of Shares | | Value | |
| SELF STORAGE | | | 0.9 | % | | | | | | | | | |
| Safestore Holdings Ltd. | | | | | | | 9,108,419 | | | $ | 31,548,328 | | |
| TOTAL UNITED KINGDOM | | | | | | | | | | | 794,468,343 | | |
| TOTAL COMMON STOCK (Identified cost—$3,636,882,395) | | | | | | | | | | | 3,647,971,162 | | |
| | | | | Number
of Rights | | | |
| RIGHTS | | | 0.0 | % | | | | | | | | | |
| HONG KONG | |
Wharf Holdings Ltd., expires 1/8/08a
TOTAL RIGHTS (Identified cost—$0) | | | | | | | 598,530 | | | | 821,334 | | |
| | | | | Principal
Amount | | | |
| COMMERCIAL PAPER | | | 1.4 | % | | | | | | | | | |
Prudential Funding Corp., 3.15%, due 1/2/08
(Identified cost—$52,910,370) | | | | | | $ | 52,915,000 | | | | 52,910,370 | | |
| TOTAL INVESTMENTS (Identified cost—$3,689,792,765) | | | 100.4 | % | | | | | | | 3,701,702,866 | | |
| LIABILITIES IN EXCESS OF OTHER ASSETS | | | (0.4 | )% | | | | | | | (15,633,460 | ) | |
| NET ASSETS | | | 100.0 | % | | | | | | $ | 3,686,069,406 | | |
Glossary of Portfolio Abbreviations
REIT Real Estate Investment Trust
USD United States Dollar
Note: Percentages indicated are based on the net assets of the fund.
a Non-income producing security.
See accompanying notes to financial statements.
16
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2007
| ASSETS: | |
| Investments in securities, at value (Identified cost—$3,689,792,765) | | $ | 3,701,702,866 | | |
| Cash | | | 30,697 | | |
| Receivable for fund shares sold | | | 77,103,551 | | |
| Receivable for investment securities sold | | | 27,061,534 | | |
| Dividends receivable | | | 11,415,828 | | |
| Other assets | | | 51,781 | | |
| Total Assets | | | 3,817,366,257 | | |
| LIABILITIES: | |
| Payable for dividends declared | | | 88,595,527 | | |
| Payable for fund shares redeemed | | | 38,140,558 | | |
| Payable for investment advisory fees | | | 2,956,710 | | |
| Payable for administration fees | | | 199,716 | | |
| Payable for distribution fees | | | 128,755 | | |
| Payable for shareholder servicing fees | | | 45,631 | | |
| Payable for directors' fees | | | 4,163 | | |
| Other liabilities | | | 1,225,791 | | |
| Total Liabilities | | | 131,296,851 | | |
| NET ASSETS | | $ | 3,686,069,406 | | |
| NET ASSETS consist of: | |
| Paid-in-capital | | $ | 3,942,135,943 | | |
| Dividends in excess of net investment income | | | (138,447,934 | ) | |
| Accumulated net realized loss | | | (129,528,366 | ) | |
| Net unrealized appreciation | | | 11,909,763 | | |
| | | $ | 3,686,069,406 | | |
See accompanying notes to financial statements.
17
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES—(Continued)
December 31, 2007
| CLASS A SHARES: | |
| NET ASSETS | | $ | 1,475,242,525 | | |
| Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 91,208,354 | | |
| Net asset value and redemption price per share | | $ | 16.17 | | |
| Maximum offering price per share ($16.17 ÷ 0.955)a | | $ | 16.93 | | |
| CLASS C SHARES: | |
| NET ASSETS | | $ | 1,074,874,946 | | |
| Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 66,654,747 | | |
| Net asset value and offering price per shareb | | $ | 16.13 | | |
| CLASS I SHARES: | |
| NET ASSETS | | $ | 1,135,951,935 | | |
| Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 70,144,033 | | |
| Net asset value, offering, and redemption price per share | | $ | 16.19 | | |
a On investments of $100,000 or more, the offering price is reduced.
b Redemption price per share is equal to the net asset value per share less any applicable deferred sales charge of 1% on shares held for less than one year.
See accompanying notes to financial statements.
18
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2007
| Investment Income: | |
| Dividend income (net of $12,103,898 of foreign withholding tax) | | $ | 105,894,337 | | |
| Interest income | | | 2,269,662 | | |
| Total Income | | | 108,163,999 | | |
| Expenses: | |
| Investment advisory fees | | | 34,912,814 | | |
| Distribution fees—Class A | | | 4,230,202 | | |
| Distribution fees—Class C | | | 8,514,949 | | |
| Shareholder servicing fees—Class A | | | 1,692,081 | | |
| Shareholder servicing fees—Class C | | | 2,838,316 | | |
| Custodian fees and expenses | | | 3,226,150 | | |
| Administration fees | | | 2,899,660 | | |
| Transfer agent fees and expenses | | | 1,603,143 | | |
| Shareholder reporting expenses | | | 593,278 | | |
| Registration and filing fees | | | 252,826 | | |
| Professional fees | | | 179,827 | | |
| Line of credit fees | | | 57,820 | | |
| Directors' fees and expenses | | | 52,665 | | |
| Miscellaneous | | | 69,512 | | |
| Total Expenses | | | 61,123,243 | | |
| Net Investment Income | | | 47,040,756 | | |
| Net Realized and Unrealized Gain (Loss): | |
| Net realized gain (loss) on: | |
| Investments | | | 42,518,008 | | |
| Foreign currency transactions | | | (4,883,428 | ) | |
| Net realized gain | | | 37,634,580 | | |
| Net change in unrealized appreciation on: | |
| Investments | | | (394,271,824 | ) | |
| Foreign currency translations | | | 52,045 | | |
| Net change in unrealized appreciation | | | (394,219,779 | ) | |
| Net realized and unrealized loss | | | (356,585,199 | ) | |
| Net Decrease in Net Assets Resulting from Operations | | $ | (309,544,443 | ) | |
See accompanying notes to financial statements.
