Cohen & Steers Quality Income Realty Fund, Inc.

N-CSRS 1 d897817dncsrs.htm COHEN & STEERS QUALITY INCOME REALTY FUND, INC. Cohen & Steers Quality Income Realty Fund, Inc.

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: 811-10481

Cohen & Steers Quality Income Realty Fund, Inc.

(Exact name of registrant as specified in charter)

280 Park Avenue, New York, NY 10017

(Address of principal executive offices) (Zip code)

Dana A. DeVivo

Cohen & Steers Capital Management, Inc.

280 Park Avenue

New York, New York 10017

(Name and address of agent for service)

Registrant’s telephone number, including area code: (212) 832-3232

Date of fiscal year end: December 31

Date of reporting period: June 30, 2020

Item 1. Reports to Stockholders.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

To Our Shareholders:

We would like to share with you our report for the six months ended June 30, 2020. The total returns for Cohen & Steers Quality Income Realty Fund, Inc. (the Fund) and its comparative benchmarks were:


	Six Months Ended June 30, 2020
Cohen & Steers Quality Income Realty Fund at Net Asset Value^a		–16.25	%
Cohen & Steers Quality Income Realty Fund at Market Value^a		–23.25	%
FTSE Nareit All Equity REITs Index^b		–13.30	%
Blended Benchmark—80% FTSE Nareit All Equity REITs Index/ 20% ICE BofA REIT Preferred Securities Index^b		–10.74	%
S&P 500 Index^b		–3.08	%

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.

Managed Distribution Policy

The Fund, acting in accordance with an exemptive order received from the U.S. Securities and Exchange Commission (SEC) and with approval of its Board of Directors (the Board), adopted a managed distribution policy under which the Fund intends to include long-term capital gains, where applicable, as part of the regular monthly cash distributions to its shareholders (the Plan). The Plan gives the Fund greater flexibility to realize long-term capital gains and to distribute those gains on a regular monthly basis. In accordance with the Plan, the Fund currently distributes $0.08 per share on a monthly basis.

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.

^a	As a closed-end investment company, the price of the Fund’s exchange-traded shares will be set by market forces and can deviate from the net asset value (NAV) per share of the Fund.

The FTSE Nareit All Equity REITs Index contains all tax-qualified 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 ICE BofA REIT Preferred Securities Index tracks the performance of fixed-rate U.S. dollar-denominated preferred securities issued in the U.S. domestic market including all REITs. 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.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Shareholders should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the terms of the Fund’s Plan. The Fund’s total return based on NAV is presented in the table above as well as in the Financial Highlights table.

The Plan provides that the Board may amend or terminate the Plan at any time without prior notice to Fund shareholders; however, at this time, there are no reasonably foreseeable circumstances that might cause the termination. The termination of the Plan could have the effect of creating a trading discount (if the Fund’s stock is trading at or above NAV) or widening an existing trading discount.

Market Review

U.S. real estate securities declined in the first half of 2020 along with stocks broadly, falling sharply in the first quarter as the spread of COVID-19 led to widespread economic and social shutdowns. The group partly recovered in the second quarter, with markets responding positively to massive and unprecedented fiscal and monetary stimulus policies. The listed real estate market was also supported by mostly intact earnings and dividends, and by encouraging rent collection data (outside of retail and hotel landlords).

Fund Performance

The Fund had a negative total return in the period and underperformed its blended benchmark on both a market price and NAV basis.

Most property sectors declined in the period, although data center REITs and cell tower owners in the infrastructure sector had sizable gains, aided by a significant increase in demand for e-commerce–related services amid a surge in working and purchasing from home. Industrial REITs, which play a key role in the delivery chain to homes, also outperformed by a significant margin. Overall, the Fund’s positioning in these sectors helped its relative performance, due to an overweight in data centers. The Fund’s underweights in the infrastructure and industrial sectors detracted from performance.

Health care REITs underperformed for the period but outperformed in the second half as certain companies—such as owners of senior living facilities, which reported better-than-expected occupancies—showed surprising signs of resilience in the face of COVID-19. The Fund increased the degree of its overweight in the health care sector during the period; this was beneficial to relative performance for the six months, as was stock selection in the sector.

Sentiment toward regional malls was severely impacted by a weakening economy and a threat to rental payments as numerous malls temporarily closed around the country. The Fund’s overweight and stock selection in regional malls detracted from performance. Simon Property Group accounted for most of the Fund’s mall weighting in the period; we continued to favor the company for its high-quality properties and access to capital at attractive terms. The Fund’s underweight and stock selection in shopping center owners, which also struggled, helped performance.

Office companies held up better but also underperformed broader REITs. Amid the spread of COVID-19, many industries showed success in transitioning from physical offices to work from home, which led to questions about the long-term future of office demand. The Fund’s underweight in offices aided performance, although the effect was largely countered by less favorable stock selection in the sector.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

The Fund’s underweight in real estate preferreds detracted from relative performance, as REIT preferreds outperformed REIT common shares. Security selection in the group also hindered performance, including an underweight in securities issued by Public Storage, which had a modest gain overall. We continued to view the company’s issues as less attractive from an income perspective.

Rights Offering

On January 7, 2020, the Fund announced that its Board of Directors (the Board) had approved the terms of the issuance of transferrable rights (Rights) to the holders of the Fund’s common stock, entitling them to purchase one new common share for every three Rights held (1-for-3). The gross proceeds of the offer were $351,368,592, which was equal to 24,970,742 common shares.

The Board determined that it was in the best interest of the Fund and its common shareholders to conduct the offer. By increasing assets through the offer, the Fund will be better positioned to invest in additional REITs offering attractive current income, competitive total returns and meaningful portfolio diversification. The investment manager agreed to pay all fees and expenses in connection with the offer. For additional information please see page 35.

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 detracted from the Fund’s performance for the six-month period ended June 30, 2020.

Impact of Derivatives on Fund Performance

The Fund engaged in the buying and selling of single stock options with the intention of enhancing total returns and reducing overall volatility. These contracts did not have a material effect on the Fund’s total return for the six-month period ended June 30, 2020.

The Fund also used derivatives in the form of forward foreign currency exchange contracts for managing currency risk on certain Fund positions denominated in foreign currencies. These instruments did not have a material effect on the Fund’s total return for the six-month period ended June 30, 2020.

In connection with its use of leverage, the Fund pays interest on a portion of its borrowings based on a floating rate under the terms of its credit agreement. To reduce the impact that an increase in interest rates could have on the performance of the Fund with respect to these borrowings, the Fund used interest rate swaps to exchange a portion of the floating rate for a fixed rate. In addition, the Fund used forward starting interest rate swaps to extend the maturity of the fixed rate portion of the borrowing. The Fund’s use of swaps detracted from the Fund’s total return for the six-month period ended June 30, 2020.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Sincerely,




THOMAS N. BOHJALIAN		WILLIAM F. SCAPELL
Portfolio Manager		Portfolio Manager




JASON YABLON		MATHEW KIRSCHNER
Portfolio Manager		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 specializes in liquid real assets, including real estate securities, listed infrastructure and natural resource equities, as well as preferred securities and other income solutions.

COHEN & STEERS QUALITY INCOME REALTY 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 June 30, 2020, leverage represented 24% 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 through 2026 (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 NAV 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 Facts^a,b


Leverage (as a % of managed assets)		24%
% Variable Rate Financing		10%
Variable Rate		1.0%
% Fixed Rate Financing^c,d		90%
Weighted Average Rate on Fixed Financing		3.2%
Weighted Average Term on Fixed Financing		3.4 years

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 NAV 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 incur breakage fees under the Fund’s credit arrangement and 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 June 30, 2020. Information is subject to change.

^b	See Note 6 in Notes to Financial Statements.

^c	Represents a combination of fixed rate borrowings and fixed payer interest rate swap contracts on variable rate borrowing.

^d	The Fund entered into a forward-starting interest rate swap contract with interest receipts andpayments commencing on December 28, 2020 (effective date).

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

June 30, 2020

Top Ten Holdings^a

(Unaudited)


Security	Value		% of Managed Assets

American Tower Corp.	$	221,687,967		10.5
Equinix, Inc.		128,829,912		6.1
Prologis, Inc.		127,694,759		6.1
Crown Castle International Corp.		101,600,695		4.8
Public Storage		79,921,033		3.8
Welltower, Inc.		78,683,132		3.7
VICI Properties, Inc.		73,257,982		3.5
Sun Communities, Inc.		71,148,557		3.4
Duke Realty Corp.		67,739,787		3.2
Essex Property Trust, Inc.		65,088,176		3.1

Top ten holdings (excluding short-term investments and derivative instruments) are determined on the basis of the value of individual securities held. The Fund may also hold positions in other securities issued by the companies listed above. See the Schedule of Investments for additional details on such other positions.

Sector Breakdown^b

(Based on Managed Assets)

(Unaudited)

LOGO

^b	Excludes derivative instruments.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS

June 30, 2020 (Unaudited)


		Shares		Value
COMMON STOCK	108.6%
COMMUNICATIONS—TOWERS	23.1%
American Tower Corp.^a,b			857,461	$	221,687,967
Crown Castle International Corp.^a,b			607,115		101,600,695
SBA Communications Corp.			151,521		45,141,137

					368,429,799

REAL ESTATE	85.5%
DATA CENTERS	13.5%
CyrusOne, Inc.^a,b			559,231		40,684,055
Digital Realty Trust, Inc.^a,b			319,981		45,472,500
Equinix, Inc.^a,b			183,440		128,829,912

					214,986,467

DIVERSIFIED—FOREIGN	0.0%
BGP Holdings PLC (Australia) (EUR)^c,d			3,927,678		0

HEALTH CARE	14.6%
Healthpeak Properties, Inc.^‡,a			1,656,432		45,651,266
Medical Properties Trust, Inc.^a			2,255,571		42,404,735
Omega Healthcare Investors, Inc.			254,333		7,561,320
Ventas, Inc.			1,603,799		58,731,119
Welltower, Inc.^a			1,520,447		78,683,132

					233,031,572

HOTEL	1.3%
Host Hotels & Resorts, Inc.^a,b			1,895,010		20,447,158

INDUSTRIALS	12.3%
Duke Realty Corp.^a,b			1,914,094		67,739,787
Prologis, Inc.^a,b			1,368,207		127,694,759

					195,434,546

NET LEASE	10.0%
Agree Realty Corp.			272,991		17,938,239
Spirit Realty Capital, Inc.^a,b			834,061		29,075,366
VEREIT, Inc.^a			6,036,300		38,813,409
VICI Properties, Inc.^a			3,628,429		73,257,982

					159,084,996

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Shares		Value
OFFICE	2.2%
Kilroy Realty Corp.^a,b			590,181	$	34,643,625

RESIDENTIAL	17.3%
APARTMENT	9.3%
Apartment Investment & Management Co., Class A^a,b			664,291		25,003,913
Essex Property Trust, Inc.^a,b			284,017		65,088,176
UDR, Inc.^a,b			1,575,776		58,902,507

					148,994,596

MANUFACTURED HOME	4.5%
Sun Communities, Inc.^a,b			524,385		71,148,557

SINGLE FAMILY	3.5%
Invitation Homes, Inc.^a,b			2,039,944		56,159,658

TOTAL RESIDENTIAL					276,302,811

SELF STORAGE	8.9%
Extra Space Storage, Inc.^a,b			671,929		62,066,082
Public Storage^‡,a,b			416,494		79,921,033

					141,987,115

SHOPPING CENTERS	5.4%
COMMUNITY CENTER	1.5%
Regency Centers Corp.^a,b			524,583		24,073,114

