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 | 811-23097 | |||||||
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Cohen & Steers Low Duration Preferred and Income Fund, Inc. | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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280 Park Avenue, New York, NY |
| 10017 | ||||||
(Address of principal executive offices) |
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Tina M. Payne | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | (212) 832-3232 |
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Date of fiscal year end: | April 30 |
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Date of reporting period: | April 30, 2016 |
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Item 1. Reports to Stockholders.
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
To Our Shareholders:
We would like to share with you our report for the period ended April 30, 2016. The net asset values (NAV) per share at that date were $9.87, $9.87, $9.88, $9.88 and $9.88 for Class A, Class C, Class I, Class R and Class Z shares, respectively.
The total returns, including income and change in NAV, for the Fund and its comparative benchmarks were:
For the Period November 30, 2015 (commencement of operations) Through April 30, 2016 | |||||||
Cohen & Steers Low Duration Preferred and Income Fund— Class A Shares | 0.07 | % | |||||
Cohen & Steers Low Duration Preferred and Income Fund— Class C Shares | –0.25 | % | |||||
Cohen & Steers Low Duration Preferred and Income Fund— Class I Shares | 0.17 | % | |||||
Cohen & Steers Low Duration Preferred and Income Fund— Class R Shares | –0.06 | % | |||||
Cohen & Steers Low Duration Preferred and Income Fund— Class Z Shares | 0.17 | % | |||||
Blended Benchmark—65% BofA Merrill Lynch 8% Constrained Developed Markets Low Duration Capital Securities Custom Index and 35% BofA Merrill Lynch 1-5 Year U.S. Corporate Indexa | 0.72 | % | |||||
S&P 500 Indexa | 0.14 | % |
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 NAV. Fund performance figures reflect fee waivers and/or expense reimbursements,
a The Blended Benchmark consists of 65% BofA Merrill Lynch 8% Constrained Developed Markets Low Duration Capital Securities Custom Index and 35% BofA Merrill Lynch 1-5 Year U.S. Corporate Index. The BofA Merrill Lynch 8% Constrained Developed Markets Low Duration Capital Securities Custom Index tracks the performance of select U.S. dollar-denominated fixed and floating-rate preferred, corporate and contingent capital securities, with a remaining term to final maturity of one year or more, but less than five years. The BofA Merrill Lynch 1-5 Year U.S. Corporate Index tracks the performance of U.S. dollar denominated investment grade corporate debt publicly issued in the U.S. domestic market with a remaining term to final maturity of less than five years. 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.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
without which the performance would have been lower. Performance quoted does not reflect the deduction of the maximum 2.00% initial sales charge on Class A shares and 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.
The Fund makes regular monthly distributions at a level rate (the Policy). Distributions paid by the Fund 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. As a result of the Policy, the Fund may pay distributions in excess of the Fund's investment company taxable income and net realized gains. This excess would be a return of capital distributed from the Fund's assets. Distributions of capital decrease the Fund's total assets and, therefore, could have the effect of increasing the Fund's expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.
Market Review
Preferred securities had generally positive returns for the period beginning November 30, 2015 (commencement of operations) and ending April 30, 2016, although low-duration preferreds underperformed longer-dated preferreds in a period of declining interest rates. Conversely, they have historically outperformed when rates rise.
In the beginning of the period, conditions were difficult for credit-sensitive securities amid plummeting oil prices and disappointing global economic data. These trends especially weighed on the high-yield market, which, unlike preferreds, has a meaningful energy sector component. However, equity and debt classes moved higher beginning in mid-February, as oil rallied from a 13-year low and U.S. data firmed.
The monetary policy backdrop was broadly supportive; the European Central Bank announced additional quantitative easing measures that went beyond expectations, and the U.S. Federal Reserve took a more dovish tone, citing global growth risks. China continued to implement aggressive monetary and fiscal stimulus. In this environment, the yield on the U.S. 10-year Treasury fell from 2.2% at the start of the period to 1.8% on April 30, aiding the performance of high-quality, longer-duration fixed income securities. At the same time, high-yield, lower-quality issues also performed well, more than recouping earlier declines as conditions in credit markets improved.
In the preferreds market, many issues from banks, which are the primary issuers of preferred securities, recovered from early-period pressures. While a flatter yield curve raised concerns about banks' net interest margins, bank credit fundamentals remained strong, with ample capital and adequate profitability. Also, worries regarding banks' energy exposure—which is only a small part of bank loan portfolios—eased as oil prices rose.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
European bank preferreds, notably contingent capital, or "CoCo" instruments, generally did not recover to the same extent as U.S. bank issues. These securities were hindered more than other bank preferreds in the period amid particularly poor performance from European bank equities as well as a new supply overhang. The market also focused on the potential for a large German bank to miss CoCo payments due to a potential shortfall on distributable income under German accounting principles. In addition, the announcement of the U.K. referendum date over European Union membership introduced pressure, notably in securities issued by U.K. banks.
Fund Performance
The Fund had a relatively flat total return in the period and underperformed its blended benchmark. Our substantial underweight in short-term investment-grade corporate bonds, which make up 35% of the Fund's blended benchmark, was the primary driver of relative performance. High-quality corporate bonds performed well as a safe haven, returning 1.9% in the period and significantly besting the short-term preferred index that makes up the other 65% of our blended benchmark, which returned just 0.1%.
Security selection in the banking sector also detracted from relative performance. We owned several out-of-index issues from U.K. banks that declined in the period, in part due to uncertainty surrounding the U.K.'s possible exit from the European Union. Their performance in the period notwithstanding, we favor U.K. banks based on their attractive capitalization and strong regulatory oversight within a relatively healthy economy.
Factors that helped the Fund's relative performance included our overweight in certain General Electric preferreds that were the subject of an exchange offer. As well, the Fund was aided by security selection within the insurance and utilities sectors and among debt securities issued by real estate investment trusts.
Impact of Derivatives on Fund Performance
The Fund used derivatives in the form of forward foreign currency exchange contracts in order to manage currency risk on certain Fund positions denominated in foreign currencies. These contracts detracted from the Fund's total return during the period November 30, 2015 (commencement of operations) through April 30, 2016.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
Sincerely,
ROBERT H. STEERS | WILLIAM F. SCAPELL | ||||||||||
Chairman | Portfolio Manager |
ELAINE ZAHARIS-NIKAS
Portfolio Manager
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 LOW DURATION PREFERRED AND INCOME FUND, INC.
Performance Review (Unaudited)
Class A—Growth of a $10,000 Investment
Class C—Growth of a $10,000 Investment
Class I—Growth of a $100,000 Investment
Class R—Growth of a $10,000 Investment
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
Performance Review (Unaudited)—(Continued)
Class Z—Growth of a $10,000 Investment
Average Annual Total Returns—For Period Ended April 30, 2016
Class A Shares | Class C Shares | Class I Shares | Class R Shares | Class Z Shares | |||||||||||||||||||
Since Inceptionc (with sales charge) | –1.93 | %d | –1.25 | %e | — | — | — | ||||||||||||||||
Since Inceptionc (without sales charge) | 0.07 | % | –0.25 | % | 0.17 | % | –0.06 | % | 0.17 | % |
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 graphs and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During the period presented above, the investment advisor waived fees and/or reimbursed expenses. Without this arrangement, performance would have been lower.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
Performance Review (Unaudited)—(Continued)
The annualized gross and net expense ratios, respectively, for each class of shares as disclosed in the November 30, 2015 prospectus, as supplemented December 22, 2015, were as follows: Class A—1.90% and 1.15%; Class C—2.55% and 1.80%; Class I—1.65% and 0.80%; Class R—2.05% and 1.30%; and Class Z—1.55% and 0.80%. Through June 30, 2017, the investment advisor has contractually agreed to waive its fee and/or reimburse expenses so the Fund's total annual operating expenses (excluding acquired fund fees and expenses and extraordinary expenses) do not exceed 1.15% for Class A shares, 1.80% for Class C shares, 0.80% for Class I shares, 1.30% for Class R shares and 0.80% for Class Z shares. This contractual agreement can be amended at any time by agreement of the Fund 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 The comparative indices are not adjusted to reflect expenses or other fees that the SEC requires to be reflected in the Fund's performance. Index performance does not reflect the deduction of any fees, taxes or expenses. An investor cannot invest directly in an index. The Fund's performance assumes the reinvestment of all dividends and distributions at NAV. For more information, including charges and expenses, please read the prospectus carefully before you invest.
b The Blended Benchmark consists of 65% BofA Merrill Lynch 8% Constrained Developed Markets Low Duration Capital Securities Custom Index and 35% BofA Merrill Lynch 1-5 Year U.S. Corporate Index.
c Inception date of November 30, 2015.
d Reflects a 2.00% front-end sales charge.
e Reflects a contingent deferred sales charge of 1.00%.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME 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 November 30, 2015 (commencement of operations)—April 30, 2016.
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 LOW DURATION PREFERRED AND INCOME FUND, INC.
