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As filed with the Securities and Exchange Commission on April 9, 1997
File No. 333-21993
811-08059
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. ___
COHEN & STEERS SPECIAL EQUITY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
757 Third Avenue, New York, New York 10017
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 832-3232
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Robert H. Steers
Cohen & Steers Special Equity Fund, Inc.
757 Third Avenue, New York, New York 10017
(Name and address of agent for service of process)
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Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this registration statement.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on (date) pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, Registrant declares that an indefinite number of its shares of common
stock are being registered under the Securities Act of 1933 by this registration
statement.
The Registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a), may determine.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
Cross Reference Sheet pursuant to Rule 404A(a)
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<CAPTION>
Prospectus and Statement
Form of Additional Information
N-1A ITEM Form Caption Caption
- --------- --------------------------------- --------------------------
<S> <C> <C>
1 Cover Page Cover Page
2 Synopsis Fee Table
3 Condensed Financial Information Not Included
4 General Description of Registrant Investment Objectives and
Policies; Types of
Investments; Investment
Techniques; Risk Factors;
Diversification and
Portfolio Turnover
5 Management of the Fund Management of the Fund;
Custodian and Transfer and
Dividend Disbursing Agent
6 Capital Stock and Other Securities Organization and Description
of Capital Stock; Dividends
and Distribution; Taxation
7 Purchase of Securities Being Purchase of Shares
Offered
8 Redemption or Repurchase Redemption of Shares: Exchange
Privilege
9 Legal Proceedings Not Applicable
10 Cover Page Cover Page**
11 Table of Contents Table of Contents**
12 General Information and History Not Applicable
13 Investment Objectives and Policies Additional Information about
Investment Restrictions and
Policies; Additional
Information about Investment
Techniques; Portfolio Turnover
14 Management of the Registrant Management of the Fund**
15 Control Persons and Principal Management of the Fund**;
Holders of Securities Advisor and Investment
Advisory Agreement
16 Investment Advisory and Other Advisor and Investment
Advisory Agreement; Fund
Administration; Custodian
and Transfer and Dividend
Disbursing Agent**
17 Brokerage Allocation Diversification and
Portfolio Turnover**;
Portfolio Transactions and Brokerage
</TABLE>
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<TABLE>
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18 Capital Stock and Other Securities Organization and Description
of Capital Stock**
19 Purchase, Redemption, and Pricing Redemption of Shares**
of Securities Being Offered
20 Tax Status Taxation
21 Underwriters Not Applicable
22 Calculation of Yield Quotations Performance Information*;
of Money Market Funds Performance Information**
23 Financial Statements Financial Statements; Report
of Independent Accountants
</TABLE>
* Prospectus
** Statement of Additional Information
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
Cohen & Steers Special Equity Fund, Inc. is a non-diversified, open-end
management investment company that seeks maximum capital appreciation over the
long-term through investment primarily in real estate oriented companies. Under
normal circumstances, at least 65% of the Fund's total assets will be invested
in the equity securities of a limited number of companies which are engaged in
business in the real estate industry or related industries or in companies which
own significant real estate assets, and which are believed by the investment
adviser to have unrecognized intrinsic value. The Fund may also invest up to 35%
of its total assets in equity or debt securities of companies engaged in any
business, in money market instruments, and in options, financial futures, and
currency contracts. Investments are selected for long-term capital appreciation;
current income is incidental to the Fund's investment objective.
The Fund's investment objective is suitable for investors who are
willing to hold their shares through periods of market fluctuations and the
accompanying changes in share values. The Fund is not intended for investors
seeking short-term price appreciation or for "market timers." Cohen & Steers
Capital Management, Inc. serves as investment adviser to the Fund.
This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Fund. A Statement of Additional
Information dated May 1, 1997, containing additional and more detailed
information about the Fund, has been filed with the Securities and Exchange
Commission and is hereby incorporated by reference into this Prospectus. It is
available without charge and can be obtained by writing or calling the Fund at
the address and telephone number printed on the back cover of this prospectus.
The Board of Directors of the Fund believes that unrestrained growth in
the Fund's assets might impair investment flexibility and therefore would not be
in the best interests of the Fund's shareholders. The Fund will cease offering
its shares to new investors for a period of at least six months when total
assets reach $150 million. This limitation will not apply to existing
shareholders of record who will be permitted to continue to authorize investment
in the Fund and to reinvest dividends or capital gains distributions. After the
Fund has been closed for at least six months, the Fund will evaluate whether to
re-open the Fund to new investors.
________________________________________________________________________________
INVESTORS ARE ADVISED TO READ THIS PROSPECTUS
AND RETAIN IT FOR FUTURE REFERENCE.
________________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
MAY 1, 1997
________________________________________________________________________________
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FEE TABLE
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Shareholder Transaction Expenses
<S> <C>
Sales load imposed on purchases...................................................None
Sales load imposed on reinvested dividends........................................None
Deferred sales load...............................................................None
Redemption charge (as a percent of
redemption proceeds)............................................................2.0%
during the
first year;
0% thereafter
Annual Fund Operating Expenses (as a percentage of average net assets)
Management fees..................................................................0.90%
Other expenses*..................................................................0.45%
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Total fund operating expenses ...................................................1.35%
</TABLE>
* After reimbursement of expenses.
<TABLE>
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Example
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return (cumulatively through the end of each time period):
1 year...........................................................................$ 14
3 years..........................................................................$ 43
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
FUTURE EXPENSES WHICH MAY BE MORE OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Fund will bear directly or
indirectly. The assumption in the Example of a 5% annual return is required by
regulations of the SEC applicable to all mutual funds. The assumed 5% annual
return is not a prediction of, and does not represent, the projected or actual
performance of the Fund's shares. "Other Expenses" are based on estimated
amounts for the Fund's current fiscal year.
The investment adviser has voluntarily agreed to limit the total
expenses of the Fund (excluding interest, taxes, brokerage, and extraordinary
expenses) to an annual rate of 1.35% of the Fund's average net assets until
December 31, 1997. As long as this temporary expense limitation continues, it
may lower the Fund's expenses and increase its total return. After December 31,
1997, the expense limitation may be terminated or revised at any time, at which
time the Fund's expenses may increase and its total return may be reduced
depending on the total assets of the Fund. Without the expense reimbursement, it
is estimated that the Fund's total operating expenses for the current fiscal
year would have amounted to 1.43% of the Fund's average net assets for the
period.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE. The fundamental investment objective of Cohen &
Steers Special Equity Fund, Inc. (the "Fund") is to obtain maximum capital
appreciation over the long-term through investment primarily in real estate
oriented companies. Under normal circumstances, at least 65% of the Fund's total
assets will be invested in the equity securities of a limited number of
companies which are engaged in business in the real estate industry
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or related industries or in companies which own significant real estate assets,
and which are believed by the investment adviser to be undervalued. The Fund may
also invest up to 35% of its total assets in equity or debt securities of
companies engaged in any business, in money market instruments, and in options,
financial futures, and currency contracts, as described in more detail below.
Investments are selected based upon the potential for long-term capital
appreciation; current income is incidental to the Fund's investment objective.
DEFINITION OF COMPANIES IN THE REAL ESTATE INDUSTRY. A company is
considered to be in the real estate industry (residential, commercial or
industrial) or a related industry if it satisfies one of the following tests:
1. Revenues and Net Profits. At least 50% of the company's gross revenues
or net profits are derived from construction, ownership, management,
operation, financing, sales, or development of real estate, or from the
extraction of timber or minerals from real estate owned or leased by the
company either as a lessor or as a lessee under a lease granting the
designated development or extraction rights, or from businesses which
have a clear relationship to the ownership, management, use, operation,
or development of real estate or appurtenances to real estate.
2. Valuation of Assets. At least 50% of the company's intrinsic value, as
determined by the investment adviser, is attributable to the value of
real estate owned or leased by the company either as lessor or as
lessee, to the value of timber or minerals on such real estate, or to
the value of the stream of fees or revenues to be derived from the
management or operation of real estate or to the rights to extract
timber or minerals from real estate.
Under the above definitions, at least 65% of the Fund's assets will be
invested in companies such as real estate investment trusts; manufacturers and
distributors of construction materials, equipment and building supplies;
financial institutions which make or service mortgages on real estate; hotel and
hotel management companies; retail chains; railroads; and lumber, paper, forest
product, timber, mining and oil companies as well as other similar types of
companies which have a clear relationship to real estate or the real estate
industry. A company which is engaged in one or more businesses outside the real
estate industry will be considered to be in the real estate industry for
purposes of evaluating compliance with the Fund's investment objective if it
satisfies one of the above tests.
POLICY ON INDUSTRY CONCENTRATION. In keeping with its investment
objective, the Fund will concentrate more than 25% of its net assets in
securities of issuers in real estate or related industries. With regard to
issuers not in the real estate or related industries, the Fund will not invest
as much as 25% of its net assets in securities of issuers in any one industry.
As described in the prior section, the Fund's investment in companies engaged in
businesses outside the real estate industry which possess significant real
estate holdings will be deemed to be in the real estate industry for purposes of
its investment objective and its policy on industry concentration. This
concentration policy will not limit the Fund's purchase of obligations issued by
the U.S. Government and its agencies or instrumentalities, or cash equivalents
(which will not be used to concentrate investments in a single industry other
than real estate).
TYPES OF INVESTMENTS
EQUITY SECURITIES. Equity securities in which the Fund may invest
include common stock, preferred stock, convertible preferred stock, convertible
bonds and warrants.
REAL ESTATE INVESTMENT TRUSTS. The Fund is authorized to invest in the
equity securities of real estate investment trusts or "REITs." A REIT is a
corporation or a business trust that would otherwise be taxed as a corporation,
which meets the definitional requirements of the Internal Revenue Code of 1986,
as amended (the "Code"). The Code permits a qualifying REIT to deduct dividends
paid, thereby effectively eliminating corporate level federal income tax and
making the REIT a pass-through vehicle for federal income tax purposes. To meet
the definitional requirements of the Code, a REIT must, among other things,
invest substantially all of its assets in interests in real estate (including
mortgages and other REITs) or cash and government securities; derive most of its
income from rents from real property or interest on loans secured by mortgages
on real property; and distribute to shareholders annually 95% or more of its
otherwise taxable income.
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FIXED INCOME SECURITIES. The Fund may invest a maximum of 25% of its net
assets in investment grade and non-investment grade debt securities of
companies, including real estate industry companies, and preferred stock of such
companies. Securities rated non-investment grade (lower than Baa by Moody's
Investor Services Inc. ("Moody's") or lower than BBB by Standard and Poor's
Corporation ("S&P")) are sometimes referred to as "high yield" or "junk" bonds.
Investors should consider the following risks associated with high yield, high
risk securities before investing in the Fund.
High yield securities may be regarded as speculative with respect to the
issuer's continuing ability to make principal and interest payments. Analysis of
the creditworthiness of issuers of high yield securities may be more complex
than for issuers of higher quality debt securities, and the ability of a Fund to
achieve its investment objective may, to the extent of its investment in high
yield securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher quality securities.
High yield securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than higher grade
securities. The prices of high yield securities have been found to be less
sensitive to interest-rate changes than more highly rated investments, but more
sensitive to adverse economic downturns or individual corporate developments.
Yields on high yield securities will fluctuate. If the issuer of high yield
securities defaults, the Fund may incur additional expenses to seek recovery.
The secondary markets in which high yield securities are traded may be
less liquid than the market for higher grade securities. Less liquidity in the
secondary trading markets could adversely affect the price at which the Fund
could sell a particular high yield security when necessary to meet liquidity
needs or in response to a specific economic event, such as a deterioration in
the creditworthiness of the issuer, and could adversely affect and cause large
fluctuations in the daily net asset value of the Fund's shares. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities.
It is reasonable to expect that any adverse economic conditions could
disrupt the market for high yield securities, have an adverse impact on the
value of such securities, and adversely affect the ability of the issuers of
such securities to repay principal and pay interest thereon. New laws and
proposed new laws may adversely impact the market for high yield securities. See
the Appendix for additional information about the classifications of investment
grade and non-investment grade debt and preferred stocks.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest a maximum of 15%
of its net assets in restricted securities (securities which are not registered
or which are not deemed to be readily marketable) and all other illiquid
securities, including repurchase agreements with maturities of more than seven
days. Securities that may be resold without registration pursuant to Rule 144A
may be treated as liquid for these purposes, subject to the supervision and
oversight of, and in accordance with guidelines established by, the Board of
Directors to determine whether there is a readily available market for such
securities. Illiquid securities may include securities issued by certain REITs
or other real estate companies that are not listed on a major stock exchange,
options sold in the over-the-counter market, and forward foreign currency
contracts which are not exchange traded.
Restricted or non-registered securities may be sold only in privately
negotiated transactions, in a public offering with respect to which a
registration statement is in effect under the Securities Act of 1933 or pursuant
to Rule 144 promulgated under such Act. Where registration is required, the Fund
may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If during such a period adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to sell. The Adviser will monitor the liquidity of restricted securities
in the Fund's portfolio under the supervision of the Board of Directors. In
reaching liquidity decisions, the Adviser will consider, inter alia, the
following factors: (1) the frequency of trades and quotes for the security;
(2) the number of dealers wishing to purchase or sell the security and the
number of other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of the transfer).
FOREIGN SECURITIES. The Fund may invest up to 15% of total assets in
securities of foreign issuers which meet the same criteria for investment as
domestic companies, or sponsored and unsponsored depositary receipts for such
securities. The Fund may be subject to additional investment risks for these
securities that are different in some respects from those incurred by
investments in securities of domestic issuers. Such risks include currency
7
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risks, future political and economic developments, the possible imposition of
foreign withholding taxes on interest income payable on the securities, the
possible establishment of exchange controls, the possible seizure or
nationalization of foreign deposits, or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such securities. There can be no assurance that such laws may
not become applicable to certain of the Fund's investments. 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.
CASH RESERVES. The Fund's cash reserves, held to provide sufficient
flexibility to take advantage of new opportunities for investments and for other
cash needs, will be invested in money market instruments and generally will not
exceed 15% of total assets. If the investment adviser has difficulty finding an
adequate number of undervalued equity securities, all or any portion of the
Fund's assets may also be invested temporarily in money market instruments. Cash
reserves in excess of 35% of total assets will be maintained for defensive
purposes only.
Money market instruments in which the Fund may invest its cash reserves
will generally consist of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and such obligations which are
subject to repurchase agreements. A repurchase agreement is an instrument under
which an investor such as the Fund purchases a U.S. Government security from a
vendor, with an agreement by the vendor to repurchase the security at the same
price, plus interest at a specified rate. In such a case, the security is held
by the Fund, in effect, as collateral for the repurchase obligation. Repurchase
agreements may be entered into with member banks of the Federal Reserve System
or "primary dealers" (as designated by the Federal Reserve Bank of New York) in
United States Government securities. Repurchase agreements usually have a short
duration, often less than one week. In entering into the repurchase agreement
for the Fund, the investment adviser will evaluate and monitor the
creditworthiness of the vendor. In the event that a vendor should default on its
repurchase obligation, the Fund might suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
the vendor becomes bankrupt, the Fund might be delayed, or may incur costs or
possible losses of principal and income, in selling the collateral.
Other acceptable money market instruments include commercial paper rated
by any nationally recognized rating agency, such as Moody's or Standard &
Poor's, certificates of deposit, bankers' acceptances issued by domestic banks
having total assets in excess of one billion dollars, and money market
investment companies (limited to a maximum of 5% of total assets).
INVESTMENT TECHNIQUES
The Fund is authorized to use the following investment techniques,
subject to the accompanying restrictions. Although these techniques or
strategies are used regularly by some investment companies, the investment
adviser expects that the Fund's use of these techniques will not be routine and
will be limited to special situations.