19
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
| | | For the
Year Ended
December 31, 2007 | | For the
Year Ended
December 31, 2006 | |
| Change in Net Assets: | |
| From Operations: | |
| Net investment income | | $ | 47,040,756 | | | $ | 12,449,838 | | |
| Net realized gain on investments | | | 37,634,580 | | | | 27,735,137 | | |
| Net change in unrealized appreciation | | | (394,219,779 | ) | | | 383,026,686 | | |
Net increase (decrease) in net assets resulting from
operations | | | (309,544,443 | ) | | | 423,211,661 | | |
| Dividends and Distributions to Shareholders from: | |
| Net investment income | |
| Class A | | | (85,498,592 | ) | | | (21,290,215 | ) | |
| Class C | | | (53,461,452 | ) | | | (13,994,061 | ) | |
| Class I | | | (66,495,517 | ) | | | (18,596,373 | ) | |
| Net realized gain on investments | |
| Class A | | | (46,125,099 | ) | | | (3,907,785 | ) | |
| Class C | | | (33,340,919 | ) | | | (2,983,495 | ) | |
| Class I | | | (34,900,639 | ) | | | (3,127,535 | ) | |
| Total dividends and distributions to shareholders | | | (319,822,218 | ) | | | (63,899,464 | ) | |
| Capital Stock Transactions: | |
| Increase in net assets from fund share transactions | | | 1,994,884,224 | | | | 1,658,109,653 | | |
| Total increase in net assets | | | 1,365,517,563 | | | | 2,017,421,850 | | |
| Net Assets: | |
| Beginning of year | | | 2,320,551,843 | | | | 303,129,993 | | |
| End of yeara | | $ | 3,686,069,406 | | | $ | 2,320,551,843 | | |
a Includes dividends in excess of net investment income of $138,447,934 and $37,088,746, respectively.
See accompanying notes to financial statements.
20
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout each period and other performance information derived from the financial statements. It should be read in conjunction with the financial statements and notes thereto.
| | | Class A | |
| | | For the Year Ended December 31, | | For the Period
March 31, 2005a
through | |
| Per Share Operating Performance: | | 2007 | | 2006 | | December 31, 2005 | |
| Net asset value, beginning of period | | $ | 18.48 | | | $ | 13.28 | | | $ | 11.46 | | |
| Income from investment operations: | |
| Net investment income | | | 0.25 | c | | | 0.20 | b,c | | | 0.07 | c | |
| Net realized and unrealized gain (loss) on investments | | | (1.09 | ) | | | 5.59 | | | | 1.86 | | |
| Total from investment operations | | | (0.84 | ) | | | 5.79 | | | | 1.93 | | |
| Less dividends and distributions to shareholders from: | |
| Net investment income | | | (0.95 | ) | | | (0.50 | ) | | | (0.06 | ) | |
| Net realized gain on investments | | | (0.53 | ) | | | (0.09 | ) | | | (0.05 | ) | |
| Total dividends and distributions to shareholders | | | (1.48 | ) | | | (0.59 | ) | | | (0.11 | ) | |
| Redemption fees retained by the fund | | | 0.01 | | | | 0.00 | d | | | 0.00 | d | |
| Net increase (decrease) in net asset value | | | (2.31 | ) | | | 5.20 | | | | 1.82 | | |
| Net asset value, end of period | | $ | 16.17 | | | $ | 18.48 | | | $ | 13.28 | | |
| Total investment returnf | | | –4.64 | % | | | 43.88 | % | | | 16.88 | %e | |
| Ratios/Supplemental Data: | |
| Net assets, end of period (in millions) | | $ | 1,475.2 | | | $ | 921.0 | | | $ | 91.6 | | |
| Ratio of expenses to average daily net assets (before expense reduction) | | | 1.46 | % | | | 1.61 | % | | | 1.86 | %g | |
| Ratio of expenses to average daily net assets (net of expense reduction) | | | 1.46 | % | | | 1.61 | % | | | 1.70 | %g | |
| Ratio of net investment income to average daily net assets (before expense reduction) | | | 1.31 | % | | | 1.26 | % | | | 0.56 | %g | |
| Ratio of net investment income to average daily net assets (net of expense reduction) | | | 1.31 | % | | | 1.26 | % | | | 0.72 | %g | |
| Portfolio turnover rate | | | 67 | % | | | 30 | % | | | 35 | %e | |
a Commencement of operations.
b 18.1% of gross income was attributable to a special dividend paid by Great Eagle Holdings Ltd.
c Calculation based on average shares outstanding.
d Amount is less than $0.005.
e Not annualized.
f Does not reflect sales charges, which would reduce return.
g Annualized.
See accompanying notes to financial statements.
