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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act File Number: 811-21677
Cohen & Steers International Realty Fund, Inc.
(Exact name of registrant as specified in charter)
757 Third Avenue, New York, NY 10017
(Address of principal executive offices) (Zip code)
Adam M. Derechin
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
(Name and address of agent for service)
Registrant's telephone number, including area code: (212) 832-3232
Date of fiscal year end: December 31
Date of reporting period: June 30, 2005
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Item 1. Reports to Stockholders.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
July 28, 2005
To Our Shareholders:
We are pleased to submit to you our report for Cohen & Steers International
Realty Fund for the period beginning at the fund's inception on March 31, 2005
through June 30, 2005. The net asset values per share at that date were $11.77,
$11.77, and $11.78 for Class A, C, and I shares, respectively. From commencement
of operations through June 30, 2005, the fund produced the following total
returns (including reinvestment of distributions) compared with its relevant
benchmark:
<Table>
<Caption>
TOTAL RETURN,
QUARTER ENDED 6/30/05
---------------------
Cohen & Steers International Realty Fund
Class A......................................... 2.9%
Cohen & Steers International Realty Fund
Class C......................................... 2.8%
Cohen & Steers International Realty Fund
Class I......................................... 3.1%
S&P/Citigroup BMI World Property Index
(ex. U.S.)(a)................................... 4.3%
</Table>
During the quarter, semi-annual distributions were declared for shareholders
of record on June 23, 2005 and paid on June 24, 2005 in amounts per share for
Class A, C, and I shares of $0.020, $0.015, $0.030, respectively. The board will
consider distributions semiannually, with the intent of distributing what is
earned in the period rather than adhering to a fixed rate of distributions per
share. This distribution policy is consistent with the global real estate
securities universe, where many companies pay dividends annually or
semiannually.
INTRODUCTION
We welcome you as a shareholder of Cohen & Steers International Realty Fund,
a fund that we believe is well positioned to take advantage of opportunities in
a growing global real estate securities universe. At Cohen & Steers, we have
been monitoring the international real estate securities markets for many years.
Last year, we decided that the time was finally right to take our market
leadership in U.S. real estate securities investing overseas via our investment
in Houlihan Rovers, the sub-adviser to the fund and an experienced investor in
international real estate securities.
The success of REITs in the U.S. has created a model for the world to
follow. While U.S. REITs have been around since 1960, in 1993, U.S. REITs kicked
off a twelve-year growth period during which time the sector outperformed
virtually all other asset classes. Over this period, REITs benefited from the
rationalization of property ownership and financial restructuring, positive
regulatory changes and a broad cyclical recovery in real estate fundamentals. We
believe that a convergence of similar forces outside the U.S. has the potential
to create an analogous era of securitization in Europe and in the Asia/Pacific
region. The proliferation of the REIT structure
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(a) The S&P/Citigroup BMI World Property Index (excluding U.S.) is an unmanaged
portfolio of approximately 219 constituents from 17 countries.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
around the globe, in particular, should fundamentally improve the income and
stability profile of publicly owned real estate such that investors globally
will find the benefits of publicly traded real estate securities highly
attractive, in our view. Over 22 countries have introduced structures similar to
U.S. REITs, and several more are considering REIT legislation.
Over the last decade, the global real estate equity market capitalization
has more than quadrupled to $683 billion, with REIT shares accounting for a
substantial portion of this increase. While a large part of growth heretofore
occurred in the U.S., we believe that the growth of real estate securities going
forward will be as a result of increasing activity internationally. We believe
that allocations to different economies and real estate markets enhance the
fund's diversification benefits(b) and total return potential.
INVESTMENT REVIEW
For the quarter, the fund had a total return, based on income and change in
net asset value, of 2.9% for Class A shares. Class C and Class I returned 2.8%
and 3.1%, respectively. This compares with the S&P/Citigroup BMI World Property
Index (excluding U.S.) total return of 4.3%. Performance relative to the index
reflects the fund's high cash position during the initial investment period.
Also note that many international real estate securities markets performed even
better in local currency; therefore, the fund's overall results in U.S. dollar
terms were held back by the appreciation of the U.S. dollar during the quarter.
We do not intend to hedge currency in the fund, providing currency
diversification benefits to investors.
The objective of the fund is total return, with a balanced emphasis on
current income and capital appreciation. Our investment universe is primarily in
developed countries in Europe and the Asia/Pacific region, and any allocation to
the U.S. will be limited to less than 20%. At quarter-end, the fund's regional
allocations were 39% to Europe, 42% to Asia/Pacific and 15% to North America
(the remaining 4% was in cash).
In Europe, the region provided a 5.9% total return in the quarter, led by
Spain at 21.7%, Sweden at 17.9% and Finland at 17.0%. Among the larger, core
markets, Netherlands, France, and Germany had returns of 7.9%, 6.9% and 10.3%,
respectively. The United Kingdom underperformed with a 2.8% total return. While
the European economy has slowed, occupancies and rents generally continue to
improve, although property fundamentals vary dramatically by country. Investor
demand for property investments is very high in most countries, and we believe
that this will continue to further compress property yields, increasing property
values. While heavy tax regulation on income and capital gains has historically
caused many public corporations in Europe to trade at persistent discounts to
net asset value, the advent of REIT legislation has continued to drive shares
prices closer to net asset value.
In addition to strong private market demand for income property, merger and
acquisition activity has helped illuminate the value of public real estate
companies in Europe. Metrovacesa, Spain's largest real estate company, bought a
majority stake in France's Gecina, whose market value is twice its size,
representing the biggest takeover
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(b) Diversification does not ensure a profit or insure against losses in a down
market.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
of a real estate company in France since the late 1990s. Metrovacesa was
attracted to Gecina's tax-exempt REIT structure and France's strong real estate
fundamentals. In the United Kingdom, acquisition offers for Pillar by British
Land and Tops by Land Securities surfaced value for shareholders.
In the Asia/Pacific region, the total returns in the major countries were as
follows: Australia (2.4%), Hong Kong (7.7%), Singapore (7.7%) and Japan
(-1.7%). More than in Europe, real estate fundamentals vary widely by country.
Australia, the second oldest REIT market after the U.S., lagged in the quarter
due to concerns about the residential market and the risk in several Australian
companies expanding their operations internationally. Property fundamentals in
Australia are generally stable, benefiting from the healthy local economy, and
these companies provide some of the highest dividend yields in the world. Hong
Kong and Singapore benefited from many positive factors including China's
growth, improving property leasing fundamentals, liberalization of REIT
legislation, and attractive property acquisition and development opportunities.
While Japan underperformed, we do believe that the country's economy continues
to improve, and that property markets are poised for a recovery.
