Overview
Founded in 1986, we are a leading global investment management firm focused on global real estate securities, global listed infrastructure, real assets, large cap value stocks and preferred securities. We also manage alternative investment strategies such as hedged real estate securities portfolios and private real estate multimanager strategies for qualified investors. We serve institutional and individual investors through a broad range of investment vehicles.

Assets Under Management
We manage three types of accounts: institutional accounts, open-end mutual funds
and closed-end mutual funds.
The following table sets forth information regarding the net flows and
appreciation/(depreciation) of assets under management for the periods presented
(in millions):
                                            Three Months Ended             Six Months Ended
                                                 June 30,                      June 30,
                                           2012            2011           2012           2011
Institutional Accounts
Assets under management, beginning of
period                                 $    26,608     $   21,931     $   25,380     $   19,625
Inflows                                        296          4,997          1,366          6,526
Outflows                                    (1,785 )         (430 )       (4,218 )         (751 )
Net (outflows) inflows                      (1,489 )        4,567         (2,852 )        5,775
Market appreciation                            480            794          3,071          1,892
Total (decrease) increase                   (1,009 )        5,361            219          7,667
Assets under management, end of period $    25,599     $   27,292     $   25,599     $   27,292
Average assets under management for
period                                 $    25,496     $   24,293     $   25,690     $   22,482

Open-End Mutual Funds
Assets under management, beginning of
period                                 $    11,588     $    9,390     $    9,619     $    8,484
Inflows                                      1,077          1,175          2,759          2,322
Outflows                                      (784 )         (642 )       (1,528 )       (1,282 )
Net inflows                                    293            533          1,231          1,040
Market appreciation                            233            290          1,264            689
Total increase                                 526            823          2,495          1,729
Assets under management, end of period $    12,114     $   10,213     $   12,114     $   10,213
Average assets under management for
period                                 $    11,543     $    9,822     $   11,055     $    9,313

Closed-End Mutual Funds
Assets under management, beginning of
period                                 $     6,694     $    6,709     $    6,285     $    6,353
Inflows                                          -             24              -            153
Outflows                                         -              -              -              -
Net inflows                                      -             24              -            153
Market (depreciation) appreciation             (16 )           76            393            303
Total (decrease) increase                      (16 )          100            393            456
Assets under management, end of period $     6,678     $    6,809     $    6,678     $    6,809
Average assets under management for
period                                 $     6,608     $    6,818     $    6,583     $    6,715

Total
Assets under management, beginning of
period                                 $    44,890     $   38,030     $   41,284     $   34,462
Inflows                                      1,373          6,196          4,125          9,001
Outflows                                    (2,569 )       (1,072 )       (5,746 )       (2,033 )
Net (outflows) inflows                      (1,196 )        5,124         (1,621 )        6,968
Market appreciation                            697          1,160          4,728          2,884
Total (decrease) increase                     (499 )        6,284          3,107          9,852
Assets under management, end of period $    44,391     $   44,314     $   44,391     $   44,314
Average assets under management for
period                                 $    43,647     $   40,933     $   43,328     $   38,510