Expense Example (Unaudited)—(Continued)
Beginning Account Value November 30, 2015a | Ending Account Value April 30, 2016 | Expenses Paid During Periodb November 30, 2015a– April 30, 2016 | |||||||||||||
Class A | |||||||||||||||
Actual (0.07% return)c | $ | 1,000.00 | $ | 1,000.70 | $ | 4.78 | |||||||||
Hypothetical (5% annual return before expenses)d | $ | 1,000.00 | $ | 1,019.14 | $ | 5.77 | |||||||||
Class C | |||||||||||||||
Actual (–0.25% return)c | $ | 1,000.00 | $ | 997.50 | $ | 7.47 | |||||||||
Hypothetical (5% annual return before expenses)d | $ | 1,000.00 | $ | 1,015.91 | $ | 9.02 | |||||||||
Class I | |||||||||||||||
Actual (0.17% return)c | $ | 1,000.00 | $ | 1,001.70 | $ | 3.33 | |||||||||
Hypothetical (5% annual return before expenses)d | $ | 1,000.00 | $ | 1,020.89 | $ | 4.02 | |||||||||
Class R | |||||||||||||||
Actual (–0.06% return)c | $ | 1,000.00 | $ | 999.40 | $ | 5.40 | |||||||||
Hypothetical (5% annual return before expenses)d | $ | 1,000.00 | $ | 1,018.40 | $ | 6.52 | |||||||||
Class Z | |||||||||||||||
Actual (0.17% return)c | $ | 1,000.00 | $ | 1,001.70 | $ | 3.33 | |||||||||
Hypothetical (5% annual return before expenses)d | $ | 1,000.00 | $ | 1,020.89 | $ | 4.02 |
a Commencement of operations.
b Expenses are equal to the Fund's Class A, Class C, Class I, Class R and Class Z annualized net expense ratios of 1.15%, 1.80%, 0.80%, 1.30% and 0.80%, respectively, multiplied by the average account value over the period, multiplied by 152/366 (to reflect the fiscal period).
c Actual expenses for the period November 30, 2015 (commencement of operations) to April 30, 2016.
d Hypothetical expenses if the class had been in existence from November 1, 2015 through April 30, 2016.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
April 30, 2016
Top Ten Holdingsa
(Unaudited)
Security | Value | % of Net Assets | |||||||||
General Electric Co., 5.00%, Series D | $ | 1,593,280 | 4.8 | ||||||||
Farm Credit Bank of Texas, 10.00%, Series I | 1,169,687 | 3.6 | |||||||||
Wells Fargo & Co., 7.98%, Series K | 1,145,375 | 3.5 | |||||||||
SMFG Preferred Capital, 9.50%, 144A (Japan) | 1,031,424 | 3.1 | |||||||||
Rabobank Nederland, 11.00%, 144A (Netherlands) | 1,008,562 | 3.1 | |||||||||
Prudential Financial, 8.875%, due 6/15/38 | 915,902 | 2.8 | |||||||||
National Retail Properties, 6.875%, due 10/15/17 | 910,845 | 2.8 | |||||||||
ING Capital Funding Trust III, 4.231%, Series 9 (FRN) (Netherlands) | 877,500 | 2.7 | |||||||||
VEREIT Operating Partnership LP, 3.00%, due 2/6/19 | 837,250 | 2.5 | |||||||||
La Mondiale Vie, 7.625% (France) | 806,771 | 2.5 |
a Top ten holdings are determined on the basis of the value of individual securities held. The Fund may also hold positions in other types of securities issued by the companies listed above. See the Schedule of Investments for additional details on such other positions.
Sector Breakdown
(Based on Net Assets)
(Unaudited)
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
April 30, 2016
Number of Shares | Value | ||||||||||||||
PREFERRED SECURITIES—$25 PAR VALUE | 13.0% | ||||||||||||||
BANKS | 6.3% | ||||||||||||||
Ally Financial, 8.50%, Series A | 18,500 | $ | 462,130 | ||||||||||||
Citigroup Capital XIII, 7.008%, due 10/30/40, (FRN) | 25,200 | 658,980 | |||||||||||||
Countrywide Capital IV, 6.75%, due 4/1/33 | 7,144 | 183,958 | |||||||||||||
First Niagara Financial Group, 8.625%, Series B | 17,818 | 476,988 | |||||||||||||
GMAC Capital Trust I, 6.402%, due 2/15/40, Series 2 (TruPS) (FRN) | 6,500 | 162,955 | |||||||||||||
US Bancorp, 6.50%, Series F | 4,000 | 118,240 | |||||||||||||
2,063,251 | |||||||||||||||
BANKS—FOREIGN | 1.2% | ||||||||||||||
Barclays Bank PLC, 8.125%, Series 5 (United Kingdom) | 8,627 | 227,580 | |||||||||||||
National Westminster Bank PLC, 7.763%, Series C (United Kingdom) | 5,981 | 155,028 | |||||||||||||
382,608 | |||||||||||||||
FINANCIAL—DIVERSIFIED FINANCIAL SERVICES | 0.7% | ||||||||||||||
State Street Corp., 5.35%, Series G | 8,400 | 220,836 | |||||||||||||
INSURANCE | 1.6% | ||||||||||||||
MULTI-LINE—FOREIGN | 0.5% | ||||||||||||||
ING Groep N.V., 7.20% (Netherlands) | 7,000 | 183,540 | |||||||||||||
REINSURANCE—FOREIGN | 1.1% | ||||||||||||||
Aspen Insurance Holdings Ltd., 7.25% (Bermuda) | 5,467 | 144,493 | |||||||||||||
Endurance Specialty Holdings Ltd., 7.50%, Series B (Bermuda) | 8,000 | 203,600 | |||||||||||||
348,093 | |||||||||||||||
TOTAL INSURANCE | 531,633 | ||||||||||||||
REAL ESTATE | 2.4% | ||||||||||||||
HOTEL | 0.4% | ||||||||||||||
Summit Hotel Properties, 9.25%, Series A | 5,500 | 145,860 | |||||||||||||
SHOPPING CENTERS—COMMUNITY CENTER | 2.0% | ||||||||||||||
Inland Real Estate Corp., 8.125%, Series A | 25,681 | 650,050 | |||||||||||||
TOTAL REAL ESTATE | 795,910 |
See accompanying notes to financial statements.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
April 30, 2016
Number of Shares | Value | ||||||||||||||
TRANSPORT—MARINE—FOREIGN | 0.8% | ||||||||||||||
Seaspan Corp., 9.50%, Series C (Hong Kong) | 10,000 | $ | 251,400 | ||||||||||||
TOTAL PREFERRED SECURITIES—$25 PAR VALUE (Identified cost—$4,209,761) | 4,245,638 | ||||||||||||||
PREFERRED SECURITIES—CAPITAL SECURITIES | 76.9% | ||||||||||||||
BANKS | 18.7% | ||||||||||||||
Bank of America Corp., 6.30%, Series DD | 695,000 | 729,750 | |||||||||||||
Bank of America Corp., 6.50%, Series Z | 200,000 | 210,750 | |||||||||||||
Capital One Financial Corp., 5.55%, Series E | 150,000 | 150,075 | |||||||||||||
Citigroup, 6.125%, Series R | 400,000 | 407,000 | |||||||||||||
Citigroup, 6.25%, Series T | 450,000 | 463,500 | |||||||||||||
CoBank ACB, 6.25%, Series I | 300,000 | 312,000 | |||||||||||||
Farm Credit Bank of Texas, 10.00%, Series I | 950 | 1,169,687 | |||||||||||||
JPMorgan Chase & Co., 7.90%, Series I | 500,000 | 503,438 | |||||||||||||
JPMorgan Chase & Co., 6.75%, Series S | 125,000 | 138,450 | |||||||||||||
JPMorgan Chase & Co., 5.30%, Series Z | 400,000 | 401,000 | |||||||||||||
US Bancorp, 5.125%, Series I | 200,000 | 204,750 | |||||||||||||
Wachovia Capital Trust III, 5.57% (FRN) | 300,000 | 299,625 | |||||||||||||
Wells Fargo & Co., 7.98%, Series Ka | 1,100,000 | 1,145,375 | |||||||||||||
6,135,400 | |||||||||||||||
BANKS—FOREIGN | 22.7% | ||||||||||||||
Allied Irish Banks PLC, 7.375%, Series EMTN (EUR) (Ireland) | 200,000 | 200,060 | |||||||||||||
Banco Bilbao Vizcaya Argentaria SA, 8.875% (EUR) (Spain) | 200,000 | 234,449 | |||||||||||||
Bank of Ireland, 10.00%, due 7/30/16, Series EMTN (EUR) (Ireland) | 200,000 | 234,048 | |||||||||||||
Barclays Bank PLC, 14.00%, Series RCI (GBP) (United Kingdom) | 50,000 | 91,231 | |||||||||||||
Barclays PLC, 8.25% (United Kingdom) | 400,000 | 402,419 | |||||||||||||
BNP Paribas SA, 7.625%, 144A (France)b | 400,000 | 410,000 | |||||||||||||
Cooperatieve Rabobank UA, 6.625%, (EUR) (Netherlands) | 200,000 | 231,587 | |||||||||||||
Credit Agricole SA, 8.125%, 144A (France)b | 400,000 | 414,377 | |||||||||||||
Credit Suisse Group Guernsey I Ltd, 7.875%, due 2/24/41 (Switzerland) | 400,000 | 404,645 | |||||||||||||
Lloyds Banking Group PLC, 7.50% (United Kingdom) | 200,000 | 198,800 | |||||||||||||
Rabobank Nederland, 8.40% (Netherlands) | 400,000 | 422,050 |
See accompanying notes to financial statements.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