Our allocation to North America, 15% at quarter-end, helped performance as
the U.S. market had a total return of 15.1% and Canada had a total return of
7.4%. Continued momentum in the recovery of U.S. real estate fundamentals and
REIT earnings growth, and a flurry of merger and buyout activity, drove share
prices to new highs in the U.S. Consolidation activity accelerated in the REIT
sector over the past year, as seven sizeable REIT buyouts have been announced
since August 2004, totaling approximately $27 billion in value. Finally, these
deals were all struck at significant premiums to the pre-announcement target
stock prices -- ranging from 7.2% to 33.4%.
The fund's best performing investments were in the U.S., Spain, Sweden,
Finland and Germany. Investments in Belgium, the United Kingdom, Austria,
Singapore, and Japan detracted most from the fund's performance.
INVESTMENT OUTLOOK
We believe that the increasing growth and dynamism that has characterized
the real estate equities markets globally for the last few years marks the
beginning of a long-term trend. As recapitalization, privatization, ownership
rationalism, regulatory change and cyclical recovery continue, we expect REITs
to emerge globally as a dominant form of property ownership. Favorable long-term
GDP growth forecasts should also provide for continued improvement in real
estate fundamentals, in our view, and may be aided by interest rate cuts in
Europe.
Meanwhile, we believe demographic shifts among aging populations in North
America, Asia/Pacific and Europe should stimulate demand for the investment
characteristics that REITs potentially provide: greater levels of current
income, diversification from the broader stock markets, and generally lower
volatility. We also believe that U.S. investors will increasingly seek out
international property investments. The performances of the S&P/Citigroup BMI
World Property Index (excluding the U.S.) and the NAREIT Equity REIT Index (the
primary U.S. benchmark) reveal a correlation of just 38%, illustrating the
potential diversification benefits of owning both U.S. and international real
estate.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
The recent success of the REIT-like structure in France has compelled
several other Europeans countries, in particular Germany and the United Kingdom,
to begin fashioning their own REIT legislation. The French SIIC (Societe
d'investissement Immobilier Cotee), launched in 2003, helped improve the
valuations for companies that converted to this structure. Since 1990, shares of
French-listed companies traded at an historical average discount to net asset
value (NAV) of 26%. Since the SIIC was introduced, most major French-listed
property companies have elected SIIC status and many of these companies now
trade at premiums to NAV.
With an estimated $1.6 trillion in real estate assets, nearly 75% of which
is owned by corporations (compared with just 25% in the U.S.) we believe that
the launch of German G-REITs, expected in 2006, could infuse liquidity into this
enormous property market which, in our view, is currently undervalued. Until
now, Germany has failed to draw much capital from foreign investors but the
creation of a REIT structure could prompt a recapitalization of the German real
estate market.
In the United Kingdom, where we also anticipate REIT legislation in the next
several years, investor interest has already driven the listed property sector
to a 9% discount to net asset value, up from 30% to 40% discounts in recent
years. Property fundamentals in the U.K. are exhibiting a strong, steady
recovery, underpinned by the strongest economic growth in Europe.
Asian property markets, in general, are also in the midst of a cyclical
recovery that we believe is sustainable. Commercial property values in Asia fell
significantly between 1990 and 2003 but fundamentals and values have been
recovering. Today, with strong fundamentals and balance sheets, many Asian
property companies offer the potential to generate improved returns to
shareholders, in our view.
We believe the Asia/Pacific region will be one of the most active in terms
of REIT IPOs. Since the introduction of J-REITs in 2002, Japan has emerged as
the largest REIT market in Asia, with an equity market cap of $11.6 billion, or
8.5% of the listed global real estate market. In Singapore and Hong Kong,
improving REIT regulations may foster more IPOs. In fact, after quarter end
Mapletree, an industrial property REIT in Singapore, went public and closed at a
30% premium to the IPO price on its first day of trading.
Japanese REITs have become more active buyers in the Tokyo market, as
declining vacancy rates point toward potentially higher property values going
forward. With additional refinements to the J-REIT structure, which should
facilitate the transfer of real estate owned by financial institutions into
REITs on a more tax efficient basis, we expect the J-REIT sector to continue to
grow in the years ahead. Japan's aging population has made yield-oriented
investments a focus for individual investors for some time.
In Hong Kong, we believe the REIT era is about to begin. Property companies
have been a significant part of the stock market for many years. Recent
legislative changes in Hong Kong reversing the prohibition of property ownership
outside of Hong Kong will, in our view, facilitate the rapid development of the
Hong Kong REIT market by expanding the investment opportunity set available to a
prospective REIT. The Link REIT, which would have been the first Hong Kong REIT
IPO and one of the largest ever globally, was postponed due to a legal
challenge. However, this challenge has been resolved and we expect the Link REIT
to resurface later this year. Others may be attractive as a result of the very
robust rebound in Hong Kong rents and occupancies, the ability to channel
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
investments into neighboring China's booming property markets, and the thirst
for yield in the Hong Kong equity market.
While there may be a general trend toward global investments, we believe
that commercial property shares in particular will remain favorable as the
fundamental characteristics of underlying real estate assets -- stable,
attractive yields and modest capital appreciation potential -- remain attractive
to investors. We also expect more harmonization in tax provisions across REIT
regimes as increasing competition necessitates that companies pursue growth
outside the jurisdiction of their borders. The Netherlands, for example, is
considering liberalization of existing REIT legislation to improve tax
efficiency.
Over time, we believe that REIT structures and investing may spread to
Spain, Finland, and Italy, and, with recent favorable changes in tax
regulations, to Latin American countries, including Brazil and Mexico. As more
countries bring their significant property holdings to the international capital
markets, we believe that Cohen & Steers International Realty Fund is well
positioned to meet its total return objective as a result of these favorable
developments in the global real estate market.
Sincerely,
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
Co-chairman Co-chairman
JOSEPH M. HARVEY JAMES S. CORL
JOSEPH M. HARVEY JAMES S. CORL
Portfolio Manager Portfolio Manager
W. JOSEPH HOULIHAN GERIOS J.M. ROVERS
W. JOSEPH HOULIHAN GERIOS J.M. ROVERS
Portfolio Manager Portfolio Manager
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
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VISIT COHEN & STEERS ONLINE AT COHENANDSTEERS.COM
For more information about any of our funds, visit cohenandsteers.com,
where you'll find daily net asset values, fund fact sheets and portfolio
highlights. You can also access newsletters, education tools and market
updates covering the REIT, utility and preferred securities sectors.
In addition, our Web site contains comprehensive information about our
firm, including our most recent press releases, profiles of our senior
investment professionals, and an overview of our investment approach.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
EXPENSE EXAMPLE
(UNAUDITED)
As a shareholder of the fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments and redemption fees;
and (2) ongoing costs including management fees; distribution and/or service
(12b-1) fees; and other fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period 03/31/05-06/30/05.
