We would like to share with you our report for the year ended December 31, 2009. The net asset value (NAV) at that date was $17.39 per common share. The Fund's common stock is traded on the New York Stock Exchange (NYSE) and its share price can differ from its NAV; at period end, the Fund's closing price on the NYSE was $15.95.

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

The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return and the principal value of an investment will fluctuate and shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effects of leverage, resulting from the issuance of preferred shares and/or borrowings under a credit agreement. Current total returns of the Fund can be obtained by visiting our Web site at cohenandsteers.com.

The Fund may pay distributions in excess of its investment company taxable income and net realized capital gains. This excess would be a "return of capital" distributed from the Fund's assets. Distributions of capital decrease the Fund's total assets and, therefore, could have the effect of increasing the Fund's expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.

Equities were subject to strong shifts in sentiment and performance in 2009. Stocks struggled in January and February amid increasing economic and financial uncertainty, and markets fell to multiyear lows. Conditions improved in March when the government offered more clarity on its plans to address the banking crisis.

^a As a closed-end investment company, the price of the Fund's New York Stock Exchange-traded shares will be set by market forces and at times may deviate from the net asset value per share of the Fund.

^b The S&P 1500 Utilities Index is an unmanaged market-capitalization-weighted index of 71 companies whose primary business involves the generation, transmission and/or distribution of electricity and/or natural gas. The S&P 500 Index is an unmanaged index of common stocks that is frequently used as a general measure of stock market performance. The Merrill Lynch Fixed Rate Preferred Index is an unmanaged index of preferred securities.

Equities extended their rise well into the second quarter, led by lower-quality, small- and mid-cap stocks, which had declined the most during 2008's equity market rout. Large, high-quality companies were less favored. The pace of the run-up in stocks slowed in the fourth quarter amid a pullback in investors' risk appetite and concern about global policy tightening. In this environment, large cap, higher-quality stocks began to take more of a leading role in the market's rise.

In a rally that favored cyclical companies for much of the year, utility stocks lagged. Their relatively stable cash flows provided some downside protection when investors were decidedly defensive in January and February. However, the sector underperformed when investors' risk appetite increased, and they favored companies more leveraged to the economic recovery.

The shares of electric companies (+10.6%), the largest utilities subsector, languished as their defensive characteristics grew less appealing when the worst of the financial crisis appeared to be over. Although the subsector rallied modestly late in the year, the outlook for power supply and demand remains challenging.

The natural gas pipeline (+61.4%) and distribution (+25.4%) subsectors gained momentum in the second half of the year amid signs of economic recovery and the likely impact it would have on these groups' fundamentals.

Preferred securities also rebounded. Their performance was tied to sentiment toward financial companies, which are the predominate issuers of preferreds. The group struggled early on amid concerns about the possible nationalization of leading banks. However, government initiatives to shore up capital were well received and did not suggest nationalization. Importantly, banks reported better-than-expected first quarter earnings, helping to revive the market.

REIT preferreds significantly outperformed preferreds issued by non-real estate companies, aided by the factors that helped real estate common shares. REITs did not issue preferreds in 2009, favoring the common stock and bond deals that contributed to the supportive investment backdrop.

At a special meeting on November 27, 2009, UTF stockholders modified the Fund's investment objective to allow it to invest in global infrastructure securities. On the same date, the Fund was renamed Cohen & Steers Infrastructure Fund, Inc. and its benchmark became the UBS Global 50/50 Infrastructure & Utilities Index. The changes were effective January 1, 2010.

The Fund's stockholders were also asked to approve a merger with Cohen & Steers REIT and Utility Income Fund, Inc. (RTU). The board believes merging the funds would benefit shareholders through lower expenses and greater operating efficiencies. RTU's shareholders approved the merger. Although UTF shareholders who voted were overwhelmingly (88%) in favor of the merger, an insufficient number of votes were cast to approve it. As of this writing, UTF continues to solicit votes to approve the proposal. For more information, see Note 9 in the Notes to Financial Statements.

The Fund employs leverage as part of a yield-enhancement strategy. Leverage, which can increase total return in rising markets (just as it can have the opposite effect in declining markets), boosted the Fund's performance for the year compared with its benchmarks, which are not leveraged.

The Fund's market price rose 67.1% in the period. This reflected not only strong investment performance (and the associated impact of leverage), but also a general narrowing in closed-end funds' discounts to their underlying NAVs. Discounts for most funds reached historically wide levels in 2008, but narrowed considerably in 2009.

Performance within utilities was helped by an overweight in pipeline companies and stock selection in the electric utilities subsector. Within the pipeline group, we owned several out-of-index companies (largely master limited partnerships) and chose not to hold the only pipeline operator in the benchmark; it had a strong absolute return but lagged the index. In the electric utilities subsector, the Fund benefited from our underweight positions in several large cap electric utilities that underperformed because of challenging power market fundamentals.

The Fund's performance also received a boost from its allocation to preferred securities (preferreds are not included in the S&P 1500 Utilities Index), which posted strong returns in both absolute terms and compared with the broad preferred and equity markets. The Fund's REIT preferreds had especially large gains.

The largest detractor from relative performance was our stock selection and underweight in gas distribution companies. The gas distribution subsector is split between pure-play regulated gas companies and those focused on oil and gas exploration and production. Our underweight in regulated companies helped performance, but that was more than offset by our underweight in commodity-sensitive companies that benefited from the strong performance of energy stocks.

As we enter 2010, the Fund's holdings reflect a broadened infrastructure mandate. We believe that the global economic recovery will continue, and that more economically sensitive subsectors are likely to outperform. Nevertheless, we are monitoring the pace of growth, with the understanding that a number of factors could pose threats—namely, inflation and higher interest rates.

From a geographic perspective, we plan to maintain our out-of-index allocation to emerging markets (particularly China and Brazil) that have strong manufacturing-based economies, solid organic growth and steadily increasing internal demand, all of which have a favorable impact on infrastructure creation. We have, however, recently reduced our overweight as some strongly performing sectors have approached our fair value estimates.

Within the United States and other developed economies, which make up the largest part of our holdings, we are being more tactical in our asset allocation. In those slower-growing markets, we are focusing on the highest-quality companies with strong balance sheets and attractive capital deployment opportunities.

Regarding preferred securities, we continue to find good value in the market, which remains inexpensive based on various valuation metrics. In particular, credit spreads offered by preferreds remain well wide of historical

levels. We expect the economic recovery to continue to support corporate credit and cause credit spreads to contract further. We also believe that many investors should be attracted by the historically high and stable income offered by preferreds.

The views and opinions in the preceding commentary are subject to change. 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.

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, listed infrastructure, utilities, large cap value and preferred securities sectors.

In addition, our Web site 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.

Our current leverage strategy utilizes borrowings up to the maximum permitted by the 1940 Act to provide additional capital for the Fund, with an objective of increasing the net income available for shareholders. As of December 31, 2009, leverage represented 37%^a of the Fund's managed assets.

It has been our philosophy to utilize interest rate swap transactions to seek to reduce the interest rate risk inherent in our utilization of leverage. Considering that borrowings have variable interest rate payments, we seek to lock in those rates on a significant portion of this additional capital through interest rate swap agreements (where we effectively convert our variable rate obligation to a fixed rate obligation for the term of the swap agreements). Specifically, as of December 31, 2009, we have fixed the rate on 41% of our borrowings at an average interest rate of 3.4% for an average remaining period of 3.3 years (when we first entered into the swaps, the average term was 5.3 years). Locking in a significant portion of our leveraging costs is designed to protect the dividend-paying ability of the Fund. The use of leverage increases the volatility of the Fund's net asset value in both up and down markets. However, we believe that locking in a portion of the Fund's leveraging costs for the term of the swap agreements partially protects the Fund's expenses from an increase in short-term interest rates.

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

^aOn June 1, 2009, the Securities and Exchange Commission (SEC) issued an order (the "Order") to the Fund providing an exemption from Section 18 of the 1940 Act. The Order temporarily permits the Fund to maintain 200% asset coverage for debt used to replace auction market preferred securities (AMPS) rather than 300% asset coverage required by Section 18 for debt. The exemptive relief expires on October 31, 2010.

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

^a A portion or all of the security is pledged in connection with the revolving credit agreement: $901,528,457 has been pledged as collateral.

^b Fair valued security. This security has been valued at its fair value as determined in good faith under procedures established by and under the general supervision of the Fund's Board of Directors. Aggregate fair value securities represent 62.2% of net assets of the Fund, all of which have been fair valued pursuant to foreign security fair value pricing procedures approved by the Board of Directors.

^c A portion or all of the security is rehypothecated in connection with the Fund's revolving credit agreement in the aggregate amount of $35,186,180.

^e A portion of the security is segregated as collateral for interest rate swap transactions: $14,076,500 has been segregated as collateral.

^f Resale is restricted to qualified institutional investors. Aggregate holdings equal 6.6% of net assets of the Fund.

^a Based on LIBOR (London Interbank Offered Rate). Represents rates in effect at December 31, 2009.

^a Includes undistributed net investment income of $5,298,029 and $4,450,522, respectively.

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

^c Total market value return is computed based upon the New York Stock Exchange market price of the Fund's shares and excludes the effects of brokerage commissions. Total net asset value return measures the changes in value over the period indicated, taking into account dividends as reinvested. Dividends and distributions, if any, are assumed for purposes of these calculations, to be reinvested at prices obtained under the Fund's dividend reinvestment plan.

^e Average daily managed assets represent net assets applicable to common shares plus liquidation preference of preferred shares and/or the outstanding balance of the revolving credit agreement.

^f Includes the effect of the outstanding borrowings from the revolving credit agreement.

^h The Fund received temporary relief from the Securities and Exchange Commission permitting the Fund to maintain 200% asset coverage.

Cohen & Steers Infrastructure Fund, Inc. (the Fund) was incorporated under the laws of the State of Maryland on January 8, 2004 and is registered under the Investment Company Act of 1940, as amended, as a nondiversified closed-end management investment company. On January 1, 2010, the Fund changed its name from Cohen & Steers Select Utility Fund, Inc. Additionally, the Fund's investment objective was changed to total return, with an emphasis on income. Prior to January 1, 2010, the Fund's investment objective was a high level of after-tax total return which was achieved through investment in utility companies. In connection with the investment objective change, the Fund also changed its principal investment strategy to focus on infrastructure companies.

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 asked prices for the day or, if no asked price is available, at the bid price. Exchange traded options are valued at their last sale price as of the close of options trading on applicable exchanges. In the absence of a last sale, options are valued at the average of the quoted bid and asked prices as of the close of business. Over-the-counter options quotations are provided by the respective counterparty.

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 on the business day as of which such value is being determined as reflected on the tape at the close of the exchange representing the principal market for such securities. 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 investment manager) to be over-the-counter, are valued at the official closing prices as reported by sources as the Board of Directors deem appropriate 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 asked prices for the day, or if no asked 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 Board of Directors to reflect the fair market value of such securities. Interest rate swaps are valued utilizing quotes received from an outside pricing service.

Securities for which market prices are unavailable, or securities for which the investment manager determines that the bid and/or asked price does not reflect market value, will be valued at fair value pursuant to procedures approved by the Fund's Board of Directors. Circumstances in which market prices may be unavailable include, but are not limited to, when trading in a security is suspended, the exchange on which the security is traded is subject to an unscheduled close or disruption or material events occur after the close of the exchange on which the security is principally traded. In these circumstances, the Fund determines fair value in a manner that fairly reflects the market value of the security on the valuation date based on consideration of any information or factors it deems appropriate. These may include, but are not limited to, recent transactions in comparable securities, information relating to the specific security and developments in the markets.

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

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.

Fair value is defined as the price that the Fund would receive to sell an investment or 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 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.

The following is a summary of the inputs used as of December 31, 2009 in valuing the Fund's investments carried at value:

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

The change in unrealized appreciation attributable to securities owned on December 31, 2009 which were valued using significant unobservable inputs (Level 3) amounted to approximately $607,030.

Security Transactions and Investment Income: Security transactions are recorded on trade date. Realized gains and losses on investments sold are recorded on the basis of identified cost. Interest income is recorded on the accrual basis. Discounts are accreted and premiums are amortized over the life of the respective securities. Dividend income is recorded on the ex-dividend date except for certain dividends on foreign securities, which are recorded as soon as the Fund is informed after the ex-dividend date. The Fund records distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available, and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Fund adjusts the estimated amounts of the components of distributions (and consequently its net investment income) as an increase to unrealized appreciation/(depreciation) and realized gain/(loss) on investments as necessary once the issuers provide information about the actual composition of the distributions.

Options: The Fund may write put or covered call options on an index or a security with the intention of earning option premiums. Option premiums may increase the Fund's realized gains and therefore may help increase distributable income. When a Fund writes (sells) an option, an amount equal to the premium received by the Fund is recorded in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. When an option expires, the Fund realizes a gain on the option to the extent of the premiums received. Premiums received from writing options which are exercised or closed, are added to or offset against the proceeds or amount paid on the transaction to determine the realized gain or loss. If a put option on a security is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the underlying index or security. Other risks include the possibility of an illiquid options market or the inability of the counterparties to fulfill their obligations under the contract.

Foreign Currency Translations: The books and records of the Fund are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities, other assets and liabilities and foreign

currency contracts are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities.

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 those of securities of comparable U.S. issuers.

Interest Rate Swaps: The Fund uses interest rate swaps in connection with the sale of preferred shares and borrowing under its credit agreement. The interest rate swaps are intended to reduce the risk that an increase in short-term interest rates could have on the performance of the Fund's common shares as a result of the floating rate structure of the preferred shares and the credit agreement. In these interest rate swaps, the Fund agrees to pay the other party to the interest rate swap (which is known as the counterparty) a fixed rate payment in exchange for the counterparty agreeing to pay the Fund a variable rate payment that is intended to approximate the Fund's variable rate payment obligation on the preferred shares and the credit agreement. The payment obligation is based on the notional amount of the swap. Depending on the state of interest rates in general, the use of interest rate swaps could enhance or harm the overall performance of the common shares. The market value of interest rate swaps is based on pricing models that consider the time value of money, volatility, the current market and contractual prices of the underlying financial instrument. Unrealized appreciation is reported as an asset and unrealized depreciation is reported as a liability on the Statement of Assets and Liabilities. The change in value of swaps, including the accrual of periodic amounts of interest to be paid or received on swaps, is reported as unrealized appreciation or depreciation in the Statement of Operations. A realized gain or loss is recorded upon payment or receipt of a periodic payment or termination of swap agreements. Swap agreements involve, to varying degrees, elements of market and counterparty risk, and exposure to loss in excess of the related amounts reflected in the Statement of Assets and Liabilities. The Fund's maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract's remaining life, to the extent that such amount is positive.