REGIONAL MALL	3.9%
Simon Property Group, Inc.^a,b			919,390		62,867,888

TOTAL SHOPPING CENTERS					86,941,002

TOTAL REAL ESTATE					1,362,859,292

TOTAL COMMON STOCK (Identified cost—$1,357,986,381)					1,731,289,091

PREFERRED SECURITIES—$25 PAR VALUE	14.0%
BANKS	1.4%
GMAC Capital Trust I, 6.177% (3 Month US LIBOR + 5.785%), due 2/15/40, Series 2 (TruPS) (FRN)^e			250,000		5,605,000
Huntington Bancshares, Inc., 6.25%, Series D^f			75,432		1,889,572
JPMorgan Chase & Co., 5.75%, Series DD^f			75,000		1,981,500
Truist Financial Corp., 5.20%, Series F^f			100,000		2,485,000
Wells Fargo & Co., 5.20%^f			200,000		4,976,000

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Shares		Value
Wells Fargo & Co., 5.50%, Series X^f			49,355	$	1,240,291
Wells Fargo & Co., 4.75%, Series Z^f			208,044		4,834,942

					23,012,305

FINANCIAL—DIVERSIFIED FINANCIAL SERVICES	0.3%
KKR & Co., Inc., 6.75%, Series A^f			107,425		2,771,565
State Street Corp., 5.90% to 3/15/24, Series D^f,g			50,000		1,311,500

					4,083,065

INSURANCE	0.1%
MetLife, Inc., 4.75%, Series F^f			95,600		2,348,892

PIPELINES	0.2%
Energy Transfer Operating LP, 7.60% to 5/15/24, Series E^f,g			147,000		3,022,320

REAL ESTATE	12.0%
DATA CENTERS	1.2%
Digital Realty Trust, Inc., 6.625%, Series C^f			179,137		4,623,526
Digital Realty Trust, Inc., 6.35%, Series I^f			234,000		5,875,740
Digital Realty Trust, Inc., 5.85%, Series K^f			98,115		2,575,519
Digital Realty Trust, Inc., 5.20%, Series L^f			128,000		3,221,760
QTS Realty Trust, Inc., 7.125%, Series A^f			115,975		3,122,047

					19,418,592

DIVERSIFIED	1.8%
Armada Hoffler Properties, Inc., 6.75%, Series A^f			30,000		713,700
Colony Capital, Inc., 7.15%, Series I^f			279,915		4,431,055
Colony Capital, Inc., 7.125%, Series J^f			196,364		3,118,260
EPR Properties, 9.00%, Series E (Convertible)^a,f			181,000		4,664,370
EPR Properties, 5.75%, Series G^f			137,002		2,341,364
Investors Real Estate Trust, 6.625%, Series C^f			98,959		2,552,153
Lexington Realty Trust, 6.50%, Series C ($50 Par Value)^a,b,f			79,704		4,300,031
Office Properties Income Trust, 6.375%, due 6/23/50			25,000		615,750
Urstadt Biddle Properties, Inc., 6.25%, Series H^f			157,556		3,278,740
Urstadt Biddle Properties, Inc., 5.875%, Series K^f			159,900		3,190,005

					29,205,428

HOTEL	1.4%
Ashford Hospitality Trust, Inc., 7.375%, Series F^f			216,000		1,630,800
Ashford Hospitality Trust, Inc., 7.50%, Series H^f			100,000		733,000

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Shares		Value
Ashford Hospitality Trust, Inc., 7.50%, Series I^f			165,000	$	1,230,900
Pebblebrook Hotel Trust, 6.50%, Series C^f			160,000		3,190,400
Pebblebrook Hotel Trust, 6.30%, Series F^f			134,000		2,483,020
RLJ Lodging Trust, 1.95%, Series A^f			39,846		872,229
Summit Hotel Properties, Inc., 6.45%, Series D^f			123,000		2,245,980
Summit Hotel Properties, Inc., 6.25%, Series E^f			200,000		3,582,000
Sunstone Hotel Investors, Inc., 6.95%, Series E^f			180,000		4,413,600
Sunstone Hotel Investors, Inc., 6.45%, Series F^f			91,964		2,239,323

					22,621,252

INDUSTRIALS	1.4%
Monmouth Real Estate Investment Corp., 6.125%, Series C^f			386,763		9,456,355
PS Business Parks, Inc., 5.20%, Series W^f			45,000		1,107,900
PS Business Parks, Inc., 5.20%, Series Y^f			185,000		4,576,900
PS Business Parks, Inc., 4.875%, Series Z^f			62,900		1,500,165
Rexford Industrial Realty, Inc., 5.875%, Series A^f			85,500		2,158,533
STAG Industrial, Inc., 6.875%, Series C^f			160,000		4,145,600

					22,945,453

NET LEASE	1.6%
Gladstone Commercial Corp., 7.00%, Series D^f			70,000		1,680,000
Spirit Realty Capital, Inc., 6.00%, Series A^a,f			351,071		8,541,558
VEREIT, Inc., 6.70%, Series F^a,f			575,311		14,394,281

					24,615,839

OFFICE	1.0%
Brookfield Property Partners LP, 5.75%, Series A^f			204,000		3,378,240
Brookfield Property Partners LP, 6.375%, Series A2^f			126,056		2,285,395
City Office REIT, Inc., 6.625%, Series A^f			50,000		1,183,500
SL Green Realty Corp., 6.50%, Series I^a,f			191,919		4,788,379
Vornado Realty Trust, 5.70%, Series K^f			161,024		3,664,906

					15,300,420

RESIDENTIAL	1.7%
APARTMENT	0.2%
Bluerock Residential Growth REIT, Inc., 8.25%, Series A^f			148,198		3,547,860

MANUFACTURED HOME	0.3%
UMH Properties, Inc., 8.00%, Series B^f			45,000		1,131,075

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Shares		Value
UMH Properties, Inc., 6.75%, Series C^f			152,845	$	3,614,784

					4,745,859

SINGLE FAMILY	1.2%
American Homes 4 Rent, 6.50%, Series D^a,f			207,796		5,288,408
American Homes 4 Rent, 6.35%, Series E^a,f			378,397		9,429,654
American Homes 4 Rent, 6.25%, Series H^f			162,714		4,150,834

					18,868,896

TOTAL RESIDENTIAL					27,162,615

SELF STORAGE	0.4%
National Storage Affiliates Trust, 6.00%, Series A^f			192,080		4,919,169
Public Storage, 4.625%, Series L^f			30,000		762,600

					5,681,769

SHOPPING CENTERS	1.5%
COMMUNITY CENTER	1.0%
Cedar Realty Trust, Inc., 7.25%, Series B^a,b,f			32,686		642,280
Kimco Realty Corp., 5.125%, Series L^f			60,000		1,406,400
Kimco Realty Corp., 5.25%, Series M^f			110,000		2,589,400
Saul Centers, Inc., 6.125%, Series D^f			101,300		2,309,640
Saul Centers, Inc., 6.00%, Series E^f			111,000		2,485,290
SITE Centers Corp., 6.375%, Series A^f			188,203		4,206,337
SITE Centers Corp., 6.25%, Series K^f			70,000		1,577,800

					15,217,147

REGIONAL MALL	0.5%
Brookfield Property REIT, Inc., 6.375%, Series A^f			184,943		2,851,821
Pennsylvania REIT, 7.20%, Series C^f			158,825		1,242,012
Taubman Centers, Inc., 6.25%, Series K^f			196,133		4,226,666

					8,320,499

TOTAL SHOPPING CENTERS					23,537,646

TOTAL REAL ESTATE					190,489,014

TOTAL PREFERRED SECURITIES—$25 PAR VALUE (Identified cost—$242,749,609)					222,955,596

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Principal Amount			Value
PREFERRED SECURITIES—CAPITAL SECURITIES	6.1%
AUTO—FOREIGN	0.1%
Volkswagen International Finance NV, 3.875% to 6/17/29 (Germany)^f,g,h		$	600,000		$	663,663

BANKS	0.8%
Citigroup, Inc., 5.00% to 9/12/24, Series U^f,g			336,000			316,885
Farm Credit Bank of Texas, 10.00%, Series 1^a,f			4,000	^†		4,040,000
Goldman Sachs Group, Inc./The, 4.37% (3 Month US LIBOR + 3.922%), Series M (FRN)^a,e,f			3,000,000			2,780,124
JPMorgan Chase & Co., 4.23% (3 Month US LIBOR + 3.47%), Series I (FRN)^a,e,f			4,858,000			4,431,657
JPMorgan Chase & Co., 4.753% (3 Month US LIBOR + 3.32%), Series V (FRN)^e,f			738,000			652,687

						12,221,353

BANKS—FOREIGN	3.1%
Banco Bilbao Vizcaya Argentaria SA, 6.50% to 3/5/25, Series 9 (Spain)^a,f,g,i			4,000,000			3,885,086
BNP Paribas SA, 6.625% to 3/25/24, 144A (France)^f,g,i,j			1,750,000			1,791,562
Credit Agricole SA, 8.125% to 12/23/25, 144A (France)^a,f,g,i,j			5,000,000			5,728,125
Credit Suisse Group AG, 7.125% to 7/29/22 (Switzerland)^f,g,h,i			3,000,000			3,092,820
Credit Suisse Group AG, 7.50% to 12/11/23, 144A (Switzerland)^a,f,g,i,j			2,891,000			3,122,049
Credit Suisse Group AG, 7.50% to 7/17/23, 144A (Switzerland)^a,f,g,i,j			2,000,000			2,079,210
DNB Bank ASA, 6.50% to 3/26/22 (Norway)^f,g,h,i			3,000,000			3,090,000
HBOS Capital Funding LP, 6.85% (United Kingdom)^f,h			2,600,000			2,640,716
ING Groep N.V., 6.50% to 4/16/25 (Netherlands)^a,f,g,i			4,000,000			4,103,400
Lloyds Banking Group PLC, 7.50% to 6/27/24 (United Kingdom)^a,f,g,i			3,400,000			3,534,368
Royal Bank of Scotland Group PLC, 7.648% to 9/30/31 (United Kingdom)^a,f,g			4,000,000			5,794,880
Royal Bank of Scotland Group PLC, 8.625% to 8/15/21 (United Kingdom)^a,b,f,g,i			3,300,000			3,438,501
Standard Chartered PLC, 7.50% to 4/2/22, 144A (United Kingdom)^a,f,g,i,j			4,000,000			4,145,980

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Principal Amount			Value
Stichting AK Rabobank Certificaten, 6.50% (Netherlands)^f,h		$	2,978,000		$	3,570,404

						50,017,101

COMMUNICATIONS—TOWERS	0.7%
Crown Castle International Corp., 6.875%, due 8/1/20, Series A (Convertible)^a			7,700	†		11,469,299

INDUSTRIALS	0.2%
General Electric Co., 5.00% to 1/21/21, Series D^a,b,f,g			4,000,000			3,146,582

INSURANCE	0.4%
LIFE/HEALTH INSURANCE	0.1%
MetLife Capital Trust IV, 7.875%, due 12/15/37, 144A (TruPS)^a,j			2,000,000			2,537,130

PROPERTY CASUALTY—FOREIGN	0.3%
QBE Insurance Group Ltd., 6.75% to 12/2/24, due 12/2/44 (Australia)^g,h			4,052,000			4,478,453