BORROWING. The Fund may borrow up to 30% of the value its assets to
increase its holdings of portfolio securities. The Fund is required to maintain
continuous asset coverage of 300% with respect to such borrowings and to sell
(within three days) sufficient portfolio holdings to restore such coverage if it
should decline to less than 300% due to market fluctuations or otherwise, even
if such liquidations of the Fund's portfolio are disadvantageous from an
investment standpoint. Leveraging by means of borrowing, which is deemed to be a
speculative technique, may exaggerate the effect of any increase or decrease in
the value of portfolio securities on the Fund's net asset value. Money borrowed
also will be subject to interest and other costs (which may include commitment
fees and/or the cost of maintaining minimum average balances) which may or may
not exceed the income received from the securities purchased with borrowed
funds.
OPTIONS ON SECURITIES AND STOCK INDICES. The Fund may write (i.e., sell)
covered put and call options and purchase put and call options on securities or
stock indices that are listed on a national securities or commodities exchange.
An option on a security is a contract that gives the purchaser of the option, in
return for the premium paid, the right to buy a specified security (in the case
of a call option) or to sell a specified security (in the case of a put option)
from or to the writer of the option at a designated price during the term of the
option. An option on
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a stock index gives the purchaser of the option, in return for the premium paid,
the right to receive from the seller cash equal to the difference between the
closing price of the index and the exercise price of the option.
The Fund may write a call or put option only if the option is "covered."
This means that so long as the Fund is obligated as the writer of a call option,
it will own the underlying securities subject to the call, or hold a call at the
same or lower exercise price, for the same exercise period, and on the same
securities as the written call. A put is covered if the Fund maintains
collateral consisting of cash or liquid portfolio securities with a value equal
to the exercise price in a segregated account, or holds a put on the same
underlying security at an equal or greater exercise price. The value of the
underlying securities on which options may be written at any one time will not
exceed 25% of the total assets of the Fund. The Fund will not purchase put or
call options if the aggregate premium paid for such options would exceed 5% of
its total assets at the time of purchase.
FUTURES CONTRACTS. The Fund may buy and sell financial futures
contracts, stock and bond index futures contracts, foreign currency futures
contracts and options on any of the foregoing. A financial futures contract is
an agreement between two parties to buy or sell a specified debt security at a
set price on a future date. An index futures contract is an agreement to take or
make delivery of an amount of cash based on the difference between the value of
the index at the beginning and at the end of the contract period. A futures
contract on a foreign currency is an agreement to buy or sell a specified amount
of a currency for a set price on a future date.
The Fund may use financial futures contracts and related options for
"bona fide hedging" purposes, as such term is defined in applicable regulations
of the Commodity Futures Trading Commission. The Fund will also be authorized to
enter into such contracts and options for nonhedging purposes, for example, to
enhance total return or provide market exposure pending the investment of cash
balances, but only to the extent that aggregate initial margin deposits plus
premiums paid by it for open futures options positions, less the amount by which
any such positions are "in-the-money," would not exceed 5% of the Fund's total
assets. The Fund may lose the expected benefit of the transactions if interest
rates, currency exchange rates or securities prices change in an unanticipated
manner. Such unanticipated changes in interest rates, currency exchange rates or
securities prices may also result in poorer overall performance of the Fund than
if the Fund had not entered into any futures transactions.
FORWARD FOREIGN CURRENCY CONTRACTS. The Fund may enter into forward
foreign currency exchange contracts ("forward contracts") to attempt to minimize
the risk to the Fund from adverse changes in the relationship between the U.S.
dollar and foreign currencies. A forward contract is an obligation to purchase
or sell a specific currency for an agreed price at a future date which is
individually negotiated and privately traded by currency traders and their
customers.
The Fund will enter into forward contracts under the following
circumstances. First, when the Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may desire to "lock in"
the U.S. dollar price of the security in relation to another currency by
entering into a forward contract to buy the amount of foreign currency needed to
settle the transaction. Second, when it is believed that the currency of a
particular foreign country may suffer or enjoy a substantial movement against
another currency, it may enter into a forward contract to sell or buy the amount
of the former foreign currency (or another currency which acts as a proxy for
that currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. The second investment practice
is generally referred to as "cross-hedging." The Fund's forward transactions may
call for the delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its portfolio
securities are denominated.
The Fund will not enter into forward foreign currency contracts if, as a
result, the Fund will have more than 15% of the value of its net assets
committed to the consummation of such contracts. To the extent such contracts
would be deemed to be illiquid, they will be included in the maximum limitation
of 15% of net assets invested in restricted or illiquid securities.
RISKS OF OPTIONS, FUTURES AND FOREIGN CURRENCY CONTRACTS. Options,
futures, and foreign currency contracts are forms of derivatives. The use of
options and futures as hedging techniques may not succeed where the price
movements of the securities underlying the options and futures do not follow the
price movements of the
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portfolio securities subject to the hedge. Gains on investments in options and
futures depend on the portfolio manager's ability to predict correctly the
direction of stock prices, interest rates, and other economic factors. Where a
liquid secondary market for options or futures does not exist, the Fund may not
be able to close its position and, in such an event would be unable to control
its losses. The loss from investing in futures contracts is potentially
unlimited. The use of forward foreign currency contracts may limit gains from a
positive change in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may cause poorer overall
performance for the Fund than if it had not engaged in such contracts.
SHORT SALES. The Fund may enter into short sales, provided the dollar
amount of short sales at any one time would not exceed 25% of the net assets of
the Fund, and the value of securities of any one issuer in which the Fund is
short would not exceed the lesser of 2% of the value of the Fund's net assets or
2% of the securities of any class of any issuer. The Fund must maintain
collateral in a segregated account consisting of cash or liquid portfolio
securities with a value equal to the current market value of the shorted
securities, which is marked to market daily. If the Fund owns an equal amount of
such securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issuer as, and
equal in amount to, the securities sold short (which sales are commonly referred
to as "short sales against the box"), the above requirements are not applicable.
RISK FACTORS
The risks related to the particular types of securities in which the
Fund may invest and the investment techniques which it may use are discussed in
the preceding sections describing those securities and techniques. In addition,
the following general investment risks should be considered.
Under normal circumstances, at least 65% of the Fund's total assets will
be invested in the equity securities of companies engaged in the real estate
industry or in businesses related to the real estate industry. Because the Fund
will be concentrated in this industry, the Fund may be subject to the risks
associated with the direct ownership of real estate. For example, real estate
values may fluctuate as a result of general and local economic conditions,
overbuilding and increased competition, increases in property taxes and
operating expenses, changes in zoning laws, casualty or condemnation losses,
regulatory limitations on rents, changes in neighborhood values, changes in the
appeal of properties to tenants and increase in interest rates. The value of
securities of companies which service the real estate business sector may also
be affected by such risks. Thus, the value of the Fund's shares may change at
different rates compared to the value of shares of a mutual fund with
investments in many different industries.
Because the Fund may invest a substantial portion of its assets in
REITs, the Fund may also be subject to certain risks associated with direct
investments in REITs. REITs may be affected by changes in the value of their
underlying properties and by defaults by borrowers or tenants. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in financing a
limited number of projects. REITs depend generally on their ability to generate
cash flow to make distributions to shareholders, and certain REITs have
self-liquidation provisions by which mortgages held may be paid in full and
distributions of capital returns may be made at any time. In addition, the
performance of a REIT may be affected by changes in the tax laws or by its
failure to qualify for tax-free pass-through of income.
Because prices of equity securities fluctuate from day to day, the value
of the Fund's portfolio and the Fund's price per share will vary based upon
general market conditions. There is no assurance that the investment objectives
of the Fund can be achieved, and the value of your investment as a shareholder
upon redemption may be more or less than the purchase price.
DIVERSIFICATION AND PORTFOLIO TURNOVER
The Special Equity Fund is non-diversified under the federal securities
laws. As a non-diversified portfolio, there are no restrictions under the
securities laws limiting the percentage of assets that may be invested in the
securities of any one issuer. To the extent that the Fund is less diversified,
it may be more susceptible to adverse economic, political, or regulatory
developments affecting a single issuer than would be the case if it were more
broadly diversified. However, the Fund intends to qualify as a
"regulated investment company" under Subchapter M of the Code. See "Taxation."
To qualify as such, the Fund must, among other things, satisfy
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certain asset diversification requirements.
The Fund may engage in portfolio trading when considered appropriate,
but short-term trading will not be used as the primary means of achieving its
investment objective. Although the Fund cannot accurately predict its portfolio
turnover rate, it is not expected to exceed 100% in normal circumstances.
However, there generally are no limits on the rate of portfolio turnover, and
investments may be sold without regard to length of time held when, in the
opinion of the investment adviser, investment considerations warrant such
action. Higher portfolio turnover rates, such as rates in excess of 100%,
and short-term trading involve correspondingly greater commission expenses
and transaction costs. As a regulated investment company, however, the Fund's
ability to dispose of certain assets held for less than three months will be
limited. See "Taxation".
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund is vested
with 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 adviser, administrator,
sub-administrator, custodian and transfer agent. The management of the Fund's
day-to-day operations is delegated to its officers, to Cohen & Steers Capital
Management, Inc., the Fund's investment adviser (the "Adviser" or "Cohen &
Steers"), and to the Fund's administrator and sub-administrator, subject always
to the investment objective and policies of the Fund and to general supervision
by the Board of Directors. The Directors and officers of the Fund and their
principal occupations are set forth below.
Robert H. Steers, Chairman of the Board, is the Chairman and one
of the principals of the Adviser.
Martin Cohen, Director and President, is the President and one of
the principals of the Adviser.
Gregory C. Clark, Director, is the principal of Wellspring
Management Group.
George Grossman, Director, is an attorney at law in private
practice.
Jeffrey H. Lynford, Director, is Chairman of Wellsford Group,
Inc. and of Wellsford Residential Property Trust.
Willard H. Smith Jr., Director, is a board member of several REIT
companies.
Elizabeth O. Reagan, Vice President, is a Senior Vice President
of the Adviser.
THE ADVISER
Cohen & Steers, with offices located at 757 Third Avenue, New York, New
York 10017, has been retained to provide investment advice, and, in general, to
conduct the management and investment program of the Fund under the overall
supervision and control of the Directors of the Fund. Cohen & Steers, a
registered investment adviser, was formed in 1986 and is the leading U.S.
manager of portfolios dedicated to investments in real estate investment trusts
("REITs"). Its current clients include pension plans, endowment funds and mutual
funds, including Cohen & Steers Realty Income Fund, Inc. and Cohen & Steers
Total Return Realty Fund, Inc., both of which are closed-end investment
companies, and Cohen & Steers Realty Shares, Inc., which is an open-end
investment company. All of Cohen & Steers' client accounts are invested
principally in real estate securities. Its principal officers include Robert H.
Steers, Chairman; and Martin Cohen, President. Mr. Cohen and Mr. Steers are
responsible for the day-to-day management of the Fund's portfolio. Mr. Cohen and
Mr. Steers may be deemed "controlling persons" of the Adviser on the basis of
their ownership of the Adviser's stock.
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INVESTMENT ADVISORY AGREEMENT
Pursuant to an investment advisory agreement (the "Advisory Agreement")
the Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, and generally manages
the Fund's investments in accordance with the stated policies of the Fund,
subject to the general supervision of the Board of Directors of the Fund. The
Adviser also selects brokers and dealers to execute purchase and sale orders for
the portfolio transactions of the Fund. Consistent with the Conduct Rules of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, the Adviser may consider sales of shares of the Fund as a
factor in the selection of brokers and dealers to enter into portfolio
transactions with the Fund. The Adviser provides persons satisfactory to the
Directors of the Fund to serve as officers of the Fund. Such officers, as well
as certain other employees and Directors of the Fund, may be directors,
officers, or employees of the Adviser. Under the Advisory Agreement, the Fund
pays the Adviser a monthly management fee in an amount equal to 1/12th of .90%
of the average daily net assets of the Fund (approximately .90% on an annual
basis). This fee is higher than that incurred by most other investment
companies.
In addition to the payments to the Adviser under the Advisory Agreement
described above, the Fund pays certain other costs of its operations including
(a) custody, transfer and dividend disbursing expenses, (b) fees of Directors
who are not affiliated with the Adviser, (c) legal and auditing expenses, (d)
clerical, accounting and other office costs, (e) costs of printing the Fund's
prospectuses and shareholder reports, (f) costs of maintaining the Fund's
existence, (g) interest charges, taxes, brokerage fees and commissions, (h)
costs of stationery and supplies, (i) expenses and fees related to registration
and filing with the Securities and Exchange Commission and with state regulatory
authorities, and (j) upon the approval of the Board of Directors, costs of
personnel of the Adviser or its affiliates rendering clerical, accounting and
other office services.
ADMINISTRATOR AND SUB-ADMINISTRATOR
The Adviser has entered into an administration agreement with the Fund
(the "Administration Agreement") under which the Adviser performs certain
administrative functions for the Fund, including (i) providing office space,
telephone, office equipment and supplies for the Fund; (ii) paying compensation
of the Fund's officers for services rendered as such; (iii) authorizing
expenditures and approving bills for payment on behalf of the Fund; (iv)
supervising preparation of the periodic updating of the Fund's registration
statement, including the prospectus and statement of additional information, for
the purpose of filings with the Securities and Exchange Commission and state
securities administrators and monitoring and maintaining the effectiveness of
such filings, as appropriate; (v) supervising preparation of quarterly reports
to the Fund's shareholders, notices of dividends, capital gains distributions
and tax credits, and attending to routine correspondence and other
communications with individual shareholders; (vi) supervising the daily pricing
of the Fund's investment portfolio and the publication of the net asset value of
the Fund's shares, earnings reports and other financial data; (vii) monitoring
relationships with organizations providing services to the Fund, including the
Custodian, Transfer Agent and printers; (viii) providing trading desk facilities
for the Fund; (ix) supervising compliance by the Fund with recordkeeping
requirements under the 1940 Act and regulations thereunder, maintaining books
and records for the Fund (other than those maintained by the Custodian and
Transfer Agent) and preparing and filing of tax reports other than the Fund's
income tax returns; and (x) providing executive, clerical and secretarial help
needed to carry out these responsibilities. For its services under the
Administration Agreement, the Adviser receives a monthly fee from the Fund at
the annual rate of .02% of the Fund's average daily net assets.
In accordance with the terms of the Administration Agreement and with
the approval of the Fund's Board of Directors, the Adviser has caused the Fund
to retain The Chase Manhattan Bank ("Chase") as sub-administrator under a fund
accounting and administration agreement (the "Sub-Administration Agreement").
Under the Sub-Administration Agreement, Chase has assumed responsibility for
performing certain of the foregoing administrative functions, including
determining the Fund's net asset value and preparing such figures for
publication, maintaining certain of the Fund's books and records that are not
maintained by the Adviser, custodian or transfer agent, preparing financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholders reports, and Commission filings, and responding to
shareholder inquiries. The Adviser remains responsible for monitoring and
overseeing the performance by Chase and Chase Global Funds Services Company of
their obligations to the Fund under their respective agreements with the Fund,
subject to the overall authority of the Fund's Board of Directors.
Under the terms of the Sub-Administration Agreement, the Fund pays Chase
a monthly administration fee at the annual rate of .08% on the first $500
million of the Fund's average daily net assets and at lower rates on the Fund's
average daily net assets in excess of that amount. Chase Global Funds Services
Company, P.O. Box 2798, Boston, Massachusetts 02208,
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a wholly-owned subsidiary of Chase, has been retained by Chase to provide to the
Fund the administrative services described above. Chase also serves as the
Fund's custodian and transfer agent. See "Custodian and Transfer and Dividend
Disbursing Agent," below. Chase Global Funds Services Company has been similarly
retained by Chase to provide transfer agency services to the Fund and is
hereafter sometimes referred to as the "Transfer Agent."
DETERMINATION OF NET ASSET VALUE
Net asset value per share will be determined on each day the New York
Stock Exchange is open for trading and on each other day on which there is a
sufficient degree of trading in the Fund's investments to affect the net asset
value, as of the close of trading on the New York Stock Exchange by adding the
market value of all securities in the Fund's portfolio and other assets,
subtracting liabilities, incurred or accrued, and dividing by the total number
of the Fund's shares then outstanding.
