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) |
Dana DeVivo
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: June 30, 2018
Item 1. Reports to Stockholders.
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
To Our Shareholders:
We would like to share with you our report for the six months ended June 30, 2018. The total returns for Cohen & Steers International Realty Fund, Inc. (the Fund) and its comparative benchmarks were:
| | | | |
| | | Six Months Ended
June 30, 2018 | |
Cohen & Steers International Realty Fund: | | | | |
Class A | | | 0.22 | % |
Class C | | | –0.12 | % |
Class I | | | 0.41 | % |
Class R | | | 0.16 | % |
Class Z | | | 0.41 | % |
FTSE EPRA/NAREIT Developed Ex-US Real Estate Index—neta | | | –0.41 | % |
S&P 500 Indexa | | | 2.65 | % |
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. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. All share class returns assume the reinvestment of all dividends and distributions at net asset value (NAV). Fund performance figures reflect fee waivers and/or expense reimbursements, without which the performance would have been lower. Performance quoted does not reflect the deduction of the maximum 4.50% initial sales charge on Class A shares or the 1.00% maximum contingent deferred sales charge on Class C shares. The 1.00% maximum contingent deferred sales charge on Class C shares applies if redemption occurs on or before the one year anniversary date of their purchase. If such charges were included, returns would have been lower. Index performance does not reflect the deduction of any fees, taxes or expenses. An investor cannot invest directly in an index. Performance figures for periods shorter than one year are not annualized.
Please note that distributions paid by the Fund to shareholders are subject to recharacterization for tax purposes and are taxable up to the amount of the Fund’s investment company taxable income and net realized gains. Distributions in excess of the Fund’s investment company taxable income and net realized gains are a return of capital distributed from the Fund’s assets.
| a | The FTSE EPRA/NAREIT Developed Ex-US Real Estate Index—net is an unmanaged market-capitalization-weighted total return index which consists of publicly traded equity real estate investment trusts (REITs) and listed property companies from developed markets excluding the United States and is net of dividend withholding taxes. The S&P 500 Index is an unmanaged index of 500 large-capitalization stocks that is frequently used as a general measure of U.S. stock market performance. |
1
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Market Review
The flat overall total return for international real estate stocks in the six-month period ended June 30, 2018 belied occasional heightened market volatility and a wide dispersion of returns by country. The group initially had a sharp decline amid an early-period spike in bond yields, even as broad-based economic growth continued to benefit real estate fundamentals. Markets began to recover as inflation remained generally benign and Europe’s economic momentum slowed, allowing for a retreat in bond yields. However, other macro concerns—such as political uncertainty in Italy and Spain and increased global trade tensions—emerged as factors driving bouts of volatility. The U.S. Federal Reserve continued to raise short-term interest rates, although other central banks kept rates mostly unchanged at historically low levels.
Fund Performance
The Fund had a positive total return in the period (except for the Fund’s Class C shares, which had a slight decline) and outperformed its benchmark. Australia had a modest gain in local currencies; however, as with most markets in the period, performance was dampened in U.S. dollar terms, as currencies generally depreciated against the U.S. dollar. Stock selection in Australia contributed positively to relative performance, in part because the Fund did not own retail landlord Westfield. The stock ended 2017 on a strong note, rising on a takeover bid from Europe’s Unibail-Rodamco, but had a negative return for 2018 through May, when the merger was completed.
Germany’s real estate stocks performed well, aided by continued economic growth that supported fundamentals. Stock selection in Germany benefited the Fund’s performance, led by overweights in apartment landlords Deutsche Wohnen and ADO Properties, which continued to benefit from strong demand and low new supply.
The U.K. had mixed performance amid economic uncertainty as Brexit negotiations unfolded. Our emphasis on less-cyclical companies contributed to relative performance, as they generally outperformed more economically sensitive stocks. The Fund’s overweights in self storage operators Big Yellow Group and Safestore Holdings had significant gains; in addition, the Fund did not own Intu Properties, a retail landlord that fell on tenant bankruptcy concerns. An overweight in Spain further aided performance. The country, which has one of Europe’s fastest-growing economies, was a top performer globally in the period.
The Fund’s out-of-index allocation to Brazilian mall companies detracted from performance. Brazilian stocks in general were pressured by signs of economic deceleration, election uncertainty and rising oil prices. In addition to hampering the consumer, higher fuel costs sparked a crippling truckers’ strike.
Most real estate stocks in Hong Kong had negative returns, with developers generally posting the largest declines due to their sensitivity to slowing growth in China and global trade concerns. Stock selection in Hong Kong hindered performance, in part because of an overweight in developer Sun Hung Kai Properties, which struggled, and the Fund’s non-investment in Wharf Real Estate Investment, which benefited from better-than-expected retail sales data in the period.
2
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Japan had a solid return, benefiting from an improving economy and high occupancy rates in most markets. Our underweight in J-REITs as a group detracted from relative returns, as they outperformed developers, favored for their above-average dividend income and relatively defensive characteristics.
Impact of Foreign Currency on Fund Performance
The currency impact of the Fund’s investments in foreign securities detracted from absolute performance during the period. Although the Fund reports its NAV and pays dividends in U.S. dollars, the Fund’s investments denominated in foreign currencies are subject to foreign currency risk. Most currencies depreciated against the U.S. dollar, including the euro and U.K. pound. Consequently, changes in the exchange rates between foreign currencies and the U.S. dollar were a net headwind for absolute returns.
Sincerely,
| | |
| | 
|
JON CHEIGH Portfolio Manager | | WILLIAM LEUNG Portfolio Manager |
| |
| | 
|
LUKE SULLIVAN Portfolio Manager | | ROGIER QUIRIJNS Portfolio Manager |
3
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
The views and opinions in the preceding commentary are subject to change without notice and are as of the date of the report. There is no guarantee that any market forecast set forth in the commentary will be realized. 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 the Cohen & Steers family of mutual funds, visit cohenandsteers.com. Here you will find fund net asset values, fund fact sheets and portfolio highlights, as well as educational resources and timely market updates.
Our website also provides comprehensive information about Cohen & Steers, including our most recent press releases, profiles of our senior investment professionals and their investment approach to each asset class. The Cohen & Steers family of mutual funds invests in major real asset categories including real estate securities, listed infrastructure, commodities and natural resource equities, as well as preferred securities and other income solutions.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Performance Review (Unaudited)
Average Annual Total Returns—For Periods Ended June 30, 2018
| | | | | | | | | | | | | | | | | | | | |
| | | Class A
Shares | | | Class C
Shares | | | Class I
Shares | | | Class R
Shares | | | Class Z
Shares | |
1 Year (with sales charge) | | | 5.56 | %a | | | 8.89 | %b | | | — | | | | — | | | | — | |
1 Year (without sales charge) | | | 10.53 | % | | | 9.89 | % | | | 10.97 | % | | | 10.38 | % | | | 10.97 | % |
5 Years (with sales charge) | | | 4.78 | %a | | | 5.08 | % | | | — | | | | — | | | | — | |
5 Years (without sales charge) | | | 5.75 | % | | | 5.08 | % | | | 6.14 | % | | | — | | | | — | |
10 Years (with sales charge) | | | 2.86 | %a | | | 2.67 | % | | | — | | | | — | | | | — | |
10 Years (without sales charge) | | | 3.34 | % | | | 2.67 | % | | | 3.70 | % | | | — | | | | — | |
Since Inceptionc (with sales charge) | | | 4.45 | %a | | | 4.15 | % | | | — | | | | — | | | | — | |
Since Inceptionc (without sales charge) | | | 4.82 | % | | | 4.15 | % | | | 5.18 | % | | | 7.90 | % | | | 8.30 | % |
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, if 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 website at cohenandsteers.com. All share class returns assume the reinvestment of all dividends and distributions at NAV. The performance table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During the periods presented above, the investment advisor waived fees and/or reimbursed expenses. Without this arrangement, performance would have been lower.
The annualized gross and net expense ratios, respectively, for each class of shares as disclosed in the May 1, 2018 prospectus were as follows: Class A—1.44% and 1.35%; Class C—2.09% and 2.00%; Class I—1.16% and 1.00%; Class R—1.59% and 1.50% and Class Z—1.09% and 1.00%. Through June 30, 2020, the investment advisor has contractually agreed to waive its fee and/or reimburse the Fund for expenses incurred so that the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, taxes and extraordinary expenses) do not exceed 1.35% for Class A shares, 2.00% for Class C shares, 1.00% for Class I shares, 1.50% for Class R shares and 1.00% for Class Z shares. This contractual agreement can be amended at any time by agreement of the Fund’s Board of Directors and the investment advisor and will terminate automatically in the event of termination of the investment advisory agreement between the investment advisor and the Fund.
| a | Reflects a 4.50% front-end sales charge. |
| b | Reflects a contingent deferred sales charge of 1.00%. |
| c | Inception dates: March 31, 2005 for Class A, C and I and October 1, 2015 for Class R and Z. |
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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 (2) ongoing costs including investment advisory 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 January 1, 2018—June 30, 2018.
