N-CSR 1 a13-2372_1ncsr.htm N-CSR

 

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

811-22392

 

Cohen & Steers Preferred Securities and Income Fund, Inc.

(Exact name of registrant as specified in charter)

 

280 Park Avenue, New York, NY

 

10017

(Address of principal executive offices)

 

(Zip code)

 

Tina M. Payne

Cohen & Steers Capital Management, Inc.

280 Park Avenue

New York, New York 10017

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(212) 832-3232

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

December 31, 2012

 

 



 

Item 1. Reports to Stockholders.

 



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

To Our Shareholders:

We would like to share with you our report for the year ended December 31, 2012. The net asset values (NAV) per share at that date were $13.34, $13.29 and $13.36 for Class A, Class C and Class I shares, respectively.

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

    Six Months Ended
December 31, 2012
  Year Ended
December 31, 2012
 
Cohen & Steers Preferred Securities and
Income Fund—Class A
   

10.71

%

   

22.04

%

 
Cohen & Steers Preferred Securities and
Income Fund—Class C
   

10.34

%

   

21.31

%

 
Cohen & Steers Preferred Securities and
Income Fund—Class I
   

10.98

%

   

22.52

%

 
BofA Merrill Lynch Fixed Rate Preferred
Indexa
   

3.99

%

   

13.60

%

 
Blended benchmark—50% BofA Merrill Lynch
US Capital Securities Index/50% BofA
Merrill Lynch Fixed Rate Preferred Indexa
   

7.32

%

   

17.40

%

 

S&P 500 Indexa

   

5.95

%

   

16.00

%

 

The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and the principal value of an investment will fluctuate and shares, if redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Current total returns of the Fund can be obtained by visiting our website at cohenandsteers.com. All share class returns assume the reinvestment of all dividends and distributions at NAV. Fund performance reflects fee waivers and/or expense reimbursements, without which the performance would have been lower. Performance quoted does not reflect the deduction of the maximum 3.75% initial sales charge on Class A shares or the 1% maximum contingent deferred sales charge on Class C shares. If such charges were included, returns would have been lower. Index performance does not reflect the deduction of any fees, taxes or expenses. An investor cannot invest directly in an index. Performance figures for periods shorter than one year are not annualized.

The Fund implements fair value pricing when the daily change in a specific U.S. market index exceeds a predetermined percentage. Fair value pricing adjusts the valuation of certain non-U.S. holdings to account for such index change following the close of foreign markets. This standard practice has been adopted by a majority of the fund industry. In the event fair value pricing is implemented on the first and/or last day of a performance measurement period, the Fund's return may diverge from the relative performance of its benchmark index, which does not use fair value pricing.

a  The BofA Merrill Lynch Fixed Rate Preferred Index is an unmanaged index of preferred securities. The BofA Merrill Lynch US Capital Securities Index is a subset of the BofA Merrill Lynch US Corporate Index. The BofA Merrill Lynch US Corporate Index tracks the performance of US dollar denominated investment grade corporate debt publicly issued in the US domestic market. The S&P 500 Index is an unmanaged index of common stocks that is frequently used as a general measure of stock market performance.


1



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

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 realized gains are a return of capital distributed from the Fund's assets.

Investment Review

Preferred securities performed well in 2012, both in absolute terms and compared with other fixed income categories. The group benefited from demand for above-average income in an environment of slow economic growth and historically low interest rates, as well as a general betterment in the credit fundamentals of many financial companies. Preferreds' strong performance also reflected technical price support: an already favorable supply/demand dynamic improved when the Federal Reserve released a banking supervision statement that opened the door to more significant call activity.

Political uncertainty in Europe continued to drive volatility in financial markets, including in the preferreds space. Sentiment on this front improved as European Union officials took steps to ease the strain on sovereign balance sheets. In September, an agreement was reached to permit the European Central Bank to conduct unlimited open-market purchases of sovereign debt from countries willing to agree to certain conditions, prompting a sharp downturn in bond yields in Spain and Italy. Markets also benefited from signs of economic stabilization in China, which mitigated one of the key risks to global growth.

Redemptions continued, while new issuance accelerated

In June, the Federal Reserve released a much-anticipated notice laying out new proposed capital treatment rules. This enabled U.S. banks to take advantage of a special "regulatory call" window to redeem trust preferreds destined to lose their Tier 1 regulatory status. Call activity spiked in the window, with more than $30 billion redeemed by early September.

Federal Reserve guidance also provided the first clear indication of what types of preferreds would continue to offer Tier 1 capital treatment. Accordingly, with investors continuing to show strong interest in preferreds, U.S. banks began to issue in large sizes for the first time since 2008. Issuance appeared to be opportunistic, taking advantage of low market rates. To be sure, redemptions did not dry up; in October, Bank of America announced a $5.1 billion redemption of its preferreds, an example of a company removing higher-coupon securities that happened to be callable.

New preferred supply from U.S. banks was largely concentrated in the retail exchange-traded market, where companies could generally get more-favorable terms. Issuance in the over-the-counter (OTC) institutional market was relatively light (aiding the outperformance of OTC preferreds in the year), but there were some large deals, including from foreign issuers. One noteworthy transaction was a Barclay's $3 billion contingent capital (CoCo) security, the largest single publicly offered CoCo to date. These new forms of bank capital are favored by European regulators and have write-down or conversion to equity features in the event the issuer's capitalization falls below a target level.


2



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Performance was broadly positive by sector

In this environment, bank and insurance company issues had the largest gains for the year, despite further compression of net interest margins (banks) and lower investment incomes (insurance) related to a low and relatively flat Treasury yield curve. In addition to the positive technical of a shrinking investable market due to issuer redemptions, bank preferreds benefited from steady improvements in credit fundamentals, including higher capital mandated by regulators and better asset quality supported in part by an improving housing market. Insurance issuers, too, generally saw capital improve; however, life issuers were particularly challenged by the yield environment, which hindered their investment returns.

Real estate, utilities and telecommunications preferreds had relatively modest gains. From a regional standpoint, dollar-denominated European preferreds were subject to wide swings in performance, but ended with a strong gain for the period.

Fund performance

The Fund had a positive total return for the year and outperformed its blended benchmark by a wide margin. The primary factor affecting relative performance was our security selection in the financial sectors (banking, insurance, finance and brokerage). We were well positioned to benefit from regulatory reform trends, having previously sold many callable hybrid preferreds that we expected to be redeemed. Instead, we favored securities with relatively high coupons and substantial call protection, including many out-of-index issues. As the preferred market shrank and credit spreads collapsed, securities that could not be called generally continued to rise. In addition, we had beneficial positions in certain European issuers based on what we viewed as very attractive discounts.

Our overweight in REIT preferreds detracted from relative returns, although this was offset by positive security selection in the sector, in part due to our avoidance of preferreds issued by Public Storage, a serial issuer. Similarly, our overweight in telecommunications preferreds had a negative effect on performance that was largely offset by positive stock selection. Our out-of-index allocation to pipeline securities had a sizable absolute gain but trailed the wider preferred securities market.

Impact of Derivatives on Fund Performance

The Fund used derivatives in the form of forward foreign currency exchange contracts in order to manage currency risk on certain Fund positions denominated in foreign currencies. These contracts did not have a material effect on the Fund's total return for the period.

Investment Outlook

Given the pending implementation of Basel III regulatory rules (an official commencement date has yet to be established across many global jurisdictions) and a U.S. regulatory framework that appears largely set, while we believe banks will continue to redeem existing preferreds, we expect them to also issue many new ones that will work under the new framework. Consequently, net supply is becoming more balanced after a meaningful contraction in the preferreds market over the past year. We expect new supply to remain elevated, assuming that credit markets remain receptive, which could result in a


3



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

net increase in supply in 2013. We note that some of the new issuance will be in the form of untested structures with greater yield spreads and potential room for price appreciation.

In this context, we believe it will be important to have a strategy that is active and flexible enough to take advantage of best values wherever they exist. We are generally finding better opportunities in the over-the-counter institutional market, which offers a wider array of issuers and structures, including the new CoCo securities and preferreds with fixed-to-floating-rate structures that have both attractive yields and defensive characteristics relative to interest rate risk. We have also found good values in floating-rate issues. We have been more selective in the $25-par market, based on higher new supply and generally less attractive relative valuations. That said, we have found some very appealing new issues in both markets.

Across the broad preferred securities market, we believe yields are still attractive compared with other fixed income classes, both in absolute terms and relative to historical credit spread relationships. Yields offered by preferreds generally exceed those offered by other investment-grade asset classes by a wider margin than they have historically; the spread to Treasurys remains well-wide of the historical norm. In addition, given wide credit spreads, the catalyst of much stronger financial-services regulation and a better economic backdrop suggests that improving credit fundamentals could lead to further spread tightening and good relative performance.

As well, we continue to believe that wide spreads could have a meaningful cushioning effect on prices should Treasury yields rise. This dampening effect has been evident in several recent periods, including as Treasury yields increased in December, resulting in losses to Treasury holders even as preferred prices generally rose. While we are vigilant and prefer securities less sensitive to interest rates, we do not expect interest rates to increase meaningfully or in a sustained fashion in the first half of 2013. Rather, we believe that rising taxes associated with the "fiscal cliff," as well as uncertainty surrounding federal spending negotiations, will have a dampening effect on growth and rates.


4



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Sincerely,

       

 

 
       

MARTIN COHEN

 

ROBERT H. STEERS

 
       

Co-chairman

 

Co-chairman

 
       

 

 
       

JOSEPH M. HARVEY

 

WILLIAM F. SCAPELL

 
       

Portfolio Manager

 

Portfolio Manager

 

The views and opinions in the preceding commentary are subject to change and are as of the date of publication. 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 any of our funds, visit cohenandsteers.com, where you will find daily net asset values, fund fact sheets and portfolio highlights. You can also access newsletters, education tools and market updates covering the global real estate, commodities, global natural resource equities, listed infrastructure, utilities, large cap value and preferred securities sectors.

In addition, our website contains comprehensive information about our firm, including our most recent press releases, profiles of our senior investment professionals and an overview of our investment approach.


5



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Performance Review (Unaudited)

Class A—Growth of a $10,000 Investment

Class C—Growth of a $10,000 Investment

Class I—Growth of a $100,000 Investment


6



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Performance Review (Unaudited)—(Continued)

Average Annual Total Returns—For Periods Ended December 31, 2012

   

Class A Shares

 

Class C Shares

 

Class I Shares

 

1 Year (with sales charge)

   

17.46

%b

   

20.31

%c

   

   

1 Year (without sales charge)

   

22.04

%

   

21.31

%

   

22.52

%

 

Since Inceptiond (with sales charge)

   

11.16

%b

   

12.02

%

   

   

Since Inceptiond (without sales charge)

   

12.77

%

   

12.02

%

   

13.17

%

 

The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate and shares, if redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance information current to the most recent month end can be obtained by visiting our website at cohenandsteers.com. All share class returns assume the reinvestment of all dividends and distributions at NAV. The performance graphs and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. During the periods presented above, the advisor waived fees and/or reimbursed expenses. Without this arrangement, performance would have been lower.

