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

811-21326

 

Cohen & Steers REIT and Preferred Income Fund, Inc.

(Exact name of registrant as specified in charter)

 

280 Park Avenue, New York, NY

 

10017

(Address of principal executive offices)

 

(Zip code)

 

Tina M. Payne

Cohen & Steers Capital Management, Inc.

280 Park Avenue

New York, New York 10017

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(212) 832-3232

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

December 31, 2015

 

 



 

Item 1. Reports to Stockholders.

 


 


COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

To Our Shareholders:

We would like to share with you our report for the year ended December 31, 2015. The net asset value (NAV) at that date was $21.63 per common share. The Fund's common stock is traded on the New York Stock Exchange (NYSE) and its share price can differ from its NAV; at year end, the Fund's closing price on the NYSE was $18.44.

The total returns, including income, for the Fund and its comparative benchmarks were:

  Six Months Ended
December 31, 2015
  Year Ended
December 31, 2015
 
Cohen & Steers REIT and Preferred
Income Fund at NAVa
   

10.10

%

   

8.45

%

 
Cohen & Steers REIT and Preferred
Income Fund at Market Valuea
   

9.86

%

   

5.26

%

 
FTSE NAREIT Equity REIT Indexb    

9.40

%

   

3.20

%

 
BofA Merrill Lynch Fixed-Rate Preferred
Securities Indexb
   

5.25

%

   

7.58

%

 
Blended Benchmark—50% FTSE NAREIT
Equity REIT Index/50% BofA Merrill Lynch
Fixed-Rate Preferred Securities Indexb
   

7.41

%

   

5.58

%

 
S&P 500 Indexb    

0.15

%

   

1.38

%

 

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 sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effects of leverage, resulting from borrowings under a credit agreement. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. The Fund's returns assume the reinvestment of all dividends and distributions at prices obtained under the Fund's dividend reinvestment plan. 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.

a  As a closed-end investment company, the price of the Fund's NYSE-traded shares will be set by market forces and can deviate from the NAV per share of the Fund.

b  The FTSE NAREIT Equity REIT Index contains all tax-qualified REITs except timber and infrastructure REITs with more than 50% of total assets in qualifying real estate assets other than mortgages secured by real property that also meet minimum size and liquidity criteria. The BofA Merrill Lynch Fixed-Rate Preferred Securities Index tracks the performance of fixed-rate U.S. dollar-denominated preferred securities issued in the U.S. domestic market. 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. Benchmark returns are shown for comparative purposes only and may not be representative of the Fund's portfolio. The Fund's benchmarks do not include below-investment grade securities.


1



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

The Fund makes regular quarterly 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

The year was a challenging period for equities, as investors reacted to signs of economic deceleration in China, falling commodity prices and slowing global growth generally. In the U.S. the prospect for an interest-rate hike by the Federal Reserve (the Fed) occasionally upset markets although when the Fed finally raised rates off of near-zero in December by 0.25%, investors seemed to take it in stride. The Fed's unanimous vote was based on steady U.S. economic growth and low unemployment, but showed concern for low inflation and the impact of the strong dollar on exports and manufacturing.

In this environment, U.S. REITs, which have a strong domestic orientation, had a positive total return and outperformed the broader U.S. market, aided by continued strength in real estate fundamentals. Throughout the year, REITs generally exceeded or met the market's high earnings expectations, and many raised their guidance. Meanwhile, acquisition activity continued to confirm high property valuation levels, also helping REIT shares recover from their mid-year lows.

Preferred Securities Also Advanced

Preferred securities had positive returns in 2015. Preferreds, which generally offer the highest income rates in the investment-grade universe, outperformed Treasuries and corporate bonds by wide margins. They were even stronger compared with high-yield debt, reflecting preferreds' relative insulation from the weakness in commodities, energy and other cyclical sectors that weighed on high yield in the period. By contrast, the preferreds universe is heavily represented by issues from banks and insurance companies, which generally have relatively little direct exposure to energy and materials companies.

Fund Performance

The Fund had a positive total return in the year and outperformed its blended benchmark on an NAV basis but underperformed based on market price. Our overweight and stock selection in the apartment sector contributed positively to relative performance. Apartment landlords were one of the top-performing property sectors in the year, overcoming concerns about rising supply as household formation continued to support demand.

The Fund's overweight in self storage REITs, which likewise had sizable share-price gains, also aided performance. Demand for self storage has continued to outstrip very limited new supply, driving strong same-store sales growth for these companies.


2



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

Stock selection in the regional mall sector was a positive contributor as well, reflecting our preference for owners of high-quality properties. In an uncertain retail environment, companies focused on Class A properties and outlet centers in desirable locations advanced, while landlords that predominately operate Class B malls had significant declines.

Our underweight in the hotel sector also helped performance, as it was the poorest-performing property type in the period. Hotels struggled amid moderating economic growth in the U.S. and abroad, with a strong dollar also dampening demand due to slowing tourism. Rising supply in certain large markets also weighed on returns. Factors that detracted from relative performance included stock selection in the industrial and shopping center sectors.

The Fund's allocation to preferred securities had a good absolute total return, although it underperformed the broad preferreds universe as measured by the BofA Merrill Lynch Fixed-Rate Preferred Securities Index. Favorable security selection in the brokerage sector was more than countered by underperformance among our insurance, utilities and real estate issues on a total-return basis.

Impact of Derivatives on Fund Performance

The Fund used derivatives in the form of options with the intention of enhancing total returns and reducing overall volatility, as well as forward foreign currency exchange contracts for managing currency risk on certain Fund positions denominated in foreign currencies. These contracts did not have a material effect on the Fund's total return during the 12-month period ended December 31, 2015.

Impact of Leverage on Fund Performance

The Fund employs leverage as part of a yield-enhancement strategy. Leverage, which can increase total return in rising markets (just as it can have the opposite effect in declining markets), significantly contributed to the Fund's performance for the 12-month period ended December 31, 2015.


3



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

Sincerely,

       

 

 
       

ROBERT H. STEERS

 

JOSEPH M. HARVEY

 
       

Chairman

 

Portfolio Manager

 
       

 

 
       

WILLIAM F. SCAPELL

 

THOMAS N. BOHJALIAN

 
       

Portfolio Manager

 

Portfolio Manager

 

  

  JASON YABLON

  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.


4



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

Our Leverage Strategy
(Unaudited)

Our current leverage strategy utilizes borrowings up to the maximum permitted by the Investment Company Act of 1940 to provide additional capital for the Fund, with an objective of increasing net income available for shareholders. As of December 31, 2015, leverage represented 25% of the Fund's managed assets.

Through a combination of variable and fixed rate financing, the Fund has locked in interest rates on a significant portion of this additional capital for periods expiring in 2017, 2018 and 2019c (where we effectively reduce our variable rate obligation and lock in our fixed rate obligation over various terms). Locking in a significant portion of our leveraging costs is designed to protect the dividend-paying ability of the Fund. The use of leverage increases the volatility of the Fund's net asset value in both up and down markets. However, we believe that locking in portions of the Fund's leveraging costs for the various terms partially protects the Fund's expenses from an increase in short-term interest rates.

Leverage Factsa,b

Leverage (as a % of managed assets)

  25%  
% Fixed Rate   85%  
% Variable Rate   15%  

Weighted Average Rate on Financing

  1.9%c  
Weighted Average Term on Financing   5.3 yearsc  

The Fund seeks to enhance its dividend yield through leverage. The use of leverage is a speculative technique and there are special risks and costs associated with leverage. The net asset value of the Fund's shares may be reduced by the issuance and ongoing costs of leverage. So long as the Fund is able to invest in securities that produce an investment yield that is greater than the total cost of leverage, the leverage strategy will produce higher current net investment income for shareholders. On the other hand, to the extent that the total cost of leverage exceeds the incremental income gained from employing such leverage, shareholders would realize lower net investment income. In addition to the impact on net income, the use of leverage will have an effect of magnifying capital appreciation or depreciation for shareholders. Specifically, in an up market, leverage will typically generate greater capital appreciation than if the Fund were not employing leverage. Conversely, in down markets, the use of leverage will generally result in greater capital depreciation than if the Fund had been unlevered. To the extent that the Fund is required or elects to reduce its leverage, the Fund may need to liquidate investments, including under adverse economic conditions which may result in capital losses potentially reducing returns to shareholders. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.

a  Data as of December 31, 2015. Information is subject to change.

b  See Note 7 in Notes to Financial Statements.

c  On February 24, 2015, the Fund amended its credit agreement to extend the fixed rate financing terms by three years expiring in 2020, 2021 and 2022. The weighted average rate on financing does not include the three year extension and will increase as the extended fixed-rate tranches become effective. The weighted average term on financing includes the three year extension.


5



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

December 31, 2015
Top Ten Holdingsa
(Unaudited)

Security

 

Value

  % of
Managed
Assets
 

Simon Property Group

 

$

68,550,016

     

5.0

   

Equity Residential

   

44,174,376

     

3.2

   

Extra Space Storage

   

38,516,808

     

2.8

   

Vornado Realty Trust

   

36,872,945

     

2.7

   

SL Green Realty Corp.