Actual Expenses
The first line of the following table 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 following table 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 transaction costs, such as sales charges (loads). 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.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Expense Example (Unaudited)—(Continued)
| | | | | | | | | | | | |
| | | Beginning
Account Value
January 1, 2018 | | | Ending
Account Value
June 30, 2018 | | | Expenses Paid
During Perioda
January 1, 2018—
June 30, 2018 | |
Class A | | | | | | | | | | | | |
Actual (0.22% return) | | $ | 1,000.00 | | | $ | 1,002.20 | | | $ | 6.70 | |
Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,018.10 | | | $ | 6.76 | |
| | | |
Class C | | | | | | | | | | | | |
Actual (–0.12% return) | | $ | 1,000.00 | | | $ | 998.80 | | | $ | 9.91 | |
Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,014.88 | | | $ | 9.99 | |
| | | |
Class I | | | | | | | | | | | | |
Actual (0.41% return) | | $ | 1,000.00 | | | $ | 1,004.10 | | | $ | 4.97 | |
Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,019.84 | | | $ | 5.01 | |
| | | |
Class R | | | | | | | | | �� | | | |
Actual (0.16% return) | | $ | 1,000.00 | | | $ | 1,001.60 | | | $ | 7.44 | |
Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,017.36 | | | $ | 7.50 | |
| | | |
Class Z | | | | | | | | | | | | |
Actual (0.41% return) | | $ | 1,000.00 | | | $ | 1,004.10 | | | $ | 4.97 | |
Hypothetical (5% annual return before expenses) | | $ | 1,000.00 | | | $ | 1,019.84 | | | $ | 5.01 | |
| a | Expenses are equal to the Fund’s Class A, Class C, Class I, Class R and Class Z annualized net expense ratios of 1.35%, 2.00%, 1.00%, 1.50% and 1.00%, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
7
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
June 30, 2018
Top Ten Holdings
(Unaudited)
| | | | | | | | |
Security | | Value | | | % of
Net
Assets | |
Deutsche Wohnen AG | | $ | 43,598,963 | | | | 6.5 | |
CK Asset Holdings Ltd. | | | 31,238,937 | | | | 4.7 | |
Link REIT | | | 30,338,190 | | | | 4.6 | |
Mitsui Fudosan Co., Ltd. | | | 28,658,691 | | | | 4.3 | |
Sun Hung Kai Properties Ltd. | | | 28,365,942 | | | | 4.3 | |
Boardwalk REIT | | | 20,130,199 | | | | 3.0 | |
Fonciere des Regions | | | 16,699,767 | | | | 2.5 | |
Tokyo Tatemono Co., Ltd. | | | 16,553,189 | | | | 2.5 | |
Goodman Group | | | 16,207,912 | | | | 2.4 | |
Mitsubishi Estate Co., Ltd. | | | 16,095,864 | | | | 2.4 | |
Country Breakdown
(Based on Net Assets)
(Unaudited)
8
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
June 30, 2018 (Unaudited)
| | | | | | | | | | | | |
| | | | | | Number of
Shares | | | Value | |
COMMON STOCK | | | 98.5% | | | | | | | | | |
AUSTRALIA | | | 11.3% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 6.5% | | | | | | | | | |
BGP Holdings PLC (EUR)a,b | | | | 56,622,235 | | | $ | — | |
Charter Hall Group | | | | 2,107,179 | | | | 10,167,405 | |
Dexus Property Group | | | | 1,806,296 | | | | 12,979,837 | |
GPT Group | | | | 2,997,985 | | | | 11,226,414 | |
Ingenia Communities Group | | | | 3,943,706 | | | | 8,989,102 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 43,362,758 | |
| | | | | | | | | | | | |
INDUSTRIALS | | | 2.4% | | | | | | | | | |
Goodman Group | | | | 2,276,622 | | | | 16,207,912 | |
| | | | | | | | | | | | |
OFFICE | | | 1.0% | | | | | | | | | |
Investa Office Fund | | | | 1,650,419 | | | | 6,387,883 | |
| | | | | | | | | | | | |
SELF STORAGE | | | 1.4% | | | | | | | | | |
National Storage REIT | | | | 7,424,601 | | | | 9,038,578 | |
| | | | | | | | | | | | |
TOTAL AUSTRALIA | | | | | | | | 74,997,131 | |
| | | | | | | | | | | | |
AUSTRIA | | | 0.7% | | | | | | | | | |
REAL ESTATE—DIVERSIFIED | | | | | | | | | | | | |
CA Immobilien Anlagen AG | | | | 142,651 | | | | 4,754,417 | |
| | | | | | | | | | | | |
BELGIUM | | | 1.0% | | | | | | | | | |
REAL ESTATE—RESIDENTIAL | | | | | | | | | | | | |
Aedifica SA | | | | 70,295 | | | | 6,411,268 | |
| | | | | | | | | | | | |
BRAZIL | | | 1.1% | | | | | | | | | |
REAL ESTATE—RETAIL | | | | | | | | | | | | |
BR Malls Participacoes SAb | | | | 1,715,240 | | | | 4,292,802 | |
Iguatemi Empresa de Shopping Centers SA | | | | 386,051 | | | | 3,071,873 | |
| | | | | | | | | | | | |
TOTAL BRAZIL | | | | | | | | 7,364,675 | |
| | | | | | | | | | | | |
CANADA | | | 4.7% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
OFFICE | | | 1.7% | | | | | | | | | |
Allied Properties REIT | | | | 346,487 | | | | 11,029,918 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements.
9
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
June 30, 2018 (Unaudited)
| | | | | | | | | | | | |
| | | | | | Number of
Shares | | | Value | |
RESIDENTIAL | | | 3.0% | | | | | | | | | |
Boardwalk REIT | | | | 579,465 | | | $ | 20,130,199 | |
| | | | | | | | | | | | |
TOTAL CANADA | | | | | | | | 31,160,117 | |
| | | | | | | | | | | | |
CHINA | | | 0.8% | | | | | | | | | |
REAL ESTATE—DIVERSIFIED | | | | | | | | | | | | |
Longfor Group Holdings Ltd. (HKD) | | | | 2,087,000 | | | | 5,626,090 | |
| | | | | | | | | | | | |
FINLAND | | | 0.7% | | | | | | | | | |
REAL ESTATE—RESIDENTIAL | | | | | | | | | | | | |
Kojamo Oyjb | | | | 408,400 | | | | 4,363,905 | |
| | | | | | | | | | | | |
FRANCE | | | 8.8% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 4.2% | | | | | | | | | |
Fonciere des Regions | | | | 160,496 | | | | 16,699,767 | |
Unibail-Rodamco-Westfieldb | | | | 52,218 | | | | 11,497,813 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 28,197,580 | |
| | | | | | | | | | | | |
OFFICE | | | 2.2% | | | | | | | | | |
Gecina SA | | | | 88,179 | | | | 14,756,380 | |
| | | | | | | | | | | | |
RETAIL | | | 2.4% | | | | | | | | | |
Klepierre | | | | 420,000 | | | | 15,817,851 | |
| | | | | | | | | | | | |
TOTAL FRANCE | | | | | | | | 58,771,811 | |
| | | | | | | | | | | | |
GERMANY | | | 10.0% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
OFFICE | | | 0.7% | | | | | | | | | |
Alstria Office REIT AG | | | | 288,807 | | | | 4,340,650 | |
| | | | | | | | | | | | |
RESIDENTIAL | | | 8.6% | | | | | | | | | |
ADO Properties SA, 144Ac | | | | 249,110 | | | | 13,544,800 | |
Deutsche Wohnen AG | | | | 901,794 | | | | 43,598,963 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 57,143,763 | |
| | | | | | | | | | | | |
RETAIL | | | 0.7% | | | | | | | | | |
VIB Vermoegen AG | | | | 190,295 | | | | 4,866,761 | |
| | | | | | | | | | | | |
TOTAL GERMANY | | | | | | | | 66,351,174 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements.
10
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
June 30, 2018 (Unaudited)
| | | | | | | | | | | | |
| | | | | | Number of
Shares | | | Value | |
HONG KONG | | | 16.5% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 12.0% | | | | | | | | | |
CK Asset Holdings Ltd. | | | | 3,934,000 | | | $ | 31,238,937 | |
Hang Lung Properties Ltd. | | | | 2,828,000 | | | | 5,832,191 | |
New World Development Co., Ltd. | | | | 7,476,579 | | | | 10,520,729 | |
Sun Hung Kai Properties Ltd. | | | | 1,879,627 | | | | 28,365,942 | |
Swire Properties Ltd. | | | | 1,000,000 | | | | 3,696,339 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 79,654,138 | |
| | | | | | | | | | | | |
RETAIL | | | 4.5% | | | | | | | | | |
Link REIT | | | | 3,322,000 | | | | 30,338,190 | |
| | | | | | | | | | | | |
TOTAL HONG KONG | | | | | | | | 109,992,328 | |
| | | | | | | | | | | | |
JAPAN | | | 21.4% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 17.8% | | | | | | | | | |
Activia Properties | | | | 2,902 | | | | 13,315,414 | |
Hoosiers Holdings | | | | 637,200 | | | | 4,586,988 | |
Invincible Investment Corp. | | | | 14,619 | | | | 6,588,882 | |
Mitsubishi Estate Co., Ltd. | | | | 920,007 | | | | 16,095,864 | |
Mitsui Fudosan Co., Ltd. | | | | 1,186,592 | | | | 28,658,691 | |
NIPPON REIT Investment Corp. | | | | 2,490 | | | | 7,230,592 | |
Nomura Real Estate Holdings | | | | 448,200 | | | | 9,950,554 | |
Orix JREIT | | | | 9,754 | | | | 15,584,904 | |
Tokyo Tatemono Co., Ltd. | | | | 1,204,922 | | | | 16,553,189 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 118,565,078 | |
| | | | | | | | | | | | |
INDUSTRIALS | | | 1.6% | | | | | | | | | |
GLP J-REIT | | | | 10,032 | | | | 10,655,857 | |
| | | | | | | | | | | | |
OFFICE | | | 1.0% | | | | | | | | | |
Daiwa Office Investment Corp. | | | | 1,173 | | | | 6,738,274 | |
| | | | | | | | | | | | |
RESIDENTIAL | | | 1.0% | | | | | | | | | |
Japan Rental Housing Investments | | | | 7,846 | | | | 6,314,218 | |
| | | | | | | | | | | | |
TOTAL JAPAN | | | | | | | | 142,273,427 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements.
11
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
June 30, 2018 (Unaudited)
| | | | | | | | | | | | |
| | | | | | Number of
Shares | | | Value | |
MEXICO | | | 0.4% | | | | | | | | | |
REAL ESTATE—OFFICE | | | | | | | | | | | | |
Concentradora Fibra Danhos SA de CV | | | | 1,871,585 | | | $ | 2,780,013 | |
| | | | | | | | | | | | |
NORWAY | | | 1.2% | | | | | | | | | |
REAL ESTATE—OFFICE | | | | | | | | | | | | |
Entra ASA, 144Ac | | | | 611,294 | | | | 8,346,386 | |
| | | | | | | | | | | | |
SINGAPORE | | | 2.1% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 1.0% | | | | | | | | | |
Keppel DC REIT | | | | 6,850,300 | | | | 6,837,730 | |
| | | | | | | | | | | | |
HEALTH CARE | | | 1.1% | | | | | | | | | |
Parkway Life Real Estate Investment Trust | | | | 3,634,100 | | | | 7,254,864 | |
| | | | | | | | | | | | |
TOTAL SINGAPORE | | | | | | | | 14,092,594 | |
| | | | | | | | | | | | |
SPAIN | | | 4.9% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 2.3% | | | | | | | | | |
Merlin Properties Socimi SA | | | | 1,066,810 | | | | 15,516,697 | |
| | | | | | | | | | | | |
OFFICE | | | 1.9% | | | | | | | | | |
Inmobiliaria Colonial Socimi SA | | | | 1,117,698 | | | | 12,354,170 | |
| | | | | | | | | | | | |
RESIDENTIAL | | | 0.7% | | | | | | | | | |
Aedas Homes SAU, 144Ab,c | | | | 135,835 | | | | 4,822,295 | |
| | | | | | | | | | | | |
TOTAL SPAIN | | | | | | | | 32,693,162 | |
| | | | | | | | | | | | |
SWEDEN | | | 2.0% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
RESIDENTIAL | | | 0.5% | | | | | | | | | |
D. Carnegie & Co. ABb | | | | 203,624 | | | | 3,300,997 | |
| | | | | | | | | | | | |
RETAIL | | | 1.5% | | | | | | | | | |
Catena AB | | | | 500,888 | | | | 9,775,334 | |
| | | | | | | | | | | | |
TOTAL SWEDEN | | | | | | | | 13,076,331 | |
| | | | | | | | | | | | |
UNITED KINGDOM | | | 10.9% | | | | | | | | | |
REAL ESTATE | | | | | | | | | | | | |
DIVERSIFIED | | | 0.6% | | | | | | | | | |
LondonMetric Property PLC | | | | 1,612,428 | | | | 3,936,805 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements.