For each swap counterparty, the Fund entered into an International Swap Dealers Association Inc. Master Agreement and related annexes thereto ("ISDAs") which sets forth the general terms and conditions of the Fund's swap transactions. During 2008, the Fund notified Merrill Lynch Derivative Products AG ("MLDP"), UBS AG ("UBS") and

Royal Bank of Canada ("RBC") that it breached certain terms and conditions of its ISDAs. On November 21, 2008, UBS granted a conditional waiver to the Fund stating that UBS did not intend to presently exercise its rights under the ISDA. MLDP has required that the Fund post collateral in the form of cash or U.S. Treasury securities. The collateral amount is determined by the approximate unrealized depreciation of a particular swap transaction on each valuation date. As of December 31, 2009, this amount was $1,817,000 and was pledged in cash by the Fund to MLDP.

During the year ended December 31, 2009, the Fund notified UBS and RBC of additional breaches. On December 16, 2009, RBC waived all of its rights and remedies related to any breaches that occurred or existed prior to and including this day. At December 31, 2009, the Fund continues to operate under the existing terms of all of its various ISDAs, including those with MLDP and UBS. However, MLDP and UBS reserve any and all rights to take any future action with respect to such events, including termination of outstanding swap transactions; termination or renegotiation of the ISDAs; posting of collateral in the form of cash or U.S. Treasury securities representing the unrealized depreciation on outstanding interest rate swap transactions or continuation under the current terms of the ISDAs. Any action resulting in the early termination of an interest rate swap transaction would cause the Fund to realize any market depreciation that existed on such transaction. In addition to realizing such losses, the early termination of a swap transaction may generate additional expenses for the Fund.

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 are declared and paid quarterly. Net realized capital gains, unless offset by any available capital loss carryforward, are typically distributed to shareholders at least annually. Dividends and distributions to shareholders are recorded on the ex-dividend date and are automatically reinvested in full and fractional shares of the Fund 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, 2009, a portion of the dividends have been reclassified to capital gain and return of capital.

Prior to redemption, Series M7, Series T7, Series T7-2, Series W7, Series TH7 and Series F7 preferred shares paid dividends based on a variable interest rate set at auctions, normally held every seven days. The dividends were declared and recorded for the subsequent seven day period on the auction date. In most instances, dividends were payable every seven days, on the first business day following the end of the dividend period.

Prior to redemption, Series T28 and Series TH28 preferred shares paid dividends based on a variable interest rate set at auctions, normally held every 28 days. The dividends were declared and recorded for the subsequent 28 day period on the auction date. In most instances, dividends were payable every 28 days, on the first business day following the end of the dividend period.

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.

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 where it trades for all open tax years and has concluded that as of December 31, 2009, no provisions for income tax would be required in the Fund's financial statements. The Fund's tax positions for the tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service, state departments of revenue and by foreign tax authorities.

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

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

For the services under the investment management agreement, the Fund pays the investment manager an investment management fee, accrued daily and paid monthly, at an annual rate of 0.85% of the Fund's average daily managed asset value. Managed asset value is the net asset value of the common shares plus the liquidation preference of the preferred shares and/or the amount of any loan outstanding.

The investment manager has contractually agreed to waive its investment management fee as follows:

During the year ended December 31, 2009, the investment manager waived its fee at the annual rate of 0.16%.

Administration Fees: The Fund has entered into an administration agreement with the investment manager under which the investment manager performs certain administrative functions for the Fund and receives a fee, accrued daily and paid monthly, at the annual rate of 0.06% of the Fund's average daily managed assets up to $1 billion, 0.04% of the Fund's average daily managed assets in excess of $1 billion up to $1.5 billion and 0.02% of the Fund's average daily managed assets in excess of $1.5 billion. For the year ended December 31, 2009, the Fund incurred $592,119 in administration fees. Additionally, the Fund pays State Street Bank and Trust Company as sub-administrator under a fund accounting and administration agreement.

Directors' and Officers' Fees: Certain directors and officers of the Fund are also directors, officers, and/or employees of the investment manager. The Fund does not pay compensation to any affiliated directors and officers except for the Chief Compliance Officer, who received $13,460 from the Fund for the year ended December 31, 2009.

Purchases and sales of securities, excluding short-term investments, for the year ended December 31, 2009, totaled $1,165,466,466 and $1,116,698,960, respectively.

Transactions in options written during the year ended December 31, 2009, were as follows:

As of December 31, 2009, the tax-basis components of accumulated earnings and the federal tax cost were as follows:

The other cost basis adjustments are primarily attributable to unrealized depreciation on interest rate swaps and book/tax adjustments on partnership investments.

During the year ended December 31, 2009, the Fund utilized net capital loss carryforwards of $44,546,338.

As of December 31, 2009, the Fund had temporary book/tax differences primarily attributable to wash sales on portfolio securities and book/tax adjustments on partnership investments and permanent book/tax differences primarily attributable to income redesignations and differing treatment on interest rate swaps. To reflect reclassifications arising from the permanent differences, paid-in capital was credited $2,512,527, accumulated net realized loss was credited $5,875,937 and accumulated net investment income was charged $8,388,464.

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

During the years ended December 31, 2009 and December 31, 2008, the fund issued no shares of common stock for the reinvestment of dividends.

On December 17, 2008, the Board of Directors approved the continuation of the delegation of its authority to management to effect repurchases, pursuant to management's discretion and subject to market conditions and investment considerations, of up to 10% of the Fund's common shares outstanding ("Share Repurchase Program") through the fiscal year ended December 31, 2009. On December 15, 2009, the Board of Directors authorized the continuation of the Share Repurchase Program through fiscal year ending December 31, 2010. During the years ended December 31, 2009 and December 31, 2008, the Fund did not effect any repurchases.

During the year ended December 31, 2008, an adjustment of $4,920 was debited to common stock for differences between estimated and actual preferred offering costs.

The Fund's articles of incorporation authorize the issuance of Fund preferred shares, par value $0.001 per share, in one or more classes or series, with rights as determined by the Board of Directors, by action of the Board of Directors without the approval of the common shareholders.

Prior to the redemption, each series of preferred shares were senior to the Fund's common shares and ranked on a parity with shares of any other series of preferred shares, and with shares of any other series of preferred stock of the Fund, as to the payment of dividends and the distribution of assets upon liquidation. If the Fund did not timely cure a failure to (1) maintain a discounted value of its portfolio equal to the preferred shares basic maintenance amount, (2) maintain the 1940 Act preferred shares asset coverage, or (3) file a required certificate related to asset coverage on time, the preferred shares were subject to a mandatory redemption at the redemption price of $25,000 per share plus an amount equal to accumulated but unpaid dividends thereon to the date fixed

for redemption. To the extent permitted under the 1940 Act and Maryland Law, the Fund at its option could without consent of the holders of preferred shares, redeem preferred shares having a dividend period of one year or less, in whole, or in part, on the business day after the last day of such dividend period upon not less than 15 calendar days and not more than 40 calendar days prior to notice. The optional redemption price was $25,000 per share plus an amount equal to accumulated but unpaid dividends thereon to the date fixed for redemption.

The Fund's common shares and preferred shares had equal voting rights of one vote per share and voted together as a single class, except in certain circumstances regarding the election of directors. In addition, the affirmative vote of the holders of a majority, as defined in the 1940 Act, of the outstanding preferred shares was required to (1) approve any plan of reorganization that would adversely affect the preferred shares and (2) approve any matter that materially and adversely affects the rights, preferences, or powers of that series.

The Articles Supplementary (the "Articles") creating each series of Auction Market Preferred Shares ("AMPS") provided for dividends to be paid at either the rate set in the current auction, or at the maximum rate as defined in the Articles if sufficient clearing bids for the AMPS were not received in the current auction. Beginning on February 13, 2008, sufficient clearing bids were not received for the auctions for the AMPS series of the Fund, and therefore, the maximum rates were declared on the respective AMPS series. Based upon the ratings of the AMPS, the maximum rate for shares of a series were the greater of 125% of LIBOR or 125 basis points plus LIBOR.

During the years ended December 31, 2009 and December 31, 2008, the Fund redeemed $292,000,000, and $360,000,000 respectively, of its outstanding preferred shares at a redemption price of $25,000 per share plus accrued but unpaid dividends. Any partial redemptions of the preferred shares were made on a pro rata basis across all preferred series. Redemptions were allocated among participating broker/dealers by the Depository Trust Company using a predetermined methodology and each broker/dealer allocated the redeemed shares to the underlying beneficiaries according to its own procedures. On December 10, 2009, the Fund's preferred shares were reclassified and designated as common shares with preferences, rights, voting powers, restrictions, limitations as to dividends, qualifications or terms and conditions of or rights to require redemption of common shares generally set forth in the Fund's articles of incorporation.

The following table reflects the preferred shares range of dividend rates paid during the year ended December 31, 2009:

^* All series were Auction Market Preferred Series with a $25,000 liquation value and $0.001 par value.

On September 23, 2008 the Fund entered into a $360,000,000 revolving credit agreement (the credit agreement) with BNP Paribas Prime Brokerage Inc. (BNPP). On July 15, 2009, the credit agreement was amended to increase the maximum commitment to $445,000,000. The Fund pays a facility fee of 0.95% per annum on the unused portion of the credit agreement. The credit agreement has a 270-day rolling term that resets daily; however, if the Fund exceeds certain net asset value triggers, the credit agreement may convert to a 60-day rolling term that resets daily. The Fund is required to segregate portfolio securities as collateral with the custodian in an amount up to two times the loan balance outstanding and has granted a security interest in the securities segregated to, and in favor of, BNPP as security for the loan balance outstanding. If the Fund fails to meet certain requirements, or maintain other financial covenants required under the credit agreement, the Fund may be required to repay immediately, in part or in full, the loan balance outstanding under the credit agreement necessitating the sale of portfolio securities at potentially inopportune times. The credit agreement also permits, subject to certain conditions, BNPP to rehypothecate portfolio securities segregated by the Fund up to the amount of the loan balance outstanding. The Fund continues to receive dividends and interest on rehypothecated securities. The Fund also has the right under the credit agreement to recall the securities from BNPP on demand. If BNPP fails to deliver the recalled security in a timely manner, the Fund will be compensated by BNPP for any fees or losses related to the failed delivery or, in the event a recalled security will not be returned by BNPP, the Fund, upon notice to BNPP, may reduce the loan balance outstanding by the amount of the recalled security failed to be returned. The Fund will receive a portion of the fees earned by BNPP in connection with the rehypothecation of portfolio securities.

As of December 31, 2009, the Fund has outstanding borrowings of $436,000,000. During the year ended December 31, 2009, the Fund borrowed an average daily balance of $247,639,041 at a weighted average borrowing cost of 1.38%. As of December 31, 2009, the aggregate value of rehypothecated securities was $35,186,180. During the year ended December 31, 2009, the Fund earned $114,902 in fees from rehypothecated securities.

On June 1, 2009, the Securities and Exchange Commission (SEC) issued an order (the "Order") to the Fund providing an exemption from Section 18 of the 1940 Act. The Order temporarily permits the Fund to maintain 200% asset coverage for debt used to replace auction market preferred securities (AMPS) rather than 300% asset coverage required by Section 18 for debt. The exemptive relief expires on October 31, 2010.

The following table presents the value of derivatives held during the year ended December 31, 2009, along with the respective location in the financial statements. The balance of outstanding interest rate swaps at December 31, 2009 is representative of the volume outstanding throughout the year ended December 31, 2009. The volume of activity for written options for the year ended December 31, 2009 is summarized in Note 3.

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.

On June 29, 2009, the Boards of Directors of the Fund and Cohen & Steers REIT and Utility Income Fund, Inc. ("RTU") approved a proposal, subject to approval by each fund's shareholders, in which RTU would merge with and into the Fund in accordance with Maryland General Corporation Law. If each fund's shareholders approve the merger, shareholders of RTU would become shareholders of the Fund. On November 24, 2009, RTU's shareholders approved the merger. However, the Fund failed to receive a sufficient number of votes to also approve the merger. On December 10, 2009, the Fund's Board of Directors determined that the merger remained in the best interest of shareholders and set new record and shareholder meeting dates of December 17, 2009 and February 26, 2010, respectively. If the merger is approved by the Fund's shareholders, all of RTU's assets and liabilities will be combined with the Fund, and each shareholder of RTU will receive a number of shares of the Fund in exchange for their shares of RTU having an aggregate net asset value equal to the aggregate net asset value of RTU's shares held as of the close of business of the New York Stock Exchange on the closing date of the merger. If the Fund's shareholders approve the merger, the closing date of the merger is expected to be on or about March 19, 2010.

The investment manager may elect to consummate the merger prior to the closing date and will promptly notify Fund shareholders of any such change.

Merger related expenses, which will be borne by the Fund, are accrued as incurred and are estimated to be approximately $507,000.

Events and transactions occurring after December 31, 2009 and through the date that the financial statements were issued, February 19, 2010, have been evaluated in the preparation of the financial statements.

Note 1 discloses both the Fund's name change as well as its change in investment objective. Additionally, effective January 1, 2010, the Board approved the appointment of Cohen & Steers Europe S.A., Cohen & Steers Asia Limited and Cohen & Steers UK Limited, all affiliates of the investment manager, as sub-investment advisors (the subadvisors) for the Fund. The activities and responsibilities of the investment manager with respect to the Fund may be performed by one or more of the subadvisors. The investment manager compensates the subadvisors out of the investment management fee it receives from the Fund, and the Fund's investment management fees will not change.

To the Board of Directors and Shareholders of
Cohen & Steers Infrastructure Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Cohen & Steers Infrastructure Fund, Inc. (formerly, Cohen & Steers Select Utility Fund, Inc.) (the "Fund") at December 31, 2009, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2009 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

The Board of Directors of the Fund initially called a special meeting of shareholders (the "Meeting") to be held on October 22, 2009. The Meeting was called in order to vote on the merger of the Cohen & Steers REIT and Utility Income Fund, Inc. with and into the Fund (the "Merger"). In addition, shareholders also were asked to vote to amend the Fund's charter to increase the number of authorized shares of capital stock and to change the Fund's investment objective to enable the Fund to focus its investments in infrastructure companies. The Meeting was adjourned until November 24, 2009 in order to solicit additional votes. On November 24, 2009, shareholders approved changing the Fund's investment objective; however, shareholders of the Fund did not submit sufficient votes to approve the Merger or charter amendment, and the Meeting was again adjourned with respect to these proposals until November 27, 2009. On November 27, 2009, the Meeting was adjourned indefinitely because shareholders did not submit sufficient votes to approve the Merger or charter amendment. The proposal to change the Fund's investment objective was approved by the affirmative vote of 67% of a majority of the Fund's outstanding voting securities present at the Meeting. The number of shares voted with respect to that proposal are as follows:

On December 10, 2009, the Fund's Board determined that the proposed Merger and charter amendment continue to be in the best interests of the Fund and its shareholders and, as such, set a new record date of December 17, 2009 for shareholders to vote at, and called to reconvene, the Meeting on February 26, 2010.

For more information regarding the proposed Merger, please see Note 9 to the Fund's financial statements.