ACTUAL EXPENSES
The first line of the table below provides information about actual account
values and expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading entitled 'Expenses Paid During Period' to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the fund and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) and redemption fees. Therefore, the second line of the table is
useful in comparing ongoing costs only, and will not help you determine the
relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
EXPENSE EXAMPLE (UNAUDITED) -- (CONTINUED)
<Table>
<Caption>
EXPENSES PAID
BEGINNING ENDING DURING PERIOD(a)
ACCOUNT VALUE ACCOUNT VALUE MARCH 31, 2005-
MARCH 31, 2005 JUNE 30, 2005 JUNE 30, 2005
-------------- ------------- -------------
CLASS A
Actual (2.88% return)................... $1,000.00 $1,028.80 $4.35
Hypothetical (5% annual return before
expenses)............................. $1,000.00 $1,008.32 $4.30
CLASS C
Actual (2.84% return)................... $1,000.00 $1,028.40 $6.01
Hypothetical (5% annual return before
expenses)............................. $1,000.00 $1,006.68 $5.94
CLASS I
Actual (3.05% return)................... $1,000.00 $1,030.50 $3.45
Hypothetical (5% annual return before
expenses)............................. $1,000.00 $1,009.20 $3.42
</Table>
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(a) Expenses are equal to the fund's annualized expense ratio of 1.70%, 2.35%,
and 1.35% respectively, multiplied by the average account value over the
period, multiplied by 92/365 (to reflect the operating period). If the
fund had borne all of its expenses that were assumed by the advisor,
the annulized expense ratios would have been 2.39%, 3.11% and 2.32%,
respectively.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
JUNE 30, 2005
TOP TEN HOLDINGS
(UNAUDITED)
<Table>
<Caption>
MARKET % OF
SECURITY VALUE NET ASSETS
-------- ---------- ----------
1. Westfield Group.......................................... $4,095,663 4.85%
2. Land Securities Group PLC................................ 4,002,792 4.74
3. British Land Co., PLC.................................... 3,295,520 3.91
4. Mitsubishi Estate Co., Ltd............................... 3,238,862 3.84
5. Unibail.................................................. 2,790,072 3.31
6. Sun Hung Kai Properties Ltd.............................. 2,567,067 3.04
7. Mitsui Fudosan Co., Ltd.................................. 2,486,985 2.95
8. Stockland................................................ 1,938,113 2.30
9. Hongkong Land Holdings Ltd. (USD)........................ 1,807,751 2.14
10. Liberty International PLC................................ 1,735,036 2.06
</Table>
SECTOR BREAKDOWN
(BASED ON NET ASSETS)
(UNAUDITED)
[PIE CHART]
<Table>
Hotel 1.13%
Residential/Apartment 4.65%
Industrial 5.27%
Other Assets in Excess of Liabilities 5.78%
Shopping Center 13.04%
Office 17.64%
Health Care 0.83%
Self Storage 0.81%
Diversified 50.85%
</Table>
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
COMMON STOCK 93.63%
AUSTRALIA 17.63%
DIVERSIFIED(a)
Centro Properties Group......................... 188,100 $ 840,937
DB RREEF Trust.................................. 997,000 1,032,830
General Property Trust.......................... 612,000 1,697,762
Mirvac Group.................................... 319,000 864,207
Stockland....................................... 462,341 1,938,113
--------------
6,373,849
--------------
INDUSTRIAL
Macquarie Goodman Group......................... 510,000 1,583,905
--------------
OFFICE(a)
Commonwealth Property Office Fund............... 803,500 771,888
Investa Property Group.......................... 501,000 738,322
Tishman Speyer Office Fund...................... 526,000 831,236
--------------
2,341,446
--------------
SHOPPING CENTER(a)
CFS Grandel Retail Trust........................ 380,398 484,390
Westfield Group................................. 304,000 4,095,663
--------------
4,580,053
--------------
TOTAL AUSTRALIA................................. 14,879,253
--------------
AUSTRIA(a) 1.04%
DIVERSIFIED
Immofinanz Immobilien Anlagen AG................ 95,466 874,277
--------------
BELGIUM(a) 0.53%
OFFICE
Cofinimmo....................................... 2,830 443,506
--------------
CANADA 1.59%
APARTMENT
Canadian Apartment Properties Real Estate
Investment Trust............................. 11,600 140,408
--------------
INDUSTRIAL
H&R Real Estate Investment Trust................ 19,000 302,710
--------------
</Table>
See accompanying notes to financial statements.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
OFFICE
Brookfield Properties Corp...................... 19,192 $ 552,730
--------------
SHOPPING CENTER
RioCan Real Estate Investment Trust............. 21,300 347,698
--------------
TOTAL CANADA.................................... 1,343,546
--------------
FINLAND(a) 1.17%
DIVERSIFIED
Sponda Oyj...................................... 95,860 985,934
--------------
FRANCE(a) 7.09%
DIVERSIFIED
Klepierre....................................... 9,155 871,703
Societe Immobiliere de Location pour L'Industrie
et le Commerce (Silic)....................... 15,435 1,570,489
Unibail......................................... 21,750 2,790,072
--------------
5,232,264
--------------
OFFICE
Fonciere des Regions............................ 7,560 754,636
--------------
TOTAL FRANCE.................................... 5,986,900
--------------
GERMANY(a) 2.03%
APARTMENT
Deutsche Wohnen AG.............................. 1,216 268,874
--------------
DIVERSIFIED
Deutsche Euroshop AG............................ 8,440 455,301
IVG Immobilien AG............................... 53,085 985,605
--------------
1,440,906
--------------
TOTAL GERMANY................................... 1,709,780
--------------
</Table>
See accompanying notes to financial statements.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
HONG KONG(a) 8.59%
DIVERSIFIED
Cheung Kong Holdings Ltd........................ 174,000 $ 1,682,085
Hang Lung Group Ltd............................. 129,100 226,976
Hang Lung Properties Ltd........................ 339,000 497,103
Henderson Land Development Company Ltd.......... 324,000 1,543,728
Hysan Development Company Ltd................... 355,000 735,211
Sun Hung Kai Properties Ltd..................... 261,000 2,567,067
--------------
TOTAL HONG KONG................................. 7,252,170
--------------
JAPAN(a) 10.64%
APARTMENT
Leopalace21 Corp................................ 31,000 514,003
--------------
DIVERSIFIED
Mitsubishi Estate Co., Ltd...................... 296,000 3,238,862
Mitsui Fudosan Co., Ltd......................... 223,000 2,486,985
Sumitomo Realty & Development Co., Ltd.......... 111,000 1,235,923
Tokyo Tatemono Co., Ltd......................... 47,000 313,864
--------------
7,275,634
--------------
OFFICE
Japan Prime Realty Investment Corp.............. 135 399,389
Japan Real Estate Investment Corp............... 46 390,696
--------------
790,085
--------------
SHOPPING CENTER
Japan Retail Fund Investment Corp............... 46 394,628
--------------
TOTAL JAPAN..................................... 8,974,350
--------------
NETHERLANDS(a) 5.25%
DIVERSIFIED
Corio NV........................................ 15,780 879,068
Eurocommercial Properties NV.................... 17,030 620,055
Wereldhave NV................................... 7,735 824,258
--------------
2,323,381
--------------
</Table>
See accompanying notes to financial statements.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
OFFICE
VastNed Offices/Industrial NV................... 17,485 $ 450,808
--------------
SHOPPING CENTER
Rodamco Europe NV............................... 15,265 1,250,250
VastNed Retail NV............................... 6,025 404,736
--------------
1,654,986
--------------
TOTAL NETHERLANDS............................... 4,429,175
--------------
SINGAPORE(a) 4.31%
DIVERSIFIED
CapitaLand Ltd.................................. 209,000 294,303
City Development Ltd............................ 79,800 354,059
--------------
648,362
--------------
INDUSTRIAL
Ascendas Real Estate Investment Trust
(A-REIT)..................................... 640,000 837,960
--------------
OFFICE
Hongkong Land Holdings Ltd. (USD)............... 649,000 1,807,751
--------------
SHOPPING CENTER
Fortune Real Estate Investment Trust (HKD)...... 424,000 346,093
--------------
TOTAL SINGAPORE................................. 3,640,166
--------------
SPAIN(a) 0.66%
DIVERSIFIED
Inmobiliaria Urbis SA........................... 29,610 556,229
--------------
SWEDEN 2.09%
DIVERSIFIED
Castellum AB(a)................................. 14,520 590,808
Fabege AB....................................... 29,015 631,419
Kungsleden AB(a)................................ 18,910 497,596
Wihlborgs Fastigheter AB........................ 1,721 41,858
--------------
TOTAL SWEDEN.................................... 1,761,681
--------------
</Table>
See accompanying notes to financial statements.