12
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
June 30, 2018 (Unaudited)
| | | | | | | | | | | | |
| | | | | | Number of
Shares | | | Value | |
HEALTH CARE | | | 1.6% | | | | | | | | | |
Assura PLC | | | | 13,775,529 | | | $ | 10,471,830 | |
| | | | | | | | | | | | |
INDUSTRIALS | | | 2.8% | | | | | | | | | |
Segro PLC | | | | 1,479,353 | | | | 13,069,210 | |
Tritax Big Box REIT PLC | | | | 2,765,982 | | | | 5,690,983 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 18,760,193 | |
| | | | | | | | | | | | |
OFFICE | | | 2.2% | | | | | | | | | |
Derwent London PLC | | | | 166,806 | | | | 6,837,620 | |
Great Portland Estates PLC | | | | 361,903 | | | | 3,412,129 | |
Workspace Group PLC | | | | 296,721 | | | | 4,229,255 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 14,479,004 | |
| | | | | | | | | | | | |
RESIDENTIAL | | | 1.4% | | | | | | | | | |
PRS REIT PLC/The | | | | 2,522,610 | | | | 3,479,031 | |
UNITE Group PLC | | | | 542,684 | | | | 6,166,546 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 9,645,577 | |
| | | | | | | | | | | | |
SELF STORAGE | | | 2.3% | | | | | | | | | |
Big Yellow Group PLC | | | | 661,075 | | | | 8,318,849 | |
Safestore Holdings PLC | | | | 1,013,105 | | | | 7,347,067 | |
| | | | | | | | | | | | |
| | | | | | | | | | | 15,665,916 | |
| | | | | | | | | | | | |
TOTAL UNITED KINGDOM | | | | | | | | 72,959,325 | |
| | | | | | | | | | | | |
TOTAL COMMON STOCK
(Identified cost—$606,898,495) | | | | | | | | 656,014,154 | |
| | | | | | | | | | | | |
SHORT-TERM INVESTMENTS | | | 2.6% | | | | | | | | | |
MONEY MARKET FUNDS | | | | | | | | | | | | |
State Street Institutional Treasury Money Market Fund, Premier Class, 1.74%d | | | | 17,562,685 | | | | 17,562,685 | |
| | | | | | | | | | | | |
TOTAL SHORT-TERM INVESTMENTS
(Identified cost—$17,562,685) | | | | | | | | 17,562,685 | |
| | | | | | | | | | | | |
TOTAL INVESTMENTSIN SECURITIES
(Identified cost—$624,461,180) | | | 101.1% | | | | | | | | 673,576,839 | |
LIABILITIESIN EXCESSOF OTHER ASSETS | | | (1.1) | | | | | | | | (7,584,116 | ) |
| | | | | | | | | | | | |
NET ASSETS | | | 100.0% | | | | | | | $ | 665,992,723 | |
| | | | | | | | | | | | |
See accompanying notes to financial statements.
13
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
June 30, 2018 (Unaudited)
Glossary of Portfolio Abbreviations
| | |
EUR | | Euro Currency |
HKD | | Hong Kong Dollar |
REIT | | Real Estate Investment Trust |
Note: Percentages indicated are based on the net assets of the Fund.
| a | Security value is determined based on significant unobservable inputs (Level 3). |
| b | Non-income producing security. |
| c | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. Aggregate holdings amounted to $26,713,481 or 4.0% of the net assets of the Fund, of which 0.0% are illiquid. |
| d | Rate quoted represents the annualized seven-day yield of the fund. |
| | | | |
Sector Summary | | % of
Net Assets | |
Diversified | | | 45.9 | |
Residential | | | 16.9 | |
Office | | | 12.3 | |
Retail | | | 10.2 | |
Industrials | | | 6.8 | |
Self Storage | | | 3.7 | |
Health Care | | | 2.7 | |
Other | | | 1.5 | |
| | | | |
| | | 100.0 | |
| | | | |
See accompanying notes to financial statements.
14
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2018 (Unaudited)
| | | | |
ASSETS: | |
Investments in securities, at value (Identified cost—$624,461,180) | | $ | 673,576,839 | |
Foreign currency, at value (Identified cost—$2,079,200) | | | 2,069,960 | |
Receivable for: | | | | |
Dividends | | | 4,105,479 | |
Fund shares sold | | | 1,582,563 | |
Investment securities sold | | | 473,208 | |
Other assets | | | 6,755 | |
| | | | |
Total Assets | | | 681,814,804 | |
| | | | |
LIABILITIES: | |
Payable for: | | | | |
Investment securities purchased | | | 8,389,313 | |
Fund shares redeemed | | | 5,259,035 | |
Dividends declared | | | 1,449,451 | |
Investment advisory fees | | | 444,939 | |
Shareholder servicing fees | | | 101,695 | |
Administration fees | | | 22,107 | |
Distribution fees | | | 3,069 | |
Directors’ fees | | | 216 | |
Other liabilities | | | 152,256 | |
| | | | |
Total Liabilities | | | 15,822,081 | |
| | | | |
NET ASSETS | | $ | 665,992,723 | |
| | | | |
NET ASSETS consist of: | |
Paid-in capital | | $ | 668,542,113 | |
Dividends in excess of net investment income | | | (10,922,160 | ) |
Accumulated net realized loss | | | (40,733,629 | ) |
Net unrealized appreciation | | | 49,106,399 | |
| | | | |
| | $ | 665,992,723 | |
| | | | |
See accompanying notes to financial statements.
15
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES—(Continued)
June 30, 2018 (Unaudited)
| | | | |
CLASS A SHARES: | |
NET ASSETS | | $ | 55,977,604 | |
Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 4,718,513 | |
| | | | |
Net asset value and redemption price per share | | $ | 11.86 | |
| | | | |
Maximum offering price per share ($11.86 ÷ 0.955)a | | $ | 12.42 | |
| | | | |
CLASS C SHARES: | |
NET ASSETS | | $ | 31,140,271 | |
Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 2,647,898 | |
| | | | |
Net asset value and offering price per shareb | | $ | 11.76 | |
| | | | |
CLASS I SHARES: | |
NET ASSETS | | $ | 578,679,692 | |
Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 48,498,047 | |
| | | | |
Net asset value, offering and redemption price per share | | $ | 11.93 | |
| | | | |
CLASS R SHARES: | |
NET ASSETS | | $ | 111,628 | |
Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 9,324 | |
| | | | |
Net asset value, offering and redemption price per share | | $ | 11.97 | |
| | | | |
CLASS Z SHARES: | |
NET ASSETS | | $ | 83,528 | |
Shares issued and outstanding ($0.001 par value common stock outstanding) | | | 7,001 | |
| | | | |
Net asset value, offering and redemption price per share | | $ | 11.93 | |
| | | | |
| 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 contingent deferred sales charge of 1.00% on shares held for less than one year. |
See accompanying notes to financial statements.
16
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2018 (Unaudited)
| | | | |
Investment Income: | |
Dividend income (net of $1,050,249 of foreign withholding tax) | | $ | 12,422,425 | |
| | | | |
Expenses: | |
Investment advisory fees | | | 3,126,709 | |
Shareholder servicing fees—Class A | | | 30,186 | |
Shareholder servicing fees—Class C | | | 41,244 | |
Shareholder servicing fees—Class I | | | 194,529 | |
Distribution fees—Class A | | | 75,465 | |
Distribution fees—Class C | | | 123,732 | |
Distribution fees—Class R | | | 364 | |
Administration fees | | | 168,710 | |
Registration and filing fees | | | 62,198 | |
Custodian fees and expenses | | | 58,457 | |
Professional fees | | | 47,855 | |
Transfer agent fees and expenses | | | 44,036 | |
Shareholder reporting expenses | | | 30,814 | |
Directors’ fees and expenses | | | 20,245 | |
Miscellaneous | | | 22,521 | |
| | | | |
Total Expenses | | | 4,047,065 | |
Reduction of Expenses (See Note 2) | | | (484,801 | ) |
| | | | |
Net Expenses | | | 3,562,264 | |
| | | | |
Net Investment Income (Loss) | | | 8,860,161 | |
| | | | |
Net Realized and Unrealized Gain (Loss): | | | | |
Net realized gain (loss) on: | | | | |
Investments in securities | | | 26,295,445 | |
Foreign currency transactions | | | 57,050 | |
| | | | |
Net realized gain (loss) | | | 26,352,495 | |
| | | | |
Net change in unrealized appreciation (depreciation) on: | | | | |
Investments in securities | | | (33,489,254 | ) |
Foreign currency translations | | | (21,208 | ) |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (33,510,462 | ) |
| | | | |
Net Realized and Unrealized Gain (Loss) | | | (7,157,967 | ) |
| | | | |
Net Increase (Decrease) in Net Assets Resulting from Operations | | $ | 1,702,194 | |
| | | | |
See accompanying notes to financial statements.
17
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
| | | | | | | | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the
Year Ended
December 31, 2017 | |
Change in Net Assets: | |
From Operations: | |
Net investment income (loss) | | $ | 8,860,161 | | | $ | 12,346,966 | |
Net realized gain (loss) | | | 26,352,495 | | | | 62,186,555 | |
Net change in unrealized appreciation (depreciation) | | | (33,510,462 | ) | | | 56,498,183 | |
| | | | | | | | |
Net increase (decrease) in net assets resulting from operations | | | 1,702,194 | | | | 131,031,704 | |
| | | | | | | | |
Dividends to Shareholders from: | |
Net investment income: | |
Class A | | | (868,790 | ) | | | (2,012,671 | ) |
Class C | | | (383,256 | ) | | | (839,642 | ) |
Class I | | | (10,053,402 | ) | | | (18,674,282 | ) |
Class R | | | (1,556 | ) | | | (5,536 | ) |
Class Z | | | (1,451 | ) | | | (1,304 | ) |
| | | | | | | | |
Total dividends to shareholders | | | (11,308,455 | ) | | | (21,533,435 | ) |
| | | | | | | | |
Capital Stock Transactions: | |
Increase (decrease) in net assets from Fund share transactions | | | 23,654,316 | | | | (29,487,939 | ) |
| | | | | | | | |
Total increase (decrease) in net assets | | | 14,048,055 | | | | 80,010,330 | |
Net Assets: | |
Beginning of period | | | 651,944,668 | | | | 571,934,338 | |
| | | | | | | | |
End of perioda | | $ | 665,992,723 | | | $ | 651,944,668 | |
| | | | | | | | |
| a | Includes dividends in excess of net investment income of $10,922,160 and $8,473,866, respectively. |
See accompanying notes to financial statements.