TOTAL INSURANCE						7,015,583

INTEGRATED TELECOMMUNICATIONS SERVICES—FOREIGN	0.2%
Vodafone Group PLC, 7.00% to 1/4/29, due 4/4/79 (United Kingdom)^a,g			2,750,000			3,225,640

PIPELINES	0.1%
Energy Transfer Operating LP, 7.125% to 5/15/30, Series G^a,f,g			1,900,000			1,626,875

PIPELINES—FOREIGN	0.1%
Enbridge, Inc., 6.00% to 1/15/27, due 1/15/77, Series 16-A (Canada)^a,g			1,750,000			1,730,060

UTILITIES—ELECTRIC UTILITIES—FOREIGN	0.4%
Enel SpA, 8.75% to 9/24/23, due 9/24/73, 144A (Italy)^a,g,j			5,250,000			5,982,165

TOTAL PREFERRED SECURITIES—CAPITAL SECURITIES (Identified cost—$92,863,504)						97,098,321

CORPORATE BONDS	1.2%
COMMUNICATIONS—TOWERS	0.2%
SBA Communications Corp., 3.875%, due 2/15/27, 144^a,j			2,875,000			2,866,964

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Principal Amount		Value
CONSUMER—CYCLICAL	0.0%
Macy’s, Inc., 8.375%, due 6/15/25, 144A^j		$	400,000	$	398,750

REAL STATE	1.0%
DATA CENTERS	0.1%
Equinix, Inc., 5.375%, due 5/15/27^a			2,000,000		2,186,630

DIVERSIFIED	0.1%
Service Properties Trust, 4.95%, due 10/1/29^a			1,625,000		1,378,904

HEALTH CARE	0.3%
Diversified Healthcare Trust, 9.75%, due 6/15/25			2,500,000		2,689,062
Sabra Health Care LP, 4.80%, due 6/1/24^a			1,200,000		1,203,891
Welltower, Inc., 2.75%, due 1/15/31			700,000		698,033

					4,590,986

NET LEASE	0.2%
Spirit Realty Capital, Inc., 3.75%, due 5/15/21^a			1,850,000		1,836,125
VEREIT Operating Partnership LP, 3.40%, due 1/15/28			400,000		403,071
VICI Properties LP, 4.125%, due 8/15/30, 144A^a,j			1,366,000		1,304,961

					3,544,157

SHOPPING CENTERS	0.3%
COMMUNITY CENTER	0.1%
Federal Realty Investment Trust, 3.50%, due 6/1/30^a			1,350,000		1,424,854
Regency Centers LP, 3.70%, due 6/15/30			450,000		484,714

					1,909,568

REGIONAL MALL	0.2%
Brookfield Property REIT, Inc., 5.75%, due 5/15/26, 144A^a,j			3,300,000		2,796,222

TOTAL SHOPPING CENTERS					4,705,790

TOTAL REAL ESTATE					16,406,467

TOTAL CORPORATE BONDS (Identified cost—$19,885,518)					19,672,181

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)


		Shares		Value
SHORT-TERM INVESTMENTS	0.9%
MONEY MARKET FUNDS
State Street Institutional Treasury Money Market Fund, Premier Class, 0.11%^k			13,746,311	$	13,746,311

TOTAL SHORT-TERM INVESTMENTS (Identified cost—$13,746,311)					13,746,311

TOTAL INVESTMENTS IN SECURITIES (Identified cost—$1,727,231,323)	130.8%				2,084,761,500
WRITTEN OPTION CONTRACTS	(0.2)				(2,996,276	)
LIABILITIES IN EXCESS OF OTHER ASSETS	(30.6)				(488,492,554	)

NET ASSETS (Equivalent to $11.87 per share based on 134,243,229 shares of common stock outstanding)	100.0%			$	1,593,272,670

Exchange-Traded Option Contracts

Written Options



Description	Exercise Price		Expiration Date		Number of Contracts			Notional Amount^l			Premiums Received			Value
Call—Invitation Homes, Inc.		$30.00		8/21/20		(1,470	)	$	(4,046,910	)	$	(94,684	)	$	(110,250	)
Call—Simon Property Group, Inc.		90.00		10/16/20		(1,620	)		(11,077,560	)		(1,135,030	)		(656,100	)
Put—Gaming and Leisure Properties		33.00		7/17/20		(2,390	)		(8,269,400	)		(248,462	)		(250,950	)
Put—WP Carey, Inc.		70.00		7/17/20		(1,200	)		(8,118,000	)		(375,545	)		(456,000	)
						(6,680	)	$	(31,511,870	)	$	(1,853,721	)	$	(1,473,300	)

Over-the-Counter Option Contracts

Written Options



Description	Counterparty	Exercise Price		Expiration Date		Number of Contracts			Notional Amount^l			Premiums Received			Value
Put—Gaming and Leisure Properties	Goldman Sachs International		$32.00		7/17/20		(2,390	)	$	(8,269,400	)	$	(246,170	)	$	(167,536	)
Put—Omega Healthcare Investors, Inc.	Goldman Sachs International		25.00		7/17/20		(2,440	)		(7,254,120	)		(219,600	)		(76,720	)
Put—Healthpeak Properties, Inc.	Goldman Sachs International		31.75		8/21/20		(2,672	)		(7,364,032	)		(1,416,160	)		(1,278,720	)
							(7,502	)	$	(22,887,552	)	$	(1,881,930	)	$	(1,522,976	)

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)

Centrally Cleared Interest Rate Swap Contracts



Notional Amount		Fixed Rate Payable			Fixed Payment Frequency	Floating Rate Receivable (resets monthly)	Floating Payment Frequency	Maturity Date		Value			Upfront Receipts (Payments)			Unrealized Appreciation (Depreciation)
	$115,000,000		1.460	%^m	Monthly	1 Month LIBOR^m	Monthly		12/28/23	$	(4,540,038	)	$	—		$	(4,540,038	)
	69,000,000		1.280		Monthly	0.178%ⁿ	Monthly		2/3/26		(3,968,633	)		(14,000	)		(3,982,633	)
										$	(8,508,671	)	$	(14,000	)	$	(8,522,671	)

Forward Foreign Currency Exchange Contracts



Counterparty	Contracts to Deliver		In Exchange For			Settlement Date		Unrealized Appreciation (Depreciation)
Brown Brothers Harriman	EUR	582,022		USD	654,736		7/2/20	$	835
Brown Brothers Harriman	EUR	139,642		USD	154,828		7/2/20		(2,060	)
Brown Brothers Harriman	EUR	3,210,647		USD	3,572,936		7/2/20		(34,224	)
Brown Brothers Harriman	USD	4,112,417		EUR	3,659,027		7/2/20		(1,502	)
Brown Brothers Harriman	USD	309,570		EUR	273,284		7/2/20		(2,536	)
Brown Brothers Harriman	EUR	3,745,062		USD	4,211,828		8/4/20		1,239

								$	(38,248	)

Glossary of Portfolio Abbreviations


EUR		Euro Currency
FRN		Floating Rate Note
LIBOR		London Interbank Offered Rate
REIT		Real Estate Investment Trust
TruPS		Trust Preferred Securities
USD		United States Dollar

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

June 30, 2020 (Unaudited)

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

^†	Represents shares.

^‡	All or a portion of the security is pledged in connection with exchange-traded written option contracts. $19,696,864 in aggregate has been pledged as collateral.

^a	All or a portion of the security is pledged as collateral in connection with the Fund’s credit agreement. $1,086,846,481 in aggregate has been pledged as collateral.

^b	A portion of the security has been rehypothecated in connection with the Fund’s credit agreement. $458,999,339 in aggregate has been rehypothecated.

^c	Security value is determined based on significant unobservable inputs (Level 3).

^d	Non-income producing security.

^e	Variable rate. Rate shown is in effect at June 30, 2020.

^f	Perpetual security. Perpetual securities have no stated maturity date, but they may be called/redeemed by the issuer.

^g	Security converts to floating rate after the indicated fixed-rate coupon period.

^h	Securities exempt from registration under Regulation S of the Securities Act of 1933. These securities are subject to resale restrictions. Aggregate holdings amounted to $17,536,056 which represents 1.1% of the net assets of the Fund, of which 0.0% are illiquid.

ⁱ

Contingent Capital security (CoCo). CoCos are debt or preferred securities with loss absorption characteristics built into the terms of the security for the benefit of the issuer. Aggregate holdings amounted to $38,011,101 which represents 2.4% of the net assets of the Fund (1.8% of the managed assets of the Fund).

^j	Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. Aggregate holdings amounted to $32,753,117 which represents 2.1% of the net assets of the Fund, of which 0.0% are illiquid.

^k	Rate quoted represents the annualized seven-day yield.

^l	Amount represents number of contracts multiplied by notional contract size multiplied by the underlying price.

^m	Represents a forward-starting interest rate swap contract with interest receipts and payments commencing on December 28, 2020 (effective date).

ⁿ	Based on 1 month LIBOR. Represents rates in effect at June 30, 2020.

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

June 30, 2020 (Unaudited)


ASSETS:
Investments in securities, at value^a (Identified cost—$1,727,231,323)	$	2,084,761,500
Cash		2,268,199
Cash collateral pledged for interest rate swap contracts		4,162,098
Cash collateral pledged for over-the-counter option contracts		1,900,000
Foreign currency, at value (Identified cost—$1,628)		1,616
Receivable for:
Investment securities sold		9,719,604
Dividends and interest		8,354,682
Variation margin on interest rate swap contracts		37,669
Unrealized appreciation on forward foreign currency exchange contracts		2,074
Other assets		77,872

Total Assets		2,111,285,314

LIABILITIES:
Written option contracts, at value (Premiums received—$3,735,651)		2,996,276
Unrealized depreciation on forward foreign currency exchange contracts		40,322
Payable for:
Credit agreement		510,000,000
Investment management fees		1,495,627
Investment securities purchased		1,421,926
Interest expense		1,193,030
Dividends declared		541,832
Administration fees		105,574
Directors’ fees		186
Other liabilities		217,871

Total Liabilities		518,012,644

NET ASSETS	$	1,593,272,670

NET ASSETS consist of:
Paid-in capital	$	1,281,058,202
Total distributable earnings/(accumulated loss)		312,214,468

	$	1,593,272,670

NET ASSET VALUE PER SHARE:
($1,593,272,670 ÷ 134,243,229 shares issued and outstanding)	$	11.87

MARKET PRICE PER SHARE	$	10.93

MARKET PRICE PREMIUM (DISCOUNT) TO NET ASSET VALUE PER SHARE		(7.92	)%

^a	Includes $1,086,846,481 pledged, of which $458,999,339 has been re-hypothecated in connection with the Fund’s credit agreement, as described in Note 6.