April 30, 2016
Number of Shares | Value | ||||||||||||||
Rabobank Nederland, 11.00%, 144A (Netherlands)b | 825,000 | $ | 1,008,562 | ||||||||||||
Royal Bank of Scotland Group PLC, 7.50% (United Kingdom) | 200,000 | 187,000 | |||||||||||||
Royal Bank of Scotland PLC, 9.50%, due 3/16/22 (United Kingdom) | 200,000 | 212,043 | |||||||||||||
SMFG Preferred Capital, 9.50%, 144A (Cayman Islands)b | 900,000 | 1,031,424 | |||||||||||||
Societe Generale SA, 8.25%, Series EMTN (France) | 400,000 | 410,500 | |||||||||||||
Societe Generale SA, 8.875% (GBP) (France) | 100,000 | 158,471 | |||||||||||||
UBS AG, 7.25%, due 2/22/22, Series EMTN (Switzerland) | 600,000 | 620,618 | |||||||||||||
UBS Group AG, 6.875% (Switzerland) | 400,000 | 395,000 | |||||||||||||
UBS Group AG, 7.125% (Switzerland) | 200,000 | 203,624 | |||||||||||||
7,470,908 | |||||||||||||||
ELECTRIC | 2.9% | ||||||||||||||
INTEGRATED ELECTRIC | 1.3% | ||||||||||||||
Southern California Edison Co, 6.25%, Series E | 400,000 | 439,800 | |||||||||||||
REGULATED ELECTRIC | 1.6% | ||||||||||||||
Southern Co./The, 2.15%, due 9/1/19 | 500,000 | 506,561 | |||||||||||||
TOTAL ELECTRIC | 946,361 | ||||||||||||||
FINANCIAL | 2.9% | ||||||||||||||
DIVERSIFIED FINANCIAL SERVICES | 1.1% | ||||||||||||||
Ford Motor Credit Co. LLC, 2.021%, due 5/3/19 | 250,000 | 250,000 | |||||||||||||
State Street Corp., 5.25%, Series F | 125,000 | 128,000 | |||||||||||||
378,000 | |||||||||||||||
INVESTMENT BANKER/BROKER | 1.8% | ||||||||||||||
Charles Schwab Corp./The, 7.00% | 500,000 | 575,625 | |||||||||||||
TOTAL FINANCIAL | 953,625 | ||||||||||||||
INDUSTRIALS—DIVERSIFIED MANUFACTURING | 4.8% | ||||||||||||||
General Electric Co., 5.00%, Series D | 1,532,000 | 1,593,280 | |||||||||||||
INSURANCE | 20.6% | ||||||||||||||
LIFE/HEALTH INSURANCE | 3.5% | ||||||||||||||
MetLife, 5.25%, Series C | 225,000 | 219,645 | |||||||||||||
Prudential Financial, 8.875%, due 6/15/38 | 827,000 | 915,902 | |||||||||||||
1,135,547 |
See accompanying notes to financial statements.
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
April 30, 2016
Number of Shares | Value | ||||||||||||||
LIFE/HEALTH INSURANCE—FOREIGN | 9.5% | ||||||||||||||
Aegon NV, 1.74%, ($100 Par Value) (FRN) (Netherlands) | 150,000 | $ | 93,143 | ||||||||||||
CNP Assurances, 7.50% (France) | 400,000 | 440,528 | |||||||||||||
Dai-ichi Life Insurance Co. Ltd., 7.25%, 144A (Japan)b | 100,000 | 119,563 | |||||||||||||
Friends Life Holdings PLC, 7.875% (United Kingdom) | 711,000 | 782,112 | |||||||||||||
ING Capital Funding Trust III, 4.231%, Series 9 (FRN) (Netherlands) | 900,000 | 877,500 | |||||||||||||
La Mondiale Vie, 7.625% (France) | 750,000 | 806,771 | |||||||||||||
3,119,617 | |||||||||||||||
MULTI-LINE | 1.3% | ||||||||||||||
Hartford Financial Services Group, 8.125%, due 6/15/38 | 400,000 | 433,000 | |||||||||||||
MULTI-LINE—FOREIGN | 2.1% | ||||||||||||||
Aviva PLC, 8.25% (United Kingdom) | 650,000 | 702,404 | |||||||||||||
PROPERTY CASUALTY—FOREIGN | 2.2% | ||||||||||||||
QBE Capital Funding III Ltd., 7.25%, due 5/24/41, 144A (Australia)b | 200,000 | 219,998 | |||||||||||||
XLIT Ltd., 2.30%, due 12/15/18 (Cayman Islands) | 500,000 | 501,616 | |||||||||||||
721,614 | |||||||||||||||
REINSURANCE—FOREIGN | 2.0% | ||||||||||||||
Aquarius + Investments PLC, 8.25% (Switzerland) | 500,000 | 546,398 | |||||||||||||
Swiss Re Capital I LP, 6.854%, 144A (Switzerland)b | 100,000 | 100,350 | |||||||||||||
646,748 | |||||||||||||||
TOTAL INSURANCE | 6,758,930 | ||||||||||||||
REAL ESTATE | 4.3% | ||||||||||||||
FINANCE | 2.6% | ||||||||||||||
VEREIT Operating Partnership LP, 3.00%, due 2/6/19 | 850,000 | 837,250 | |||||||||||||
SHOPPING CENTERS—FREE STANDING | 1.7% | ||||||||||||||
Realty Income Corp., 6.75%, due 8/15/19 | 500,000 | 572,084 | |||||||||||||
TOTAL REAL ESTATE | 1,409,334 | ||||||||||||||
TOTAL PREFERRED SECURITIES—CAPITAL SECURITIES (Identified cost—$25,154,404) | 25,267,838 |
See accompanying notes to financial statements.
14
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
April 30, 2016
Principal Amount | Value | ||||||||||||||
CORPORATE BONDS | 8.5% | ||||||||||||||
INTEGRATED TELECOMMUNICATIONS SERVICES | 1.3% | ||||||||||||||
Telecom Italia Capital SA, 6.999%, due 6/4/18 (Italy) | $ | 400,000 | $ | 438,000 | |||||||||||
REAL ESTATE | 7.2% | ||||||||||||||
DIVERSIFIED | 4.9% | ||||||||||||||
National Retail Properties, 6.875%, due 10/15/17 | 850,000 | 910,845 | |||||||||||||
NorthStar Realty Europe Corp., 4.625%, due 12/15/16, 144Ab | 250,000 | 249,350 | |||||||||||||
Select Income REIT, 2.85%, due 2/1/18 | 450,000 | 450,397 | |||||||||||||
1,610,592 | |||||||||||||||
FINANCE | 2.3% | ||||||||||||||
iStar Financial, 4.00%, due 11/1/17 | 150,000 | 148,500 | |||||||||||||
VEREIT Operating Partnership LP, 2.00%, due 2/6/17 | 600,000 | 602,100 | |||||||||||||
750,600 | |||||||||||||||
TOTAL REAL ESTATE | 2,361,192 | ||||||||||||||
TOTAL CORPORATE BONDS (Identified cost—$2,781,065) | 2,799,192 | ||||||||||||||
Number of Shares | |||||||||||||||
SHORT-TERM INVESTMENTS | 0.9% | ||||||||||||||
MONEY MARKET FUNDS | |||||||||||||||
State Street Institutional Treasury Money Market Fund, 0.16%c | 300,000 | 300,000 | |||||||||||||
TOTAL SHORT-TERM INVESTMENTS (Identified cost—$300,000) | 300,000 | ||||||||||||||
TOTAL INVESTMENTS (Identified cost—$32,445,230) | 99.3 | % | 32,612,668 | ||||||||||||
OTHER ASSETS IN EXCESS OF LIABILITIES | 0.7 | 244,589 | |||||||||||||
NET ASSETS | 100.0 | % | $ | 32,857,257 |
See accompanying notes to financial statements.
15
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
SCHEDULE OF INVESTMENTS—(Continued)
April 30, 2016
Forward foreign currency exchange contracts outstanding at April 30, 2016 were as follows:
Counterparty | Contracts to Deliver | In Exchange For | Settlement Date | Unrealized Appreciation (Depreciation) | |||||||||||||||
Brown Brothers Harriman | EUR | 202,185 | USD | 228,263 | 5/3/16 | $ | (3,249 | ) | |||||||||||
Brown Brothers Harriman | EUR | 385,584 | USD | 439,803 | 5/3/16 | (1,710 | ) | ||||||||||||
Brown Brothers Harriman | EUR | 192,771 | USD | 220,667 | 5/3/16 | (66 | ) | ||||||||||||
Brown Brothers Harriman | USD | 893,812 | EUR | 780,540 | 5/3/16 | (54 | ) | ||||||||||||
Brown Brothers Harriman | GBP | 170,357 | USD | 244,900 | 5/4/16 | (4,017 | ) | ||||||||||||
Brown Brothers Harriman | USD | 249,606 | GBP | 170,357 | 5/4/16 | (688 | ) | ||||||||||||
Brown Brothers Harriman | EUR | 786,333 | USD | 901,130 | 6/2/16 | (37 | ) | ||||||||||||
Brown Brothers Harriman | GBP | 170,937 | USD | 250,445 | 6/2/16 | 663 | |||||||||||||
$ | (9,158 | ) |
Glossary of Portfolio Abbreviations
EUR Euro Currency
FRN Floating Rate Note
GBP Great British Pound
REIT Real Estate Investment Trust
TruPS Trust Preferred Securities
USD United States Dollar
Note: Percentages indicated are based on the net assets of the Fund.
a A portion of the security is segregated as collateral for open forward foreign currency exchange contracts. $81,218 in aggregate has been segregated as collateral.
b Resale is restricted to qualified institutional investors. Aggregate holdings equal 10.8% of the net assets of the Fund, of which 0.0% are illiquid.
c Rate quoted represents the annualized seven-day yield of the Fund.