18
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)
The following tables include selected data for a share outstanding throughout each period and other performance information derived from the financial statements. They should be read in conjunction with the financial statements and notes thereto.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class A | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Per Share Operating Performance: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net asset value, beginning of period | | $ | 12.02 | | | $ | 10.09 | | | $ | 10.74 | | | $ | 11.23 | | | $ | 11.34 | | | $ | 11.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)a | | | 0.14 | | | | 0.19 | | | | 0.18 | | | | 0.16 | | | | 0.30 | b | | | 0.18 | |
Net realized and unrealized gain (loss) | | | (0.11 | ) | | | 2.11 | c | | | (0.21 | ) | | | (0.33 | ) | | | (0.04 | ) | | | 0.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.03 | | | | 2.30 | | | | (0.03 | ) | | | (0.17 | ) | | | 0.26 | | | | 0.47 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less dividends and distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.19 | ) | | | (0.37 | ) | | | (0.62 | ) | | | (0.32 | ) | | | (0.37 | ) | | | (0.43 | ) |
Return of capital | | | — | | | | — | | | | (0.00 | )d | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions to shareholders | | | (0.19 | ) | | | (0.37 | ) | | | (0.62 | ) | | | (0.32 | ) | | | (0.37 | ) | | | (0.43 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value | | | (0.16 | ) | | | 1.93 | | | | (0.65 | ) | | | (0.49 | ) | | | (0.11 | ) | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.86 | | | $ | 12.02 | | | $ | 10.09 | | | $ | 10.74 | | | $ | 11.23 | | | $ | 11.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total investment returne,f | | | 0.22 | %g | | | 23.03 | %c | | | –0.38 | % | | | –1.58 | % | | | 2.30 | % | | | 4.32 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to financial statements.
19
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class A | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Ratios/Supplemental Data: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net assets, end of period (in millions) | | $ | 56.0 | | | $ | 63.9 | | | $ | 55.7 | | | $ | 78.6 | | | $ | 121.7 | | | $ | 163.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios to average daily net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses (before expense reduction) | | | 1.44 | %h | | | 1.46 | % | | | 1.47 | % | | | 1.48 | % | | | 1.46 | % | | | 1.53 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (net of expense reduction) | | | 1.35 | %h | | | 1.35 | % | | | 1.34 | % | | | 1.36 | % | | | 1.35 | % | | | 1.35 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (before expense reduction) | | | 2.24 | %h | | | 1.58 | % | | | 1.53 | % | | | 1.31 | % | | | 2.53 | % | | | 1.37 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (net of expense reduction) | | | 2.33 | %h | | | 1.69 | % | | | 1.66 | % | | | 1.43 | % | | | 2.64 | % | | | 1.55 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio turnover rate | | | 40 | %g | | | 67 | % | | | 68 | % | | | 73 | % | | | 101 | % | | | 93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| a | Calculation based on average shares outstanding. |
| b | 33.3% of gross income was attributable to dividends paid by Westfield Corp. |
| c | Includes gains from a class action settlement payment related to foreign exchange transactions from prior years. Without these gains, the net realized and unrealized gain (loss) on investments per share would have been $2.04 and the total return would have been 22.31%. |
| d | Amount is less than $0.005. |
| e | Does not reflect sales charges, which would reduce return. |
| f | Return assumes the reinvestment of all dividends and distributions at net asset value. |
See accompanying notes to financial statements.
20
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class C | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Per Share Operating Performance: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net asset value, beginning of period | | $ | 11.92 | | | $ | 9.99 | | | $ | 10.63 | | | $ | 11.12 | | | $ | 11.23 | | | $ | 11.19 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income (loss)a | | | 0.10 | | | | 0.12 | | | | 0.11 | | | | 0.08 | | | | 0.22 | b | | | 0.10 | |
Net realized and unrealized gain (loss) | | | (0.11 | ) | | | 2.09 | c | | | (0.21 | ) | | | (0.32 | ) | | | (0.04 | ) | | | 0.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.01 | ) | | | 2.21 | | | | (0.10 | ) | | | (0.24 | ) | | | 0.18 | | | | 0.39 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less dividends and distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.15 | ) | | | (0.28 | ) | | | (0.54 | ) | | | (0.25 | ) | | | (0.29 | ) | | | (0.35 | ) |
Return of capital | | | — | | | | — | | | | (0.00 | )d | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions to shareholders | | | (0.15 | ) | | | (0.28 | ) | | | (0.54 | ) | | | (0.25 | ) | | | (0.29 | ) | | | (0.35 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value | | | (0.16 | ) | | | 1.93 | | | | (0.64 | ) | | | (0.49 | ) | | | (0.11 | ) | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.76 | | | $ | 11.92 | | | $ | 9.99 | | | $ | 10.63 | | | $ | 11.12 | | | $ | 11.23 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total investment returne,f | | | –0.12 | %g | | | 22.27 | %c | | | –0.98 | % | | | –2.23 | % | | | 1.60 | % | | | 3.64 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to financial statements.
21
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class C | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Ratios/Supplemental Data: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net assets, end of period (in millions) | | $ | 31.1 | | | $ | 34.6 | | | $ | 46.4 | | | $ | 65.5 | | | $ | 80.8 | | | $ | 109.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios to average daily net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Expenses (before expense reduction) | | | 2.09 | %h | | | 2.11 | % | | | 2.12 | % | | | 2.13 | % | | | 2.11 | % | | | 2.18 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (net of expense reduction) | | | 2.00 | %h | | | 2.00 | % | | | 1.99 | % | | | 2.01 | % | | | 2.00 | % | | | 2.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (before expense reduction) | | | 1.60 | %h | | | 0.95 | % | | | 0.88 | % | | | 0.63 | % | | | 1.83 | % | | | 0.70 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (net of expense reduction) | | | 1.69 | %h | | | 1.06 | % | | | 1.01 | % | | | 0.75 | % | | | 1.94 | % | | | 0.88 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio turnover rate | | | 40 | %g | | | 67 | % | | | 68 | % | | | 73 | % | | | 101 | % | | | 93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| a | Calculation based on average shares outstanding. |
| b | 33.3% of gross income was attributable to dividends paid by Westfield Corp. |
| c | Includes gains from a class action settlement payment related to foreign exchange transactions from prior years. Without these gains, the net realized and unrealized gain (loss) on investments per share would have been $2.02 and the total return would have been 21.56%. |
| d | Amount is less than $0.005. |
| e | Return assumes the reinvestment of all dividends and distributions at net asset value. |
| f | Does not reflect sales charges, which would reduce return. |
See accompanying notes to financial statements.
22
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class I | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Per Share Operating Performance: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net asset value, beginning of period | | $ | 12.09 | | | $ | 10.15 | | | $ | 10.80 | | | $ | 11.29 | | | $ | 11.40 | | | $ | 11.36 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | |
| | | | | | |
Net investment income (loss)a | | | 0.17 | | | | 0.23 | | | | 0.22 | | | | 0.20 | | | | 0.33 | b | | | 0.22 | |
Net realized and unrealized gain (loss) | | | (0.12 | ) | | | 2.12 | c | | | (0.21 | ) | | | (0.33 | ) | | | (0.03 | ) | | | 0.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.05 | | | | 2.35 | | | | 0.01 | | | | (0.13 | ) | | | 0.30 | | | | 0.51 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less dividends and distributions to shareholders from: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net investment income | | | (0.21 | ) | | | (0.41 | ) | | | (0.66 | ) | | | (0.36 | ) | | | (0.41 | ) | | | (0.47 | ) |
Return of capital | | | — | | | | — | | | | (0.00 | )d | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions to shareholders | | | (0.21 | ) | | | (0.41 | ) | | | (0.66 | ) | | | (0.36 | ) | | | (0.41 | ) | | | (0.47 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value | | | (0.16 | ) | | | 1.94 | | | | (0.65 | ) | | | (0.49 | ) | | | (0.11 | ) | | | 0.04 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.93 | | | $ | 12.09 | | | $ | 10.15 | | | $ | 10.80 | | | $ | 11.29 | | | $ | 11.40 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Total investment returne | | | 0.41 | %f | | | 23.39 | %c | | | 0.00 | %g | | | –1.18 | % | | | 2.63 | % | | | 4.65 | % |
| | | | | | | | | | | | | | | | | | | | | | �� | | |
| | |
See accompanying notes to financial statements.
23
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Class I | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year Ended December 31, | |
Ratios/Supplemental Data: | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |
Net assets, end of period (in millions) | | $ | 578.7 | | | $ | 553.2 | | | $ | 469.5 | | | $ | 578.8 | | | $ | 668.2 | | | $ | 628.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios to average daily net assets: | |
| | | | | | |
Expenses (before expense reduction) | | | 1.16 | %h | | | 1.18 | % | | | 1.19 | % | | | 1.19 | % | | | 1.19 | % | | | 1.23 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Expenses (net of expense reduction) | | | 1.00 | %h | | | 1.00 | % | | | 0.99 | % | | | 1.01 | % | | | 1.00 | % | | | 1.00 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (before expense reduction) | | | 2.63 | %h | | | 1.91 | % | | | 1.81 | % | | | 1.58 | % | | | 2.68 | % | | | 1.65 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (net of expense reduction) | | | 2.79 | %h | | | 2.09 | % | | | 2.01 | % | | | 1.76 | % | | | 2.87 | % | | | 1.89 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Portfolio turnover rate | | | 40 | %f | | | 67 | % | | | 68 | % | | | 73 | % | | | 101 | % | | | 93 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| a | Calculation based on average shares outstanding. |
| b | 33.3% of gross income was attributable to dividends paid by Westfield Corp. |
| c | Includes gains from a class action settlement payment related to foreign exchange transactions from prior years. Without these gains, the net realized and unrealized gain (loss) on investments per share would have been $2.05 and the total return would have been 22.68%. |
| d | Amount is less than $0.005. |
| e | Return assumes the reinvestment of all dividends and distributions at net asset value. |
| g | Amount is less than 0.005%. |
See accompanying notes to financial statements.