For purposes of determining the Fund's net asset value per share,
readily marketable portfolio securities listed on the New York Stock Exchange
are valued, except as indicated below, at the last sale price reflected on the
consolidated tape 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 on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Directors shall determine in good faith
to reflect its fair market value. Readily marketable securities not listed on
the New York Stock Exchange but listed on other domestic or foreign securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued in a like
manner. Portfolio 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.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the Adviser to
be over-the-counter, but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Directors deem
appropriate to reflect their fair market value. Where securities are traded on
more than one exchange and also over-the-counter, the securities will generally
be valued using the quotations the Board of Directors believes reflect most
closely the value of such securities.
PURCHASE OF SHARES
Shares of the Fund may be purchased through Cohen & Steers Securities,
Inc., the Fund's distributor and an affiliate of the Adviser, acting as agent
for the Fund. The minimum initial investment is $10,000 per investor. The Fund
reserves the right, in its sole discretion, to waive the minimum initial
investment amount for certain investors. The Fund reserves the right to reject
any purchase order. Shareholder accounts may be maintained through brokerage
firms or other financial institutions ("financial intermediaries"). Financial
intermediaries may impose their own minimum investment amounts and may make
arrangements for their customers to purchase and redeem Fund shares by
telephone, in which event a transaction fee may be charged by the intermediary
(not by the Fund). The minimum for initial investments through such institutions
may be as low as $2,000 per investor. Subsequent investments must be at
least $500 and will not be permitted if, as a result of redemption, the value of
the investor's account is less than $10,000 (after giving effect to the proposed
purchase). Financial intermediaries, however, may impose different minimums for
subsequent investments.
Orders for shares of the Fund will become effective at the net asset
value per share next determined after receipt by Chase Global Funds Services
Company, the Transfer Agent, of a check drawn on any bank or domestic
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savings institution or after receipt by the Chase Manhattan Bank, the Fund's
custodian, of a bank wire or Federal Reserve Wire. Checks must be payable in
United States dollars and will be accepted subject to collection at full face
value. All funds will be invested in full and fractional shares.
By investing in the Fund, a shareholder appoints the Transfer Agent, as
agent, to establish an open account to which all shares purchased will be
credited, together with any dividends and capital gain distributions that are
paid in additional shares. See "Dividends and Distributions." Although most
shareholders elect not to receive stock certificates, certificates for full
shares can be obtained on specific written request to the Transfer Agent. No
certificates are issued for fractional shares. IT IS MORE COMPLICATED TO REDEEM
SHARES HELD IN CERTIFICATE FORM. See "Redemption of Shares -- Redemption by
Mail" below.
The Board of Directors of the Fund believes that unrestrained growth in
the Fund's assets might impair investment flexibility and therefore would not be
in the best interests of the Fund's shareholders. The Fund will cease offering
its shares to new investors for a period of at least six months when total
assets reach $150 million. This limitation will not apply to existing
shareholders of record who will be permitted to continue to authorize investment
in the Fund and to reinvest dividends or capital gains distributions. After the
Fund has been closed for at least six months, the Fund will evaluate whether to
re-open the Fund to new investors.
INITIAL PURCHASE BY WIRE
1. Telephone toll free from any continental state: (800) 437-9912 ((617)
557-8000 for Massachusetts residents). Give the name of the Fund,
name(s) in which shares are to be registered, address, social security
or tax identification number (where applicable), dividend payment
election, amount to be wired, name of the wiring bank and name and
telephone number of the person to be contacted in connection with the
order. A wire reference control number will be assigned.
2. Instruct the wiring bank to transmit the specified amount in federal
funds ($10,000 or more) to the Custodian):
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081-1000
ABA # 021000021
Account: DDA # 910-2-733012
Attn: Cohen & Steers Special Equity Fund, Inc.
For further credit to: (Account name)
Account Number:
Wire Reference Control #:
3. Complete the Subscription Agreement included at the end of this
Prospectus. Mail the Subscription Agreement to the Transfer Agent:
Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208
ADDITIONAL PURCHASES BY WIRE
1. Telephone toll free from any continental state: (800) 437-9912 ((617)
557-8000 for Massachusetts residents). Give the name of the Fund, the
account number, the amount to be wired, name of the wiring bank and name
and telephone number of the person to be contacted in connection with
the order. A wire reference control number will be assigned.
2. Instruct the wiring bank to transmit the specified amount in federal
funds to the Custodian (minimum: $500 or, if greater, the amount
necessary to increase the value of the investor's account to $10,000):
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The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081-1000
ABA # 021000021
Account: DDA # 910-2-733012
Attn: Cohen & Steers Special Equity Fund
For further credit to: (Account Name)
Account Number:
Wire Reference Control #:
INITIAL PURCHASE BY MAIL
1. Complete the Subscription Agreement included at the end of this
Prospectus.
2. Mail the Subscription Agreement and a check for $10,000 or more, payable
to the Fund, to the Transfer Agent at the address set forth above.
ADDITIONAL PURCHASES BY MAIL
1. Make a check payable to the Fund (minimum: $500 or, if greater, the
amount necessary to increase the value of the investor's account to
$10,000). Write the shareholder's Fund account number on the check.
2. Mail the check and the detachable stub from the Statement of Account (or
a letter providing the account number) to the Transfer Agent at the
address set forth above.
EXCHANGE PRIVILEGE
Shareholders may exchange some or all of their Fund shares for shares of
Cohen & Steers Realty Shares, Inc. ('Realty Shares'). Realty Shares is a no-load
open-end investment company managed by the Adviser whose investment objective is
total return through investment in real estate securities. Realty Shares pursues
its objective of total return by seeking, with approximately equal emphasis,
capital appreciation (both realized and unrealized) and current income.
Exchanges are made at net asset value.
An exchange of shares pursuant to the exchange privilege may result in a
shareholder's realizing a taxable gain or loss for income tax purposes. The
exchange privilege is available to shareholders residing in any state in which
the shares of Realty Shares may be legally sold. A shareholder wishing to
utilize the exchange privilege should read the Realty Shares prospectus.
The Fund reserves the right to limit or terminate the exchange privilege as
to any shareholder who makes exchanges more than four times a year. THE FUND
CAN MODIFY OR REVOKE THE EXCHANGE PRIVILEGE FOR ALL SHAREHOLDERS UPON 60 DAYS'
PRIOR WRITTEN NOTICE. There is no charge for the exchange privilege. For
additional information concerning exchanges, or to effect exchanges, contact the
Fund at (800) 437-9912.
REDEMPTION OF SHARES
Upon receipt by the Transfer Agent of a redemption request in proper
form, shares of the Fund will be redeemed at their next determined net asset
value, less any applicable redemption charge, as described below. See
"Determination of Net Asset Value." Shareholders redeeming shares within 12
months of purchase will receive proceeds equal to 98% of the aggregate net asset
value of the shares redeemed. Shares acquired through the reinvestment of
dividends and distributions by the Fund will not be subject to any such
redemption charge. For purposes of determining whether this redemption charge
applies, shares acquired through the reinvestment of dividends and
distributions will first be redeemed, and thereafter shares will be redeemed in
the order that they were purchased.
REDEMPTION BY TELEPHONE
You may submit redemption requests by telephone by calling Chase Global
Funds Services Company at (800) 437-9912 ((617) 557-8000 for Massachusetts
residents) and requesting that the proceeds be directed as indicated in the
Subscription Agreement. Requests for redemption made by telephone will be
accepted if a proper redemption request is received prior to 4:00 p.m., Eastern
time. Shares will be redeemed at the net asset value determined as of the
closing of trading on the New York Stock Exchange on that day, less any
applicable redemption charge, as described above. If a proper request is
received after 4:00 p.m. Eastern time, the shares will be redeemed as of the
close of trading on the New York Stock Exchange on the next business day.
You may not make a redemption request by telephone if the proceeds are to be
wired or mailed to a bank account number or address other than the one specified
on the Subscription Agreement. Such requests must be in writing accompanied by
a signature guarantee. If you would like to change your wiring instructions or
the address to which your check should be mailed, your written notification
must be signed by all of the account's registered shareholders, accompanied by
a signature guarantee and sent to Chase Global Funds Services Company, at the
address listed above. The guarantor of a signature must be a trust company or
national bank, a member bank of the Federal Reserve System, a member firm of a
national securities exchange or any other guarantor approved by Chase
Global Funds Services Company. Telephone redemption privileges may be
modified or suspended without notice during periods of drastic economic
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or market changes. TELEPHONE REDEMPTION PRIVILEGES MAY BE MODIFIED OR TERMINATED
AT ANY TIME BY THE FUND UPON 30 DAYS NOTICE TO SHAREHOLDERS.
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to
the Transfer Agent:
Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208
A written redemption request must (i) state the number of shares or
dollar amount to be redeemed, (ii) identify the shareholder account number and
tax identification number, and (iii) be signed by each registered owner exactly
as the shares are registered. If the shares to be redeemed were issued in
certificate form, the certificate must be endorsed for transfer (or be
accompanied by a duly executed stock power) and must be submitted to Chase
Global Funds Services Company together with a redemption request. When proceeds
of a redemption are to be paid to someone other than the shareholder, either by
wire or check, the signature(s) on the letter of instruction must be guaranteed
regardless of the amount of the redemption. The guarantor of a signature must be
a trust company or national bank, a member bank of the Federal Reserve System, a
member firm of a national securities exchange or any other guarantor approved by
Chase Global Funds Services Company. For redemptions made by corporations,
executors, administrators, guardians, Chase Global Funds Services Company may
require additional supporting documents evidencing the authority of the person
making the redemption (including evidence of appointment or incumbency). A
redemption request will not be deemed to be properly received until Chase Global
Funds Services Company receives all required documents in proper form.
OTHER REDEMPTION INFORMATION
Checks for redemption proceeds will normally be mailed within five
business days, but will not be mailed until all checks in payment for the
purchase of the shares to be redeemed have been collected, which may take up to
21 days or more. Unless other instructions are given in proper form, a check for
the proceeds of a redemption will be sent to the shareholder's address of
record. The Custodian may benefit from the use of redemption proceeds until the
check issued to a redeeming shareholder for such proceeds has cleared.
The Fund may suspend the right of redemption during any period when (i)
trading on the New York Stock Exchange is restricted or that Exchange is closed,
other than customary weekend and holiday closings, (ii) the Securities and
Exchange Commission (the "SEC") has by order permitted such suspension or (iii)
an emergency, as defined by rules of the SEC, exists making disposal of
portfolio securities or determination of the value of the net assets of the Fund
not reasonably practicable.
A redemption is a taxable event which may result in a gain or loss for
federal income tax purposes.
The Fund reserves the right to redeem upon not less than 30 days'
written notice the shares in an account that has a value of $2,000 or less as
the result of voluntary redemption. However, any shareholder affected by the
exercise of this right will be allowed to make additional investments prior to
the date fixed for redemption to avoid liquidation of the account.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the Fund's investment income will be declared and
distributed semi-annually. Additional distributions may be made to satisfy
certain annual distribution requirements. The Fund intends to distribute net
realized capital gains, if any, at least annually although the Board of
Directors may in the future determine to retain realized capital gains and
not distribute them to shareholders. For information concerning the tax
treatment of the Fund's distribution policies for the Fund and its shareholders,
see "Taxation."
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Distributions will automatically be paid in full and fractional shares
of the Fund based on the net asset value per share at the close of business on
the payable date unless the shareholder has elected to have them paid in cash.
TAXATION
The following discussion is intended for general information only. An
investor should consult with his or her own tax adviser as to the tax
consequences of an investment in the Fund, including the status of distributions
under applicable state or local law.
FEDERAL INCOME TAXES
The Fund intends to elect and qualify annually to be treated
as a regulated investment company under the Code. To qualify, the Fund must meet
certain income, distribution and diversification requirements. In any year in
which the Fund qualifies as a regulated investment company and timely
distributes all of its taxable income, the Fund generally will not pay any U.S.
federal income or excise tax.
Dividends paid out of the Fund's investment company taxable income
(including dividends, interest and net short-term capital gains) will be taxable
to a U.S. shareholder as ordinary income. Because a portion of the Fund's income
may consist of dividends paid by U.S. corporations, a portion of the dividends
paid by the Fund may be eligible for the corporate dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares. Dividends are taxable to shareholders in
the same manner whether received in cash or reinvested in additional Fund
shares.
A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by the Fund in October, November or December
with a record date in such a month and paid by the Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year in which the distributions are declared, rather than the
calendar year in which the distributions are received.
Each year the Fund will notify shareholders of the tax status of
dividends and distributions.
Upon the sale or other disposition of shares of the Fund, a shareholder
may realize a capital gain or loss which will be long-term or short-term,
generally depending upon the shareholder's holding period for the shares.
The Fund may be required to withhold U.S. federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against the shareholder's U.S. federal income tax
liability.
Further information relating to tax consequences is contained in the
Statement of Additional Information.
STATE AND LOCAL TAXES
Fund distributions also may be subject to state and local taxes.
Shareholders should consult their own tax advisers regarding the particular tax
consequences of an investment in the Fund.
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
The Fund was incorporated on February 14, 1997 as a Maryland
corporation and is authorized to issue 50,000,000 shares of common stock, $.001
par value (the "Common Stock"). The Fund's Board of Directors may, without
shareholder approval, increase or decrease the number of authorized but unissued
shares of the Fund's Common Stock. Each of the Fund's shares has equal dividend,
distribution, liquidation and voting rights. There are no conversion or
preemptive rights in connection with any shares of the Fund. All shares of the
Fund when
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duly issued will be fully paid and nonassessable. The rights of the holders of
shares of Common Stock may not be modified except by the vote of a majority of
the shares outstanding. The Fund is empowered to establish, without shareholder
approval, additional portfolios which may have different investment objectives.
The Fund is not required to hold regular annual shareholders' meetings.
A shareholders' meeting shall, however, be called by the secretary upon the
written request of the holders of not less than 10% of the outstanding shares of
the Fund. The Fund will assist shareholders wishing to communicate with one
another for the purpose of requesting such a meeting.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Chase, which has its principal business address at One Chase Manhattan
Plaza, New York, New York 10081-1000, has been retained to act as Custodian of
the Fund's investments and to serve as the Fund's transfer and dividend
disbursing agent. Chase has retained its wholly-owned subsidiary, Chase Global
Funds Services Company, to provide transfer and dividend disbursing agency
services to the Fund. Neither Chase nor Chase Global Funds Services Company has
any part in deciding the Fund's investment policies or which securities are to
be purchased or sold for the Fund's portfolio.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on December 31 of each year. The Fund
sends to its shareholders, at least semi-annually, reports showing the
investments and other information (including unaudited financial statements). An
annual report, containing financial statements audited by the Fund's independent
accountants, is sent to shareholders each year.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual total
return" over various periods of time. This total return figure shows the average
percentage change in value of an investment in the Fund from the beginning date
of the measuring period to the ending date of the measuring period. The figure
reflects changes in the price of the Fund's shares and assumes that any income
dividends and/or capital gains distributions made by the Fund during the period
are reinvested in shares of the Fund. Figures will be given for recent one-,
five- and ten-year periods (when applicable), and may be given for other periods
as well (such as from commencement of the Fund's operations, or on a
year-by-year basis). When considering "average" total return figures for periods
longer than one year, investors should note that the Fund's annual total return
for any one year in the period might have been greater or less than the average
for the entire period. The Fund also may use "aggregate" total return figures
for various periods, representing the cumulative change in value of an
investment in the Fund for the specific period (again reflecting changes in the
Fund's share price and assuming reinvestment of dividends and distributions).
Aggregate total returns may be shown by means of schedules, charts or graphs,
and may indicate subtotals of the various components of total return (that is,
the change in value of initial investment, income dividends and capital gains
distributions).
It is important to note that total return figures are based on
historical earnings and are not intended to indicate future performance. The
Statement of Additional Information further describes the methods used to
determine the Fund's performance.