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COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
SWITZERLAND(a) 0.77%
DIVERSIFIED
PSP Swiss Property AG........................... 15,005 $ 651,259
--------------
UNITED KINGDOM 17.77%
DIVERSIFIED
British Land Co., PLC(a)........................ 210,350 3,295,520
Development Securities PLC(a)................... 42,070 360,984
Eurocastle Investment Limited (EUR)(a).......... 14,000 318,788
Great Portland Estates PLC...................... 111,300 696,960
Hammerson PLC(a)................................ 99,770 1,586,611
Helical Bar PLC................................. 14,875 365,792
Mapeley UK Co., Ltd............................. 9,416 453,399
Quintain Estates & Development PLC(a)........... 48,345 455,691
--------------
7,533,745
--------------
INDUSTRIAL(a)
Slough Estates PLC.............................. 185,325 1,724,397
--------------
OFFICE(a)
Land Securities Group PLC....................... 161,200 4,002,792
--------------
SHOPPING CENTER(a)
Liberty International PLC....................... 100,150 1,735,036
--------------
TOTAL UNITED KINGDOM............................ 14,995,970
--------------
UNITED STATES 12.47%
HEALTH CARE
Ventas.......................................... 6,596 199,199
--------------
HOTEL
Hilton Hotels Corp.............................. 17,074 407,215
Starwood Hotels & Resorts Worldwide............. 9,300 544,701
--------------
951,916
--------------
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
OFFICE
American Financial Realty Trust................. 10,400 $ 159,952
Arden Realty.................................... 12,000 431,760
BioMed Realty Trust............................. 9,600 228,960
Boston Properties............................... 10,203 714,210
Forest City Enterprises......................... 6,660 472,860
Kilroy Realty Corp.............................. 13,179 625,871
Maguire Properties.............................. 15,052 426,574
Reckson Associates Realty Corp.................. 8,700 291,885
SL Green Realty Corp............................ 6,068 391,386
--------------
3,743,458
--------------
RESIDENTIAL -- APARTMENT
American Campus Communities..................... 35,500 805,140
Apartment Investment & Management Co............ 15,800 646,536
Archstone-Smith Trust........................... 20,000 772,400
Avalonbay Communities........................... 3,800 307,040
BRE Properties.................................. 8,839 369,912
Equity Residential.............................. 2,700 99,414
--------------
3,000,442
--------------
SELF STORAGE
Extra Space Storage............................. 9,200 131,836
Shurgard Storage Centers........................ 12,049 553,772
--------------
685,608
--------------
SHOPPING CENTER
COMMUNITY CENTER
Pan Pacific Retail Properties................... 6,600 438,108
Tanger Factory Outlet Centers................... 7,511 202,271
--------------
640,379
--------------
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
<Caption>
NUMBER VALUE
OF SHARES (NOTE 1)
--------- --------------
REGIONAL MALL
Macerich Co..................................... 3,998 $ 268,066
Simon Property Group............................ 8,700 630,663
Taubman Centers................................. 11,946 407,239
--------------
1,305,968
--------------
TOTAL SHOPPING CENTER........................... 1,946,347
--------------
TOTAL UNITED STATES............................. 10,526,970
--------------
TOTAL COMMON STOCK (Identified
cost -- $77,595,701)..................... 79,011,166
--------------
PREFERRED STOCK 0.59%
UNITED STATES 0.59%
HEALTH CARE
Windrose Medical Properties Trust, 7.50%,
Series A..................................... 20,000 500,000
--------------
TOTAL PREFERRED STOCK (Identified
cost -- $500,000)........................ 500,000
--------------
</Table>
<Table>
<Caption>
PRINCIPAL
AMOUNT
-----------
COMMERCIAL PAPER 16.90%
American Express Credit Corp., 2.20%, due
07/01/05..................................... $2,000,000 2,000,000
American General Finance Corp., 2.20%, due
07/01/05..................................... 2,000,000 2,000,000
General Electric Capital Corp., 2.20%, due
07/01/05..................................... 2,000,000 2,000,000
HSBC Finance Corp., 2.20%, due 07/01/05......... 2,000,000 2,000,000
New Center Asset Trust, 2.20%, due 07/01/05..... 2,259,000 2,259,000
Prudential Funding Corp., 2.20%, due 07/01/05... 2,000,000 2,000,000
UBS Finance Delaware LLC, 2.20%, due 07/01/05... 2,000,000 2,000,000
--------------
TOTAL COMMERCIAL PAPER (Identified
cost -- $14,259,000)..................... 14,259,000
--------------
TOTAL INVESTMENTS (Identified
cost -- $92,354,701)......................... 111.12% 93,770,166
LIABILITIES IN EXCESS OF OTHER ASSETS.......... (11.12)% (9,385,211)
------ --------------
NET ASSETS..................................... 100.00% $ 84,384,955
------ --------------
------ --------------
</Table>
- -------------------
Note: Percentages indicated are based on the net assets of the fund.