The performance data quoted represent past performance. Past performance is no guarantee of future results. The investment return will vary and the principal value of an investment will fluctuate and shares, if sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. Performance results reflect the effect of leverage resulting from the issuance of preferred shares and/or borrowings under a credit agreement.

Pursuant to the Jobs and Growth Relief Reconciliation Act of 2003, the Fund designates qualified dividend income of $36,474,874. Additionally, 75% of the ordinary dividends qualified for the dividends received deduction available to corporations. Also, the Fund designates a long-term capital gain distribution of $4,578,186 at the 15% rate.

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

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

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

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

Participants in the Plan may withdraw from the Plan upon notice to the Plan Agent. Such withdrawal will be effective immediately if received not less than ten days prior to a Dividend record date; otherwise, it will be effective for all subsequent Dividends. When a participant withdraws from the Plan or upon termination of the Plan as provided below, certificates for whole common shares credited to his or her account under the Plan will be issued and a cash payment will be made for any fraction of a common share credited to such account. If any participant elects to have the Plan Agent sell all or part of his or her shares and remit the proceeds, the Plan Agent is authorized to deduct a $15.00 fee plus $0.10 per share brokerage commissions.

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

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

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 Web site at cohenandsteers.com or (iii) on the Securities and Exchange Commission's Web site 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 (i) without charge, upon request, by calling 800-330-7348 or (ii) on the SEC's Web site 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 Web site 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 the 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 would be a tax-free return of capital distributed from the Fund's assets. To the extent this occurs, the Fund's shareholders of record will be notified of the estimated amount of capital returned to shareholders for each

such distribution and this information will also be available at cohenandsteers.com. The final tax treatment of all distributions is reported to shareholders on their 1099-DIV forms, which are mailed after the close of each calendar year. Distributions of capital decrease the Fund's total assets and, therefore, could have the effect of increasing the Fund's expense ratio. In addition, in order to make these distributions, the Fund may have to sell portfolio securities at a less than opportune time.

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase, from time to time, shares of its common stock in the open market.

The Board of Directors, at its June 9-10, 2009 meeting, expanded the Fund's universe of permissible derivatives transactions. The Fund may, but is not required to, use, without limit, various derivatives transactions described below to seek to generate return, facilitate portfolio management and mitigate risks. Although the investment manager may seek to use these kinds of transactions to further the Fund's investment objectives, no assurance can be given that they will achieve this result. The Fund may enter into exchange-listed and over-the-counter put and call options on securities (including securities of investment companies and baskets of securities), indexes, and other financial instruments; purchase and sell financial futures contracts and options thereon; enter into various interest rate transactions, such as swaps, caps, floors or collars or credit transactions; equity index, total return and credit default swaps; forward contracts; and structured investments. In addition, the Fund may enter into various currency transactions, such as forward currency contracts, currency futures contracts, currency swaps or options on currency or currency futures. The Fund also may purchase and sell derivative instruments that combine features of these instruments. The Fund may invest in other types of derivatives, structured and similar instruments which are not currently available but which may be developed in the future. Collectively, all of the above are referred to as "Derivatives Transactions."

Derivatives Transactions can be highly volatile and involve various types and degrees of risk, depending upon the characteristics of the particular derivative, including the imperfect correlation between the value of such instruments and the underlying assets, the possible default of the other party to the transaction and illiquidity of the derivative instruments. Derivatives Transactions may entail investment exposures that are greater than their cost would suggest, meaning that a small investment in derivatives could have a large potential impact on the Fund's performance, effecting a form of investment leverage on the Fund's portfolio. In certain types of Derivatives Transactions the Fund could lose the entire amount of its investment; in other types of Derivatives Transactions the potential loss is theoretically unlimited.

The market for many derivatives is, or suddenly can become, illiquid. Changes in liquidity may result in significant, rapid and unpredictable changes in the prices for Derivatives Transactions. The Fund could experience losses if it were unable to liquidate its position because of an illiquid secondary market. Successful use of Derivatives Transactions also is subject to the ability of the Investment Manager to predict correctly movements in the direction of the relevant market and, to the extent the transaction is entered into for hedging purposes, to ascertain the appropriate correlation between the transaction being hedged and the price movements of the derivatives.

Derivatives Transactions entered into to seek to manage the risks of the Fund's portfolio of securities may have the effect of limiting gains from otherwise favorable market movements. The use of Derivatives Transactions may result in losses greater than if they had not been used (and a loss on a Derivatives Transaction position may be larger than the gain in a portfolio position being hedged), may require the Fund to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation the Fund can realize on an investment, or may cause the Fund to hold a security that it might otherwise sell. Amounts paid by the Fund as premiums and cash or other assets held as collateral with respect to Derivatives Transactions may not otherwise be available to the Fund for investment purposes.

The use of currency transactions can result in the Fund incurring losses as a result of the imposition of exchange controls, political developments, government intervention or failure to intervene, suspension of settlements or the inability of the Fund to deliver or receive a specified currency.

Structured notes and other related instruments carry risks similar to those of more traditional derivatives such as futures, forward and option contracts. However, structured instruments may entail a greater degree of market risk and volatility than other types of debt obligations.

The Fund will be subject to credit risk with respect to the counterparties to certain Derivatives Transactions entered into by the Fund. Derivatives may be purchased on established exchanges or through privately negotiated transactions referred to as over-the-counter ("OTC") derivatives. Exchange-traded derivatives generally are guaranteed by the clearing agency which is the issuer or counterparty to such derivatives. However, many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day and once the daily limit has been reached in a particular contract no trades may be made that day at a price beyond that limit or trading may be suspended. There also is no assurance that sufficient trading interest to create a liquid secondary market on an exchange will exist at any particular time and no such secondary market may exist or may cease to exist. Each party to an OTC derivative bears the risk that the counterparty will default. OTC derivatives are less liquid than exchange-traded derivatives because the other party to the transaction may be the only investor with sufficient understanding of the derivative to be interested in bidding for it. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in bankruptcy or other reorganization proceeding. The Fund may obtain only a limited recovery or may obtain no recovery in such circumstances.

The Fund will not be a commodity pool (i.e., a pooled investment vehicle which trades in commodity futures contracts and options thereon and the operator of which is registered with the Commodity Futures Trading Commission). In addition, the Fund has claimed an exclusion from the definition of commodity pool operator and, therefore, is not subject to registration or regulation as a pool operator under the Commodity Exchange Act.

The Board of Directors, including the Directors who are not "Interested persons" (as defined in the Investment Company Act of 1940) of the Fund (the Independent Directors), at a meeting held on June 29, 2009 and August 11, 2009, approved and submitted for shareholder approval, changing the Fund's investment objective to facilitate a broader

investment focus on infrastructure securities. shareholder approval of the change to the investment objective was required because the investment objective is a "fundamental" policy, meaning it may only be changed with shareholder approval. At a special meeting of shareholders initially held on October 22, 2009, and adjourned until November 24, 2009, shareholders of the Fund approved changing the Fund's then current (old) investment objective to its new investment objective as set forth below.

Old Investment Objective: The Fund's investment objective is to achieve a high level of after-tax total return through investment in utility securities.

New Investment Objective: The Fund's investment objective is total return, with an emphasis on income.

This change was proposed to facilitate a change in the Fund's investment focus from utility securities to infrastructure securities.

Changes to Principal Investment Strategy and Certain Non-Fundamental Investment Policies

In addition, the Fund's Board adopted, subject to stockholder approval of the change in the Fund's investment objective, a policy that the Fund invest, under normal market conditions, at least 80% of its managed assets in securities issued by infrastructure companies, which consist of utilities, pipelines, toll roads, airports, railroads, ports, telecommunications companies and other infrastructure companies. This policy took effect upon stockholder approval of the investment objective change and replaced the Fund's current (old) policy to invest at least 80% of its managed assets in a portfolio of securities issued by utility companies. The new 80% investment policy is non-fundamental and may be changed by the Fund's Board without stockholder approval. However, the Fund will provide stockholders with written notice at least 60 days' prior to a change in its 80% investment policy. The Fund's Board also approved, subject to stockholder approval of the change in the Fund's investment objective, changing the Fund's name to "Cohen & Steers Infrastructure Fund, Inc." Effective with the foregoing changes, the Fund's primary benchmark changed from the S&P 1500 Utility Index to the UBS Global 50/50 Infrastructure & Utilities Index, which tracks a 50% exposure to the global developed-market utilities sector and a 50% exposure to the global developed-market infrastructure sector. The changes to the Fund's name, its benchmark and completion of the transition of the Fund's portfolio to investment in infrastructure securities were effective January 1, 2010. The Fund's NYSE trading symbol "UTF" remains the same.

In making investment decisions with respect to common stocks and other equity securities issued by infrastructure companies, the investment manager will rely on a fundamental analysis of each company. Securities will be evaluated for their potential to provide an attractive total return through a combination of current income and capital appreciation. The investment manager will review each company's potential for success in light of general economic and industry trends, as well as the company's quality of management, financial condition, business plan, industry and sector market position, dividend payout ratio and corporate governance. The investment manager utilizes a value-oriented approach, and evaluates each company's valuation on the basis of relative price/cash flow and price/earnings multiples, earnings growth rate, dividend yield, and price/book value, among other metrics. These equity securities can consist of: common stocks; rights or warrants to purchase common

stocks; securities convertible into common stocks where the conversion feature represents, in the investment advisor's view, a significant element of the securities' value; preferred stocks; and equity units.

Infrastructure companies derive at least 50% of their revenues from, or have at least 50% of their assets committed to, the generation, transmission, sale or distribution of electric energy; distribution, purification and treatment of water; production, transmission or distribution of natural resources used to produce energy; and provision of communication services, including cable television, satellite, microwave, radio, telephone and other communications media. In addition, infrastructure companies derive at least 50% of their revenues from, or have at least 50% of their assets committed to, the management, ownership and/or operation of infrastructure assets or construction, development or financing of infrastructure assets, such as pipelines, toll roads, airports, railroads or ports. Infrastructure companies also include energy-related companies organized as master limited partnerships ("MLPs") and their affiliates.

Securities and instruments of infrastructure companies are more susceptible to adverse economic or regulatory occurrences affecting their industries. Infrastructure companies may be subject to a variety of factors that may adversely affect their business or operations, including high interest costs in connection with capital construction programs, high leverage, costs associated with environmental and other regulations, the effects of economic slowdown, surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Infrastructure companies may also be affected by or subject to (i) regulation by various government authorities, (ii) government regulation of rates charged to customers, (iii) service interruption due to environmental, operational or other mishaps, (iv) the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards, and (v) general changes in market sentiment towards infrastructure and utility assets.

In connection with approving the changes to the Fund's investment objective, the Board also approved expanding the Fund's permissible investments to include energy-related MLPs and their affiliates (up to 25% of the Fund's managed assets) and Canadian royalty trusts, which took effect upon stockholder approval of the investment objective change.

An MLP is a publicly traded company organized as a limited partnership or limited liability company and treated as a partnership for federal income tax purposes. MLPs may derive income and gains from the exploration, development, mining or production, processing, refining, transportation (including pipelines transporting gas, oil, or products thereof), or the marketing of any mineral or natural resources. MLPs generally have two classes of owners, the general partner and limited partners. The general partner of an MLP is typically owned by one or more of the following: a major energy company, an investment fund, or the direct management of the MLP. The general partner may be structured as a private or publicly traded corporation or other entity. The general partner typically controls the operations and management of the MLP through an up to 2% equity interest in the MLP plus, in many cases, ownership of common units and subordinated units. Limited partners own the remainder of the partnership, through ownership of common units, and have a limited role in the partnership's operations and management.

An investment in MLP units involves some risks that differ from an investment in the common stock of a corporation. Holders of MLP units have limited control on matters affecting the partnership. Investing in MLPs

involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. MLPs that concentrate in a particular industry or a particular geographic region are subject to risks associated with such industry or region. The benefit derived from the Fund's investment in MLPs is largely dependent on the MLPs being treated as partnerships for federal income tax purposes.

A Canadian royalty trust is a trust whose securities are listed on a Canadian stock exchange and which controls an underlying company whose business is the acquisition, exploitation, production and sale of oil and natural gas. These trusts generally pay out to unitholders the majority of the cash flow that they receive from the production and sale of underlying oil and natural gas reserves. The amount of distributions paid on a Canadian royalty trust's units will vary from time to time based on production levels, commodity prices, royalty rates and certain expenses, deductions and costs, as well as on the distribution payout ratio policy adopted. As a result of distributing the bulk of their cash flow to unitholders, the ability of a Canadian royalty trust to finance internal growth through exploration is limited. Therefore, Canadian royalty trusts typically grow through acquisition of additional oil and gas properties or producing companies with proven reserves of oil and gas, funded through the issuance of additional equity or, where the trust is able, additional debt.

The Board also approved the removal of the 20% investment limitation in preferred securities and other fixed income securities issued by any type of company. The risks of investing in preferred securities include (i) such securities may be more sensitive to changes in interest rates than common stocks; (ii) certain issuers may, at their discretion, defer or omit distributions for a stated period without any adverse consequences to the issuer; (iii) generally subordinated to bonds and other debt instruments in a company's capital structure in terms of having priority to corporate income and liquidation payments; (iv) may be substantially less liquid than many other securities, such as common stocks; (v) generally, traditional preferred securities offer no voting rights with respect to the issuing company unless preferred dividends have been in arrears for a specified number of periods and in certain varying circumstances and (vi) an issuer of preferred securities may redeem the securities prior to a specified date. Debt securities, such as bonds, involve credit risk. Credit risk is the risk that the borrower will not make timely payments of principal and interest. Changes in an issuer's credit rating or the market's perception of an issuer's creditworthiness may also affect the value of the Fund's investment in that issuer. The degree of credit risk depends on the issuer's financial condition and on the terms of the securities. Debt securities are also subject to interest rate risk. Interest rate risk is the risk that the value of a debt security may fall when interest rates rise. In general, the market price of debt securities with longer maturities will go up or down more in response to changes in interest rates than the market price of shorter term securities.

The Board also voted to remove the 20% limitation on investments in foreign securities and 10% limitation on investments in emerging market securities. The Fund has no geographic restrictions and expects to invest in infrastructure companies primarily in developed countries, but may invest in securities of infrastructure companies domiciled in emerging market countries. Risks of investing in foreign securities include currency risks, future political and economic developments and possible imposition of foreign withholding taxes on income payable on

the securities. In addition, there may be less publicly available information about a foreign issuer than about a domestic issuer, and foreign issuers may not be subject to the same accounting, auditing and financial recordkeeping standards and requirements as domestic issuers. Emerging market countries generally have less developed markets and economies and, in some countries, less mature governments and governmental institutions. A small number of companies representing a limited number of industries may account for a significant percentage of an emerging country's overall market and trading volume. Emerging market countries may have political and social uncertainties, and their economies may be over-dependent on exports, especially with respect to primary commodities, making these economies vulnerable to changes in commodity prices. Emerging market countries may have overburdened infrastructure and obsolete or unseasoned financial systems, environmental problems, less developed legal systems and less reliable custodial services and settlement practices.