The annualized gross and net expense ratios, respectively, for each class of shares as disclosed in the May 1, 2012 prospectuses were as follows: Class A—1.29% and 1.10%; Class C—1.94% and 1.75%; and Class I—0.95% and 0.75%. Through June 30, 2014, the advisor has contractually agreed to waive its fee and/or reimburse the Fund for expenses incurred (excluding applicable distribution and shareholder servicing fees for Class A and Class C, acquired fund fees and expenses and extraordinary expenses) to the extent necessary to maintain the Fund's total annual operating expenses as a percentage of average net assets at 1.10% for Class A shares, 1.75% for Class C shares and 0.75% for Class I shares.

a  The comparative indexes are not adjusted to reflect expenses or other fees that the SEC requires to be reflected in the Fund's performance. An investor cannot invest directly in an index. The Fund's performance assumes the reinvestment of all dividends and distributions at NAV. For more information, including charges and expenses, please read the prospectus carefully before you invest.

b  Reflects a 3.75% front-end sales charge.

c  Reflects a contingent deferred sales charge of 1%.

d  Inception date of May 3, 2010.


7



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Expense Example
(Unaudited)

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments; and (2) ongoing costs including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2012—December 31, 2012.

Actual Expenses

The first line of the following table provides information about actual account values and expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads). Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.


8



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Expense Example (Unaudited)—(Continued)

    Beginning
Account Value
July 1, 2012
  Ending
Account Value
December 31, 2012
  Expenses Paid
During Perioda
July 1, 2012–
December 31, 2012
 

Class A

 

Actual (10.71% return)

 

$

1,000.00

   

$

1,107.10

   

$

5.83

   
Hypothetical (5% annual return before
expenses)
 

$

1,000.00

   

$

1,019.61

   

$

5.58

   

Class C

 

Actual (10.34% return)

 

$

1,000.00

   

$

1,103.40

   

$

9.25

   
Hypothetical (5% annual return before
expenses)
 

$

1,000.00

   

$

1,016.34

   

$

8.87

   

Class I

 

Actual (10.98% return)

 

$

1,000.00

   

$

1,109.80

   

$

3.98

   
Hypothetical (5% annual return before
expenses)
 

$

1,000.00

   

$

1,021.37

   

$

3.81

   

a  Expenses are equal to the Fund's Class A, Class C and Class I annualized expense ratios of 1.10%, 1.75% and 0.75%, respectively, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period). If the Fund had borne all of its expenses that were assumed by the advisor, the annualized expense ratios would have been 1.22%, 1.87% and 0.87%, respectively.


9



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

December 31, 2012

Top Ten Long-Term Holdingsa
(Unaudited)

Security

 

Value

  % of
Net
Assets
 

JP Morgan Chase & Co., 7.90%, due 4/29/49, Series I

 

$

55,261,699

     

3.1

   

American International Group, 8.175%, due 5/15/58, (FRN)

   

44,817,177

     

2.5

   

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

   

35,290,506

     

2.0

   

Wells Fargo & Co., 7.98%, due 3/29/49, Series K

   

35,289,550

     

2.0

   

HSBC Capital Funding LP, 10.176%, due 12/29/49, 144A (Jersey)

   

34,386,615

     

1.9

   

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

   

33,193,500

     

1.8

   

American General Institutional Capital A, 7.57%, due 12/1/45, 144A

   

32,665,500

     

1.8

   

Wells Fargo & Co., 7.50%, Series L ($1,000 Par Value)(Convertible)

   

32,193,000

     

1.8

   

MetLife Capital Trust X, 9.25%, due 4/8/38, 144A

   

30,255,325

     

1.7

   

General Electric Capital Corp., 7.125%, due 12/15/49, Series A

   

27,347,764

     

1.5

   

a  Top ten holdings are determined on the basis of the value of individual securities held. All of the securities listed above are preferred stock. The Fund may also hold positions in other types of securities issued by the companies listed above. See the Schedule of Investments for additional details on such other positions.

Sector Breakdown

(Based on Net Assets)
(Unaudited)


10




COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS

December 31, 2012

        Number
of Shares
 

Value

 

PREFERRED SECURITIES—$25 PAR VALUE

 

37.8%

                 

BANKS

 

13.7%

                 

Ally Financial, 7.25%, due 2/7/33

       

379,921

   

$

9,498,025

   

Ally Financial, 7.35%, due 8/8/32

       

233,779

     

5,851,488

   

Ally Financial, 7.30%, due 3/9/31, (PINES)

       

562,024

     

14,044,980

   
Bank of America Corp., 7.25%, Series L
($1,000 Par Value)(Convertible)
       

15,775

     

17,904,625

   

Bank of America Corp., 8.625%, Series VIII

       

170,937

     

4,369,150

   

Citigroup Capital VIII, 6.95%, due 9/15/31, (TruPS)

       

738,959

     

18,614,377

   

Citigroup Capital XIV, 6.875%, due 6/30/66, (TruPS)

       

123,327

     

3,094,274

   

Citigroup Capital XV, 6.50%, due 9/15/66, (TruPS)

       

134,927

     

3,386,668

   
Citigroup Capital XVI, 6.45%, due 12/31/66, Series W
(TruPS)
       

135,586

     

3,392,362

   

CoBank ACB, 6.25%, 144A ($100 Par Value)a

       

240,000

     

25,117,512

   

Countrywide Capital IV, 6.75%, due 4/1/33

       

127,062

     

3,153,679

   

Countrywide Capital V, 7.00%, due 11/1/36

       

810,527

     

20,417,175

   

First Niagara Financial Group, 8.625%, Series B

       

229,881

     

6,540,114

   

First Republic Bank, 6.70%, Series A

       

203,215

     

5,480,708

   

First Republic Bank, 6.20%, due 12/30/49, Series B

       

38,009

     

992,035

   
Huntington Bancshares, 8.50%, due 12/31/49,
Series A ($1,000 Par Value)(Convertible)
       

17,017

     

20,930,910

   
KeyCorp, 7.75%, due 12/31/49, Series A
($100 Par Value)(Convertible)
       

19,207

     

2,405,677

   

PNC Financial Services Group, 6.125%, Series P

       

344,700

     

9,551,637

   

PrivateBancorp, 7.125%, due 10/30/42

       

348,075

     

8,928,124

   

US Bancorp, 6.50%, Series F

       

130,399

     

3,734,627

   
Wells Fargo & Co., 7.50%, Series L
($1,000 Par Value)(Convertible)
       

26,280

     

32,193,000

   

Zions Bancorp, 9.50%, due 12/29/49, Series C

       

533,419

     

13,804,884

   

Zions Bancorp, 7.90%, Series F

       

462,800

     

13,846,976

   
             

247,253,007

   

See accompanying notes to financial statements.
11



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

BANKS—FOREIGN

 

2.4%

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

316,846

   

$

7,978,182

   

Deutsche Bank Contingent Capital Trust III, 7.60%

       

265,252

     

7,145,889

   
National Westminster Bank PLC, 7.76%, Series C
(United Kingdom)
       

329,708

     

8,170,164

   
Royal Bank of Scotland Group PLC, 6.40%, Series M
(United Kingdom)
       

242,440

     

5,476,720

   
Royal Bank of Scotland Group PLC, 6.35%, Series N
(United Kingdom)
       

285,625

     

6,432,275

   
Royal Bank of Scotland Group PLC, 6.60%, Series S
(United Kingdom)
       

370,000

     

8,510,000

   
             

43,713,230

   

ELECTRIC—INTEGRATED

 

1.7%

                 

DTE Energy Co., 6.50%, due 12/1/61

       

147,654

     

4,029,478

   

Entergy Arkansas, 4.90%, due 12/1/52

       

278,700

     

6,925,695

   

Entergy Louisiana LLC, 5.25%, due 7/1/52

       

203,375

     

5,332,493

   
NextEra Energy Capital Holdings, 5.70%,
due 3/1/72, Series G
       

114,106

     

2,974,743

   
NextEra Energy Capital Holdings, 5.625%,
due 6/15/72, Series H
       

139,701

     

3,635,020

   

SCE Trust I, 5.625%

       

271,600

     

7,007,280

   
             

29,904,709

   

FINANCE

 

0.8%

                 

INVESTMENT ADVISORY SERVICES

 

0.6%

                 

Affiliated Managers Group, 6.375%, due 8/15/42

       

400,000

     

10,520,000

   

INVESTMENT BANKER/BROKER

 

0.2%

                 

Raymond James Financial, 6.90%, due 3/15/42

       

153,040

     

4,173,401

   

TOTAL FINANCE

           

14,693,401

   

INDUSTRIALS—DIVERSIFIED MANUFACTURING

 

0.7%

                 

Stanley Black & Decker, 5.75%, due 7/25/52

       

500,000

     

12,975,000

   

See accompanying notes to financial statements.
12



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

INSURANCE

 

6.1%

                 

LIFE/HEALTH INSURANCE—FOREIGN

 

0.6%

                 

Aegon NV, 6.875% (Netherlands)

       

157,132

   

$

3,928,300

   

Aegon NV, 7.25% (Netherlands)

       

146,830

     

3,681,028

   

Aegon NV, 8.00%, due 2/15/42 (Netherlands)

       

98,987

     

2,769,656

   
             

10,378,984

   

MULTI-LINE

 

1.3%

                 

American International Group, 7.70%, due 12/18/62

       

216,336

     

5,494,934

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

645,000

     

18,517,950

   
             

24,012,884

   

MULTI-LINE—FOREIGN

 

1.9%

                 

ING Groep N.V., 6.375% (Netherlands)

       

169,832

     

4,108,236

   

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

       

234,352

     

5,861,144

   

ING Groep N.V., 7.20% (Netherlands)

       

218,926

     

5,490,664

   

ING Groep N.V., 7.375% (Netherlands)

       

527,050

     

13,170,980

   

ING Groep N.V., 8.50% (Netherlands)

       

234,865

     

6,010,195

   
             

34,641,219

   

REINSURANCE

 

0.8%

                 

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

       

550,000

     

14,910,500

   

REINSURANCE—FOREIGN

 

1.5%

                 

Arch Capital Group Ltd., 6.75% (Bermuda)

       

230,900

     

6,195,047

   

Aspen Insurance Holdings Ltd., 7.25% (Bermuda)

       

202,107

     

5,291,161

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

256,140

     

6,838,938

   
Endurance Specialty Holdings Ltd., 7.50%, Series B
(Bermuda)
       

163,398

     

4,356,191

   

Montpelier Re Holdings Ltd., 8.875% (Bermuda)

       

140,175

     

3,781,922

   
             

26,463,259

   

TOTAL INSURANCE

           

110,406,846

   

See accompanying notes to financial statements.
13



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

INTEGRATED TELECOMMUNICATIONS SERVICES

 

1.8%

                 

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

       

320,208

   

$

8,453,491

   

Qwest Corp., 7.00%, due 7/1/52

       

189,876

     

4,934,877

   

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

       

228,874

     

6,136,112

   

Qwest Corp., 7.50%, due 9/15/51

       

144,215

     

3,889,479

   

Telephone & Data Systems, 6.875%, due 11/15/59

       

137,957

     

3,600,678

   

Telephone & Data Systems, 7.00%, due 3/15/60

       

187,146

     

4,955,626

   
             

31,970,263

   

REAL ESTATE

 

10.0%

                 

DIVERSIFIED

 

4.0%

                 

Colony Financial, 8.50%, Series A

       

314,736

     

8,224,052

   
Coresite Realty Corp., 7.25%, due 12/12/17,
Series A
       

349,038

     

8,799,248

   

Cousins Properties, 7.75%, Series A

       

199,343

     

5,039,391

   

Cousins Properties, 7.50%, Series B

       

83,350

     

2,085,417

   

DuPont Fabros Technology, 7.875%, Series A

       

318,329

     

8,461,185

   

Forest City Enterprises, 7.375%, due 2/1/34

       

445,000

     

10,840,200

   

Lexington Realty Trust, 7.55%, Series D

       