See accompanying notes to financial statements.
16
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2016
ASSETS: | |||||||
Investments in securities, at value (Identified cost—$32,445,230) | $ | 32,612,668 | |||||
Cash | 427,671 | ||||||
Foreign currency, at value (Identified cost—$227,584) | 230,466 | ||||||
Receivable for: | |||||||
Dividends and interest | 485,339 | ||||||
Fund shares sold | 35,200 | ||||||
Unrealized appreciation on forward foreign currency exchange contracts | 663 | ||||||
Due from investment advisor | 4,885 | ||||||
Other assets | 167 | ||||||
Total Assets | 33,797,059 | ||||||
LIABILITIES: | |||||||
Unrealized depreciation on forward foreign currency exchange contracts | 9,821 | ||||||
Payable for: | |||||||
Investment securities purchased | 766,702 | ||||||
Dividends declared | 94,774 | ||||||
Fund shares redeemed | 5,159 | ||||||
Administration fees | 1,294 | ||||||
Distribution fees | 98 | ||||||
Directors' fees | 66 | ||||||
Shareholder servicing fees | 37 | ||||||
Other liabilities | 61,851 | ||||||
Total Liabilities | 939,802 | ||||||
NET ASSETS | $ | 32,857,257 | |||||
NET ASSETS consist of: | |||||||
Paid-in capital | $ | 32,803,903 | |||||
Accumulated undistributed net investment income | 59,539 | ||||||
Accumulated net realized loss | (166,384 | ) | |||||
Net unrealized appreciation | 160,199 | ||||||
$ | 32,857,257 |
See accompanying notes to financial statements.
17
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES—(Continued)
April 30, 2016
CLASS A SHARES: | |||||||
NET ASSETS | $ | 3,153,407 | |||||
Shares issued and outstanding ($0.001 par value common stock outstanding) | 319,339 | ||||||
Net asset value and redemption price per share | $ | 9.87 | |||||
Maximum offering price per share ($9.87 ÷ 0.98)a | $ | 10.07 | |||||
CLASS C SHARES: | |||||||
NET ASSETS | $ | 539,921 | |||||
Shares issued and outstanding ($0.001 par value common stock outstanding) | 54,714 | ||||||
Net asset value and offering price per shareb | $ | 9.87 | |||||
CLASS I SHARES: | |||||||
NET ASSETS | $ | 29,144,164 | |||||
Shares issued and outstanding ($0.001 par value common stock outstanding) | 2,949,233 | ||||||
Net asset value, offering and redemption price per share | $ | 9.88 | |||||
CLASS R SHARES: | |||||||
NET ASSETS | $ | 9,883 | |||||
Shares issued and outstanding ($0.001 par value common stock outstanding) | 1,000 | ||||||
Net asset value, offering and redemption price per share | $ | 9.88 | |||||
CLASS Z SHARES: | |||||||
NET ASSETS | $ | 9,882 | |||||
Shares issued and outstanding ($0.001 par value common stock outstanding) | 1,000 | ||||||
Net asset value, offering and redemption price per share | $ | 9.88 |
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.
18
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
STATEMENT OF OPERATIONS
For the Period November 30, 2015a through April 30, 2016
Investment Income: | |||||||
Dividend income | $ | 122,386 | |||||
Interest income | 385,320 | ||||||
Total Investment Income | 507,706 | ||||||
Expenses: | |||||||
Professional fees | 75,758 | ||||||
Investment advisory fees | 71,011 | ||||||
Shareholder reporting expenses | 30,000 | ||||||
Administration fees | 22,958 | ||||||
Transfer agent fees and expenses | 11,575 | ||||||
Registration and filing fees | 10,826 | ||||||
Custodian fees and expenses | 5,628 | ||||||
Distribution and service fees—Class A (See Note 2) | 1,198 | ||||||
Distribution and service fees—Class C (See Note 2) | 1,273 | ||||||
Distribution and service fees—Class R (See Note 2) | 21 | ||||||
Directors' fees and expenses | 571 | ||||||
Miscellaneous | 16,881 | ||||||
Total Expenses | 247,700 | ||||||
Reduction of Expenses (See Note 2) | (157,810 | ) | |||||
Net Expenses | 89,890 | ||||||
Net Investment Income | 417,816 | ||||||
Net Realized and Unrealized Gain (Loss): | |||||||
Net realized gain (loss) on: | |||||||
Investments | (328,988 | ) | |||||
Foreign currency transactions | (22,676 | ) | |||||
Net realized loss | (351,664 | ) | |||||
Net change in unrealized appreciation (depreciation) on: | |||||||
Investments | 167,438 | ||||||
Foreign currency translations | (7,239 | ) | |||||
Net change in unrealized appreciation (depreciation) | 160,199 | ||||||
Net realized and unrealized loss | (191,465 | ) | |||||
Net Increase in Net Assets Resulting from Operations | $ | 226,351 |
a Commencement of operations.
See accompanying notes to financial statements.
19
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
For the Period November 30, 2015a through April 30, 2016 | |||||||
Change in Net Assets: | |||||||
From Operations: | |||||||
Net investment income | $ | 417,816 | |||||
Net realized loss | (351,664 | ) | |||||
Net change in unrealized appreciation (depreciation) | 160,199 | ||||||
Net increase in net assets resulting from operations | 226,351 | ||||||
Dividends to Shareholders from: | |||||||
Net investment income: | |||||||
Class A | (18,602 | ) | |||||
Class C | (4,407 | ) | |||||
Class I | (382,831 | ) | |||||
Class R | (113 | ) | |||||
Class Z | (136 | ) | |||||
Total dividends to shareholders | (406,089 | ) | |||||
Capital Stock Transactions: | |||||||
Increase in net assets from Fund share transactions | 32,936,995 | ||||||
Total increase in net assets | 32,757,257 | ||||||
Net Assets: | |||||||
Beginning of period | 100,000 | ||||||
End of periodb | $ | 32,857,257 |
a Commencement of operations.
b Includes accumulated undistributed net investment income of $59,539.
See accompanying notes to financial statements.
20
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
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 | |||||||
Per Share Operating Performance: | For the Period November 30, 2015a through April 30, 2016 | ||||||
Net asset value, beginning of period | $ | 10.00 | |||||
Income (loss) from investment operations: | |||||||
Net investment incomeb | 0.16 | ||||||
Net realized and unrealized loss | (0.16 | ) | |||||
Total from investment operations | — | ||||||
Less dividends to shareholders from: | |||||||
Net investment income | (0.13 | ) | |||||
Total dividends to shareholders | (0.13 | ) | |||||
Net decrease in net asset value | (0.13 | ) | |||||
Net asset value, end of period | $ | 9.87 | |||||
Total investment returnc | 0.07 | %d,e | |||||
Ratios/Supplemental Data: | |||||||
Net assets, end of period (in millions) | $ | 3.2 | |||||
Ratio of expenses to average daily net assets (before expense reduction) | 2.16 | %f | |||||
Ratio of expenses to average daily net assets (net of expense reduction) | 1.15 | %f | |||||
Ratio of net investment income to average daily net assets (before expense reduction) | 2.94 | %f | |||||
Ratio of net investment income to average daily net assets (net of expense reduction) | 3.95 | %f | |||||
Portfolio turnover rate | 40 | %e |
a Commencement of operations.
b Calculation based on average shares outstanding.
c Does not reflect sales charges, which would reduce return.
d The net asset value (NAV) disclosed in the April 30, 2016 annual report reflects adjustments in accordance with accounting principles generally accepted in the United States of America and as such, differs from the NAV reported on April 30, 2016. The total return reported is based on the unadjusted NAV which was the official NAV for executing transactions on April 30, 2016.
e Not annualized.
f Annualized.
See accompanying notes to financial statements.
21
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
Class C | |||||||
Per Share Operating Performance: | For the Period November 30, 2015a through April 30, 2016 | ||||||
Net asset value, beginning of period | $ | 10.00 | |||||
Income (loss) from investment operations: | |||||||
Net investment incomeb | 0.12 | ||||||
Net realized and unrealized loss | (0.15 | ) | |||||
Total from investment operations | (0.03 | ) | |||||
Less dividends to shareholders from: | |||||||
Net investment income | (0.10 | ) | |||||
Total dividends to shareholders | (0.10 | ) | |||||
Net decrease in net asset value | (0.13 | ) | |||||
Net asset value, end of period | $ | 9.87 | |||||
Total investment returnc | –0.25 | %d | |||||
Ratios/Supplemental Data: | |||||||
Net assets, end of period (in millions) | $ | 0.5 | |||||
Ratio of expenses to average daily net assets (before expense reduction) | 2.87 | %e | |||||
Ratio of expenses to average daily net assets (net of expense reduction) | 1.80 | %e | |||||
Ratio of net investment income to average daily net assets (before expense reduction) | 1.93 | %e | |||||
Ratio of net investment income to average daily net assets (net of expense reduction) | 3.00 | %e | |||||
Portfolio turnover rate | 40 | %d |
a Commencement of operations.
b Calculation based on average shares outstanding.
c Does not reflect sales charges, which would reduce return.
d Not annualized.
e Annualized.