The Board also approved expanding the types of permitted investments for temporary defensive measures to include short-term debt instruments, government securities, cash or cash equivalents (currently only short-term debt).

In connection with approving the change to the Fund's investment objective, the Board approved the appointment of Cohen & Steers Europe S.A., Cohen & Steers Asia Limited and Cohen & Steers UK Limited as sub-investment advisors (the subadvisors) for the Fund, which took effect on January 1, 2010. Each of the subadvisors is a direct or indirect wholly-owned subsidiary of the investment manager's parent company, CNS. The activities and responsibilities of the investment manager with respect to the Fund may be performed by one or more of the subadvisors. The investment manager compensates the subadvisors out of the investment management fee it receives from the Fund, and the Fund's investment management fees will not change. Appointment of the subadvisors was not subject to approval by the Fund's stockholders, and is in reliance on the issuance of an opinion from Fund counsel. Information about the factors considered by the Board in approving subadvisory agreements with the subadvisors is set forth below beginning on page 49.

In the course of doing business with Cohen & Steers, you may share personal information with us. We are committed to maintaining the privacy of this information and recognize the importance of preventing unauthorized access to it. You may provide personal information on account applications and requests for forms or other literature (such as your address and social security number) and through account transactions with us (such as purchases, sales and account balances). You may also provide us with this information through written, electronic and telephone account inquiries.

We do not sell personal information about current and former customers to anyone, and we do not disclose it unless necessary to process a transaction, service an account or as otherwise required or permitted by law. For

* This privacy policy applies to the following Cohen & Steers companies: Cohen & Steers Capital Management, Inc., Cohen & Steers Securities, LLC, and the Cohen & Steers Funds.

example, we may disclose information to companies that perform administrative services for Cohen & Steers, such as transfer agents, or printers that assist us in the distribution of investor materials. These organizations will use this information only for purposes of providing the required services or as otherwise may be required by law. We may also share personal information within the Cohen & Steers family of companies to provide you with additional information about our products and services.

We maintain physical, electronic and procedural safeguards to protect your personal information. Within Cohen & Steers, we restrict access to your personal information to those employees who need it to perform their jobs, such as servicing your account or informing you of new products and services.

The accuracy of your personal information is important. If you need to correct or update your personal or account information, please call us at 800-330-7348. We will be happy to review, correct or update your personal or account information.

The Board of Directors of the Fund, including a majority of the directors who are not parties to the Fund's investment management agreement (the "Investment Management Agreement") and the subadvisory agreements (the "Subadvisory Agreements", and together with the Investment Management Agreement, the "Management Agreements"), or interested persons of any such party ("Independent Directors"), has the responsibility under the 1940 Act to approve the Fund's Management Agreements for their initial two year terms and their continuation annually thereafter at a meeting of the Board of Directors called for the purpose of voting on the approval or continuation of the management agreement. At a meeting held in person on September 22-23, 2009, the Investment Management Agreement was discussed and was unanimously continued for a term ending June 30, 2010 by the Fund's Board of Directors, including the Independent Directors. At a meeting held in person on September 22-23, 2009, each Subadvisory Agreement was discussed and were unanimously approved for a term ending June 30, 2011 by the Fund's Board of Directors, including the Independent Directors. The Independent Directors were represented by independent counsel who assisted them in their deliberations during the meeting and executive session.

In considering whether to continue the Investment Management Agreement, the Board of Directors reviewed materials provided by the Fund's investment manager (the "Investment Manager") and Fund counsel which included, among other things, fee, expense and performance information compared to peer funds ("Peer Funds") prepared by an independent data provider; supplemental performance and summary information prepared by the Investment Manager; and memoranda outlining the legal duties of the Board of Directors. The Board of Directors also spoke directly with representatives of the independent data provider and met with investment management personnel. In addition, the Board of Directors considered information provided from time to time by the Investment Manager throughout the year at meetings of the Board of Directors, including presentations by portfolio managers relating to the investment performance of the Fund and the investment strategies used in pursuing the Fund's objective. In particular, the Board of Directors considered the following:

(i) The nature, extent and quality of services provided by the Investment Manager and the Subadvisors: The Board of Directors reviewed the services that the Investment Manager provides, and the sub-investment advisors

(the "Subadvisors") will provide, to the Fund, including, but not limited to, making the day-to-day investment decisions for the Fund, and, for the Investment Manager, generally managing the Fund's investments in accordance with the stated policies of the Fund. The Board of Directors also discussed with officers and portfolio managers of the Fund the amount of time the Investment Manager dedicates to the Fund and the types of transactions that were being done on behalf of the Fund. Additionally, the Board of Directors took into account the services provided by the Investment Manager and the Subadvisors to other Cohen & Steers funds, including those that invest substantially in utilities and have investment objectives and strategies similar to the Fund. The Board of Directors next considered the education, background and experience of the Investment Manager's and Subadvisors' personnel, noting particularly that the favorable history and reputation of the portfolio managers for the Fund has had, and would likely continue to have, a favorable impact on the Fund. The Board of Directors further noted the Investment Manager's and Subadvisors' ability to attract quality and experienced personnel. The Board of Directors then considered the administrative services provided by the Investment Manager, including compliance and accounting services. After consideration of the above factors, among others, the Board of Directors concluded that the nature, quality and extent of services provided by the Investment Manager, and proposed to be provided by the subadvisor are adequate and appropriate.

(ii) Investment performance of the Fund and the Investment Manager: The Board of Directors considered the investment performance of the Fund compared to Peer Funds and compared to a relevant benchmark and blended benchmark. The Board of Directors noted that the Fund outperformed the Peer Funds' median for the year-to-date period, and underperformed the Peer Funds' medians for the one-, three- and five-year periods ended June 30, 2009. The Board of Directors noted that the Fund outperformed its benchmark and blended benchmark for the year-to-date period and underperformed its benchmark and blended benchmark for the one-, three- and five-year periods ended June 30, 2009, mainly due to leverage in a down market. The Board of Directors engaged in discussions with the Investment Manager regarding the contributors and detractors to the Fund's performance during the periods, as well as the impact of leverage on the Fund's performance. The Board of Directors also considered supplemental performance data provided by the Investment Manager, including a narrative summary of various factors affecting performance, and the Investment Manager's performance in managing other funds that invest in utilities securities. The Board of Directors then determined that Fund performance, in light of all the considerations noted above, was satisfactory.

(iii) Cost of the services provided and profits realized by the Investment Manager from the relationship with the Fund: Next, the Board of Directors considered the management fees and administrative fees payable by the Fund, as well as total expense ratios. The Board also considered the proposed fees to be paid by the Investment Manager to the Subadvisors out of the management fee paid by the Funds. As part of their analysis, the Board of Directors gave substantial consideration to the fee and expense analyses provided by the independent data provider. The Board of Directors considered the Fund's actual and contractual management fees, and the Fund's net expense ratios at managed and common asset levels compared to the medians of the Peer Funds, generally ranking the Fund third or fourth out of the four Peer Funds across most categories. The Board considered the impact of reduced asset levels as a result of the 2008 market decline, leverage levels and change to the capital structure by replacing AMPS with borrowings on the Fund's fees and expenses at managed and common asset levels. The Board noted that the

proposed fees payable to the Subadvisors would be paid by the Investment Manager and that the Fund's management fee will not increase. The Board of Directors also noted that the Investment Manager continues to waive a portion of its management fee until early 2012 and that the Fund pays an administration fee to the Investment Manager. The Board of Directors concluded that, in light of market conditions, the Fund's current expense structure is satisfactory.

The Board of Directors also reviewed information regarding the profitability to the Investment Manager of its relationship with the Fund. The Board of Directors considered the level of the Investment Manager's profits and whether the profits were reasonable for the Investment Manager. Because the Subadvisors would be paid by the Investment Manager and not by the Fund, the Board of Directors did not consider the projected profitability of the Subadvisors to be relevant to their considerations. The Board of Directors took into consideration other benefits to be derived by the Investment Manager in connection with the Investment Management Agreement, noting particularly the research and related services, within the meaning of Section 28(e) of the Securities Exchange Act of 1934, as amended, that the Investment Manager receives by allocating the Fund's brokerage transactions. The Board of Directors also considered the fees received by the Investment Manager under the Administration Agreement, and noted the significant services received, such as operational services and furnishing office space and facilities for the Fund, and providing persons satisfactory to the Board of Directors to serve as officers of the Fund, and that these services were beneficial to the Fund. The Board of Directors concluded that the profits realized by the Investment Manager from its relationship with the Fund were reasonable and consistent with fiduciary duties.

(iv) The extent to which economies of scale would be realized as the Fund grows and whether fee levels would reflect such economies of scale: The Board of Directors noted that as a closed-end fund, the Fund would not be expected to have inflows of capital that might produce increasing economies of scale. The Board of Directors determined that, given the Fund's closed-end structure, there were not at this time significant economies of scale that were not being shared with stockholders.

(v) Comparison of services rendered and fees paid to those under other investment management contracts, such as contracts of the same and other investment advisers or other clients: As discussed above in (i) and (iii), the Board of Directors compared both the services rendered and the fees paid under the Investment Management Agreement to those under other investment management contracts of other investment advisers managing Peer Funds. The Board of Directors also considered the services rendered, fees paid and profitability under the Investment Management Agreement to the Investment Manager's other fund management agreements and advisory contracts with institutional and other clients with similar investment mandates, as well as the profitability under the Investment Management Agreement to the Investment Manager's other advisory contracts with institutional and other clients with similar investment mandates. The Board of Directors determined that on a comparative basis the fees under the Investment Management Agreement, and proposed fees under the Subadvisory Agreements, were reasonable in relation to the services provided or proposed to be provided.

No single factor was cited as determinative to the decision of the Board of Directors. Rather, after weighing all of the considerations and conclusions discussed above, the Board of Directors, including the Independent Directors, unanimously approved the continuation of the Investment Management Agreement and unanimously approved the Subadvisory Agreements.

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

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 the investment manager (Interested Directors).

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.

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.

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

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

• Designed for investors seeking total return, investing primarily in REITs

• Designed for institutional investors seeking total return, investing primarily in REITs

• Designed for investors seeking maximum total return, investing primarily in real estate securities with an emphasis on both income and capital appreciation

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

• Designed for investors seeking total return, investing primarily in real estate securities located in the Asia Pacific region

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

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

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

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

The Bank of New York Mellon
480 Washington Boulevard
Jersey City, NJ 07310
(866) 227-0757

This report is for shareholder information. This is not a prospectus intended for use in the purchase or sale of Fund shares. Past performance is of course no guarantee of future results and your investment may be worth more or less at the time you sell.

Item 2. Code of Ethics.

On October 1, 2009, the registrant has adopted an Amended and Restated Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The material changes to the Code of Ethics that apply to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions were (i) a shortened preclearance window, (ii) the implementation of a 30-day holding period to sell securities at a profit, (iii) limitations on the frequency of trading, and (iv) a preclearance requirement for exchange traded funds. The registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made by calling 800-330-7348 or writing to the Secretary of the registrant, 280 Park Avenue, New York, NY 10017.

Item 3. Audit Committee Financial Expert.

The registrant’s board has determined that Frank K. Ross, a member of the board’s Audit Committee, is an “audit committee financial expert”. Mr. Ross is “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:

	2009		2008
Audit Fees	$	50,200	$	50,200
Audit-Related Fees	—		33,500
Tax Fees	14,250		15,800
All Other Fees	—		—

Audit-related fees were billed in connection with the preparation and issuance of certification reports to rating agencies relating to the registrant’s preferred shares. Tax fees were billed in connection with the preparation of tax returns, calculation and designation of dividends and other miscellaneous tax services.

Aggregate fees billed by the registrant’s principal accountant for the last two fiscal years for non-audit services provided to the registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted or overseen by another investment advisor) and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the registered investment company, where the engagement relates directly to the operations and financial reporting of the registrant, were as follows:

	2009	2008
Audit-Related Fees	—	—
Tax Fees	—	—
All Other Fees	—	$	110,000

These other fees were billed in connection with internal control reviews.

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

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

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

(f) Not applicable.

(g) For the fiscal years ended December 31, 2009 and December 31, 2008, 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 $14,250 and $130,885, respectively.

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

Item 5. Audit Committee of Listed Registrants.

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

Item 6. Schedule of Investments.

Included in Item 1 above.

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

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

COHEN & STEERS CAPITAL MANAGEMENT, INC.

STATEMENT OF POLICIES AND PROCEDURES REGARDING THE VOTING OF SECURITIES

This statement sets forth the policies and procedures that Cohen & Steers Capital Management, Inc. (“C&S”) follows in exercising voting rights with respect to securities held in our client portfolios. All proxy-voting rights that are exercised by C&S shall be subject to this Statement of Policy and Procedures.

I. Objectives

Voting rights are an important component of corporate governance. The Advisor and the Subadvisor have three overall objectives in exercising voting rights:

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

B. Rationalizing Management and Shareholder Concerns. The Advisor and Subadvisor seek to ensure that the interests of a company’s management and board are aligned with those of the company’s shareholders. In this respect, compensation must be structured to reward the creation of shareholder value.

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

In exercising voting rights, the Advisor and Subadvisor follow the general principles set forth below.

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

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

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

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

· To the extent reasonably possible, the Advisor and Subadvisor shall participate in each shareholder voting opportunity.

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

· The Advisor and Subadvisor, and its officers and employees, shall never accept any item of value in consideration of a favorable proxy voting decision.

Set forth below are general guidelines followed in exercising proxy voting rights:

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

Third Party Views. While the Advisor and Subadvisor may consider the views of third parties, the Advisor and Subadvisor shall never base a proxy voting decision solely on the opinion of a third party.

Rather, decisions shall be based on a reasonable and good faith determination as to how best to maximize shareholder value.

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

Set forth below are guidelines as to how specific proxy voting issues shall be analyzed and assessed.

While these guidelines will provide a framework for the Advisor and Subadvisor decision making process, the mechanical application of these guidelines can never address all proxy voting decisions.

When new issues arise or old issues present nuances not encountered before, the Advisor and Subadvisor must be guided by their reasonable judgment to vote in a manner that the Advisor and Subadvisor deem to be in the best interests of the Fund and its shareholders. In addition, because the regulatory framework and the business cultures and practices vary from region to region, the below general guidelines may be inconsistent in certain circumstances for proxies of issuers of securities in the Asia Pacific region.

Uncontested Director Elections

Votes on director nominees should be made on a case-by-case basis using a “mosaic” approach, where all factors are considered in director elections and where no single issue is deemed to be determinative.