231,293

     

5,784,638

   

Retail Properties of America, 7.00%

       

327,500

     

8,072,875

   
Sovereign Real Estate Investment Trust, 12.00%, 144A
($1,000 Par Value)a
       

4,090

     

5,237,167

   

Urstadt Biddle Properties, 7.125%, Series F

       

232,000

     

6,029,680

   

Winthrop Realty Trust, 7.75%, due 8/15/22

       

132,900

     

3,435,465

   
             

72,009,318

   

HOTEL

 

2.1%

                 

Chesapeake Lodging Trust, 7.75%, Series A

       

295,000

     

7,811,600

   

Hersha Hospitality Trust, 8.00%, Series B

       

129,235

     

3,276,107

   

Hospitality Properties Trust, 7.125%, Series D

       

50,000

     

1,330,000

   

LaSalle Hotel Properties, 7.50%, Series H

       

99,900

     

2,572,425

   

Pebblebrook Hotel Trust, 7.875%, Series A

       

231,372

     

5,994,849

   

Strategic Hotels & Resorts, 8.50%, Series A

       

260,496

     

6,528,030

   

Strategic Hotels & Resorts, 8.25%, Series B

       

291,320

     

7,283,000

   

Sunstone Hotel Investors, 8.00%, Series D

       

171,620

     

4,378,026

   
             

39,174,037

   

See accompanying notes to financial statements.
14



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

INDUSTRIALS

 

0.3%

                 

First Potomac Realty Trust, 7.75%, Series A

       

192,001

   

$

4,928,665

   

MORTGAGE

 

0.3%

                 

Annaly Capital Management, 7.50%, Series D

       

200,000

     

4,974,000

   

OFFICE

 

1.2%

                 

BioMed Realty Trust, 7.375%, Series A

       

121,483

     

3,096,602

   

CommonWealth REIT, 6.50%, Series D (Convertible)

       

227,859

     

5,258,986

   

Corporate Office Properties Trust, 7.375%, Series L

       

292,000

     

7,340,880

   

Hudson Pacific Properties, 8.375%, Series B

       

230,908

     

6,180,252

   
             

21,876,720

   

RESIDENTIAL—MANUFACTURED HOME

 

0.2%

                 

Equity Lifestyle Properties, 6.75%, Series C

       

176,688

     

4,547,949

   

SHOPPING CENTERS

 

1.9%

                 

COMMUNITY CENTER

 

0.9%

                 

Cedar Realty Trust, 7.25%, Series B

       

195,000

     

4,767,750

   

DDR Corp., 7.375%, Series H

       

229,387

     

5,741,557

   

DDR Corp., 6.50%, Series J

       

100,000

     

2,446,000

   

Kite Realty Group Trust, 8.25%, Series A

       

103,490

     

2,654,518

   
             

15,609,825

   

FREE STANDING

 

0.1%

                 

Realty Income Corp., 6.625%, Series F

       

91,200

     

2,418,624

   

REGIONAL MALL

 

0.9%

                 

CBL & Associates Properties, 7.375%, Series D

       

204,110

     

5,112,956

   
Glimcher Realty Trust, 7.50%, due 11/20/49,
Series H
       

189,700

     

4,816,483

   

Pennsylvania REIT, 8.25%, Series A

       

222,833

     

5,856,051

   
             

15,785,490

   

TOTAL SHOPPING CENTERS

           

33,813,939

   

TOTAL REAL ESTATE

           

181,324,628

   

See accompanying notes to financial statements.
15



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

TRANSPORT—MARINE

 

0.6%

                 

Seaspan Corp., 9.50%, due 1/29/49, Series C

       

359,575

   

$

9,906,291

   
TOTAL PREFERRED SECURITIES—$25 PAR VALUE
(Identified cost—$641,723,732)
           

682,147,375

   

PREFERRED SECURITIES—CAPITAL SECURITIES

 

58.1%

                 

BANKS

 

9.6%

                 
Bank of America Corp., 8.125%, due 12/29/49,
Series M
       

3,500,000

     

3,879,785

   

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

       

3,000,000

     

3,229,887

   
CoBank ACB, 11.00%, Series C, 144A
($50 Par Value)a
       

45,000

     

2,318,909

   
Farm Credit Bank of Texas, 10.00%, due 12/15/20,
Series I
       

14,200

     

17,727,812

   

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

       

22,811,000

     

23,747,095

   
Goldman Sachs Capital III, 4.00%, due 12/31/49,
Series F (FRN)
       

5,200,000

     

4,020,536

   
JP Morgan Chase & Co., 7.90%, due 4/29/49,
Series I
       

48,600,000

     

55,261,699

   

M&T Capital Trust II, 8.277%, due 6/1/27

       

6,000,000

     

6,135,000

   

PNC Financial Services Group, 6.75%, due 7/29/49

       

9,000,000

     

10,264,473

   

Regions Financial Corp., 7.375%, due 12/10/37

       

10,661,000

     

11,727,100

   

Wells Fargo & Co., 7.98%, due 3/29/49, Series K

       

30,620,000

     

35,289,550

   
     

     

173,601,846

   

BANKS—FOREIGN

 

17.6%

                 
Abbey National Capital Trust I, 8.963%, due 12/29/49
(United Kingdom)
       

11,232,000

     

12,790,440

   
Banco do Brasil SA/Cayman, 9.25%, due 12/31/49,
144A (Brazil)a
       

19,950,000

     

24,787,875

   
Barclays Bank PLC, 6.278%, due 12/31/49
(United Kingdom)
       

5,550,000

     

5,328,272

   
Barclays Bank PLC, 6.86%, due 12/31/49, 144A
(United Kingdom)a
       

14,600,000

     

15,056,250

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

25,000,000

     

25,031,250

   
BNP Paribas, 7.195%, due 12/31/49, 144A
(France)a
       

12,900,000

     

13,287,000

   

See accompanying notes to financial statements.
16



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 
BNP Paribas SA, 7.781%, due 6/29/49,
(France) (EUR)
       

2,600,000

   

$

3,825,896

   

BPCE SA, 9.00%, due 3/29/49, (France) (EUR)

       

6,000,000

     

8,434,676

   
Claudius Ltd. (Credit Suisse), 7.875%, due 12/12/49
(Jersey)
       

9,804,000

     

10,527,045

   
Credit Suisse Group Guernsey I Ltd., 7.875%,
due 2/24/41
       

11,400,000

     

12,117,060

   
HBOS Capital Funding LP, 6.85%, due 12/31/49
(Jersey)
       

20,983,000

     

19,282,726

   
HSBC Capital Funding LP, 10.176%, due 12/29/49,
144A (Jersey)a
       

25,054,000

     

34,386,615

   
LBG Capital No.1 PLC, 8.00%, due 12/29/49,
144A (United Kingdom)a
       

10,430,000

     

10,873,275

   
Lloyds TSB Bank PLC, 6.35%, due 12/31/49
(United Kingdom) (EUR)
       

5,686,000

     

6,184,318

   
Lloyds TSB Bank PLC, 11.875%, due 12/16/21, (FRN)
(United Kingdom) (EUR)
       

4,405,000

     

7,326,065

   
Rabobank Nederland, 8.40%, due 12/31/49
(Netherlands)
       

21,150,000

     

23,091,781

   
Rabobank Nederland, 11.00%, due 6/29/49, 144A
(Netherlands)a
       

12,330,000

     

16,778,097

   
RBS Capital Trust B, 6.80%, due 12/29/49
(United Kingdom)
       

12,000,000

     

10,980,000

   
RBS Capital Trust II, 6.425%, due 12/31/49, (FRN)
(United Kingdom)
       

5,428,000

     

4,776,640

   
SMFG Preferred Capital, 9.50%, due 7/29/49, 144A
(FRN) (Cayman Islands)a
       

4,000,000

     

5,142,000

   

Societe Generale, 6.625%, due 12/31/49 (France)

       

7,000,000

     

7,013,650

   
Standard Chartered PLC, 7.014%, due 7/29/49, 144A
(United Kingdom)a
       

6,450,000

     

6,960,930

   

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

       

30,000,000

     

33,193,500

   
     

     

317,175,361

   

FINANCE

 

4.6%

                 

CREDIT CARD

 

0.3%

                 

American Express Co., 6.80%, due 9/1/66

       

5,455,000

     

5,877,763

   

See accompanying notes to financial statements.
17



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

DIVERSIFIED FINANCIAL SERVICES

 

4.1%

                 

Citigroup, 5.95%, due 12/31/49, (FRN)

       

20,650,000

   

$

20,933,937

   
General Electric Capital Corp., 7.125%, due 12/15/49,
Series A
       

24,100,000

     

27,347,764

   
General Electric Capital Corp., 6.25%, due 12/15/49,
Series B
       

23,000,000

     

25,155,123

   
     

     

73,436,824

   

INVESTMENT BANKER/BROKER

 

0.2%

                 

Charles Schwab Corp., 7.00%, due 12/31/49

       

2,700,000

     

3,096,792

   

TOTAL FINANCE

     

   

82,411,379

   

INSURANCE

 

19.0%

                 

LIFE/HEALTH INSURANCE

 

6.0%

                 
American General Institutional Capital A, 7.57%,
due 12/1/45, 144Aa
       

27,450,000

     

32,665,500

   
American General Institutional Capital B, 8.125%,
due 3/15/46, 144Aa
       

15,450,000

     

19,428,375

   
CNP Assurances, 6.875%, due 9/30/41, (FRN)
(France) (EUR)
       

8,500,000

     

11,601,048

   
Friends Life Group PLC, 7.875%, due 12/31/49, (FRN)
(United Kingdom)
       

9,500,000

     

10,127,532

   
Great-West Life & Annuity Insurance Co., 7.153%,
due 5/16/46, 144Aa
       

2,800,000

     

2,919,000

   
Nippon Life Insurance Co., 5.00%, due 10/18/42, 144A
(Japan)a
       

8,400,000

     

8,890,006

   

Prudential Financial, 5.625%, due 6/15/43, (FRN)

       

22,475,000

     

23,403,217

   

   

     

109,034,678

   

LIFE/HEALTH INSURANCE—FOREIGN

 

1.0%

                 
Dai-Ichi Mutual Life, 7.25%, due 12/29/49, 144A
(Japan)a
       

3,500,000

     

3,996,027

   

Prudential PLC, 7.75%, due 6/23/16 (United Kingdom)

       

13,155,000

     

14,260,020

   
             

18,256,047

   

See accompanying notes to financial statements.
18



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

MULTI-LINE

 

5.1%

                 
American International Group, 8.175%, due 5/15/58,
(FRN)
       

34,277,000

   

$

44,817,177

   

MetLife Capital Trust IV, 7.875%, due 12/15/37, 144Aa

       

13,565,000

     

16,752,775

   

MetLife Capital Trust X, 9.25%, due 4/8/38, 144Aa

       

21,845,000

     

30,255,325

   
             

91,825,277

   

MULTI-LINE—FOREIGN

 

1.9%

                 

Aviva PLC, 8.25%, due 4/29/49 (United Kingdom)

       

5,850,000

     

6,375,927

   

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

       

5,000,000

     

6,282,655

   

AXA SA, 6.379%, due 12/31/49, 144A (France)a

       

8,250,000

     

8,126,250

   

AXA SA, 6.463%, due 12/31/49, 144A (France)a

       

6,300,000

     

6,237,000

   

Cloverie PLC, 8.25%, due 12/31/49 (Ireland)

       

5,800,000

     

6,702,039

   
             

33,723,871

   

PROPERTY CASUALTY

 