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2020 (Unaudited)


Investment Income:
Dividend income	$	31,162,061
Interest income		2,517,549
Rehypothecation income		70,430

Total Investment Income		33,750,040

Expenses:
Investment management fees		8,765,448
Interest expense		7,464,472
Administration fees		705,009
Shareholder reporting expenses		375,546
Custodian fees and expenses		50,719
Professional fees		42,844
Directors’ fees and expenses		36,224
Transfer agent fees and expenses		14,322
Miscellaneous		82,572

Total Expenses		17,537,156

Net Investment Income (Loss)		16,212,884

Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on:
Investments in securities		(69,153,541	)
Written option contracts		(2,332,385	)
Forward foreign currency exchange contracts		(81,468	)
Interest rate swap contracts		(28,864	)
Foreign currency transactions		(7,332	)

Net realized gain (loss)		(71,603,590	)

Net change in unrealized appreciation (depreciation) on:
Investments in securities		(252,424,445	)
Written option contracts		490,462
Forward foreign currency exchange contracts		(38,248	)
Interest rate swap contracts		(8,871,954	)
Foreign currency translations		(11	)

Net change in unrealized appreciation (depreciation)		(260,844,196	)

Net Realized and Unrealized Gain (Loss)		(332,447,786	)

Net Increase (Decrease) in Net Assets Resulting from Operations	$	(316,234,902	)

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS (Unaudited)


	For the Six Months Ended June 30, 2020			For the Year Ended December 31, 2019
Change in Net Assets:
From Operations:
Net investment income (loss)	$	16,212,884		$	29,926,789
Net realized gain (loss)		(71,603,590	)		101,180,818
Net change in unrealized appreciation (depreciation)		(260,844,196	)		315,522,430

Net increase (decrease) in net assets resulting from operations		(316,234,902	)		446,630,037

Distributions to Shareholders		(60,441,584	)		(110,277,290	)

Capital Stock Transactions:
Proceeds from the rights offering resulting in the issuance of 24,970,742 and 0 shares, respectively (Note 8)		351,368,592			—
Increase (decrease) in net assets from Fund share transactions		—			1,672,216

Net increase (decrease) in net assets resulting from capital stock transactions		351,368,592			1,672,216

Total increase (decrease) in net assets		(25,307,894	)		338,024,963
Net Assets:
Beginning of period		1,618,580,564			1,280,555,601

End of period	$	1,593,272,670		$	1,618,580,564

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 2020 (Unaudited)


Increase (Decrease) in Cash:
Cash Flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	(316,234,902	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash used by operating activities:
Purchases of long-term investments		(858,837,728	)
Proceeds from sales and maturities of long-term investments		512,456,797
Net purchases, sales and maturities of short-term investments		1,213,416
Net amortization of premium on investments in securities		357,779
Net decrease in dividends and interest receivable and other assets		1,122,515
Net increase in interest expense payable, accrued expenses and other liabilities		18,065
Net increase in receivable for variation margin on interest rate swap contracts		(1,956	)
Increase in premiums received from written option contracts		3,431,313
Net change in unrealized appreciation on written option contracts		(490,462	)
Net change in unrealized depreciation on investments in securities		252,424,445
Net change in unrealized depreciation on forward foreign currency exchange contracts		38,248
Net realized loss on investments in securities		69,153,541

Cash used for operating activities		(335,348,929	)

Cash Flows from Financing Activities:
Drawdown on credit agreement		50,000,000
Proceeds from rights offering		351,368,592
Dividends paid		(65,361,993	)

Cash provided by financing activities		336,006,599

Increase (decrease) in cash and restricted cash		657,670
Cash and restricted cash at beginning of period		7,674,243

Cash and restricted cash at end of period	$	8,331,913

Supplemental Disclosure of Cash Flow Information and Non-Cash Activities:

For the six months ended June 30, 2020, interest paid was $7,438,762.

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

STATEMENT OF CASH FLOWS—(Continued)

For the Six Months Ended June 30, 2020 (Unaudited)

The following table provides a reconciliation of cash and restricted cash reported within the Statement of Assets and Liabilities that sums to the total of such amounts shown on the Statement of Cash Flows.


Cash	$	2,268,199
Restricted cash		6,062,098
Foreign currency		1,616

Total cash and restricted cash shown on the Statement of Cash Flows	$	8,331,913

Restricted cash consists of cash that has been pledged to cover the Fund’s collateral or margin obligations under derivative contracts. It is reported on the Statement of Assets and Liabilities as cash collateral pledged for interest rate swap contracts and cash collateral pledged for over-the-counter option contracts.

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

FINANCIAL HIGHLIGHTS (Unaudited)

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


	For the Six Months Ended June 30, 2020			For the Year Ended December 31,
Per Share Operating Data:	For the Six Months Ended June 30, 2020			2019			2018			2017			2016			2015
Net asset value, beginning of period		$14.81			$11.73			$13.59			$13.42			$13.46			$13.54

Income (loss) from investment operations:

Net investment income (loss)^a		0.13			0.27			0.31			0.33			0.36			0.29
Net realized and unrealized gain (loss)		(2.31	)		3.82			(1.21	)^b		0.80			0.56	^c		0.58

Total from investment operations		(2.18	)		4.09			(0.90	)		1.13			0.92			0.87

Less dividends and distributions to shareholders from:

Net investment income		(0.48	)		(0.28	)		(0.32	)		(0.32	)		(0.35	)		(0.28	)
Net realized gain		—			(0.73	)		(0.64	)		(0.64	)		(0.61	)		(0.68	)

Total dividends and distributions to shareholders		(0.48	)		(1.01	)		(0.96	)		(0.96	)		(0.96	)		(0.96	)

Dilutive effect of rights offer (Note 8)		(0.28	)		—			—			—			—			—

Anti-dilutive effect from the repurchase of shares		—			—			—			—			—			0.01

Net increase (decrease) in net asset value		(2.94	)		3.08			(1.86	)		0.17			(0.04	)		(0.08	)

Net asset value, end of period		$11.87			$14.81			$11.73			$13.59			$13.42			$13.46

Market value, end of period		$10.93			$14.88			$10.36			$12.65			$12.21			$12.22




Total net asset value return^d		–16.25	%^e		35.80	%		–6.32	%^b		9.18	%		7.41	%^c		7.88	%

Total market value return^d		–23.25	%^e		54.49	%		–11.11	%		11.69	%		7.64	%		8.79	%

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

FINANCIAL HIGHLIGHTS (Unaudited)—(Continued)


	For the Six Months Ended June 30, 2020			For the Year Ended December 31,
	For the Six Months Ended June 30, 2020			2019			2018			2017			2016			2015
Ratios/Supplemental Data:

Net assets, end of period (in millions)		$1,593.3			$1,618.6			$1,280.6			$1,483.9			$1,465.3			$1,469.1

Ratios to average daily net assets:

Expenses		2.23	%^f		2.15	%		2.17	%^b		1.88	%		1.81	%		1.83	%

Expenses (excluding interest expense)		1.28	%^f		1.26	%		1.32	%		1.25	%		1.22	%		1.24	%

Net investment income (loss)		2.06	%^f		1.94	%		2.47	%		2.40	%		2.60	%		2.18	%

Ratio of expenses to average daily managed assets^g		1.70	%^f		1.66	%		1.63	%		1.43	%		1.38	%		1.39	%

Portfolio turnover rate		25	%^e		51	%		26	%		25	%		33	%		35	%

Credit Agreement

Asset coverage ratio for credit agreement		412	%		452	%		378	%		423	%		419	%		419	%


Asset coverage per $1,000 for credit agreement		$4,124			$4,519			$3,784			$4,226			$4,185			$4,194


Amount of loan outstanding (in millions)		$510.0			$460.0			$460.0			$460.0			$460.0			$460.0

^a	Calculation based on average shares outstanding.

During the reporting period the Fund settled legal claims against one issuer of securities previously held by the Fund. As a result, the net realized and unrealized gain (loss) on investments per share includes proceeds received from the settlements. Without these proceeds the net realized and unrealized gain (loss) on investments per share would have been $(1.22). Additionally, the expense ratio includes extraordinary expenses related to the direct action. Without these expenses, the ratio of expenses to average daily net assets would have been 2.16%. Excluding the proceeds from and expenses relating to the settlements, the total return on a NAV basis would have been -6.37%.

^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 $0.55 and the total return on a NAV basis would have been 7.33%.

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 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.

^e	Not annualized.

^f	Annualized.

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

See accompanying notes to financial statements.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

Note 1. Organization and Significant Accounting Policies

Cohen & Steers Quality Income Realty Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on August 22, 2001 and is registered under the Investment Company Act of 1940 (the 1940 Act) as a diversified, closed-end management investment company. The Fund’s primary investment objective is high current income through investment in real estate securities. The Fund’s secondary objective is capital appreciation.

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

Portfolio Valuation: Investments in securities that are listed on the New York Stock Exchange (NYSE) are valued, except as indicated below, at the last sale price reflected at the close of the NYSE on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and ask prices on such day or, if no ask price is available, at the bid price. Centrally cleared interest rate swaps are valued at the price determined by the relevant exchange or clearinghouse. Forward foreign currency exchange contracts are valued daily at the prevailing forward exchange rate. 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 (OTC) options are valued based upon prices provided by a third-party pricing service or counterparty.

Securities not listed on the NYSE but listed on other domestic or foreign securities exchanges (including NASDAQ) are valued in a similar manner. Securities traded on more than one securities exchange are valued at the last sale price reflected at the close of the exchange representing the principal market for such securities on the business day as of which such value is being determined. If after the close of a foreign market, but prior to the close of business on the day the securities are being valued, market conditions change significantly, certain non-U.S. equity holdings may be fair valued pursuant to procedures established by the Board of Directors.

Readily marketable securities traded in the OTC market, including listed securities whose primary market is believed by Cohen & Steers Capital Management, Inc. (the investment manager) to be OTC, are valued on the basis of prices provided by a third-party pricing service or third-party broker-dealers when such prices are believed by the investment manager, pursuant to delegation by the Board of Directors, to reflect the fair value of such securities.

Fixed-income securities are valued on the basis of prices provided by a third-party pricing service or third-party broker-dealers when such prices are believed by the investment manager, pursuant to delegation by the Board of Directors, to reflect the fair value of such securities. The pricing services or

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

broker-dealers use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services or broker-dealers may utilize a market-based approach through which quotes from market makers are used to determine fair 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 then 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 net asset value (NAV).

The policies and procedures approved by the Fund’s Board of Directors delegate authority to make fair value determinations to the investment 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 NAV of Fund shares to differ from the NAV that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.

Fair value is defined as the price that the Fund would expect to receive upon the sale of an investment or expect to pay to transfer a liability in an orderly transaction with an independent buyer in the principal market or, in the absence of a principal market, the most advantageous market for the investment or liability. The hierarchy of inputs that are used in determining the fair value of the Fund’s investments is summarized below.

•

Level 1—quoted prices in active markets for identical investments

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

•

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, credit risk, etc.)

•

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing investments may or may not be an indication of the risk associated with those investments. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

The following is a summary of the inputs used as of June 30, 2020 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:
Real Estate— Diversified—Foreign	$	0		$	—		$	—		$	0	^a
Other Industries		1,731,289,091			1,731,289,091			—			—
Preferred Securities—
$25 Par Value:
Real Estate—Residential		27,162,615			26,031,540			1,131,075			—
Other Industries		195,792,981			195,792,981			—			—
Preferred Securities—
Capital Securities		97,098,321			—			97,098,321			—
Corporate Bonds		19,672,181			—			19,672,181			—
Short-Term Investments		13,746,311			—			13,746,311			—

Total Investments in Securities^b	$	2,084,761,500		$	1,953,113,612		$	131,647,888		$	0

Forward Foreign Currency Exchange Contracts	$	2,074		$	—		$	2,074		$	—

Total Derivative Assets^b	$	2,074		$	—		$	2,074		$	—

Interest Rate Swap Contracts	$	(8,522,671	)	$	—		$	(8,522,671	)	$	—
Written Option Contracts		(2,996,276	)		(1,473,300	)		(1,522,976	)		—
Forward Foreign Currency Exchange Contracts		(40,322	)		—			(40,322	)		—

Total Derivative Liabilities^b	$	(11,559,269	)	$	(1,473,300	)	$	(10,085,969	)	$	—

^a	BGP Holdings PLC was acquired via a spinoff and has been fair valued at $0 by the Valuation Committee, pursuant to the Fund’s fair value procedures and classified as a Level 3 security.