See accompanying notes to financial statements.
22
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
Class I | |||||||
Per Share Operating Performance: | For the Period November 30, 2015a through April 30, 2016 | ||||||
Net asset value, beginning of period | $ | 10.00 | |||||
Income (loss) from investment operations: | |||||||
Net investment incomeb | 0.16 | ||||||
Net realized and unrealized loss | (0.14 | ) | |||||
Total from investment operations | 0.02 | ||||||
Less dividends to shareholders from: | |||||||
Net investment income | (0.14 | ) | |||||
Total dividends to shareholders | (0.14 | ) | |||||
Net decrease in net asset value | (0.12 | ) | |||||
Net asset value, end of period | $ | 9.88 | |||||
Total investment return | 0.17 | %c | |||||
Ratios/Supplemental Data: | |||||||
Net assets, end of period (in millions) | $ | 29.1 | |||||
Ratio of expenses to average daily net assets (before expense reduction) | 1.93 | %d | |||||
Ratio of expenses to average daily net assets (net of expense reduction) | 0.80 | %d | |||||
Ratio of net investment income to average daily net assets (before expense reduction) | 2.70 | %d | |||||
Ratio of net investment income to average daily net assets (net of expense reduction) | 3.83 | %d | |||||
Portfolio turnover rate | 40 | %c |
a Commencement of operations.
b Calculation based on average shares outstanding.
c Not annualized.
d Annualized.
See accompanying notes to financial statements.
23
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
Class R | |||||||
Per Share Operating Performance: | For the Period November 30, 2015a through April 30, 2016 | ||||||
Net asset value, beginning of period | $ | 10.00 | |||||
Income (loss) from investment operations: | |||||||
Net investment incomeb | 0.13 | ||||||
Net realized and unrealized loss | (0.14 | ) | |||||
Total from investment operations | (0.01 | ) | |||||
Less dividends to shareholders from: | |||||||
Net investment income | (0.11 | ) | |||||
Total dividends to shareholders | (0.11 | ) | |||||
Net decrease in net asset value | (0.12 | ) | |||||
Net asset value, end of period | $ | 9.88 | |||||
Total investment return | –0.06 | %c | |||||
Ratios/Supplemental Data: | |||||||
Net assets, end of period (in 000's) | $ | 9.9 | |||||
Ratio of expenses to average daily net assets (before expense reduction) | 2.45 | %d | |||||
Ratio of expenses to average daily net assets (net of expense reduction) | 1.30 | %d | |||||
Ratio of net investment income to average daily net assets (before expense reduction) | 2.09 | %d | |||||
Ratio of net investment income to average daily net assets (net of expense reduction) | 3.24 | %d | |||||
Portfolio turnover rate | 40 | %c |
a Commencement of operations.
b Calculation based on average shares outstanding.
c Not annualized.
d Annualized.
See accompanying notes to financial statements.
24
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS—(Continued)
Class Z | |||||||
Per Share Operating Performance: | For the Period November 30, 2015a through April 30, 2016 | ||||||
Net asset value, beginning of period | $ | 10.00 | |||||
Income (loss) from investment operations: | |||||||
Net investment incomeb | 0.15 | ||||||
Net realized and unrealized loss | (0.13 | ) | |||||
Total from investment operations | 0.02 | ||||||
Less dividends to shareholders from: | |||||||
Net investment income | (0.14 | ) | |||||
Total dividends to shareholders | (0.14 | ) | |||||
Net decrease in net asset value | (0.12 | ) | |||||
Net asset value, end of period | $ | 9.88 | |||||
Total investment return | 0.17 | %c | |||||
Ratios/Supplemental Data: | |||||||
Net assets, end of period (in 000's) | $ | 9.9 | |||||
Ratio of expenses to average daily net assets (before expense reduction) | 1.96 | %d | |||||
Ratio of expenses to average daily net assets (net of expense reduction) | 0.80 | %d | |||||
Ratio of net investment income to average daily net assets (before expense reduction) | 2.60 | %d | |||||
Ratio of net investment income to average daily net assets (net of expense reduction) | 3.76 | %d | |||||
Portfolio turnover rate | 40 | %c |
a Commencement of operations.
b Calculation based on average shares outstanding.
c Not annualized.
d Annualized.
See accompanying notes to financial statements.
25
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Cohen & Steers Low Duration Preferred and Income Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on September 2, 2015 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 high current income. The Fund had no operations until November 3, 2015 when it sold 1,000 shares each of Class A, C, R and Z and 6,000 shares of Class I for $100,000 to Cohen & Steers Capital Management, Inc. (the investment advisor). Investment operations commenced on November 30, 2015.The authorized shares of the Fund are divided into five classes designated Class A, C, I, R 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).
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 Topic (ASC) 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. Forward foreign currency contracts are valued daily at the prevailing forward exchange rate.
Securities not listed on the NYSE but listed on other domestic or foreign securities exchanges 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 market, including listed securities whose primary market is believed by the investment advisor to be over-the-counter, are valued at the last sale price on the valuation date as reported by sources deemed appropriate by the Board of Directors to reflect their fair market value. If there has been no sale on such day, the securities are valued at the mean of the closing bid and ask prices on such day or, if no ask price is available, at the bid price. However, certain fixed-income securities may be 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 market value of such securities. The pricing services or broker-dealers use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services or broker-dealers may utilize a market-based approach through which quotes from market makers are used to determine fair
26
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
value. In instances where sufficient market activity may not exist or is limited, the pricing services or broker-dealers also utilize proprietary valuation models which may consider market transactions in comparable securities and the various relationships between securities in determining fair value and/or characteristics such as benchmark yield curves, option-adjusted spreads, credit spreads, estimated default rates, coupon rates, anticipated timing of principal repayments, underlying collateral, and other unique security features which are used to calculate the fair values.
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 their closing net asset value.
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 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.
The Fund's use of fair value pricing may cause the net asset value of Fund shares to differ from the net asset value that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.
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 securities are not necessarily an indication of the risk associated with investing in those securities.
27
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
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 April 30, 2016.
The following is a summary of the inputs used as of April 30, 2016 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) | ||||||||||||||||
Preferred Securities— $25 Par Value: | |||||||||||||||||||
Real Estate— Shopping Centers— Community Center | $ | 650,050 | $ | — | $ | 650,050 | $ | — | |||||||||||
Other Industries | 3,595,588 | 3,595,588 | — | — | |||||||||||||||
Preferred Securities— Capital Securities | 25,267,838 | — | 25,267,838 | — | |||||||||||||||
Corporate Bonds | 2,799,192 | — | 2,799,192 | — | |||||||||||||||
Short-Term Investments | 300,000 | — | 300,000 | — | |||||||||||||||
Total Investmentsa | $ | 32,612,668 | $ | 3,595,588 | $ | 29,017,080 | $ | — | |||||||||||
Forward foreign currency exchange contracts | $ | 663 | $ | — | $ | 663 | $ | — | |||||||||||
Total Unrealized Appreciation in Other Financial Instrumentsa | $ | 663 | $ | — | $ | 663 | $ | — | |||||||||||
Forward foreign currency exchange contracts | $ | (9,821 | ) | $ | — | $ | (9,821 | ) | $ | — | |||||||||
Total Unrealized Depreciation in Other Financial Instrumentsa | $ | (9,821 | ) | $ | — | $ | (9,821 | ) | $ | — |
a Portfolio holdings are disclosed individually on the Schedule of Investments.
28
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Security Transactions, Investment Income and Expense Allocations: Security transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized over the life of the respective securities. Dividend income 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. Distributions from Real Estate Investment Trusts (REITs) are recorded as ordinary income, net realized capital gain or return of capital based on information reported by the REITs and management's estimates of such amounts based on historical information. These estimates are adjusted when the actual source of distributions is disclosed by the REITs and actual amounts may differ from the estimated amounts. 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 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.
Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to hedge the currency exposure associated with certain of its non-U.S. dollar denominated securities. A forward foreign currency exchange contract is a commitment between two parties to purchase or sell foreign currency at a set price on a future date. The market value of a forward foreign currency exchange contract fluctuates with changes in foreign currency exchange rates. These contracts are marked to market daily and the change in value is recorded by the Fund as unrealized appreciation and/or depreciation on foreign currency translations. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are included in net realized gain or loss on foreign currency transactions. For federal income tax purposes, the Fund has made an election to treat gains and losses from forward foreign currency exchange contracts as capital gains and losses.
29
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Forward foreign currency exchange contracts involve elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the contract. Risks may also arise upon entering these contracts from the potential inability of the counterparties to meet the terms of their contracts. In connection with these contracts, securities may be identified as collateral in accordance with the terms of the respective contracts.
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 monthly. 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 net asset value per share at the close of business on the payable date, unless the shareholder has elected to have them paid in cash. 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, if such qualification is in the best interest of the shareholders, by complying with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, and by distributing substantially all of its taxable earnings to its shareholders. 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 the current tax year and has concluded that as of April 30, 2016, no additional provisions for income tax are required in the Fund's financial statements. The Fund's tax positions for the current tax year 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 Fees, Administration Fees and Other Transactions with Affiliates
Investment Advisory Fees: The investment advisor 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 0.65% of the average daily net assets of the Fund.