Assets under management were $44.4 billion at June 30, 2012, compared with $44.3 billion at June 30, 2011. The increase was due to market appreciation of $1.2 billion, offset by net outflows of $1.2 billion during the prior twelve month period.
Average assets under management were $43.6 billion in the three months ended June 30, 2012, an increase of 7% from $40.9 billion in the three months ended June 30, 2011. Average assets under management were $43.3 billion in the six months ended June 30, 2012, an increase of 13% from $38.5 billion in the six months ended June 30, 2011.
Institutional accounts
Institutional accounts assets under management were $25.6 billion at June 30, 2012, a 6% decrease from $27.3 billion at June 30, 2011. The decrease in assets under management was due to net outflows of $2.6 billion, primarily from global/international real estate strategies associated with subadvisory relationships, partially offset by market appreciation of $895 million during the prior twelve month period.
Average assets under management for institutional accounts were $25.5 billion in the three months ended June 30, 2012, an increase of 5% from $24.3 billion in the three months ended June 30, 2011. Average assets under management for institutional accounts were $25.7 billion in the six months ended June 30, 2012, an increase of 14% from $22.5 billion in the six months ended June 30, 2011. Net outflows for institutional accounts were $1.5 billion in the three months ended June 30, 2012, compared with net inflows of $4.6 billion in the three months ended June 30, 2011. Gross inflows were $296 million in the three months ended June 30, 2012, compared with $5.0 billion in the three months ended June 30, 2011. Gross outflows totaled $1.8 billion in the three months ended June 30, 2012, compared with $430 million in the three months ended June 30, 2011. Market appreciation was $480 million in the three months ended June 30, 2012, compared with $794 million in the three months ended June 30, 2011. Net outflows for institutional accounts were $2.9 billion in the six months ended June 30, 2012, compared with net inflows of $5.8 billion in the six months ended June 30, 2011. Gross inflows were $1.4 billion in the six months ended June 30, 2012, compared with $6.5 billion in the six months ended June 30, 2011. Gross outflows totaled $4.2 billion in the six months ended June 30, 2012, compared with $751 million in the six months ended June 30, 2011. Market appreciation was $3.1 billion in the six months ended June 30, 2012, compared with $1.9 billion in the six months ended June 30, 2011. Open-end mutual funds
Open-end mutual fund assets under management were $12.1 billion at June 30, 2012, a 19% increase from $10.2 billion at June 30, 2011. The increase in assets under management was due to net inflows of $1.5 billion and market appreciation of $423 million during the prior twelve month period.
Average assets under management for open-end mutual funds were $11.5 billion in the three months ended June 30, 2012, a 18% increase from $9.8 billion in the three months ended June 30, 2011. Average assets under management for open-end mutual funds were $11.1 billion in the six months ended June 30, 2012, a 19% increase from $9.3 billion in the six months ended June 30, 2011. Net inflows for open-end mutual funds were $293 million in the three months ended June 30, 2012, compared with $533 million in the three months ended June 30, 2011. Gross inflows were $1.1 billion in the three months ended June 30, 2012, compared with $1.2 billion in the three months ended June 30, 2011. Gross outflows totaled $784 million in the three months ended June 30, 2012, compared with $642 million in the three months ended June 30, 2011. Market appreciation was $233 million in the three months ended June 30, 2012, compared with $290 million in the three months ended June 30, 2011.
Net inflows for open-end mutual funds were $1.2 billion in the six months ended June 30, 2012, compared with $1.0 billion in the six months ended June 30, 2011. Gross inflows were $2.8 billion in the six months ended June 30, 2012, compared with $2.3 billion in the six months ended June 30, 2011. Gross outflows totaled $1.5 billion in the six months ended June 30, 2012, compared with $1.3 billion in the six months ended June 30, 2011. Market appreciation was $1.3 billion in the six months ended June 30, 2012, compared with $689 million in the six months ended June 30, 2011.
Closed-end mutual funds
Closed-end mutual funds assets under management were $6.7 billion at June 30, 2012, a 2% decrease from $6.8 billion at June 30, 2011. The decrease in assets under management was primarily due to market depreciation during the prior twelve

month period.
Average assets under management for closed-end mutual funds were $6.6 billion in the three months ended June 30, 2012, a 3% decrease from $6.8 billion in the three months ended June 30, 2011. Average assets under management for closed-end mutual funds were $6.6 billion in the six months ended June 30, 2012, a 2% decrease from $6.7 billion in the six months ended June 30, 2011.
Closed-end mutual funds had net inflows of $24 million in the three months ended June 30, 2011 through an increase in the use of the funds' credit facilities. Market depreciation was $16 million in the three months ended June 30, 2012, compared with market appreciation of $76 million in the three months ended June 30, 2011.
Closed-end mutual funds had net inflows of $153 million in the six months ended June 30, 2011 through an increase in the use of the funds' credit facilities. Market appreciation was $393 million in the six months ended June 30, 2012, compared with $303 million in the six months ended June 30, 2011. On July 27, 2012, Cohen & Steers Limited Duration Preferred and Income Fund, Inc. (the "Fund") raised approximately $662.5 million in proceeds (before deduction of sales load and other expenses and exclusive of the underwriters' overallotment) in its initial public offering. Assuming full exercise of the underwriters' overallotment option, which may or may not occur, overall sales of the Fund totaled approximately $752 million. The Fund may employ leverage in an amount up to 33-1/3%. In conjunction with the offering of the Fund, we expect to record an expense of approximately $15 million during the third quarter of 2012 associated with the payment of additional compensation agreements.