21
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
| | | Class C | |
| | | For the Year Ended December 31, | | For the Period
March 31, 2005a
through | |
| Per Share Operating Performance: | | 2007 | | 2006 | | December 31, 2005 | |
| Net asset value, beginning of period | | $ | 18.44 | | | $ | 13.26 | | | $ | 11.46 | | |
| Income from investment operations: | |
| Net investment income | | | 0.12 | c | | | 0.10 | b,c | | | 0.01 | c | |
| Net realized and unrealized gain (loss) on investments | | | (1.07 | ) | | | 5.58 | | | | 1.87 | | |
| Total from investment operations | | | (0.95 | ) | | | 5.68 | | | | 1.88 | | |
| Less dividends and distributions to shareholders from: | |
| Net investment income | | | (0.84 | ) | | | (0.41 | ) | | | (0.03 | ) | |
| Net realized gain on investments | | | (0.53 | ) | | | (0.09 | ) | | | (0.05 | ) | |
| Total dividends and distributions to shareholders | | | (1.37 | ) | | | (0.50 | ) | | | (0.08 | ) | |
| Redemption fees retained by the fund | | | 0.01 | | | | 0.00 | d | | | 0.00 | d | |
| Net increase (decrease) in net asset value | | | (2.31 | ) | | | 5.18 | | | | 1.80 | | |
| Net asset value, end of period | | $ | 16.13 | | | $ | 18.44 | | | $ | 13.26 | | |
| Total investment returnf | | | –5.23 | % | | | 42.99 | % | | | 16.37 | %e | |
| Ratios/Supplemental Data: | |
| Net assets, end of period (in millions) | | $ | 1,074.9 | | | $ | 688.1 | | | $ | 61.4 | | |
| Ratio of expenses to average daily net assets (before expense reduction) | | | 2.12 | % | | | 2.26 | % | | | 2.50 | %g | |
| Ratio of expenses to average daily net assets (net of expense reduction) | | | 2.12 | % | | | 2.26 | % | | | 2.35 | %g | |
Ratio of net investment income (loss) to average daily net assets (before
expense reduction) | | | 0.63 | % | | | 0.63 | % | | | (0.09 | )%g | |
| Ratio of net investment income to average daily net assets (net of expense reduction) | | | 0.63 | % | | | 0.63 | % | | | 0.07 | %g | |
| Portfolio turnover rate | | | 67 | % | | | 30 | % | | | 35 | %e | |
a Commencement of operations.
b 18.1% of gross income was attributable to a special dividend paid by Great Eagle Holdings Ltd.
c Calculation based on average shares outstanding.
d Amount is less than $0.005.
e Not annualized.
f Does not reflect sales charges, which would reduce return.
g Annualized.
See accompanying notes to financial statements.
22
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
| | | Class I | |
| | | For the Year Ended December 31, | | For the Period
March 31, 2005a
through | |
| Per Share Operating Performance: | | 2007 | | 2006 | | December 31, 2005 | |
| Net asset value, beginning of period | | $ | 18.50 | | | $ | 13.28 | | | $ | 11.46 | | |
| Income from investment operations: | |
| Net investment income | | | 0.30 | c | | | 0.26 | b,c | | | 0.11 | c | |
| Net realized and unrealized gain (loss) on investments | | | (1.08 | ) | | | 5.59 | | | | 1.85 | | |
| Total from investment operations | | | (0.78 | ) | | | 5.85 | | | | 1.96 | | |
| Less dividends and distributions to shareholders from: | |
| Net investment income | | | (1.01 | ) | | | (0.54 | ) | | | (0.09 | ) | |
| Net realized gain on investments | | | (0.53 | ) | | | (0.09 | ) | | | (0.05 | ) | |
| Total dividends and distributions to shareholders | | | (1.54 | ) | | | (0.63 | ) | | | (0.14 | ) | |
| Redemption fees retained by the fund | | | 0.01 | | | | 0.00 | d | | | 0.00 | d | |
| Net increase (decrease) in net asset value | | | (2.31 | ) | | | 5.22 | | | | 1.82 | | |
| Net asset value, end of period | | $ | 16.19 | | | $ | 18.50 | | | $ | 13.28 | | |
| Total investment return | | | –4.32 | % | | | 44.45 | % | | | 17.14 | %e | |
| Ratios/Supplemental Data: | |
| Net assets, end of period (in millions) | | $ | 1,136.0 | | | $ | 711.5 | | | $ | 150.2 | | |
| Ratio of expenses to average daily net assets (before expense reduction) | | | 1.12 | % | | | 1.25 | % | | | 1.57 | %f | |
| Ratio of expenses to average daily net assets (net of expense reduction) | | | 1.12 | % | | | 1.25 | % | | | 1.35 | %f | |
| Ratio of net investment income to average daily net assets (before expense reduction) | | | 1.61 | % | | | 1.60 | % | | | 1.00 | %f | |
| Ratio of net investment income to average daily net assets (net of expense reduction) | | | 1.61 | % | | | 1.60 | % | | | 1.22 | %f | |
| Portfolio turnover rate | | | 67 | % | | | 30 | % | | | 35 | %e | |
a Commencement of operations.
b 18.1% of gross income was attributable to a special dividend paid by Great Eagle Holdings Ltd.
c Calculation based on average shares outstanding.
d Amount is less than $0.005.
e Not annualized.
f Annualized.
See accompanying notes to financial statements.
23
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Cohen & Steers International Realty Fund, Inc. (the fund) was incorporated under the laws of the State of Maryland on November 23, 2004 and is registered under the Investment Company Act of 1940, as amended, as a nondiversified, open-end management investment company. The fund's investment objective is total return. The authorized shares of the fund are divided into three classes designated Class A, C, and I shares. Each of the fund's shares has equal dividend, liquidation and voting rights (except for matters relating to distributions and shareholder servicing of such shares).
The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New York Stock Exchange are valued, except as indicated below, at the last sale price reflected at the close of the New York Stock Exchange on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices for the day or, if no asked price is available, at the bid price.