^b	Portfolio holdings are disclosed individually on the Schedule of Investments.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(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, which includes the amortization of premiums and accretion of discounts, is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, except for certain dividends on foreign securities, which are recorded as soon as the Fund is informed after the ex-dividend date. Distributions from real estate investment trusts (REITs) are recorded as ordinary income, net realized capital gains 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.

Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the date of valuation. Purchases and sales of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign currency transaction gains or losses arise from sales of foreign currencies, (excluding gains and losses on forward foreign currency exchange contracts, which are presented separately, if any) 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 currency translation gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates. Pursuant to U.S. federal income tax regulations, certain foreign currency gains/losses included in realized and unrealized gains/losses are included in or are a reduction of ordinary income for federal income tax purposes.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to hedge the currency exposure associated with certain of its non-U.S. dollar denominated securities. A forward foreign currency exchange contract is a commitment between two parties to purchase or sell foreign currency at a set price on a future date. The market value of a forward foreign currency exchange contract fluctuates with changes in foreign currency exchange rates. These contracts are marked to market daily and the change in value is recorded by the Fund as unrealized appreciation and/or depreciation on forward foreign currency exchange contracts. 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 forward foreign currency exchange contracts.

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

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

connection with these contracts, securities may be identified as collateral in accordance with the terms of the respective contracts.

Options: The Fund may purchase and write exchange-listed and OTC put or call options on securities, stock indices and other financial instruments for hedging purposes, to enhance portfolio returns and/or 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 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.

Centrally Cleared Interest Rate Swap Contracts: The Fund uses interest rate swaps in connection with borrowing under its credit agreement. The interest rate swaps are intended to reduce interest rate risk by countering the effect that an increase in short-term interest rates could have on the performance of the Fund’s shares as a result of the floating rate structure of interest owed pursuant to the credit agreement. When entering into interest rate swaps, the Fund agrees to pay the other party to the interest rate swap (which is known as the counterparty) a fixed rate payment in exchange for the counterparty’s agreement to pay the Fund a variable rate payment that was intended to approximate the Fund’s variable rate payment obligation on the credit agreement, the accruals for which would begin at a specific date in the future (the effective date). The payment obligation is based on the notional amount of the swap. Depending on the state of interest rates in general, the use of interest rate swaps could enhance or harm the overall performance of the Fund. Swaps are marked-to-market daily and changes in the value are recorded as unrealized appreciation (depreciation).

Immediately following execution of the swap agreement, the swap agreement is novated to a central counterparty (the CCP) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through a broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

Statement of Assets and Liabilities as cash collateral pledged for interest rate swap contracts. The daily change in valuation of centrally cleared swaps is recorded as a receivable or payable for variation margin on interest rate swap contracts in the Statement of Assets and Liabilities. Any upfront payments paid or received upon entering into a swap agreement would be recorded as assets or liabilities, respectively, in the Statement of Assets and Liabilities, and amortized or accreted over the life of the swap and recorded as realized gain (loss) in the Statement of Operations. Payments received from or paid to the counterparty during the term of the swap agreement, or at termination, are recorded as realized gain (loss) in the Statement of Operations.

Swap agreements involve, to varying degrees, elements of market and counterparty risk, and exposure to loss in excess of the related amounts reflected on the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements and that there may be unfavorable changes in interest rates.

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 typically declared quarterly and paid monthly. Net realized capital gains, unless offset by any available capital loss carryforward, are typically distributed to shareholders at least annually. Dividends and distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the Fund in accordance with the Fund’s Reinvestment Plan, unless the shareholder has elected to have them paid in cash.

The Fund has a managed distribution policy in accordance with exemptive relief issued by the U.S. Securities and Exchange Commission (SEC). The Plan gives the Fund greater flexibility to realize long-term capital gains throughout the year and to distribute those gains on a more regular basis to shareholders. Therefore, regular monthly distributions throughout the year may include a portion of estimated realized long-term capital gains, along with net investment income, short-term capital gains and return of capital, which is not taxable. In accordance with the Plan, the Fund is required to adhere to certain conditions in order to distribute long-term capital gains during the year.

Dividends from net investment income are subject to recharacterization for tax purposes. Based upon the results of operations for the six months ended June 30, 2020, the investment manager considers it likely that a portion of the dividends will be reclassified to distributions from net realized gain upon the final determination of the Fund’s taxable income after December 31, 2020, the Fund’s fiscal year end.

Distributions Subsequent to June 30, 2020: The following distributions have been declared by the Fund’s Board of Directors and are payable subsequent to the period end of this report.

Ex-Date

Record Date

Payable Date

Amount

7/14/20

7/15/20

7/31/20

0.080

8/18/20

8/19/20

8/31/20

0.080

9/15/20

9/16/20

9/30/20

0.080

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

Income Taxes: It is the policy of the Fund to continue to qualify as a regulated investment company (RIC), if such qualification is in the best interest of the shareholders, by complying with the requirements of Subchapter M of the Internal Revenue Code applicable to RICs, and by distributing substantially all of its taxable earnings to its shareholders. Also, in order to avoid the payment of any federal excise taxes, the Fund will distribute substantially all of its net investment income and net realized gains on a calendar year basis. Accordingly, no provision for federal income or excise tax is necessary. Dividend and interest income from holdings in non-U.S. securities is recorded net of non-U.S. taxes paid. Management has analyzed the Fund’s tax positions taken on federal and applicable state income tax returns as well as its tax positions in non-U.S. jurisdictions in which it trades for all open tax years and has concluded that as of June 30, 2020, 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: Cohen & Steers Capital Management, Inc. 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 0.85% 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. For the six months ended June 30, 2020, the Fund incurred $618,738 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 $8,165 for the six months ended June 30, 2020.

Note 3. Purchases and Sales of Securities

Purchases and sales of securities, excluding short-term investments, for the six months ended June 30, 2020, totaled $856,146,580 and $511,467,963, respectively.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

Note 4. Derivative Investments

The following tables present the value of derivatives held at June 30, 2020 and the effect of derivatives held during the six months ended June 30, 2020, along with the respective location in the financial statements.

Statement of Assets and Liabilities

Assets

Liabilities

Derivatives

Location

Fair Value

Location

Fair Value

Equity Risk:

Written Option Contracts—Exchange-Traded^a

—

Written option
contracts

1,473,300

Written Option Contracts—Over-the-Counter

—

Written option
contracts

1,522,976

Interest Rate Risk:

Interest Rate Swap Contracts^a

Receivable for variation margin on interest rate swap contracts

(8,522,671

)^b

—

Foreign Exchange Risk:

Forward Foreign Currency
Exchange Contracts^c

Unrealized appreciation

2,074

Unrealized depreciation

40,322

^a	Not subject to a master netting agreement or another similar arrangement.

^b	Amount represents the cumulative depreciation on interest rate swap contracts as reported on the Schedule of Investments. The Statement of Assets and Liabilities only reflects the current day variation margin receivable from the broker.

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

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

Statement of Operations


Derivatives	Location	Realized Gain (Loss)			Change in Unrealized Appreciation (Depreciation)
Equity Risk:
Purchased Option Contracts^a	Net Realized and Unrealized Gain (Loss)	$	(1,189,907	)	$	—
Written Option Contracts	Net Realized and Unrealized Gain (Loss)		(2,332,385	)		490,462

Interest Rate Risk:
Interest Rate Swap Contracts	Net Realized and Unrealized Gain (Loss)		(28,864	)		(8,871,954	)

Foreign Exchange Risk:
Forward Foreign Currency Exchange Contracts	Net Realized and Unrealized Gain (Loss)		(81,468	)		(38,248	)

^a	Purchased options are included in net realized gain (loss) and change in unrealized appreciation (depreciation) on investments in securities.

At June 30, 2020, the Fund’s derivative assets and liabilities (by type), which are subject to a master netting agreement, are as follows:


Derivative Financial Instruments	Assets		Liabilities
Equity Risk:
Written Option Contracts	$	—	$	1,522,976

The following table presents the Fund’s derivative liabilities by counterparty net of amounts available for offset under a master netting agreement and net of the related collateral pledged by the Fund, if any, as of June 30, 2020:


Counterparty	Gross Amount of Liabilities Presented in the Statement of Assets and Liabilities		Financial Instruments and Derivatives Available for Offset		Collateral Pledged^a			Net Amount of Derivative Liabilities^b
Goldman Sachs International	$	1,522,976	$	—	$	(1,522,976	)	$	—

^a	Collateral received or pledged is limited to the net derivative asset or net derivative liability amounts. Actual collateral amounts received or pledged may be higher than amounts above.

^b	Net amount represents the net payable due to the counterparty in the event of default.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

The following summarizes the volume of the Fund’s option contracts, interest rate swap contracts and forward foreign currency exchange contracts activity for the six months ended June 30, 2020:


	Purchased Option Contracts^a,b		Written Option Contracts^a,b		Interest Rate Swap Contracts		Forward Foreign Currency Exchange Contracts^c
Average Notional Amount	$	13,929,837	$	41,503,241	$	164,285,714	$	3,301,058

^a	Average notional amounts represent the average for all months in which the Fund had option contracts outstanding at month end. For the period, this represents four months for purchased option contracts and six months for written option contracts.

^b	Notional amount is calculated using the number of contracts multiplied by notional contract size multiplied by the underlying price.

^c	Average notional amount represents the average for all months in which the Fund had forward foreign currency contracts outstanding at month end. For the period, this represents five months.

Note 5. Income Tax Information

As of June 30, 2020, the federal tax cost and net unrealized appreciation (depreciation) in value of investments held were as follows:


Cost of investments in securities for federal income tax purposes	$	1,727,231,323

Gross unrealized appreciation on investments	$	433,721,477
Gross unrealized depreciation on investments		(84,012,844	)

Net unrealized appreciation (depreciation) on investments	$	349,708,633

Note 6. 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 $560,000,000. The Fund may pay a fee of 0.45% per annum on any 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 and/or cash as collateral in an amount up to two 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

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

securities at potentially inopportune times. Under the terms of the credit agreement, the Fund may, upon prior written notice to BNPP, prepay all or a portion of the fixed rate portions of the credit facility. In the event of such prepayment, the Fund will receive or pay any gain or loss associated with BNPP’s interest rate hedge with respect to the applicable fixed rate portions of the credit facility, which could be material in certain circumstances (breakage fee). 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 and the Fund receives a portion of the fees earned by BNPP in connection with the rehypothecation of portfolio securities. 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.

As of June 30, 2020, the Fund had outstanding borrowings of $510,000,000. The fair value of these borrowings at June 30, 2020 was approximately $524,556,000, including estimated breakage fees of $14,556,000 in the event of a prepayment of all the fixed rate financing. The borrowings are classified as Level 2 within the fair value hierarchy. During the six months ended June 30, 2020, the Fund borrowed an average daily balance of $494,340,659 at a weighted average borrowing cost of 3.0%.

Note 7. Capital Stock

The Fund is authorized to issue 300 million shares of common stock at a par value of $0.001 per share.

During the six months ended June 30, 2020, the Fund did not issue shares of common stock for the reinvestment of dividends. During the year ended December 31, 2019, the Fund issued 111,085 shares of common stock at $1,672,216 for the reinvestment of dividends.

On December 10, 2019, 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, 2020, through the fiscal year ended December 31, 2020.

During the six months ended June 30, 2020 and the year ended December 31, 2019, the Fund did not effect any repurchases.