Results of Operations
Three Months Ended June 30, 2012 compared with Three Months Ended June 30, 2011

                                            Three Months Ended
                                                 June 30,
(in thousands)                              2012          2011
Results of operations
Total revenue                            $  67,432     $ 61,459
Total expenses                             (41,368 )    (38,564 )
Total non-operating (loss) income           (1,992 )      1,306
Income before provision for income taxes $  24,072     $ 24,201

Revenue
Total revenue increased 10% to $67.4 million in the three months ended June 30, 2012 from $61.5 million in the three months ended June 30, 2011. This increase was primarily attributable to higher investment advisory and administration fees resulting from higher average assets under management. Average assets under management in the three months ended June 30, 2012 were $43.6 billion compared with $40.9 billion in the three months ended June 30, 2011. In the three months ended June 30, 2012, total investment advisory and administration revenue from institutional accounts decreased 3% to $22.2 million from $22.8 million in the three months ended June 30, 2011. The decrease in institutional account revenue was attributable to a lower effective fee rate, partially offset by higher average assets under management. Average assets under management for institutional accounts in the three months ended June 30, 2012 were $25.5 billion compared with $24.3 billion in the three months ended June 30, 2011.

In the three months ended June 30, 2012, total investment advisory and administration revenue from open-end mutual funds increased 14% to $23.5 million from $20.6 million in the three months ended June 30, 2011. The increase in open-end mutual fund revenue was attributable to higher average assets under management resulting from net inflows of $1.5 billion and market appreciation of $423 million during the prior twelve month period. Average assets under management for open-end mutual funds in the three months ended June 30, 2012 were $11.5 billion compared with $9.8 billion in the three months ended June 30, 2011.
In the three months ended June 30, 2012, total investment advisory and administration revenue from closed-end mutual

funds decreased 1% to $14.0 million from $14.1 million in the three months ended June 30, 2011. The decrease in closed-end mutual fund revenue was attributable to lower average assets under management resulting primarily from market depreciation during the prior twelve month period. Average assets under management for closed-end mutual funds in the three months ended June 30, 2012 were $6.6 billion compared with $6.8 billion in the three months ended June 30, 2011.
In the three months ended June 30, 2012, total portfolio consulting and other revenue increased 256% to $5.0 million from $1.4 million in the three months ended June 30, 2011. The increase was attributable to higher average assets under advisement from model-based strategies. Expenses
Total operating expenses increased 7% to $41.4 million in the three months ended June 30, 2012 from $38.6 million in the three months ended June 30, 2011, primarily due to increases in employee compensation and benefits, distribution and service fees and general and administrative expenses.
Employee compensation and benefits increased 5% to $22.9 million in the three months ended June 30, 2012 from $21.8 million in the three months ended June 30, 2011. This increase was primarily due to higher incentive bonus and production compensation, net of deferrals, of approximately $677,000, higher amortization of restricted stock units of approximately $198,000 and higher salaries of approximately $180,000.
Distribution and service fee expenses increased 6% to $6.5 million in the three months ended June 30, 2012 from $6.2 million in the three months ended June 30, 2011. This increase was primarily due to higher average assets under management in certain of our open-end no-load mutual funds.
General and administrative expenses increased 12% to $9.9 million in the three months ended June 30, 2012 from $8.9 million in the three months ended June 30, 2011. This increase was primarily due to higher professional fees of approximately $550,000, higher fund reimbursements of approximately $277,000 and higher information technology costs of approximately $164,000. Non-operating Income
Non-operating loss was $2.0 million in the three months ended June 30, 2012, compared with non-operating income of $1.3 million in the three months ended June 30, 2011. The decrease was primarily attributable to losses from trading securities from our seed investments.
Income Taxes
We recorded an income tax expense of $9.0 million in the three months ended June 30, 2012, compared with $8.4 million in the three months ended June 30, 2011. The provision for income taxes in the three months ended June 30, 2012 included U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 36%. The effective tax rate for the three months ended June 30, 2011 was approximately 35%. We expect our tax rate for the full year 2012 to approximate 36%, excluding discrete items.
Six Months Ended June 30, 2012 compared with Six Months Ended June 30, 2011