   

28,465,424

     

2.1

   

Essex Property Trust

   

25,716,943

     

1.9

   

UDR

   

25,289,569

     

1.8

   

Host Hotels & Resorts

   

24,601,433

     

1.8

   

Omega Healthcare Investors

   

24,122,558

     

1.7

   

Equinix

   

23,947,359

     

1.7

   

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 Managed Assets)
(Unaudited)


6




COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS

December 31, 2015

        Number
of Shares
 

Value

 

COMMON STOCK—REAL ESTATE

 

65.6%

                 

DIVERSIFIED

 

4.4%

                 

American Assets Trusta

       

214,357

   

$

8,220,591

   

Vornado Realty Trusta,b

       

368,877

     

36,872,945

   
             

45,093,536

   

HEALTH CARE

 

6.3%

                 

HCPa

       

400,847

     

15,328,389

   

Healthcare Trust of America, Class Aa,b

       

549,593

     

14,822,523

   

Omega Healthcare Investorsa,b

       

689,610

     

24,122,558

   

Physicians Realty Trusta

       

611,314

     

10,306,754

   
             

64,580,224

   

HOTEL

 

3.5%

                 

Host Hotels & Resortsa,b

       

1,603,744

     

24,601,433

   

Sunstone Hotel Investorsa,b

       

919,017

     

11,478,522

   
             

36,079,955

   

OFFICE

 

6.3%

                 

Douglas Emmetta,b

       

308,082

     

9,605,997

   

Kilroy Realty Corp.a,b

       

296,048

     

18,733,917

   

PS Business Parks

       

90,942

     

7,951,059

   

SL Green Realty Corp.a,b

       

251,951

     

28,465,424

   
             

64,756,397

   

RESIDENTIAL

 

14.3%

                 

APARTMENT

 

12.9%

                 

Apartment Investment & Management Co.a,b

       

386,748

     

15,481,523

   

Equity Residentiala,b

       

541,419

     

44,174,376

   

Essex Property Trusta,b

       

107,418

     

25,716,943

   

Mid-America Apartment Communitiesa

       

167,228

     

15,185,975

   

Starwood Waypoint Residential Trusta,b

       

306,079

     

6,929,629

   

UDRa,b

       

673,132

     

25,289,569

   
             

132,778,015

   

MANUFACTURED HOME

 

1.4%

                 

Sun Communitiesa

       

213,633

     

14,640,269

   

TOTAL RESIDENTIAL

           

147,418,284

   

See accompanying notes to financial statements.
7



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

SELF STORAGE

 

6.9%

                 

CubeSmarta,b

       

770,854

   

$

23,603,550

   

Extra Space Storagea,b

       

436,649

     

38,516,808

   

Sovran Self Storagea,b

       

83,299

     

8,938,816

   
             

71,059,174

   

SHOPPING CENTERS

 

19.3%

                 

COMMUNITY CENTER

 

5.7%

                 

DDR Corp.a,b

       

949,842

     

15,995,339

   

Ramco-Gershenson Properties Trusta,b

       

557,383

     

9,258,132

   

Regency Centers Corp.a,b

       

317,295

     

21,614,135

   

Retail Properties of America, Class Aa,b

       

836,509

     

12,355,238

   
             

59,222,844

   

FREE STANDING

 

2.9%

                 

National Retail Propertiesa

       

409,272

     

16,391,344

   

Spirit Realty Capitala

       

1,299,599

     

13,021,982

   
             

29,413,326

   

REGIONAL MALL

 

10.7%

                 

General Growth Propertiesa,b

       

731,479

     

19,903,544

   

Macerich Co. (The)a,c

       

162,713

     

13,129,312

   

Pennsylvania REIT

       

377,207

     

8,249,517

   

Simon Property Groupa,b

       

352,551

     

68,550,016

   
             

109,832,389

   

TOTAL SHOPPING CENTERS

           

198,468,559

   

SPECIALTY

 

4.6%

                 

CyrusOnea

       

258,025

     

9,663,036

   

Equinixa,b

       

79,191

     

23,947,359

   

Four Corners Property Trustd

       

11,026

     

266,388

   

QTS Realty Trust, Class Aa,b

       

305,320

     

13,772,985

   
             

47,649,768

   
TOTAL COMMON STOCK
(Identified cost—$488,216,675)
           

675,105,897

   

See accompanying notes to financial statements.
8



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

PREFERRED SECURITIES—$25 PAR VALUE

 

26.6%

                 

BANKS

 

6.2%

                 

Bank of America Corp., 6.50%, Series Ya

       

359,600

   

$

9,608,512

   

BB&T Corp., 5.20%, Series F

       

99,981

     

2,509,523

   

Capital One Financial Corp., 6.25%, Series Ca

       

27,584

     

727,666

   

Citigroup, 6.875%, Series Ka

       

83,974

     

2,339,516

   

Farm Credit Bank of Texas, 6.75%, 144Aa,e

       

63,000

     

6,575,625

   

Fifth Third Bancorp, 6.625%, Series Ia

       

155,465

     

4,492,938

   

First Republic Bank, 5.50%

       

54,276

     

1,363,413

   
GMAC Capital Trust I, 8.125%, due 2/15/40,
Series II (TruPS)
       

164,847

     

4,180,520

   

JPMorgan Chase & Co., 5.50%, Series O

       

125,034

     

3,163,235

   

JPMorgan Chase & Co., 6.125%, Series Y

       

130,000

     

3,395,600

   

PNC Financial Services Group, 6.125%, Series Pa

       

122,500

     

3,496,150

   

Regions Financial Corp., 6.375%, Series B

       

209,686

     

5,688,781

   

SunTrust Banks, 5.875%, Series E

       

90,014

     

2,330,462

   

US Bancorp, 6.50%, Series Fa

       

78,991

     

2,267,042

   

Wells Fargo & Co., 5.85%a

       

270,142

     

7,056,109

   

Wells Fargo & Co., 6.625%

       

46,774

     

1,343,817

   

Zions Bancorp, 7.90%, Series Fa

       

95,656

     

2,561,668

   

Zions Bancorp, 6.30%, Series G

       

45,086

     

1,178,052

   
             

64,278,629

   

BANKS—FOREIGN

 

1.9%

                 
Barclays Bank PLC, 7.75%, Series IV
(United Kingdom)
       

100,000

     

2,635,000

   
Barclays Bank PLC, 8.125%, Series V
(United Kingdom)a
       

250,000

     

6,632,500

   

Deutsche Bank Contingent Capital Trust III, 7.60%

       

121,716

     

3,218,171

   
National Westminster Bank PLC, 7.763%, Series C
(United Kingdom)a
       

172,192

     

4,459,773

   
RBS Capital Funding Trust VII, 6.08%, Series G
(United Kingdom)
       

87,542

     

2,182,422

   
             

19,127,866

   

ELECTRIC

 

1.3%

                 

INTEGRATED ELECTRIC

 

0.4%

                 

Integrys Energy Group, 6.00%, due 8/1/73f

       

162,977

     

4,211,945

   

See accompanying notes to financial statements.
9



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

REGULATED ELECTRIC

 

0.9%

                 

Southern Co./The, 6.25%, due 10/15/75

       

330,000

   

$

8,873,700

   

TOTAL ELECTRIC

           

13,085,645

   

FINANCIAL—INVESTMENT BANKER/BROKER

 

1.6%

                 

Morgan Stanley, 6.875%a

       

316,012

     

8,769,333

   

Morgan Stanley, 6.375%, Series I

       

303,517

     

8,055,341

   
             

16,824,674

   

FOOD

 

0.6%

                 
Dairy Farmers of America, 7.875%, 144A
($100 Par Value)e
       

62,000

     

6,314,316

   

INDUSTRIALS—CHEMICALS

 

1.3%

                 

CHS, 6.75%a

       

190,453

     

5,106,045

   

CHS, 7.50%, Series 4

       

74,495

     

2,015,090

   

CHS, 7.10%, Series IIa

       

213,453

     

5,820,863

   
             

12,941,998

   

INSURANCE

 

4.6%

                 

LIFE/HEALTH INSURANCE—FOREIGN

 

0.1%

                 

Aegon NV, 6.50% (Netherlands)c

       

44,521

     

1,151,313

   

MULTI-LINE

 

2.1%

                 

American Financial Group, 5.75%, due 8/25/42

       

200,000

     

5,172,000

   

American Financial Group, 6.00%, due 11/15/55

       

99,000

     

2,541,330

   

American Financial Group, 6.25%, due 9/30/54

       

139,041

     

3,622,018

   
Hanover Insurance Group/The, 6.35%,
due 3/30/53
       

78,400

     

1,996,848

   
Hartford Financial Services Group, 7.875%,
due 4/15/42a
       

133,052

     

4,204,443

   

WR Berkley Corp., 5.625%, due 4/30/53a

       

159,845

     

4,063,260

   
             

21,599,899

   

MULTI-LINE—FOREIGN

 

1.0%

                 

ING Groep N.V., 7.05% (Netherlands)

       

149,060

     

3,866,616

   

PartnerRe Ltd., 6.50%, Series D (Bermuda)

       

64,770

     

1,764,983

   

PartnerRe Ltd., 7.25%, Series E (Bermuda)

       

167,275

     

4,779,047

   
             

10,410,646

   

See accompanying notes to financial statements.
10



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

REINSURANCE

 

0.3%

                 
Reinsurance Group of America, 6.20%,
due 9/15/42
       

108,573

   

$

3,152,960

   

REINSURANCE—FOREIGN

 

1.1%

                 
Aspen Insurance Holdings Ltd., 5.95%
(Bermuda)
       

114,309

     

2,948,029

   
Aspen Insurance Holdings Ltd., 7.25%
(Bermuda)
       

106,000

     

2,784,620

   
Axis Capital Holdings Ltd., 6.875%, Series C
(Bermuda)
       

55,284

     

1,482,717

   
Endurance Speciality Holdings Ltd., 6.35%,
Series C (Bermuda)
       

137,000

     

3,515,420

   
             

10,730,786

   

TOTAL INSURANCE

           

47,045,604

   

INTEGRATED TELECOMMUNICATIONS SERVICES

 

0.6%

                 

Qwest Corp., 6.875%, due 10/1/54

       

73,856

     

1,901,792

   

Qwest Corp., 7.00%, due 4/1/52

       

55,429

     

1,423,417

   

Qwest Corp., 7.375%, due 6/1/51

       

100,000

     

2,543,000

   
             

5,868,209

   

REAL ESTATE

 

7.6%

                 

DIVERSIFIED

 

2.0%

                 

Coresite Realty Corp., 7.25%, Series A

       

79,200

     

2,098,008

   
Lexington Realty Trust, 6.50%, Series C
($50 Par Value)a,b
       

76,536

     

3,635,460

   

National Retail Properties, 5.70%, Series E

       

73,266

     

1,817,730

   
NorthStar Realty Finance Corp., 8.50%,
Series D
       

119,300

     

2,743,900

   

VEREIT, 6.70%, Series Fa

       

323,710

     

7,963,266

   
Wells Fargo Real Estate Investment Corp., 6.375%,
Series A
       

102,536

     

2,683,367

   
             

20,941,731

   

FINANCE

 

0.2%

                 

iStar Financial, 7.80%, Series F

       

79,630

     

1,839,453

   

See accompanying notes to financial statements.
11



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

HOTEL

 

0.8%

                 

Hersha Hospitality Trust, 6.875%, Series C

       

134,345

   

$

3,377,433

   

Hospitality Properties Trust, 7.125%, Series D

       

107,050

     

2,767,243

   

Pebblebrook Hotel Trust, 7.875%, Series Aa,b

       