(a) Fair valued securities. Aggregate holdings equal 75.09% of net assets.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
16
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2005 (UNAUDITED)
<Table>
ASSETS:
Investments in securities, at value (Identified
cost -- $92,354,701) (Note 1)........................ $ 93,770,166
Receivable for foreign exchange contracts............... 7,374,441
Receivable for fund shares sold......................... 1,888,054
Foreign currency (Identified cost -- $706,126).......... 700,177
Dividends and interest receivable....................... 323,717
Receivable for investment securities sold............... 287,496
Receivable due from advisor............................. 75,318
------------
Total Assets....................................... 104,419,369
------------
LIABILITIES:
Payable for investment securities purchased............. 12,465,174
Payable for foreign exchange contracts.................. 7,390,621
Payable to investment advisor........................... 85,865
Payable for distribution fees........................... 10,827
Payable for shareholder servicing fees.................. 3,909
Payable to administrator................................ 3,289
Payable for directors fees.............................. 1,695
Other liabilities....................................... 73,034
------------
Total Liabilities.................................. 20,034,414
------------
NET ASSETS.................................................. $ 84,384,955
------------
------------
NET ASSETS consist of:
Paid-in capital......................................... $ 82,793,204
Undistributed net investment income..................... 192,697
Net realized loss on investments and foreign currency
transactions......................................... (18,612)
Net unrealized appreciation on investments and foreign
currency translations................................ 1,417,666
------------
$ 84,384,955
------------
------------
</Table>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
17
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
JUNE 30, 2005 (UNAUDITED)
<Table>
CLASS A SHARES:
NET ASSETS.............................................. $29,629,755
Shares issued and outstanding ($0.001 par value common
stock outstanding)................................... 2,516,530
-----------
Net asset value and redemption price per share..... $ 11.77
-----------
-----------
Maximum offering price per share
($11.77 [div] 0.955)(a).............................. $ 12.32
-----------
-----------
CLASS C SHARES:
NET ASSETS.............................................. $13,986,994
Shares issued and outstanding ($0.001 par value common
stock outstanding)................................... 1,188,718
-----------
Net asset value and offering price per share(b).... $ 11.77
-----------
-----------
CLASS I SHARES:
NET ASSETS.............................................. $40,768,206
Shares issued and outstanding ($0.001 par value common
stock outstanding)................................... 3,462,049
-----------
Net asset value, offering, and redemption price
per share....................................... $ 11.78
-----------
-----------
</Table>
- -------------------
(a) On investments of $100,000 or more, the offering price is reduced.
(b) Redemption price per share is equal to the net asset value per share less
any applicable deferred sales charge which varies with the length of time
shares are held.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
18
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 31, 2005(a) THROUGH JUNE 30, 2005 (UNAUDITED)
<Table>
Investment Income (Note 1):
Dividend income (net of $91,864 of foreign withholding
tax)................................................. $ 456,899
Interest income......................................... 34,312
----------
Total Income....................................... 491,211
----------
Expenses:
Investment advisory fees (Note 2)....................... 85,865
Professional fees....................................... 31,120
Administration and transfer agent fees (Note 2)......... 28,907
Distribution fees -- Class A (Note 2)................... 8,175
Distribution fees -- Class C (Note 2)................... 10,366
Shareholder reporting expenses.......................... 15,456
Directors' fees and expenses (Note 2)................... 13,070
Custodian fees and expenses............................. 12,984
Registration and filing fees............................ 9,178
Shareholder servicing fees -- Class A (Note 2).......... 3,270
Shareholder servicing fees -- Class C (Note 2).......... 3,454
Miscellaneous........................................... 983
----------
Total Expenses..................................... 222,828
Reduction of Expenses (Note 2).......................... (75,318)
----------
Net Expenses....................................... 147,510
----------
Net Investment Income....................................... 343,701
----------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on:
Investments........................................ 43,914
Foreign currency transactions...................... (62,526)
----------
Net realized loss............................. (18,612)
----------
Net change in unrealized appreciation on:
Investments........................................ 1,415,465
Foreign currency translations...................... 2,201
----------
Net change in unrealized appreciation......... 1,417,666
----------
Net realized and unrealized gain on investments.... 1,399,054
----------
Net Increase in Net Assets Resulting from Operations........ $1,742,755
----------
----------
</Table>
- -------------------
(a) Commencement of operations.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
19
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
<Table>
<Caption>
FOR THE PERIOD
MARCH 31, 2005(a)
THROUGH
JUNE 30, 2005
---------------
Change in Net Assets:
From Operations:
Net investment income.............................. $ 343,701
Net realized loss on investments and foreign
currency transactions........................... (18,612)
Net change in unrealized appreciation on
investments and foreign currency translations... 1,417,666
-----------
Net increase in net assets resulting from
operations.................................. 1,742,755
-----------
Dividends to Shareholders from Net Investment Income
(Note 1):
Class A....................................... (39,779)
Class C....................................... (16,350)
Class I....................................... (94,875)
-----------
Total dividends to shareholders.......... (151,004)
-----------
Capital Stock Transactions (Note 5):
Increase in net assets from fund share
transactions.................................... 82,692,929
-----------
Total increase in net assets.................. 84,284,680
Net Assets:
Beginning of period................................ 100,275
-----------
End of period(b)................................... $84,384,955
-----------
-----------
</Table>
- -------------------
(a) Commencement of operations.
(b) Includes undistributed net investment income of $192,697.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
20
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
financial statements. It should be read in conjunction with the financial
statements and notes thereto.
<Table>
<Caption>
CLASS A CLASS C CLASS I
--------------- --------------- ---------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
MARCH 31, 2005(a) MARCH 31, 2005(a) MARCH 31, 2005(a)
THROUGH THROUGH THROUGH
PER SHARE OPERATING PERFORMANCE: JUNE 30, 2005 JUNE 30, 2005 JUNE 30, 2005
- -------------------------------- ------------- ------------- -------------
Net asset value, beginning of period.......... $11.46 $11.46 $11.46
------ ------ ------
Income from investment operations:
Net investment income(b).................. 0.10 0.10 0.12
Net realized and unrealized gain on
investments............................. 0.23 0.23 0.23
------ ------ ------
Total from investment operations...... 0.33 0.33 0.35
------ ------ ------
Less dividends to shareholders from net
investment income........................... (0.02) (0.02) (0.03)
------ ------ ------
Redemption fees retained by the fund.......... 0.00(c) -- --
------ ------ ------
Net increase in net asset value........... 0.31 0.31 0.32
------ ------ ------
Net asset value, end of period................ $11.77 $11.77 $11.78
------ ------ ------
------ ------ ------
================================================================================================
Total investment return(d,f).................. 2.88% 2.84% 3.05%
------ ------ ------
------ ------ ------
================================================================================================
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (in millions)....... $ 29.6 $ 14.0 $ 40.8
------ ------ ------
------ ------ ------
Ratio of expenses to average daily net assets
(before expense reduction)(e)............... 2.39% 3.11% 2.32%
------ ------ ------
------ ------ ------
Ratio of expenses to average daily net assets
(net of expense reduction)(e)............... 1.70% 2.35% 1.35%
------ ------ ------
------ ------ ------
Ratio of net investment income to average
daily net assets (before expense
reduction)(e)............................... 2.75% 2.72% 3.21%
------ ------ ------
------ ------ ------
Ratio of net investment income to average
daily net assets (net of expense
reduction)(e)............................... 3.44% 3.47% 4.17%
------ ------ ------
------ ------ ------
Portfolio turnover rate(f).................... 1.24% 1.24% 1.24%
------ ------ ------
------ ------ ------
</Table>
- -------------------
(a) Commencement of operations.