                                             Six Months Ended
                                                 June 30,
(in thousands)                              2012          2011
Results of operations
Total revenue                            $ 131,162     $ 116,214
Total expenses                             (79,702 )     (74,406 )
Total non-operating income                   1,025         2,281
Income before provision for income taxes $  52,485     $  44,089

Revenue
Total revenue increased 13% to $131.2 million in the six months ended June 30, 2012 from $116.2 million in the six months ended June 30, 2011. This increase was primarily attributable to higher investment advisory and administration fees resulting from higher average assets under management. Average assets under management in the six months ended June 30, 2012 were $43.3 billion compared with $38.5 billion in the six months ended June 30, 2011. In the six months ended June 30, 2012, total investment advisory and administration revenue from institutional accounts increased 7% to $45.0 million from $42.2 million in the six months ended June 30, 2011. The increase in institutional account revenue was attributable to higher levels of average assets under management. Average assets under management for institutional accounts in the six months ended June 30, 2012 were $25.7 billion compared with $22.5 billion in the six months ended June 30, 2011.

In the six months ended June 30, 2012, total investment advisory and administration revenue from open-end mutual funds increased 16% to $45.3 million from $39.0 million in the six months ended June 30, 2011. The increase in open-end mutual fund revenue was attributable to higher levels of average assets under management. Average assets under management for open-end mutual funds in the six months ended June 30, 2012 were $11.1 billion compared with $9.3 billion in the six months ended June 30, 2011.
In the six months ended June 30, 2012, total investment advisory and administration revenue from closed-end mutual funds increased 1% to $27.6 million from $27.3 million in the six months ended June 30, 2011. The increase in closed-end mutual fund revenue was attributable to higher levels of average assets under management. Average assets under management for closed-end mutual funds in the six months ended June 30, 2012 were $6.6 billion compared with $6.7 billion in the six months ended June 30, 2011.
In the six months ended June 30, 2012, total portfolio consulting and other revenue increased 200% to $8.1 million from $2.7 million in the six months ended June 30, 2011. The increase was attributable to higher average assets under advisement from model-based strategies.
Expenses
Total operating expenses increased 7% to $79.7 million in the six months ended June 30, 2012 from $74.4 million in the six months ended June 30, 2011, primarily due to increases in employee compensation and benefits, distribution and service fees and general and administrative expenses.
Employee compensation and benefits increased 7% to $44.6 million in the six months ended June 30, 2012 from $41.8 million in the six months ended June 30, 2011. This increase was primarily due to higher incentive bonus and production compensation, net of deferrals, of approximately $1.0 million, higher salaries of approximately $624,000, higher amortization of restricted stock units of approximately $456,000 and higher payroll taxes of approximately $229,000 associated with the delivery of restricted stock units.
Distribution and service fee expenses increased 7% to $12.8 million in the six months ended June 30, 2012 from $11.9 million in the six months ended June 30, 2011. This increase was primarily due to higher average assets under management in certain of our open-end no-load mutual funds.
General and administrative expenses increased 6% to $18.5 million in the six months ended June 30, 2012 from $17.5 million in the six months ended June 30, 2011. This increase was primarily due to higher professional fees of approximately $402,000, higher fund reimbursements of approximately $283,000, higher marketing and printing costs of approximately $181,000 and higher information technology costs of approximately $157,000. Non-operating Income
Non-operating income was $1.0 million in the six months ended June 30, 2012, compared with $2.3 million in the six months ended June 30, 2011. The decrease was primarily attributable to losses in our seed investments and foreign currency revaluations.
Income Taxes
We recorded an income tax expense of $19.2 million in the six months ended June 30, 2012, compared with $15.4

million in the six months ended June 30, 2011. The provision for income taxes in the six months ended June 30, 2012 included U.S. federal, state, local and foreign taxes at an approximate effective tax rate of 36%. The effective tax rate for the six months ended June 30, 2011 was approximately 35%. We expect our tax rate for the full year 2012 to approximate 36%, excluding discrete items.