100,000

     

2,512,000

   
             

8,656,676

   

INDUSTRIALS

 

0.6%

                 

Gramercy Property Trust, 7.125%, Series A

       

151,270

     

3,781,750

   
Monmouth Real Estate Investment Corp., 7.875%,
Series B
       

87,500

     

2,273,250

   
             

6,055,000

   

OFFICE

 

0.3%

                 
Corporate Office Properties Trust, 7.375%,
Series La,b
       

100,000

     

2,571,000

   

RESIDENTIAL

 

0.6%

                 

APARTMENT

 

0.2%

                 

American Homes 4 Rent, 5.00%, Series A

       

79,685

     

2,047,905

   

MANUFACTURED HOME

 

0.4%

                 

Campus Crest Communities, 8.00%, Series A

       

87,939

     

2,365,559

   

Equity Lifestyle Properties, 6.75%, Series C

       

60,843

     

1,566,707

   
             

3,932,266

   

TOTAL RESIDENTIAL

           

5,980,171

   

SELF STORAGE

 

0.3%

                 

Public Storage, 5.375%, Series V

       

107,703

     

2,741,041

   

SHOPPING CENTERS

 

2.3%

                 

COMMUNITY CENTER

 

1.5%

                 

Cedar Realty Trust, 7.25%, Series Ba

       

219,000

     

5,409,300

   

DDR Corp., 6.50%, Series J

       

60,000

     

1,512,000

   

Inland Real Estate Corp., 8.125%, Series A

       

135,000

     

3,412,800

   

Inland Real Estate Corp., 6.95%, Series B

       

121,388

     

3,060,191

   

Saul Centers, 6.875%, Series C

       

84,140

     

2,200,261

   
             

15,594,552

   

REGIONAL MALL

 

0.8%

                 

CBL & Associates Properties, 7.375%, Series Da

       

324,982

     

8,218,795

   

TOTAL SHOPPING CENTERS

           

23,813,347

   

See accompanying notes to financial statements.
12



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

SPECIALTY

 

0.5%

                 

Digital Realty Trust, 7.375%, Series H

       

60,000

   

$

1,614,000

   

Digital Realty Trust, 6.35%, Series I

       

140,000

     

3,595,200

   
             

5,209,200

   

TOTAL REAL ESTATE

           

77,807,619

   

TRANSPORT—MARINE—FOREIGN

 

0.1%

                 

Seaspan Corp., 9.50%, Series C (Hong Kong)

       

60,786

     

1,518,434

   

UTILITIES

 

0.8%

                 

SCE Trust III, 5.75%

       

52,698

     

1,409,671

   

SCE Trust IV, 5.375%, Series J

       

272,000

     

7,387,520

   
             

8,797,191

   
TOTAL PREFERRED SECURITIES—$25 PAR VALUE
(Identified cost—$255,893,893)
           

273,610,185

   

PREFERRED SECURITIES—CAPITAL SECURITIES

 

39.1%

                 

BANKS

 

11.3%

                 

AgriBank FCB, 6.875%

       

38,000

     

4,019,689

   

Bank of America Corp., 6.10%, Series AA

       

3,075,000

     

3,121,125

   

Bank of America Corp., 6.50%, Series Za

       

9,638,000

     

10,168,090

   

Citigroup, 5.875%, Series Oa

       

3,950,000

     

3,925,313

   

Citigroup, 5.95%, Series Q

       

3,000,000

     

2,993,541

   

Citigroup, 6.125%, Series R

       

2,806,000

     

2,865,628

   

Citigroup Capital III, 7.625%, due 12/1/36a

       

4,700,000

     

5,759,972

   

Citizens Financial Group, 5.50%, 144Ae

       

1,400,000

     

1,381,800

   

CoBank ACB, 6.25%, 144Aa,e

       

33,000

     

3,404,158

   

CoBank ACB, 6.125%, Series Ga

       

46,500

     

4,215,518

   

Farm Credit Bank of Texas, 10.00%, Series Ia

       

6,000

     

7,408,125

   

Goldman Sachs Capital I, 6.345%, due 2/15/34a,b

       

2,100,000

     

2,463,718

   

Goldman Sachs Capital II, 4.00%, (FRN)a

       

3,340,000

     

2,363,050

   
Huntington Bancshares, 8.50%, Series A
(Convertible)a
       

3,212

     

4,368,320

   

JPMorgan Chase & Co., 7.90%, Series Ia,b

       

11,000,000

     

11,211,750

   

JPMorgan Chase & Co., 6.75%, Series Sa

       

8,650,000

     

9,439,312

   

JPMorgan Chase & Co., 5.30%, Series Z

       

4,300,000

     

4,294,625

   

PNC Financial Services Group, 6.75%a

       

6,275,000

     

6,682,875

   

US Bancorp, 5.125%, Series I

       

3,033,000

     

3,051,046

   

Wells Fargo & Co., 7.98%, Series Ka

       

11,975,000

     

12,454,000

   

See accompanying notes to financial statements.
13



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

Wells Fargo & Co., 5.90%, Series S

       

2,255,000

   

$

2,280,369

   

Wells Fargo & Co., 5.875%, Series U

       

3,870,000

     

4,078,013

   

Zions Bancorp, 7.20%, Series J

       

3,997,000

     

4,281,786

   
             

116,231,823

   

BANKS—FOREIGN

 

11.9%

                 
Allied Irish Banks PLC, 7.375%, Series EMTN
(EUR) (Ireland)
       

5,000,000

     

5,518,651

   
Banco Bilbao Vizcaya Argentaria SA, 9.00%
(Spain)
       

3,200,000

     

3,437,027

   
Barclays Bank PLC, 7.625%, due 11/21/22
(United Kingdom)a
       

3,375,000

     

3,849,609

   
Barclays Bank PLC, 6.86%, 144A
(United Kingdom)a,e
       

4,300,000

     

4,912,750

   

Barclays PLC, 7.875% (GBP) (United Kingdom)

       

1,000,000

     

1,477,137

   

Barclays PLC, 8.00% (EUR) (United Kingdom)

       

2,050,000

     

2,421,826

   

Barclays PLC, 8.25% (United Kingdom)a

       

5,320,000

     

5,682,271

   

BNP Paribas, 7.195%, 144A (France)a,e

       

3,300,000

     

3,778,500

   

BNP Paribas, 7.375%, 144A (France)e

       

8,200,000

     

8,425,500

   
Credit Suisse Group AG, 7.50%, 144A
(Switzerland)a,e
       

4,005,000

     

4,222,536

   
Dresdner Funding Trust I, 8.151%, due 6/30/31,
144A (Germany)a,b,e
       

7,235,906

     

8,863,985

   
HBOS Capital Funding LP, 6.85%
(United Kingdom)
       

3,300,000

     

3,349,708

   
HSBC Capital Funding LP, 10.176%, 144A
(United Kingdom)e
       

8,442,000

     

12,705,210

   

HSBC Holdings PLC, 6.375% (United Kingdom)a,b

       

7,400,000

     

7,409,250

   

Intesa Sanpaolo SpA, 7.70%, 144A (Italy)e

       

3,600,000

     

3,673,728

   
Lloyds Banking Group PLC, 7.50%
(United Kingdom)a
       

7,366,000

     

7,863,205

   
Nationwide Building Society, 10.25% (GBP)
(United Kingdom)
       

4,790,000

     

9,147,220

   
Rabobank Nederland, 11.00%, 144A
(Netherlands)a,e
       

5,800,000

     

7,181,850

   
Royal Bank of Scotland Group PLC, 7.50%
(United Kingdom)
       

2,500,000

     

2,609,375

   

See accompanying notes to financial statements.
14



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 
Royal Bank of Scotland Group PLC, 7.648%
(United Kingdom)a
       

5,691,000

   

$

7,078,181

   
Royal Bank of Scotland Group PLC, 8.00%
(United Kingdom)
       

1,500,000

     

1,590,000

   
Standard Chartered PLC, 7.014%, 144A
(United Kingdom)a,b,e
       

2,250,000

     

2,427,187

   

UBS AG, 7.625%, due 8/17/22 (Switzerland)a,b

       

1,750,000

     

1,997,634

   

UBS Group AG, 7.125% (Switzerland)

       

3,000,000

     

3,150,000

   
             

122,772,340

   

FINANCIAL—DIVERSIFIED FINANCIAL SERVICES

 

0.6%

                 
Depository Trust & Clearing Corp/The, 4.875%,
Series C, 144Ae
       

3,000,000

     

2,985,000

   

State Street Corp., 5.25%, Series F

       

3,005,000

     

3,023,781

   
             

6,008,781

   

FOOD

 

0.7%

                 

Dairy Farmers of America, 7.875%, 144Ae,g

       

68,100

     

7,165,400

   

INDUSTRIALS—DIVERSIFIED MANUFACTURING

 

2.0%

                 

General Electric Co., 4.00%, Series A

       

13,579,500

     

13,596,474

   

General Electric Co., 4.10%, Series B

       

6,632,080

     

6,623,790

   
             

20,220,264

   

INSURANCE

 

10.5%

                 

LIFE/HEALTH INSURANCE

 

2.7%

                 

MetLife, 5.25%, Series C

       

5,602,000

     

5,714,040

   
MetLife Capital Trust X, 9.25%, due 4/8/68,
144Aa,e
       

8,065,000

     

11,149,862

   

Principal Financial Group, 4.70%, due 5/15/55

       

4,100,000

     

4,085,650

   

Prudential Financial, 5.375%, due 5/15/45

       

2,136,000

     

2,136,000

   

Prudential Financial, 5.625%, due 6/15/43

       

4,550,000

     

4,663,750

   
             

27,749,302

   

LIFE/HEALTH INSURANCE—FOREIGN

 

2.8%

                 
Dai-ichi Life Insurance Co. Ltd., 5.10%, 144A
(Japan)e
       

3,400,000

     

3,553,000

   
Demeter BV (Swiss Re Ltd.), 5.75%, due 8/15/50
(Netherlands)
       

2,400,000

     

2,401,920

   

La Mondiale Vie, 7.625% (France)

       

5,700,000

     

6,145,256

   

See accompanying notes to financial statements.
15



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 
Meiji Yasuda Life Insurance Co., 5.20%,
due 10/20/45, 144A (Japan)e
       

9,350,000

   

$

9,643,889

   
Nippon Life Insurance Co., 5.10%,
due 10/16/44, 144A (Japan)e
       

2,200,000

     