24
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | |
| | | Class R | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year
Ended
December 31, | | | For the Period
October 1, 2015a
through
December 31, 2015 | |
Per Share Operating Performance: | | | 2017 | | | 2016 | | |
Net asset value, beginning of period | | $ | 12.12 | | | $ | 10.17 | | | $ | 10.79 | | | $ | 10.88 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
| | | | |
Net investment income (loss)b | | | 0.11 | | | | 0.17 | | | | 0.16 | | | | 0.02 | |
Net realized and unrealized gain (loss) | | | (0.09 | ) | | | 2.13 | c | | | (0.16 | ) | | | 0.01 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.02 | | | | 2.30 | | | | — | | | | 0.03 | |
| | | | | | | | | | | | | | | | |
Less dividends and distributions to shareholders from: | | | | | | | | | | | | | | | | |
| | | | |
Net investment income | | | (0.17 | ) | | | (0.35 | ) | | | (0.62 | ) | | | (0.12 | ) |
Return of capital | | | — | | | | — | | | | (0.00 | )d | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions to shareholders | | | (0.17 | ) | | | (0.35 | ) | | | (0.62 | ) | | | (0.12 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value | | | (0.15 | ) | | | 1.95 | | | | (0.62 | ) | | | (0.09 | ) |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.97 | | | $ | 12.12 | | | $ | 10.17 | | | $ | 10.79 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Total investment returne | | | 0.16 | %f | | | 22.78 | %c | | | –0.05 | % | | | 0.26 | %f |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
| | | | |
Net assets, end of period (in 000s) | | $ | 111.6 | | | $ | 192.4 | | | $ | 233.6 | | | $ | 9.9 | |
| | | | | | | | | | | | | | | | |
Ratios to average daily net assets: | | | | | | | | | | | | | | | | |
| | | | |
Expenses (before expense reduction) | | | 1.59 | %g | | | 1.61 | % | | | 1.62 | % | | | 1.63 | %g |
| | | | | | | | | | | | | | | | |
Expenses (net of expense reduction) | | | 1.50 | %g | | | 1.50 | % | | | 1.49 | % | | | 1.51 | %g |
| | | | | | | | | | | | | | | | |
Net investment income (loss) (before expense reduction) | | | 1.78 | %g | | | 1.41 | % | | | 1.34 | % | | | 0.70 | %g |
| | | | | | | | | | | | | | | | |
Net investment income (loss) (net of expense reduction) | | | 1.87 | %g | | | 1.52 | % | | | 1.47 | % | | | 0.82 | %g |
| | | | | | | | | | | | | | | | |
Portfolio turnover rate | | | 40 | %f | | | 67 | % | | | 68 | % | | | 73 | %f |
| | | | | | | | | | | | | | | | |
| b | Calculation based on average shares outstanding. |
| c | Includes gains from a class action settlement payment related to foreign exchange transactions from prior years. Without these gains, the net realized and unrealized gain (loss) on investments per share would have been $2.06 and the total return would have been 22.07%. |
| d | Amount is less than $0.005. |
| e | Return assumes the reinvestment of all dividends and distributions at net asset value. |
See accompanying notes to financial statements.
25
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)
| | | | | | | | | | | | | | | | |
| | | Class Z | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the Year
Ended
December 31, | | | For the Period
October 1, 2015a
through
December 31, 2015 | |
Per Share Operating Performance: | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 12.09 | | | $ | 10.15 | | | $ | 10.79 | | | $ | 10.88 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
| | | | |
Net investment income (loss)b | | | 0.17 | | | | 0.25 | | | | 0.23 | | | | 0.04 | |
Net realized and unrealized gain (loss) | | | (0.12 | ) | | | 2.10 | c | | | (0.21 | ) | | | 0.00 | d |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.05 | | | | 2.35 | | | | 0.02 | | | | 0.04 | |
| | | | | | | | | | | | | | | | |
Less dividends and distributions to shareholders from: | | | | | | | | | | | | | | | | |
| | | | |
Net investment income | | | (0.21 | ) | | | (0.41 | ) | | | (0.66 | ) | | | (0.13 | ) |
Return of capital | | | — | | | | — | | | | (0.00 | )d | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions to shareholders | | | (0.21 | ) | | | (0.41 | ) | | | (0.66 | ) | | | (0.13 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) in net asset value | | | (0.16 | ) | | | 1.94 | | | | (0.64 | ) | | | (0.09 | ) |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.93 | | | $ | 12.09 | | | $ | 10.15 | | | $ | 10.79 | �� |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Total investment returne | | | 0.41 | %f | | | 23.39 | %c | | | 0.09 | % | | | 0.39 | %f |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
Net assets, end of period (in 000s) | | $ | 83.5 | | | $ | 82.8 | | | $ | 32.7 | | | $ | 9.9 | |
| | | | | | | | | | | | | | | | |
Ratios to average daily net assets: | | | | | | | | | | | | | | | | |
| | | | |
Expenses (before expense reduction) | | | 1.09 | %g | | | 1.11 | % | | | 1.12 | % | | | 1.13 | %g |
| | | | | | | | | | | | | | | | |
Expenses (net of expense reduction) | | | 1.00 | %g | | | 1.00 | % | | | 0.99 | % | | | 1.01 | %g |
| | | | | | | | | | | | | | | | |
Net investment income (loss) (before expense reduction) | | | 2.67 | %g | | | 2.16 | % | | | 2.02 | % | | | 1.20 | %g |
| | | | | | | | | | | | | | | | |
Net investment income (loss) (net of expense reduction) | | | 2.76 | %g | | | 2.27 | % | | | 2.15 | % | | | 1.32 | %g |
| | | | | | | | | | | | | | | | |
Portfolio turnover rate | | | 40 | %f | | | 67 | % | | | 68 | % | | | 73 | %f |
| | | | | | | | | | | | | | | | |
| b | Calculation based on average shares outstanding. |
| c | Includes gains from a class action settlement payment related to foreign exchange transactions from prior years. Without these gains, the net realized and unrealized gain (loss) on investments per share would have been $2.03 and the total return would have been 22.68%. |
| d | Amount is less than $0.005. |
| e | Return assumes the reinvestment of all dividends and distributions at net asset value. |
See accompanying notes to financial statements.
26
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Note 1. Organization and 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 (the 1940 Act) as a non-diversified, open-end management investment company. The Fund’s investment objective is total return. The authorized shares of the Fund are divided into seven classes designated Class A, C, F, I, R, T and Z shares. Each of the Fund’s shares has equal dividend, liquidation and voting rights (except for matters relating to distribution and shareholder servicing of such shares). Class F shares and Class T shares are currently not available for purchase.
The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 946—Investment Companies. The accounting policies of the Fund 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 (NYSE) are valued, except as indicated below, at the last sale price reflected at the close of the NYSE 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 ask prices on such day or, if no ask price is available, at the bid price.
Securities not listed on the NYSE but listed on other domestic or foreign securities exchanges (including NASDAQ) are valued in a similar manner. Securities traded on more than one securities exchange are valued at the last sale price reflected at the close of the exchange representing the principal market for such securities on the business day as of which such value is being determined. If after the close of a foreign market, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain non-U.S. equity holdings may be fair valued pursuant to procedures established by the Board of Directors.
Readily marketable securities traded in the over-the-counter (OTC) market, including listed securities whose primary market is believed by Cohen & Steers Capital Management, Inc. (the investment advisor) to be OTC, are valued on the basis of prices provided by a third-party pricing service or third-party broker-dealers when such prices are believed by the investment advisor, pursuant to delegation by the Board of Directors, to reflect the fair value of such securities.
Short-term debt securities with a maturity date of 60 days or less are valued at amortized cost, which approximates fair value. Investments in open-end mutual funds are valued at net asset value (NAV).
The policies and procedures approved by the Fund’s Board of Directors delegate authority to make fair value determinations to the investment advisor, subject to the oversight of the Board of Directors. The investment advisor has established a valuation committee (Valuation Committee) to
27
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
administer, implement and oversee the fair valuation process according to the policies and procedures approved annually by the Board of Directors. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.
Securities for which market prices are unavailable, or securities for which the investment advisor determines that the bid and/or ask price or a counterparty valuation does not reflect market value, will be valued at fair value, as determined in good faith by the Valuation Committee, 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, but are not limited to, recent transactions in comparable securities, information relating to the specific security and developments in the markets.
Foreign equity fair value pricing procedures utilized by the Fund may cause certain non-U.S. equity holdings to be fair valued on the basis of fair value factors provided by a pricing service to reflect any significant market movements between the time the Fund values such securities and the earlier closing of foreign markets.
The Fund’s use of fair value pricing may cause the NAV of Fund shares to differ from the NAV 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.
Fair value is defined as the price that the Fund would expect to receive upon the sale of an investment or expect to pay to transfer a liability in an orderly transaction with an independent buyer in the principal market or, in the absence of a principal market, the most advantageous market for the investment or liability. The hierarchy of inputs that are used in determining the fair value of the Fund’s investments is summarized 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 inputs or methodology used for valuing investments may or may not be an indication of the risk associated with those investments.
For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfer at the end of the period in which the underlying event causing the movement occurred. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. There were no transfers between Level 1 and Level 2 investments as of June 30, 2018.
28
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
The following is a summary of the inputs used as of June 30, 2018 in valuing the Fund’s investments carried at value:
| | | | | | | | | | | | | | | | |
| | | Total | | | Quoted Prices
in Active
Markets for
Identical
Investments
(Level 1) | | | Other
Significant
Observable
Inputs
(Level 2) | | | Significant
Unobservable
Inputs
(Level 3) | |
Common Stock: | | | | | | | | | | | | | | | | |
Australia | | $ | 43,362,758 | | | $ | 43,362,758 | | | $ | — | | | $ | — | a |
Other Countries | | | 612,651,396 | | | | 612,651,396 | | | | — | | | | — | |
Short-Term Investments | | | 17,562,685 | | | | — | | | | 17,562,685 | | | | — | |
| | | | | | | | | | | | | | | | |
Total Investments in Secutritiesb | | $ | 673,576,839 | | | $ | 656,014,154 | | | $ | 17,562,685 | | | $ | — | |
| | | | | | | | | | | | | | | | |
| a | BGP Holdings PLC was acquired via a spinoff and has been fair valued at $0 by the Valuation Committee, pursuant to the Fund’s fair value procedures and classified as a Level 3 security. |
| b | Portfolio holdings are disclosed individually on the Schedule of Investments. |
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, which includes the amortization of premiums and accretion of discounts, is recorded on the accrual basis. Dividend income 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. 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 Translation: The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency exchange contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains
29
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates. Pursuant to U.S. federal income tax regulations, certain foreign currency gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income for federal income tax purposes.
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, if any, are declared and paid semi-annually. Net realized capital gains, unless offset by any available capital loss carryforward, are typically distributed to shareholders at least 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 NAV per share at the close of business on the payable date, unless the shareholder has elected to have them paid in cash. Dividends from net investment income are subject to recharacterization for tax purposes.