1.6%

                 

Liberty Mutual Group, 7.00%, due 3/15/37, 144Aa

       

5,505,000

     

5,498,119

   

Liberty Mutual Group, 7.80%, due 3/15/37, 144Aa

       

20,356,000

     

22,747,830

   

           

28,254,949

   

PROPERTY CASUALTY—FOREIGN

 

0.6%

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

10,000,000

     

11,473,940

   

REINSURANCE

 

0.3%

                 

Reinsurance Group of America, 6.75%, due 12/15/65

       

5,500,000

     

5,513,750

   

REINSURANCE—FOREIGN

 

2.5%

                 
Aquarius + Investments PLC, 8.25%, due 12/31/49
(Ireland)
       

9,980,000

     

10,711,255

   
Catlin Insurance Co., 7.249%, due 12/31/49, 144A
(Bermuda)a
       

16,900,000

     

16,984,500

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

7,275,000

     

7,541,425

   
Swiss Re Capital I LP, 6.854%, due 5/29/49, 144A
(Jersey)a
       

5,800,000

     

6,083,579

   
Swiss Reinsurance Co., Ltd., Series I, 7.635%,
due 12/31/49, (Australia) (AUD)
       

3,000,000

     

3,087,124

   
             

44,407,883

   

TOTAL INSURANCE

     

   

342,481,395

   

See accompanying notes to financial statements.
19



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Number
of Shares
 

Value

 

INTEGRATED TELECOMMUNICATIONS SERVICES

 

1.9%

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

28,162

   

$

35,290,506

   

OIL & GAS EXPLORATION & PRODUCTION

 

0.4%

                 
Origin Energy Finance Ltd., 7.875%, due 6/16/71
(Australia) (EUR)
       

5,000,000

     

6,962,740

   

PIPELINES

 

3.1%

                 

Enbridge Energy Partners LP, 8.05%, due 10/1/37

       

19,403,000

     

22,060,299

   
Enterprise Products Operating LLC, 7.034%,
due 1/15/68, Series B
       

14,325,000

     

16,419,759

   
Enterprise Products Operating LP, 8.375%,
due 8/1/66
       

15,676,000

     

17,904,250

   
             

56,384,308

   

UTILITIES

 

1.9%

                 

ELECTRIC UTILITIES

 

0.7%

                 

FPL Group Capital, 7.30%, due 9/1/67, Series D

       

12,200,000

     

13,570,756

   

MULTI-UTILITIES

 

1.2%

                 

Dominion Resources, 7.50%, due 6/30/66, Series A

       

7,495,000

     

8,325,888

   

PPL Capital Funding, 6.70%, due 3/30/67, Series A

       

12,638,000

     

13,377,007

   
             

21,702,895

   

TOTAL UTILITIES

           

35,273,651

   
TOTAL PREFERRED SECURITIES—CAPITAL SECURITIES
(Identified cost—$964,144,199)
     

   

1,049,581,186

   
        Principal
Amount
     

CORPORATE BONDS

 

1.7%

                 

INSURANCE—PROPERTY CASUALTY

 

0.5%

                 
Liberty Mutual Insurance, 7.697%, due 10/15/97,
144Aa
     

$

8,400,000

     

8,671,135

   

See accompanying notes to financial statements.
20



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

        Principal
Amount
 

Value

 

INTEGRATED TELECOMMUNICATIONS SERVICES

   

1.2%

                   

CenturyLink, 7.65%, due 3/15/42

     

$

7,850,000

   

$

8,228,667

   

Citizens Communications Co., 9.00%, due 8/15/31

       

11,850,000

     

13,094,250

   
             

21,322,917

   
TOTAL CORPORATE BONDS
(Identified cost—$28,019,667)
     

   

29,994,052

   
        Number
of Shares
     

SHORT-TERM INVESTMENTS

   

0.9%

                   

MONEY MARKET FUNDS

                         

BlackRock Liquidity Funds: FedFund, 0.01%c

       

8,450,366

     

8,450,366

   

Federated Government Obligations Fund, 0.01%c

       

8,450,573

     

8,450,573

   
TOTAL SHORT-TERM INVESTMENTS
(Identified cost—$16,900,939)
           

16,900,939

   

TOTAL INVESTMENTS (Identified cost—$1,650,788,537)

   

98.5

%

           

1,778,623,552

   

OTHER ASSETS IN EXCESS OF LIABILITIES

   

1.5

             

27,940,681

   

NET ASSETS

   

100.0

%

         

$

1,806,564,233

   

See accompanying notes to financial statements.
21



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

SCHEDULE OF INVESTMENTS—(Continued)

December 31, 2012

Forward foreign currency exchange contracts outstanding at December 31, 2012 were as follows:

Counterparty

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

Brown Brothers, Harriman

 

USD

3,638,109

   

EUR

2,812,978

   

1/3/13

 

$

74,884

   

Brown Brothers, Harriman

 

USD

3,073,511

   

AUD

2,959,830

   

1/3/13

   

123

   

Brown Brothers, Harriman

 

USD

43,627,824

   

EUR

33,098,120

   

1/3/13

   

60,066

   

Brown Brothers, Harriman

 

AUD

2,959,830

   

USD

3,080,251

   

1/3/13

   

6,616

   

Brown Brothers, Harriman

 

EUR

35,911,098

   

USD

46,710,643

   

1/3/13

   

(690,240

)

 

Brown Brothers, Harriman

 

AUD

2,969,730

   

USD

3,076,765

   

2/4/13

   

156

   

Brown Brothers, Harriman

 

EUR

33,583,956

   

USD

44,276,617

   

2/4/13

   

(64,642

)

 

 

$

(613,037

)

 

Glossary of Portfolio Abbreviations

AUD  Australian Dollar

EUR  Euro Currency

FRN  Floating Rate Note

PINES  Public Income Notes

REIT  Real Estate Investment Trust

TruPS  Trust Preferred Securities

USD  United States Dollar

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

a  Resale is restricted to qualified institutional investors. Aggregate holdings equal 22.3% of the net assets of the Fund, of which 0.0% are illiquid.

b  A portion of the security is segregated as collateral for open forward foreign currency exchange contracts. $2,136,000 in aggregate has been segregated as collateral.

c  Rate quoted represents the seven-day yield of the fund.

See accompanying notes to financial statements.
22




COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2012

ASSETS:

 

Investments in securities, at value (Identified cost—$1,650,788,537)

 

$

1,778,623,552

   

Cash

   

5,621,860

   

Receivable for:

 

Dividends and interest

   

16,916,666

   

Fund shares sold

   

11,219,977

   

Investment securities sold

   

565,926

   

Unrealized appreciation on forward foreign currency exchange contracts

   

141,845

   

Other assets

   

33,204

   

Total Assets

   

1,813,123,030

   

LIABILITIES:

 

Unrealized depreciation on forward foreign currency exchange contracts

   

754,882

   

Payable for:

 

Investment securities purchased

   

3,357,643

   

Fund shares redeemed

   

1,195,559

   

Investment management fees

   

799,007

   

Administration fees

   

74,471

   

Distribution fees

   

44,712

   

Shareholder servicing fees

   

39,438

   

Directors' fees

   

1,636

   

Other liabilities

   

291,449

   

Total Liabilities

   

6,558,797

   

NET ASSETS

 

$

1,806,564,233

   

NET ASSETS consist of:

 

Paid-in capital

 

$

1,681,774,195

   
Dividends in excess of net investment income    

(1,549,585

)

 
Accumulated net realized loss    

(907,930

)

 
Net unrealized appreciation    

127,247,553

   
   

$

1,806,564,233

   

See accompanying notes to financial statements.
23



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES—(Continued)

December 31, 2012

CLASS A SHARES:

 

NET ASSETS

 

$

413,603,114

   

Shares issued and outstanding ($0.001 par value common stock outstanding)

   

30,998,212

   

Net asset value and redemption price per share

 

$

13.34

   

Maximum offering price per share ($13.34 ÷ .9625)a

 

$

13.86

   

CLASS C SHARES:

 

NET ASSETS

 

$

410,543,455

   

Shares issued and outstanding ($0.001 par value common stock outstanding)

   

30,899,710

   

Net asset value and offering price per shareb

 

$

13.29

   

CLASS I SHARES:

 

NET ASSETS

 

$

982,417,664

   

Shares issued and outstanding ($0.001 par value common stock outstanding)

   

73,558,977

   

Net asset value, offering and redemption price per share

 

$

13.36

   

a  On investments of $100,000 or more, the offering price is reduced.

b  Redemption price per share is equal to the net asset value per share less any applicable contingent deferred sales charge of 1% on shares held for less than one year.

See accompanying notes to financial statements.
24



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

STATEMENT OF OPERATIONS

For the Year Ended December 31, 2012

Investment Income:

 

Dividend income (net of $12,488 of foreign withholding tax)

 

$

38,747,428

   

Interest income (net of $1,436 of foreign withholding tax)

   

43,862,860

   
Total Income    

82,610,288

   

Expenses:

 

Investment management fees

   

8,643,346

   

Distribution fees—Class A

   

655,711

   

Distribution fees—Class C

   

2,131,093

   

Shareholder servicing fees—Class A

   

262,285

   

Shareholder servicing fees—Class C

   

710,364

   

Shareholder servicing fees—Class I

   

69,036

   

Administration fees

   

850,232

   

Transfer agent fees and expenses

   

500,129

   

Custodian fees and expenses

   

171,792

   

Registration and filing fees

   

170,780

   

Professional fees

   

110,166

   

Shareholder reporting expenses

   

95,690

   

Directors' fees and expenses

   

85,446

   

Line of credit fees

   

24,135

   

Miscellaneous

   

54,101

   

Total Expenses

   

14,534,306

   

Reduction of Expenses (See Note 2)

   

(1,513,839

)

 

Net Expenses

   

13,020,467

   
Net Investment Income    

69,589,821

   

Net Realized and Unrealized Gain (Loss):

 

Net realized gain (loss) on:

 
Investments    

17,669,566

   

Foreign currency transactions

   

(683,602

)

 
Net realized gain    

16,985,964

   

Net change in unrealized appreciation (depreciation) on:

 
Investments    

145,881,732

   

Foreign currency translations

   

(717,784

)

 
Net change in unrealized appreciation    

145,163,948

   
Net realized and unrealized gain    

162,149,912

   

Net Increase in Net Assets Resulting from Operations

 

$

231,739,733

   

See accompanying notes to financial statements.
25



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS

    For the
Year Ended
December 31, 2012
  For the
Year Ended
December 31, 2011
 

Change in Net Assets:

 

From Operations:

 

Net investment income

 

$

69,589,821

   

$

27,585,459

   
Net realized gain (loss)    

16,985,964

     

(4,002,686

)

 
Net change in unrealized appreciation
(depreciation)
   

145,163,948

     

(19,328,354

)

 
Net increase in net assets resulting
from operations
   

231,739,733

     

4,254,419

   

Dividends and Distributions to Shareholders from:

 

Net investment income:

 
Class A    

(15,316,059

)

   

(5,295,510

)

 
Class C    

(14,952,881

)

   

(5,461,040

)

 
Class I    

(42,485,526

)

   

(16,507,064

)

 

Net realized gain:

 
Class A    

(2,663,280

)

   

   
Class C    

(2,822,876

)

   

   
Class I    

(6,744,681

)

   

   

Tax return of capital:

 
Class A    

(489,660

)

   

(757,867

)

 
Class C    

(533,211

)

   

(865,727

)

 
Class I    

(1,287,349

)

   

(2,183,495

)

 
Total dividends and distributions
to shareholders
   

(87,295,523

)

   

(31,070,703

)

 

Capital Stock Transactions:

 
Increase in net assets from Fund share
transactions
   

959,943,211

     

565,115,659

   

Total increase in net assets

   

1,104,387,421

     

538,299,375

   

Net Assets:

 

Beginning of year

   

702,176,812

     

163,877,437

   

End of yeara

 

$

1,806,564,233

   

$

702,176,812

   

a  Includes dividends in excess of net investment income and accumulated undistributed net investment income of $1,549,585 and $640,387, respectively.