2,310,000

   
Sumitomo Life Insurance Co., 6.50%,
due 9/20/73, 144A (Japan)a,e
       

3,800,000

     

4,254,100

   
             

28,308,165

   

MULTI-LINE

 

0.8%

                 
American International Group, 8.175%,
due 5/15/68, (FRN)a
       

2,723,000

     

3,587,553

   

MetLife, 10.75%, due 8/1/69a

       

3,000,000

     

4,706,250

   
             

8,293,803

   

MULTI-LINE—FOREIGN

 

0.8%

                 

Aviva PLC, 8.25% (United Kingdom)

       

2,700,000

     

2,943,132

   

AXA SA, 8.60%, due 12/15/30 (France)a

       

1,800,000

     

2,427,748

   

AXA SA, 6.463%, 144A (France)a,b,e

       

3,250,000

     

3,337,750

   
             

8,708,630

   

PROPERTY CASUALTY

 

0.7%

                 
Liberty Mutual Group, 7.80%, due 3/7/87,
144Aa,e
       

6,150,000

     

7,026,375

   

PROPERTY CASUALTY—FOREIGN

 

2.1%

                 
Atradius Finance BV, 5.25%, due 9/23/44
(EUR) (Netherlands)
       

2,200,000

     

2,146,517

   
Mitsui Sumitomo Insurance Co., Ltd., 7.00%,
due 3/15/72, 144A (Japan)a,e
       

3,250,000

     

3,814,687

   
QBE Capital Funding III Ltd., 7.25%,
due 5/24/41, 144A (Australia)a,e
       

3,800,000

     

4,199,156

   
QBE Insurance Group Ltd., 6.75%,
due 12/2/44 (Australia)
       

6,003,000

     

6,288,142

   
RL Finance Bonds No. 3 PLC, 6.125%,
due 11/13/28 (GBP) (United Kingdom)
       

3,200,000

     

4,807,902

   
             

21,256,404

   

See accompanying notes to financial statements.
16



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

REINSURANCE—FOREIGN

 

0.6%

                 
Aquarius + Investments PLC, 8.25%
(Switzerland)
       

6,000,000

   

$

6,544,500

   

TOTAL INSURANCE

           

107,887,179

   

INTEGRATED TELECOMMUNICATIONS SERVICES

 

0.7%

                 
Centaur Funding Corp., 9.08%, due 4/21/20,
144A (Cayman Islands)a,e
       

6,254

     

7,528,253

   

UTILITIES

 

1.4%

                 

ELECTRIC UTILITIES

 

0.4%

                 
NextEra Energy Capital Holdings, 7.30%,
due 9/1/67, Series Da,b
       

4,107,000

     

3,935,327

   

ELECTRIC UTILITIES—FOREIGN

 

0.8%

                 

Enel SpA, 8.75%, due 9/24/73, 144A (Italy)a,e

       

7,010,000

     

8,000,163

   

MULTI-UTILITIES

 

0.2%

                 

Dominion Resources, 5.75%, due 10/1/54a

       

2,426,000

     

2,383,060

   

TOTAL UTILITIES

           

14,318,550

   
TOTAL PREFERRED SECURITIES—CAPITAL SECURITIES
(Identified cost—$367,285,989)
           

402,132,590

   
        Principal
Amount
     
CORPORATE BONDS—INTEGRATED
TELECOMMUNICATIONS SERVICES
 

0.8%

                 

Embarq Corp., 7.995%, due 6/1/36

     

$

3,210,000

     

3,314,326

   
Frontier Communications Corp., 9.00%,
due 8/15/31a
       

5,660,000

     

4,782,700

   
TOTAL CORPORATE BONDS
(Identified cost—$8,910,071)
           

8,097,026

   

See accompanying notes to financial statements.
17



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

        Number
of Shares
 

Value

 

SHORT-TERM INVESTMENTS

   

0.5%

                   

MONEY MARKET FUNDS

             
State Street Institutional Treasury
Money Market Fund, 0.07%h
       

5,900,000

   

$

5,900,000

   
TOTAL SHORT-TERM INVESTMENTS
(Identified cost—$5,900,000)
           

5,900,000

   

TOTAL INVESTMENTS (Identified cost—$1,126,206,628)

   

132.6

%

           

1,364,845,698

   

WRITTEN OPTION CONTRACTS

   

0.0

             

(19,368

)

 

LIABILITIES IN EXCESS OF OTHER ASSETS

   

(32.6

)

           

(335,833,859

)

 
NET ASSETS (Equivalent to $21.63 per share
based on 47,566,736 shares of common
stock outstanding)
   

100.0

%

         

$

1,028,992,471

   
        Number of
Contracts
     

WRITTEN OPTION CONTRACTS

   

0.0%

                   
General Growth Properties, Put, USD
Strike Price 24, expires 1/15/16
       

1,614

     

(19,368

)

 
TOTAL WRITTEN OPTION CONTRACTS
(Premiums received—$72,629)
         

$

(19,368

)

 

Note: Percentages indicated are based on the net assets of the Fund.

a  All or a portion of the security is pledged as collateral in connection with the Fund's credit agreement. $705,324,477 in aggregate has been pledged as collateral.

b  A portion of the security has been rehypothecated in connection with the Fund's credit agreement. $320,888,147 in aggregate has been rehypothecated.

c  All or a portion of the security is pledged as collateral in connection with written option contracts. $961,311 in aggregate has been pledged as collateral.

d  Non-income producing security.

e  Resale is restricted to qualified institutional investors. Aggregate holdings equal 14.5% of the net assets of the Fund, of which 0.7% are illiquid.

f  A portion of the security is segregated as collateral for open forward foreign currency exchange contracts. $775,314 in aggregate has been segregated as collateral.

g  Illiquid security. Aggregate holdings equal 0.7% of the net assets of the Fund.

h  Rate quoted represents the annualized seven-day yield of the Fund.

See accompanying notes to financial statements.
18



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2015

Forward foreign currency exchange contracts outstanding at December 31, 2015 were as follows:

Counterparty

  Contracts to
Deliver
  In Exchange
For
  Settlement
Date
  Unrealized
Appreciation
(Depreciation)
 

Brown Brothers Harriman

 

EUR

5,239,205

   

USD

5,538,049

   

1/5/16

 

$

(155,656

)

 

Brown Brothers Harriman

 

EUR

4,043,561

   

USD

4,292,968

   

1/5/16

   

(101,371

)

 

Brown Brothers Harriman

 

GBP

10,322,355

   

USD

15,536,280

   

1/5/16

   

319,064

   

Brown Brothers Harriman

 

USD

15,217,216

   

GBP

10,322,355

   

1/5/16

   

0

a

 

Brown Brothers Harriman

 

USD

10,085,911

   

EUR

9,282,766

   

1/5/16

   

2,133

   

Brown Brothers Harriman

 

EUR

9,285,604

   

USD

10,094,529

   

2/2/16

   

(3,575

)

 

Brown Brothers Harriman

 

GBP

10,441,487

   

USD

15,392,245

   

2/2/16

   

(1,822

)

 
   

$

58,773

   

a  Amount is less than $1.

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

See accompanying notes to financial statements.
19




COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2015

ASSETS:

 

Investments in securities, at value (Identified cost—$1,126,206,628)

 

$

1,364,845,698

   

Cash

   

7,052,980

   

Foreign currency, at value (Identified cost—$451,343)

   

446,519

   

Receivable for:

 

Dividends and interest

   

9,736,226

   

Unrealized appreciation on forward foreign currency exchange contracts

   

321,197

   

Other assets

   

49,420

   

Total Assets

   

1,382,452,040

   

LIABILITIES:

 

Unrealized depreciation on forward foreign currency exchange contracts

   

262,424

   

Written option contracts, at value (Premiums received—$72,629)

   

19,368

   

Payable for:

 

Credit agreement

   

350,000,000

   

Investment securities purchased

   

1,383,170

   

Investment management fees

   

756,424

   

Dividends declared

   

722,603

   

Administration fees

   

63,535

   

Interest expense

   

36,750

   

Directors' fees

   

245

   

Other liabilities

   

215,050

   

Total Liabilities

   

353,459,569

   

NET ASSETS

 

$

1,028,992,471

   

NET ASSETS consist of:

 

Paid-in capital

 

$

802,134,535

   
Accumulated undistributed net investment income    

1,769,977

   

Accumulated net realized loss

   

(13,656,324

)

 
Net unrealized appreciation    

238,744,283

   
   

$

1,028,992,471

   

NET ASSET VALUE PER SHARE:

 

($1,028,992,471 ÷ 47,566,736 shares outstanding)

 

$

21.63

   

MARKET PRICE PER SHARE

 

$

18.44

   

MARKET PRICE DISCOUNT TO NET ASSET VALUE PER SHARE

   

(14.75

)%

 

See accompanying notes to financial statements.
20



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2015

Investment Income:

 

Dividend income

 

$

35,703,731

   

Interest income (net of $3,246 of foreign withholding tax)

   

24,634,995

   

Rehypothecation income

   

73,044

   
Total Investment Income    

60,411,770

   

Expenses:

 

Investment management fees

   

8,985,753

   

Interest expense

   

6,586,112

   

Administration fees

   

954,074

   

Shareholder reporting expenses

   

151,575

   

Custodian fees and expenses

   

140,103

   

Line of credit fees

   

125,521

   

Professional fees

   

104,551

   

Directors' fees and expenses

   

68,798

   

Transfer agent fees and expenses

   

21,162

   

Registration and filing fees

   

9,020

   

Miscellaneous

   

100,276

   

Total Expenses

   

17,246,945

   
Net Investment Income    

43,164,825

   

Net Realized and Unrealized Gain (Loss):

 

Net realized gain (loss) on:

 
Investments    

60,030,075

   

Written option contracts

   

(3,281,229

)

 

Foreign currency transactions

   

2,494,049

   
Net realized gain    

59,242,895

   

Net change in unrealized appreciation (depreciation) on:

 

Investments

   

(31,512,337

)

 

Written option contracts

   

122,518

   

Foreign currency translations

   

(402,224

)

 

Net change in unrealized appreciation (depreciation)

   

(31,792,043

)

 
Net realized and unrealized gain    

27,450,852

   

Net Increase in Net Assets Resulting from Operations

 

$

70,615,677

   

See accompanying notes to financial statements.
21



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS

    For the
Year Ended
December 31, 2015
  For the
Year Ended
December 31, 2014
 

Change in Net Assets:

 

From Operations:

 

Net investment income

 

$

43,164,825

   

$

46,069,917

   
Net realized gain    

59,242,895

     

95,626,490

   
Net change in unrealized appreciation
(depreciation)
   

(31,792,043

)

   

98,347,098

   
Net increase in net assets resulting
from operations
   

70,615,677

     

240,043,505

   
Dividends to Shareholders from Net
Investment Income
   

(70,488,885

)

   

(61,623,000

)

 

Capital Stock Transactions:

 
Decrease in net assets from Fund share
transactions
   

(3,824,582

)

   

   

Total increase (decrease) in net assets

   

(3,697,790

)

   

178,420,505

   

Net Assets:

 

Beginning of year

   

1,032,690,261

     

854,269,756

   

End of yeara

 

$

1,028,992,471

   

$

1,032,690,261

   

a  Includes accumulated undistributed net investment income of $1,769,977 and $2,459,875, respectively.