ADDITIONAL INFORMATION
Any shareholder inquiries may be directed to the Fund at the address or
telephone number listed on the back cover of this Prospectus. This Prospectus,
including the Statement of Additional Information which has been incorporated by
reference herein, does not contain all the information set forth in the
Registration Statement filed by the Fund with the SEC under the Securities Act
of 1933. Copies of the Registration Statement may be obtained at a reasonable
charge from the SEC or may be examined, without charge, at the offices of the
SEC in Washington, D.C. (http://www.sec.gov).
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 832-3232
________________________________________________________________________________
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997
Cohen & Steers Special Equity Fund, Inc. (the "Fund") is a
non-diversified, open-end management investment company that seeks maximum
capital appreciation over the long-term through investment primarily in real
estate oriented companies. Cohen & Steers Capital Management, Inc. serves as
investment adviser (the "Adviser" or "Cohen & Steers") to the Fund.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY THE FUND'S
PROSPECTUS DATED MAY 1, 1997 (THE "PROSPECTUS"). THIS STATEMENT OF ADDITIONAL
INFORMATION CONTAINS ADDITIONAL AND MORE DETAILED INFORMATION THAN THAT SET
FORTH IN THE PROSPECTUS AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
ADDITIONAL COPIES OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY WRITING OR CALLING
THE FUND AT THE ADDRESS AND TELEPHONE NUMBER GIVEN ABOVE.
________________________________________________________________________________
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Table of Contents
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ADDITIONAL INFORMATION ABOUT INVESTMENT RESTRICTIONS AND POLICIES.......................... 21
ADDITIONAL INFORMATION ABOUT INVESTMENT TECHNIQUES......................................... 22
PORTFOLIO TURNOVER......................................................................... 25
MANAGEMENT OF THE FUND..................................................................... 25
Compensation of Directors and Certain Officers..................................... 26
Adviser and Investment Advisory Agreement.......................................... 27
Administrator and Sub-Administrator................................................ 28
DETERMINATION OF NET ASSET VALUE........................................................... 28
REDEMPTION OF SHARES....................................................................... 29
PORTFOLIO TRANSACTIONS AND BROKERAGE....................................................... 29
TAXATION................................................................................... 30
Taxation of the Fund............................................................... 30
Distributions...................................................................... 30
Sale of Shares..................................................................... 31
Original Issue Discount Securities................................................. 31
Market Discount Bonds.............................................................. 31
Options and Hedging Transactions................................................... 31
Currency Fluctuations--Section 988 Gains or Losses................................. 31
Investments in Real Estate Investment Trusts....................................... 31
Passive Foreign Investment Companies............................................... 31
Foreign Withholding Taxes.......................................................... 32
Backup Withholding................................................................. 32
Foreign Shareholders............................................................... 32
Other Taxation..................................................................... 33
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK.............................................. 33
DISTRIBUTOR................................................................................ 34
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT....................................... 34
PERFORMANCE INFORMATION.................................................................... 34
LEGAL MATTERS.............................................................................. 35
ACCOUNTANTS................................................................................ 35
FINANCIAL STATEMENTS....................................................................... 36
REPORT OF INDEPENDENT ACCOUNTANTS.......................................................... 37
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ADDITIONAL INFORMATION ABOUT INVESTMENT RESTRICTIONS AND POLICIES
Cohen & Steers Special Equity Fund, Inc. (the "Fund") is a registered
open-end management investment company. The fundamental investment objective and
the general investment policies and investment techniques are described in the
Prospectus. The Fund has also adopted certain investment restrictions limiting
the following activities except as specifically authorized:
The Fund may not:
(1) Borrow money, except that it may borrow from banks to
increase its holdings of portfolio securities in an amount not to exceed
30% of the value of its total assets and may borrow for temporary or
emergency purposes from banks and entities other than banks in an amount
not to exceed 5% of the value of its total assets; provided that
aggregate borrowing at any time may not exceed 30% of the Fund's total
assets;
(2) Issue any senior securities, except that collateral
arrangements with respect to transactions such as forward contracts,
futures contracts, short sales or options, including deposits of initial
and variation margin, shall not be considered to be the issuance of a
senior security for purposes of this restriction;
(3) Act as an underwriter of securities issued by other
persons, except insofar as the Fund may be deemed an underwriter in
connection with the disposition of securities;
(4) Purchase or sell real estate, except that the Fund may
invest in securities of companies that deal in real estate or are
engaged in the real estate business, including real estate investment
trusts, and securities secured by real estate or interests therein and
the Fund may hold and sell real estate acquired through default,
liquidation, or other distributions of an interest in real estate as a
result of the Fund's ownership of such securities:
(5) Purchase or sell commodities or commodity futures
contracts, except that the Fund may invest in financial futures
contracts, options thereon and similar instruments;
(6) Make loans to other persons except through the lending
of securities held by it (but not to exceed a value of one-third of
total assets), through the use of repurchase agreements, and by the
purchase of debt securities, all in accordance with its investment
policies;
(7) Purchase restricted or "illiquid" securities,
including repurchase agreements maturing in more than seven days, if as
a result, more than 15% of the Fund's net assets would then be invested
in such securities (excluding securities which are eligible for resale
pursuant to Rule 144A under the Securities Act of 1933);
(8) Acquire or retain securities of any investment
company, except that the Fund may (a) acquire securities of investment
companies up to the limits permitted by Sec. 12(d)(1) of the Investment
Company Act of 1940, and (b) acquire securities of any investment
company as part of a merger, consolidation or similar transaction;
(9) Make short sales whereby the dollar amount of short
sales at any one time would exceed 25% of the net assets of the Fund;
provided the Fund maintains collateral in a segregated account
consisting of cash or liquid portfolio securities with a value equal to
the current market value of the shorted securities, which is marked to
market daily. If the Fund owns an equal amount of such securities or
securities convertible into or exchangeable for, without payment of any
further consideration, securities of the same issuer as, and equal in
amount to, the securities sold short (which sales are commonly referred
to as "short sales against the box"), such restrictions shall not apply;
(10) Invest in puts, calls, straddles, spreads or any
combination thereof, except that the Fund may (a) purchase put and call
options on securities and securities indexes, and (b) write covered put
and
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call options on securities and securities indexes, provided that (i)
the securities underlying such options are within the investment
policies of the Fund; (ii) at the time of such investment, the value of
the aggregate premiums paid for such securities does not exceed 5% of
the Fund's total assets; and (iii) the value of the underlying
securities on which options may be written at any one time does not
exceed 25% of total assets;
(11) Invest in oil, gas or other mineral exploration
programs, development programs or leases, except that the Fund may
purchase securities of companies engaging in whole or in part in such
activities;
(12) Pledge, mortgage or hypothecate its assets except in
connection with permitted borrowings; or
(13) Purchase securities on margin, except short-term
credits as are necessary for the purchase and sale of securities,
provided that the deposit or payment of initial or variation margin in
connection with futures contracts or related options will not be deemed
to be a purchase on margin.
FUNDAMENTAL INVESTMENT RESTRICTIONS. The Investment Objective and
Policies set forth in the Prospectus and the Investment Restrictions numbered 1
through 6 in this Statement of Additional Information have been adopted as
fundamental policies of the Fund. Under the Investment Company Act of 1940, as
amended (the "1940 Act"), a fundamental policy may not be changed without the
vote of a majority of the outstanding voting securities of the Fund, as defined
under the 1940 Act. "Majority" means the lesser of (1) 67% or more of the shares
present at a meeting of shareholders of the Fund, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy,
or (2) more than 50% of the outstanding shares of the Fund. Investment
restrictions numbered 7 through 13 above, are non-fundamental and may be changed
at any time by vote of a majority of the Board of Directors.
ADDITIONAL INFORMATION ABOUT INVESTMENT TECHNIQUES
The following sections provide expanded discussion of several of the
types of investments and investment techniques which may be used by the Fund.
Real Estate Investment Trusts. REITs are sometimes informally
characterized as equity REITs, mortgage REITs and hybrid REITs. An equity REIT
invests primarily in the fee ownership or leasehold ownership of land and
buildings and derives its income primarily from rental income. An equity REIT
may also realize capital gains (or losses) by selling real estate properties in
its portfolio that have appreciated (or depreciated) in value. A mortgage REIT
invests primarily in mortgages on real estate, which may secure construction,
development or long-term loans. A mortgage REIT generally derives its income
primarily from interest payments on the credit it has extended. A hybrid REIT
combines the characteristics of equity REITs and mortgage REITs, generally by
holding both ownership interests and mortgage interests in real estate. It is
anticipated, although not required, that under normal circumstances a majority
of the Fund's investments in REITs will consist of equity REITs.
Futures Contracts. The Fund may purchase and sell financial futures
contracts. A futures contract is an agreement to buy or sell a specific security
or financial instrument at a particular price on a stipulated future date.
Although some financial futures contracts call for making or taking delivery of
the underlying securities, in most cases these obligations are closed out before
the settlement date. The closing of a contractual obligation is accomplished by
purchasing or selling an identical offsetting futures contract. Other financial
futures contracts by their terms call for cash settlements.
The Fund may also buy and sell index futures contracts with respect to
any stock or bond index traded on a recognized stock exchange or board of trade.
An index futures contract is a contract to buy or sell units of an index at a
specified future date at a price agreed upon when the contract is made. The
stock index futures contract specifies that no delivery of the actual stocks
making up the index will take place. Instead, settlement in cash must occur upon
the termination of the contract, with the settlement being the difference
between the contract price and the actual level of the stock index at the
expiration of the contract.
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At the time the Fund purchases a futures contract, an amount of cash or
liquid portfolio securities equal to the market value of the futures contract
will be deposited in a segregated account with the Fund's custodian. When
writing a futures contract, the Fund will maintain with its custodian similar
liquid assets that, when added to the amounts deposited with a futures
commission merchant or broker as margin, are equal to the market value of the
instruments underlying the contract. Alternatively, the Fund may "cover" its
position by owning the instruments underlying the contract (or, in the case of
an index futures contract, a portfolio with a volatility substantially similar
to that of the index on which the futures contract is based), or holding a call
option permitting the Fund to purchase the same futures contract at a price no
higher than the price of the contract written by the Fund (or at a higher price
if the difference is maintained in liquid assets with the Fund's custodian).
The Fund will be authorized to use financial futures contracts and
related options for "bona fide hedging" purposes, as such term is defined in
applicable regulations of the Commodity Futures Trading Commission ("CFTC"). The
Fund will also be authorized to enter into such contracts and related options
for nonhedging purposes, for example to enhance total return or provide market
exposure pending the investment of cash balances, but only to the extent that
aggregate initial margin deposits plus premiums paid by it for open futures
options positions, less the amount by which any such positions are
"in-the-money," would not exceed 5% of the Fund's total assets. The Fund may
lose the expected benefit of the transactions if interest rates, currency
exchange rates or securities prices change in an unanticipated manner. Such
unanticipated changes in interest rates, currency exchange rates or securities
prices may also result in poorer overall performance than if the Fund had not
entered into any futures transactions.
Options on Securities and Stock-Indices. The Fund may write covered call
and put options and purchase call and put options on securities or stock indices
that are traded on United States exchanges.
An option on a security is a contract that gives the purchaser of the
option, in return for the premium paid, the right to buy a specified security
(in the case of a call option) or to sell a specified security (in the case of a
put option) from or to the writer of the option at a designated price during the
term of the option. An option on a securities index gives the purchaser of the
option, in return for the premium paid, the right to receive from the seller
cash equal to the difference between the closing price of the index and the
exercise price of the option.
The Fund may write a call or put option only if the option is "covered."
A call option on a security written by the Fund is covered if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option on a security is also covered if the Fund holds a call on the same
security and in the same principal amount as the call written where the exercise
price of the call held (a) is equal to or less than the exercise price of the
call written or (b) is greater than the exercise price of the call written if
the difference is maintained by the Fund in cash or liquid portfolio securities
in a segregated account with its custodian. A put option on a security written
by the Fund is "covered" if the Fund maintains similar liquid assets with a
value equal to the exercise price in a segregated account with its custodian, or
else holds a put on the same security and in the same principal amount as the
put written where the exercise price of the put held is equal to or greater than
the exercise price of the put written.
The Fund will cover call options on stock indices by owning securities
whose price changes, in the opinion of the investment adviser are expected to be
similar to those of the index, or in such other manner as may be in accordance
with the rules of the exchange on which the option is traded and applicable laws
and regulations. Nevertheless, where the Fund covers a call option on a stock
index through ownership of securities, such securities may not match the
composition of the index. In that event, the Fund will not be fully covered and
could be subject to risk of loss in the event of adverse changes in the value of
the index. The Fund will cover put options on stock indices by segregating
assets equal to the option's exercise price, or in such other manner as may be
in accordance with the rules of the exchange on which the option is traded and
applicable laws and regulations.
The Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of a security or an index
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on which the Fund has written a call option falls or remains the same, the Fund
will realize a profit in the form of the premium received (less transaction
costs) that could offset all or a portion of any decline in the value of the
portfolio securities being hedged. If the value of the underlying security or
index rises, however, the Fund will realize a loss in its call option position,
which will reduce the benefit of any unrealized appreciation in the Fund's stock
investments. By writing a put option, the Fund assumes the risk of a decline in
the underlying security or index. To the extent that the price changes of the
portfolio securities being hedged correlate with changes in the value of the
underlying security or index, writing covered put options on securities or
indices will increase the Fund's losses in the event of a market decline,
although such losses will be offset in part by the premium received for writing
the option.
The Fund may also purchase put options to hedge its investments against
a decline in value. By purchasing a put option, the Fund will seek to offset a
decline in the value of the portfolio securities being hedged through
appreciation of the put option. If the value of the Fund's investments does not
decline as anticipated, or if the value of the option does not increase, the
Fund's loss will be limited to the premium paid for the option plus related
transaction costs. The success of this strategy will depend, in part, on the
accuracy of the correlation between the changes in value of the underlying
security or index and the changes in value of the Fund's security holdings being
hedged.
The Fund may purchase call options on individual securities to hedge
against an increase in the price of securities that the Fund anticipates
purchasing in the future. Similarly, the Fund may purchase call options to
attempt to reduce the risk of missing a broad market advance, or an advance in
an industry or market segment, at a time when the Fund holds uninvested cash or
short-term debt securities awaiting investment. When purchasing call options,
the Fund will bear the risk of losing all or a portion of the premium paid if
the value of the underlying security or index does not rise.
There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. Trading could be interrupted, for
example, because of supply and demand imbalances arising from a lack of either
buyers or sellers, or the options exchange could suspend trading after the price
has risen or fallen more than the maximum specified by the exchange. Although
the Fund may be able to offset to some extent any adverse effects of being
unable to liquidate an option position, the Fund may experience losses in some
cases as a result of such inability.
Foreign Currency Contracts and Currency Hedging Transactions. In order
to hedge against foreign currency exchange rate risks, the Fund may enter into
forward foreign currency exchange contracts and foreign currency futures
contracts, as well as purchase put or call options on foreign currencies, as
described below. The Fund may also conduct its foreign currency exchange
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market.
The Fund may enter into forward foreign currency exchange contracts
("forward contracts") to attempt to minimize the risk to the Fund from adverse
changes in the relationship between the U.S. dollar and foreign currencies. A
forward contract is an obligation to purchase or sell a specific currency for an
agreed price at a future date which is individually negotiated and privately
traded by currency traders and their customers. The Fund may enter into a
forward contract, for example, when it enters into a contract for the purchase
or sale of a security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of the security. In addition, for example, when the Fund
believes that a foreign currency may suffer or enjoy a substantial movement
against another currency, it may enter into a forward contract to sell an amount
of the former foreign currency (or another currency which acts as a proxy for
that currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. This second investment practice
is generally referred to as "cross-hedging." Because in connection with the
Fund's foreign currency forward transactions an amount of the Fund's assets
equal to the amount of the purchase will be held aside or segregated to be used
to pay for the commitment, the Fund will always have cash or other liquid assets
available sufficient to cover any commitments under these contracts or to limit
any potential risk. The segregated account will be marked-to-market on a daily
basis. In addition, the Fund will not enter into such forward contracts if, as a
result, the Fund will have more than 15% of the value of its total assets
committed to such contracts. While these contracts are not presently regulated
by the CFTC, the CFTC may
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in the future assert authority to regulate forward contracts. In such event, the
Fund's ability to utilize forward contracts in the manner set forth above may be
restricted. Forward contracts may limit potential gain from a positive change in
the relationship between the U.S. dollar and foreign currencies. Unanticipated
changes in currency prices may result in poorer overall performance for the Fund
than if it had not engaged in such contracts.