See accompanying notes to financial statements.
26




COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

FINANCIAL HIGHLIGHTS

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.

   

Class A

 
    For the Year Ended
December 31,
  For the Period
May 3, 2010a
 
       

though

 

Per Share Operating Performance:

 

2012

 

2011

 

December 31, 2010

 

Net asset value, beginning of period

 

$

11.69

   

$

12.10

   

$

11.46

   

Income from investment operations:

 
Net investment incomeb    

0.71

     

0.75

     

0.53

   
Net realized and unrealized gain (loss)    

1.80

     

(0.35

)

   

0.52

   

Total from investment operations

   

2.51

     

0.40

     

1.05

   

Less dividends and distributions to shareholders from:

 
Net investment income    

(0.73

)

   

(0.70

)

   

(0.34

)

 
Net realized gain    

(0.11

)

   

     

(0.04

)

 
Tax return of capital    

(0.02

)

   

(0.11

)

   

(0.03

)

 

Total dividends and distributions to shareholders

   

(0.86

)

   

(0.81

)

   

(0.41

)

 

Redemption fees retained by the Fund

   

     

0.00

c

   

0.00

c

 

Net increase (decrease) in net asset value

   

1.65

     

(0.41

)

   

0.64

   

Net asset value, end of period

 

$

13.34

   

$

11.69

   

$

12.10

   

Total investment returnd,e

   

22.04

%

   

3.32

%

   

9.22

%f

 

Ratios/Supplemental Data:

 

Net assets, end of period (in millions)

 

$

413.6

   

$

136.4

   

$

50.4

   
Ratio of expenses to average daily net assets (before expense
reduction)g
   

1.22

%

   

1.29

%

   

1.67

%h

 
Ratio of expenses to average daily net assets (net of expense
reduction)g
   

1.10

%

   

1.06

%

   

0.85

%h

 
Ratio of net investment income to average daily net assets
(before expense reduction)g
   

5.45

%

   

5.95

%

   

5.71

%h

 
Ratio of net investment income to average daily net assets
(net of expense reduction)g
   

5.57

%

   

6.18

%

   

6.53

%h

 

Portfolio turnover rate

   

39

%

   

44

%

   

31

%f

 

a  Commencement of operations.

b  Calculation based on average shares outstanding.

c  Amount is less than $0.005.

d  Does not reflect sales charges, which would reduce return.

e  Return assumes the reinvestment of all dividends and distributions at NAV.

f  Not annualized.

g  Non-class specific expenses are calculated at the Fund level and class specific expenses are calculated at the class level.

h  Annualized.

See accompanying notes to financial statements.
27



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

FINANCIAL HIGHLIGHTS—(Continued)

   

Class C

 
    For the Year Ended
December 31,
  For the Period
May 3, 2010a
 
       

though

 

Per Share Operating Performance:

 

2012

 

2011

 

December 31, 2010

 

Net asset value, beginning of period

 

$

11.65

   

$

12.06

   

$

11.46

   

Income from investment operations:

 
Net investment incomeb    

0.63

     

0.67

     

0.49

   
Net realized and unrealized gain (loss)    

1.79

     

(0.34

)

   

0.49

   

Total from investment operations

   

2.42

     

0.33

     

0.98

   

Less dividends and distributions to shareholders from:

 
Net investment income    

(0.65

)

   

(0.63

)

   

(0.31

)

 
Net realized gain    

(0.11

)

   

     

(0.04

)

 
Tax return of capital    

(0.02

)

   

(0.11

)

   

(0.03

)

 

Total dividends and distributions to shareholders

   

(0.78

)

   

(0.74

)

   

(0.38

)

 

Redemption fees retained by the Fund

   

     

0.00

c

   

0.00

c

 

Net increase (decrease) in net asset value

   

1.64

     

(0.41

)

   

0.60

   

Net asset value, end of period

 

$

13.29

   

$

11.65

   

$

12.06

   

Total investment returnd,e

   

21.31

%

   

2.69

%

   

8.62

%f

 

Ratios/Supplemental Data:

 

Net assets, end of period (in millions)

 

$

410.5

   

$

152.1

   

$

48.4

   
Ratio of expenses to average daily net assets (before expense
reduction)g
   

1.87

%

   

1.94

%

   

2.32

%h

 
Ratio of expenses to average daily net assets (net of expense
reduction)g
   

1.75

%

   

1.71

%

   

1.50

%h

 
Ratio of net investment income to average daily net assets
(before expense reduction)g
   

4.82

%

   

5.36

%

   

5.22

%h

 
Ratio of net investment income to average daily net assets
(net of expense reduction)g
   

4.94

%

   

5.59

%

   

6.04

%h

 

Portfolio turnover rate

   

39

%

   

44

%

   

31

%f

 

a  Commencement of operations.

b  Calculation based on average shares outstanding.

c  Amount is less than $0.005.

d  Does not reflect sales charges, which would reduce return.

e  Return assumes the reinvestment of all dividends and distributions at NAV.

f  Not annualized.

g  Non-class specific expenses are calculated at the Fund level and class specific expenses are calculated at the class level.

h  Annualized.

See accompanying notes to financial statements.
28



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

FINANCIAL HIGHLIGHTS—(Continued)

   

Class I

 
    For the Year Ended
December 31,
  For the Period
May 3, 2010a
 
       

though

 

Per Share Operating Performance:

 

2012

 

2011

 

December 31, 2010

 

Net asset value, beginning of period

 

$

11.70

   

$

12.10

   

$

11.46

   

Income from investment operations:

 
Net investment incomeb    

0.76

     

0.80

     

0.58

   
Net realized and unrealized gain (loss)    

1.80

     

(0.35

)

   

0.49

   

Total from investment operations

   

2.56

     

0.45

     

1.07

   

Less dividends and distributions to shareholders from:

 
Net investment income    

(0.77

)

   

(0.74

)

   

(0.36

)

 
Net realized gain    

(0.11

)

   

     

(0.04

)

 
Tax return of capital    

(0.02

)

   

(0.11

)

   

(0.03

)

 

Total dividends and distributions to shareholders

   

(0.90

)

   

(0.85

)

   

(0.43

)

 

Redemption fees retained by the Fund

   

     

0.00

c

   

0.00

c

 

Net increase (decrease) in net asset value

   

1.66

     

(0.40

)

   

0.64

   

Net asset value, end of period

 

$

13.36

   

$

11.70

   

$

12.10

   

Total investment returnd

   

22.52

%

   

3.74

%

   

9.39

%e

 

Ratios/Supplemental Data:

 

Net assets, end of period (in millions)

 

$

982.4

   

$

413.7

   

$

65.1

   
Ratio of expenses to average daily net assets (before expense
reduction)f
   

0.87

%

   

0.94

%

   

1.32

%g

 
Ratio of expenses to average daily net assets (net of expense
reduction)f
   

0.75

%

   

0.71

%

   

0.50

%g

 
Ratio of net investment income to average daily net assets
(before expense reduction)f
   

5.83

%

   

6.47

%

   

6.43

%g

 
Ratio of net investment income to average daily net assets
(net of expense reduction)f
   

5.95

%

   

6.70

%

   

7.25

%g

 

Portfolio turnover rate

   

39

%

   

44

%

   

31

%e

 

a  Commencement of operations.

b  Calculation based on average shares outstanding.

c  Amount is less than $0.005.

d  Return assumes the reinvestment of all dividends and distributions at NAV.

e  Not annualized.

f  Non-class specific expenses are calculated at the Fund level and class specific expenses are calculated at the class level.

g  Annualized.

See accompanying notes to financial statements.
29




COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS

Note 1. Significant Accounting Policies

Cohen & Steers Preferred Securities and Income Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on February 22, 2010 and is registered under the Investment Company Act of 1940, as amended, as a non-diversified, open-end management investment company. The Fund's investment objective is total return. The authorized shares of the Fund are divided into three classes designated Class A, C and I shares. Each of the Fund's shares has equal dividend, liquidation and voting rights (except for matters relating to distributions and shareholder servicing of such shares).

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of the financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Portfolio Valuation: Investments in securities that are listed on the New York Stock Exchange are valued, except as indicated below, at the last sale price reflected at the close of the New York Stock Exchange on the business day as of which such value is being determined. If there has been no sale on such day, the securities are valued at the mean of the closing bid and ask prices on such day or, if no ask price is available, at the bid price. Forward contracts are valued at the prevailing forward exchange rate.

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

Readily marketable securities traded in the over-the-counter market, including listed securities whose primary market is believed by Cohen & Steers Capital Management, Inc. (the advisor) to be over-the-counter, are valued at the last sale price on the valuation date as reported by sources deemed appropriate by the Board of Directors to reflect their fair market value. If there has been no sale on such day, the securities are valued at the mean of the closing bid and ask prices on such day or, if no ask price is available, at the bid price. However, certain fixed-income securities may be valued on the basis of prices provided by a pricing service when such prices are believed by the advisor, pursuant to delegation by the Board of Directors, to reflect the fair market value of such securities.

Short-term debt securities with a maturity date of 60 days or less are valued at amortized cost, which approximates value. Investments in open-end mutual funds are valued at their closing net asset value.

The policies and procedures approved by the Fund's Board of Directors delegate authority to make fair value determinations to the advisor, subject to the oversight of the Board of Directors. The


30



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

advisor has established a valuation committee (Valuation Committee) to administer, implement and oversee the fair valuation process according to the policies and procedures approved annually by the Board of Directors. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers and other market sources to determine fair value.

Securities for which market prices are unavailable, or securities for which the advisor determines that the bid and/or ask price 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.

Foreign equity fair value pricing procedures utilized by the Fund may cause certain foreign securities to be fair valued on the basis of fair value factors provided by a pricing service to reflect any significant market movements between the time the Fund values such securities and the earlier closing of foreign markets.

The Fund's use of fair value pricing may cause the net asset value of Fund shares to differ from the net asset value that would be calculated using market quotations. Fair value pricing involves subjective judgments and it is possible that the fair value determined for a security may be materially different than the value that could be realized upon the sale of that security.

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

•  Level 1—quoted prices in active markets for identical investments

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

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

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfer at the end of the period in which the underlying event causing the movement occurred. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy. As of December 31, 2012, there were $7,556,076 of securities transferred


31



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

between Level 1 and Level 2 which resulted from the Fund using prices provided by a pricing service to value certain securities which included other significant observable inputs.