See accompanying notes to financial statements.
22



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2015

Increase in Cash:

 

Cash Flows from Operating Activities:

 

Net increase in net assets resulting from operations

 

$

70,615,677

   
Adjustments to reconcile net increase in net assets resulting from
operations to net cash provided by operating activities:
 

Purchases of long-term investments

   

(564,489,406

)

 

Net purchases, sales and maturities of short-term investments

   

(4,400,000

)

 

Net amortization of premium on Investments

   

595,297

   
Proceeds from sales and maturities of long-term investments    

606,740,496

   

Net increase in dividends and interest receivable and other assets

   

(251,658

)

 
Net increase in interest expense payable, accrued expenses and
other liabilities
   

4,288

   

Decrease in premiums received from written option contracts

   

(1,587,331

)

 

Net change in unrealized appreciation on written option contracts

   

(122,518

)

 
Net change in unrealized depreciation on investments    

31,512,337

   
Net change in unrealized depreciation on forward foreign currency
exchange contracts
   

435,561

   

Net realized gain on investments

   

(60,030,075

)

 

Cash provided by operating activities

   

79,022,668

   

Cash Flows from Financing Activities:

 

Decrease in net assets from Fund share transactions

   

(3,824,582

)

 

Dividends paid

   

(70,450,317

)

 

Cash used for financing activities

   

(74,274,899

)

 

Increase in cash

   

4,747,769

   

Cash at beginning of year

   

2,751,730

   

Cash at end of year (including foreign currency)

 

$

7,499,499

   

Supplemental Disclosure of Cash Flow Information:

During the year ended December 31, 2015, interest paid was $6,585,360.

See accompanying notes to financial statements.
23




COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

FINANCIAL HIGHLIGHTS

The following table includes selected data for a share outstanding throughout each year and other performance information derived from the financial statements. It should be read in conjunction with the financial statements and notes thereto.

   

For the Year Ended December 31,

 

Per Share Operating Performance:

 

2015

 

2014

 

2013

 

2012

 

2011

 

Net asset value, beginning of year

 

$

21.62

   

$

17.88

   

$

18.37

   

$

15.34

   

$

15.63

   

Income (loss) from investment operations:

 
Net investment income    

0.91

a

   

0.96

a

   

0.83

a

   

0.95

a

   

1.21

   
Net realized and unrealized gain (loss)    

0.57

     

4.07

b

   

(0.13

)c

   

3.28

     

(0.30

)

 

Total from investment operations

   

1.48

     

5.03

     

0.70

     

4.23

     

0.91

   

Less dividends to shareholders from:

 

Net investment income

   

(1.48

)

   

(1.29

)

   

(1.20

)

   

(1.20

)

   

(1.20

)

 

Total dividends to shareholders

   

(1.48

)

   

(1.29

)

   

(1.20

)

   

(1.20

)

   

(1.20

)

 
Anti-dilutive effect from the issuance of
reinvested shares
   

     

     

     

     

0.00

d

 
Anti-dilutive effect from the repurchase of
shares
   

0.01

     

     

0.01

     

     

   

Net increase (decrease) in net asset value

   

0.01

     

3.74

     

(0.49

)

   

3.03

     

(0.29

)

 

Net asset value, end of year

 

$

21.63

   

$

21.62

   

$

17.88

   

$

18.37

   

$

15.34

   

Market value, end of year

 

$

18.44

   

$

18.99

   

$

15.70

   

$

16.99

   

$

14.15

   

Total net asset value returne

   

8.45

%

   

29.87

%

   

4.48

%

   

28.45

%

   

6.46

%

 

Total market value returne

   

5.26

%

   

29.91

%

   

–0.80

%

   

28.79

%

   

7.41

%

 

See accompanying notes to financial statements.
24



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

FINANCIAL HIGHLIGHTS—(Continued)

   

For the Year Ended December 31,

 

Ratios/Supplemental Data:

 

2015

 

2014

 

2013

 

2012

 

2011

 

Net assets, end of year (in millions)

 

$

1,029.0

   

$

1,032.7

   

$

854.3

   

$

883.1

   

$

737.7

   

Ratio of expenses to average daily net assets

   

1.67

%

   

1.71

%

   

1.82

%

   

1.63

%

   

1.72

%

 
Ratio of expenses to average daily net assets
(excluding interest expense)
   

1.03

%

   

1.03

%

   

1.10

%

   

1.10

%

   

1.13

%

 
Ratio of net investment income to average daily
net assets
   

4.18

%

   

4.76

%

   

4.38

%

   

5.45

%

   

5.62

%

 
Ratio of expenses to average daily managed
assetsf
   

1.25

%

   

1.26

%

   

1.31

%

   

1.15

%

   

1.18

%

 

Portfolio turnover rate

   

42

%

   

54

%

   

51

%

   

49

%

   

52

%

 

Credit Agreement

 

Asset coverage ratio for credit agreement

   

394

%

   

395

%

   

344

%

   

352

%

   

311

%

 
Asset coverage per $1,000 for credit
agreement
 

$

3,940

   

$

3,951

   

$

3,441

   

$

3,523

   

$

3,108

   

a  Calculation based on average shares outstanding.

b  Includes gains resulting from class action litigation payments on securities owned in prior years. Without these gains, the net realized and unrealized gains (losses) on investments per share would have been $3.99 and the total return on an NAV basis would have been 29.58%.

c  Includes gains resulting from class action litigation payments on securities owned in prior years. Without these gains, the net realized and unrealized gains (losses) on investments per share would have been $(0.17) and the total return on an net asset value (NAV) basis would have been 4.33%.

d  Amount is less than $0.005.

e  Total net asset value return measures the change in net asset value per share over the period indicated. Total market value return is computed based upon the Fund's NYSE market price per share and excludes the effects of brokerage commissions. Dividends and distributions are assumed, for purposes of these calculations, to be reinvested at prices obtained under the Fund's dividend reinvestment plan.

f  Average daily managed assets represent net assets plus the outstanding balance of the credit agreement.

See accompanying notes to financial statements.
25




COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1. Organization and Significant Accounting Policies

Cohen & Steers REIT and Preferred Income Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on March 25, 2003 and is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, closed-end management investment company. The Fund's investment objective is high current income.

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The Fund is an investment company and, accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 946—Investment Companies. The accounting policies of the Fund are in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Portfolio Valuation: Investments in securities that are listed on the 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. Exchange-traded options are valued at their last sale price as of the close of options trading on applicable exchanges on the valuation date. In the absence of a last sale price on such day, options are valued at the average of the quoted bid and ask prices as of the close of business. Over-the-counter options are valued based upon prices provided by the respective counterparty. Forward 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 Cohen & Steers Capital Management, Inc. (the investment manager) 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 manager, 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,


26



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

the pricing services or broker-dealers may utilize a market-based approach through which quotes from market makers are used to determine fair 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 manager, subject to the oversight of the Board of Directors. The investment manager 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 manager 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


27



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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.

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. As of December 31, 2015, there was a transfer of $4,211,945 from Level 1 to Level 2, which resulted from a change in the use of a quoted price to an evaluated mean price, supplied by an independent pricing service, for one security.

The following is a summary of the inputs used as of December 31, 2015 in valuing the Fund's investments carried at value:

    Total   Quoted Prices
In Active
Markets for
Identical
Investments
(Level 1)
  Other
Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

Common Stock

 

$

675,105,897

   

$

675,105,897

   

$

   

$

   
Preferred Securities—
$25 Par Value:
 

Banks

   

64,278,629

     

57,703,004

     

6,575,625

     

   
Electric-Integrated
Electric
   

4,211,945

     

     

4,211,945

     

   

Food

   

6,314,316

     

     

6,314,316

     

   

Other Industries

   

198,805,295

     

198,805,295

     

     

   
Preferred Securities—
Capital Securities:
 

Banks

   

116,231,823

     

4,368,320

     

107,647,985

     

4,215,518

   

Food

   

7,165,400

     

     

     

7,165,400

   

Other Industries

   

278,735,367

     

     

278,735,367

     

   

Corporate Bonds

   

8,097,026

     

     

8,097,026

     

   

Short-Term Investments

   

5,900,000

     

     

5,900,000

     

   

Total Investmentsa

 

$

1,364,845,698

   

$

935,982,516

   

$

417,482,264

   

$

11,380,918

b

 


28



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

    Total   Quoted Prices
In Active
Markets for
Identical
Investments
(Level 1)
  Other
Significant
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 
Forward foreign currency
exchange contracts
 

$

321,197

   

$

   

$

321,197

   

$

   
Total Appreciation in
Other Financial
Instrumentsa
 

$

321,197

   

$

   

$

321,197

   

$

   
Forward foreign currency
exchange contracts
 

$

(262,424

)

 

$

   

$

(262,424

)

 

$

   
Written option contracts    

(19,368

)

   

(19,368

)

   

     

   
Total Depreciation in
Other Financial
Instrumentsa
 

$

(281,792

)

 

$

(19,368

)

 

$

(262,424

)

 

$

   

a  Portfolio holdings are disclosed individually on the Schedule of Investments.

b  Level 3 investments are valued by a third-party pricing service. The inputs for these securities are not readily available or cannot be reasonably estimated. A change in the significant unobservable inputs could result in a significantly lower or higher value in such Level 3 investments.