For example, a nominee’s experience and business judgment may be critical to the long-term success of the portfolio company, notwithstanding the fact that he or she may serve on the board of more than four public companies. In evaluating nominees, the Advisor and Subadvisor consider the following factors:

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

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

· Whether the nominee ignored a significant shareholder proposal that was approved by a (i) majority of the shares outstanding or (ii) majority of the votes cast for two consecutive years;

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

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

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

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

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

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

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

· Whether the nominee is believed by us to have a material conflict of interest with the portfolio company; and

· Whether the nominee (or the overall board) in our view has a record of making poor corporate or strategic decisions or has demonstrated an overall lack of good business judgment.

The Advisor and Subadvisor vote on a case-by-case basis for shareholder proposals requesting companies to amend their bylaws in order to create access to the proxy so as to nominate candidates for directors.

The Advisor and Subadvisor recognize the importance of shareholder access to the ballot process as a means to ensure that boards do not become self-perpetuating and self-serving. However, the Advisor and Subadvisor are also aware that some proposals may promote certain interest groups and could be disruptive to the nomination process. Special attention will be paid to companies that display a chronic lack of shareholder accountability.

Proxy Contests

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

Reimbursement of Proxy Solicitation Expenses. Decisions to provide full reimbursement for dissidents waging a proxy contest should be made on a case-by-case basis.

Ratification of Auditors

The Advisor and Subadvisor vote for proposals to ratify auditors, unless an auditor has a financial interest in or association with the company, and are therefore not independent; or there is reason to believe that the independent auditor has rendered an opinion that is neither accurate nor indicative of the company’s financial position. Generally, the Advisor and Subadvisor vote against auditor ratification and withhold votes from audit committee members if non-audit fees exceed audit fees. The Advisor and Subadvisor vote on a case-by-case basis on auditor rotation proposals. Criteria for evaluating the rotation proposal include, but are not limited to: tenure of the audit firm; establishment and disclosure of a renewal process whereby the auditor is regularly evaluated for both audit quality and competitive price; length of the rotation period advocated in the proposal; and any significant audit related issues. Generally, the Advisor and Subadvisor vote against auditor indemnification and limitation of liability; however the Advisor and Subadvisor recognize there may be situations where indemnification and limitations on liability may be appropriate.

Takeover Defenses

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

Shareholder Rights Plans. The Advisor and Subadvisor acknowledge that there are arguments for and against shareholder rights plans, also known as “poison pills.” Companies should put their case for rights plans to shareholders. The Advisor and Subadvisor review on a case-by-case basis management proposals to ratify a poison pill. The Advisor and Subadvisor generally look for shareholder friendly features including a two- to three-year sunset provision, a permitted bid provision and a 20 percent or higher flip-in provision.

Greenmail. The Advisor and Subadvisor vote for proposals to adopt anti-greenmail charter or bylaw amendments or otherwise restrict a company’s ability to make greenmail payments.

Unequal Voting Rights. Generally, The Advisor and Subadvisor vote against dual-class recapitalizations as they offer an effective way for a firm to thwart hostile takeovers by concentrating voting power in the hands of management or other insiders.

Classified Boards. The Advisor and Subadvisor generally vote in favor of shareholder proposals to declassify a board of directors, although the Advisor and Subadvisor acknowledge that a classified board may be in the long-term best interests of a company in certain situations. In voting on shareholder proposals to declassify a board of directors, the Advisor and Subadvisor evaluate all facts and circumstances surrounding such proposal, including whether the shareholder proposing the de-classification has an agenda in making such proposal that may be at odds with the long-term best interests of the company or whether it would be in the best interests of the company to thwart a shareholder’s attempt to control the board of directors.

Cumulative Voting. Having the ability to cumulate our votes for the election of directors—that is, cast more than one vote for a director about whom they feel strongly—generally increases shareholders’ rights to effect change in the management of a corporation. The Advisor and Subadvisor generally support, therefore, proposals to adopt cumulative voting.

Shareholder Ability to Call Special Meeting. the Advisor and Subadvisor votes on a case-by-case basis for shareholder proposals requesting companies to amend their governance documents (bylaws and/or charter) in order to allow shareholders to call special meetings. The Advisor and Subadvisor recognize the importance on shareholder ability to call a special meeting, however, the Advisor and Subadvisor are also aware that some proposals are put forth in order to promote the agenda(s) of certain special interest groups and could be disruptive to the management of the company.

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

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

Miscellaneous Board Provisions

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

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

Separate Chairman and CEO Positions. The Advisor and Subadvisor will generally vote for proposals looking to separate the CEO and Chairman roles. The Advisor and Subadvisor do acknowledge, however, that under certain circumstances, it may be reasonable for the CEO and Chairman roles to be held by a single person.

Lead Directors and Executive Sessions. In cases where the CEO and Chairman roles are combined, Advisor and Subadvisor will vote for the appointment of a “lead” (non-insider) director and for regular “executive” sessions (board meetings taking place without the CEO/Chairman present).

Majority of Independent Directors. The Advisor and Subadvisor vote for proposals that call for the board to be composed of a majority of independent directors. The Advisor and Subadvisor believe that a majority of independent directors can be an important factor in facilitating objective decision making and enhancing accountability to shareholders.

Independent Committees. The Advisor and Subadvisor vote for shareholder proposals requesting that the board’s audit, compensation, and nominating committees consist exclusively of independent directors.

Stock Ownership Requirements. The Advisor and Subadvisor support measures requiring senior executives to hold a minimum amount of stock in a company (often expressed as a percentage of annual compensation), requiring stock acquired through option exercise to be held for a certain minimum amount of time and issuing restricted stock awards instead of options.

Term of Office. The Advisor and Subadvisor vote against shareholder proposals to limit the tenure of outside directors. Term limits pose artificial and arbitrary impositions on the board and could harm shareholder interests by forcing experienced and knowledgeable directors off the board.

Director and Officer Indemnification and Liability Protection. Proposals concerning director and officer indemnification and liability protection should be evaluated on a case-by-case basis.

Board Size. The Advisor and Subadvisor generally vote for proposals to limit the size of the board to 15 members or less.

Majority Vote Standard. The Advisor and Subadvisor generally vote for proposals asking for the board to initiate the appropriate process to amend the company’s governance documents (charter or bylaws) to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders. The Advisor and Subadvisor would generally review on a case-by-case basis proposals that address alternative approaches to a majority vote requirement.

Confidential Voting. The Advisor and Subadvisor vote for shareholder proposals requesting that companies adopt confidential voting, use independent tabulators, and use independent inspectors of election as long as the proposals include clauses for proxy contests as follows: in the case of a contested election, management should be permitted to request that the dissident group honor its confidential voting policy. If the dissidents agree, the policy remains in place. If the dissidents do not agree, the confidential voting policy is waived.

The Advisor and Subadvisor also vote for management proposals to adopt confidential voting.

Bundled Proposals. The Advisor and Subadvisor review on a case-by-case basis bundled or “conditioned” proxy proposals. In the case of items that are conditioned upon each other, the Advisor and Subadvisor examine the benefits and costs of the packaged items. In instances where the joint effect of the

conditioned items is not in shareholders’ best interests, the Advisor and Subadvisor vote against the proposals. If the combined effect is positive, the Advisor and Subadvisor support such proposals.

Date/Location of Meeting. The Advisor and Subadvisor vote against shareholder proposals to change the date or location of the shareholders’ meeting. No one site will meet the needs of all shareholders.

Adjourn Meeting if Votes are Insufficient. Open-end requests for adjournment of a shareholder meeting generally will not be supported. However, where management specifically states the reason for requesting an adjournment and the requested adjournment is necessary to permit a proposal that would otherwise be supported under this policy to be carried out; the adjournment request will be supported.

Disclosure of Shareholder Proponents. The Advisor and Subadvisor vote for shareholder proposals requesting that companies disclose the names of shareholder proponents. Shareholders may wish to contact the proponents of a shareholder proposal for additional information.

Capital Structure

Increase Additional Common Stock. The Advisor and Subadvisor generally vote for increases in authorized shares, provided that the increase is not greater than three times the number of shares outstanding and reserved for issuance (including shares reserved for stock-related plans and securities convertible into common stock, but not shares reserved for any poison pill plan). Votes generally are cast in favor of proposals to authorize additional shares of stock except where the proposal:

· creates a blank check preferred stock; or

· establishes classes of stock with superior voting rights.

Blank Check Preferred Stock. Votes generally are cast in opposition to management proposals authorizing the creation of new classes of preferred stock with unspecific voting, conversion, distribution and other rights, and management proposals to increase the number of authorized blank check preferred shares. The Advisor and Subadvisor may vote in favor of this type of proposal when it receives assurances to its reasonable satisfaction that (i) the preferred stock was authorized by the board for the use of legitimate capital formation purposes and not for anti- takeover purposes, and (ii) no preferred stock will be issued with voting power that is disproportionate to the economic interests of the preferred stock. These representations should be made either in the proxy statement or in a separate letter from the company to the Advisor and Subadvisor.

Preemptive Rights. Votes regarding shareholder proposals seeking preemptive rights are determined on a case-by-case basis after evaluating:

· The size of the company;

· The shareholder base; and

· The liquidity of the stock.

For example, it would be difficult to support a shareholder proposal that would require an S&P 500 company with over $1 billion in equity held by thousands of shareholders (with no single shareholder owning a significant percentage of outstanding shares) to implement preemptive rights each time it conducted a new offering. Such a requirement would be impractical and extremely costly. Moreover, at companies with that large of a shareholder base and the ease with which shareholders could preserve their

relative interest through purchases of shares on the on the open market, the cost of implementing preemptive rights does not seem justifiable in relation to the benefits.

Dual Class Capitalizations. Because classes of common stock with unequal voting rights limit the rights of certain shareholders, the Advisor and Subadvisor vote against adoption of a dual or multiple class capitalization structure.

Restructurings/Recapitalizations. The Advisor and Subadvisor review proposals to increase common and/or preferred shares and to issue shares as part of a debt restructuring plan on a case- by-case basis.

In voting, the Advisor and Subadvisor consider the following issues:

· dilution—how much will ownership interest of existing shareholders be reduced, and how extreme will dilution to any future earnings be?

· change in control—will the transaction result in a change in control of the company?

· bankruptcy—generally, approve proposals that facilitate debt restructurings unless there are clear signs of self-dealing or other abuses.

Share Repurchase Programs. Boards may institute share repurchase or stock buy-back programs for a number of reasons. The Advisor and Subadvisor will generally vote in favor of such programs where the repurchase would be in the long-term best interests of shareholders, and where the company is not thought to be able to use the cash in a more useful way.

The Advisor and Subadvisor will vote against such programs when shareholders’ interests could be better served by deployment of the cash for alternative uses, or where the repurchase is a defensive maneuver or an attempt to entrench management.

Targeted Share Placements. These shareholder proposals ask companies to seek stockholder approval before placing 10% or more of their voting stock with a single investor. The proposals are typically in reaction to the placement by various companies of a large block of their voting stock in an ESOP, parent capital fund or with a single friendly investor, with the aim of protecting themselves against a hostile tender offer. These proposals are voted on a case-by-case basis after reviewing the individual situation of the company receiving the proposal.

Executive and Director Compensation

Stock-based Incentive Plans. Votes with respect to compensation plans should be determined on a case-by-case basis. The analysis of compensation plans focuses primarily on the transfer of shareholder wealth (the dollar cost of pay plans to shareholders). Other matters included in our analysis are the amount of the company’s outstanding stock to be reserved for the award of stock options or restricted stock, whether the exercise price of an option is less than the stock’s fair market value at the date of the grant of the options, and whether the plan provides for the exchange of outstanding options for new ones at lower exercise prices. Every award type is valued. An estimated dollar cost for the proposed plan and all continuing plans is derived. This cost, dilution to shareholders’ equity, will also be expressed as a percentage figure for the transfer of shareholder wealth and will be considered along with dilution to voting power. Once the cost of the plan is estimated, it is compared to an allowable industry-specific and market cap-based dilution cap.

If the proposed plan cost is above the allowable cap, an against vote is indicated. If the proposed cost is below the allowable cap, a vote for the plan is indicated unless the plan violates the repricing guidelines. If the company has a history of repricing options or has the express ability to reprice underwater stock options without first securing shareholder approval under the proposed plan, the plan receives an against vote—even in cases where the plan cost is considered acceptable based on the quantitative analysis.

The Advisor and Subadvisor vote against equity plans that have high average three year burn rates, unless the company has publicly committed to reduce the burn rate to a rate that is comparable to its peer group (as determined by the Advisor and Subadvisor).

Approval of Cash or Cash-and-Stock Bonus Plans. The Advisor and Subadvisor vote for cash or cash-and-stock bonus plans to exempt the compensation from limits on deductibility under the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code).

Executive Compensation. Executive compensation should be tied to the performance of the executive and the company as well as relevant market conditions. The Advisor and Subadvisor feel that the performance criteria and specific amounts and types of executive compensation are best decided by a company’s board of directors and/or its compensation committee and fully disclosed to shareholders.

The Advisor and Subadvisor will, however, vote for shareholder proposals that call for shareholders to vote, in a non-binding manner, on executive pay since such vote is non-binding and is merely informative for the board of directors and/or compensation committee. Further, the Advisor and Subadvisor generally vote for shareholder proposals that seek additional disclosure of executive and director pay information.

Reload/Evergreen Features. The Advisor and Subadvisor will generally vote against plans that enable the issuance of reload options and that provide an automatic share replenishment (“evergreen”) feature.

Golden Parachutes. The Advisor and Subadvisor oppose the use of accelerated employment contracts that result in cash grants of greater than three times annual compensation (salary and bonus) in the event of termination of employment following a change in control of a company. In general, the guidelines call for voting against “golden parachute” plans because they impede potential takeovers that shareholders should be free to consider. The Advisor and Subadvisor generally withhold our votes at the next shareholder meeting for directors who to our knowledge approved golden parachutes.

401(k) Employee Benefit Plans. The Advisor and Subadvisor vote for proposals to implement a 401(k) savings plan for employees.

Employee Stock Purchase Plans. The Advisor and Subadvisor support employee stock purchase plans, although the Advisor and Subadvisor generally believe the discounted purchase price should be at least 85% of the current market price.

Option Expensing. The Advisor and Subadvisor vote for shareholder proposals to expense fixed-price options.

Vesting. The Advisor and Subadvisor believe that restricted stock awards normally should vest over at least a two-year period.

Option Repricing. Stock options generally should not be re-priced, and never should be re-priced without shareholder approval. In addition, companies should not issue new options, with a lower strike price, to make up for previously issued options that are substantially underwater. The Advisor and Subadvisor will

vote against the election of any slate of directors that, to its knowledge, has authorized a company to re-price or replace underwater options during the most recent year without shareholder approval.

Stock Holding Periods. Generally vote against all proposals requiring executives to hold the stock received upon option exercise for a specific period of time.

Transferable Stock Options. Review on a case-by-case basis proposals to grant transferable stock options or otherwise permit the transfer of outstanding stock options, including cost of proposal and alignment with shareholder interests.

Recoup Bonuses. The Advisor and Subadvisor vote on a case-by-case on shareholder proposals to recoup unearned incentive bonuses or other incentive payments made to senior executives if it is later determined that fraud, misconduct, or negligence significantly contributed to a restatement of financial results that led to the awarding of unearned incentive compensation.