The following is a summary of the inputs used as of December 31, 2012 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)a
 
Preferred Securities—$25 Par
Value—Banks
 

$

247,253,007

   

$

222,135,495

   

$

25,117,512

   

$

   
Preferred Securities—$25 Par
Value—Real Estate—
Diversified
   

72,009,318

     

66,772,151

     

5,237,167

     

   
Preferred Securities—$25 Par
Value—Other Industries
   

362,885,050

     

362,885,050

     

     

   
Preferred Securities—
Capital Securities—Banks
   

173,601,846

     

     

155,874,034

     

17,727,812

b

 
Preferred Securities—
Capital Securities—
Other Industries
   

875,979,340

     

     

875,979,340

     

   
Corporate Bonds    

29,994,052

     

     

29,994,052

     

   

Money Market Funds

   

16,900,939

     

     

16,900,939

     

   

Total Investmentsc

 

$

1,778,623,552

   

$

651,792,696

   

$

1,109,103,044

   

$

17,727,812

   
Forward foreign currency
exchange contracts
   

141,845

     

     

141,845

     

   
Total Appreciation in Other
Financial Instrumentsc
 

$

141,845

   

$

   

$

141,845

   

$

   
Forward foreign currency
exchange contracts
   

(754,882

)

   

     

(754,882

)

   

   
Total Depreciation in Other
Financial Instrumentsc
 

$

(754,882

)

 

$

   

$

(754,882

)

 

$

   

a  Certain of the Fund's investments are categorized as Level 3 and were valued utilizing third party pricing information without adjustment. Such valuations are based on significant unobservable inputs. A change in the significant unobservable inputs could result in a significantly lower or higher value in such Level 3 investments.

b  Valued by a pricing service which utilized independent broker quotes.

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


32



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

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

    Total
Investments
in Securities
  Preferred
Securities—
$25 Par
Value—
Bank
  Preferred
Securities—
Capital
Securities—
Banks
  Preferred
Securities—
Capital
Securities—
Oil & Gas
Exploration &
Production
 

Balance as of December 31, 2011

 

$

5,188,161

   

$

2,832,625

   

$

   

$

2,355,536

   

Purchases

   

6,657,043

     

2,940,000

     

     

3,717,043

   

Sales

   

(6,100,000

)

   

(6,100,000

)

   

     

   

Amortization

   

(582

)

   

     

     

(582

)

 

Realized gain

   

224,840

     

224,840

     

     

   

Change in unrealized appreciation

   

993,278

     

102,535

     

     

890,743

   

Transfers into Level 3a

   

17,727,812

     

     

17,727,812

     

   

Transfers out of Level 3b

   

(6,962,740

)

   

     

     

(6,962,740

)

 

Balance as of December 31, 2012

 

$

17,727,812

   

$

   

$

17,727,812

   

$

   

a  As of December 31, 2011, the Fund used significant observable inputs in determining the value of certain investments. As of December 31, 2012, the Fund used significant unobservable inputs in determining the value of the same investments.

b  As of December 31, 2011, the Fund used significant unobservable inputs in determining the value of certain investments. As of December 31, 2012, the Fund used significant observable inputs in determining the value on the same investments.

Security Transactions, Investment Income and Expense Allocations: Security transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized over the life of the respective securities. Dividend income is recorded on the ex-dividend date, except for certain dividends on foreign securities, which are recorded as soon as the Fund is informed after the ex-dividend date. Distributions from Real Estate Investment Trusts ("REITs") are recorded as ordinary income, net realized capital gain or return of capital based on information reported by the REITs and management's estimates of such amounts based on historical information. These estimates are adjusted when the actual source of distributions is disclosed by the REITs and actual amounts may differ from the estimated amounts. Income, expenses (other than expenses attributable to a specific class) and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets.

Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the date of valuation. Purchases and sales


33



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

of investment securities and income and expense items denominated in foreign currencies are translated into U.S. dollars based upon prevailing exchange rates on the respective dates of such transactions. The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, including gains and losses on forward foreign currency exchange contracts, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the values of assets and liabilities, other than investments in securities, on the date of valuation, resulting from changes in exchange rates. Pursuant to U.S. federal income tax regulations, certain foreign currency gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes.

Foreign Securities: The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the ability to repatriate funds, less complete financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.

Forward Foreign Currency Exchange Contracts: The Fund enters into forward foreign currency exchange contracts to hedge the currency exposure associated with certain of its non-U.S. dollar denominated securities. A forward foreign currency exchange contract is a commitment between two parties to purchase or sell foreign currency at a set price on a future date. The market value of a foreign forward currency exchange contract fluctuates with changes in foreign currency exchange rates. These contracts are marked to market daily and the change in value is recorded by the Fund as unrealized appreciation and/or depreciation on foreign currency translations. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are included in net realized gain or loss on foreign currency transactions. For federal income tax purposes, the Fund has made an election to treat gains and losses from forward foreign currency exchange contracts as capital gains and losses.

Forward foreign currency exchange contracts involve elements of market risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in the foreign exchange rate underlying the contract. Risks may also arise upon entering these contracts from the potential inability of the counterparties to meet the terms of their contracts. In connection with these contracts, securities may be identified as collateral in accordance with the terms of the respective contracts.

Dividends and Distributions to Shareholders: Dividends from net investment income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from GAAP. Dividends from net investment income, if any, are declared and paid monthly. Net realized capital gains, unless offset by any available capital loss carryforward, are typically distributed to shareholders at


34



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

least annually. Dividends and distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the Fund based on the net asset value per share at the close of business on the payable date, unless the shareholder has elected to have them paid in cash.

Distributions paid by the Fund are subject to recharacterization for tax purposes. Based upon the results of operations for the year ended December 31, 2012, a portion of the dividends has been reclassified to return of capital and distributions of net realized capital gains.

Income Taxes: It is the policy of the Fund to continue to qualify as a regulated investment company, if such qualification is in the best interest of the shareholders, by complying with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies, and by distributing substantially all of its taxable earnings to its shareholders. 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 income tax returns as well as its tax positions in non-U.S. jurisdictions in which it trades for all open tax years and has concluded that as of December 31, 2012, 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 Advisory and Administration Fees and Other Transactions with Affiliates

Investment Advisory Fees: The advisor serves as the Fund's investment advisor pursuant to an investment advisory agreement (the investment advisory agreement). Under the terms of the investment advisory agreement, the advisor provides the Fund with day-to-day investment decisions and generally manages the Fund's investments in accordance with the stated policies of the Fund, subject to the supervision of the Board of Directors.

For the services provided to the Fund, the advisor receives a fee, accrued daily and paid monthly, at the annual rate of 0.70% of the average daily net assets of the Fund.

For the year ended December 31, 2012, and through June 30, 2014, the advisor has contractually agreed to waive its fee and/or reimburse the Fund for expenses incurred (excluding distribution and shareholder servicing fees applicable to Class A and Class C shares, acquired fund fees and expenses and extraordinary expenses) to the extent necessary to maintain the Fund's total annual operating expenses as a percentage of average net assets at 1.10% for Class A shares, 1.75% for Class C shares and 0.75% for Class I shares. This contractual agreement can be amended at any time by agreement of the Fund and the advisor. For the year ended December 31, 2012, fees waived and/or expenses reimbursed totaled $1,513,839.

Administration Fees: The Fund has entered into an administration agreement with the advisor under which the advisor performs certain administrative functions for the Fund and receives a fee, accrued daily and paid monthly, at the annual rate of 0.05% of the average daily net assets of the Fund. For the year ended December 31, 2012, the Fund paid the advisor $617,382 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.


35



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Distribution Fees: Shares of the Fund are distributed by Cohen & Steers Securities, LLC (the distributor), an affiliated entity of the advisor. The Fund has adopted a distribution plan (the plan) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The plan provides that the Fund will pay the distributor a fee, accrued daily and paid monthly, at an annual rate of up to 0.25% of the average daily net assets attributable to Class A shares and up to 0.75% of the average daily net assets attributable to Class C shares.

There is a maximum initial sales charge of 3.75% for Class A shares which commenced on June 1, 2012. Prior to June 1, 2012, the maximum initial sales charge was 4.50% for Class A shares. There is a contingent deferred sales charge ("CDSC") of 1.00% on Class C shares, which applies if redemption occurs within one year from purchase. For the year ended December 31, 2012, the Fund has been advised that the distributor received $410,731 in sales commissions from the sale of Class A shares and $46,270 and $71,213 of CDSC relating to redemptions of Class A and C shares, respectively. The distributor has advised the Fund that proceeds from the CDSC on these classes are used by the distributor to defray its expenses related to providing distribution-related services to the Fund in connection with the sale of these classes, including payments to dealers and other financial intermediaries for selling these classes.

Shareholder Servicing Fees: For shareholder services, the Fund pays the distributor a fee, accrued daily and paid monthly, at an annual rate of up to 0.10% of the average daily net assets of the Fund's Class A and Class I shares and up to 0.25% of the average daily net assets of the Fund's Class C shares. The distributor is responsible for paying qualified financial institutions for shareholder services.

Directors' and Officers' Fees: Certain directors and officers of the Fund are also directors, officers and/or employees of the advisor. The Fund does not pay compensation to directors and officers affiliated with the advisor except for the Chief Compliance Officer, who received compensation from the advisor which was reimbursed by the Fund, in the amount of $17,159 for the year ended December 31, 2012.

Note 3. Purchases and Sales of Securities

Purchases and sales of securities, excluding short-term investments, for the year ended December 31, 2012, totaled $1,410,373,992 and $475,252,183, respectively.

Note 4. Derivative Investments

The following tables present the value of derivatives held at December 31, 2012 and the effect of derivatives held during the year ended December 31, 2012, along with the respective location in the financial statements.


36



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Statement of Assets and Liabilities

 
   

Assets

 

Liabilities

 

Derivatives

 

Location

 

Fair Value

 

Location

 

Fair Value

 
Forward foreign
currency exchange 
contracts
 

Unrealized appreciation

 

$

141,845

   

Unrealized depreciation

 

$

754,882

   

Statement of Operations

 

 

Derivatives

 

Location

  Realized
Loss
  Change in
Unrealized
Depreciation
 
Forward foreign
currency exchange 
contracts
 

Net Realized and Unrealized Gain (Loss)

 

$

(688,702

)

 

$

(743,100

)

 

The following summarizes the volume of the Fund's forward foreign currency exchange contracts activity during the year ended December 31, 2012:

    Forward Foreign
Currency Exchange
Contracts
 

Average Notional Amount

 

$

24,339,790

   

Ending Notional Amount

 

$

47,353,382

   

Note 5. Income Tax Information

The tax character of dividends and distributions paid was as follows:

    For the Year Ended
December 31,
 
   

2012

 

2011

 

Ordinary income

 

$

82,064,757

   

$

27,263,614

   
Long-term capital gain    

2,920,546

     

   
Tax return of capital    

2,310,220

     

3,807,089

   

Total dividends and distributions

 

$

87,295,523

   

$

31,070,703

   

As of December 31, 2012, the tax-basis components of accumulated earnings and the federal tax cost were as follows:

Cost for federal income tax purposes

 

$

1,654,329,725

   

Gross unrealized appreciation

 

$

127,824,282

   

Gross unrealized depreciation

   

(3,530,455

)

 

Net unrealized appreciation

 

$

124,293,827

   


37



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

The Fund incurred net ordinary capital losses of $506,132 after October 31, 2012, that it has elected to treat as arising in the following fiscal year.

During the year ended December 31, 2012, the Fund utilized net capital loss carryforwards of $2,836,903.

As of December 31, 2012, the Fund had temporary book/tax differences primarily attributable to wash sales on portfolio securities and unrealized appreciation on passive foreign investment companies and permanent book/tax differences primarily attributable to foreign currency transactions, certain fixed income securities and prior year REIT distribution adjustments. To reflect reclassifications arising from the permanent differences, paid-in capital was credited $114,817, accumulated net realized loss was charged $1,089,490 and dividends in excess of net investment income was credited $974,673. Net assets were not affected by this reclassification.