Securities not listed on the New York Stock Exchange but listed on other domestic or foreign securities exchanges or admitted to trading on the National Association of Securities Dealers Automated Quotations, Inc. (Nasdaq) national market system are valued in a similar manner. Securities traded on more than one securities exchange are valued at the last sale price on the business day as of which such value is being determined as reflected on the tape at the close of the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market, including listed securities whose primary market is believed by Cohen & Steers Capital Management, Inc. (the investment manager) to be over-the-counter, but excluding securities admitted to trading on the Nasdaq National List, are valued at the official closing prices as reported by Nasdaq, the National Quotation Bureau, or such other comparable sources as the Board of Directors deem appropriate to reflect their fair market value. If there has been no sale on such day, the securities are valued at the mean of the closing bid and asked prices for the day, or if no asked price is available, at the bid price. However, certain fixed-income securities may be valued on the basis of prices provided by a pricing service when such prices are believed by the Board of Directors to reflect the fair market value of such securities. Where securities are traded on more than one exchan ge and also over-the-counter, the securities will generally be valued using the quotations the Board of Directors believes most closely reflect the value of such securities.
Portfolio securities primarily traded on foreign markets are generally valued at the closing values of such securities on their respective exchanges or if after the close of the foreign markets, but prior to the close of business
24
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
on the day the securities are being valued, market conditions change significantly, certain foreign securities may be fair valued pursuant to procedures established by the Board of Directors.
Securities for which market prices are unavailable, or securities for which the investment manager determines that bid and/or asked price does not reflect market value, will be valued at fair value pursuant to procedures approved by the fund's Board of Directors. Circumstances in which market prices may be unavailable include, but are not limited to, when trading in a security is suspended, the exchange on which the security is traded is subject to an unscheduled close or disruption or material events occur after the close of the exchange on which the security is principally traded. In these circumstances, the fund determines fair value in a manner that fairly reflects the market value of the security on the valuation date based on consideration of any information or factors it deems appropriate. These may include recent transactions in comparable securities, information relating to the specific security and developments in the markets.
The fund's use of fair value pricing may cause the net asset value of fund shares to differ from the net asset value that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.
Short-term debt securities, which have a maturity date of 60 days or less, are valued at amortized cost, which approximates value.
Security Transactions, Investment Income and Expense Allocations: Security transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized over the life of the respective securities. Dividend income, net of applicable withholding taxes, is recorded on the ex-dividend date, except for certain dividends on foreign securities, which are recorded as soon as the fund is informed after the ex-dividend date. The fund records distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available, and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The fund adjusts the estimated amounts of the components of distributions (and consequently its net investment income) as an increase to unrealized appreciation/(depreciation) and realized gain/(loss) on investments as necessary once the issuers provide information about the actual composition of the distributions. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.
Foreign Currency Translations: The books and records of the fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and foreign currency contracts are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions.
25
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
The resultant exchange gains and losses are recorded as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities.
Foreign Securities: The fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.
Dividends and Distributions to Shareholders: Dividends from net investment income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from GAAP. Dividends from net investment income are declared and paid semi-annually. Net realized capital gains, unless offset by any available capital loss carryforward, are distributed to shareholders annually. Dividends and distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the fund based on the net asset value per share at the close of business on the payable date unless the shareholder has elected to have them paid in cash.
Income Taxes: It is the policy of the fund to continue to qualify as a regulated investment company, if such qualification is in the best interest of the shareholders, by complying with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, and by distributing substantially all of its taxable earnings to its shareholders. Accordingly, no provision for federal income or excise tax is necessary.
Note 2. Investment Advisory and Administration Fees and Other Transactions with Affiliates
Investment Advisory Fees: The advisor serves as the fund's investment advisor pursuant to an investment advisory agreement (the advisory agreement). Under the terms of the advisory agreement, the advisor provides the fund with the day-to-day investment decisions and generally manages the fund's investments in accordance with the stated policies of the fund, subject to the supervision of the fund's Board of Directors. For the services provided to the fund, the advisor receives a monthly fee, accrued daily and paid monthly, at the annual rate of 0.95% of the average daily net assets of the fund up to and including $1.5 billion and 0.85% of the average daily net asset above $1.5 billion.
Under subadvisory agreements between the advisor and Cohen & Steers Asia Limited, Cohen & Steers UK Limited and Cohen & Steers Europe S.A. (formerly, Houlihan Rovers S.A.) (collectively the subadvisors),
26
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
affiliates of the advisor, the subadvisors are responsible for managing the fund's investments in certain non-U.S. real estate securities. For their services provided under the subadvisory agreement, the advisor (not the fund) pays the subadvisors 27.5%, 10.0% and 10.0%, respectively, of the advisory fee received by the advisor from the fund. Prior to January 16, 2007, Cohen & Steers Europe S.A. was the sole sub-advisor and was paid by the advisor at the annual rate of 0.30% of the average daily net assets of the fund. For the year ended December 31, 2007, the advisor paid the subadvisors $9,601,024, $3,386,436 and $3,731,821, respectively.
Administration Fees: The fund has entered into an administration agreement with the advisor under which the advisor performs certain administrative functions for the fund and receives a fee, accrued daily and paid monthly, at the annual rate of 0.06% of the fund's average daily net assets. For the year ended December 31, 2007, the fund paid the advisor $2,358,552 in fees under this administration agreement. Additionally, the fund has retained State Street Bank and Trust Company as sub-administrator under a fund accounting and administration agreement.
Distribution Fees: Shares of the fund are distributed by Cohen & Steers Securities, LLC (the distributor), an affiliated entity of the advisor. The fund has adopted a distribution plan (the plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The plan provides that the fund will pay the distributor a fee at an annual rate of up to 0.25% of the average daily net assets attributable to the Class A shares and up to 0.75% of the average daily net assets attributable to the Class C shares.
For the year ended December 31, 2007, the fund has been advised that the distributor received $1,232,676 in sales commissions from the sale of Class A shares and that the distributor also received $545,372 and $939,654 of contingent deferred sales charges relating to redemptions of Class A and Class C shares, respectively. The distributor has advised the fund that proceeds from the contingent deferred sales charge on the Class C shares are paid to the distributor and are used by the distributor to defray its expenses related to providing distribution-related services to the fund in connection with the sale of the Class C shares, including payments to dealers and other financial intermediaries for selling Class C shares and interest and other financing costs associated with Class C shares.