The Fund may purchase and write put and call options on foreign
currencies for the purpose of protecting against declines in the dollar value of
foreign portfolio securities and against increases in the dollar cost of foreign
securities to be acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only a partial
hedge, up to the amount of the premium received, and the Fund could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. The purchase of an option on foreign currency may
constitute an effective hedge against fluctuation in exchange rates although, in
the event of rate movements adverse to the Fund's position, the Fund may forfeit
the entire amount of the premium plus related transaction costs.
The Fund may enter into exchange-traded contracts for the purchase or
sale for future delivery of foreign currencies ("foreign currency futures").
This investment technique will be used only to hedge against anticipated future
changes in exchange rates which otherwise might adversely affect the value of
the Fund's portfolio securities or adversely affect the prices of securities
that the Fund intends to purchase at a later date. The successful use of
currency futures will usually depend on the investment adviser's ability to
forecast currency exchange rate movements correctly. Should exchange rates move
in an unexpected manner, the Fund may not achieve the anticipated benefits of
foreign currency futures or may realize losses.
PORTFOLIO TURNOVER
The Fund may engage in portfolio trading when considered appropriate,
but short-term trading will not be used as the primary means of achieving its
investment objective. Although the Fund cannot accurately predict its portfolio
turnover rate, it is not expected to exceed 100% in normal circumstances.
However, there generally are no limits on the rate of portfolio turnover, and
investments may be sold without regard to length of time held when, in the
opinion of the investment adviser, investment considerations warrant such
action. Higher portfolio turnover rates, such as rates in excess of 100%,
and short-term trading involve correspondingly greater commission expenses
and transaction costs. As a regulated investment company, however, the Fund's
ability to dispose of certain assets held for less than three months will be
limited. See "Taxation."
MANAGEMENT OF THE FUND
The directors and officers of the Fund and their principal occupations
during the past five years are set forth below. Each such director and officer
is also a director or officer of Cohen & Steers Realty Income Fund, Inc. and
Cohen & Steers Total Return Realty Fund, Inc., both of which are closed-end
investment companies sponsored by the investment adviser, and Cohen & Steers
Realty Shares, Inc., which is an open-end investment company also sponsored by
the investment adviser.
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Principal Occupation
Name and Address and Age Office during the Past 5 Years
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*Robert H. Steers Director, Chairman Chairman of Cohen & Steers
757 Third Avenue Capital Management, Inc., the
New York, New York Fund's investment adviser,
Age: 44 Chairman and President of Cohen
& Steers Securities, Inc.
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Principal Occupation
Name and Address and Age Office during the Past 5 Years
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*Martin Cohen Director, President President of Cohen & Steers
757 Third Avenue Capital Management, Inc., the
New York, New York Fund's investment adviser, Vice
Age: 48 President of Cohen & Steers
Securities, Inc.
Gregory C. Clark Director Principal of Wellspring
P.O. Box 5697 Management Group.
Snowmass Village, Colorado
Age: 50
George Grossman Director Attorney at law,
17 Elm Place
Rye, New York
Age: 43
Jeffrey H. Lynford Director Chairman of Wellsford Group
610 Fifth Avenue Inc. since 1986 and of Wellsford
New York, New York Residential Property Trust since
Age: 49 1992. Mr. Lynford is also an
Emeritus Trustee of the National
Trust for Historic Preservation.
Willard H. Smith Jr. Director Board member Essex Property
7 Slayton Drive Trust, Inc., Highwoods
Short Hills, New Jersey Properties, Inc., Realty Income
Age: 60 Corporation and Willis Lease
Finance Corporation. Managing
director at Merrill Lynch & Co.,
Equity Capital Markets Division
from 1983 to 1995.
Elizabeth O. Reagan Vice President Senior Vice President of Cohen &
757 Third Avenue Steers Capital Management, Inc.,
New York, New York the Fund's investment adviser,
Age: 34 since 1996 and prior to that Vice
President of Cohen & Steers
Capital Management, Inc. Ms.
Reagan is also Vice President of
Cohen & Steers Securities, Inc.
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* Directors who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940.
The Directors of the Fund who are employees of the investment adviser or
officers or employees of any of its affiliates receive no remuneration from the
Fund. Each of the other Directors is paid an annual retainer of $5,500, and a
fee of $500 for each meeting attended and is reimbursed for the expenses of
attendance at such meetings.
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS
The following table sets forth information regarding estimated
compensation of Directors by the Fund and by the fund complex of which the Fund
is a part for the Fund's current fiscal year. Officers of the Fund or any other
fund in the fund complex which is a U.S. registered investment Company. In the
Column headed "Total Compensation From Registrant and Fund Complex Paid to
Directors," the number in parentheses indicated the total number of boards in
the fund complex on which the Director serves.
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1997
(estimated)
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Total
Compensation
Pension or From
Retirement Estimated Registrant
Aggregate Benefits Annual and Fund
Compensation Accrued As Benefits Complex
From Part of Fund Upon Paid to
Name of Person, Position Registrant Expenses Retirement Directors
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Gregory C. Clark*........................ $6,125 N/A N/A $28,625 (4)
Martin Cohen**, Director and President... 0 N/A N/A 0 (4)
George Grossman*, Director............... 6,125 N/A N/A 28,625 (4)
Jeffrey H. Lynford*, Director............ 6,125 N/A N/A 28,625 (4)
Willard H. Smith, Jr. ................... 6,125 N/A N/A 28,625 (4)
Robert H. Steers*, Director and Chairman. 0 N/A N/A 0 (4)
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* Member of the Audit Committee.
** "Interested person," as defined in the Investment Company Act of 1940,
of the Fund because of the affiliation with Cohen & Steers Capital
Management, Inc., the Fund's investment adviser.
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ADVISER AND INVESTMENT ADVISORY AGREEMENT
Cohen & Steers Capital Management, Inc. (the "Adviser" or "Cohen &
Steers"), a registered investment adviser, was formed in 1986 and specializes in
the management of real estate securities portfolios. Its current clients include
pension plans of leading corporations, endowment funds and mutual funds,
including Cohen & Steers Realty Income Fund, Inc. and Cohen & Steers Total
Return Realty Fund, Inc., both of which are closed-end investment companies and
Cohen & Steers Realty Shares, Inc., an open-end investment company. Mr. Cohen
and Mr. Steers may be deemed "controlling persons" of the Adviser on the basis
of their ownership of the Adviser's stock.
Certain other clients of the Adviser may have investment objectives and
policies similar to those of the Fund. The Adviser may, from time to time, make
recommendations which result in the purchase or sale of a particular security by
its other clients simultaneously with the Fund. If transactions on behalf of
more than one client during the same period increase the demand for securities
being sold there may be an adverse effect on price. It is the policy of the
Adviser to allocate advisory recommendations and the placing of orders in a
manner which is deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the Adviser (including
the Fund) are purchasing or selling the same security on a given day through the
same broker-dealer, such transactions may be averaged as to price.
Pursuant to an investment advisory agreement (the "Advisory Agreement"),
the Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, executes the purchase
and sale orders for the portfolio transactions of the Fund and generally manages
the Fund's investments in accordance with the stated policies of the Fund,
subject to the general supervision of the Board of Directors of the Fund.
Under the Advisory Agreement, the Fund will pay the Adviser a monthly
management fee in an amount equal to 1/12th of .90% of the average daily value
of the net assets of the Fund (approximately .90% on an annual basis).
The Adviser also provides the Fund with such personnel as the Fund may
from time to time request for the performance of clerical, accounting and other
office services, such as coordinating matters with the administrator, the
transfer agent and the custodian, which the Adviser is not required to furnish
under the Advisory Agreement. The personnel rendering these services, who may
act as officers of the Fund, may be employees of the Adviser or its affiliates.
The cost to the Fund of these services must be agreed to by the Fund and is
intended to be no higher than the actual cost to the Adviser or its affiliates
of providing the services. The Fund does not pay for services performed by
officers of the Adviser or its affiliates. The Fund may from time to time hire
its own employees or contract to have services performed by third parties, and
the management of the Fund intends to do so whenever it appears advantageous to
the Fund.
The Advisory Agreement was approved on March 12, 1997 by the Fund's
Directors, including a majority of the Directors who are not interested persons
as defined in the Investment Company Act of 1940, as amended (the "1940 Act") of
the Fund or the Adviser.
The Advisory Agreement continues in effect from year to year, provided
that its continuance is specifically approved annually by the Directors or by a
vote of the shareholders, and in either case by a majority of the Directors who
are not parties to the Advisory Agreement or interested persons of any such
party, by vote cast in person at a meeting called for the purpose of voting on
such approval.
The Advisory Agreement is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting securities or by a vote of a majority of its Directors, or by
the Adviser on sixty days' written notice, and will automatically terminate in
the event of its assignment. The Advisory Agreement provides that in the absence
of willful misfeasance, bad faith or gross negligence on the part of the
Adviser, or of reckless disregard of its obligations thereunder, the Adviser
shall not be liable for any action or failure to act in accordance with its
duties thereunder.
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ADMINISTRATOR AND SUB-ADMINISTRATOR
The Adviser has entered into an administration agreement with the Fund
(the "Administration Agreement") under which the Adviser performs certain
administrative functions for the Fund, including (i) providing office space,
telephone, office equipment and supplies for the Fund; (ii) paying compensation
of the Fund's officers for services rendered as such; (iii) authorizing
expenditures and approving bills for payment on behalf of the Fund; (iv)
supervising preparation of the periodic updating of the Fund's registration
statement, including the prospectus and statement of additional information, for
the purpose of filings with the Securities and Exchange Commission and state
securities administrators and monitoring and maintaining the effectiveness of
such filings, as appropriate; (v) supervising preparation of quarterly reports
to the Fund's shareholders, notices of dividends, capital gains distributions
and tax credits, and attending to routine correspondence and other
communications with individual shareholders; (vi) supervising the daily pricing
of the Fund's investment portfolio and the publication of the net asset value of
the Fund's shares, earnings reports and other financial data; (vii) monitoring
relationships with organizations providing services to the Fund, including the
Custodian, Transfer Agent and printers; (viii) providing trading desk facilities
for the Fund; (ix) supervising compliance by the Fund with recordkeeping
requirements under the 1940 Act and regulations thereunder, maintaining books
and records for the Fund (other than those maintained by the Custodian and
Transfer Agent) and preparing and filing of tax reports other than the Fund's
income tax returns; and (x) providing executive, clerical and secretarial help
needed to carry out these responsibilities. For its services under the
Administration Agreement, the Adviser receives a monthly fee from the Fund at
the annual rate of .02% of the Fund's average daily net assets.
In accordance with the terms of the Administration Agreement and with
the approval of the Fund's Board of Directors, the Adviser has caused the Fund
to retain The Chase Manhattan Bank ("Chase") as sub-administrator under a fund
accounting and administration agreement (the "Sub-Administration Agreement").
Under the Sub-Administration Agreement, Chase has assumed responsibility for
performing certain of the foregoing administrative functions, including
determining the Fund's net asset value and preparing such figures for
publication, maintaining certain of the Fund's books and records that are not
maintained by the Adviser, custodian or transfer agent, preparing financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholders reports, and Commission filings, and responding to
shareholder inquiries. The Adviser remains responsible for monitoring and
overseeing the performance by Chase and Chase Global Funds Services Company
of their obligations to the Fund under their respective agreements with the
Fund, subject to the overall authority of the Fund's Board of Directors.
Under the terms of the Sub-Administration Agreement, the Fund pays Chase
a monthly administration fee at the annual rate of .08% on the first $500
million of the Fund's average daily net assets and at lower rates on the Fund's
average daily net assets in excess of that amount. Chase Global Funds Services
Company, P.O. Box 2798, Boston, Massachusetts 02208, a wholly-owned
subsidiary of Chase, has been retained by Chase to provide to the Fund the
administrative services described above. Chase also serves as the Fund's
custodian and transfer agent. See "Custodian and Transfer and Dividend
Disbursing Agent," below. Chase Global Funds Services Company has been similarly
retained by Chase to provide transfer agency services to the Fund and is
hereafter sometimes referred to as the "Transfer Agent."
The Administration Agreement is terminable by either party on sixty
days' written notice to the other. The Administration Agreement provides that in
the absence of willful misfeasance, bad faith or gross negligence on the part of
the Administrator, or of reckless disregard of its obligations thereunder, the
Adviser shall not be liable for any action or failure to act in accordance with
its duties thereunder.
DETERMINATION OF NET ASSET VALUE
Net asset value per share is determined by the Fund on each day the New
York Stock Exchange is open for trading, and on any other day during which there
is a sufficient degree of trading in the investments of the Fund to affect
materially the Fund's net asset value. The New York Stock Exchange is closed on
Saturdays, Sundays, and on New Years' Day, Presidents' Day (the third Monday in
February), Good Friday, Memorial Day (the last Monday in May), Independence Day,
Labor Day (the first Monday in September), Thanksgiving Day and Christmas
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Day (collectively, the "Holidays"). When any Holiday falls on a Saturday, the
Exchange is closed the preceding Friday, and when any holiday falls on a Sunday,
the Exchange is closed the following Monday. No redemptions will be made on
Martin Luther King Day (the third Monday in January), Columbus Day (the second
Monday in October) and Veteran's Day, nor on any of the Holidays.
For purposes of determining the Fund's net asset value per share, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean of the bid and asked prices of
such currencies against the United States dollar last quoted by a major bank
which is a regular participant in the institutional foreign exchange markets or
on the basis of a pricing service which takes into account the quotes provided
by a number of such major banks.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either
in cash or in portfolio securities (selected in the discretion of the Board of
Directors of the Fund and taken at their value used in determining the Fund's
net asset value per share as described in the Prospectus under "Determination of
Net Asset Value"), or partly in cash and partly in portfolio securities.
However, payments will be made wholly in cash unless the Board of Directors
believes that economic conditions exist which would make such a practice
detrimental to the best interests of the Fund. If payment for shares redeemed is
made wholly or partly in portfolio securities, brokerage costs may be incurred
by the investor in converting the securities to cash. The Fund will not
distribute in kind portfolio securities that are not readily marketable.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of its brokerage commission rates are
made by the Adviser. Transactions on United States stock exchanges involve the
payment by the Fund of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market but the price paid by the Fund usually includes an undisclosed dealer
commission or mark-up. In certain instances, the Fund may make purchases of
underwritten issues at prices which include underwriting fees.
In selecting a broker to execute each particular transaction, the
Adviser will take the following into consideration: the best net price
available; the reliability, integrity and financial condition of the broker; the
size and difficulty in executing the order; and the value of the expected
contribution of the broker to the investment performance of the Fund on a
continuing basis. Accordingly, the cost of the brokerage commissions to the Fund
in any transaction may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies and procedures as the Directors may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty solely by reason of its having caused the Fund to pay a broker
that provides research services to the Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the research service provided by such
broker viewed in terms of either that particular transaction or the Adviser's
ongoing responsibilities with respect to the Fund. Research and investment
information is provided by these and other brokers at no cost to the Adviser and
is available for the benefit of other accounts advised by the Adviser and its
affiliates, and not all of the information will be used in connection with the
Fund. While this information may be useful in varying degrees and may tend to
reduce the Adviser's expenses, it is not possible to estimate its value and in
the opinion of the Adviser it does not reduce the Adviser's expenses in a
determinable amount. The extent to which the Adviser makes use of statistical,
research and other services furnished by brokers is considered by the Adviser in
the allocation of brokerage business but there is no formula by which such
business is allocated. The Adviser does so in accordance with its judgment of
the best interests of the Fund and its shareholders. The Adviser may also take
into account payments made by brokers effecting transactions for the Fund to
other persons on behalf of the Fund for services provided to it for which it
would be obligated to pay (such as custodial and professional fees). In
addition, consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best price and
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execution, the Adviser may consider sales of shares of the Fund as a factor in
the selection of brokers and dealers to enter into portfolio transactions with
the Fund.