Incorporation

Reincorporation Outside of the United States. Generally, the Advisor and Subadvisor will vote against companies looking to reincorporate outside of the U.S.

Voting on State Takeover Statutes. The Advisor and Subadvisor review on a case-by-case basis proposals to opt in or out of state takeover statutes (including control share acquisition statutes, control share cash-out statutes, freeze out provisions, fair price provisions, stakeholder laws, poison pill endorsements, severance pay and labor contract provisions, anti greenmail provisions, and disgorgement provisions). In voting on these shareholder proposals, the Advisor and Subadvisor evaluate all facts and circumstances surrounding such proposal, including whether the shareholder proposing such measure has an agenda in making such proposal that may be at odds with the longterm best interests of the company or whether it would be in the best interests of the company to thwart a shareholder’s attempt to control the board of directors.

Voting on Reincorporation Proposals. Proposals to change a company’s state of incorporation are examined on a case-by-case basis. In making our decision, the Advisor and Subadvisor review management’s rationale for the proposal, changes to the charter/bylaws, and differences in the state laws governing the companies.

Mergers and Corporate Restructurings

Mergers and Acquisitions. Votes on mergers and acquisitions should be considered on a case-by-case basis, taking into account factors including the following: anticipated financial and operating benefits; offer price (cost vs. premium); prospects of the combined companies; how the deal was negotiated; and changes in corporate governance and their impact on shareholder rights.

The Advisor and Subadvisor vote against proposals that require a super-majority of shareholders to approve a merger or other significant business combination. The Advisor and Subadvisor support proposals that seek to lower super-majority voting requirements.

Nonfinancial Effects of a Merger or Acquisition. Some companies have proposed a charter provision which specifies that the board of directors may examine the nonfinancial effect of a merger or acquisition on the company. This provision would allow the board to evaluate the impact a proposed change in control would have on employees, host communities, suppliers and/or others. The Advisor and Subadvisor generally vote against proposals to adopt such charter provisions. The Advisor and

Subadvisor feel it is the directors’ fiduciary duty to base decisions solely on the financial interests of the shareholders.

Corporate Restructuring. Votes on corporate restructuring proposals, including minority squeeze outs, leveraged buyouts, “going private” proposals, spin-offs, liquidations, and asset sales, should be considered on a case-by-case basis.

Spin-offs. Votes on spin-offs should be considered on a case-by-case basis depending on the tax and regulatory advantages, planned use of sale proceeds, market focus, and managerial incentives.

Asset Sales. Votes on asset sales should be made on a case-by-case basis after considering the impact on the balance sheet/working capital, value received for the asset, and potential elimination of diseconomies.

Liquidations. Votes on liquidations should be made on a case-by-case basis after reviewing management’s efforts to pursue other alternatives, appraisal value of assets, and the compensation plan for executives managing the liquidation.

Appraisal Rights. The Advisor and Subadvisor vote for proposals to restore, or provide shareholders with, rights of appraisal. Rights of appraisal provide shareholders who are not satisfied with the terms of certain corporate transactions the right to demand a judicial review in order to determine a fair value for their shares.

Changing Corporate Name. The Advisor and Subadvisor vote for changing the corporate name.

Social Issues.

The Advisor and Subadvisor believe that it is the responsibility of the board and management to run a company on a daily basis. With this in mind, in the absence of unusual circumstances, the Advisor and Subadvisor do not believe that shareholders should be involved in determining how a company should address broad social and policy issues. As a result, the Advisor and Subadvisor generally vote against these types of proposals, which are generally initiated by shareholders, unless the Advisor and Subadvisor believe the proposal has significant economic implications.

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

Information pertaining to the portfolio managers of the registrant, as of February 28, 2010, is set forth below.

Martin Cohen

· Director and co-chairman

· Portfolio manager since inception

Co-founder, co-chairman and co-chief executive officer of Cohen & Steers Capital Management, Inc. (“C&S”) and its parent company, Cohen & Steers, Inc. (“CNS”). Vice president and director of Cohen & Steers Securities, LLC. Director and co-chairman of each of the Cohen & Steers funds. Previously, president of C&S and each of the Cohen & Steers funds.

Robert Steers

· Director and co-chairman

Co-founder, co-chairman and co-chief executive officer of C&S and CNS. Vice President and Director of Cohen & Steers

· Portfolio manager since inception		Securities, LLC. Director and co-chairman of each of the Cohen & Steers funds. Previously, chairman of C&S and each of the Cohen & Steers funds.
Joseph Harvey · Vice president · Portfolio manager since 2004		President of C&S and CNS. Previously, senior vice president of C&S and director of research.

William F. Scapell · Vice President · Portfolio manager since inception		Senior vice president of C&S. Previously, chief strategist for preferred securities at Merrill Lynch & Co.

Robert Becker · Vice President · Portfolio manager since inception		Senior vice president of C&S. Previously, co-portfolio manager for the Franklin Utilities Fund at Franklin Templeton Investments.

Ben Morton · Portfolio manager since 2009		Senior vice president of C&S.

Each portfolio manager listed above manages other investment companies and/or investment vehicles and accounts in addition to the registrant. The following tables show, as of December 31, 2009, the number of accounts each portfolio manager managed in each of the listed categories and the total assets in the accounts managed within each category. The portfolio managers do not receive performance-based fees with respect to any of the registered investment companies, other pooled investment vehicles or other accounts that they manage.

Martin Cohen

	Number of accounts	Total assets

· Registered investment companies	15	$	11,284,365,000

· Other pooled investment vehicles	37	$	7,385,259,000

· Other accounts	45	$	3,057,923,000

Robert Steers

	Number of accounts	Total assets

· Registered investment companies	15	$	11,284,365,000

· Other pooled investment vehicles	37	$	7,385,259,000

· Other accounts	45	$	3,057,923,000

Joseph Harvey

	Number of accounts	Total assets

· Registered investment companies	15	$	11,284,365,000

· Other pooled investment vehicles	37	$	7,385,259,000

· Other accounts	45	$	3,057,923,000

William F. Scapell

	Number of accounts	Total assets

· Registered investment companies	7	$	5,027,409,000

· Other pooled investment vehicles	2	$	41,187,000

· Other accounts	10	$	499,097,000

Robert Becker

	Number of accounts	Total assets

· Registered investment companies	3	$	2,446,326,000

· Other pooled investment vehicles	2	$	125,757,000

· Other accounts	0	$	0

Ben Morton

	Number of accounts	Total assets

· Registered investment companies	3	$	1,635,838,000

· Other pooled investment vehicles	2	$	125,757,000

· Other accounts	0	$	0

Share Ownership. The following table indicates the dollar range of securities of the registrant owned by the registrant’s portfolio managers as of December 31, 2009:

		Dollar Range of Securities Owned
Martin Cohen		None
Robert Steers		None
Joseph Harvey		None
William F. Scapell		None
Robert Becker		None
Ben Morton		None

Conflicts of Interest. It is possible that conflicts of interest may arise in connection with the portfolio managers’ management of the registrant’s investments on the one hand and the investments of other accounts or vehicles for which the portfolio managers are responsible on the other. For example, a portfolio manager may have conflicts of interest in allocating management time, resources and investment opportunities among the registrant and the other accounts or vehicles he advises. In addition, due to differences in the investment strategies or restrictions among the registrant and the other accounts, a portfolio manager may take action with respect to another account that differs from the action taken with respect to the registrant.

In some cases, another account managed by a portfolio manager may provide more revenue to C&S. While this may appear to create additional conflicts of interest for the portfolio manager in the allocation of management time, resources and investment opportunities, C&S strives to ensure that portfolio managers endeavor to exercise their discretion in a manner that is equitable to all interested persons. In this regard, in the absence of specific account-related impediments (such as client-imposed restrictions or lack of available cash), it is the policy of C&S to allocate investment ideas pro rata to all accounts with the same primary investment objective.

In addition, certain of the portfolio managers may from time to time manage one or more accounts on behalf of C&S and its affiliated companies (the “CNS Accounts”). Certain securities held in the CNS Accounts also may be held in the account of the registrant or other client accounts of C&S. C&S has adopted procedures that are designed to ensure that the interests of the CNS Accounts are never placed ahead of the interests of the registrant or any other client account. In this regard, C&S will not purchase or sell a security for the CNS Accounts until C&S has completed its purchase or sale program for the registrant and any other client accounts. While it is possible that a security will be sold out of the CNS Accounts but continue to be held for the registrant or one or more other client accounts, this will occur only if C&S, acting in its reasonable judgment and consistent with its fiduciary duties, believes this to be appropriate for, and consistent with the objectives and profile of, the registrant or other client accounts.

Advisor Compensation Structure. Compensation of the Advisor’s portfolio managers and other investment professionals has three primary components: (1) a base salary, (2) an annual cash bonus and (3) annual stock-based compensation consisting generally of restricted stock units of the Advisor’s parent, CNS. The Advisor’s investment professionals, including the portfolio managers, also receive certain retirement, insurance and other benefits that are broadly available

to all of its employees. Compensation of the Advisor’s investment professionals is reviewed primarily on an annual basis.

Method to Determine Compensation. The Advisor compensates its portfolio managers based primarily on the total return performance of funds and accounts managed by the portfolio manager versus appropriate peer groups or benchmarks. C&S uses a variety of benchmarks to evaluate each portfolio managers’ performance for compensation purposes, including the S&P 1500 Utilities Index, Merrill Lynch Fixed Rate Preferred Index and other broad based indexes based on the asset classes managed by each portfolio manager. In evaluating the performance of a portfolio manager, primary emphasis is normally placed on one- and three-year performance, with secondary consideration of performance over longer periods of time. Performance is evaluated on a pre-tax and pre-expense basis. In addition to rankings within peer groups of funds on the basis of absolute performance, consideration may also be given to risk-adjusted performance. For funds and accounts with a primary investment objective of high current income, consideration will also be given to the fund’s and account’s success in achieving this objective. For portfolio managers responsible for multiple funds and accounts, investment performance is evaluated on an aggregate basis. The Advisor does not have any funds or accounts with performance-based advisory fees. Portfolio managers are also evaluated on the basis of their success in managing their dedicated team of analysts. Base compensation for portfolio managers of the Advisor varies in line with the portfolio manager’s seniority and position with the firm.

Salaries, bonuses and stock-based compensation are also influenced by the operating performance of the Advisor and CNS. While the annual salaries of the Advisor’s portfolio managers are fixed, cash bonuses and stock based compensation may fluctuate significantly from year to year, based on changes in manager performance and other factors.

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.

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 INFRASTRUCTURE FUND, INC.

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

Date: March 8, 2010

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
		(principal financial officer)


Date: March 8, 2010

Investment Company Act file number			811-21485

Cohen & Steers Infrastructure Fund, Inc.
(Exact name of registrant as specified in charter)

280 Park Avenue, 10th Floor, New York, NY					10017
(Address of principal executive offices)					(Zip code)

Adam M. Derechin 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, 2009

	Six Months Ended December 31, 2009			Year Ended December 31, 2009
Cohen & Steers Infrastructure Fund at Market Value^a		35.64	%		67.09	%
Cohen & Steers Infrastructure Fund at Net Asset Value^a		31.34	%		42.04	%
S&P 1500 Utilities Index^b		14.80	%		12.80	%
S&P 500 Index^b		22.59	%		26.46	%
Blended benchmark—80% S&P 1500 Utilities Index/20% Merrill Lynch Fixed Rate Preferred Index^b		15.26	%		14.76	%



MARTIN COHEN				ROBERT H. STEERS

Co-chairman				Co-chairman



ROBERT S. BECKER				WILLIAM F. SCAPELL

Portfolio Manager				Portfolio Manager

Security	Value		% of Managed Assets
American Tower Corp.	$	35,654,213		3.0	%
Scottish and Southern Energy PLC		32,080,949		2.7
East Japan Railway Co.		28,938,275		2.4
SES SA		28,238,853		2.4
Terna Rete Elettrica Nazionale S.p.A.		27,953,721		2.4
Fortum Oyj		25,146,309		2.1
CLP Holdings Ltd.		24,068,831		2.0
Atlantia S.p.A.		23,390,493		2.0
Vinci SA		23,229,092		2.0
Snam Rete Gas S.p.A.		22,998,332		1.9

			Number of Shares		Value
COMMON STOCK	119.6	%
CONSUMER DISCRETIONARY—CABLE & SATELLITE	4.1	%
Eutelsat Communications (France)^a,b				91,700	$	2,942,112
SES SA (Luxembourg)^a,b				1,253,540		28,238,853
						31,180,965
ENERGY	17.6	%
INTEGRATED OIL & GAS	1.7	%
Origin Energy Ltd. (Australia)^a,b				821,600		12,361,208
OIL & GAS STORAGE & TRANSPORTATION	15.9	%
DCP Midstream Partners LP^a				257,069		7,601,530
Enbridge Energy Partners LP^a				56,337		3,024,734
Energy Transfer Partners LP^a				405,867		18,251,839
Enterprise Products Partners LP^a				573,200		18,004,212
Kinder Morgan Energy Partners LP^a,c				200,300		12,214,294
MarkWest Energy Partners LP^a				548,065		16,041,863
Spectra Energy Corp.^a,c				306,508		6,286,479
TransCanada Corp. (Canada)^a				532,900		18,440,169
Williams Cos. (The)^a				384,050		8,095,774
Williams Partners LP^a				389,700		11,952,099
						119,912,993
TOTAL ENERGY						132,274,201
INDUSTRIALS	20.9	%
AIRPORT SERVICES	2.5	%
Auckland International Airport Ltd. (New Zealand)^a,b				1,265,694		1,850,451
Macquarie Airports (Australia)^a,b				6,339,879		17,159,894
						19,010,345
INDUSTRIAL CONGLOMERATES	0.4	%
Beijing Enterprises Holdings Ltd. (Hong Kong)^b				452,500		3,277,348
CONSTRUCTION & ENGINEERING	5.1	%
Ferrovial SA (Spain)^b				1,308,300		15,451,473
Vinci SA (France)^a,b				412,807		23,229,092
						38,680,565

Leverage (as a % of managed assets)^a	37	%
% Fixed Rate	41	%
% Variable Rate	59	%
Weighted Average Rate on Swaps	3.4	%
Weighted Average Term on Swaps	3.3 years
Current Rate on Debt^c	1.3	%