Note 8. Rights Offering

On January 7, 2020, the Fund announced that its Board of Directors had approved the terms of the issuance of transferrable rights (Rights) to the holders of the Fund’s common stock (par value $0.001 per share), as of the record date, January 17, 2020 (the Record Date). As of the close of business on the Record Date, the Fund issued Rights to its common shareholders of record (Record Date Shareholders), entitling the holders of those Rights to subscribe (the Offer) for up to an aggregate of

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

36,424,162 shares of the Fund’s common stock (the Common Shares). Record Date Shareholders received one Right for each outstanding Common Share owned on the Record Date. The Rights entitled their holders to purchase one new Common Share for every three Rights held (1-for-3). The Common Shares offered for subscription in the Offer are listed and trade on the New York Stock Exchange (NYSE) under the symbol “RQI.” The investment manager agreed to pay all fees and expenses in connection with the Offer which were approximately $12 million.

The Offer expired at 5:00 p.m., Eastern Time, on February 13, 2020 (the “Expiration Date”). The subscription price pursuant to the Offer was $14.12 per Common Share, which was equal to 90.25% of the Fund’s net asset value per Common Share at the close of trading on the NYSE on the Expiration Date. The gross proceeds of the Offer were $351,368,592, which was equal to 24,970,742 Common Shares. The Fund received the entire proceeds of the Offer since the investment manager agreed to pay the dealer manager fee and all other expenses related to the Offer. In connection with the receipt of the gross proceeds, the Fund amended its credit agreement with BNPP to increase the commitment amount by $100 million in order to be able to maintain approximately the same leverage rate prior to the Offer. Shortly thereafter, the Fund drew down $50,000,000 under the credit agreement with BNPP.

Note 9. Other Risks

Risk of Market Price Discount from Net Asset Value: Shares of closed-end investment companies frequently trade at a discount from their NAV. This characteristic is a risk separate and distinct from the risk that NAV could decrease as a result of investment activities. Whether investors will realize gains or losses upon the sale of the shares will depend not upon the Fund’s NAV but entirely upon whether the market price of the shares at the time of sale is above or below the investor’s purchase price for the shares. Because the market price of the shares is determined by factors such as relative supply of and demand for shares in the market, general market and economic conditions, and other factors beyond the control of the Fund, the shares may trade at, above or below NAV.

Common Stock Risk: While common stocks have historically generated higher average returns than fixed-income securities over the long-term, common stocks have also experienced significantly more volatility in those returns, although under certain market conditions, fixed-income investments may have comparable or greater price volatility. The value of common stocks and other equity securities will fluctuate in response to developments concerning the company, political and regulatory circumstances, the stock market, and the economy. In the short term, stock prices can fluctuate dramatically in response to these developments. Different parts of the market and different types of equity securities can react differently to these developments. For example, stocks of large companies can react differently than stocks of smaller companies, and value stocks (stocks of companies that are undervalued by various measures and have potential for long-term capital appreciation), can react differently from growth stocks (stocks of companies with attractive cash flow returns on invested capital and earnings that are expected to grow). These developments can affect a single company, all companies within the same industry, economic sector or geographic region, or the stock market as a whole.

Real Estate Market Risk: Since the Fund concentrates its assets in companies engaged in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

markets. Risks of investing in real estate securities include falling property values due to increasing vacancies, declining rents resulting from economic, legal, tax, political or technological developments, lack of liquidity, limited diversification, and sensitivity to certain economic factors such as interest-rate changes and market recessions. Real estate company prices also may drop because of the failure of borrowers to pay their loans and poor management, and residential developers, in particular, could be negatively impacted by falling home prices, slower mortgage origination and rising construction costs. The risks of investing in REITs are similar to those associated with direct investments in real estate securities.

REIT Risk: In addition to the risks of securities linked to the real estate industry, REITs are subject to certain other risks related to their structure and focus. REITs are dependent upon management skills and generally may not be diversified. REITs are also subject to heavy cash flow dependency, defaults by borrowers and self-liquidation. In addition, REITs could possibly fail to (i) qualify for pass-through of income under applicable tax law, or (ii) maintain their exemptions from registration under the 1940 Act. The above factors may also adversely affect a borrower’s or a lessee’s ability to meet its obligations to the REIT. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments.

Small- and Medium-Sized Companies Risk: Real estate companies in the industry tend to be small- to medium-sized companies in relation to the equity markets as a whole. There may be less trading in a smaller company’s stock, which means that buy and sell transactions in that stock could have a larger impact on the stock’s price than is the case with larger company stocks. Smaller companies also may have fewer lines of business so that changes in any one line of business may have a greater impact on a smaller company’s stock price than is the case for a larger company. Further, smaller company stocks may perform differently in different cycles than larger company stocks. Accordingly, real estate company shares can, and at times will, perform differently than large company stocks.

Preferred Securities Risk: Preferred securities are subject to credit risk, which is the risk that a security will decline in price, or the issuer of the security will fail to make dividend, interest or principal payments when due, because the issuer experiences a decline in its financial status. Preferred securities are also subject to interest rate risk and may decline in value because of changes in market interest rates. The Fund may be subject to a greater risk of rising interest rates than would normally be the case in an environment of low interest rates and the effect of potential government fiscal policy initiatives and resulting market reaction to those initiatives. In addition, an issuer may be permitted to defer or omit distributions. Preferred securities are also generally subordinated to bonds and other debt instruments in a company’s capital structure. During periods of declining interest rates, an issuer may be able to exercise an option to redeem (call) its issue at par earlier than scheduled, and the Fund may be forced to reinvest in lower yielding securities. Certain preferred securities may be substantially less liquid than many other securities, such as common stocks. Generally, preferred security holders have no voting rights with respect to the issuing company unless certain events occur. Certain preferred securities may give the issuers special redemption rights allowing the securities to be redeemed prior to a specified date if certain events occur, such as changes to tax or securities laws.

Derivatives and Hedging Transactions Risk: The Fund’s use of derivatives, including for the purpose of hedging interest rate or foreign currency risks, presents risks different from, and possibly

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

greater than, the risks associated with investing directly in traditional securities. Among the risks presented are counterparty risk, financial leverage risk, liquidity risk, OTC trading risk and tracking risk. The use of derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives.

Options Risk: Gains on options transactions depend on the investment manager’s ability to predict correctly the direction of stock prices, indexes, interest rates, and other economic factors, and unanticipated changes may cause poorer overall performance for the Fund than if it had not engaged in such transactions. A rise in the value of the security or index underlying a call option written by the Fund exposes the Fund to possible loss or loss of opportunity to realize appreciation in the value of any portfolio securities underlying or otherwise related to the call option. By writing a put option, the Fund assumes the risk of a decline in the underlying security or index. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position, and for certain options not traded on an exchange no market usually exists. Trading could be interrupted, for example, because of supply and demand imbalances arising from a lack of either buyers or sellers, or an options exchange could suspend trading after the price has risen or fallen more than the maximum specified by the exchange.

Although the Fund may be able to offset to some extent any adverse effects of being unable to liquidate an option position, that Fund may experience losses in some cases as a result of such inability, may not be able to close its position and, in such an event would be unable to control its losses.

Leverage Risk: The use of leverage is a speculative technique and there are special risks and costs associated with leverage. The NAV 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 the 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 incur applicable breakage fees under the Fund’s credit arrangement and may need to liquidate investments, including under adverse economic conditions which may result in capital losses potentially reducing returns to shareholders. The use of leverage also results in the investment management fees payable to the investment manager being higher than if the Fund did not use leverage and can increase operating costs, which may reduce total return. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.

Geopolitical Risk: Occurrence of global events similar to those in recent years, such as war, terrorist attacks, natural or environmental disasters, country instability, infectious disease epidemics, such as that caused by the COVID-19 virus, market instability, debt crises and down grades, embargoes, tariffs, sanctions and other trade barriers and other governmental trade or market control programs, the potential exit of a country from its respective union and related geopolitical events, may

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

result in market volatility and may have long-lasting impacts on both the U.S. and global financial markets. Additionally, those events, as well as other changes in foreign and domestic political and economic conditions, could adversely affect individual issuers or related groups of issuers, securities markets, interest rates, secondary trading, credit ratings, inflation, investor sentiment and other factors affecting the value of the Fund’s investments.

An outbreak of respiratory disease caused by a novel coronavirus designated as COVID-19 has resulted in, among other things, extreme volatility in the financial markets and severe losses, reduced liquidity of many instruments, significant travel restrictions, significant disruptions to business operations, supply chains and customer activity, lower consumer demand for goods and services, service and event cancellations, reductions and other changes, strained healthcare systems, as well as general concern and uncertainty. The impact of the COVID-19 outbreak has negatively affected the global economy, the economies of individual countries, and the financial performance of individual issuers, sectors, industries, asset classes, and markets in significant and unforeseen ways. Pandemics may also exacerbate other pre-existing political, social, economic, market and financial risks. The effects of the outbreak in developing or emerging market countries may be greater due to less established health care systems and supply chains. The COVID-19 pandemic and its effects may be short term or, particularly in the event of a “second wave” of infections, may result in a sustained economic downturn or a global recession, ongoing market volatility and/or decreased liquidity in the financial markets, exchange trading suspensions and closures, higher default rates, domestic and foreign political and social instability and damage to diplomatic and international trade relations. There are numerous potential vaccines in development, but the scalability and effectiveness of such vaccines are unknown. Even if an effective vaccine were to become readily available, the political, social, economic, market and financial risks of COVID-19 could persist for years to come. The foregoing could impair the Fund’s ability to maintain operational standards (such as with respect to satisfying redemption requests), disrupt the operations of the Fund’s service providers, adversely affect the value and liquidity of the Fund’s investments, and negatively impact the Fund’s performance and your investment in the Fund.

On January 31, 2020, the United Kingdom (UK) withdrew from the European Union (EU) (referred to as Brexit), commencing a transition period. During this period, the UK will no longer be considered a member state of the EU, but will remain subject to EU law, regulations and maintain access to the EU single market while the UK and EU negotiate and agree on the nature of their future relationship. The transition period is expected to end December 31, 2020, subject to extension. Brexit has resulted in volatility in European and global markets and could have negative long-term impacts on financial markets in the UK and throughout Europe. There is considerable uncertainty about the potential consequences of Brexit, how negotiations of trade agreements will proceed, and how the financial markets will react. As this process unfolds, markets may be further disrupted. Given the size and importance of the UK’s economy, uncertainty about its legal, political and economic relationship with the remaining member states of the EU may continue to be a source of instability. In addition, if the UK and the EU are unable to agree on trade and/or other agreements by the end of the transition period, or a related extension, the economic impact resulting from Brexit may be more negative.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

Growing tensions, including trade disputes, between the United States and other nations, or among foreign powers, and possible diplomatic, trade or other sanctions could adversely impact the global economy, financial markets and the Fund. The strengthening or weakening of the U.S. dollar relative to other currencies may, among other things, adversely affect the Fund’s investments denominated in non-U.S. dollar currencies. It is difficult to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have, and the duration of those effects.

Regulatory Risk: The U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Fund and on the mutual fund industry in general. The SEC’s final rules and amendments to modernize reporting and disclosure, along with other potential upcoming regulations, could, among other things, restrict the Fund’s ability to engage in transactions, and/or increase overall expenses of the Fund. In addition, the SEC, Congress, various exchanges and regulatory and self-regulatory authorities, both domestic and foreign, have undertaken reviews of the use of derivatives by registered investment companies, which could affect the nature and extent of instruments used by the Fund. While the full extent of all of these regulations is still unclear, these regulations and actions may adversely affect both the Fund and the instruments in which the Fund invests as well as its ability to execute its investment strategy. Similarly, regulatory developments in other countries may have an unpredictable and adverse impact on the Fund.