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

    Total
Investments
in Securities
  Preferred
Securities—Capital
Securities—Banks
  Preferred
Securities—Capital
Securities—Food
 

Balance as of December 31, 2014

 

$

14,621,194

   

$

7,338,750

   

$

7,282,444

   
Change in unrealized appreciation
(depreciation)
   

(47,669

)

   

69,375

     

(117,044

)

 
Transfers into Level 3a    

4,215,518

     

4,215,518

     

   
Transfers out of Level 3b    

(7,408,125

)

   

(7,408,125

)

   

   

Balance as of December 31, 2015

 

$

11,380,918

   

$

4,215,518

   

$

7,165,400

   

The change in unrealized appreciation (depreciation) attributable to securities owned on December 31, 2015 which were valued using significant unobservable inputs (Level 3) amounted to $(124,307).

a  Transfers from Level 2 to Level 3 are due to a decrease in market activity (e.g. frequency of trades), which resulted in a lack of available market inputs to determine prices.

b  Transfers from Level 3 to Level 2 are due to an increase in market activity (e.g. frequency of trades), which resulted in an increase in available market inputs to determine prices.


29



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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. 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.

Options: The Fund may purchase and write exchange-listed and over-the-counter put or call options on securities, stock indices and other financial instruments to enhance portfolio returns and reduce overall volatility.

When the Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded on the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When an option expires, the Fund realizes a gain on the option to the extent of the premium received. Premiums received from writing options which are exercised or closed are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium reduces the cost basis of the security purchased by the Fund. If a call option is exercised, the premium is added to the proceeds of the security sold to determine the realized gain or loss. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the underlying index or security. Other risks include the possibility of an illiquid options market or the inability of the counterparties to fulfill their obligations under the contracts.

Put and call options purchased are accounted for in the same manner as portfolio securities. Premiums paid for purchasing options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss when the underlying transaction is executed. The risk associated with purchasing an option is that the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of the premium and change in market value should the counterparty not perform under the contract.

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.


30



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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.

Foreign Securities: The Fund directly purchases 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 securities of comparable U.S. issuers.

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.

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 quarterly. 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 in accordance with the Fund's Reinvestment Plan, unless the shareholder has elected to have them paid in cash. Dividends from net investment income are subject to recharacterization for tax purposes.


31



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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 all open tax years and has concluded that as of December 31, 2015, no additional provisions for income tax are required in the Fund's financial statements. The Fund's tax positions for the tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service, state departments of revenue and by foreign tax authorities.

Note 2. Investment Management Fees, Administration Fees and Other Transactions with Affiliates

Investment Management Fees: The investment manager serves as the Fund's investment manager pursuant to an investment management agreement (the investment management agreement). Under the terms of the investment management agreement, the investment manager 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 manager receives a fee, accrued daily and paid monthly, at the annual rate of 0.65% of the average daily managed assets of the Fund. Managed assets are equal to the net assets plus the amount of any borrowings, used for leverage, outstanding.

Administration Fees: The Fund has entered into an administration agreement with the investment manager under which the investment manager 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 average daily managed assets of the Fund up to $1 billion, 0.04% of the average daily managed assets of the Fund in excess of $1 billion and up to $1.5 billion and 0.02% of the average daily managed assets of the Fund in excess of $1.5 billion. For the year ended December 31, 2015, the Fund incurred $752,969 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.

Directors' and Officers' Fees: Certain directors and officers of the Fund are also directors, officers and/or employees of the investment manager. The Fund does not pay compensation to directors and officers affiliated with the investment manager except for the Chief Compliance Officer, who received compensation from the investment manager, which was reimbursed by the Fund, in the amount of $17,140 for the year ended December 31, 2015.


32



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Note 3. Purchases and Sales of Securities

Purchases and sales of securities, excluding short-term investments, for the year ended December 31, 2015, totaled $567,724,079 and $596,680,453, respectively.

Transactions in written option contracts during the year ended December 31, 2015, were as follows:

    Number
of Contracts
 

Premiums

 

Written option contracts outstanding at December 31, 2014

   

18,444

   

$

1,659,960

   

Option contracts written

   

1,614

     

72,629

   

Option contracts expired

   

(9,222

)

   

(977,532

)

 

Option contracts terminated in closing transactions

   

(9,222

)

   

(682,428

)

 
Written option contracts outstanding at December 31, 2015    

1,614

   

$

72,629

   

Note 4. Derivative Investments

The following tables present the value of derivatives held at December 31, 2015 and the effect of derivatives held during the year ended December 31, 2015, along with the respective location in the financial statements. The volume of activity for written option contracts for the year ended December 31, 2015 is summarized in Note 3.

Statement of Assets and Liabilities

 
   

Assets

 

Liabilities

 

Derivatives

 

Location

 

Fair Value

 

Location

 

Fair Value

 

Foreign Exchange Risk:

 
Forward foreign
currency
exchange
contractsa
 

Unrealized appreciation

 

$

321,197

   

Unrealized depreciation

 

$

262,424

   

Equity Risk:

 
Written optionb
contracts
   

     

   
Written option contracts
   

19,368

   

a  Forward foreign currency exchange contracts executed with Brown Brothers Harriman are not subject to a master netting arrangement or another similar agreement.

b  Option contracts executed with Goldman Sachs & Co. are not subject to a master netting arrangement or another similar arrangement.


33



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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)

 

$

2,502,387

   

$

(435,561

)

 

Equity Risk:

 
Written option
contracts
 

Net Realized and Unrealized Gain (Loss)

   

(3,281,229

)

   

122,518

   

The following summarizes the volume of the Fund's forward foreign currency exchange contracts activity during the year ended December 31, 2015:

    Forward Foreign
Currency Exchange
Contracts
 

Average Notional Amount

 

$

25,085,522

   

Ending Notional Amount

   

25,486,774

   

Note 5. Income Tax Information

The tax character of dividends paid was as follows:

    For the Year Ended
December 31,
 
   

2015

 

2014

 

Ordinary income

 

$

70,488,885

   

$

61,623,000

   

Total dividends

 

$

70,488,885

   

$

61,623,000

   

As of December 31, 2015, the tax-basis components of accumulated earnings and the federal tax cost were as follows:

Cost for federal income tax purposes

 

$

1,126,373,161

   

Gross unrealized appreciation

 

$

247,712,940

   
Gross unrealized depreciation    

(9,240,403

)

 

Net unrealized appreciation

 

$

238,472,537

   


34



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

As of December 31, 2015, the Fund had a net capital loss carryforward of $11,853,313, which may be used to offset future capital gains. These losses are comprised of short-term capital loss carryovers, which will expire on December 31, 2017. The Fund incurred short-term capital losses of $478,187 and long-term capital losses of $417,870 after October 31, 2015, that it has elected to treat as arising in the following fiscal year. In addition, the Fund incurred net ordinary loss of $1,202,899, that it has elected to treat as arising in the following fiscal year.

During the year ended December 31, 2015, the Fund utilized net capital loss carryforwards of $60,416,202.

As of December 31, 2015, 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 Fund distributions, certain fixed income securities and foreign currency transactions. To reflect reclassifications arising from the permanent differences, paid-in capital was charged $28,097,633, accumulated net realized loss was credited $1,463,471 and accumulated undistributed net investment income was credited $26,634,162. Net assets were not affected by this reclassification.

Note 6. Capital Stock

The Fund is authorized to issue 100 million shares of common stock at a par value of $0.001 per share.

During the years ended December 31, 2015 and December 31, 2014, the Fund did not issue any shares of common stock for the reinvestment of dividends.

On December 8, 2015, the Board of Directors approved the continuation of the delegation of its authority to management to effect repurchases, pursuant to management's discretion and subject to market conditions and investment considerations, of up to 10% of the Fund's common shares outstanding (Share Repurchase Program) as of January 1, 2016, through the fiscal year ended December 31, 2016.

During the year ended December 31, 2015, the Fund repurchased 203,031 Treasury shares of its common stock at an average price of $18.84 per share (including brokerage commissions) at a weighted average discount of 13.8%. These repurchases, which had a total cost of $3,824,582, resulted in an increase of $0.01 to the Fund's net asset value per share. During the year ended December 31, 2014, the Fund did not effect any repurchases.

Note 7. Borrowings

The Fund has entered into an amended and restated credit agreement (the credit agreement) with BNP Paribas Prime Brokerage International, Ltd. (BNPP) in which the Fund pays a monthly financing charge based on a combination of LIBOR-based variable and fixed rates. The commitment amount of the credit agreement is $350,000,000. The Fund also pays a fee of 0.55% per annum on the unused portion of the credit agreement. BNPP may not change certain terms of the credit agreement except upon 360 days' notice. Also, if the Fund violates certain conditions, the credit agreement may be terminated. The Fund is required to pledge portfolio securities as collateral in an amount up to two


35



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

times the loan balance outstanding (or more depending on the terms of the credit agreement) and has granted a security interest in the securities pledged to, and in favor of, BNPP as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement, necessitating the sale of portfolio securities at potentially inopportune times. The Fund may, upon prior written notice to BNPP, prepay all or a portion of the fixed and variable rate portions of the credit facility. The Fund may have to pay a breakage fee with respect to a prepayment of all or a portion of the fixed rate financing under the credit facility. The credit agreement also permits, subject to certain conditions, BNPP to rehypothecate portfolio securities pledged by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the rehypothecated securities from BNPP on demand. If BNPP fails to deliver the recalled security in a timely manner, the Fund will be compensated by BNPP for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNPP, the Fund, upon notice to BNPP, may reduce the loan balance outstanding by the amount of the recalled security failed to be returned. The Fund will receive a portion of the fees earned by BNPP in connection with the rehypothecation of portfolio securities.

On February 24, 2015, the Fund entered into an amendment to the credit agreement in order to extend the term length of the 5-year, 6-year and 7-year fixed rate tranches of the credit agreement by three years to 2020, 2021 and 2022, respectively. The new rates will increase and become effective upon maturity date of the current fixed rate tranches. In connection with the extension, the Fund paid an arrangement fee based on the aggregate fixed rate financing amount.

As of December 31, 2015, the Fund had outstanding borrowings of $350,000,000. During the year ended December 31, 2015, the Fund borrowed an average daily balance of $350,000,000 at a weighted average borrowing cost of 1.9%. As of December 31, 2015, the aggregate value of rehypothecated securities, which are reflected as part of investments in securities on the Statement of Assets and Liabilities, was $320,888,147. The value of the outstanding borrowings under the credit agreement exceeded the value of the rehypothecated securities at December 31, 2015. During the year ended December 31, 2015, the Fund earned $73,044 in fees from rehypothecated securities.