For the period November 30, 2015 (commencement of operations) through April 30, 2016, and through June 30, 2017, the investment advisor had contractually agreed to waive its fee and/or reimburse expenses so that the Fund's total annual operating expenses (excluding acquired fund fees and
30
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
expenses and extraordinary expenses) do not exceed 1.15% for Class A shares, 1.80% for Class C shares, 0.80% for Class I shares, 1.30% for Class R shares and 0.80% for Class Z shares. This contractual agreement may be amended or terminated at any time by agreement of the Fund 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 period November 30, 2015 (commencement of operations) through April 30, 2016, fees waived and/or expenses reimbursed totaled $157,810.
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 0.05% of the average daily net assets of the Fund. For the period November 30, 2015 (commencement of operations) through April 30, 2016, the Fund incurred $5,462 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 and Service 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 a distribution and service plan (the plan) pursuant to Rule 12b-1 under the 1940 Act. The plan provides that the Fund will pay the distributor a monthly distribution fee, accrued daily and paid monthly, at an annual rate of up to 0.25%, 0.75% and 0.50% of the average daily net assets attributable to Class A, Class C and Class R shares, respectively. In addition, also under the plan, the Fund may pay the distributor a monthly service fee, accrued daily and paid monthly, at an annual rate of up to 0.10% and 0.25% of the average daily net assets attributable to Class A and Class C shares, respectively. The amounts paid pursuant to the plan for Class A, Class C and Class R shares 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 2.00% 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 period November 30, 2015 (commencement of operations) through April 30, 2016, the Fund has been advised that the distributor received $1,197 in sales commissions from the sale of Class A shares. There were no CDSC fees collected relating to redemptions of Class A and Class C shares. 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.
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 Class I 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 $154 for the period November 30, 2015 (commencement of operations) through April 30, 2016.
31
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Other: At April 30, 2016, the investment advisor and affiliated persons of the investment advisor owned 75.3% of the Fund's outstanding shares. Investment activities of these shareholders could have a significant impact on the Fund. In addition, a person who beneficially owns, either directly or indirectly, more than 25% of the voting securities of the Fund may be presumed to control the Fund. A control person could potentially control the outcome of any proposal submitted to the shareholders for approval, including changes to the Fund's fundamental policies or terms of the investment advisory agreement with the investment advisor.
Note 3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments, for the period November 30, 2015 (commencement of operations) through April 30, 2016, totaled $42,789,901 and $10,138,877, respectively.
Note 4. Derivative Investments
The following tables present the value of derivatives held at April 30, 2016 and the effect of derivatives held during the period November 30, 2015 (commencement of operations) through April 30, 2016, along with the respective location in the financial statements.
Statement of Assets and Liabilities | |||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||
Derivatives | Location | Fair Value | Location | Fair Value | |||||||||||||||
Foreign Exchange Risk: | |||||||||||||||||||
Forward foreign currency exchange contractsa | Unrealized appreciation | $ | 663 | Unrealized depreciation | $ | 9,821 |
a Forward foreign currency exchange contracts executed with Brown Brothers Harriman are not subject to a master netting arrangement or another similar agreement.
Statement of Operations | |||||||||||||||
Derivatives | Location | Realized Gain (Loss) | Change in Unrealized Appreciation (Depreciation) | ||||||||||||
Foreign Exchange Risk: | |||||||||||||||
Forward foreign currency exchange contracts | Net Realized and Unrealized Gain (Loss) | $ | (23,747 | ) | $ | (9,158 | ) |
32
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
The following summarizes the volume of the Fund's forward foreign currency exchange contracts activity during the period November 30, 2015 (commencement of operations) through April 30, 2016:
Forward Foreign Currency Exchange Contracts | |||||||
Average Notional Amount | $ | 1,139,841 | |||||
Ending Notional Amount | $ | 1,151,575 |
Note 5. Income Tax Information
The tax character of dividends paid was as follows:
For the Period November 30, 2015a through April 30, 2016 | |||||||
Ordinary income | $ | 406,089 | |||||
Total dividends | $ | 406,089 |
a Commencement of operations.
As of April 30, 2016, the tax-basis components of accumulated earnings and the federal tax cost were as follows:
Cost for federal income tax purposes | $ | 32,261,309 | |||||
Gross unrealized appreciation | $ | 550,446 | |||||
Gross unrealized depreciation | (199,087 | ) | |||||
Net unrealized appreciation | $ | 351,359 | |||||
Undistributed ordinary income | $ | 53,631 |
As of April 30, 2016, the Fund had a net capital loss carryforward of $355,532 which may be used to offset future capital gains. These losses are a short-term capital loss carryforward of $335,822 and a long-term capital loss carryforward of $19,710, which under current federal income tax rules, may offset capital gains recognized in any future period.
As of April 30, 2016, the Fund had temporary book/tax differences primarily attributable to wash sales on portfolio securities and certain fixed income securities and permanent book/tax differences primarily attributable to foreign currency transactions and certain fixed income securities. To reflect reclassifications arising from the permanent differences, paid-in capital was charged $233,092, accumulated net realized loss was credited $185,280 and accumulated undistributed net investment income was credited $47,812. Net assets were not affected by this reclassification.
33
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 6. Capital Stock
The Fund is authorized to issue 1 billion shares of capital stock, at a par value of $0.001 per share. The Board of Directors of the Fund may increase or decrease the aggregate number of shares of common stock that the Fund has authority to issue. Transactions in Fund shares were as follows:
For the Period November 30, 2015a through April 30, 2016 | |||||||||||
Shares | Amount | ||||||||||
Class A: | |||||||||||
Sold | 318,651 | $ | 3,144,808 | ||||||||
Issued as reinvestment of dividends | 654 | 6,462 | |||||||||
Redeemed | (966 | ) | (9,524 | ) | |||||||
Net increase | 318,339 | $ | 3,141,746 | ||||||||
Class C: | |||||||||||
Sold | 53,653 | $ | 530,858 | ||||||||
Issued as reinvestment of dividends | 61 | 601 | |||||||||
Net increase | 53,714 | $ | 531,459 | ||||||||
Class I: | |||||||||||
Sold | 2,965,320 | $ | 29,478,194 | ||||||||
Issued as reinvestment of dividends | 3,017 | 29,620 | |||||||||
Redeemed | (25,104 | ) | (244,024 | ) | |||||||
Net increase | 2,943,233 | $ | 29,263,790 |
a Commencement of operations.
Note 7. Other Risks
Risks of Investing in Preferred Securities: Investing in any market exposes investors to risks. In general, the risks of investing in preferred securities are similar to those of investing in bonds, including credit risk and interest-rate risk. As nearly all preferred securities have issuer call options, call risk, income risk and reinvestment risk are also important considerations. In addition, investors face equity-like risks, such as deferral or omission of distributions, subordination to bonds and other more senior debt, and higher corporate governance risks with limited voting rights.
34
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Risks associated with preferred securities differ from risks inherent with other investments. In particular, in the event of bankruptcy, a company's preferred securities are senior to common stock but subordinated to all other types of corporate debt. Corporate bonds sit higher in the capital structure than preferred securities, and therefore in the event of bankruptcy, will be senior to the preferred securities.
Duration Risk: Duration is a mathematical calculation of the average life of a fixed-income or preferred security that serves as a measure of the security's price risk to changes in interest rates (or yields). Securities with longer durations tend to be more sensitive to interest rate (or yield) changes than securities with shorter durations. Duration differs from maturity in that it considers potential changes to interest rates, and a security's coupon payments, yield, price and par value and call features, in addition to the amount of time until the security matures. Various techniques may be used to shorten or lengthen the Fund's duration. The duration of a security will be expected to change over time with changes in market factors and time to maturity.
Risks of Investing in Below Investment-Grade Securities: Preferred securities may be rated below investment-grade or may be unrated. Below-investment-grade securities or equivalent unrated securities generally involve greater volatility of price and risk of loss of income and principal, and may be more susceptible to real or perceived adverse economic or competitive industry conditions than higher-grade securities.
Concentration Risk: Because the Fund invests at least 25% of its net assets in the financials sector, which is comprised of the banks, diversified financials, real estate (including REITs) and insurance industries, it will be more susceptible to adverse economic or regulatory occurrences affecting this sector, such as changes in interest rates, loan concentration and competition. In addition, the Fund will also be subject to the risks of investing in the individual industries and securities that comprise the financials sector, including the bank, diversified financials, real estate (including REITs) and insurance industries. To the extent that the Fund focuses its investments in other sectors or industries, such as (but not limited to) energy, industrials, utilities, pipelines, health care and telecommunications, the Fund will be subject to the risks associated with these particular sectors and industries. These sectors and industries may be adversely affected by, among others, changes in government regulation, world events and economic conditions.
Liquidity Risk: Liquidity risk is the risk that particular investments of the Fund may become difficult to sell or purchase. The market for certain investments may become less liquid or illiquid due to adverse changes in the conditions of a particular issuer or due to adverse market or economic conditions. In addition, dealer potential to increase price volatility in the fixed income markets in which the Fund invests. Recent federal banking regulations may also cause certain dealers to reduce their inventories of certain securities, which may further decrease the Fund's ability to buy or sell such securities. As a result of this decreased liquidity, the Fund may have to accept a lower price to sell a security, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative effect on performance. Further, transactions in less liquid or illiquid securities may entail transaction costs that are higher than those for transactions in liquid securities.
