UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-02240

Stratton Monthly Dividend REIT Shares, Inc.

(Exact name of registrant as specified in charter)

610 W. Germantown Pike, Suite 300

Plymouth Meeting, PA 19462-1050

(Address of principal executive offices) (Zip code)

Patricia L. Sloan, Secretary/Treasurer

Stratton Monthly Dividend REIT Shares, Inc.

610 W. Germantown Pike, Suite 300

Plymouth Meeting, PA 19462-1050

(Name and address of agent for service)

Registrant’s telephone number, including area code: 610-941-0255

Date of fiscal year end: December 31, 2004

Date of reporting period: September 30, 2004

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Schedule of Investments.

The Schedule of Investments is attached herewith.

SCHEDULE OF INVESTMENTS September 30, 2004 (unaudited)

Stratton Monthly Dividend REIT Shares

	Number of Shares	Market Value1
COMMON STOCKS – 97.1%
Apartments – 16.2%
Amli Residential Properties Trust	110,000	$	3,360,500
Apartment Investment & Management Co.	165,000		5,738,700
Archstone-Smith Trust	145,000		4,587,800
Camden Property Trust	70,000		3,234,000
Mid-America Apartment Communities, Inc.	140,000		5,453,000
Summit Properties, Inc.	217,200		5,875,260
United Dominion Realty Trust, Inc.	240,000		4,759,200
			33,008,460
Diversified – 10.6%
Colonial Properties Trust	165,000		6,636,300
Crescent Real Estate Equities Co.	125,000		1,967,500
iStar Financial Inc.	115,000		4,741,450
Lexington Corporate Properties Trust	170,000		3,690,700
U.S. Restaurant Properties, Inc.	270,000		4,560,300
			21,596,250
Health Care – 17.8%
Health Care Property Investors, Inc.	240,800		6,260,800
Health Care REIT, Inc.	180,000		6,336,000
Healthcare Realty Trust, Inc.	155,000		6,051,200
National Health Investors, Inc.	140,000		3,981,600
Nationwide Health Properties, Inc.	305,000		6,328,750
Universal Health Realty Income Trust	100,000		3,030,000
Ventas, Inc.	165,000		4,276,800
			36,265,150
Industrial – 5.2%
EastGroup Properties, Inc.	130,000		4,316,000
First Industrial Realty Trust, Inc.	169,000		6,236,100
			10,552,100
Lodging – 4.9%
Hospitality Properties Trust	145,000		6,161,050
Winston Hotels, Inc.	350,000		3,745,000
			9,906,050

	Number of Shares	Market Value1
Net Lease – 2.9%
Commercial Net Lease Realty	325,000	$	5,921,500
Office – 24.4%
Arden Realty, Inc.	180,000		5,864,400
Brandywine Realty Trust	187,500		5,340,000
CarrAmerica Realty Corp.	155,000		5,068,500
Glenborough Realty Trust Inc.	294,800		6,122,996
Highwoods Properties, Inc.	195,000		4,798,950
Liberty Property Trust	157,100		6,258,864
Mack-Cali Realty Corp.	155,000		6,866,500
Prentiss Properties Trust	110,000		3,960,000
Reckson Associates Realty Corp.	185,000		5,318,750
			49,598,960
Regional Malls – 8.7%
Glimcher Realty Trust	275,000		6,682,500
The Mills Corp.	135,000		7,002,450
Simon Property Group, Inc.	75,000		4,022,250
			17,707,200
Shopping Centers – 6.4%
Heritage Property Investment Trust	200,000		5,834,000
New Plan Excel Realty Trust	240,000		6,000,000
Urstadt Biddle Properties Class A	80,000		1,219,200
			13,053,200
Total Common Stocks (Cost $156,998,056)			197,608,870
Total Investments – 97.1% (Cost $156,998,056*)			197,608,870
Cash and Other Assets Less Liabilities – 2.9%			5,928,470
NET ASSETS – 100.00%		$	203,537,340

* Aggregate cost for federal income tax purposes is $156,998,056 and net unrealized appreciation is as follows:

Gross unrealized appreciation	$	40,636,435
Gross unrealized depreciation		(25,621	)
Net unrealized appreciation	$	40,610,814

¹ Security Valuation – Securities listed or admitted to trading on any national securities exchange are valued at their last sale price on the exchange where the securities are principally traded or, if there has been no sale on that date, at the mean between the last reported bid and asked prices. Securities traded in the over-the-counter market are valued at the official closing price if carried in the National Market Issues section by NASDAQ; other over-the-counter securities are valued at the mean between the closing bid and asked prices obtained from a principal market maker. All other securities and assets are valued at their fair value as determined in good faith by the Boards of Directors of the Funds, which may include the amortized cost method for securities maturing in sixty days or less and other cash equivalent investments.

Item 2. Controls and Procedures.

(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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.

(Registrant)	Stratton Monthly Dividend REIT Shares, Inc.
By (Signature and Title)	/s/ James W. Stratton
	James W. Stratton,
	Chief Executive Officer
	(principal executive officer)

Date October 28, 2004

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 (Signature and Title)	/s/ James W. Stratton
	James W. Stratton,
	Chief Executive Officer
	(principal executive officer)

Date October 28, 2004

By (Signature and Title)	/s/ James A. Beers
	James A. Beers,
	Chief Financial Officer
	(principal financial officer)

Date October 28, 2004