			Number of Shares		Value
HIGHWAYS & RAILTRACKS	8.1	%
Abertis Infraestructuras S.A. (Spain)^a,b				545,400	$	12,331,050
Anhui Expressway Co. (Hong Kong)^b				9,511,000		6,603,823
Atlantia S.p.A. (Italy)^b				894,400		23,390,493
Cia de Concessoes Rodoviarias (Brazil)^a				442,927		10,148,396
Sichuan Expressway Co. Ltd. (Hong Kong)^a,b				5,496,000		2,938,945
Transurban Group (Australia)^a,b				1,182,800		5,853,776
						61,266,483
MARINE PORTS & SERVICES	0.9	%
Santos Brasil Participacoes SA (Brazil)^d				628,700		6,319,500
RAILROADS	3.9	%
East Japan Railway Co. (Japan)^a,b				457,300		28,938,275
RailAmerica^a				21,761		265,484
						29,203,759
TOTAL INDUSTRIALS						157,758,000
TELECOMMUNICATION SERVICES	11.9	%
ALTERNATIVE CARRIERS	1.5	%
Inmarsat PLC (United Kingdom)^a,b				1,020,100		11,367,202
INTEGRATED TELECOMMUNICATIONS SERVICES	3.2	%
AT&T^a				426,100		11,943,583
Verizon Communications^a				356,300		11,804,219
						23,747,802
WIRELESS TELECOMMUNICATION SERVICES	7.2	%
American Tower Corp.^a,d				825,138		35,654,213
Crown Castle International Corp.^a,d				325,300		12,699,712
SBA Communications Corp.^a,d				179,000		6,114,640
						54,468,565
TOTAL TELECOMMUNICATION SERVICES						89,583,569

			Number of Shares		Value
UTILITIES	64.7	%
ELECTRIC UTILITIES	41.4	%
American Electric Power Co.^a				79,500	$	2,765,805
Cheung Kong Infrastructure Holdings Ltd. (Hong Kong)^a,b				2,295,000		8,727,174
Cia de Transmissao de Energia Eletrica Paulista (Brazil)				284,836		8,466,550
CLP Holdings Ltd. (Hong Kong)^a,b				3,556,500		24,068,831
CPFL Energia SA (Brazil)				357,538		7,251,388
DPL^a				28,700		792,120
Duke Energy Corp.^a,e				950,284		16,354,388
E.ON AG (Germany)^a,b				440,300		18,481,181
E.ON AG (ADR) (Germany)^a				59,370		2,478,698
Enel S.p.A. (Italy)^a,b				3,887,440		22,505,901
Entergy Corp.^a				212,730		17,409,823
Exelon Corp.^a,e				265,144		12,957,587
FirstEnergy Corp.^a				68,818		3,196,596
Fortum Oyj (Finland)^a,b				926,900		25,146,309
FPL Group^a				361,454		19,092,000
ITC Holdings Corp.^a				119,526		6,226,109
Kansai Electric Power Co. (The) (Japan)^a,b				509,200		11,490,882
Northeast Utilities^a				160,000		4,126,400
NV Energy^a				366,213		4,533,717
PPL Corp.^a				60,000		1,938,600
Scottish and Southern Energy PLC (United Kingdom)^a,b				1,713,930		32,080,949
Southern Co.^a				659,664		21,980,005
Terna Rete Elettrica Nazionale S.p.A. (Italy)^a,b				6,500,000		27,953,721
Tokyo Electric Power Co. (The) (Japan)^a,b				465,100		11,673,282
						311,698,016
GAS UTILITIES	4.8	%
EQT Corp.^a,c				122,022		5,359,206
Questar Corp.^a				113,608		4,722,685
Snam Rete Gas S.p.A. (Italy)^a,b				4,631,000		22,998,332
Xinao Gas Holdings Ltd. (Hong Kong)^b				1,194,000		3,056,987
						36,137,210

			Number of Shares		Value
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS	0.8	%
China Longyuan Power Group Corp. (Hong Kong)				4,918,900	$	6,369,561
MULTI UTILITIES	14.9	%
AGL Energy Ltd. (Australia)^a,b				483,600		6,078,490
Alliant Energy Corp.^a				194,629		5,889,474
CenterPoint Energy^a				205,102		2,976,030
CMS Energy Corp.^a,c				766,506		12,003,484
Consolidated Edison^a				98		4,452
Dominion Resources^a				80,000		3,113,600
GDF Suez (France)^b				159,186		6,896,100
National Grid PLC (United Kingdom)^a,b				1,118,633		12,209,792
PG&E Corp.^a,c				181,852		8,119,692
Public Service Enterprise Group^a				299,500		9,958,375
RWE AG (Germany)^a,b				185,000		17,952,834
Sempra Energy^a				165,330		9,255,173
Suez Environnement SA (France)^a,b				500,000		11,529,575
Wisconsin Energy Corp.^a				123,731		6,165,516
						112,152,587
WATER UTILITIES	3.2	%
American Water Works Co.^a				305,520		6,846,703
Beijing Enterprises Water Group Ltd. (Hong Kong)^b,d				9,378,000		3,112,088
China Water Affairs Group Ltd. (Hong Kong)^b				8,612,000		3,422,474
Cia de Saneamento Basico do Estado de Sao Paulo (Brazil)				203,494		4,018,451
Cia de Saneamento de Minas Gerais (Brazil)				175,000		3,342,189
Pennon Group PLC (United Kingdom)^b				368,800		3,193,149
						23,935,054
TOTAL UTILITIES						490,292,428
TOTAL COMMON STOCK (Identified cost—$847,338,650)						901,089,163
PREFERRED SECURITIES—$25 PAR VALUE	15.3	%
BANK	0.6	%
Bank of America Corp., 8.625%, Series MER^a				80,000		1,963,200
Citigroup Capital VII, 7.125%, due 7/31/31, (TruPS)				10,103		211,052
JPMorgan Chase Capital XXVIII, 7.20%, due 12/22/39^a				100,000		2,551,000
						4,725,252

			Number of Shares		Value
BANK—FOREIGN	1.6	%
Barclays Bank PLC, 8.125%^a				199,800	$	4,967,028
Deutsche Bank Contingent Capital Trust II, 6.55%^a				116,488		2,420,621
Deutsche Bank Contingent Capital Trust III, 7.60%^a				182,500		4,330,725
						11,718,374
FINANCE—MORTGAGE LOAN/BROKER	0.8	%
Countrywide Capital IV, 6.75%, due 4/1/33^a				288,615		6,167,703
INSURANCE	2.9	%
MULTI-LINE	0.4	%
Aegon NV, 6.50%^a				158,429		2,842,216
Aegon NV, 6.875%				14,402		271,910
						3,114,126
MULTI-LINE—FOREIGN	1.7	%
Allianz SE, 8.375%^a				225,110		5,557,403
ING Groep N.V., 7.375%^a				371,658		7,321,663
						12,879,066
PROPERTY CASUALTY—FOREIGN	0.2	%
Arch Capital Group Ltd., 8.00%^a				64,000		1,601,280
REINSURANCE—FOREIGN	0.6	%
Aspen Insurance Holdings Ltd., 7.401%, Series A^a				100,000		2,220,000
Axis Capital Holdings Ltd., 7.25%, Series A^a				97,785		2,229,498
						4,449,498
TOTAL INSURANCE						22,043,970
INTEGRATED TELECOMMUNICATIONS SERVICES	0.8	%
Telephone & Data Systems, 7.60%, due 12/1/41, Series A^a				143,850		3,532,956
United States Cellular Corp., 7.50%, due 6/15/34^a				91,177		2,271,219
						5,804,175
MEDIA—DIVERSIFIED SERVICES	0.8	%
Comcast Corp., 7.00%, due 9/15/55, Series B^a				250,856		6,281,434

			Number of Shares		Value
REAL ESTATE	5.6	%
HEALTH CARE	1.8	%
Health Care REIT, 7.625%, Series F^a				165,000	$	4,108,500
LTC Properties, 8.00%, Series F^a				391,657		9,509,432
						13,617,932
OFFICE	2.0	%
Alexandria Real Estate Equities, 8.375%, Series C^a				225,508		5,588,088
SL Green Realty Corp., 7.625%, Series C^a				202,168		4,639,756
SL Green Realty Corp., 7.875%, Series D^a				197,333		4,676,792
						14,904,636
OFFICE/INDUSTRIAL	0.8	%
PS Business Parks, 7.95%, Series K^a				230,000		5,808,650
SELF STORAGE	0.3	%
Public Storage, 6.45%, Series X^a				110,000		2,456,300
SHOPPING CENTER	0.7	%
COMMUNITY CENTER	0.4	%
Developers Diversified Realty Corp., 7.50%, Series I^a				137,884		2,566,021
REGIONAL MALL	0.3	%
CBL & Associates Properties, 7.75%, Series C^a				121,931		2,487,392
TOTAL SHOPPING CENTER						5,053,413
TOTAL REAL ESTATE						41,840,931
UTILITIES	2.2	%
ELECTRIC UTILITIES	0.7	%
FPL Group, 8.375%, due 6/1/12, ($50 par value)^a				100,000		5,199,000
ELECTRIC—INTEGRATED	1.1	%
Dominion Resources, 8.375%, due 6/15/64, Series A^a				201,400		5,518,360
SCANA Corp., 7.70%, due 1/30/65^a				100,000		2,640,000
						8,158,360

			Number of Shares		Value
FOOD	0.7	%
Dairy Farmers of America, 7.875%, 144A^a,f,g				35,000	$	2,649,063
HJ Heinz Finance Co, 8.00%, due 7/15/13, 144A^a,f				25		2,600,000
						5,249,063
INSURANCE	2.7	%
MULTI-LINE	0.7	%
Metlife Capital Trust IV, 7.875%, due 12/15/37, 144A^a,f				1,500,000		1,507,500
MetLife Capital Trust X, 9.25%, due 4/8/38, 144A^a,f				3,400,000		3,876,000
						5,383,500
PROPERTY CASUALTY	2.0	%
ACE Capital Trust II, 9.70%, due 4/1/30^a				4,470,000		5,031,700
Catlin Insurance Co., 7.249%, due 12/1/49, 144A^a,f				3,000,000		2,220,000
Liberty Mutual Group, 10.75%, due 6/15/58, 144A^a,f				4,000,000		4,280,000
Liberty Mutual Insurance, 7.697%, due 10/15/97, 144A^a,f				4,000,000		3,433,668
						14,965,368
TOTAL INSURANCE						20,348,868
OIL—EXPLORATION AND PRODUCTION	0.3	%
Pemex Project Funding Master Trust, 7.75%, due 9/28/49				2,000,000		1,977,500
PIPELINES	1.3	%
Enbridge Energy Partners LP, 8.05%, due 10/1/37^a				4,000,000		3,723,836
Enterprise Products Operating LP, 8.375%, due 8/1/66^a				6,180,000		6,032,959
						9,756,795
UTILITIES	2.2	%
ELECTRIC UTILITIES	0.4	%
DPL Capital Trust II, 8.125%, due 9/1/31^a				3,000,000		3,213,882
GAS UTILITIES	0.6	%
Southern Union Co., 7.20%, due 11/1/66^a				5,100,000		4,386,000

			Number of Shares		Value
SHORT-TERM INVESTMENTS	4.1	%
MONEY MARKET FUNDS
Federated Government Obligations Fund, 0.06%^h				15,420,000	$	15,420,000
State Street Institutional Liquid Reserves Fund, 0.16%^h				15,420,000		15,420,000
TOTAL SHORT-TERM INVESTMENTS (Identified cost—$30,840,000)						30,840,000
TOTAL INVESTMENTS (Identified cost—$1,116,916,041)	156.8	%				1,181,543,843
LIABILITIES IN EXCESS OF OTHER ASSETS	(56.8	)				(428,055,190	)
NET ASSETS (Equivalent to $17.39 per share based on 43,320,750 shares of common stock outstanding)	100.0	%			$	753,488,653

Counterparty	Notional Amount		Fixed Rate Payable			Floating Rate^a(reset monthly) Receivable			Termination Date	Unrealized Depreciation
Merrill Lynch Derivative Products AG	$	35,000,000		3.510	%		0.232	%	December 22, 2012	$	(1,648,216	)
Royal Bank of Canada	$	35,000,000		3.525	%		0.233	%	October 17, 2012		(1,662,234	)
Royal Bank of Canada	$	72,000,000		3.615	%		0.231	%	March 29, 2014		(3,135,697	)
UBS AG	$	35,000,000		2.905	%		0.231	%	May 25, 2012		(1,067,133	)
										$	(7,513,280	)

ASSETS:
Investments in securities, at value (Identified cost—$1,116,916,041)	$	1,181,543,843
Cash (includes $1,817,000 pledged as collateral for open swap positions)		1,883,123
Foreign currency, at value (Identified cost—$19,752,067)		19,715,129
Receivable for:
Investment securities sold		112,394,309
Dividends and interest		4,494,290
Other assets		36,017
Total Assets		1,320,066,711
LIABILITIES:
Unrealized depreciation on interest rate swap transactions		7,513,280
Payable for:
Revolving credit agreement		436,000,000
Investment securities purchased		120,143,459
Dividends declared on common shares		1,638,055
Investment management fees		698,860
Administration fees		56,921
Interest expense		31,027
Directors' fees		1,932
Other liabilities		494,524
Total Liabilities		566,578,058
NET ASSETS	$	753,488,653
TOTAL NET ASSETS APPLICABLE TO COMMON SHARES consist of:
Paid-in-capital	$	704,091,366
Accumulated undistributed net investment income		5,298,029
Accumulated net realized loss		(12,847,543	)
Net unrealized appreciation		56,946,801
	$	753,488,653
NET ASSET VALUE PER COMMON SHARE:
($753,488,653 ÷ 43,320,750 shares outstanding)	$	17.39
MARKET PRICE PER COMMON SHARE	$	15.95
MARKET PRICE DISCOUNT TO NET ASSET VALUE PER COMMON SHARE		(8.28	)%

			Number of Shares		Value
MULTI UTILITIES	0.4	%
Xcel Energy, 7.60%, due 1/1/68^a				120,500	$	3,205,300
TOTAL UTILITIES						16,562,660
TOTAL PREFERRED SECURITIES—$25 PAR VALUE (Identified cost—$114,326,422)						115,144,499
PREFERRED SECURITIES—CAPITAL SECURITIES	14.1	%
BANK	3.6	%
Bank of America Corp., 8.125%, due 12/29/49^a				5,000,000		4,819,950
Citigroup Capital XXI, 8.30%, due 12/21/57^a				2,000,000		1,935,000
CoBank ACB, 11.00%, Series C, 144A^a,f				80,000		3,995,000
JPMorgan Chase & Co., 7.90%, due 12/31/49^a				4,500,000		4,656,753
PNC Preferred Funding Trust I, 8.70%, due 12/31/49, 144A^a,f				6,800,000		6,983,464
Wells Fargo & Co., 7.98%, due 2/28/49^a				4,750,000		4,785,625
						27,175,792
BANK—FOREIGN	1.8	%
Barclays Bank PLC, 6.278%, due 12/31/49^a				3,460,000		2,625,275
Barclays Bank PLC, 7.434%, due 9/29/49, 144A^a,f				2,000,000		1,850,000
BBVA International Preferred SA, 5.919%, due 12/31/49^a				2,000,000		1,612,246
Credit Agricole SA, 8.375%, due 12/31/49, 144A^a,f				3,000,000		3,190,083
Groupe BPCE SA, 12.50%, due 8/29/49, 144A^f				2,500,000		2,760,382
HSBC Capital Funding LP, 10.176%, due 12/29/49, 144A^a,f				1,250,000		1,521,875
						13,559,861
FINANCE	1.5	%
CREDIT CARD	0.7	%
American Express Co., 6.80%, due 9/1/66^a				3,500,000		3,167,500
Capital One Capital III, 7.686%, due 8/15/36^a				2,500,000		2,325,000
						5,492,500
DIVERSIFIED FINANCIAL SERVICES	0.8	%
ZFS Finance USA Trust I, 6.15%, due 12/15/65, 144A^a,f				4,500,000		4,140,000
ZFS Finance USA Trust II, 6.45%, due 12/15/65, 144A^a,f				2,065,000		1,858,500
						5,998,500
TOTAL FINANCE						11,491,000