35
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
Foreign (Non-U.S.) and Emerging Market Securities Risk: The Fund directly purchases securities of foreign issuers. Risks of investing in foreign securities, which can be expected to be greater for investments in emerging markets, 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 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.
Investing in securities of companies in emerging markets may entail special risks relating to potential economic, political or social instability and the risks of expropriation, nationalization, confiscation, trade sanctions or embargoes or the imposition of restrictions on foreign investment, the lack of hedging instruments, and repatriation of capital invested. The securities and real estate markets of some emerging market countries have in the past experienced substantial market disruptions and may do so in the future.
Contingent Capital Securities Risk: Contingent capital securities (sometimes referred to as "CoCos") are debt or preferred securities with loss absorption characteristics built into the terms of the security, for example a mandatory conversion into common stock of the issuer under certain circumstances, such as the issuer's capital ratio falling below a certain level. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero, and conversion would deepen the subordination of the investor, hence worsening the investor's standing in a bankruptcy. Some CoCos provide for a reduction in the value or principal amount of the security under such circumstances. In addition, most CoCos are considered to be high yield or "junk" securities and are therefore subject to the risks of investing in below investment-grade securities.
This is not a complete list of the risks of investing in the Fund. For additional risks of investing in the Fund, please consult the Fund's prospectus.
Note 8. 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 9. Subsequent Events
Management has evaluated events and transactions occurring after April 30, 2016 through the date that the financial statements were issued, and had determined that no additional disclosure in the financial statements is required.
36
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Cohen & Steers Low Duration Preferred and Income Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Cohen & Steers Low Duration Preferred and Income Fund, Inc. (the "Fund") at April 30, 2016, and the results of its operations, the changes in its net assets and the financial highlights for the period November 30, 2015 (commencement of operations) through April 30, 2016, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at April 30, 2016 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
June 28, 2016
37
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
TAX INFORMATION—2016 (Unaudited)
Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the Fund designates qualified dividend income of $393,636. Additionally, 32.32% of the ordinary dividends qualified for the dividends received deduction available to corporations.
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 Securities and Exchange Commission's (the SEC) 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 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. To the extent this occurs, the Fund's shareholders of record will be notified of the estimated amount of capital returned to shareholders for each such distribution and this information will also be available at cohenandsteers.com. 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. Distributions of capital decrease the Fund's total assets and, therefore, could have the effect of increasing the Fund's expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.
38
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of the Board of Directors. The Board of Directors approves all significant agreements between the Fund and persons or companies furnishing services to it, including the Fund's agreements with its investment advisor, administrator, co-administrator, custodian and transfer agent. The management of the Fund's day-to-day operations is delegated to its officers, the investment advisor, administrator and co-administrator, subject always to the investment objective and policies of the Fund and to the general supervision of the Board of Directors.
The Board of Directors and officers of the Fund and their principal occupations during at least the past five years are set forth below. The statement of additional information (SAI) includes additional information about fund directors and is available, without charge, upon request by calling 800-330-7348.
Name, Address and Year of Birth1 | Position(s) Held With Fund | Term of Office2 | Principal Occupation During At Least The Past 5 Years (Including Other Directorships Held) | Number of Funds Within Fund Complex Overseen by Director (Including the Fund) | Length of Time Served3 | ||||||||||||||||||
Interested Directors4 | |||||||||||||||||||||||
Robert H. Steers 1953 | Director and Chairman | Until next election of directors | Chief Executive Officer of Cohen & Steers Capital Management, Inc. (CSCM or the Advisor) and its parent, Cohen & Steers, Inc. (CNS) since 2014. Prior to that, Co-Chairman and Co-Chief Executive Officer of the Advisor since 2003 and CNS since 2004. | 22 | Since 1991 | ||||||||||||||||||
Joseph M. Harvey 1963 | Director and Vice President | Until next election of directors | President and Chief Investment Officer of the Advisor since 2003 and President of CNS since 2004. | 22 | Since 2014 |
(table continued on next page)
39
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
(table continued from previous page)
Name, Address and Year of Birth1 | Position(s) Held With Fund | Term of Office2 | Principal Occupation During At Least The Past 5 Years (Including Other Directorships Held) | Number of Funds Within Fund Complex Overseen by Director (Including the Fund) | Length of Time Served3 | ||||||||||||||||||
Disinterested Directors | |||||||||||||||||||||||
Michael G. Clark 1965 | Director | Until next election of directors | From 2006 to 2011, President and Chief Executive Officer of DWS Funds and Managing Director of Deutsche Asset Management. | 22 | Since 2011 | ||||||||||||||||||
Bonnie Cohen 1942 | Director | Until next election of directors | Consultant. Board Member, DC Public Library Foundation since 2012, President since 2014; Board member, Telluride Mountain Film Festival since 2010; Trustee, H. Rubenstein Foundation since 1996; Trustee, District of Columbia Public Libraries from 2004 to 2014. | 22 | Since 2001 | ||||||||||||||||||
George Grossman 1953 | Director | Until next election of directors | Attorney-at-law. | 22 | Since 1996 | ||||||||||||||||||
Dean Junkans 1959 | Director | Until next election of directors | C.F.A.; Chief Investment Officer at Wells Fargo Private Bank from 2004 to 2014 and Chief Investment Officer of the Wealth, Brokerage and Retirement group at Wells Fargo & Company from 2011 to 2014; Member and former Chair, Claritas Advisory Committee at the CFA Institute since 2013; Board Member and Investment Committee member, Bethel University Foundation since 2010; formerly, Corporate Executive Board Member of the National Chief Investment Officers Circle, 2010 to 2015; formerly, Member of the Board of Governors of the University of Wisconsin Foundation, River Falls, 1996 to 2004; U.S. Army Veteran, Gulf War. | 22 | Since 2015 |
(table continued on next page)
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
(table continued from previous page)
Name, Address and Year of Birth1 | Position(s) Held With Fund | Term of Office2 | Principal Occupation During At Least The Past 5 Years (Including Other Directorships Held) | Number of Funds Within Fund Complex Overseen by Director (Including the Fund) | Length of Time Served3 | ||||||||||||||||||
Richard E. Kroon 1942 | Director | Until next election of directors | Member of Investment Committee, Monmouth University since 2004; Retired Chairman and Managing Partner of Sprout Group venture capital funds, then an affiliate of Donaldson, Lufkin and Jenrette Securities Corporation from 1981 to 2001. Former Director of the National Venture Capital Association from 1997 to 2000, and Chairman for the year 2000. | 22 | Since 2004 | ||||||||||||||||||
Gerald J. Maginnis 1955 | Director | Until next election of directors | Philadelphia Office Managing Partner, KPMG LLP from 2006 to 2015; Partner in Charge, KPMG Pennsylvania Audit Practice from 2002 to 2008; President, Pennsylvania Institute of Certified Public Accountants (PICPA) from 2014 to 2015; member, PICPA Board of Directors from June 2012 to June 2016; member, Council of the American Institute of Certified Public Accountants (AICPA); member, Board of Trustees of AICPA Foundation. | 22 | Since 2015 |
(table continued on next page)
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COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
(table continued from previous page)
Name, Address and Year of Birth1 | Position(s) Held With Fund | Term of Office2 | Principal Occupation During At Least The Past 5 Years (Including Other Directorships Held) | Number of Funds Within Fund Complex Overseen by Director (Including the Fund) | Length of Time Served3 | ||||||||||||||||||
Jane F. Magpiong 1960 | Director | Until next election of directors | President, Untap Potential since 2013; Board Member, Crespi High School Since 2014; Senior Managing Director, TIAA-CREF, from 2011 to 2013; National Head of Wealth Management, TIAA-CREF, from 2008 to 2011; and prior to that, President, Bank of America Private Bank from 2005 to 2008. | 22 | Since 2015 | ||||||||||||||||||
Richard J. Norman 1943 | Director | Until next election of directors | Private Investor. Member, Montgomery County, Maryland Department of Corrections Volunteer Corps. since February 2010; Liason for Business Leadership, Salvation Army World Service Organization (SAWSO) since 2010; Advisory Board Member, The Salvation Army since 1985; Prior thereto, Investment Representative of Morgan Stanley Dean Witter from 1966 to 2000. | 22 | Since 2001 |
(table continued on next page)
42
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
(table continued from previous page)
Name, Address and Year of Birth1 | Position(s) Held With Fund | Term of Office2 | Principal Occupation During At Least The Past 5 Years (Including Other Directorships Held) | Number of Funds Within Fund Complex Overseen by Director (Including the Fund) | Length of Time Served3 | ||||||||||||||||||
Frank K. Ross 1943 | Director | Until next election of directors | Visiting Professor of Accounting and Director of the Center for Accounting Education at Howard University School of Business since 2004; Board member and member of Audit Committee (Chairman from 2007 to 2012) and Human Resources and Compensation Committee, Pepco Holdings, Inc. (electric utility) from 2004 to 2014; Formerly, Mid-Atlantic Area Managing Partner for Assurance Services at KPMG LLP and Managing Partner of its Washington, DC offices from 1995 to 2003. | 22 | Since 2004 | ||||||||||||||||||
C. Edward Ward, Jr. 1946 | Director | Until next election of directors | Member of The Board of Trustees of Manhattan College, Riverdale, New York from 2004 to 2014. Formerly Director of closed-end fund management for the New York Stock Exchange (the NYSE) where he worked from 1979 to 2004. | 22 | Since 2004 |
1 The address for each director is 280 Park Avenue, New York, NY 10017.
2 On March 12, 2008, the Board of Directors adopted a mandatory retirement policy stating a Director must retire from the Board on December 31st of the year in which he or she turns 75 years of age.