(b) Calculated based on the average shares outstanding during the period.
(c) Less than $0.005 per share.
(d) Does not reflect sales charges, which would reduce return.
(e) Annualized.
(f) Not annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
21
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers International Realty Fund, Inc. (the fund) was incorporated
under the laws of the State of Maryland on November 23, 2004 and is registered
under the Investment Company Act of 1940, as amended, as a nondiversified,
open-end management investment company. The fund's investment objective is total
return. The fund had no operations until January 11, 2005 when it sold 10 shares
each of Class A, B, C, and 8,720 shares of Class I for $100,275 to Cohen &
Steers Capital Management, Inc. (The Class B shares were subsequently
transferred to Class I and Class B shares are presently not offered). Investment
operations commenced on March 31, 2005. The authorized shares of the fund are
divided into three classes designated Class A, C, and I shares. Each of the
fund's shares has equal dividend, liquidation and voting rights (except for
matters relating to distributions and shareholder servicing of such shares).
The following is a summary of significant accounting policies consistently
followed by the fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America (GAAP). The preparation of the financial statements in
accordance with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day or, if no asked price is available, at the bid price.
Securities not listed on the New York Stock Exchange but listed on other
domestic or foreign securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. (Nasdaq) national
market system are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by Cohen & Steers
Capital Management, Inc. to be over-the-counter, but excluding securities
admitted to trading on the Nasdaq National List, are valued at the official
closing prices as reported by Nasdaq, the National Quotation Bureau, or such
other comparable sources as the Board of Directors deem appropriate to reflect
their fair market value. If there has been no sale on such day, the securities
are valued at the mean of the closing bid and asked prices for the day, or if no
asked price is available, at the bid price. However, certain fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed by the Board of Directors to reflect the fair
market value of such securities. Where securities are traded on more than one
- --------------------------------------------------------------------------------
22
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
exchange and also over-the-counter, the securities will generally be valued
using the quotations the Board of Directors believes most closely reflect the
value of such securities.
Portfolio securities primarily traded on foreign markets are generally
valued at the preceding closing values of such securities on their respective
exchanges or if after the close of the foreign markets, but prior to the close
of business on the day the securities are being valued, market conditions change
significantly, certain foreign securities may be fair valued pursuant to
procedures established by the Board of Directors.
Securities for which market prices are unavailable will be valued at fair
value pursuant to procedures approved by the fund's Board of Directors.
Circumstances in which market prices may be unavailable include, but are not
limited to, when trading in a security is suspended, the exchange on which the
security is traded is subject to an unscheduled close or disruption or material
events occur after the close of the exchange on which the security is
principally traded. In these circumstances, the fund determines fair value in a
manner that fairly reflects the market value of the security on the valuation
date based on consideration of any information or factors it deems appropriate.
These may include recent transactions in comparable securities, information
relating to the specific security and developments in the markets.
The fund's use of fair value pricing may cause the net asset value of fund
shares to differ from the net asset value that would be calculated using market
quotations. Fair value pricing involves subjective judgments and it is possible
that the fair value determined for a security may be materially different than
the value that could be realized upon the sale of that security.
To the extent the fund holds securities that are primarily listed on foreign
exchanges that trade on weekends or days when the fund does not price its
shares, the value of the securities held in the fund may change on days when you
will not be able to purchase or redeem fund shares.
Short-term debt securities, which have a maturity date of 60 days or less,
are valued at amortized cost, which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date. The fund
records distributions received in excess of income from underlying investments
as a reduction of cost of investments and/or realized gain. Such amounts are
based on estimates if actual amounts are not available, and actual amounts of
income, realized gain and return of capital may differ from the estimated
amounts. The fund adjusts the estimated amounts of the components of
distributions (and consequently its net investment income) as an increase to
unrealized appreciation/(depreciation) and realized gain/(loss) on investments
as necessary once the issuers provide information about the actual composition
of the distributions. Income, expenses (other than expenses attributable to a
specific class), and realized and unrealized gains or losses on investments are
allocated to each class of shares based on its relative net assets.
- --------------------------------------------------------------------------------
23
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Foreign Currency Translation and Forward Foreign Currency Contracts: The
books and records of the fund are maintained in U.S. dollars as follows:
(1) the foreign currency market value of investment securities, other assets and
liabilities and forward foreign currency contracts (forward contracts) are
translated at the exchange rates prevailing at the end of the period; and
(2) purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are recorded as realized and unrealized gain/loss on foreign
exchange transactions. Pursuant to U.S. federal income tax regulations, certain
foreign exchange gains/losses included in realized and unrealized gain/loss are
included in or are a reduction of ordinary income for federal income tax
purposes. The fund does not isolate that portion of the results of operations
arising as a result of changes in the foreign exchange rates from the changes in
the market prices of the securities. Forward contracts are valued daily at the
appropriate exchange rates. The resultant unrealized exchange gains and losses
are recorded as unrealized foreign currency gain or loss. The fund records
realized gains or losses on delivery of the currency or at the time the forward
contract is extinguished (compensated) by entering into a closing transaction
prior to delivery.
Foreign Securities: The fund may directly purchase securities of foreign
issuers. Investing in securities of foreign issuers involves special risks not
typically associated with investing in securities of U.S. issuers. The risks
include possible revaluation of currencies, the ability to repatriate funds,
less complete financial information about companies and possible future adverse
political and economic developments. Moreover, securities of many foreign
issuers and their markets may be less liquid and their prices more volatile than
those of securities of comparable U.S. issuers.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid quarterly. 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 ex-dividend date unless the
shareholder has elected to have them paid in cash.
Distributions paid by the fund are subject to recharacterization for tax
purposes. Based upon the results of operations for the period March 31, 2005
(commencement of operations) through June 30, 2005, the advisor considers it
likely that a portion of the dividends will be reclassified to return of capital
and distributions of net realized capital gains upon the final determination of
the fund's taxable income for the year. Net realized capital gains, unless
offset by any available capital loss carryforward, are distributed to
shareholders annually.
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. federal income tax regulations, which may
differ from GAAP.
Federal Income Taxes: It is the policy of the fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary.