Income Taxes: It is the policy of the Fund to continue to qualify as a regulated investment company (RIC), 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 RICs, and by distributing substantially all of its taxable earnings to its shareholders. Also, in order to avoid the payment of any federal excise taxes, the Fund will distribute substantially all of its net investment income and net realized gains on a calendar year basis. Accordingly, no provision for federal income or excise tax is necessary. Dividend and interest income from holdings in non-U.S. securities is recorded net of non-U.S. taxes paid. Management has analyzed the Fund’s tax positions taken on federal and applicable state income tax returns as well as its tax positions in non-U.S. jurisdictions in which it trades for all open tax years and has concluded that as of June 30, 2018, no additional provisions for income tax are required in the Fund’s financial statements. The Fund’s tax positions for the tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service, state departments of revenue and by foreign tax authorities.
Note 2. Investment Advisory, Administration Fees and Other Transactions with Affiliates
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. serves as the Fund’s investment advisor pursuant to an investment advisory agreement (the investment advisory agreement). Under the terms of the investment advisory agreement, the investment advisor provides the Fund with 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 Board of Directors.
For the services provided to the Fund, the investment advisor receives a 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 assets above $1.5 billion.
For the six months ended June 30, 2018, and through June 30, 2020, the investment advisor has contractually agreed to waive its fee and/or reimburse the Fund for expenses incurred so that the Fund’s total annual operating expenses (excluding acquired fund fees and expenses, taxes and extraordinary expenses), do not exceed 1.35% for Class A shares, 2.00% for Class C shares, 1.00% for Class I
30
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
shares, 1.50% for Class R shares and 1.00% for Class Z shares. This contractual agreement can be amended at any time by agreement of the Fund’s Board of Directors and the investment advisor and will terminate automatically in the event of termination of the investment advisory agreement between the investment advisor and the Fund. For the six months ended June 30, 2018, fees waived and/or expenses reimbursed totaled $484,801.
Under subadvisory agreements between the investment advisor and each of Cohen & Steers Asia Limited and Cohen & Steers UK Limited (collectively, the subadvisors), affiliates of the investment 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 agreements, the investment advisor (not the Fund) pays the subadvisors. The investment advisor allocates 50% of the investment advisory fee received from the Fund among itself and each subadvisor based on the portion of the Fund’s average daily net assets managed by the investment advisor and each subadvisor.
Administration Fees: The Fund has entered into an administration agreement with the investment advisor under which the investment advisor performs certain administrative functions for the Fund and receives a fee, accrued daily and paid monthly, at the annual rate of 0.04% of the average daily net assets of the Fund. For the six months ended June 30, 2018, the Fund incurred $131,651 in fees under this administration agreement. Additionally, the Fund pays State Street Bank and Trust Company as co-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 investment advisor. The Fund has adopted an amended distribution plan (the plan) pursuant to Rule 12b-1 under the 1940 Act. The plan provides that the Fund will pay the distributor a fee, accrued daily and paid monthly, at an annual rate of up to 0.25% of the average daily net assets attributable to Class A shares, up to 0.75% of the average daily net assets attributable to Class C shares and up to 0.50% of the average daily net assets attributable to Class R shares. In addition, with respect to Class R shares, such amounts may also be used to pay for services to Fund shareholders or services related to the maintenance of shareholder accounts.
There is a maximum initial sales charge of 4.50% for Class A shares. There is a contingent deferred sales charge (CDSC) of 1.00% on purchases of $1 million or more of Class A shares, which applies if redemption occurs within one year from purchase. There is a CDSC of 1.00% on Class C shares, which applies if redemption occurs within one year from purchase. For the six months ended June 30, 2018, the Fund has been advised that the distributor received $2,087, which represents a portion of the sales commissions paid by shareholders from the sale of Class A shares, and $30,000 and $13 of CDSC relating to redemptions of Class A and Class C shares, respectively. The distributor has advised the Fund that proceeds from the CDSC on these classes are used by the distributor to defray its expenses related to providing distribution-related services to the Fund in connection with the sale of these classes, including payments to dealers and other financial intermediaries for selling these classes. The payment of a CDSC may result in the distributor receiving amounts greater or less than the upfront commission paid by the distributor to the financial intermediary.
Shareholder Servicing Fees: For shareholder services, the Fund pays the distributor or its affiliates a fee, accrued daily, at an annual rate of up to 0.10% of the average daily net assets of the Fund’s
31
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
Class A and Class I shares and up to 0.25% of the average daily net assets of the Fund’s Class C shares. The distributor is responsible for paying qualified financial institutions for shareholder services.
Directors’ and Officers’ Fees: Certain directors and officers of the Fund are also directors, officers and/or employees of the investment advisor. The Fund does not pay compensation to directors and officers affiliated with the investment advisor except for the Chief Compliance Officer, who received compensation from the investment advisor, which was reimbursed by the Fund, in the amount of $3,916 for the six months ended June 30, 2018.
Other: As of June 30, 2018, approximately 45% of the Fund’s outstanding shares were owned by shareholders investing either directly or indirectly through an account, platform or program sponsored by one financial institution. Investment and asset allocation decisions by either a direct shareholder or financial institution regarding the account, platform or program through which multiple shareholders invest may result in subscription and redemption decisions that have a significant impact on the assets, expenses and trading activities of the Fund. Such a decision may cause the Fund to sell assets at disadvantageous times or prices, and may negatively affect the Fund’s NAV and performance.
Note 3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, for the six months ended June 30, 2018, totaled $284,236,153 and $260,037,911, respectively.
Note 4. Income Tax Information
As of June 30, 2018, the federal tax cost and net unrealized appreciation (depreciation) in value of investments held were as follows:
| | | | |
Cost of investments in securities for federal income tax purposes | | $ | 624,461,180 | |
| | | | |
Gross unrealized appreciation on investments | | $ | 62,522,601 | |
Gross unrealized depreciation on investments | | | (13,406,942 | ) |
| | | | |
Net unrealized appreciation (depreciation) on investments | | $ | 49,115,659 | |
| | | | |
As of December 31, 2017, the Fund had a net capital loss carryforward of $59,806,588, which may be used to offset future capital gains. These losses are a short-term capital loss carryover which will expire on December 31, 2018.
Note 5. Capital Stock
The Fund is authorized to issue 1.8 billion shares of capital stock, at a par value of $0.001 per share, classified in seven classes as follows: 250 million of Class A capital stock, 250 million of Class C capital stock, 250 million of Class F capital stock, 300 million of Class I capital stock, 250 million of Class R capital stock, 250 million of Class T capital stock and 250 million of Class Z capital stock. Class F shares and Class T shares are currently not available for purchase.
32
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
The Board of Directors of the Fund may increase or decrease the number of shares of common stock that the Fund has authority to issue. Transactions in Fund shares were as follows:
| | | | | | | | | | | | | | | | |
| | | For the Six
Months Ended
June 30, 2018 | | | For the
Year Ended
December 31, 2017 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Class A: | |
Sold | | | 237,225 | | | $ | 2,883,637 | | | | 1,459,892 | | | $ | 16,451,287 | |
Issued as reinvestment of dividends | | | 54,789 | | | | 649,794 | | | | 133,689 | | | | 1,522,285 | |
Redeemed | | | (887,049 | ) | | | (10,755,923 | ) | | | (1,799,529 | ) | | | (20,034,977 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (595,035 | ) | | $ | (7,222,492 | ) | | | (205,948 | ) | | $ | (2,061,405 | ) |
| | | | | | | | | | | | | | | | |
Class C: | |
Sold | | | 44,659 | | | $ | 539,474 | | | | 75,847 | | | $ | 848,527 | |
Issued as reinvestment of dividends | | | 29,135 | | | | 342,629 | | | | 66,550 | | | | 753,303 | |
Redeemed | | | (330,144 | ) | | | (3,968,676 | ) | | | (1,883,854 | ) | | | (20,651,717 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (256,350 | ) | | $ | (3,086,573 | ) | | | (1,741,457) | | | $ | (19,049,887 | ) |
| | | | | | | | | | | | | | | | |
Class I: | |
Sold | | | 6,578,006 | | | $ | 80,917,627 | | | | 10,681,441 | | | $ | 117,771,945 | |
Issued as reinvestment of dividends | | | 742,994 | | | | 8,863,922 | | | | 1,478,517 | | | | 16,925,669 | |
Redeemed | | | (4,569,370 | ) | | | (55,741,016 | ) | | | (12,685,290 | ) | | | (143,037,968 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 2,751,630 | | | $ | 34,040,533 | | | | (525,332 | ) | | $ | (8,340,354 | ) |
| | | | | | | | | | | | | | | | |
Class R: | |
Issued as reinvestments of dividends | | | 117 | | | $ | 1,401 | | | | 454 | | | $ | 5,219 | |
Redeemed | | | (6,662 | ) | | | (80,429 | ) | | | (7,557 | ) | | | (84,288 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | (6,545 | ) | | $ | (79,028 | ) | | | (7,103 | ) | | $ | (79,069 | ) |
| | | | | | | | | | | | | | | | |
Class Z: | |
Sold | | | 116 | | | $ | 1,420 | | | | 3,881 | | | $ | 45,671 | |
Issued as reinvestment of dividends | | | 106 | | | | 1,259 | | | | 81 | | | | 929 | |
Redeemed | | | (67 | ) | | | (803 | ) | | | (343 | ) | | | (3,824 | ) |
| | | | | | | | | | | | | | | | |
Net increase (decrease) | | | 155 | | | $ | 1,876 | | | | 3,619 | | | $ | 42,776 | |
| | | | | | | | | | | | | | | | |
33
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
Note 6. Other Risks
Common Stock Risk: While common stocks have historically generated higher average returns than fixed income securities over the long-term, common stock has also experienced significantly more volatility in those returns, although under certain market conditions, fixed-income investments may have comparable or greater price volatility. An adverse event, such as an unfavorable earnings report, may depress the value of common stock held by the Fund. Also, the price of common stock is sensitive to general movements in the stock market. A drop in the stock market may depress the price of common stock held by the Fund.
Real Estate Market Risk: Since the Fund concentrates its assets in companies engaged in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Risks of investing in real estate securities include falling property values due to increasing vacancies, declining rents resulting from economic, legal, tax, political or technological developments, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest-rate changes and market recessions. Real estate company prices also may drop because of the failure of borrowers to pay their loans and poor management, and residential developers, in particular, could be negatively impacted by falling home prices, slower mortgage origination and rising construction costs. The risks of investing in REITs are similar to those associated with direct investments in real estate securities.
REIT Risk: In addition to the risks of securities linked to the real estate industry, REITs are subject to certain other risks related to their structure and focus. REITs are dependent upon management skills and generally may not be diversified. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. In addition, REITs could possibly fail to (i) qualify for pass-through of income under applicable tax law, or (ii) maintain their exemptions from registration under the 1940 Act. The above factors may also adversely affect a borrower’s or a lessee’s ability to meet its obligations to the REIT. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments.