Note 6. Capital Stock

The Fund is authorized to issue 600 million shares of capital stock, at a par value of $0.001 per share. The Board of Directors of the Fund may increase or decrease the aggregate number of shares of common stock that the Fund has authority to issue. Transactions in Fund shares were as follows:

    For the
Year Ended
December 31, 2012
  For the
Year Ended
December 31, 2011
 
   

Shares

 

Amount

 

Shares

 

Amount

 

CLASS A:

 

Sold

   

25,418,970

   

$

325,040,045

     

11,460,890

   

$

137,745,212

   
Issued as reinvestment
of dividends and
distributions
   

1,043,170

     

13,406,946

     

291,649

     

3,504,192

   

Redeemed

   

(7,128,433

)

   

(91,654,478

)

   

(4,256,635

)

   

(50,730,825

)

 
Redemption fees
retained by the Funda
   

     

     

     

2,555

   

Net increase

   

19,333,707

   

$

246,792,513

     

7,495,904

   

$

90,521,134

   

CLASS C:

 

Sold

   

19,931,667

   

$

252,206,078

     

9,849,875

   

$

118,620,691

   
Issued as reinvestment
of dividends and
distributions
   

560,528

     

7,183,060

     

145,208

     

1,731,681

   

Redeemed

   

(2,645,525

)

   

(33,971,664

)

   

(952,704

)

   

(11,299,508

)

 
Redemption fees
retained by the Funda
   

     

     

     

2,491

   

Net increase

   

17,846,670

   

$

225,417,474

     

9,042,379

   

$

109,055,355

   


38



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

    For the
Year Ended
December 31, 2012
  For the
Year Ended
December 31, 2011
 
   

Shares

 

Amount

 

Shares

 

Amount

 

CLASS I:

 

Sold

   

59,825,821

   

$

765,409,444

     

37,537,321

   

$

455,670,619

   

Subscriptions in-kindb

   

342,468

     

4,291,121

     

     

   
Issued as reinvestment
of dividends and
distributions
   

1,201,092

     

15,472,775

     

355,156

     

4,245,465

   

Redeemed

   

(23,155,734

)

   

(297,440,116

)

   

(7,926,576

)

   

(94,380,245

)

 
Redemption fees
retained by the Funda
   

     

     

     

3,331

   

Net increase

   

38,213,647

   

$

487,733,224

     

29,965,901

   

$

365,539,170

   

a  A 2% redemption fee, paid directly to the Fund, was charged on shares sold within 60 days of the time of purchase. Effective March 1, 2011, the Fund no longer charges redemption fees.

b  Certain shareholders of the Fund were permitted to purchase shares in-kind.

Note 7. Borrowings

The Fund, in conjunction with other Cohen & Steers funds, is a party to a $200,000,000 syndicated credit agreement (the credit agreement) with State Street Bank and Trust Company, as administrative agent and operations agent, and the lenders identified in the credit agreement, which expires January 25, 2013. The Fund pays a commitment fee of 0.10% per annum on its proportionate share of the unused portion of the credit agreement. For the period January 1, 2012 through January 27, 2012, the commitment fee was 0.125% per annum on the Fund's proportionate share of the unused portion of the credit agreement. Effective January 25, 2013, the credit agreement was renewed under similar terms and expires January 24, 2014.

During the year ended December 31, 2012, the Fund did not borrow under the credit agreement.

Note 8. Other

In the normal course of business, the Fund enters into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is dependent on claims that may be made against the Fund in the future and, therefore, cannot be estimated; however, based on experience, the risk of material loss from such claims is considered remote.

Note 9. New Accounting Pronouncement

In December 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update No. 2011-11, "Balance Sheet (Topic 210)—Disclosures about Offsetting Assets and Liabilities requirements in U.S. GAAP and IFRSs" ("ASU 2011-11"). ASU 2011-11 requires additional


39



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

disclosures on financial instruments and derivative instruments that are either offset in accordance with existing accounting guidance or are subject to an enforceable master netting arrangement or similar agreement. The new requirements do not change the accounting guidance on netting, but rather enhance the disclosures to more clearly show the impact of netting arrangements on a company's financial position.

Management is currently evaluating the impact the adoption of this pronouncement will have on the Fund's financial statements. ASU 2011-11 is effective for fiscal years and interim periods beginning after January 1, 2013.

Note 10. Subsequent Events

Management has evaluated events and transactions occurring after December 31, 2012 through the date that the financial statements were issued, and has determined that no additional disclosure in the financial statements is required.


40




COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Cohen & Steers Preferred Securities and Income Fund, Inc. (the "Fund") at December 31, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
New York, New York
February 20, 2013


41



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

TAX INFORMATION—2012 (Unaudited)

Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the Fund designates qualified dividend income of $39,495,970. Additionally, 16.9% of the ordinary dividends qualified for the dividends received deduction available to corporations. Also, the Fund designates a long-term capital gain distribution of $2,558,675 at the 15% rate and $361,871 at the 25% rate or maximum allowable.

OTHER INFORMATION

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling 800-330-7348, (ii) on our website at cohenandsteers.com or (iii) on the Securities and Exchange Commission's website at http://www.sec.gov. In addition, the Fund's proxy voting record for the most recent 12-month period ended June 30 is available by August 31 of each year (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SEC's website at http://www.sec.gov.

The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q are available (i) without charge, upon request by calling 800-330-7348, or (ii) on the SEC's website at http://www.sec.gov. In addition, the Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

Please note that distributions paid by the Fund to shareholders are subject to recharacterization for tax purposes. The Fund may also pay distributions in excess of the Fund's net investment company taxable income and this excess could be a tax free return of capital distributed from the Fund's assets. 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.


42



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

MANAGEMENT OF THE FUND

The business and affairs of the Fund are managed under the direction of the Board of Directors. The Board of Directors approves all significant agreements between the Fund and persons or companies furnishing services to it, including the Fund's agreements with its advisor, administrator, co-administrator, custodian and transfer agent. The management of the Fund's day-to-day operations is delegated to its officers, the advisor, administrator and co-administrator, subject always to the investment objective and policies of the Fund and to the general supervision of the Board of Directors.

The Board of Directors and officers of the Fund and their principal occupations during at least the past five years are set forth below. The statement of additional information (SAI) includes additional information about fund directors and is available, without charge, upon request by calling 800-330-7348.

Name, Address1 and Age

  Position(s) Held
with Fund
  Term of
Office2
  Principal Occupation
During At Least
The Past 5 Years
(Including Other
Directorships Held)
  Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund)
  Length
of Time
Served3
 

Interested Director4

 
Robert H. Steers
Age: 59
 

Director and Co-Chairman

 

Until next election of directors

 

Co-Chairman and Co-Chief Executive Officer of Cohen & Steers Capital Management, Inc. (the Advisor) since 2003 and its parent, Cohen & Steers, Inc. since 2004. Vice President of Cohen & Steers Securities, LLC.

 

20

  1991 to present  
Martin Cohen
Age: 64
 

Director and Co-Chairman

 

Until next election of directors

 

Co-Chairman and Co-Chief Executive Officer of the Advisor since 2003 and Cohen & Steers, Inc. since 2004. Prior to that, President of the Advisor; Vice President of Cohen & Steers Securities, LLC.

 

20

  1991 to present  

  (table continued on next page)


43



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

(table continued from previous page)

Name, Address1 and Age

  Position(s) Held
with Fund
  Term of
Office2
  Principal Occupation
During At Least
The Past 5 Years
(Including Other
Directorships Held)
  Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund)
  Length
of Time
Served3
 

Disinterested Directors

 
Michael G. Clark
Age: 47
 

Director

 

Until next election of directors

 

From May 2006 to June 2011, President and Chief Executive Officer of DWS Funds and Managing Director of Deutsche Asset Management.

 

20

 

June 2011 to present

 
Bonnie Cohen5
Age: 70
 

Director

 

Until next election of directors

 

Consultant. Board Member, DC Public Library Foundation since 2012; Board Member, United States Department of Defense Business Board since 2010; Board Member, Teluride Mountain Film Festival since 2010; Advisory Board Member, Posse Foundation since 2004; Trustee, H. Rubenstein Foundation since 1996; Trustee, District of Columbia Public Libraries since 2004.

 

20

  2001 to present  
George Grossman
Age: 59
 

Director

 

Until next election of directors

 

Attorney-at-law

 

20

  1993 to present  
Richard E. Kroon
Age: 70
 

Director

 

Until next election of directors

 

Member of Investment Committee, Monmouth University since 2004; Former Director, Retired Chairman and Managing Partner of Sprout Group venture capital funds, then an affiliate of Donaldson, Lufkin and Jenrette Securities Corporation from 1981 to 2001. Former chairman of the National Venture Capital Association for the year 2000.

 

20

  2004 to present  

  (table continued on next page)


44



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

(table continued from previous page)

Name, Address1 and Age

  Position(s) Held
with Fund
  Term of
Office2
  Principal Occupation
During At Least
The Past 5 Years
(Including Other
Directorships Held)
  Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund)
  Length
of Time
Served3
 
Richard J. Norman
Age: 69
 

Director

 

Until next election of directors

 

Private Investor. Member, District of Columbia Department of Corrections Chaplains Corps from 2008 to February 2010; Member, Montgomery County, Maryland Department of Corrections Volunteer Corps since February 2010; Liaison for Business Leadership, Salvation Army World Service Organization (SAWSO) since 2010; Advisory Board Member, The Salvation Army since 1985; Financial Education Fund Chair, The Foundation Board of Maryland Public Television since 2009; Former President, Executive Committee, Chair of Investment Committee, The Foundation Board of Maryland Public Television from 1997 to 2008. Prior thereto, Investment Representative of Morgan Stanley Dean Witter from 1966 to 2000.

 

20

  2001 to present  
Frank K. Ross
Age: 69
 

Director

 

Until next election of directors

 

Visiting Professor of Accounting, Howard University School of Business since 2004; Board member and Audit Committee Chair and Human Resources and Compensation Committee Member, Pepco Holdings, Inc. (electric utility) since 2004. Formerly, Midatlantic Area Managing Partner for Assurance Services at KPMG LLP and Managing Partner of its Washington, DC offices from 1977 to 2003.

 

20

  2004 to present  

  (table continued on next page)


45



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

(table continued from previous page)

Name, Address1 and Age

  Position(s) Held
with Fund
  Term of
Office2
  Principal Occupation
During At Least
The Past 5 Years
(Including Other
Directorships Held)
  Number of
Funds Within
Fund
Complex
Overseen by
Director
(Including
the Fund)
  Length
of Time
Served3
 
C. Edward Ward Jr.
Age: 66
 

Director

 

Until next election of directors

 

Member of The Board of Trustees of Manhattan College, Riverdale, New York since 2004. Formerly Director of closed-end fund management for the New York Stock Exchange, where he worked from 1979 to 2004.

 

20

  2004 to present  

1  The address for each director is 280 Park Avenue, New York, NY 10017.

2  On March 12, 2008, the Board of Directors adopted a mandatory retirement policy stating a Director must retire from the Board on December 31st of the year in which he or she turns 75 years of age.

3  The length of time served represents the year in which the director was first elected or appointed to any fund in the Cohen & Steers fund complex.

4  "Interested person", as defined in the 1940 Act, of the fund because of affiliation with CSCM (Interested Directors).

5  Martin Cohen and Bonnie Cohen are not related.


46



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

The officers of the Fund (other than Messrs. Cohen and Steers, whose biographies are provided above), their address, their ages and their principal occupations for at least the past five years are set forth below.