- --------------------------------------------------------------------------------
24
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
advisor) serves as the fund's investment advisor pursuant to an investment
advisory agreement (the advisory agreement). Under the terms of the advisory
agreement, the advisor provides the fund with the day-to-day investment
decisions and generally manages the fund's investments in accordance with the
stated policies of the fund, subject to the supervision of the fund's Board of
Directors. For the services provided to the fund, the advisor receives a monthly
fee, accrued daily and paid monthly at the annual rate of 0.95% of the average
daily net assets of the fund up to and including $1.5 billion and 0.85% of the
average daily net asset above $1.5 billion.
For the period March 31, 2005 (commencement of operations) through June 30,
2005 and through December 31, 2005, the advisor has contractually agreed to
waive its fee and/or reimburse the fund for expenses incurred to the extent
necessary to maintain the fund's operating expenses at 1.70% for the Class A
shares, 2.35% for the Class C shares and 1.35% for the Class I shares.
Under a subadvisory agreement between the advisor and Houlihan Rovers S.A.
(the subadvisor), an affiliate of the advisor, the subadvisor is responsible for
managing the fund's investments in certain non-U.S. real estate securities. For
its services provided under the subadvisory agreement, the advisor (not the
fund) pays the subadvisor a monthly fee at the annual rate of 0.30% of the
average daily net assets of the fund. For the period March 31, 2005
(commencement of operations) through June 30, 2005, the advisor paid the
subadvisor $27,117.
Administration Fees: The fund has entered into an administration agreement
with the advisor under which the advisor performs certain administrative
functions for the fund and receives a fee, accrued daily and paid monthly at the
annual rate of 0.06% of the fund's average daily net assets. For the period
March 31, 2005 (commencement of operations) through June 30, 2005, the fund paid
the advisor $5,423 in fees under this administration agreement.
Distribution Fees: Cohen & Steers Securities, LLC (the distributor), an
affiliated entity of the advisor, distributes the shares of the fund. The fund
has adopted a distribution plan (the plan) pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the plan, the fund may not incur
distribution fees which exceed an annual rate of 0.25% of the average daily net
assets attributable to the Class A shares and 0.75% of the average daily net
assets attributable to the Class C shares.
For the period March 31, 2005 (commencement of operations) through June 30,
2005, the fund has been advised that the distributor received $19,447 in sales
commissions from the sale of Class A shares and that the distributor also
received $228 of contingent deferred sales charges relating to redemptions of
Class C shares. The distributor has advised the fund that proceeds from the
contingent deferred sales charge on the Class C shares are paid to the
distributor and are used by the distributor to defray its expenses related to
providing distribution-related services to the fund in connection with the sale
of the Class C shares, including payments to dealers and other
- --------------------------------------------------------------------------------
25
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
financial intermediaries for selling Class C shares and interest and other
financing costs associated with Class C shares.
Shareholder Servicing Fees: The fund has adopted a shareholder services plan
which provides that the fund may obtain the services of qualified financial
institutions to act as shareholder servicing agents for their customers. For
these services, the fund may pay the shareholder servicing agent a fee at an
annual rate of up to 0.10% of the average daily net asset value of the fund's
Class A shares and up to 0.25% of the average daily net asset value of the
fund's Class C shares.
Directors' Fees: Certain directors and officers of the fund are also
directors, officers, and/or employees of the advisor. None of the directors and
officers so affiliated received compensation from the fund for their services.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
period March 31, 2005 (commencement of operations) through June 30, 2005 totaled
$78,674,838 and $598,254, respectively.
NOTE 4. INCOME TAX INFORMATION
At June 30, 2005 the cost of investments and net unrealized appreciation for
federal income tax purposes were as follows:
<Table>
Aggregate cost............................................. $92,354,701
-----------
-----------
Gross unrealized appreciation.............................. $ 1,930,559
Gross unrealized depreciation.............................. (515,094)
-----------
Net unrealized appreciation on investments................. 1,415,465
Net unrealized appreciation on foreign currency
translations............................................. 2,201
-----------
Net unrealized appreciation................................ $ 1,417,666
-----------
-----------
</Table>
- --------------------------------------------------------------------------------
26
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 5. CAPITAL STOCK
The fund is authorized to issue 200 million shares of capital stock, at a
par value of $0.001 per share. The Board of Directors of the fund may increase
or decrease the aggregate number of shares of common stock that the fund has
authority to issue. At June 30, 2005, Cohen & Steers Capital Management Inc.
owned 446,158 shares of Class I. Transactions in fund shares were as follows:
<Table>
<Caption>
FOR THE PERIOD
MARCH 31, 2005(a)
THROUGH
JUNE 30, 2005
-----------------------
SHARES AMOUNT
--------- -----------
CLASS A:
Sold....................................... 2,521,973 $29,208,414
Issued as reinvestment of dividends........ 2,097 24,829
Redeemed................................... (7,550) (87,339)
Redemption fees retained by the fund(b).... -- 422
--------- -----------
Net increase............................... 2,516,520 $29,146,326
--------- -----------
--------- -----------
CLASS C:
Sold....................................... 1,190,240 $13,797,429
Issued as reinvestment of dividends........ 368 4,356
Redeemed................................... (1,900) (21,849)
--------- -----------
Net increase............................... 1,188,708 $13,779,936
--------- -----------
--------- -----------
CLASS I:
Sold....................................... 3,447,303 $39,695,118
Issued as reinvestment of dividends........ 7,963 94,285
Redeemed................................... (1,937) (22,736)
--------- -----------
Net increase............................... 3,453,329 $39,766,667
--------- -----------
--------- -----------
</Table>
- -------------------
(a) Commencement of operations.
(b) The fund charges a 1% redemption fee on shares sold within six months of the
time of purchase.
- --------------------------------------------------------------------------------
27
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
AVERAGE ANNUAL TOTAL RETURNS
(PERIOD ENDED JUNE 30, 2005) (UNAUDITED)
<Table>
<Caption>
SINCE INCEPTION (3/31/05)
---------------------------
INCLUDING EXCLUDING
SALES CHARGE SALES CHARGE
------------ ------------
Class A.................. -1.83% 2.88%
Class C.................. 1.84 2.84
Class I.................. -- 3.05
</Table>
The performance data quoted represents past performance. Past performance is no
guarantee of future results. The investment return and principal value of an
investment will fluctuate and shares,when redeemed, may be worth more or less
than their original cost. Current performance may be lower or higher than the
performance data quoted. Performance information current to the most recent
month-end can be obtained by visiting our website at cohenandsteers.com. The
performance table does not reflect the deduction of taxes that a shareholder
would pay on fund distributions on the redemption of fund shares.
Through December 31, 2005, the fund's advisor has contractually agreed to
waive certain fees and/or reimburse the fund for expenses. Absent such
arrangements, returns would have been lower.