Liquidity and Capital Resources
Our investment advisory business does not require us to maintain significant capital balances. Our current financial condition is highly liquid, with a significant amount of our assets comprised of cash and cash equivalents, equity investments, investments, available-for-sale and accounts receivable. Our cash flows generally result from the operating activities of our business, with investment advisory and administrative fees being the most significant contributor. Cash and cash equivalents, equity investments, investments, available-for-sale and accounts receivable were 59% and 69% of total assets as of June 30, 2012 and December 31, 2011, respectively, excluding investments classified as level 3 in accordance with the Accounting Standard Codification (the "Codification") Topic 820, Fair Value Measurements and Disclosures ("Topic 820").
Cash and cash equivalents decreased by $7.0 million, excluding the effect of foreign exchange rate changes, in the six months ended June 30, 2012. Net cash used in operating activities was $16.5 million in the six months ended June 30, 2012. Net cash of $1.6 million was provided by investing activities, primarily from proceeds from sales of investments, available-for-sale in the amount of $17.1 million, partially offset by purchases of $13.9 million of investments, available-for-sale and purchases of $1.6 million of property and equipment. Net cash of $7.9 million was provided by financing activities, primarily from contributions from redeemable noncontrolling interest of $30.1 million and excess tax benefits associated with the delivery of restricted stock units of $2.8 million, partially offset by dividends paid to stockholders of $15.7 million, repurchases of common stock of $8.4 million to satisfy employee withholding tax obligations on the delivery of restricted stock units, and redemptions of redeemable noncontrolling interest of $1.1 million. Cash and cash equivalents increased by $2.8 million, excluding the effect of foreign exchange rate changes, in the six months ended June 30, 2011. Net cash provided by operating activities was $23.8 million in the six months ended June 30, 2011. Net cash of $3.3 million was used in investing activities, primarily for purchases of $16.0 million of investments, available-for-sale and purchases of $1.2 million of property and equipment, partially offset by proceeds from sales of investments, available-for-sale in the amount of $13.9 million. Net cash of $17.7 million was used in financing activities, primarily for dividends paid to stockholders of $13.0 million and repurchases of common stock of $6.5 million to satisfy employee withholding tax obligations on the delivery of restricted stock units, partially offset by excess tax benefits associated with the delivery of restricted stock units of $1.5 million. It is our policy to continuously monitor and evaluate the adequacy of our capital. We have consistently maintained net capital in excess of the regulatory requirements for our broker/dealer, as prescribed by the Securities and Exchange Commission ("SEC"). At June 30, 2012, we exceeded our minimum regulatory capital requirements by approximately $1.4 million. The SEC's Uniform Net Capital Rule 15c3-1 imposes certain requirements that may have the effect of prohibiting a broker/dealer from distributing or withdrawing capital and requiring prior notice to the SEC for certain withdrawals of capital. On April 25, 2012, we made a capital contribution to our broker/dealer for $1.0 million. Our non-U.S. subsidiaries are regulated outside the U.S. by the Hong Kong Securities and Future Commission, the United Kingdom Financial Securities Authority, and the Belgium Financial Services and Markets Authority. At June 30, 2012, our non-U.S. subsidiaries exceeded their aggregate minimum regulatory requirements by approximately $63.2 million. We believe that our cash flows from operations will be more than adequate to meet our anticipated capital requirements and other obligations as they become due.
Included in cash and cash equivalents and investments, available-for-sale were approximately $72.9 million held by our foreign subsidiaries as of June 30, 2012. We believe that our cash and cash equivalents and short term investments held in the U.S. are more than sufficient to cover our working capital needs. It is our current intention to permanently reinvest these funds outside of the U.S. We periodically commit to fund a portion of the equity in certain of our sponsored investment products. We have committed to co-invest 5%, up to $25 million, of the total capital raised in Cohen & Steers Global Realty Partners III-TE, L.P. ("GRP-TE"), a global private equity multimanager fund that had an initial closing on October 4, 2011. Our investment with GRP-TE is illiquid and will be invested for up to 12 years through the life of the fund. The ultimate co-investment amount and actual timing of the funding of this commitment is currently unknown, as the co-investment amount will be based on investor commitments to GRP-TE through October 2012, and the drawdown of our commitment is contingent on the timing of drawdowns by the underlying funds and co-investments in which GRP-TE invests. The unfunded portion of this

commitment was not recorded on our condensed consolidated statements of financial condition as of June 30, 2012.
On July 27, 2012, Cohen & Steers Limited Duration Preferred and Income Fund, Inc. (the "Fund") raised approximately $662.5 million in proceeds (before deduction of sales load and other expenses and exclusive of the underwriters' . . .