Shareholder Servicing Fees: The fund has adopted a shareholder services plan which provides that the fund may obtain the services of qualified financial institutions to act as shareholder servicing agents for their customers. For these services, the fund may pay the shareholder servicing agent a fee, accrued daily and paid monthly, at an annual rate of up to 0.10% of the average daily net asset value of the fund's Class A shares and up to 0.25% of the average daily net asset value of the fund's Class C shares.
Directors' and Officers' Fees: Certain directors and officers of the fund are also directors, officers, and/or employees of the advisor. The fund does not pay compensation to any affiliated directors and officers except for the Chief Compliance Officer, who received $42,245 from the fund for the year ended December 31, 2007.
27
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, for the year ended December 31, 2007 totaled $4,304,261,712 and $2,568,294,799 respectively.
Note 4. Income Tax Information
The tax character of dividends and distributions paid was as follows:
| | | For the Year
Ended
December 31, 2007 | | For the Year
Ended
December 31, 2006 | |
| Ordinary income | | $ | 282,912,385 | | | $ | 62,681,868 | | |
| Long-term capital gains | | | 36,909,833 | | | | 1,217,596 | | |
| Total dividends and distributions | | $ | 319,822,218 | | | $ | 63,899,464 | | |
As of December 31, 2007, the tax-basis components of accumulated earnings and the federal tax cost were as follows:
| Gross unrealized appreciation | | $ | 226,863,608 | | |
| Gross unrealized depreciation | | | (338,235,786 | ) | |
| Net unrealized depreciation | | $ | (111,372,178 | ) | |
| Cost for federal income tax purposes | | $ | 3,813,075,044 | | |
As of December 31, 2007, the fund had temporary book/tax differences primarily attributable to wash sales on portfolio securities, mark-to-market of passive foreign investment companies (PFICs) and post-October losses (capital and foreign currency losses incurred after October 31 within the taxable year which are deemed to arise on the first day of the fund's next taxable year) and permanent book/tax differences primarily attributable to tax adjustments on sales of PFICs. To reflect reclassifications arising from the permanent differences, paid-in capital was credited $8,691,138, accumulated net realized gain was charged $65,746,755 and accumulated net investment income was credited $57,055,617.
28
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 5. Capital Stock
The fund is authorized to issue 200 million shares of capital stock, at a par value of $0.001 per share. The Board of Directors of the fund may increase or decrease the aggregate number of shares of common stock that the fund has authority to issue. Transactions in fund shares were as follows:
| | | For the
Year Ended
December 31, 2007 | | For the
Year Ended
December 31, 2006 | |
| | | Shares | | Amount | | Shares | | Amount | |
| CLASS A: | |
| Sold | | | 79,760,136 | | | $ | 1,527,023,383 | | | | 46,467,246 | | | $ | 751,852,467 | | |
Issued as reinvestment of
dividends and distributions | | | 4,669,290 | | | | 78,131,752 | | | | 790,327 | | | | 13,986,265 | | |
| Redeemed | | | (43,058,128 | ) | | | (784,608,763 | ) | | | (4,318,940 | ) | | | (67,382,581 | ) | |
Redemption fees retained by
the funda | | | — | | | | 702,722 | | | | — | | | | 45,337 | | |
| Net increase | | | 41,371,298 | | | $ | 821,249,094 | | | | 42,938,633 | | | $ | 698,501,488 | | |
| CLASS C: | |
| Sold | | | 41,585,208 | | | $ | 793,585,391 | | | | 33,421,539 | | | $ | 534,794,092 | | |
Issued as reinvestment of
dividends and distributions | | | 2,352,429 | | | | 38,981,598 | | | | 418,972 | | | | 7,471,231 | | |
| Redeemed | | | (14,601,000 | ) | | | (265,281,911 | ) | | | (1,149,560 | ) | | | (18,310,143 | ) | |
Redemption fees retained by
the funda | | | — | | | | 437,125 | | | | — | | | | 33,909 | | |
| Net increase | | | 29,336,637 | | | $ | 567,722,203 | | | | 32,690,951 | | | $ | 523,989,089 | | |
| CLASS I: | |
| Sold | | | 47,863,396 | | | $ | 910,203,903 | | | | 29,457,416 | | | $ | 472,400,076 | | |
Issued as reinvestment of
dividends and distributions | | | 5,298,020 | | | | 88,700,679 | | | | 1,103,766 | | | | 19,357,953 | | |
| Redeemed | | | (21,479,393 | ) | | | (393,408,035 | ) | | | (3,406,325 | ) | | | (56,177,768 | ) | |
Redemption fees retained by
the funda | | | — | | | | 416,380 | | | | — | | | | 38,815 | | |
| Net increase | | | 31,682,023 | | | $ | 605,912,927 | | | | 27,154,857 | | | $ | 435,619,076 | | |
a The fund may charge a 2% redemption fee on shares sold within 60 days of the time of purchase. Redemption fees are paid directly to the fund. Prior to September 28, 2007, the redemption fee was charged at a rate of 1% on shares sold within six months of the time of purchase.
29
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 6. Borrowings
The fund, in conjunction with other Cohen & Steers funds, is a party to a $200,000,000 syndicated credit agreement (the credit agreement) with State Street Bank and Trust Company, as administrative agent and operations agent, and the lenders identified in the credit agreement, which expires December 2008. The fund pays a commitment fee of 0.10% per annum on its proportionate share of the unused portion of the credit agreement.
During the year ended December 31, 2007, the fund did not utilize the line of credit.
Note 7. Other
In the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is dependent on claims that may be made against the fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.