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 December 31, 2015 through the date that the financial statements were issued, and has determined that no additional disclosure in the financial statements is required.


36




COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Cohen & Steers REIT and Preferred Income Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Cohen & Steers REIT and Preferred Income Fund, Inc. (the "Fund") at December 31, 2015, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2015 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 25, 2016


37



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

AVERAGE ANNUAL TOTAL RETURNS

(Periods ended December 31, 2015) (Unaudited)

Based on Net Asset Value

 

Based on Market Value

 
One Year  

Five Years

 

Ten Years

  Since Inception
(6/27/03)
 

One Year

 

Five Years

 

Ten Years

  Since Inception
(6/27/03)
 
  8.45

%

   

15.01

%

   

8.05

%

   

9.97

%

   

5.26

%

   

13.41

%

   

7.29

%

   

8.18

%

 

The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return will vary and the principal value of an investment will fluctuate and shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effect of leverage from utilization of borrowings under a credit agreement and/or from the issuance of preferred shares. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. The Fund's returns assume the reinvestment of all dividends and distributions at prices obtained under the Fund's dividend reinvestment plan.

TAX INFORMATION—2015 (Unaudited)

Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the Fund designates qualified dividend income of $28,732,677. Additionally, 21.04% of the ordinary dividends qualified for the dividends received deduction available to corporations.

REINVESTMENT PLAN

The Fund has a dividend reinvestment plan commonly referred to as an "opt-out" plan (the Plan). Each common shareholder who participates in the Plan will have all distributions of dividends and capital gains (Dividends) automatically reinvested in additional common shares by Computershare as agent (the Plan Agent). Shareholders who elect not to participate in the Plan will receive all Dividends in cash paid by check mailed directly to the shareholder of record (or if the shares are held in street or other nominee name, then to the nominee) by the Plan Agent, as dividend disbursing agent. Shareholders whose common shares are held in the name of a broker or nominee should contact the broker or nominee to determine whether and how they may participate in the Plan.

The Plan Agent serves as agent for the shareholders in administering the Plan. After the Fund declares a Dividend, the Plan Agent will, as agent for the shareholders, either: (i) receive the cash payment and use it to buy common shares in the open market, on the NYSE or elsewhere, for the participants' accounts or (ii) distribute newly issued common shares of the Fund on behalf of the participants.

The Plan Agent will receive cash from the Fund with which to buy common shares in the open market if, on the Dividend payment date, the net asset value (NAV) per share exceeds the market price per share plus estimated brokerage commissions on that date. The Plan Agent will receive the Dividend in newly issued common shares of the Fund if, on the Dividend payment date, the market price per share plus estimated brokerage commissions equals or exceeds the NAV per share of the Fund on that date. The number of shares to be issued will be computed at a per share rate equal to the greater of (i) the NAV or (ii) 95% of the closing market price per share on the payment date.


38



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

If the market price per share is less than the NAV on a Dividend payment date, the Plan Agent will have until the last business day before the next ex-dividend date for the common stock, but in no event more than 30 days after the Dividend payment date (as the case may be, the Purchase Period), to invest the Dividend amount in shares acquired in open market purchases. If at the close of business on any day during the Purchase Period on which NAV is calculated the NAV equals or is less than the market price per share plus estimated brokerage commissions, the Plan Agent will cease making open market purchases and the uninvested portion of such Dividends shall be filled through the issuance of new shares of common stock from the Fund at the price set forth in the immediately preceding paragraph.

Participants in the Plan may withdraw from the Plan upon notice to the Plan Agent. Such withdrawal will be effective immediately if received not less than ten days prior to a Dividend record date; otherwise, it will be effective for all subsequent Dividends. If any participant elects to have the Plan Agent sell all or part of his or her shares and remit the proceeds, the Plan Agent is authorized to deduct a $15.00 fee plus $0.10 per share brokerage commissions.

The Plan Agent's fees for the handling of reinvestment of Dividends will be paid by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of Dividends. The automatic reinvestment of Dividends will not relieve participants of any income tax that may be payable or required to be withheld on such Dividends.

The Fund reserves the right to amend or terminate the Plan. All correspondence concerning the Plan should be directed to the Plan Agent at 800-432-8224.

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


39



COHEN & STEERS REIT AND PREFERRED INCOME FUND, INC.

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.

Notice is hereby given in accordance with Rule 23c-1 under the 1940 Act that the Fund may purchase, from time to time, shares of its common stock in the open market.

Election of Directors

Effective October 1, 2015, the Board of Directors has elected Gerald J. Maginnis and Jane F. Magpiong as directors of the Fund to serve until the annual meeting of stockholders in 2016 and 2018, respectively, and until his or her successor is duly elected and qualifies. Please refer to the section titled "Management of the Fund" for the biographical information of each director.


40




COHEN & STEERS REIT AND PREFERRED 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)


41



COHEN & STEERS REIT AND PREFERRED 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)


42



COHEN & STEERS REIT AND PREFERRED 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; 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)


43



COHEN & STEERS REIT AND PREFERRED 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 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)


44



COHEN & STEERS REIT AND PREFERRED 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).


45



COHEN & STEERS REIT AND PREFERRED 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

 
Thomas N. Bohjalian
1965
 

Vice President

 

Executive Vice President of CSCM since 2012. Prior to that, Senior Vice President of the CSCM since 2006.

 

Since 2006

 
Yigal D. Jhirad
1964
 

Vice President

 

Senior Vice President of CSCM since 2007.

 

Since 2007

 
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.


46




COHEN & STEERS REIT AND PREFERRED 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


47



COHEN & STEERS REIT AND PREFERRED 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.
 


48



COHEN & STEERS REIT AND PREFERRED 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 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

  •  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

  •  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 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 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.


49



COHEN & STEERS REIT AND PREFERRED 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

Thomas N. Bohjalian
Vice President

Yigal D. Jhirad
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 Manager

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

Computershare
480 Washington Boulevard
Jersey City, NJ 07310
(866) 227-0757

Legal Counsel

Ropes & Gray LLP
1211 Avenue of the Americas
New York, NY 10036

New York Stock Exchange Symbol: RNP

Website: cohenandsteers.com

This report is for shareholder information. This is not a prospectus intended for use in the purchase or sale of Fund shares. 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.


50




COHEN & STEERS

REIT AND PREFERRED INCOME FUND

280 PARK AVENUE

NEW YORK, NY 10017

eDelivery NOW AVAILABLE

Stop traditional mail delivery; receive your shareholder reports and prospectus online.

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RNPAR

Annual Report December 31, 2015

Cohen & Steers REIT and Preferred 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 and Frank K. Ross, each a member of the board’s Audit Committee, are each an “audit committee financial expert”.  Mr. Clark and Mr. Ross 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 last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:

 

 

 

2015

 

2014

 

Audit Fees

 

$

54,300

 

$

54,300

 

Audit-Related Fees

 

$

0

 

$

0

 

Tax Fees

 

$

6,600

 

$

6,600

 

All Other Fees

 

$

0

 

$

0

 

 

Tax fees were billed in connection with tax compliance services, including the preparation and review of federal and state tax returns and the computation of corporate and franchise tax amounts.

 

(e)(1)                   The registrant’s 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 (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 fiscal years ended December 31, 2015 and December 31, 2014, 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:

 

 

 

2015

 

2014

 

Registrant

 

$

6,600

 

$

6,600

 

Investment Advisor

 

$

0

 

$

15,000

 

 

(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.

 

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.  The members of the committee are Frank K. Ross (chairman), Michael G. Clark, Bonnie Cohen, George Grossman and Richard E. Kroon.

 

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.

 

The registrant has delegated voting of proxies in respect of portfolio holdings to Cohen & Steers Capital Management, Inc., in accordance with the policies and procedures set forth below.

 

COHEN & STEERS CAPITAL MANAGEMENT, INC.

STATEMENT OF POLICIES AND PROCEDURES REGARDING THE VOTING OF SECURITIES

 

This statement sets forth the policies and procedures that Cohen & Steers, Inc. and its affiliated advisors (“Cohen & Steers”, “we” or “us”) follow in exercising voting rights with respect to securities held in its client portfolios.  All proxy-voting rights that are exercised by Cohen & Steers shall be subject to this Statement of Policy and Procedures

 

A.                                    General Proxy Voting Guidelines

 

Objectives

 

Voting rights are an important component of corporate governance.  Cohen & Steers has three overall objectives in exercising voting rights:

 

·                  Responsibility. Cohen & Steers shall seek to ensure that there is an effective means in place to hold companies accountable for their actions. While management must be accountable to its board, the board must be accountable to a company’s shareholders.  Although accountability can be promoted in a variety of ways, protecting shareholder voting rights may be among our most important tools.

 

·                  Rationalizing Management and Shareholder Concerns.  Cohen & Steers seeks to ensure that the interests of a company’s management and board are aligned with those of the company’s shareholders.  In this respect, compensation must be structured to reward the creation of shareholder value.

 

·                  Shareholder Communication.  Since companies are owned by their shareholders, Cohen & Steers seeks to ensure that management effectively communicates with its owners about the company’s business operations and financial performance. It is only with effective communication that shareholders will be able to assess the performance of management and to make informed decisions on when to buy, sell or hold a company’s securities.

 

General Principles

 

In exercising voting rights, Cohen & Steers shall conduct itself in accordance with the general principles set forth below.

 

·                  The ability to exercise a voting right with respect to a security is a valuable right and, therefore, must be viewed as part of the asset itself.

 

·                  In exercising voting rights, Cohen & Steers shall engage in a careful evaluation of issues that may materially affect the rights of shareholders and the value of the security.

 

·                  Consistent with general fiduciary principles, the exercise of voting rights shall always be conducted with reasonable care, prudence and diligence.

 



 

·                  In exercising voting rights on behalf of clients, Cohen & Steers shall conduct itself in the same manner as if Cohen & Steers were the constructive owner of the securities.

 

·                  To the extent reasonably possible, Cohen & Steers shall participate in each shareholder voting opportunity.

 

·                  Voting rights shall not automatically be exercised in favor of management-supported proposals.

 

·                  Cohen & Steers, and its officers and employees, shall never accept any item of value in consideration of a favorable proxy voting decision.