The SEC has proposed a new rule that would replace present SEC and SEC staff regulatory guidance related to limits on a registered investment company’s use of derivative instruments and certain other transactions, such as short sales and reverse repurchase agreements. There is no assurance that the rule will be adopted. The proposed rule would, among other things, limit the ability of the Fund to enter into derivative transactions and certain other transactions, which may substantially curtail the Fund’s ability to use derivative instruments and inhibit the investment manager’s ability to establish what it views as the optimal level of leverage for the Fund, especially when the Fund has issued preferred shares or has borrowings, reverse repurchase agreements or similar transactions outstanding.

LIBOR Risk: Many financial instruments are tied to the London Interbank Offered Rate, or “LIBOR,” to determine payment obligations, financing terms, hedging strategies, or investment value. LIBOR is the offered rate for short-term Eurodollar deposits between major international banks. In 2017 the head of the UK Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021. Alternatives to LIBOR are in development in many major financial markets. For example, the U.S. Federal Reserve has begun publishing a Secured Overnight Financing Rate (SOFR), a broad measure of secured overnight U.S. Treasury repo rates, as a possible replacement for U.S. dollar LIBOR. Bank working groups and regulators in other countries have suggested other alternatives for their markets, including the Sterling Overnight Interbank Average Rate (SONIA) in England. Other countries are introducing their own local-currency-denominated alternative reference rates for short-term lending and global consensus on alternative rates is lacking. It is likely that panel banks will cease reporting LIBOR as soon as they are able to, effectively phasing it out as of 2022; however, the LIBOR transition might be extended. The official sector appears resistant to adjusting deadlines but there may be more pressing demands on regulators and companies stemming from COVID-19. There remains uncertainty and risk regarding the willingness and ability of issuers and lenders to include enhanced provisions in new and

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)—(Continued)

existing contracts or instruments, the suitability of the proposed replacement rates, and the process for amending existing contracts and instruments remains unclear. As such, the transition away from LIBOR may lead to increased volatility and illiquidity in markets that are tied to LIBOR, reduced values of, inaccurate valuations of, and miscalculations of payment amounts for LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and reduced effectiveness of hedging strategies, adversely affecting the Fund’s performance or NAV. In addition, any alternative reference rate may be an ineffective substitute resulting in prolonged adverse market conditions for the Fund. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021 and could extend into 2022 or beyond.

Note 10. 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 11. Subsequent Events

On August 12, 2020, the Fund drew down $50,000,000 under the credit agreement with BNPP.

Management has evaluated events and transactions occurring after June 30, 2020 through the date that the financial statements were issued, and has determined that no additional disclosure in the financial statements is required.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

PROXY RESULTS (Unaudited)

Cohen & Steers Quality Income Realty Fund, Inc. shareholders voted on the following proposals at the annual meeting held on May 14, 2020. The description of each proposal and number of shares voted are as follows:


Common Shares	Shares Voted for		Authority Withheld
To elect Directors:

Michael G. Clark		112,028,071		5,531,066
Dean A. Junkans		112,019,120		5,540,017

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

AVERAGE ANNUAL TOTAL RETURNS

(Periods ended June 30, 2020) (Unaudited)


Based on Net Asset Value												Based on Market Value
One Year			Five Years			Ten Years			Since Inception (2/28/02)			One Year			Five Years			Ten Years			Since Inception (2/28/02)
	–8.37	%		7.28	%		12.62	%		8.92	%		–13.47	%		8.58	%		13.91	%		8.25	%

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. During certain periods presented above, the investment manager waived fees and/or reimbursed expenses. Without this arrangement, performance would have been lower. The Fund’s returns assume the reinvestment of all dividends and distributions at prices obtained under the Fund’s dividend reinvestment plan.

REINVESTMENT PLAN

We urge shareholders who want to take advantage of this plan and whose shares are held in ‘Street Name’ to consult your broker as soon as possible to determine if you must change registration into your own name to participate.

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 866-227-0757, (ii) on our website at cohenandsteers.com or (iii) on the SEC’s website at http://www.sec.gov. In addition, the Fund’s proxy voting record for the most recent 12-month period ended June 30 is available by August 31 of each year (i) without charge, upon request, by calling 866-227-0757 or (ii) on the SEC’s website at http://www.sec.gov.

Disclosures of the Fund’s complete holdings are required to be made monthly on Form N-PORT, with every third month made available to the public by the SEC 60 days after the end of the Fund’s fiscal quarter. Previously, the Fund filed its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q, which has now been rescinded. Both the Fund’s Form N-Q and Form N-PORT are available (i) without charge, upon request, by calling 866-227-0757 or (ii) on the SEC’s website at http://www.sec.gov.

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

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

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.

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.

APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT

The Board of Directors of the Fund, including a majority of the directors who are not parties to the Fund’s investment management agreement (the Management Agreement), or interested persons of any such party (the Independent Directors), has the responsibility under the Investment Company Act of 1940 to approve the Fund’s Management Agreement for its initial two year term and its continuation annually thereafter at a meeting of the Board of Directors called for the purpose of voting on the approval or continuation. The Management Agreement was discussed at a meeting of the Independent Directors, in their capacity as the Contract Review Committee, held on June 2, 2020 and at meetings of the full Board of Directors held on March 17, 2020 and June 9, 2020. The Independent Directors, in their capacity as the Contract Review Committee, also discussed the Management Agreement in executive session on June 8, 2020. At the meeting of the full Board of Directors on June 9, 2020, the Management Agreement was unanimously continued for a term ending June 30, 2021 by the Fund’s Board of Directors, including the Independent Directors. The Independent Directors were represented by independent counsel who assisted them in their deliberations during the meetings and executive sessions.

In considering whether to continue the Management Agreement, the Board of Directors reviewed materials provided by an independent data provider, which included, among other items, fee, expense and performance information compared to peer funds (the Peer Funds and, collectively with the Fund, the Peer Group) and performance comparisons to a larger category universe; summary information prepared by the Fund’s investment manager (the Investment Manager); and a memorandum from Fund counsel outlining the legal duties of the Board of Directors. The Board of Directors also spoke directly with representatives of the independent data provider and met with investment management personnel. In addition, the Board of Directors considered information provided from time to time by the Investment Manager throughout the year at meetings of the Board of Directors, including presentations by portfolio managers relating to the investment performance of the Fund and the investment strategies used in pursuing the Fund’s objective. Additionally, the Independent Directors noted that in connection with their considerations, that they had received information from the Investment Managed about, and discussed with the Investment Manager, the operations of its business continuity plan and related matters and the operations of third party service providers during the COVID-19 pandemic. In particular, the Board of Directors considered the following:

(i) The nature, extent and quality of services to be provided by the Investment Manager: The Board of Directors reviewed the services that the Investment Manager provides to the Fund, including, but not limited to, making the day-to-day investment decisions for the Fund, placing orders for the investment and reinvestment of the Fund’s assets, furnishing information to the Board of Directors of the Fund regarding the Fund’s portfolio, providing individuals to serve as Fund officers, managing the Fund’s debt leverage level, and generally managing the Fund’s investments in accordance with the stated policies of the Fund. The Board of Directors also discussed with officers and portfolio managers of the

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Fund the types of transactions conducted on behalf of the Fund. Additionally, the Board of Directors took into account the services provided by the Investment Manager to its other funds and accounts, including those that have investment objectives and strategies similar to those of the Fund. The Board of Directors also considered the education, background and experience of the Investment Manager’s personnel, particularly noting the potential benefit that the portfolio managers’ work experience and favorable reputation can have on the Fund. The Board of Directors further noted the Investment Manager’s ability to attract qualified and experienced personnel. The Board of Directors also considered the administrative services provided by the Investment Manager, including compliance and accounting services. After consideration of the above factors, among others, the Board of Directors concluded that the nature, extent and quality of services provided by the Investment Manager are adequate and appropriate.

(ii) Investment performance of the Fund and the Investment Manager: The Board of Directors considered the investment performance of the Fund compared to Peer Funds and compared to a relevant linked benchmark and a relevant linked blended benchmark. The Board of Directors considered that the Fund outperformed the Peer Group medians for the one-, three-, five- and ten-year periods ended March 31, 2020, ranking first out of five peers in every period. The Board of Directors noted that the Fund outperformed the linked benchmark for the five- and ten-year periods ended March 31, 2020, performed in- line with the linked benchmark during the three-year period ended March 31, 2020, and underperformed the linked benchmark during the one-year period ended March 31, 2020. The Board of Directors also noted that the Fund outperformed the linked blended benchmark for the ten-year period ended March 31, 2020, performed in-line with the linked blended benchmark for the 5-year period ended March 31, 2020 and underperformed the linked blended benchmark during the one- and three-year periods ended March 31, 2020. The Board of Directors engaged in discussions with the Investment Manager regarding the contributors to and detractors from the Fund’s performance during the period, the relevant implications of the continuing COVID-19 pandemic as well as the impact of leverage on the Fund’s performance. The Board of Directors also considered supplemental information provided by the Investment Manager, including a narrative summary of factors affecting performance and the Investment Manager’s performance in managing other real estate funds. They also discussed the impact of the Fund’s recent rights offering on Fund performance and the management of the Fund generally. The Board of Directors determined that Fund performance, in light of all the considerations noted above, supported the continuation of the Management Agreement.

(iii) Cost of the services to be provided and profits to be realized by the Investment Manager from the relationship with the Fund: The Board of Directors considered the contractual and actual management fees paid by the Fund as well as the Fund’s total expense ratio. As part of its analysis, the Board of Directors gave consideration to the fee and expense analyses provided by the independent data provider. The Board of Directors noted the Fund’s actual management fee at managed asset levels was higher than the Peer Group median, ranking fifth out of five peers. The Board of Directors also noted that the Fund’s actual management fee at common asset levels represented the Peer Group median, ranking third out of five peers. The Board of Directors noted that the Fund’s total expense ratios including investment-related expenses at managed and common asset levels were lower than the Peer Group medians, ranking second out of five peers for each. The Board of Directors also noted that the Fund’s total expense ratios excluding investment-related expenses at managed and common asset levels were each lower than the Peer Group medians, ranking second out of five peers for each. The

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Board of Directors considered the impact of leverage levels on the Fund’s fees and expenses at managed and common asset levels. The Board of Directors concluded that, in light of market conditions, the Fund’s current expense structure was satisfactory.

The Board of Directors also reviewed information regarding the profitability to the Investment Manager of its relationship with the Fund. The Board of Directors considered the level of the Investment Manager’s profits and whether the profits were reasonable for the Investment Manager. The Board of Directors took into consideration other benefits to be derived by the Investment Manager in connection with the Management Agreement, noting particularly the research and related services, within the meaning of Section 28(e) of the Securities Exchange Act of 1934, that the Investment Manager receives by allocating the Fund’s brokerage transactions. The Board of Directors further considered that the Investment Manager continues to reinvest profits back in the business, including upgrading and/or implementing new trading, compliance and accounting systems, and by adding investment personnel to the portfolio management teams. The Board of Directors also considered the administrative services provided by the Investment Manager and the associated administration fee paid to the Investment Manager for such services under the Administration Agreement. The Board of Directors determined that the services received under the Administration Agreement are beneficial to the Fund. The Board of Directors concluded that the profits realized by the Investment Manager from its relationship with the Fund were reasonable and consistent with the Investment Manager’s fiduciary duties.