Name, Address and Age1

  Position(s) Held
with Fund
 

Principal Occupation During At Least the Past 5 Years

  Length
of Time
Served2
 
Adam M. Derechin
Age: 48
 

President and Chief Executive Officer

 

Chief Operating Officer of CSCM (since 2003) and CNS (since 2004). Prior to that, Senior Vice President of CSCM and Vice President and Assistant Treasurer of the Cohen & Steers funds.

 

Since 2005

 
Joseph M. Harvey
Age: 49
 

Vice President

 

President and Chief Investment Officer of CSCM (since 2003) and President of CNS (since 2004). Prior to that, Senior Vice President and Director of Investment Research of CSCM.

 

Since 2004

 
William F. Scapell
Age: 45
 

Vice President

 

Senior Vice President of CSCM since 2003. Prior to that, chief strategist for preferred securities at Merrill Lynch & Co., Inc.

 

Since 2003

 
Francis C. Poli
Age: 50
 

Secretary

 

Executive Vice President, Secretary and General Counsel of CSCM and CNS since March 2007. Prior thereto, General Counsel of Allianz Global Investors of America LP.

 

Since 2007

 
James Giallanza
Age: 46
 

Treasurer and Chief Financial Officer

 

Senior Vice President of CSCM since September 2006. Prior thereto, Deputy Head of the US Funds Administration and Treasurer & CFO of various mutual funds within the Legg Mason (formally Citigroup Asset Management) fund complex from August 2004 to September 2006.

 

Since 2006

 
Lisa D. Phelan
Age: 44
 

Chief Compliance Officer

 

Senior Vice President and Director of Compliance of CSCM since 2007 and prior to that, Vice President since 2006. Chief Compliance Officer of CSSL since 2004. Prior to that, Compliance Officer of CSCM since 2004. Chief Compliance Officer, Avatar Associates & Overture Asset Managers, 2003-2004.

 

Since 2006

 

1  The address of each officer is 280 Park Avenue, New York, NY 10017.

2  Officers serve one-year terms. The length of time served represents the year in which the officer was first elected to that position in any fund in the Cohen & Steers fund complex. All of the officers listed above are officers of one or more of the other funds in the complex.


47



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Cohen & Steers Privacy Policy

Facts

 

What Does Cohen & Steers Do With Your Personal Information?

 

Why?

 

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

 

What?

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

How?

 

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

 

 

Reasons we can share your personal information

  Does Cohen & Steers
share?
  Can you limit this
sharing?
 
For our everyday business purposes—
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or reports to credit bureaus
 

Yes

 

No

 
For our marketing purposes—
to offer our products and services to you
 

Yes

 

No

 

For joint marketing with other financial companies—

 

No

 

We don't share

 
For our affiliates' everyday business purposes—
information about your transactions and experiences
 

No

 

We don't share

 
For our affiliates' everyday business purposes—
information about your creditworthiness
 

No

 

We don't share

 

For our affiliates to market to you—

 

No

 

We don't share

 

For non-affiliates to market to you—

 

No

 

We don't share

 

Questions?  Call 800-330-7348


48



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Cohen & Steers Privacy Policy—(Continued)

Who we are

     

Who is providing this notice?

 

Cohen & Steers Capital Management, Inc., Cohen & Steers Asia Limited, Cohen & Steers UK Limited, Cohen & Steers Europe SA, 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.
 


49



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

Cohen & Steers Investment Solutions

COHEN & STEERS GLOBAL REALTY SHARES

  •  Designed for investors seeking total return, investing primarily in global real estate securities

  •  Symbols: CSFAX, CSFBX*, CSFCX, CSSPX

COHEN & STEERS INSTITUTIONAL REALTY SHARES

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

  •  Symbol: CSRIX

COHEN & STEERS REALTY INCOME FUND

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

  •  Symbols: CSEIX, CSBIX*, CSCIX, CSDIX

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

COHEN & STEERS
EMERGING MARKETS REAL ESTATE FUND

  •  Designed for investors seeking total return, investing primarily in emerging markets real estate securities

  •  Symbols: APFAX, APFCX, APFIX

COHEN & STEERS REALTY SHARES

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

  •  Symbol: CSRSX

COHEN & STEERS
INSTITUTIONAL GLOBAL REALTY SHARES

  •  Designed for institutional investors seeking total return, investing primarily in global real estate securities

  •  Symbol: GRSIX

COHEN & STEERS GLOBAL INFRASTRUCTURE FUND

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

  •  Symbols: CSUAX, CSUBX*, CSUCX, CSUIX

COHEN & STEERS DIVIDEND VALUE FUND

  •  Designed for investors seeking long-term growth of income and capital appreciation, investing primarily in dividend paying common stocks and preferred securities

  •  Symbols: DVFAX, DVFCX, DVFIX

COHEN & STEERS
PREFERRED SECURITIES AND INCOME FUND

  •  Designed for investors seeking total return, investing primarily in preferred and debt securities

  •  Symbols: CPXAX, CPXCX, CPXIX

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

Distributed by Cohen & Steers Securities, LLC.

COHEN & STEERS GLOBAL REALTY MAJORS ETF

  •  Designed for investors who seek a relatively low-cost "passive" approach for investing in a portfolio of real estate equity securities of companies in a specified index

  •  Symbol: GRI

Distributed by ALPS Distributors, Inc.

ISHARES COHEN & STEERS
REALTY MAJORS INDEX FUND

  •  Designed for investors who seek a relatively low-cost "passive" approach for investing in a portfolio of real estate equity securities of companies in a specified index

  •  Symbol: ICF

Distributed by BlackRock Investments, LLC.

*  Class B shares are no longer offered except through dividend reinvestment and permitted exchanges by existing Class B shareholders.

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


50



COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

OFFICERS AND DIRECTORS

Robert H. Steers
Director and co-chairman

Martin Cohen
Director and co-chairman

Michael G. Clark
Director

Bonnie Cohen
Director

George Grossman
Director

Richard E. Kroon
Director

Richard J. Norman
Director

Frank K. Ross
Director

C. Edward Ward, Jr.
Director

Adam M. Derechin
President and chief executive officer

Joseph M. Harvey
Vice president

William F. Scapell
Vice president

Francis C. Poli
Secretary

James Giallanza
Treasurer and chief financial officer

Lisa D. Phelan
Chief compliance officer

KEY INFORMATION

Investment Advisor

Cohen & Steers Capital Management, Inc.
280 Park Avenue
New York, NY 10017
(212) 832-3232

Co-administrator and Custodian

State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111

Transfer Agent

Boston Financial Data Services, Inc.
30 Dan Road
Canton, MA 02021
(800) 437-9912

Legal Counsel

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

Distributor

Cohen & Steers Securities, LLC
280 Park Avenue
New York, NY 10017

Nasdaq Symbol: Class  A—CPXAX
Class  C—CPXCX
Class   I—
CPXIX

Website: cohenandsteers.com

This report is authorized for delivery only to shareholders of Cohen & Steers Preferred Securities and Income Fund, Inc. unless accompanied or preceded by the delivery of a currently effective prospectus setting forth details of the Fund. Performance data quoted represents 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.


51




COHEN & STEERS

PREFERRED SECURITIES AND INCOME FUND

280 PARK AVENUE

NEW YORK, NY 10017

eDelivery NOW AVAILABLE

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

Sign up at cohenandsteers.com

CPXAXAR

Annual Report December 31, 2012

Cohen & Steers Preferred Securities and Income Fund




 

Item 2. Code of Ethics.

 

The Registrant has adopted an Amended and Restated Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer.  The Code of Ethics was in effect during the reporting period.  The Registrant has not amended the Code of Ethics as described in Form N-CSR during the reporting period.  The Registrant has not granted any waiver, including an implicit waiver, from a provision of the Code of Ethics as described in Form N-CSR during the reporting period.  Upon request, a copy of the Code of Ethics can be obtained free of charge by calling 800-330-7348 or writing to the Secretary of the Registrant, 280 Park Avenue, 10th floor, New York, NY  10017.

 

Item 3. Audit Committee Financial Expert.

 

The registrant’s board has determined that Michael G. Clark and Frank K. Ross, each a member of the board’s audit committee, are each an “audit committee financial expert”.  Mr. Clark and Mr. Ross are each “independent,” as such term is defined in Form N-CSR.

 

Item 4. Principal Accountant Fees and Services.

 

(a) – (d) Aggregate fees billed to the registrant for the last two fiscal years for professional services rendered by the registrant’s principal accountant were as follows:

 

 

 

2012

 

2011

 

Audit Fees

 

$

46,350

 

$

45,000

 

Audit-Related Fees

 

$

0

 

$

0

 

Tax Fees

 

$

6,400

 

$

6,250

 

All Other Fees

 

$

0

 

$

0

 

 

Tax fees were billed in connection with the preparation of tax returns, calculation and designation of dividends and other miscellaneous tax services.

 

(e)(1)                   The audit committee is required to pre-approve audit and non-audit services performed for the registrant by the principal accountant. The audit committee also is required to pre-approve non-audit services performed by the registrant’s principal accountant for the registrant’s investment advisor and any sub-advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant, if the engagement for services relates directly to the operations and financial reporting of the registrant.

 

The audit committee may delegate pre-approval authority to one or more of its members who are independent members of the board of directors of the registrant. The member or members to whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next scheduled meeting.  The audit committee may not delegate its responsibility to pre-approve services to be performed by the registrant’s principal accountant to the investment advisor.

 



 

(e) (2)                No services included in (b) – (d) above were approved by the audit committee pursuant to paragraphs (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

 

(f)                                   Not applicable.

 

(g)                                  For the fiscal years ended December 31, 2012 and December 31, 2011 (the registrant commenced operations on May 3, 2010), the aggregate fees billed by the registrant’s principal accountant for non-audit services rendered to the registrant and for non-audit services rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant were:

 

 

 

2012

 

2011

 

Registrant

 

$

6,400

 

$

6,250

 

Investment Advisor

 

$

15,000

 

$

20,000

 

 

(h)                                 The registrant’s audit committee considered whether the provision of non-audit services that were rendered to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and/or to any entity controlling, controlled by or under common control with the registrant’s investment advisor that provides ongoing services to the registrant that were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X  was compatible with maintaining the principal accountant’s independence.

 

Item 5. Audit Committee of Listed Registrants.

 

Not applicable.

 

Item 6. Schedule of Investments.

 

Included in Item 1 above.

 

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

 

Not applicable.

 

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

 

Not applicable.

 

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

 

Not applicable.

 



 

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

 

Not applicable.

 

Item 11. Controls and Procedures.

 

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures are reasonably designed to ensure that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.

 

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

 

Item 12. Exhibits.

 

(a)(1) Not Applicable.

 

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

 

(a)(3) Not applicable

 

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

 



 

SIGNATURES

 

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

 

COHEN & STEERS PREFERRED SECURITIES AND INCOME FUND, INC.

 

 

 

By:

/s/ Adam M. Derechin

 

 

 

 

Name: Adam M. Derechin

 

 

 

 

Title: President and Chief Executive Officer

 

 

 

 

 

 

 

Date: March 1, 2013

 

 

 

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

 

 

 

By:

/s/ Adam M. Derechin

 

 

 

 

Name:

Adam M. Derechin

 

 

 

 

Title:

President and Chief Executive Officer

 

 

 

 

 

(Principal Executive Officer)

 

 

 

 

 

 

 

By:

/s/ James Giallanza

 

 

 

 

Name:

James Giallanza

 

 

 

 

Title:

Treasurer and Chief Financial Officer

 

 

 

 

 

(Principal Financial Officer)

 

 

 

 

 

 

 

 

 

 

 

Date: March 1, 2013