 

General Guidelines

 

Set forth below are general guidelines that Cohen & Steers shall follow in exercising proxy voting rights:

 

·                  Prudence.  In making a proxy voting decision, Cohen & Steers shall give appropriate consideration to all relevant facts and circumstances, including the value of the securities to be voted and the likely effect any vote may have on that value.  Since voting rights must be exercised on the basis of an informed judgment, investigation shall be a critical initial step.

·                  Third Party Views.  While Cohen & Steers may consider the views of third parties, Cohen & Steers shall never base a proxy voting decision solely on the opinion of a third party.  Rather, decisions shall be based on a reasonable and good faith determination as to how best to maximize shareholder value.

·                  Shareholder Value.  Just as the decision whether to purchase or sell a security is a matter of judgment, determining whether a specific proxy resolution will increase the market value of a security is a matter of judgment as to which informed parties may differ.  In determining how a proxy vote may affect the economic value of a security, Cohen & Steers shall consider both short-term and long-term views about a company’s business and prospects, especially in light of our projected holding period on the stock (e.g., Cohen & Steers may discount long-term views on a short-term holding).

 

Specific Guidelines

 

Uncontested Director Elections

 

Votes on director nominees should be made on a case-by-case basis using a “mosaic” approach, where all factors are considered in director elections and where no single issue is deemed to be determinative.  For example, a nominee’s experience and business judgment may be critical to the long-term success of the portfolio company, notwithstanding the fact that he or she may serve on the board of more than four public companies. In evaluating nominees, we consider the following factors:

 

·                  Whether the nominee attended less than 75 percent of the board and committee meetings without a valid excuse for the absences;

 

·                  Whether the nominee is an inside or affiliated outside director and sits on the audit, compensation, or nominating committees;

 



 

·                  Whether the board ignored a significant shareholder proposal that was approved by a majority of the votes cast in the previous year;

 

·                  Whether the board, without shareholder approval, to our knowledge instituted a new poison pill plan, extended an existing plan, or adopted a new plan upon the expiration of an existing plan during the past year;

 

·                  Whether the nominee is an inside or affiliated outside director and the full board serves as the audit, compensation, or nominating committee or the company does not have one of these committees;

 

·                  Whether the nominee is an insider or affiliated outsider on boards that are not at least majority independent;

 

·                  Whether the nominee is the CEO of a publicly-traded company who serves on more than two public boards;

 

·                  Whether the nominee is the chairperson of a publicly-traded company who serves on more than two public boards;

 

·                  Whether the nominee serves on more than four public company boards;

 

·                  Whether the nominee serves on the audit committee where there is evidence (such as audit reports or reports mandated under the Sarbanes Oxley Act) that there exists material weaknesses in the company’s internal controls;

 

·                  Whether the nominee serves on the compensation committee if that director was present at the time of the grant of backdated options or options the pricing or the timing of which we believe may have been manipulated to provide additional benefits to executives;

 

·                  Whether the nominee has a material related party transaction or is believed by us to have a material conflict of interest with the portfolio company;

 

·                  Whether the nominee (or the overall board) in our view has a record of making poor corporate or strategic decisions or has demonstrated an overall lack of good business judgment, including, among other things, whether the company’s total shareholder return is in the bottom 25% of its peer group over the prior five years;

 

·                  Material failures of governance, stewardship, risk oversight(1), or fiduciary responsibilities at the company;

 


(1)  Examples of failure of risk oversight include, but are not limited to: bribery; large or serial fines from regulatory bodies; significant adverse legal judgments or settlements; hedging of company stock by the employees or directors of a company; or significant pledging of company stock in the aggregate by the officers and directors of a company.

 



 

·                  Failure to replace management as appropriate; and

 

·                  Egregious actions related to a director’s service on other boards that raise substantial doubt about his or her ability to effectively oversee management and serve the best interests of shareholders at any company.

 

Proxy Access

 

We recognize the importance of shareholder access to the ballot process as a means to ensure that boards do not become self-perpetuating and self-serving.  However, we are also aware that some proposals may promote certain interest groups and could be disruptive to the nomination process.  We vote on a case-by-case basis considering the proxy access terms in light of a company’s specific circumstances and we may support proxy access proposals when management and boards have displayed a lack of shareholder accountability.

 

Proxy Contests

 

Director Nominees in a Contested Election

 

By definition, this type of board candidate or slate runs for the purpose of seeking a significant change in corporate policy or control.  Therefore, the economic impact of the vote in favor of or in opposition to that director or slate must be analyzed using a higher standard such as is normally applied to changes in control.  Criteria for evaluating director nominees as a group or individually should also include: the underlying reason why the new slate (or individual director) is being proposed; performance; compensation; corporate governance provisions and takeover activity; criminal activity; attendance at meetings; investment in the company; interlocking directorships; inside, outside and independent directors; number of other board seats; and other experience.  It is impossible to have a general policy regarding director nominees in a contested election.

 

Reimbursement of Proxy Solicitation Expenses

 

Decisions to provide full reimbursement for dissidents waging a proxy contest should be made on a case-by-case basis. In the absence of compelling reasons, Cohen & Steers will generally not support such proposals.

 

Ratification of Auditors

 

We vote for proposals to ratify auditors, auditor remuneration and/or proposals authorizing the board to fix audit fees, unless:

 

·                  an auditor has a financial interest in or association with the company, and is therefore not independent;

 

·                  there is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company’s financial position;

 

·                  the name of the proposed auditor and/or fees paid to the audit firm are not disclosed by the company in a timely manner prior to the meeting;

 

·                  the auditors are being changed without explanation; or

 



 

·                  fees paid for non-audit related services are excessive and/or exceed limits set in local best practice recommendations or law.

 

In circumstances where fees for non-audit services include fees related to significant one-time capital structure events; initial public offerings; bankruptcy emergence, and spinoffs; and the company makes public disclosure of the amount and nature of those fees, then such fees may be excluded from the non-audit fees considered in determining whether non-audit related fees are excessive.

 

We vote on a case-by-case basis on auditor rotation proposals.  Criteria for evaluating the rotation proposal include, but are not limited to: tenure of the audit firm; establishment and disclosure of a renewal process whereby the auditor is regularly evaluated for both audit quality and competitive price; length of the rotation period advocated in the proposal; and any significant audit related issues.

 

Generally, we vote against auditor indemnification and limitation of liability; however we recognize there may be situations where indemnification and limitations on liability may be appropriate.

 

Takeover Defenses

 

While we recognize that a takeover attempt can be a significant distraction for the board and management to deal with, the simple fact is that the possibility of a corporate takeover keeps management focused on maximizing shareholder value.  As a result, Cohen & Steers opposes measures that are designed to prevent or obstruct corporate takeovers because they can entrench current management.  The following are our guidelines on change of control issues:

 

Shareholder Rights Plans

 

We acknowledge that there are arguments for and against shareholder rights plans, also known as “poison pills.”  Companies should put their case for rights plans to shareholders.

 

We review on a case-by-case basis management proposals to ratify a poison pill. We generally look for shareholder friendly features including a two- to three-year sunset provision, a permitted bid provision and a 20 percent or higher flip-in provision.

 

Greenmail

 

We vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments.

 

Unequal Voting Rights

 

Generally, we vote against dual-class recapitalizations as they offer an effective way for a firm to thwart hostile takeovers by concentrating voting power in the hands of management or other insiders.  We support the one-share, one-vote principle for voting.

 

Classified Boards

 

We generally vote in favor of shareholder proposals to declassify a board of directors, although we acknowledge that a classified board may be in the long-term best interests of the shareholders of a company in certain situations, such as continuity of a strong board and management team or for certain types of companies.  In voting on shareholder proposals to declassify a board of directors, we evaluate all

 



 

facts and circumstances surrounding such proposal, including whether: (i) the current management and board have a track record of making good corporate or strategic decisions, (ii) the shareholder proposing the de-classification has an agenda in making such proposal that may be at odds with the long-term best interests of the shareholders of the company, or (iii) it would be in the best interests of the company to thwart a shareholder’s attempt to control the board of directors.

 

Cumulative Voting

 

Having the ability to cumulate our votes for the election of directors — that is, cast more than one vote for a director about whom they feel strongly — generally increases shareholders’ rights to effect change in the management of a corporation. However, we acknowledge that cumulative voting promotes special candidates who may not represent the interests of all, or even a majority, of shareholders.  In voting on proposals to institute cumulative voting, we therefore evaluate all facts and circumstances surrounding such proposal and we generally vote against cumulative voting where the company has good corporate governance practices in place, including majority voting for board elections and de-classified boards.

 

Shareholder Ability to Call Special Meeting

 

Cohen & Steers votes on a case-by-case basis for shareholder proposals requesting companies to amend their governance documents (bylaws and/or charter) in order to allow shareholders to call special meetings.  We recognize the importance on shareholder ability to call a special meeting and generally will vote for such shareholder proposals where the shareholder(s) making such proposal hold at least 20% of the company’s outstanding shares. However, we are also aware that some proposals are put forth in order to promote the agenda(s) of certain special interest groups and could be disruptive to the management of the company, and in those cases we will vote against such shareholder proposals.

 

Shareholder Ability to Act by Written Consent

 

We generally vote against proposals to allow or facilitate shareholder action by written consent.  The requirement that all shareholders be given notice of a shareholders’ meeting and matters to be discussed therein seems to provide a reasonable protection of minority shareholder rights.

 

Shareholder Ability to Alter the Size of the Board

 

We generally vote for proposals that seek to fix the size of the board and vote against proposals that give management the ability to alter the size of the board without shareholder approval. While we recognize the importance of such proposals, we are however also aware that these proposals are sometimes put forth in order to promote the agenda(s) of certain special interest groups and could be disruptive to the management of the company.

 

Miscellaneous Board Provisions

 

Board Committees

 

Boards should delegate key oversight functions, such as responsibility for audit, nominating and compensation issues, to independent committees. The chairman and members of any committee should be clearly identified in the annual report. Any committee should have the authority to engage independent advisors where appropriate at the company’s expense.

 

Audit, nominating and compensation committees should consist solely of non-employee directors, who are independent of management.

 



 

Independent Chairman

 

We review on a case-by-case basis proposals requiring that the chairman’s position be filled by an independent director, taking into consideration the company’s current board leadership and governance structure; company performance, and any other factors that may be applicable.

 

Separate Chairman and CEO Role

 

We will generally vote f