3 The length of time served represents the year in which the Director was first elected or appointed to any fund in the Cohen & Steers fund complex.
4 "Interested person", as defined in the 1940 Act, of the Fund because of affiliation with CSCM (Interested Directors).
43
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
The officers of the Fund (other than Messrs. Steers and Harvey, whose biographies are provided above), their address, their year of birth and their principal occupations for at least the past five years are set forth below.
Name, Address and Year of Birth1 | Position(s) Held With Fund | Principal Occupation During At Least the Past 5 Years | Length of Time Served2 | ||||||||||||
Adam M. Derechin 1964 | President and Chief Executive Officer | Chief Operating Officer of CSCM since 2003 and CNS since 2004. | Since 2005 | ||||||||||||
William F. Scapell 1968 | Vice President | Executive Vice President of CSCM since 2014. Prior to that, Senior Vice President of CSCM since 2003. | Since 2003 | ||||||||||||
Elaine Zaharis-Nikas 1973 | Vice President | Senior Vice President of CSCM since 2014. Prior to that, Vice President of CSCM since 2003. | Since 2015 | ||||||||||||
Tina M. Payne 1974 | Secretary and Chief Legal Officer | Senior Vice President and Associate General Counsel of CSCM since 2010. | Since 2007 | ||||||||||||
James Giallanza 1966 | Treasurer and Chief Financial Officer | Executive Vice President of CSCM since 2014. Prior to that, Senior Vice President of CSCM since 2006. | Since 2006 | ||||||||||||
Lisa D. Phelan 1968 | Chief Compliance Officer | Executive Vice President of CSCM since 2015. Prior to that, Senior Vice President of CSCM since 2008. Chief Compliance Officer of CSCM, the Cohen & Steers funds, Cohen & Steers Asia Limited and CSSL since 2007, 2006, 2005 and 2004, respectively. | Since 2006 |
1 The address of each officer is 280 Park Avenue, New York, NY 10017.
2 Officers serve one-year terms. The length of time served represents the year in which the officer was first elected to that position in any fund in the Cohen & Steers fund complex. All of the officers listed above are officers of one or more of the other funds in the complex.
44
COHEN & STEERS LOW DURATION PREFERRED AND INCOME 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
45
COHEN & STEERS LOW DURATION PREFERRED AND INCOME 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. |
46
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
Cohen & Steers Investment Solutions
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 INSTITUTIONAL REALTY SHARES
• Designed for institutional investors seeking total return, investing primarily in U.S. real estate securities
• Symbol: CSRIX
COHEN & STEERS REAL ESTATE SECURITIES FUND
• Designed for investors seeking total return, investing primarily in U.S. real estate securities
• Symbols: CSEIX, CSCIX, CSDIX, CIRRX, CSZIX
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 REALTY SHARES
• Designed for investors seeking total return, investing primarily in U.S. real estate securities
• Symbol: CSRSX
COHEN & STEERS
INSTITUTIONAL GLOBAL REALTY SHARES
• Designed for institutional investors seeking total return, investing primarily in global real estate securities
• Symbol: GRSIX
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 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
COHEN & STEERS
PREFERRED SECURITIES AND 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, CPXIX, CPRRX, CPXZX
COHEN & STEERS
LOW DURATION PREFERRED AND 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 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
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
ACTIVE COMMODITIES STRATEGY FUND
• Designed for investors seeking total return, investing primarily in a diversified portfolio of exchange-traded commodity future contracts and other commodity-related derivative instruments
• Symbols: CDFAX, CDFCX, CDFIX, CDFRX, CDFZX
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
• Symbol: GRI
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
• Symbol: ICF
Distributed by SEI Investments Distribution Co.
Please consider the investment objectives, risks, charges and expenses of the 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.
47
COHEN & STEERS LOW DURATION PREFERRED AND INCOME FUND, INC.
OFFICERS AND DIRECTORS
Robert H. Steers
Director and Chairman
Joseph M. Harvey
Director and Vice President
Michael G. Clark
Director
Bonnie Cohen
Director
George Grossman
Director
Dean Junkans
Director
Richard E. Kroon
Director
Gerald J. Maginnis
Director
Jane F. Magpiong
Director
Richard J. Norman
Director
Frank K. Ross
Director
C. Edward Ward, Jr.
Director
Adam M. Derechin
President and Chief Executive Officer
William F. Scapell
Vice President
Elaine Zaharis-Nikas
Vice President
Tina M. Payne
Secretary and Chief Legal Officer
James Giallanza
Treasurer and Chief Financial Officer
Lisa D. Phelan
Chief Compliance Officer
KEY INFORMATION
Investment Advisor
Cohen & Steers Capital Management, Inc.
280 Park Avenue
New York, NY 10017
(212) 832-3232
Co-administrator and Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
Transfer Agent
Boston Financial Data Services, Inc.
P.O. Box 8123
Boston, MA 02266
(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—LPXAX
Class C—LPXCX
Class I—LPXIX
Class R—LPXRX
Class Z—LPXZX
Website: cohenandsteers.com
This report is authorized for delivery only to shareholders of Cohen & Steers Low Duration Preferred and Income 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.
48
COHEN & STEERS
LOW DURATION PREFERRED AND INCOME FUND
280 PARK AVENUE
NEW YORK, NY 10017
eDelivery NOW AVAILABLE
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LPXAXAR
Annual Report April 30, 2016
Cohen & Steers Low Duration Preferred and Income Fund
Item 2. Code of Ethics.
The Registrant has adopted an Amended and Restated Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Code of Ethics was in effect during the reporting period. The Registrant has not amended the Code of Ethics as described in Form N-CSR during the reporting period. The Registrant has not granted any waiver, including an implicit waiver, from a provision of the Code of Ethics as described in Form N-CSR during the reporting period. A current copy of the Code of Ethics is available on the Registrant’s website at https://www.cohenandsteers.com/assets/content/uploads/Code_of_Ethics_for_Principal_Executive_and_Principal_Financial_Officers_of_the_Funds.pdf. Upon request, a copy of the Code of Ethics can be obtained free of charge by calling 800-330-7348 or writing to the Secretary of the Registrant, 280 Park Avenue, 10th floor, New York, NY 10017.
Item 3. Audit Committee Financial Expert.
The registrant’s board has determined that Michael G. Clark, Frank K. Ross and Gerald. J. Maginnis, each a member of the board’s audit committee, each are an “audit committee financial expert”. Mr. Clark, Mr. Ross and Mr. Maginnis are each “independent,” as such term is defined in Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) – (d) Aggregate fees billed to the registrant for the period ended April 30, 2016 (the registrant commenced operations on November 30, 2015) for professional services rendered by the registrant’s principal accountant were as follows:
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| 2016 |
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Audit Fees |
| $ | 47,700 |
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Audit-Related Fees |
| $ | 0 |
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Tax Fees |
| $ | 6,600 |
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All Other Fees |
| $ | 0 |
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Tax fees were billed in connection with tax compliance services, including the preparation and review of federal and state tax returns.
(e)(1) The audit committee is required to pre-approve audit and non-audit services performed for the registrant by the principal accountant. The audit committee also is required to pre-approve non-audit services performed by the registrant’s principal accountant for the registrant’s investment advisor and any sub-advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant, if the engagement for services relates directly to the operations and financial reporting of the registrant.
The audit committee may delegate pre-approval authority to one or more of its members who are independent members of the board of directors of the registrant. The member or members to
whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next scheduled meeting. The audit committee may not delegate its responsibility to pre-approve services to be performed by the registrant’s principal accountant to the investment advisor.
(e)(2) No services included in (b) – (d) above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) For the period ended April 30, 2016 (the registrant commenced operations on November 30, 2015), the aggregate fees billed by the registrant’s principal accountant for non-audit services rendered to the registrant and for non-audit services rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant were:
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| 2016 |
| |
Registrant |
| $ | 6,600 |
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Investment Advisor |
| $ | 0 |
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(h) The registrant’s audit committee considered whether the provision of non-audit services that were rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant that were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X was compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not Applicable.
(a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(a)(3) Not applicable.
(b) Certifications of principal executive officer and principal 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 LOW DURATION PREFERRED AND INCOME FUND, INC. | |||
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| By: | /s/ Adam M. Derechin |
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| Name: Adam M. Derechin |
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| Title: President and Chief Executive Officer |
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| Date: July 7, 2016 |
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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 |
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| Name: | Adam M. Derechin |
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| Title: | President and Chief Executive Officer |
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| (Principal Executive Officer) |
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| By: | /s/ James Giallanza |
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| Name: | James Giallanza |
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| Title: | Treasurer and Chief Financial Officer |
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| (Principal Financial Officer) |
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| Date: July 7, 2016 |
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