For the Period	Percentage of Average Daily Managed Asset Value
1/01/09—3/31/09		0.20	%
4/01/09—3/31/10		0.15	%
4/01/10—3/31/11		0.10	%
4/01/11—3/31/12		0.05	%

Series^*	Shares Outstanding 12/31/08		Number of Shares Redeemed		Shares Outstanding 12/31/09		Total Value 12/31/08		Amount Redeemed		Total Value 12/31/09
M7		1,523		1,523		—	$	38,075,000	$	38,075,000		—
T7		1,523		1,523		—		38,075,000		38,075,000		—
T7-2		1,523		1,523		—		38,075,000		38,075,000		—

Series^*	Shares Outstanding 12/31/08		Number of Shares Redeemed		Shares Outstanding 12/31/09		Total Value 12/31/08		Amount Redeemed		Total Value 12/31/09
T28		1,200		1,200		—	$	30,000,000	$	30,000,000		—
W7		1,523		1,523		—		38,075,000		38,075,000		—
TH7		1,342		1,342		—		33,550,000		33,550,000		—
TH28		1,523		1,523		—		38,075,000		38,075,000		—
F7		1,523		1,523		—		38,075,000		38,075,000		—
							$	292,000,000	$	292,000,000		—

Investment Income:
Dividend income (net of $802,234 of foreign withholding tax)	$	49,676,371
Interest income		12,129,349
Rehypothecation income		114,902
Total Income		61,920,622
Expenses:
Investment management fees		8,534,223
Interest expense		3,336,405
Line of credit fees		2,080,795
Administration fees		811,236
Shareholder reporting expenses		572,820
Professional fees		305,971
Preferred remarketing fee		298,532
Custodian fees and expenses		214,017
Directors' fees and expenses		52,830
Registration and filing fees		42,521
Transfer agent fees and expenses		24,761
Miscellaneous		169,322
Total Expenses		16,443,433
Reduction of Expenses (See Note 2)		(1,616,731	)
Net Expenses		14,826,702
Net Investment Income		47,093,920
Net Realized and Unrealized Gain (Loss):
Net realized gain (loss) on:
Investments		49,435,811
Options		1,422,570
Foreign currency transactions		(574,498	)
Interest rate swap transactions		(5,525,467	)
Net realized gain		44,758,416
Net change in unrealized appreciation (depreciation) on:
Investments		130,058,895
Foreign currency translations		(160,156	)
Interest rate swap transactions		3,502,396
Net change in unrealized appreciation (depreciation)		133,401,135
Net realized and unrealized gain		178,159,551
Net Increase in Net Assets Resulting from Operations		225,253,471
Less Dividends to Preferred Shareholders		(2,496,587	)
Net Increase in Net Assets from Operations Applicable to Common Shares	$	222,756,884

	For the Year Ended December 31, 2009			For the Year Ended December 31, 2008
Change in Net Assets Applicable to Common Shares:
From Operations:
Net investment income	$	47,093,920		$	64,642,981
Net realized gain (loss)		44,758,416			(62,088,204	)
Net change in unrealized appreciation (depreciation)		133,401,135			(585,922,101	)
Net increase (decrease) in net assets resulting from operations		225,253,471			(583,367,324	)
Less Dividends and Distributions to Preferred Shareholders from:
Net investment income		(2,221,896	)		(23,023,645	)
Net realized gain		(274,691	)		—
Total dividends and distributions to preferred shareholders		(2,496,587	)		(23,023,645	)
Net increase (decrease) in net assets from operations applicable to common shares		222,756,884			(606,390,969	)
Less Dividends and Distributions to Common Shareholders from:
Net investment income		(35,636,053	)		(35,295,528	)
Net realized gain		(4,303,495	)		—
Tax return of capital		(1,648,372	)		(66,724,839	)
Total dividends and distributions to common shareholders		(41,587,920	)		(102,020,367	)
Capital Stock Transactions:
Decrease in net assets from preferred share offering cost adjustment		—			(4,920	)
Total increase (decrease) in net assets applicable to common shares		181,168,964			(708,416,256	)
Net Assets Applicable to Common Shares:
Beginning of year		572,319,689			1,280,735,945
End of year^a	$	753,488,653		$	572,319,689

Increase in Cash:
Cash Flows from Operating Activities:
Net increase in net assets resulting from operations	$	225,253,471
Adjustments to reconcile net increase in net assets from operations to net cash provided by operating activities:
Purchases of long-term investments		(1,172,642,223	)
Net purchases, sales and maturities of short-term investments		9,002,460
Net amortization/accretion of premium (discount)		(101,004	)
Proceeds from sales and maturities of long-term investments		1,124,634,690
Net increase in dividends and interest receivable, receivable for investment securities sold and other assets		(103,328,032	)
Net increase in interest payable, payable for investment securities purchased, accrued expenses and other payables		120,117,833
Net change in unrealized appreciation on investments		(130,058,895	)
Net change in unrealized appreciation on interest rate swaps		(3,502,396	)
Net realized gain from investments		(49,435,811	)
Cash provided by operating activities		19,940,093
Cash Flows from Financing Activities:
Net decrease in preferred shares outstanding		(292,000,000	)
Net increase in payable for revolving credit agreement		337,850,000
Distributions paid on preferred shares		(2,496,587	)
Distributions paid on common shares		(41,587,920	)
Increase in payable to common shareholders		105,089
Decrease in payable to preferred shareholders		(212,423	)
Cash provided by financing activities		1,658,159
Increase in cash		21,598,252
Cash at beginning of year (including foreign currency)		0
Cash at end of year (including foreign currency)	$	21,598,252

	For the Year Ended December 31,
Per Share Operating Performance:	2009			2008			2007			2006			2005
Net asset value per common share, beginning of year	$	13.21		$	29.56		$	28.45		$	23.95		$	22.38
Income from investment operations:
Net investment income		0.89			1.48			1.61			1.56			1.42	^a
Net realized and unrealized gain (loss)		4.31			(14.94	)		3.35			5.13			1.72
Total income (loss) from investment operations		5.20			(13.46	)		4.96			6.69			3.14
Less dividends and distributions to preferred shareholders from:
Net investment income		(0.05	)		(0.53	)		(0.40	)		(0.51	)		(0.37	)
Net realized gain		(0.01	)		—			(0.39	)		(0.13	)		(0.02	)
Total dividends and distributions to preferred shareholders		(0.06	)		(0.53	)		(0.79	)		(0.64	)		(0.39	)
Total from investment operations applicable to common shares		5.14			(13.99	)		4.17			6.05			2.75
Less: Preferred share offering cost adjustment		—			(0.00	)^b		—			0.00	^b		—
Offering costs charged to paid-in capital— preferred shares		—			—			(0.02	)		—			(0.02	)
Total offering costs		—			(0.00	)		(0.02	)		0.00			(0.02	)
Less dividends and distributions to common shareholders from:
Net investment income		(0.82	)		(0.82	)		(1.20	)		(1.05	)		(1.03	)
Net realized gain		(0.10	)		—			(1.12	)		(0.28	)		(0.04	)
Tax return of capital		(0.04	)		(1.54	)		(0.72	)		(0.22	)		(0.09	)
Total dividends and distributions to common shareholders		(0.96	)		(2.36	)		(3.04	)		(1.55	)		(1.16	)
Net increase (decrease) in net asset value per common share		4.18			(16.35	)		1.11			4.50			1.57
Net asset value, per common share, end of year	$	17.39		$	13.21		$	29.56		$	28.45		$	23.95
Market value, per common share, end of year	$	15.95		$	10.30		$	27.50		$	24.48		$	20.16
Net asset value total return^c		42.04	%		–49.17	%		15.93	%		27.30	%		13.16	%
Market value return^c		67.09	%		–57.40	%		25.34	%		30.13	%		7.55	%

	For the Year Ended December 31,
Ratios/Supplemental Data:	2009			2008			2007			2006			2005
Net assets applicable to common shares, end of year (in millions)	$	753.5		$	572.3		$	1,280.7		$	1,232.3		$	1,037.6
Ratio of expenses to average daily net assets applicable to common shares (before expense reduction)^d		2.75	%		2.00	%		1.54	%		1.59	%		1.55	%
Ratio of expenses to average daily net assets applicable to common shares (net of expense reduction)^d		2.48	%		1.68	%		1.24	%		1.28	%		1.26	%
Ratio of expenses to average daily net assets applicable to common shares (net of expense reduction and excluding interest expense)^d		1.92	%		1.62	%		—			—			—
Ratio of net investment income to average daily net assets applicable to common shares (before expense reduction)^d		7.61	%		6.31	%		4.67	%		5.60	%		5.72	%
Ratio of net investment income to average daily net assets applicable to common shares (net of expense reduction)^d		7.89	%		6.64	%		4.97	%		5.90	%		6.02	%
Ratio of expenses to average daily managed assets (before expense reduction)^d,e		1.64	%		1.24	%		1.04	%		1.05	%		1.05	%
Ratio of expenses to average daily managed assets (net of expense reduction)^d,e		1.48	%		1.04	%		0.84	%		0.85	%		0.85	%
Portfolio turnover rate		113	%		29	%		23	%		15	%		23	%
Preferred Shares/Revolving Credit Agreement:
Liquidation value, end of year (in 000's)		—		$	292,000		$	652,000		$	567,000		$	567,000
Total shares outstanding (in 000's)		—			12			26			23			23
Asset coverage ratio for revolving credit agreement		273	%^h		981	%		—			—			—
Asset coverage per $1,000 for revolving credit agreement	$	2,728		$	9,806			—			—			—
Asset coverage ratio for auction market preferred shares^f		—			247	%		296	%		317	%		283	%
Asset coverage per share for auction market preferred shares^f		—		$	61,750		$	74,108		$	79,335		$	70,748
Liquidation preference per share		—		$	25,000		$	25,000		$	25,000		$	25,000
Average market value per share^g		—		$	25,000		$	25,000		$	25,000		$	25,000

	Total		Quoted Prices In Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Common Stock—Consumer Discretionary—Cable & Satellite	$	31,180,965	$	—	$	31,180,965	$	—
Common Stock—Energy— Integrated Oil & Gas		12,361,208		—		12,361,208		—
Common Stock—Industrials— Airport Services		19,010,345		—		19,010,345		—
Common Stock—Industrials— Construction & Engineering		38,680,565		—		38,680,565		—
Common Stock—Industrials— Highways & Railtracks		61,266,483		10,148,396		51,118,087		—
Common Stock—Industrials— Industrial Conglomerates		3,277,348		—		3,277,348		—
Common Stock—Industrials— Railroads		29,203,759		265,484		28,938,275		—
Common Stock—Telecommunication Services—Alternative Carriers		11,367,202		—		11,367,202		—
Common Stock—Utilities—Electric Utilities		311,698,016		129,569,786		182,128,230		—
Common Stock—Utilities—Gas Utilities		36,137,210		10,081,891		26,055,319		—
Common Stock—Utilities—Multi Utilities		112,152,587		57,485,796		54,666,791		—
Common Stock—Utilities—Water Utilities		23,935,054		14,207,343		9,727,711		—

	Investments in Securities
Balance as of December 31, 2008	$	3,063,050
Realized loss		(463,887	)
Change in unrealized appreciation		1,432,400
Net sales		(1,382,500	)
Balance as of December 31, 2009	$	2,649,063

	Number of Contracts			Premium
Options outstanding at December 31, 2008		—		$	—
Options written		4,250,903			5,610,342
Options expired		(2,375,903	)		(3,240,342	)
Options terminated in closing transactions		(1,875,000	)		(2,370,000	)
Options outstanding at December 31, 2009		—			—

	For the Year Ended December 31,
	2009		2008
Ordinary income	$	37,857,949	$	58,319,173
Long-term capital gain		4,578,186		—
Tax return of capital		1,648,372		66,724,839
Total dividends and distributions	$	44,084,507	$	125,044,012

Cost for federal income tax purposes	$	1,119,500,108
Gross unrealized appreciation	$	74,954,663
Gross unrealized depreciation		(12,910,928	)
Net unrealized appreciation		62,043,735
Other cost basis adjustments		(12,646,448	)
Total net unrealized appreciation	$	49,397,287

Series^*	Shares Outstanding 12/31/07		Number of Shares Redeemed		Shares Outstanding 12/31/08		Total Value 12/31/07		Amount Redeemed		Total Value 12/31/08
M7		3,400		1,877		1,523	$	85,000,000	$	46,925,000	$	38,075,000
T7		3,400		1,877		1,523		85,000,000		46,925,000		38,075,000
T7-2		3,400		1,877		1,523		85,000,000		46,925,000		38,075,000
T28		2,680		1,480		1,200		67,000,000		37,000,000		30,000,000
W7		3,400		1,877		1,523		85,000,000		46,925,000		38,075,000
TH7		3,000		1,658		1,342		75,000,000		41,450,000		33,550,000
TH28		3,400		1,877		1,523		85,000,000		46,925,000		38,075,000
F7		3,400		1,877		1,523		85,000,000		46,925,000		38,075,000
							$	652,000,000	$	360,000,000	$	292,000,000

Series^*	Range
M7		1.49	%-1.69%
T7		1.49	%-1.70%
T7-2		1.49	%-1.70%
T28		1.56	%-1.76%
W7		1.48	%-1.70%
TH7		1.49	%-1.71%
TH28		1.55	%-1.77%
F7		1.49	%-1.71%

Derivatives	Location	Realized Gain (Loss)			Change in Unrealized Appreciation
Interest rate contracts	Net Realized and Unrealized Gain (Loss)	$	(5,525,467	)	$	3,502,396
Equity contracts	Net Realized and Unrealized Gain		1,422,570			—
		$	(4,102,897	)	$	3,502,396

				Shares Voted For				Shares Voted Against				Authority Withheld
Proposal: To approve changing the Fund's investment objective.					19,585,500.46				2,472,710.04				895,664.95

Based on Net Asset Value									Based on Market Value
One Year			Five Years			Since Inception (03/30/04)			One Year			Five Years			Since Inception (03/30/04)
	42.04	%		3.81	%		6.87	%		67.09	%		4.54	%		4.44	%