(iv) The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale: The Board of Directors noted that the Fund had raised approximately $350 million through a rights offering that closed on February 13, 2020, and furthermore, that the Investment Manager paid all costs associated with such offering. The Board of Directors determined that currently there were no significant economies of scale that were not being shared with shareholders. In considering economies of scale, the Board of Directors also noted, as discussed above in (iii), that the Investment Manager continues to reinvest profits back in the business.

(v) Comparison of services to be rendered and fees to be paid to those under other investment management contracts, such as contracts of the same and other investment advisors or other clients: As discussed above in (iii), the Board of Directors compared the fees paid under the Management Agreement to those under other investment management contracts of other investment advisors managing Peer Funds. The Board of Directors also compared the services rendered and fees paid under the Management Agreement to fees paid, including the ranges of such fees, under the Investment Manager’s other fund management agreements and advisory contracts with institutional and other clients with similar investment mandates, noting that the Investment Manager provides more services to the Fund than it does for institutional or subadvised accounts. The Board of Directors also considered the entrepreneurial risk and financial exposure assumed by the Investment Manager in developing and managing the Fund that the Investment Manager does not have with institutional and other clients and other differences in the management of registered investment companies and institutional accounts. The Board of Directors determined that on a comparative basis the fees under the Management Agreement were reasonable in relation to the services provided.

No single factor was cited as determinative to the decision of the Board of Directors, and each Director may have assigned different weights to the various factors. Rather, after weighing all of the considerations and conclusions discussed above, the Board of Directors, including the Independent Directors, unanimously approved the continuation of the Management Agreement.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Cohen & Steers Privacy Policy



Facts		What Does Cohen & Steers Do With Your Personal Information?

Why?		Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.

What?		The types of personal information we collect and share depend on the product or service you have with us. This information can include: • Social Security number and account balances • Transaction history and account transactions • Purchase history and wire transfer instructions

How?		All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Cohen & Steers chooses to share; and whether you can limit this sharing.


Reasons we can share your personal information	Does Cohen & Steers share?	Can you limit this sharing?

For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or reports to credit bureaus	Yes	No

For our marketing purposes— to offer our products and services to you	Yes	No

For joint marketing with other financial companies—	No	We don’t share

For our affiliates’ everyday business purposes— information about your transactions and experiences	No	We don’t share

For our affiliates’ everyday business purposes— information about your creditworthiness	No	We don’t share

For our affiliates to market to you—	No	We don’t share

For non-affiliates to market to you—	No	We don’t share



Questions? Call 800.330.7348

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Cohen & Steers Privacy Policy—(Continued)



Who we are

Who is providing this notice?		Cohen & Steers Capital Management, Inc., Cohen & Steers Asia Limited, Cohen & Steers Japan, LLC, Cohen & Steers UK Limited, Cohen & Steers Securities, LLC, Cohen & Steers Private Funds and Cohen & Steers Open and Closed-End Funds (collectively, Cohen & Steers).

What we do

How does Cohen & Steers protect my personal information?		To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. We restrict access to your information to those employees who need it to perform their jobs, and also require companies that provide services on our behalf to protect your information.

How does Cohen & Steers collect my personal information?		We collect your personal information, for example, when you: • Open an account or buy securities from us • Provide account information or give us your contact information • Make deposits or withdrawals from your account We also collect your personal information from other companies.

Why can’t I limit all sharing?		Federal law gives you the right to limit only: • sharing for affiliates’ everyday business purposes—information about your creditworthiness • affiliates from using your information to market to you • sharing for non-affiliates to market to you State law and individual companies may give you additional rights to limit sharing.

Definitions

Affiliates		Companies related by common ownership or control. They can be financial and nonfinancial companies. • Cohen & Steers does not share with affiliates.

Non-affiliates		Companies not related by common ownership or control. They can be financial and nonfinancial companies. • Cohen & Steers does not share with non-affiliates.

Joint marketing		A formal agreement between non-affiliated financial companies that together market financial products or services to you. • Cohen & Steers does not jointly market.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

Cohen & Steers Open-End Mutual Funds

COHEN & STEERS REALTY SHARES

•

Designed for investors seeking total return, investing primarily in U.S. real estate securities

•

Symbols: CSJAX, CSJCX, CSJIX, CSRSX, CSJRX, CSJZX

COHEN & STEERS REAL ESTATE SECURITIES FUND

•

Designed for investors seeking total return, investing primarily in U.S. real estate securities

•

Symbols: CSEIX, CSCIX, CREFX, CSDIX, CIRRX, CSZIX

COHEN & STEERS INSTITUTIONAL REALTY SHARES

•

Designed for institutional investors seeking total return, investing primarily in U.S. real estate securities

•

Symbol: CSRIX

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 INTERNATIONAL REALTY FUND

•

Designed for investors seeking total return, investing primarily in international (non-U.S.) real estate securities

•

Symbols: IRFAX, IRFCX, IRFIX, IRFRX, IRFZX

COHEN & STEERS 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 PREFERRED SECURITIES

AND INCOME FUND

•

Designed for investors seeking total return (high current income and capital appreciation), investing primarily in preferred and debt securities issued by U.S. and non-U.S. companies

•

Symbols: CPXAX, CPXCX, CPXFX, CPXIX, CPRRX, CPXZX

COHEN & STEERS LOW DURATION PREFERRED

AND INCOME FUND

•

Designed for investors seeking high current income and capital preservation by investing in low-duration preferred and other income securities issued by U.S. and non-U.S. companies

•

Symbols: LPXAX, LPXCX, LPXFX, LPXIX, LPXRX, LPXZX

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 GLOBAL INFRASTRUCTURE FUND

•

Designed for investors seeking total return, investing primarily in global infrastructure securities

•

Symbols: CSUAX, CSUCX, CSUIX, CSURX, CSUZX

COHEN & STEERS ALTERNATIVE INCOME FUND

(FORMERLY COHEN & STEERS DIVIDEND VALUE FUND)

•

Designed for investors seeking high current income and capital appreciation, investing in equity, preferred and debt securities, focused on real assets and alternative income strategies

•

Symbols: DVFAX, DVFCX, DVFIX, DVFRX, DVFZX

Distributed by Cohen & Steers Securities, LLC.

Please consider the investment objectives, risks, charges and expenses of any Cohen & Steers U.S. registered open-end fund carefully before investing. A summary prospectus and prospectus containing this and other information can be obtained by calling 800-330-7348 or by visiting cohenandsteers.com. Please read the summary prospectus and prospectus carefully before investing.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.

OFFICERS AND DIRECTORS

Robert H. Steers

Director and Chairman

Joseph M. Harvey

Director and Vice President

Michael G. Clark

Director

George Grossman

Director

Dean A. Junkans

Director

Gerald J. Maginnis

Director

Jane F. Magpiong

Director

Daphne L. Richards

Director

C. Edward Ward, Jr.

Director

Adam M. Derechin

President and Chief Executive Officer

James Giallanza

Chief Financial Officer

Dana A. DeVivo

Secretary and Chief Legal Officer

Albert Laskaj

Treasurer

Stephen Murphy

Chief Compliance Officer and Vice President

Thomas N. Bohjalian

Vice President

Yigal D. Jhirad

Vice President

William F. Scapell

Vice President

Jason A. Yablon

Vice President

KEY INFORMATION

Investment Manager and Administrator

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

150 Royall Street

Canton, MA 02021

(866) 227-0757

Legal Counsel

Ropes & Gray, LLP

1211 Avenue of the Americas

New York, NY 10036


New York Stock Exchange Symbol:		RQI

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.

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Cohen & Steers

Quality Income

Realty Fund (RQI)

Semiannual Report June 30, 2020

Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website at www.cohenandsteers.com, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you have already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary or, if you are a direct investor, by signing up at www.cohenandsteers.com.

You may elect to receive all future reports in paper, free of charge, at anytime. If you invest through a financial intermediary, you can contact your financial intermediary or, if you are a direct investor, you can call (866) 227-0757 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all Funds held in your account if you invest through your financial intermediary or all Funds held within the fund complex if you invest directly with the Fund.

RQISAR

Item 2. Code of Ethics.

Not applicable.

Item 3. Audit Committee Financial Expert.

Not applicable.

Item 4. Principal Accountant Fees and Services.

Not applicable.

Item 5. Audit Committee of Listed Registrants.

Not applicable.

Item 6. Schedule of Investments.

Included in Item 1 above.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not Applicable.

Item 8. Portfolio Managers of Closed-End Investment Companies.

(a)	Not Applicable.

(b)	The registrant has not had any change in the portfolio managers identified in response to paragraph (a)(1) of this item in the registrant’s most recent annual report on Form N-CSR.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

None.

Item 10. Submission of Matters to a Vote of Security Holders.

None.

Item 11. Controls and Procedures.

(a)	The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the registrant in this Form N-CSR was recorded,

processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

(b)	There were no changes in the registrant’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

(a)	For the fiscal year ended December 31, 2019, the registrant had the following dollar amounts of income and fees/compensation related to its securities lending activities:


	Total
Gross income from securities lending activities		$652,167
Fees and/or compensation for securities lending activities and related services
Fees paid to securities lending agent from a revenue split		$554,342
Fees paid for cash collateral management services (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split		—
Administrative fees that are not included in the revenue split		—
Indemnification fee not included in the revenue split		—
Rebates paid to borrowers;		—
Other fees relating to the securities lending program not included in the revenue split		—
Aggregate fees/compensation for securities lending activities and related services		$554,342
Net income from securities lending activities		$97,825

(b)	During the registrant’s most recent fiscal year ended December 31, 2019, BNP Paribas (“BNPP”) served as the registrant’s securities lending agent.

As a securities lending agent, BNPP is responsible for the implementation and administration of the registrant’s securities lending program. Pursuant to its respective Securities Lending Agreement (“Securities Lending Agreement”) with the registrant, BNPP, as a general matter, performs various services, including the following:

•

Locating borrowers;

•

Monitoring daily the value of the loaned securities and collateral (i.e. the collateral posted by the party borrowing);

•

Negotiation of loan terms;

•

Selection of securities to be loaned;

•

Recordkeeping and account servicing;

•

Monitoring of dividend activity and material proxy votes relating to loaned securities, and;

•

Arranging for return of loaned securities to the registrant at loan termination.

BNPP is compensated for the above-described services from its securities lending revenue split. The table above shows what the registrant earned and the fees and compensation it paid in connections with its securities lending activities during its most recent fiscal year.

Item 13. Exhibits.

(a)(1)

Not Applicable.

(a)(2)

Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

(a)(3)

Not applicable.

(a)(4)

Not applicable.

(b)	Certifications of principal executive officer and principal financial officer as required by Rule 30a- 2(b) under the Investment Company Act of 1940.

(c)	Registrant’s notices to shareholders pursuant to Registrant’s exemptive order granting an exemption from Section 19(b) of the 1940 Act and Rule 19b-1 thereunder regarding distributions pursuant to the Registrant’s Managed Distribution Plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

COHEN & STEERS QUALITY INCOME REALTY FUND, INC.



		By:		/s/ Adam M. Derechin
				Name: Adam M. Derechin
				Title: Principal Executive Officer (President and Chief Executive Officer)

		Date:		September 3, 2020

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



		By:		/s/ Adam M. Derechin
				Name: Adam M. Derechin
				Title: Principal Executive Officer (President and Chief Executive Officer)

		By:		/s/ James Giallanza
				Name: James Giallanza
				Title: Principal Financial Officer (Chief Financial Officer)

		Date:		September 3, 2020