Small- and Medium-Sized Companies Risk: Real estate companies in the industry tend to be small-to medium-sized companies in relation to the equity markets as a whole. There may be less trading in a smaller company’s stock, which means that buy and sell transactions in that stock could have a larger impact on the stock’s price than is the case with larger company stocks. Smaller companies also may have fewer lines of business so that changes in any one line of business may have a greater impact on a smaller company’s stock price than is the case for a larger company. Further, smaller company stocks may perform differently in different cycles than larger company stocks. Accordingly, real estate company shares can, and at times will, perform differently than large company stocks.
Foreign (Non-U.S.) Securities Risk: The Fund directly purchases securities of foreign issuers. Risks of investing in foreign securities, include currency risks, future political and economic developments and possible imposition of foreign withholding taxes on income or proceeds payable on the securities. In addition, there may be less publicly available information about a foreign issuer than about a domestic issuer, and foreign issuers may not be subject to the same accounting, auditing and financial
34
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
recordkeeping standards and requirements as domestic issuers. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.
Foreign Currency and Currency Hedging Risk: Although the Fund will report its NAV and pay dividends in U.S. dollars, foreign securities often are purchased with and make any dividend and interest payments in foreign currencies. Therefore, the Fund’s investments in foreign securities will be subject to foreign currency risk, which means that the Fund’s NAV could decline as a result of changes in the exchange rates between foreign currencies and the U.S. dollar. Certain foreign countries may impose restrictions on the ability of issuers of foreign securities to make payment of principal, dividends and interest to investors located outside the country, due to blockage of foreign currency exchanges or otherwise. The Fund may, but is not required to, engage in various instruments that are designed to hedge the Fund’s foreign currency risks.
If the Fund were to utilize derivatives for the purpose of hedging foreign currency risks, it would be subject to risks different from, and possibly greater than, the risks associated with investing directly in traditional securities. Among the risks presented are counterparty risk, financial leverage risk, liquidity risk, OTC trading risk and tracking risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives.
Non-Diversification Risk: As a “non-diversified” investment company, the Fund can invest in fewer individual companies than a diversified investment company. As a result, the Fund is more susceptible to any single political, regulatory or economic occurrence and to the financial condition of individual issuers in which it invests. The Fund’s relative lack of diversity may subject investors to greater risk of loss than a fund that has a diversified portfolio.
Geopolitical Risk: Occurrence of global events similar to those in recent years, such as war, terrorist attacks, natural or environmental disasters, country instability, infectious disease epidemics, market instability, debt crises and downgrades, embargoes, tariffs, sanctions and other trade barriers and other governmental trade or market control programs, the potential exit of a country from its respective union and related geopolitical events, may result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets. Additionally, those events, as well as other changes in foreign and domestic political and economic conditions, could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, secondary trading, credit ratings, inflation, investor sentiment and other factors affecting the value of the Fund’s investments. The decision of the United Kingdom (UK) to exit from the European Union following the June 2016 vote on the matter (referred to as Brexit) may cause uncertainty and thus adversely impact financial results of the Fund and the global financial markets. Growing tensions, including trade disputes, between the United States and other nations, or among foreign powers, and possible diplomatic, trade or other sanctions could adversely impact the global economy, financial markets and the Fund. The strengthening or weakening of the U.S. dollar relative to other currencies may, among other things, adversely affect the Fund’s investments denominated in non-U.S. dollar currencies. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have, and the duration of those effects.
35
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)
Regulatory Risk: The U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Fund and on the mutual fund industry in general. The U.S. Securities and Exchange Commission’s (SEC) final rules and amendments to modernize reporting and disclosure and to develop and implement a Liquidity Risk Management Program for open-end investment companies along with other potential upcoming regulations, could, among other things, restrict the Fund’s ability to engage in transactions, impact flows into the Fund and/or increase overall expenses of the Fund. In addition, the SEC, Congress, various exchanges and regulatory and self-regulatory authorities, both domestic and foreign, have undertaken reviews of the use of derivatives by registered investment companies, which could affect the nature and extent of derivatives used by the Fund. While the full extent of these regulations is still unclear, these regulations and actions may adversely affect the instruments in which the Fund invests and its ability to execute its investment strategy. Similarly, regulatory developments in other countries may have an unpredictable and adverse impact on the Fund.
Large Shareholder Risk: The Fund may have one or more large shareholders or a group of shareholders investing in classes of Fund shares indirectly through an account, platform or program sponsored by a financial institution. Investment and asset allocation decisions by such financial institutions regarding the account, platform or program through which multiple shareholders invest may result in subscription and redemption decisions that have a significant impact on the assets, expenses and trading activities of the Fund. Such a decision may cause the Fund to sell assets (or invest cash) at disadvantageous times or prices, increase or accelerate taxable gains or transaction costs and may negatively affect the Fund’s NAV, performance, or ability to satisfy redemptions in a timely manner.
This is not a complete list of the risks of investing in the Fund. For additional information concerning the risks of investing in the Fund, please consult the Fund’s prospectus.
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. Subsequent Events
Management has evaluated events and transactions occurring after June 30, 2018 through the date that the financial statements were issued, and has determined that no additional disclosure in the financial statements is required.
36
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
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 website at cohenandsteers.com or (iii) on the SEC’s website 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 by August 31 of each year (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SEC’s website 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 website 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 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 net realized gains 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.
APPROVAL OF INVESTMENT ADVISORY AND SUBADVISORY AGREEMENTS
The Board of Directors of the Fund, including a majority of the directors who are not parties to the Fund’s investment advisory and subadvisory agreements (the Advisory Agreements), or interested persons of any such party (the Independent Directors), has the responsibility under the Investment Company Act of 1940 to approve the Fund’s Advisory Agreements for their initial two year term and their continuation annually thereafter at a meeting of the Board of Directors called for the purpose of voting on the approval or continuation. The Advisory Agreements were discussed at a meeting of the Independent Directors held on June 5, 2018 and at meetings of the full Board of Directors held in person on March 20, 2018 and June 12, 2018. At the meeting of the full Board of Directors on June 12, 2018, the Advisory Agreements were unanimously continued for a term ending June 30, 2019 by the Fund’s Board of Directors, including the Independent Directors. The Independent Directors were represented by independent counsel who assisted them in their deliberations during the meetings and executive sessions.
In considering whether to continue the Advisory Agreements, the Board of Directors reviewed materials provided by an independent data provider, which included, among other things, fee, expense and performance information compared to peer funds (the Peer Funds) and performance comparisons to a larger category universe; summary information prepared by the Fund’s investment advisor (the Investment Advisor); and a memorandum from Fund counsel outlining the legal duties of the Board of Directors. The Board of Directors also spoke directly with representatives of the independent data provider and met with investment advisory personnel. In addition, the Board of Directors considered information provided from time to time by the Investment Advisor throughout the year at meetings of the Board of Directors, including presentations by portfolio managers relating to the investment
37
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
performance of the Fund and the investment strategies used in pursuing the Fund’s objective. In particular, the Board of Directors considered the following:
(i) The nature, extent and quality of services to be provided by the Investment Advisor and the Subadvisors: The Board of Directors reviewed the services that the Investment Advisor and the sub-investment advisors (the Subadvisors) provide to the Fund, including, but not limited to, making the day-to-day investment decisions for the Fund, placing orders for the investment and reinvestment of the Fund’s assets, furnishing information to the Board of Directors of the Fund regarding the Fund’s portfolio, providing individuals to serve as Fund officers, and, for the Investment Advisor, generally managing the Fund’s investments in accordance with the stated policies of the Fund. The Board of Directors also discussed with officers and portfolio managers of the Fund the types of transactions that were being done on behalf of the Fund. Additionally, the Board of Directors took into account the services provided by the Investment Advisor and the Subadvisors to other funds and accounts, including those that have investment objectives and strategies similar to those of the Fund. The Board of Directors also considered the education, background and experience of the Investment Advisor’s and Subadvisors’ personnel, particularly noting the potential benefit that the portfolio managers’ work experience and favorable reputation can have on the Fund. The Board of Directors further noted the Investment Advisor’s and Subadvisors’ ability to attract qualified and experienced personnel. The Board of Directors also considered the administrative services provided by the Investment Advisor, including compliance and accounting services. After consideration of the above factors, among others, the Board of Directors concluded that the nature, extent and quality of services provided by the Investment Advisor and the Subadvisors are satisfactory and appropriate.
(ii) Investment performance of the Fund and the Investment Advisor and Subadvisors: The Board of Directors considered the investment performance of the Fund compared to Peer Funds and compared to a relevant benchmark. The Board of Directors noted that the Fund outperformed the Peer Funds’ median for the one-, three-, and five-year periods ended March 31, 2018, ranking second out of five peers for each period. The Board of Directors also noted that the Fund represented the Peer Funds’ median for the ten-year period ended March 31, 2018, ranking third out of five peers. The Board of Directors considered that the Fund outperformed its benchmark for the one-, three-, five- and ten-year periods ended March 31, 2018. The Board of Directors engaged in discussions with the Investment Advisor regarding the contributors to and detractors from the Fund’s performance during the periods. The Board of Directors also considered supplemental information provided by the Investment Advisor, including a narrative summary of various factors affecting performance and the Investment Advisor’s performance in managing other real estate funds. The Board of Directors determined that Fund performance, in light of all the considerations noted above, supported the continuation of the Advisory Agreements.
(iii) Cost of the services to be provided and profits to be realized by the Investment Advisor from the relationship with the Fund: The Board of Directors considered the contractual and actual management fee paid by the Fund, as well as the Fund’s total expense ratio. As part of its analysis, the Board of Directors gave consideration to the fee and expense analyses provided by the independent data provider. The Board of Directors noted that the Fund’s actual management fee was higher than the Peer Funds’ median ranking fourth out of five funds. The Board of Directors also noted that the Fund’s total expense ratio was higher than the Peer Funds’ median, ranking fourth out of five funds. The Board of Directors considered that the Investment Advisor is waiving its fees and/or reimbursing expenses to
38
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
limit the overall operating expenses of the Fund. The Board of Directors noted that the Fund has a breakpoint of 0.10% on assets under management over $1.5 billion; however, the reduced fee is not currently applicable due to the size of the Fund. In light of the considerations above, the Board of Directors concluded that the Fund’s current expense structure was satisfactory.