Note 8. New Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (FASB) issued Interpretation 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109 (FIN 48). FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position must meet before being recognized in the financial statements. FIN 48 is effective for fiscal years beginning after December 15, 2006. An assessment of the fund's tax positions has been made and it has been determined that there is no impact to the fund's financial statements.
In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management has evaluated the impact of SFAS 157 and it is not expected to have a material impact on the fund's net assets or results of operations.
30
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Cohen & Steers International Realty Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Cohen & Steers International Realty Fund, Inc. (the "Fund") at December 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2007 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
February 18, 2008
31
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
TAX INFORMATION—2007 (Unaudited)
Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the fund designates qualified dividend income of $54,337,899. Also, the fund designates a long-term capital gain distribution of $37,886,667 at the 15% rate and $34,130 at the 25% rate or maximum allowable.
The fund has elected, pursuant to section 853 of the Internal Revenue Code, to pass through foreign taxes of $10,254,348. The fund generated net foreign source income of $117,998,235 with respect to this election.
OTHER INFORMATION
A description of the policies and procedures that the fund uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 800-330-7348, (ii) on our Web site at cohenandsteers.com or (iii) on the Securities and Exchange Commission's Web site at http://www.sec.gov. In addition, the fund's proxy voting record for the most recent 12-month period ended June 30 is available (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SEC's Web site at http://www.sec.gov.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund's Forms N-Q are available (i) without charge, upon request by calling 800-330-7348, or (ii) on the SEC's Web site at http://www.sec.gov. In addition, the Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.
Please note that the distributions paid by the fund to shareholders are subject to recharacterization for tax purposes. The fund may also pay distributions in excess of the fund's net investment company taxable income and this excess would be a tax-free return of capital distributed from the fund's assets. The final tax treatment of all distributions is reported to shareholders on their 1099-DIV forms, which are mailed after the close of each calendar year.
32
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
MANAGEMENT OF THE FUND
The business and affairs of the fund are managed under the direction of the board of directors. The board of directors approves all significant agreements between the fund and persons or companies furnishing services to it, including the fund's agreements with its advisor, administrator, custodian and transfer agent. The management of the fund's day-to-day operations is delegated to its officers, the advisor and the fund's administrator, subject always to the investment objective and policies of the fund and to the general supervision of the board of directors.
The directors and officers of the fund and their principal occupations during the past five years are set forth below. The statement of additional information (SAI) includes additional information about fund directors and is available, without charge, upon request by calling 800-330-7348.
| Name, Address and Age* | | Position(s) Held
with Fund | | Term of
Office | | Principal Occupation
During Past 5 Years
(Including Other
Directorships Held) | | Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund) | | Length
of Time
Served** | |
| Interested Directors1 | |
|
| Robert H. Steers Age: 54 | | Director and Co-Chairman | | Until next election of directors | | Co-Chairman and Co-Chief Executive Officer of Cohen & Steers Capital Management, Inc. (CSCM), the fund's investment manager, and its parent company, Cohen & Steers, Inc. (CNS) since 2004. Vice President and Director, Cohen & Steers Securities, LLC (CSSL), the Cohen & Steers open-end funds' distributor. Prior thereto, Chairman of CSCM and the Cohen & Steers funds. | | | 22 | | | 1991 to present | |
|
| Martin Cohen Age: 59 | | Director and Co-Chairman | | Until next election of directors | | Co-Chairman and Co-Chief Executive Officer of CSCM and CNS. Vice President and Director of CSSL. Prior thereto, President of the CSCM and the Cohen & Steers funds. | | | 22 | | | 1991 to present | |
|
(table continued on next page)
* The address for each director is 280 Park Avenue, New York, NY 10017.
** The length of time served represents the year in which the director was first elected or appointed to any fund in the Cohen & Steers fund complex.
1 "Interested person", as defined in the 1940 Act, of the fund because of affiliation with CSCM.
33
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
(table continued from previous page)
| Name, Address and Age* | | Position(s) Held
with Fund | | Term of
Office | | Principal Occupation
During Past 5 Years
(Including Other
Directorships Held) | | Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund) | | Length
of Time
Served** | |
| Disinterested Directors | |
|
| Bonnie Cohen2 Age: 65 | | Director | | Until next election of directors | | Consultant. Director, Reis, Inc.; Chair of the Board of Global Heritage Fund; Program member, The Moriah Fund; Advisory Committee member, The Posse Foundation; Board member, District of Columbia Public Libraries; Visiting Committee, Harvard Business School. Former Under Secretary of State for Management, United States Department of State, 1996-2000. | | | 22 | | | 2001 to present | |
|
| George Grossman Age: 54 | | Director | | Until next election of directors | | Attorney-at-law. | | | 22 | | | 1993 to present | |
|
| Richard E. Kroon Age: 65 | | Director | | Until next election of directors | | Member of Investment Committee, Monmouth University; retired Chairman and Managing Partner of the Sprout Group venture capital funds, then an affiliate of Donaldson, Lufkin & Jenrette Securities Corporation; and former Chairman of the National Venture Capital Association. | | | 22 | | | 2004 to present | |
|
| Richard J. Norman Age: 64 | | Director | | Until next election of directors | | Private Investor. Board of Directors of Maryland Public Television, Board Member of the Salvation Army. Prior thereto, Investment Representative of Morgan Stanley Dean Witter. | | | 22 | | | 2001 to present | |
|
(table continued on next page)
* The address for each director is 280 Park Avenue, New York, NY 10017.
** The length of time served represents the year in which the director was first elected or appointed to any fund in the Cohen & Steers fund complex.