TAXATION
TAXATION OF THE FUND
The Fund intends to qualify annually and to elect to be treated as a
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code").
To qualify as a regulated investment company, the Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities or foreign currencies or
other income derived with respect to its business of investing in such stock,
securities or currencies; (b) derive less than 30% of its gross income from the
sale or other disposition of certain assets (namely, (i) stock or securities,
(ii) options, futures, and forward contracts (other than those on foreign
currencies), and (iii) foreign currencies (including options, futures, and
forward contracts on such currencies) not directly related to the Fund's
principal business of investing in stock or securities (or options and futures
with respect to stocks or securities)) held less than 3 months; (c) diversify
its holdings so that, at the end of each quarter of the taxable year, (i) at
least 50% of the market value of the Fund's assets is represented by cash and
cash items (including receivables), U.S. Government securities, the securities
of other regulated investment companies and other securities, with such other
securities of any one issuer limited for the purposes of this calculation to an
amount not greater than 5% of the value of the Fund's total assets and not
greater than 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its total assets is invested in the securities
of any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies); and (d) distribute at least 90% of its
investment company taxable income (which includes, among other items, dividends,
interest and net short-term capital gains in excess of net long-term capital
losses) each taxable year.
As a regulated investment company, the Fund generally will not be
subject to U.S. federal income tax on its investment company taxable income and
net capital gains (the excess of net long-term capital gains over net short-term
capital losses), if any, that it distributes to shareholders. The Fund intends
to distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that was not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by the Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
DISTRIBUTIONS
Dividends paid out of the Fund's investment company taxable income will
be taxable to a U.S. shareholder as ordinary income. Because a portion of the
Fund's income may consist of dividends paid by U.S. corporations, a portion of
the dividends paid by the Fund may be eligible for the corporate
dividends-received deduction. Distributions of net capital gains, if any,
designated as capital gain dividends are taxable as long-term capital gains,
regardless of how long the shareholder has held the Fund's shares, and are not
eligible for the dividends-received deduction. Shareholders receiving
distributions in the form of additional shares, rather than cash, generally will
have a cost basis in each such share equal to the net asset value of a share of
the Fund on the reinvestment date.
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Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of
additional shares will receive a report as to the net asset value of those
shares.
SALE OF SHARES
Upon the sale or other disposition of shares of the Fund, a shareholder
may realize a capital gain or loss which will be long-term or short-term,
generally depending upon the shareholder's holding period for the shares. Any
loss realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
ending 30 days after disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
ORIGINAL ISSUE DISCOUNT SECURITIES
Investments by the Fund in zero coupon or other discount securities will
result in income to the Fund equal to a portion of the excess of the face value
of the securities over their issue price (the "original issue discount") each
year that the securities are held, even though the Fund receives no cash
interest payments. This income is included in determining the amount of income
which the Fund must distribute to maintain its status as a regulated investment
company and to avoid the payment of federal income tax and the 4% excise tax. In
addition, if the Fund invests in certain high yield original issue discount
securities issued by corporations, a portion of the original issue discount
accruing on any such obligation may be eligible for the deduction for dividends
received by corporations. In such event, dividends of investment company taxable
income received from the Fund by its corporate shareholders, to the extent
attributable to such portion of accrued original issue discount, may be eligible
for this deduction for dividends received by corporations if so designated by
the Fund in a written notice to shareholders.
MARKET DISCOUNT BONDS
Gain derived by the Fund from the disposition of any market discount bonds
(i.e., bonds purchased other than at original issue, where the face value of the
bonds exceeds their purchase price) held by the Fund will be taxed as ordinary
income to the extent of the accrued market discount of the bonds, unless the
Fund elects to include the market discount in income as it accrues.
OPTIONS AND HEDGING TRANSACTIONS
The taxation of equity options and over-the-counter options on debt
securities is governed by Code section 1234. Pursuant to Code section 1234, the
premium received by the Fund for selling a put or call option is not included in
income at the time of receipt. If the option expires, the premium is short-term
capital gain to the Fund. If the Fund enters into a closing transaction, the
difference between the amount paid to close out its position and the premium
received is short-term capital gain or loss. If a call option written by the
Fund is exercised, thereby requiring the Fund to sell the underlying security,
the premium will increase the amount realized upon the sale of such security and
any resulting gain or loss will be a capital gain or loss, and will be long-term
or short-term depending upon the holding period of the security. With respect to
a put or call option that is purchased by the Fund, if the option is sold, any
resulting gain or loss will be a capital gain or loss, and will be long-term
or short-term, depending upon the holding period of the option. If the option
expires, the resulting loss is a capital loss and is long-term or short-term,
depending upon the holding period of the option. If the option is exercised,
the cost of the option, in the case of a call option, is added to the basis
of the purchased security and, in the case of a put option, reduces the amount
realized on the underlying security in determining gain or loss.
Certain options, futures contracts and forward contracts in which the Fund
may invest are "Section 1256 contracts." Gains or losses on section 1256
contracts generally are considered 60% long-term and 40% short-term capital
gains or losses ("60/40"); however, foreign currency gains or losses (as
discussed below) arising from certain section 1256 contracts may be treated as
ordinary income or loss. Also, section 1256 contracts held by the Fund at the
end of each taxable year (and, generally, for purposes of the 4% excise tax, on
October 31 of each year) are "marked-to-market" (that is, treated as sold at
fair market value), resulting in unrealized gains or losses being treated as
through they were realized.
Generally, the hedging transactions undertaken by the Fund may result in
"straddles" for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because the straddle rules may affect the character of gains or losses,
defer losses and/or accelerate the recognition of gains or losses from the
affected straddle positions, the amount which may be distributed to
shareholders, and which will be taxed to them as ordinary income or long-term
capital gain, may be increased or decreased as compared to a fund that did not
engage in such hedging transactions.
The 30% limitation described above and the diversification requirements
applicable to the Fund's assets may limit the extent to which the Fund will be
able to engage in transactions in options, futures contracts and forward
contracts.
CURRENCY FLUCTUATIONS -- "SECTION 988" GAINS OR LOSSES
Under the Code, gains or losses attributable to fluctuations in exchange
rates which occur between the time the Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency, and on disposition of certain options, futures and foreign
currency contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition also are treated as ordinary gain or loss. These gains
or losses, referred to under the Code as "section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to its shareholders as ordinary Income.
A Fund will not realize gain or loss on a short sale of a security until it
closes the transaction by delivering the borrowed security to the lender. All or
a portion or any gain arising from a short sale may be treated as short-term
capital gain, regardless of the period for which the Fund held the security used
to close the short sale. In addition, the Fund's holding period for any security
which is substantially indentical to that which is sold short may be reduced or
eliminated as a result of the short sale. A recent budget proposal, if enacted,
would in many cases require the Fund to recognize gain (but not loss) upon
entering into a short sale with respect to an appreciated security that the Fund
owns, as though the Fund constructively sold the security at the time of
entering into the short sale.
INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS
The Fund may invest in real estate investment trusts ("REITs") that hold
residual interests in real estate mortgage investment conduits ("REMICs"). Under
Treasury regulations that have not yet been issued, but may apply retroactively,
a portion of the Fund's income from a REIT that is attributable to the REIT's
residual interest in a REMIC (referred to in the Code as an "excess inclusion")
will be subject to federal income tax in all events. These regulations are also
expected to provide that excess inclusion income of a regulated investment
company, such as the Fund, will be allocated to shareholders of the regulated
investment company in proportion to the dividends received by such shareholders,
with the same consequences as if the shareholders held the related REMIC
residual interest directly. In general, excess inclusion income allocated to
shareholders (i) cannot be offset by net operating losses (subject to a limited
exception for certain thrift institutions), (ii) will constitute unrelated
business taxable income to entities (including a qualified pension plan, an
individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt
entity) subject to tax on unrelated business income, thereby potentially
requiring such an entity that is allocated excess inclusion income, and
otherwise might not be required to file a tax return, to file a tax return and
pay tax on such income, and (iii) in the case of a foreign shareholder, will not
qualify for any reduction in U.S. federal withholding tax. In addition, if at
any time during any taxable year a "disqualified organization" (as defined in
the Code) is a record holder of a share in a regulated investment company, then
the regulated investment company will be subject to a tax equal to that portion
of its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest federal income tax rate
imposed on corporations. The Adviser does not intend on behalf of the Fund to
invest in REITs, a substantial portion of the assets of which consists of
residual interests in REMICs.
PASSIVE FOREIGN INVESTMENT COMPANIES
If the Fund invests in stock of certain foreign investment companies,
the Fund may be subject to U.S. federal income taxation on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The distribution
or gain so allocated to any taxable year of the Fund, other than the taxable
year of the excess distribution or disposition, would be taxed to the Fund at
the highest ordinary income tax
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rate in effect for such year, and the tax would be further increased by an
interest charge to reflect the value of the tax deferral deemed to have resulted
from the ownership of the foreign company's stock. Any amount of distribution or
gain allocated to the taxable year of the distribution or disposition would be
included in the Fund's investment company taxable income and, accordingly, would
not be taxable to the Fund to the extent distributed by the Fund as a dividend
to its shareholders.
The Fund may be able to make an election, in lieu of being taxable in
the manner described above, to include annually in income its pro rata share of
the ordinary earnings and net capital gain of the foreign investment company,
regardless of whether it actually received any distributions from the foreign
company. These amounts would be included in the Fund's investment company
taxable income and net capital gain which, to the extent distributed by the Fund
as ordinary or capital gain dividends, as the case may be, would not be taxable
to the Fund. In order to make this election, the Fund would be required to
obtain certain annual information from the foreign investment companies in which
it invests, which in many cases may be difficult to obtain. Alternatively, the
Fund may be eligible to elect to mark to market its foreign investment company
stock, resulting in the stock being treated as sold at fair market value on the
last business day of each taxable year. Any resulting gain would be reported as
ordinary income, and any resulting loss would not be recognized. If this
election were made, the special rules described above with respect to excess
distributions and dispositions would still apply.
FOREIGN WITHHOLDING TAXES
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries.
BACKUP WITHHOLDING
The Fund may be required to withhold U.S. federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Corporate shareholders and certain other shareholders
specified in the Code generally are exempt from such backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the shareholder's U.S. federal income tax liability.
FOREIGN SHAREHOLDERS
U.S. taxation of a shareholder who, as to the United States, is a
nonresident alien individual, a foreign trust or estate, a foreign corporation
or foreign partnership ("foreign shareholder") depends on whether the income of
the Fund is "effectively connected" with a U.S. trade or business carried on by
the shareholder.
Income Not Effectively Connected. If the income from the Fund is not
"effectively connected" with a U.S. trade or business carried on by the foreign
shareholder, distributions of investment company taxable income will be subject
to a U.S. tax of 30% (or lower treaty rate, except in the case of any excess
inclusion income allocated to the shareholder (see "Taxation -- Investments in
Real Estate Investment Trusts," above)), which tax is generally withheld from
such distributions.
Distributions of capital gain dividends and any amounts retained by the
Fund which are designated as undistributed capital gains will not be subject to
U.S. tax at the rate of 30% (or lower treaty rate) unless the foreign
shareholder is a nonresident alien individual and is physically present in the
United States for more than 182 days during the taxable year and meets certain
other requirements. However, this 30% tax on capital gains of nonresident alien
individuals who are physically present in the United States for more than the
182-day period only applies in exceptional cases because any individual present
in the United States for more than 182 days during the taxable year is generally
treated as a resident for U.S. income tax purposes; in that case, he or she
would be subject to U.S. income tax on his or her worldwide income at the
graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In
the case of a foreign shareholder who is a nonresident alien individual, the
Fund may be required to withhold U.S. income tax at a rate of 31% of
distributions of net capital gains unless the foreign shareholder
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certifies his or her non-U.S. status under penalties of perjury or otherwise
establishes an exemption. See "Taxation -- Backup Withholding," above. If a
foreign shareholder is a nonresident alien individual, any gain such shareholder
realizes upon the sale or exchange of such shareholder's shares of the Fund in
the United States will ordinarily be exempt from U.S. tax unless (i) the gain is
U.S. source income and such shareholder is physically present in the United
States for more than 182 days during the taxable year and meets certain other
requirements, or is otherwise considered to be a resident alien of the United
States, or (ii) at any time during the shorter of the period during which the
foreign shareholder held shares of the Fund and the five year period ending on
the date of the disposition of those shares, the Fund was a "U.S. real property
holding corporation" and the foreign shareholder held more than 5% of the shares
of the Fund, in which event the gain would be taxed in the same manner as for a
U.S. shareholder as discussed above and a 10% U.S. withholding tax would be
imposed on the amount realized on the disposition of such shares to be credited
against the foreign shareholder's U.S. income tax liability on such disposition.
A corporation is a "U.S. real property holding corporation" if the fair market
value of its U.S. real property interests equals or exceeds 50% of the fair
market value of such interests plus its interests in real property located
outside the United States plus any other assets used or held for use in a
business. In the case of the Fund, U.S. real property interests include
interests in stock in U.S. real property holding corporations (other than stock
of a REIT controlled by U.S. persons and holdings of 5% or less in the stock of
publicly traded U.S. real property holding corporations) and certain
participating debt securities.
Income Effectively Connected. If the income from the Fund is
"effectively connected" with a U.S. trade or business carried on by a foreign
shareholder, then distributions of investment company taxable income and capital
gain dividends, any amounts retained by the Fund which are designated as
undistributed capital gains and any gains realized upon the sale or exchange of
shares of the Fund will be subject to U.S. income tax at the graduated rates
applicable to U.S. citizens, residents and domestic corporations. Foreign
corporate shareholders may also be subject to the branch profits tax imposed by
the Code.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may differ from those described herein.
Foreign shareholders are advised to consult their own tax advisers with respect
to the particular tax consequences to them of an investment in the Fund.
OTHER TAXATION
Fund shareholders may be subject to state, local and foreign taxes on
their Fund distributions. Shareholders are advised to consult their own tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
The Fund was incorporated on February 14, 1997 as a Maryland
corporation and is authorized to issue 50,000,000 shares of Common Stock, $.001
par value. The Fund's shares have no preemptive, conversion, exchange or
redemption rights. Each share has equal voting, dividend, distribution and
liquidation rights. All shares of the Fund, when duly issued, will be fully paid
and nonassessable. Shareholders are entitled to one vote per share. All voting
rights for the election of directors are noncumulative, which means that the
holders of more than 50% of the shares can elect 100% of the Directors then
nominated for election if they choose to do so and, in such event, the holders
of the remaining shares will not be able to elect any Directors. The foregoing
description is subject to the provisions contained in the Fund's Articles of
Incorporation and By-Laws.
The Board of Directors is authorized to reclassify and issue any
unissued shares of the Fund without shareholder approval. Accordingly, in the
future, the Directors may create additional series of shares with different
investment objectives, policies or restrictions. Any issuance of shares of
another class would he governed by the 1940 Act and Maryland law.
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DISTRIBUTOR
Cohen & Steers Securities, Inc., an affiliate of the Adviser, serves
without charge as the Distributor of shares of the Fund. Cohen & Steers
Securities, Inc. is not obligated to sell any specific amount of shares and will
sell shares, as agent for the Fund, on a continuous basis only against orders to
purchase shares.