The Board of Directors also reviewed information regarding the profitability to the Investment Advisor of its relationship with the Fund. The Board of Directors considered the level of the Investment Advisor’s profits and whether the profits were reasonable for the Investment Advisor. Since the Subadvisors are paid by the Investment Advisor (and not by the Fund) for investment services provided to the Fund and are affiliates of the Investment Advisor, the Board of Directors considered the profitability of the Investment Advisor as a whole and did not consider the Subadvisors separate profitability to be particularly relevant to their determination. The Board of Directors took into consideration other benefits to be derived by the Investment Advisor in connection with the Advisory Agreements, noting particularly the research and related services, within the meaning of Section 28(e) of the Securities Exchange Act of 1934, that the Investment Advisor receives by allocating the Fund’s brokerage transactions. The Board of Directors further considered that the Investment Advisor continues to reinvest profits back in the business, including upgrading and/or implementing new trading, compliance and accounting systems, and by adding investment personnel to the portfolio management teams. The Board of Directors also considered the administrative services provided by the Investment Advisor and the associated administration fee paid to the Investment Advisor for such services under the Administration Agreement. The Board of Directors determined that the services received under the Administration Agreement are beneficial to the Fund. The Board of Directors concluded that the profits realized by the Investment Advisor from its relationship with the Fund were reasonable and consistent with the Investment Advisor’s fiduciary duties.
(iv) The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale: The Board of Directors noted that the Fund’s advisory fee schedule contains a breakpoint of 0.10% once the Fund’s assets under management reach $1.5 billion. The Board of Directors considered the Fund’s asset size and determined that there were not at this time significant economies of scale that were not being shared with shareholders. In considering economies of scale, the Board of Directors also noted, as discussed above in (iii), that the Investment Advisor continues to reinvest profits back in the business.
(v) Comparison of services to be rendered and fees to be paid to those under other investment advisory contracts, such as contracts of the same and other investment advisors or other clients: As discussed above in (iii), the Board of Directors compared the fees paid under the Advisory Agreements to those under other investment advisory contracts of other investment advisors managing Peer Funds. The Board of Directors also compared the services rendered, fees paid and profitability under the Advisory Agreements to those under the Investment Advisor’s other fund advisory agreements and advisory contracts with institutional and other clients with similar investment mandates, noting that the Investment Advisor provides more services to the Fund than it does for institutional or subadvised accounts. The Board of Directors also considered the entrepreneurial risk and financial exposure assumed by the Investment Advisor in developing and managing the Fund that the Investment Advisor does not have with institutional and other clients and other differences in the management of registered investment companies and institutional accounts. The Board of Directors determined that on a comparative basis the fees under the Advisory Agreements were reasonable in relation to the services provided.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
No single factor was cited as determinative to the decision of the Board of Directors, and each Director may have assigned different weights to the various factors. Rather, after weighing all of the considerations and conclusions discussed above, the Board of Directors, including the Independent Directors, unanimously approved the continuation of the Advisory Agreements.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Cohen & Steers Privacy Policy
| | |
| | |
| Facts | | What Does Cohen & Steers Do With Your Personal Information? |
| Why? | | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | | The types of personal information we collect and share depend on the product or service you have with us. This information can include: • Social Security number and account balances • Transaction history and account transactions • Purchase history and wire transfer instructions |
| How? | | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Cohen & Steers chooses to share; and whether you can limit this sharing. |
| | | | |
| Reasons we can share your personal information | | Does Cohen & Steers
share? | | Can you limit this
sharing? |
| | |
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or reports to credit bureaus | | Yes | | No |
| | |
For our marketing purposes— to offer our products and services to you | | Yes | | No |
| | |
| For joint marketing with other financial companies— | | No | | We don’t share |
| | |
For our affiliates’ everyday business purposes— information about your transactions and experiences | | No | | We don’t share |
| | |
For our affiliates’ everyday business purposes— information about your creditworthiness | | No | | We don’t share |
| | |
| For our affiliates to market to you— | | No | | We don’t share |
| | |
| For non-affiliates to market to you— | | No | | We don’t share |
| | |
| | | | |
| | | |
| Questions? Call 800.330.7348 | | | | |
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Cohen & Steers Privacy Policy—(Continued)
| | |
| | |
| Who we are | | |
| Who is providing this notice? | | Cohen & Steers Capital Management, Inc., Cohen & Steers Asia Limited, Cohen & Steers Japan, LLC, Cohen & Steers UK Limited, Cohen & Steers Securities, LLC, Cohen & Steers Private Funds and Cohen & Steers Open and Closed-End Funds (collectively, Cohen & Steers). |
| |
| What we do | | |
| How does Cohen & Steers protect my personal information? | | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We restrict access to your information to those employees who need it to perform their jobs, and also require companies that provide services on our behalf to protect your information. |
| How does Cohen & Steers collect my personal information? | | We collect your personal information, for example, when you: • Open an account or buy securities from us • Provide account information or give us your contact information • Make deposits or withdrawals from your account We also collect your personal information from other companies. |
| Why can’t I limit all sharing? | | Federal law gives you the right to limit only: • sharing for affiliates’ everyday business purposes—information about your creditworthiness • affiliates from using your information to market to you • sharing for non-affiliates to market to you State law and individual companies may give you additional rights to limit sharing. |
| |
| Definitions | | |
| Affiliates | | Companies related by common ownership or control. They can be financial and nonfinancial companies. • Cohen & Steers does not share with affiliates. |
| Non-affiliates | | Companies not related by common ownership or control. They can be financial and nonfinancial companies. • Cohen & Steers does not share with non-affiliates. |
| Joint marketing | | A formal agreement between non-affiliated financial companies that together market financial products or services to you. • Cohen & Steers does not jointly market. |
42
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
Cohen & Steers Investment Solutions
COHEN & STEERS REAL ASSETS FUND
| • | | Designed for investors seeking total return and the maximization of real returns during inflationary environments by investing primarily in real assets |
| • | | Symbols: RAPAX, RAPCX, RAPIX, RAPRX, RAPZX |
COHEN & STEERS GLOBAL REALTY SHARES
| • | | Designed for investors seeking total return, investing primarily in global real estate equity securities |
| • | | Symbols: CSFAX, CSFCX, CSSPX, GRSRX, CSFZX |
COHEN & STEERS REALTY SHARES
| • | | Designed for investors seeking total return, investing primarily in U.S. real estate securities |
COHEN & STEERS REAL ESTATE SECURITIES FUND
| • | | Designed for investors seeking total return, investing primarily in U.S. real estate securities |
| • | | Symbols: CSEIX, CSCIX, CREFX, CSDIX, CIRRX, CSZIX |
COHEN & STEERS INSTITUTIONAL REALTY SHARES
| • | | Designed for institutional investors seeking total return, investing primarily in U.S. real estate securities |
COHEN & STEERS INTERNATIONAL REALTY FUND
| • | | Designed for investors seeking total return, investing primarily in international (non-U.S.) real estate securities |
| • | | Symbols: IRFAX, IRFCX, IRFIX, IRFRX, IRFZX |
COHEN & STEERS GLOBAL INFRASTRUCTURE FUND
| • | | Designed for investors seeking total return, investing primarily in global infrastructure securities |
| • | | Symbols: CSUAX, CSUCX, CSUIX, CSURX, CSUZX |
COHEN & STEERS
MLP & ENERGY OPPORTUNITY FUND
| • | | Designed for investors seeking total return, investing primarily in midstream energy master limited partnership (MLP) units and related stocks |
| • | | Symbols: MLOAX, MLOCX, MLOIX, MLORX, MLOZX |
COHEN & STEERS
LOW DURATION PREFERREDAND INCOME FUND
| • | | Designed for investors seeking high current income and capital preservation by investing in low-duration preferred and other income securities issued by U.S. and non-U.S. companies |
| • | | Symbols: LPXAX, LPXCX, LPXIX, LPXRX, LPXZX |
COHEN & STEERS
PREFERRED SECURITIESAND INCOME FUND
| • | | Designed for investors seeking total return (high current income and capital appreciation), investing primarily in preferred and debt securities issued by U.S. and non-U.S. companies |
| • | | Symbols: CPXAX, CPXCX, CPXFX, CPXIX, CPRRX, CPXZX |
COHEN & STEERS DIVIDEND VALUE FUND
| • | | Designed for investors seeking long-term growth of income and capital appreciation, investing primarily in dividend paying common stocks and preferred stocks |
| • | | Symbols: DVFAX, DVFCX, DVFIX, DVFRX, DVFZX |
Distributed by Cohen & Steers Securities, LLC.
COHEN & STEERS GLOBAL REALTY MAJORS ETF
| • | | Designed for investors who seek a relatively low-cost passive approach for investing in a portfolio of global real estate equity securities of companies in a specified index |
Distributed by ALPS Distributors, Inc.
ISHARES COHEN & STEERS REALTY MAJORS INDEX FUND
| • | | Designed for investors who seek a relatively low-cost passive approach for investing in a portfolio of U.S. real estate equity securities of companies in a specified index |
Distributed by SEI Investments Distribution Co.
Please consider the investment objectives, risks, charges and expenses of any Cohen & Steers U.S. registered open-end fund carefully before investing. A summary prospectus and prospectus containing this and other information can be obtained by calling 800-330-7348 or by visiting cohenandsteers.com. Please read the summary prospectus and prospectus carefully before investing.
43
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
OFFICERS AND DIRECTORS
Robert H. Steers
Director and Chairman
Joseph M. Harvey
Director and Vice President
Michael G. Clark
Director
George Grossman
Director
Dean A. Junkans
Director
Gerald J. Maginnis
Director
Jane F. Magpiong
Director
Daphne L. Richards
Director
Frank K. Ross
Director
C. Edward Ward, Jr.
Director
Adam M. Derechin
President and Chief Executive Officer
Jon Cheigh
Vice President
Francis C. Poli
Secretary and Chief Legal Officer
James Giallanza
Chief Financial Officer
Albert Laskaj
Treasurer
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
Co-administrator and Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
Transfer Agent
DST Asset Manager Solutions, Inc.
P.O. Box 219953
Kansas City, MO 64121-9953
(800) 437-9912
Legal Counsel
Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036
Distributor
Cohen & Steers Securities, LLC
280 Park Avenue
New York, NY 10017
| | |
| NASDAQ Symbol: Class | | A—IRFAX |
| | C—IRFCX |
| | F—IRFFX* |
| | I—IRFIX |
| | R—IRFRX |
| | T—IRFTX* |
| | Z—IRFZX |
Website: 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. Performance data quoted represent past performance. Past performance is no guarantee of future results and your investment may be worth more or less at the time you sell your shares.
| * | Class F and Class T shares are currently not available for purchase. |
44
COHEN & STEERS
INTERNATIONAL REALTY FUND
280 PARK AVENUE
NEW YORK, NY 10017
eDelivery AVAILABLE
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Semiannual Report June 30, 2018
Cohen & Steers
International
Realty Fund
IRFAXSAR
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
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.
None.
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 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. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
Not applicable.
Item 13. Exhibits.
| (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: | | August 31, 2018 |
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: Chief Financial Officer (Principal Financial Officer) |
| |
| | Date: August 31, 2018 |