2 Martin Cohen and Bonnie Cohen are not related.
34
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
(table continued from previous page)
| Name, Address and Age* | | Position(s) Held
with Fund | | Term of
Office | | Principal Occupation
During Past 5 Years
(Including Other
Directorships Held) | | Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund) | | Length
of Time
Served** | |
| Frank K. Ross Age: 64 | | Director | | Until next election of directors | | Professor of Accounting, Howard University; Board member of Pepco Holdings, Inc. (electric utility). Formerly, Midatlantic Area Managing Partner for Audit and Risk Advisory Services at KPMG LLP and Managing Partner of its Washington, DC office. | | | 22 | | | 2004 to present | |
|
| Willard H. Smith Jr. Age: 71 | | Director | | Until next election of directors | | Board member of Essex Property Trust Inc., Realty Income Corporation and Crest Net Lease, Inc. Managing Director at Merrill Lynch & Co., Equity Capital Markets Division from 1983 to 1995. | | | 22 | | | 1996 to present | |
|
| C. Edward Ward Jr. Age: 61 | | Director | | Until next election of directors | | Member of the Board of Trustees of Directors Manhattan College, Riverdale, New York. Formerly head of closed-end fund listings for the New York Stock Exchange. | | | 22 | | | 2004 to present | |
|
* The address for each director is 280 Park Avenue, New York, NY 10017.
** The length of time served represents the year in which the director was first elected or appointed to any fund in the Cohen & Steers fund complex.
35
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
The officers of the fund (other than Messrs. Cohen and Steers, whose biographies are provided above), their address, their ages and their principal occupations for at least the past five years are set forth below.
| Name, Address and Age* | | Position(s) Held
with Fund | | Principal Occupation During Past 5 Years | | Length
of Time
Served** | |
| Adam M. Derechin Age: 43 | | President and Chief Executive Officer | | Chief Operating Officer of CSCM (since 2003) and CNS (since 2004). Prior to that, Senior Vice President of CSCM and Vice President and Assistant Treasurer of the Cohen & Steers funds. | | Since 2005 | |
|
| Joseph M. Harvey Age: 44 | | Vice President | | President of CSCM (since 2003) and CNS (since 2004). Prior to that, Senior Vice President and Director of Investment Research of CSCM. | | Since 2004 | |
|
| James S. Corl Age: 41 | | Vice President | | Executive Vice President of CSCM since 2004. Prior to that, Senior Vice President of CSCM. | | Since 2004 | |
|
| Francis C. Poli Age: 45 | | Secretary | | Executive Vice President, Secretary and General Counsel of CSCM and CNS since March 2007. Prior thereto, General Counsel of Allianz Global Investors of America LP. | | Since 2007 | |
|
| James Giallanza Age: 41 | | Treasurer | | Senior Vice President of CSCM since September 2006. Prior thereto, Deputy Head of the US Funds Administration and Treasurer & CFO of various mutual funds within the Legg Mason (formally Citigroup Asset Management) fund complex from August 2004 to September 2006; Director/Controller of the US wholesale business at UBS Global Asset Management (U.S.) from September 2001 to July 2004. | | Since 2006 | |
|
| Lisa Phelan Age: 39 | | Chief Compliance Officer | | Vice President & Director of Compliance of CSCM since January 2006. Chief Compliance Officer of CSSL since 2004. Prior to that, Compliance Officer of CSCM since 2004. Chief Compliance Officer, Avatar Associates & Overture Asset Managers, 2003-2004. First VP, Risk Management, Prudential Securities, Inc. 2000-2003. | | Since 2006 | |
|
* The address of each officer is 280 Park Avenue, New York, NY 10017.
** Officers serve one-year terms. The length of time served represents the year in which the officer was first elected to that position in any fund in the Cohen & Steers fund complex. All of the officers listed above are officers of one or more of the other funds in the complex.
36
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Meet the Cohen & Steers family of open-end funds:
COHEN & STEERS
REALTY SHARES
• Designed for investors seeking maximum total return, investing primarily in REITs
• Symbol: CSRSX
COHEN & STEERS
REALTY INCOME FUND
• Designed for investors seeking maximum total return, investing primarily in real estate securities with an emphasis on both income and capital appreciation
• Symbols: CSEIX, CSBIX, CSCIX, CSDIX
COHEN & STEERS
INTERNATIONAL REALTY FUND
• Designed for investors seeking maximum total return, investing primarily in international real estate securities
• Symbols: IRFAX, IRFCX, IRFIX
COHEN & STEERS
DIVIDEND VALUE FUND
• Designed for investors seeking high current income and long-term growth of income and capital appreciation, investing primarily in dividend paying common stocks and preferred stocks
• Symbols: DVFAX, DVFCX, DVFIX
COHEN & STEERS
INSTITUTIONAL GLOBAL REALTY SHARES
• Designed for investors seeking maximum total return, investing primarily in global real estate securities
• Symbol: GRSIX
COHEN & STEERS
INSTITUTIONAL REALTY SHARES
• Designed for institutional investors seeking maximum total return, investing primarily in REITs
• Symbol: CSRIX
COHEN & STEERS
GLOBAL REALTY SHARES
• Designed for investors seeking maximum total return, investing in global real estate equity securities
• Symbols: CSFAX, CSFBX, CSFCX, CSSPX
COHEN & STEERS
UTILITY FUND
• Designed for investors seeking maximum total return, investing primarily in utilities
• Symbols: CSUAX, CSUBX, CSUCX, CSUIX
COHEN & STEERS
ASIA PACIFIC REALTY SHARES
• Designed for investors seeking maximum total return, investing primarily in real estate securities located in the Asia Pacific region
• Symbols: APFAX, APFCX, APFIX
COHEN & STEERS
EUROPEAN REALTY SHARES
• Designed for investors seeking maximum total return, investing primarily in real estate securities located in Europe
• Symbols: EURAX, EURCX, EURIX
Please consider the investment objectives, risks, charges and expenses of the fund carefully before investing. A prospectus containing this and other information can be obtained by calling 800-330-7348 or by visiting cohenandsteers.com. Please read the prospectus carefully before investing.