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
Chase, which has its principal business at 770 Broadway, New York, New
York 10003 has been retained to act as Custodian of the Fund's investments and
as the Fund's transfer and dividend disbursing agent. Chase Global Funds
Services Co., a wholly-owned subsidiary of Chase, has been retained by Chase to
provide the Fund's transfer and dividend disbursing agency services and serves
as the Fund's Transfer and Dividend Disbursing Agent. Chase Global Funds
Services Co. has its principal business at 73 Tremont Street, Boston,
Massachusetts 02108-3913. Neither Chase nor Chase Global Funds Services Co.
determines the investment policies of the Fund or decides which securities the
Fund will buy or sell.
PERFORMANCE INFORMATION
From time to time, the Fund may quote the Fund's total return in
advertisements or in reports and other communications to shareholders. The
Fund's performance will vary from time to time depending upon market conditions,
the composition of its portfolio and its operating expenses. Consequently, any
given performance quotation should not be considered representative of the
Fund's performance for any specified period in the future. In addition, because
performance will fluctuate, it may not provide a basis for comparing an
investment in the Fund with certain bank deposits or other investments that pay
a fixed yield for a stated period of time. Investors comparing the Fund's
performance with that of other mutual funds should give consideration to the
quality and maturity of the respective investment companies' portfolio
securities.
Average Annual Total Return
The Fund's "average annual total return" figures described in the
Prospectus are computed according to a formula prescribed by the SEC. The
formula can be expressed as follows:
P(1+T)'pp'n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 investment
made at the beginning of a 1-, 5-, or 10-year period at the
end of a 1-, 5-, or 10-year period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
Aggregate Total Return
The Fund's aggregate total return figures described in the Prospectus
represent the cumulative change in the value of an investment in the Fund for
the specified period and are computed by the following formula:
AGGREGATE TOTAL RETURN = ERV - P
-------
P
Where: P = a hypothetical initial payment of $1,000
ERV = Ending Redeemable Value of a hypothetical $1,000 investment
made at the beginning of the 1-, 5-, or 10-year period at the
end of a 1-, 5-, or 10-year period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
34
<PAGE>
<PAGE>
Yield
Quotations of yield for the Fund will be based on all investment income
per share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ("net investment income") and
are computed by dividing net investment income by the maximum offering price per
share on the last day of the period, according to the following formula:
2[( a-b + 1)'pp'6 - 1]
--------
cd
Where: a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the
period.
In reports or other communications to shareholders of the Fund or in
advertising materials, the Fund may compare its performance with that of (i)
other mutual funds listed in the rankings prepared by Lipper Analytical
Services, Inc., publications such as Barrons, Business Week, Forbes, Fortune,
Institutional Investor, Kiplinger's Personal Finance, Money, Morningstar Mutual
Fund Values, The New York Times, The Wall Street Journal and USA Today or other
industry or financial publications or (ii) the Standard and Poor's Index of 500
Stocks, the Dow Jones Industrial Average and other relevant indices and industry
publications. The Fund may also compare the historical volatility of its
portfolio to the volatility of such indices during the same time periods.
(Volatility is a generally accepted barometer of the market risk associated with
a portfolio of securities and is generally measured in comparison to the stock
market as a whole -- the beta -- or in absolute terms -- the standard
deviation.)
LEGAL MATTERS
Legal matters in connection with the issuance of the shares of the Fund
offered hereby will be passed upon by Dechert Price & Rhoads, 30 Rockefeller
Plaza, New York, New York 10112.
ACCOUNTANTS
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New
York 10019 have been appointed as independent accountants for the Fund.
35
<PAGE>
<PAGE>
FINANCIAL STATEMENTS
COHEN & STEERS SPECIAL EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
APRIL 1, 1997
<TABLE>
<S> <C>
ASSETS:
Cash............................................................................................. $100,000
Deferred organization expenses................................................................... 123,000
--------
Total Assets................................................................................ 223,000
--------
LIABILITIES
Accrued payables................................................................................. 123,000
--------
Total Liabilities........................................................................... 123,000
--------
NET ASSETS applicable to 4,000 shares of $.001 par value common stock outstanding..................... $100,000
--------
--------
Net Asset Value and offering price per share* ($100,000 4,000 shares outstanding)..................... $ 25.00
--------
--------
</TABLE>
NOTE 1: ORGANIZATION
Cohen & Steers Special Equity Fund Inc., (the "Fund") was incorporated
under the laws of the State of Maryland on February 14, 1997 and is registered
under the Investment Company Act of 1940 (the "Act"), as amended, as an
open-ended non-diversified management investment company. The Fund has been
inactive since that date except for matters relating to the Funds'
establishment, designation, registration of the Fund's shares of common stock
("Shares") under the Securities Act of 1933, and the sale of 4,000 Fund shares
("Initial Shares") for $100,000 to Cohen & Steers Capital Management, Inc. (the
"Adviser"). The proceeds of such initial Shares in the Fund were invested in
cash. There are 50,000,000 shares of $0.001 par value common stock authorized.
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements. Actual results could differ from these
estimates.
NOTE 2: AGREEMENT
The Fund has entered into an Investment Advisory Agreement with the
Adviser, under which the Adviser will provide general investment advisory and
administrative services for the Fund. For providing, these services, facilities
and for bearing the related expenses, the Advisers will receive a fee for the
Fund, accrued daily and paid monthly, at an annual rate equal to 0.90% of the
average daily net assets.
NOTE 3: ORGANIZATION COSTS
All costs incurred in connection with organizing and establishing the Fund
will be amortized on the straight-line basis over a period of five years from
the date on which the Fund commences operations. In the event that any of the
Initial Shares of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization and
registration expenses in the same proportion as the number of shares being
redeemed bears to the number of Initial Shares outstanding at the time of such
redemption.
* Redemption price varies based on period shares are held.
36
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------
To the Shareholders and Board of Directors of
Cohen & Steers Special Equity Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Cohen & Steers Special Equity Fund, Inc. (the "Fund") as of April 1, 1997. This
statement of assets and liabilities is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this statement of
assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Cohen &
Steers Special Equity Fund, Inc. as of April 1, 1997, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
April 4, 1997
37
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a)Financial Statements
Included in Part A of the Registration Statement:
None.
Included in Part B of the Registration Statement:
Report of Independent Certified Accountants
Statement of Assets and Liabilities
Notes to Financial Statements
Included in Part C of the Registration Statement:
None.
(b)Exhibits
<TABLE>
<S> <C>
1. Articles of Incorporation*
2. By-Laws*
3. Not Applicable
4. Specimen certificate for common stock, par value $.001 per share
5. Form of Investment Advisory Agreement*
6. Distribution Agreement
7. Not Applicable
8. Form of Domestic Custody Agreement
9. (A) Administration Agreement*
(B) Mutual Fund Services (Sub-Administration) Agreement
10. Opinion and Consent of Dechert Price & Rhoads
11. Consent of Independent Certified Public Accountants
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Not Applicable
16. Not Applicable
</TABLE>
- ----------
* Filed with initial registration statement on February 19, 1997.
38
<PAGE>
<PAGE>
<TABLE>
<S> <C>
17. Not Applicable
18. Powers of Attorney
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
One shareholder as of the effective date of this Registration
Statement.
Item 27. Indemnification.
It is the Registrant's policy to indemnify its directors and
officers, employees and other agents to the maximum extent permitted
by Section 2-418 of the General Corporation Law of the State of
Maryland and as set forth in Article SEVENTH, Section 7.4 of
Registrant's Articles of Incorporation, filed as Exhibit 1, and
Article VIII of the Registrant's By-laws filed as Exhibit 2, all set
forth below. The liability of the Registrant's directors and officers
is dealt with in Article SEVENTH, Section 7.4 of Registrant's
Articles of Incorporation and Article VIII, Section 1 through Section
6, of the Registrant's By-laws, as set forth below. The liability of
Cohen & Steers Capital Management, Inc., the Registrant's investment
adviser (the "Adviser"), for any loss suffered by the Registrant or
its shareholders is set forth in Section of the Investment Advisory
Agreement filed as Exhibit 5 to this Registration Statement. The
liability of Cohen & Steers Capital Management, Inc., the
Registrant's administrator (the "Administrator"), for any loss
suffered by the Registrant or its shareholders is set forth in
Section of the Administration Agreement filed as Exhibit 9 to this
Registration Statement.
Item 28. Business and Other Connections of Investment Advisor
The descriptions of the Adviser under the caption "Management of the
Fund" in the Prospectus and in the Statement of Additional
Information constituting Parts A and B, respectively, of this
Registration Statement are incorporated by reference herein. Mr.
Robert H. Steers, Director and Chairman of the Adviser, and Mr.
Martin Cohen, Director and President of the Adviser, have had no
other business connections of a substantial nature during the past
two fiscal years.
Cohen & Steers Capital Management, Inc. acts as investment adviser
to, in addition to the Registrant, the following investment
companies:
Cohen & Steers Realty Shares, Inc.
Cohen & Steers Realty Income Fund, Inc.
Cohen & Steers Total Return Realty Fund, Inc.
Frank Russell Investment Management Company Real Estate
Securities Fund
Item 29. Principal Underwriters
(a) Cohen & Steers Securities, Inc. is the principal underwriter for
the Registrant.
(b) The following are directors and officers of Cohen & Steers
Securities, Inc. the principal address of these persons is 757 Third
Avenue, New York, New York 10017.
39
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Position and Positions and
Name Officers with Distributor Offices with Registrant
---- ------------------------- -----------------------
<S> <C> <C>
Robert H. Steers President and Chairman Chairman, Director
of the Board
Martin Cohen Senior Vice President President, Director
Elizabeth Reagan Vice President Vice President
</TABLE>
(c) Not applicable
Item 30. Location of Accounts and Records.
The majority of the accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder will be maintained as follows: Journals,
ledgers, securities records and other original records will be
maintained principally at the offices of the Registrant's
Sub-Administrator and Custodian, The Chase Manhattan Bank, One Chase
Manhattan Plaza, New York, New York 10081-1000. All other records so
required to be maintained will be maintained at the offices of Cohen
& Steers Capital Management, Inc., 757 Third Avenue, New York, New
York 10017.
Item 31. Not Applicable
Item 32. The Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director, if
requested to do so by the holders of at least 10% of the Fund's
outstanding shares, and that it will assist communication with other
shareholders as required by Section 16(c) of the Investment Company
Act of 1940.
The Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six
months from the effective date of this post-effective amendment to
the Registrant's 1933 Act Registration Statement.
40
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, Registrant has duly caused
this Pre-Effective Amendment No. 1 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York and State of New York on the 8th day of April, 1997.
COHEN & STEERS SPECIAL EQUITY FUND, INC.
By: \s\ Martin Cohen
-------------------------------------
Martin Cohen
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 1 has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <S> <C>
\s\ Martin Cohen Director, President and Treasurer 4/8/97
- -------------------------
Martin Cohen
\s\ Robert H. Steers Director, Chairman and Secretary 4/8/97
- -------------------------
Robert H. Steers
* Director 4/8/97
- -------------------------
Gregory C. Clark
* Director 4/8/97
- -------------------------
George Grossman
* Director 4/8/97
- -------------------------
Jeffrey H. Lynford
* Director 4/8/97
- -------------------------
Willard H. Smith Jr.
* By: /s/ Martin Cohen
---------------------
Attorney-in-Fact
</TABLE>
41
<PAGE>
<PAGE>
EXHIBIT INDEX
4. Specimen Certificate
6. Distribution Agreement
8. Form of Domestic Custody Agreement
9(B). Mutual Fund Services (Sub-Administration) Agreement
10. Opinion and Consent of Dechert Price & Rhoads
11. Consent of Independent Certified Public Accountants
18. Powers of Attorney
STATEMENT OF DIFFERENCES
Characters normally expressed as superscript shall be preceded by...'pp'
<PAGE>
<PAGE>
<TABLE>
<S> <C>
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
COHEN & STEERS SPECIAL EQUITY SEE REVERSE SIDE FOR
FUND, INC. CERTAIN DEFINITIONS
SHARES OF COMMON STOCK
PAR VALUE $.001 EACH
This is to Certify that_______________________________________________________ is the owner of
_______________________________________________________________________________ fully paid and
non-assessable shares of the above Corporation transferable only on the books of the Corporation by the holder
hereof in person or by duly authorized Attorney upon surrender of this Certificate properly endorsed.
Witness, the seal of the Corporation and the signatures of its duly authorized officers.
Dated:
_______________________________________________________________ _________________________________
SECRETARY/TREASURER PRESIDENT
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as through
they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT Custodian
--- -----------------------------------
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants in common Act _______________________________
(State)
For value received ________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------
- -------------------------------
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
_________________________________________________________________________________________________________ Shares
represented by the within certificate, and do hereby irrevocably constitute and appoint
_______________________________________________________________________________________________________ Attorney
to transfer the said Shares on the books of the within named Corporation with full power
of substitution in the premises.
Dated __________________ 19 ___
In presence of
________________________________________________________________________________________________________________
</TABLE>
<PAGE>
<PAGE>
COHEN & STEERS SPECIAL EQUITY FUND, INC.
757 Third Avenue
New York, New York 10017
March 13, 1997
Cohen & Steers Securities, Inc.
757 Third Avenue
New York, New York 10017
Dear Sirs:
1. In consideration of the agreements on your part herein
contained and of the payment by us to you of a fee of $1 per year and on the
terms and conditions set forth herein, we have agreed that you shall be, for the
period of this agreement, a distributor, as our agent, for the unsold portion of
such number of shares of our common stock, $.001 par value per share, as may be
effectively registered from time to time under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act").
2. We hereby agree that you will act as our agent, and hereby
appoint you our agent, to offer, and to solicit offers to subscribe to, the
unsold balance of shares of our common stock as shall then be effectively
registered under the Act. All subscriptions for shares of our common stock
obtained by you shall be directed to us for acceptance and shall not be binding
on us until accepted by us. You shall have no authority to make binding
subscriptions on our behalf. We reserve the right to sell shares of our common
stock through other distributors or directly to investors through subscriptions
received by us at our
<PAGE>
<PAGE>
principal office in New York, New York. The right given to you under this
agreement shall not apply to shares of our common stock issued in connection
with (a) the merger or consolidation of any other investment company with us,
(b) our acquisition by purchase or otherwise of all or substantially all of the
assets or stock of any other investment company, or (c) the reinvestment in
shares of our common stock by our stockholders of dividends or other
distributions or any other offering by us of securities to our stockholders.
3. You will use your best efforts to obtain subscriptions to
shares of our common stock upon the terms and conditions contained herein and in
the then current Prospectus and Statement of Additional Information including
the offering price. You will send to us promptly all subscriptions placed with
you. We will advise you of the approximate net asset value per share or net
asset value per share (as used in the Prospectus or Statement of Additional
Information) on any date requested by you and at such other times as it shall
have been determined by us. We shall furnish you from time to time, for use in
connection with the offering of shares of our common stock, such other
information with respect to us and shares of our common stock as you may
reasonably request. We shall supply you with such copies of our current
Prospectus and Statement of Additional Information in effect from time to time
as you may request. You are not authorized to give any information or to make
any representations, other than those contained in the Registration Statement,
Prospectus or Statement or Additional Information, as then in effect, filed
under the Act covering shares of our common stock or which we may authorize in
writing. You may use employees, agents and other persons who may not be your
employees or agents, at your cost and expense, to assist you in carrying out
your obligations hereunder,
<PAGE>
<PAGE>
but no such employee, agent or other person shall be deemed to be your agent or
have any rights under this agreement.
4. We reserve the right to suspend the offering of shares of our
common stock at any time, in the absolute discretion of our Board of Directors,
and upon notice of such suspension you shall cease to offer shares of our common
stock hereunder.
5. Both of us will cooperate with each other in taking such
action as may be necessary to qualify shares of our common stock for sale under
the securities laws of such states as we may designate, provided, that you shall
not be required to register as a broker-dealer or file a consent to service of
process in any such state. Pursuant to our Investment Advisory Agreement dated
March 13, 1997, with Cohen & Steers Capital Management, Inc., we will pay all
fees and expenses of registering shares of our common stock under the Act and of
qualification of shares of our common stock and our qualification under
applicable state securities laws. You shall pay all expenses relating to your
broker-dealer qualification.