Return figures for Class A shares are calculated without and with the effect
of the initial 4.50% maximum sales charge. Returns for Class C shares are
calculated without and with the effect of the 1% CDSC charged only on
redemptions made within one year of the date of purchase.
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 1-800-330-7348, (ii) on our Web site at
cohenandsteers.com or (iii) on the Securities and Exchange Commission's Web site
at http://www.sec.gov. In addition, the fund's proxy voting record for the most
recent 12-month period ended June 30 is available (i) without charge, upon
request, by calling 1-800-330-7348 or (ii) on the SEC's Web site at
http://www.sec.gov.
The fund files its complete schedule of portfolio holdings with the SEC for
the first and third quarters of each fiscal year on Form N-Q. The fund's
Forms N-Q are available (i) without charge, upon request by calling
1-800-330-7348, 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 1-800-SEC-0330.
Please note that the distributions paid by the fund to shareholders are
subject to recharacterization for tax purposes. The final tax treatment of these
distributions is reported to shareholders on their 1099-DIV forms, which are
mailed to shareholders after the close of each fiscal year. The fund may pay
distributions in excess of the fund's net investment company taxable income and
this excess would be a tax-free return of capital distributed from the fund's
assets. 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. 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.
- --------------------------------------------------------------------------------
28
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
MEET THE COHEN & STEERS FAMILY OF OPEN-END FUNDS:
<Table>
FOR TOTAL RETURN: FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
REALTY SHARES INSTITUTIONAL REALTY SHARES
DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL DESIGNED FOR INSTITUTIONAL INVESTORS SEEKING
RETURN, INVESTING PRIMARILY IN REITS MAXIMUM TOTAL RETURN, INVESTING PRIMARILY IN
SYMBOL: CSRSX REITS
SYMBOL: CSRIX
FOR HIGH CURRENT INCOME: FOR CAPITAL APPRECIATION:
COHEN & STEERS COHEN & STEERS
REALTY INCOME FUND REALTY FOCUS FUND
DESIGNED FOR INVESTORS SEEKING HIGH CURRENT DESIGNED FOR INVESTORS SEEKING MAXIMUM CAPITAL
INCOME, INVESTING PRIMARILY IN REITS APPRECIATION, INVESTING IN A LIMITED NUMBER OF
SYMBOLS: CSEIX, CSBIX, CSCIX, CSDIX REITS AND OTHER REAL ESTATE SECURITIES
SYMBOLS: CSFAX, CSFBX, CSFCX, CSSPX
FOR TOTAL RETURN: FOR TOTAL RETURN:
COHEN & STEERS COHEN & STEERS
INTERNATIONAL REALTY FUND UTILITY FUND
DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL DESIGNED FOR INVESTORS SEEKING MAXIMUM TOTAL
RETURN, INVESTING PRIMARILY IN INTERNATIONAL RETURN, INVESTING PRIMARILY IN UTILITIES
REAL ESTATE SECURITIES SYMBOLS: CSUAX, CSUBX, CSUCX, CSUIX
SYMBOLS: IRFAX, IRFCX, IRFIX
</Table>
FOR MORE INFORMATION ABOUT ANY COHEN & STEERS FUND
OR TO OBTAIN A PROSPECTUS PLEASE CONTACT US AT:
1-800-330-7348, OR VISIT OUR WEB SITE AT COHENANDSTEERS.COM
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF THE
FUND CAREFULLY BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER
INFORMATION ABOUT THE FUND.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
COHEN & STEERS SECURITIES, LLC, DISTRIBUTOR
- --------------------------------------------------------------------------------
29
<Page>
- --------------------------------------------------------------------------------
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
<Table>
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT ADVISOR
Director and co-chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and co-chairman (212) 832-3232
Bonnie Cohen SUBADVISOR
Director Houlihan Rovers SA
166 Choussee de la Hulpe
George Grossman 1170 Brussels, Belgium
Director
FUND SUBADMINISTRATOR AND CUSTODIAN
Richard E. Kroon State Street Bank and Trust Company
Director 225 Franklin Street
Boston, MA 02110
Richard J. Norman
Director TRANSFER AGENT
Boston Financial Data Services, Inc.
Frank K. Ross 66 Brooks Drive
Director Braintree, MA 02184
(800) 437-9912
Willard H. Smith Jr.
Director LEGAL COUNSEL
Simpson Thacher & Bartlett LLP
C. Edward Ward, Jr. 425 Lexington Avenue
Director New York, NY 10017
Adam M. Derechin DISTRIBUTOR
President and chief executive officer Cohen & Steers Securities, LLC
757 Third Avenue
Joseph M. Harvey New York, NY 10017
Vice president
Nasdaq Symbol: Class A -- IRFAX
James S. Corl Class C -- IRFCX
Vice president Class I -- IRFIX
Lawrence B. Stoller
Secretary Web site: cohenandsteers.com
Jay J. Chen This report is authorized for delivery
Treasurer only to shareholders of Cohen & Steers
International Realty Fund, Inc. unless
John E. McLean accompanied or preceded by the
Chief compliance officer and assistant secretary delivery of a currently effective
prospectus setting forth details of
the fund. Past performance is of
course no guarantee of future results
and your investment may be worth more
or less at the time you sell.
</Table>
- --------------------------------------------------------------------------------
30
<Page>
COHEN & STEERS
INTERNATIONAL REALTY FUND
- -------------------------------
SEMIANNUAL REPORT
JUNE 30, 2005
COHEN & STEERS
INTERNATIONAL REALTY FUND
757 THIRD AVENUE
NEW YORK, NY 10017
<Page>
Item 2. Code of Ethics.
Not applicable.
Item 3. Audit Committee Financial Expert.
Not applicable.
Item 4. Principal Accountant Fees and Services.
Not applicable.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
Included in Item 1 above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
None.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial officer
have concluded, based upon their evaluation of the registrant's disclosure
controls and procedures as conducted
<Page>
within 90 days of the filing date of this report, that these disclosure controls
and procedures provide reasonable assurance that material information required
to be disclosed by the registrant in the report it files or submits on Form
N-CSR is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms and that
such material information is accumulated and communicated to the registrant's
management, including its principal executive officer and principal financial
officer, as appropriate, in order to allow timely decisions regarding required
disclosure.
(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 has materially affected, or is 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.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
COHEN & STEERS INTERNATIONAL REALTY FUND, INC.
By: /s/ Adam M. Derechin
-------------------------------
Name: Adam M. Derechin
Title: President and Chief Executive Officer
Date: August 25, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Adam M. Derechin
-------------------------------
Name: Adam M. Derechin
Title: President and Chief Executive Officer
(principal executive officer)
By: /s/ Jay J. Chen
----------------------------------------
Name: Jay J. Chen
Title: Treasurer
(principal financial officer)
Date: August 25, 2005
STATEMENT OF DIFFERENCES
------------------------
The section symbol shall be expressed as ................................ 'SS'
The division sign shall be expressed as ................................. [div]