Cohen & Steers Securities, LLC, Distributor
37
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
OFFICERS AND DIRECTORS
Robert H. Steers
Director and co-chairman
Martin Cohen
Director and co-chairman
Bonnie Cohen
Director
George Grossman
Director
Richard E. Kroon
Director
Richard J. Norman
Director
Frank K. Ross
Director
Willard H. Smith Jr.
Director
C. Edward Ward, Jr.
Director
Adam M. Derechin
President and chief executive officer
Joseph M. Harvey
Vice president
James S. Corl
Vice president
Francis C. Poli
Secretary
James Giallanza
Treasurer and chief financial officer
Lisa D. Phelan
Chief compliance officer
KEY INFORMATION
Investment Advisor
Cohen & Steers Capital Management, Inc.
280 Park Avenue
New York, NY 10017
(212) 832-3232
Fund Subadministrator and Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
Transfer Agent
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, MA 02171
(800) 437-9912
Legal Counsel
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Distributor
Cohen & Steers Securities, LLC
280 Park Avenue
New York, NY 10017
Nasdaq Symbol: Class A—IRFAX
C—IRFCX
I— IRFIX
Web site: cohenandsteers.com
This report is authorized for delivery only to shareholders of Cohen & Steers International Realty Fund, Inc. unless accompanied or preceded by the delivery of a currently effective prospectus setting forth details of the fund. Past performance is of course no guarantee of future results and your investment may be worth more or less at the time you sell.
38
COHEN & STEERS
INTERNATIONAL REALTY FUND
280 PARK AVENUE
NEW YORK, NY 10017
eDelivery NOW AVAILABLE
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ANNUAL REPORT
DECEMBER 31, 2007
IRFAXAR
Item 2. Code of Ethics.
The registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made by calling 800-330-7348 or writing to the Secretary of the registrant, 280 Park Avenue, New York, NY 10017.
Item 3. Audit Committee Financial Expert.
The registrant’s board has determined that Frank K. Ross, a member of the board’s audit committee, is an “audit committee financial expert”. Mr. Ross is “independent,” as such term is defined in this Item.
Item 4. Principal Accountant Fees and Services.
(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:
| | 2007 | | 2006 | |
Audit Fees | | $ | 50,300 | | $ | 57,717 | |
Audit-Related Fees | | 10,000 | | — | |
Tax Fees | | 13,000 | | 13,500 | |
All Other Fees | | — | | — | |
| | | | | | | |
Tax fees were billed in connection with the preparation of tax returns, calculation and designation of dividends and other miscellaneous tax services.
Aggregate fees billed by the registrant’s principal accountant for the last two fiscal years for non-audit services provided to the registrant’s investment adviser (not including a sub-adviser whose role is primarily portfolio management and is subcontracted or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registered investment company, where the engagement relates directly to the operations and financial reporting of the registrant, were as follows:
| | 2007 | | 2006 | |
Audit-Related Fees | | — | | — | |
Tax Fees | | — | | — | |
All Other Fees | | $ | 109,000 | | $ | 65,000 | |
| | | | | | | |
These other fees were billed in connection with internal control reviews.
(e)(1) The audit committee is required to pre-approve audit and non-audit services performed for the registrant by the principal accountant. The audit committee also is required to pre-approve non-audit services performed by the registrant’s principal accountant for the registrant’s investment adviser and any sub-adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment adviser) and/or to any entity controlling, controlled by or under common control with the registrant’s investment adviser that provides ongoing services to the registrant, if the engagement for services relates directly to the operations and financial reporting of the registrant.
The audit committee may delegate pre-approval authority to one or more of its members who are independent members of the board of directors of the registrant. The member or members to whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee may not delegate its responsibility to pre-approve services to be performed by the registrant’s principal accountant to the investment adviser.
(e) (2) No services included in (b) – (d) above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) For the fiscal years ended December 31, 2007 and December 31, 2006, the aggregate fees billed by the registrant’s principal accountant for non-audit services rendered to the registrant and for non-audit services rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and/or to any entity controlling, controlled by or under common control with the registrant’s investment adviser that provides ongoing services to the registrant were $78,300 and $78,500, respectively.
(h) The registrant’s audit committee considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and/or to any entity controlling, controlled by or under common control with the registrant’s investment adviser that provides ongoing services to the registrant that were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X was compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
The board of directors of the registrant has adopted a Nominating Committee Charter which provides that the Nominating Committee (the “Committee”) will consider and evaluate nominee candidates properly submitted by shareholders on the same basis as it considers and evaluates candidates recommended by other sources. The shareholder must submit any such recommendation in writing to the registrant, to the attention of the Secretary, at the address of the principal executive offices of the registrant. A copy of the qualifications and procedures that must be met or followed by shareholders to properly submit a nominee candidate to the Committee may be obtained by submitting a request in writing to the Secretary of the registrant.
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 are reasonably designed to ensure that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant’s internal control over financial reporting that occurred during the 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)(1) Not applicable.
(a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certifications of chief executive officer and chief financial officer as required by Rule 30a- 2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
By: | /s/ Adam M. Derechin | |
| Name: Adam M. Derechin | |
| Title: President and Chief Executive Officer | |
| | |
| Date: March 3, 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 M. Derechin | |
| Name: Adam M. Derechin | |
| Title: President and Chief Executive Officer | |
| (principal executive officer) | |
| |
By: | /s/ James Giallanza | |
| Name: James Giallanza | |
| Title: Treasurer | |
| (principal financial officer) | |
| |
| |
| Date: March 3, 2008 | |
| | | | | | | |