6. We represent to you that our Registration Statement,
Prospectus and Statement of Additional Information (as in effect from time to
time) under the Act have been or will be, as the case may be, carefully prepared
in conformity with the requirements of the Act and the rules and regulations of
the Securities and Exchange Commission thereunder. We represent and warrant to
you that your Registration Statement, Prospectus and Statement of Additional
Information contain or will contain all statements required to be stated therein
in accordance with the Act and the rules and regulations of said Commission, and
that all statements of fact contained or to be contained therein are or will be
true and correct at the time indicated or the effective date as the case may be;
that our Registration Statement,
<PAGE>
<PAGE>
Prospectus and Statement of Additional Information when any of them shall become
effective or be authorized for use, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of shares
of our common stock. We will from time to time file such amendment or amendments
to our Registration Statement, Prospectus and Statement of Additional
Information as, in the light of future developments, shall, in the opinion of
our counsel, be necessary in order to have our Registration Statement,
Prospectus and Statement of Additional Information at all times contain all
material facts required to be stated therein or necessary to make any statements
therein not misleading to a purchaser of shares of our common stock, but, if we
shall not file such amendment or amendments within fifteen days after receipt by
us of a written request from you to do so, you may, at your option, terminate
this agreement immediately. We shall not file any amendment to our Registration
Statement, Prospectus or Statement of Additional Information without giving you
reasonable notice thereof in advance; provided, however, that nothing contained
in this agreement shall in any way limit our right to file at any time such
amendments to our Registration Statement, Prospectus or Statement of Additional
Information of whatever character, as we may deem advisable, such right being in
all respects absolute and unconditional. We represent and warrant to you that
any amendment to our Registration Statement, Prospectus or Statement of
Additional Information hereafter filed by us will, when it becomes effective,
contain all statements required to be stated therein in accordance with the Act
and the rules and regulations of said Commission, that all statements of fact
contained therein will, when the same shall become effective, be true and
correct and that no such amendment, when it
<PAGE>
<PAGE>
becomes effective, will include an untrue statement of a material fact or will
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of our shares.
7. We agree to indemnify, defend and hold you, and any person who
controls you within the meaning of Section 15 of the Act, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which you or any such controlling
person may incur, under the Act, or under common law or otherwise, arising out
of or based upon any alleged untrue statement of a material fact contained in
our Registration Statement, Prospectus or Statement of Additional Information in
effect from time to time under the Act or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading;
provided, however, that in no event shall anything herein contained be so
construed as to protect you against any liability to us or our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of your duties, or by reason of
your reckless disregard of your obligations and duties under this agreement. Our
agreement to indemnify you and any such controlling person as aforesaid is
expressly conditioned upon our being notified of any action brought against you
or any such controlling person, such notification to be given by letter or by
telegram addressed to us at our principal
<PAGE>
<PAGE>
office in New York, New York, and sent to us by the person against whom such
action is brought within ten days after the summons or other first legal process
shall have been served. The failure so to notify us of any such action shall not
relieve us from any liability which we may have to the person against whom such
action is brought by reason of any such alleged untrue statement or omission
otherwise than on account of our indemnity agreement contained in this paragraph
7. We will be entitled to assume the defense of any suit brought to enforce any
such claim, and to retain counsel of good standing chosen by us and approved by
you. In the event we do elect to assume the defense of any such suit and retain
counsel of good standing approved by you, the defendant or defendants in such
suit shall bear the fees and expenses of any additional counsel retained by any
of them; but in case we do not elect to assume the defense of any such suit, or
in case you do not approve of counsel chosen by us, we will reimburse you or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by you or them. Our
indemnification agreement contained in this paragraph 7 and our representations
and warranties in this agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of you or any
controlling person and shall survive the sale of any shares of our common stock
made pursuant to subscriptions obtained by you. This agreement of indemnity will
inure exclusively to your benefit, to the benefit of your successors and
assigns, and to the benefit of any controlling persons and their successors and
assigns. We agree promptly to notify you of the commencement of any litigation
or proceeding against us in connection with the issue and sale of any shares of
our common stock.
<PAGE>
<PAGE>
8. You agree to indemnify, defend and hold us, our several
officers and directors, and any person who controls us within the meaning of
Section 15 of the Act, free and harmless from and against any and all claims,
demands, liabilities, and expenses (including the cost of investigating or
defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which we, our officers or directors, or any
such controlling person may incur under the Act or under common law or
otherwise, but only to the extent that such liability, or expense incurred by
us, our officers or directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
you to us for use in our Registration Statement, Prospectus or Statement of
Additional Information in effect from time to time under the Act, or shall arise
out of or be based upon any alleged omission to state a material fact in
connection with such information required to be stated in the Registration
Statement, Prospectus or Statement of Additional Information or necessary to
make such information not misleading. Your agreement to indemnify us, our
officers or directors, and any such controlling person as aforesaid is expressly
conditioned upon your being notified of any action brought against us, our
officers or directors or any such controlling person, such notification to be
given by letter or telegram addressed to you at your principal office in New
York, New York, and sent to you by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. You shall have a right to control the defense of such action,
with counsel of your own choosing, satisfactory to us, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event you
<PAGE>
<PAGE>
and we, our officers or directors or such controlling person shall each have the
right to participate in the defense or preparation of the defense of any such
action. The failure so to notify you of any such action shall not relieve you
from any liability which you may have to us, to our officers or directors, or to
such controlling person by reason of any such untrue statement or omission on
your part otherwise than on account of your indemnity agreement contained in
this paragraph 8.
9. We agree to advise you immediately:
(a) of any request by the Securities and Exchange
Commission for amendments to our Registration Statement, Prospectus or Statement
of Additional Information or for additional information,
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the effectiveness of our
Registration Statement, Prospectus or Statement of Additional Information or the
initiation of any proceedings for that purpose,
(c) of the happening of any material event which makes
untrue any statement made in our Registration Statement, Prospectus or Statement
of Additional Information or which requires the making of a change in any
thereof in order to make the statements therein not misleading, and
(d) of all action of any Securities and Exchange
Commission with respect to any amendments to our Registration Statement,
Prospectus or Statement of Additional Information which may from time to time be
filed with the Securities and Exchange Commission under the Act.
<PAGE>
<PAGE>
10. This Agreement shall become effective on the date hereof and
shall remain in effect until December 31, 1998, and thereafter automatically for
successive twelve-month periods (computed from each January 1) provided that
such continuance is specifically approved at least annually by a vote of a
majority of our outstanding voting securities, as defined in the Investment
Company Act of 1940, as amended, or by our Board of Directors, and in either
case by a majority of our directors who are not parties to this agreement or
interested persons, as defined in the Investment Company Act of 1940, of any
such party. This agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of our outstanding voting securities (as so
defined), or by a vote of a majority of our Directors who are not parties to
this agreement or interested persons (as defined in the Investment Company Act
of 1940, as amended) of any party to this agreement, on sixty days' written
notice to you, or by you on sixty days' written notice to us.
11. This agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge. The terms "transfer", "assignment", and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
12. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, or
the right of any of your officers, directors or employees who may also be a
director, officer or employee of ours, to engage in any other business or to
devote time and attention to the management or other
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aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, firm, individual or
association.
If the foregoing is in accordance with your understanding, will
you kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
Cohen & Steers Special Equity Fund, Inc.
By___________________________
Martin Cohen
President
Accepted:
Cohen & Steers Securities, Inc.
By_____________________________
Robert H. Steers
President
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DOMESTIC CUSTODY AGREEMENT
To: The Chase Manhattan Bank
Institutional Client Services
4 New York Plaza, 4th Floor
New York, New York 10004
Gentlemen:
We hereby request you to open and to maintain a Custody Account in our
name and to hold therein as our custodian, upon the following terms and
conditions, all stocks, bonds, rights, warrants and other negotiable and
non-negotiable paper issued in certificated or book-entry form and commonly
treated or dealt with on securities exchanges or securities markets as shall be
received by and acceptable to you for the Custody Account (hereinafter refereed
to as "securities"). As used herein, the term Custody Account shall include all
such Custody Accounts opened pursuant to this Domestic Custody Agreement (the
"Agreement").
Securities held by you for the Custody Account shall be segregated at
all times from your proprietary assets.
1. Transactions. Unless you receive contrary written
instructions from us, and subject to the provisions of this
Agreement, you are authorized:
(a) to receive all interest and dividends payable on the
securities and (except as hereinafter set forth in the section entitled
"Miscellaneous") to credit such interest and dividends to the demand
deposit cash account of ours with you designated by us to receive all
sums collected in respect of transactions to the Custody Account (each
such account a "Cash Account");
(b) to credit all proceeds received from sales and
redemptions of securities to the Cash Account;
(c) to debit the Cash Account for the cost of
acquiring securities for the Custody Account;
(d) to present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
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(e) to exchange securities for other securities where the
exchange is purely ministerial as, for example, the exchange of
securities in temporary form for securities in definitive form or the
mandatory exchange of certificates;
(f) to sell fractional interests resulting from a stock split or
a stock dividend and to credit the Cash Account with the proceeds
thereof;
(g) to execute in our name, whenever you deem it appropriate,
such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other
disposition of, securities in the Custody Account and to guarantee as
our signature the signature so affixed;
(h) to receive and hold in the Custody Account securities which
have transfer limitations imposed upon them by the Securities Act of
1933, as amended; and
(i) to convert moneys received with respect to securities of
foreign issue into United States dollars whenever it is practical to do
so through customary banking channels. In effecting such conversion you
may use any method or agency available to you, including the facilities
of your own divisions, subsidiaries or affiliates. You shall incur no
liability on account of any loss suffered or expense incurred as a
result of such conversion, including, without limitation, losses arising
from fluctuations in exchange rates affecting any such conversion.
2. Instructions. You are authorized to rely and act upon all further
written instructions given or purported to be given by one or more officers,
employees or agents of ours (i) authorized by or in accordance with a corporate
resolution of ours delivered to you or (ii) described as authorized in a
certificate delivered to you by our Secretary or an Assistant Secretary or
similar officer of ours (each such officer, employee or agent or combination of
officers, employees and agents authorized pursuant to clause (i) or described
pursuant to clause (ii) of this paragraph is hereinafter referred to as an
"Authorized Officer"). (The term "instructions" includes, without limitation,
instructions to sell, assign, transfer, deliver, purchase or receive for the
Custody Account, any and all stocks, bonds and other securities or to transfer
funds in the Cash Account.) You may also rely and act upon instructions when
bearing or purporting to bear the facsimile signature of any of the individuals
designated by an Authorized Officer regardless of
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by whom or by what means the actual or purported facsimile signature or
signatures thereon may have been affixed thereto if such facsimile signature or
signatures resemble the facsimile specimen or specimens from time to time
furnished to you by any of such Authorized Officers, our Secretary or an
Assistant Secretary or similar officer of ours. In addition, you may rely and
act upon instructions received by telephone, telex, TWX, facsimile transmission,
bank wire or other teleprocess or electronic instruction or trade information
system acceptable to you which you believe in good faith to have been given by
an Authorized Officer or which are transmitted with proper testing or
authentication pursuant to terms and conditions which you may specify. You may
also rely and act upon instructions transmitted electronically through your
TITAN Data Entry System or any similar electronic instruction system acceptable
to you. You shall incur no liability to us or otherwise as a result of any act
or omission by you in accordance with instructions on which you are authorized
to rely pursuant to the provisions of this paragraph. Any instructions delivered
to you by telephone shall promptly thereafter be confirmed in writing by an
Authorized Officer, but you shall incur no liability for our failure to send
such confirmation in writing, the failure of any such written confirmation to
conform to the telephone instructions which you received, the failure of any
such written confirmation to be signed or properly signed, or your failure to
produce such confirmation at any subsequent time. You shall incur no liability
for refraining from acting upon any instructions which for any reason you, in
good faith, are unable to verify to your own satisfaction. With respect to
instructions received hereunder to transfer funds from the Cash Account to any
other account or party, we agree to implement any callback or other
authentication method or procedure or security device required by you at any
time or from time to time. Unless otherwise expressly provided, all
authorizations and instructions shall continue in full force and effect until
canceled or superseded by subsequent authorizations or instructions received by
your safekeeping account administrator with reasonable opportunity to act
thereon. Your authorization to rely and act upon instructions pursuant to this
paragraph shall be in addition to, and shall not limit, any other authorization
which we may give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication methods
or procedures or other security devices to be used with respect to instructions
which we may give hereunder, thereafter instructions given by us shall be given
and processed in accordance with terms and conditions for the use of such
arrangements, methods or procedures or devices as you may put
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into effect and modify from time to time. We shall safeguard any testkeys,
identification codes or other security devices which you make available to us
and agree that we shall be responsible for any loss, liability or damage
incurred by you or by us as a result of your acting in accordance with
instructions from any unauthorized person using the proper security device. You
may electronically record any instructions given by telephone, and any other
telephone discussions with respect to the Custody Account or transactions
pursuant to this Agreement.
If you are instructed by us to purchase or sell securities for the
Custody Account you may enter purchase and sale orders and confirmations, and
perform any other acts incidental or necessary to the performance thereof with
brokers or dealers or similar agents selected by you, including any broker or
dealer or similar agent affiliated with you, for our account and risk in
accordance with accepted industry practices in the relevant market.
Except as may be provided otherwise herein, you are authorized to
execute our instructions and take other actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar to us
and, in accordance with such practices, you may retain agents, including
subsidiaries or affiliates of yours, to perform certain of such functions.
In acting upon instructions to deliver securities against payment, you
are authorized, in accordance with customary securities processing practices, to
deliver such securities to the purchaser thereof or dealer therefor (including
to an agent for any such purchaser or dealer) against a receipt, with the
expectation of collecting payment from the purchaser, dealer or agent to whom
the securities were so delivered before the close of business on the same day.
3. Registration. Unless you receive contrary instructions from us, you
are authorized to keep securities in your own vaults or in book entry form
registered in your name or in the name of your nominee or nominees or, where
securities are eligible for deposit in a Depository (hereinafter defined), such
as The Depository Trust Company, the Federal Reserve Bank of New York or
Participants Trust Company, you may use any such Depository and permit the
registration of registered securities in the name of its nominee or nominees,
and we agree to hold you and the nominees harmless from any liability as holders
of record. We shall accept the return or delivery of securities of the same
class and denomination as those deposited with you by us or
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otherwise received by you for the Custody Account, and you need not retain the
particular certificates so deposited or received.
If any of our securities registered in your name or the name of your
nominee or held in a Depository and registered in the name of the Depository's
nominee are called for partial redemption by the issuer of such securities, you
are authorized to allot the call portion to the respective beneficial holders of
the securities in any manner deemed to be fair and equitable by you in your sole
discretion.
4. Statements. You shall notify us of each securities transaction
effected for the Custody Account and of income on and redemptions of the
securities in the Custody Account, as well as furnish us a listing of such
securities, at such times upon which you and we mutually agree. Periodic
statements shall be rendered to us as we may reasonably require, but not less
frequently than monthly. You shall at all times maintain proper books and
records that shall identify the securities as ours. Your books and records
relating to the Custody Account shall be available for inspection upon
reasonable notice to you during your regular business hours by duly authorized
officers, employees, or agents of ours, or by legally authorized regulatory
officials who are then in the process of reviewing our financial affairs upon
proof to you of such official status.
Unless we shall send to you a written exception or objection to any
statement of account within 60 days of our receipt of such statement from you,
we shall be deemed to have approved such statement. In such event, or where we
have otherwise approved such statement, you shall, to the extent permitted by
law, be released, relieved and discharged with respect to all matters set forth
in such statement or reasonably implied therefrom as though it had been settled
by the decree of a court of competent jurisdiction in an action where we and all
persons having or claiming an interest in the Custody Account or Cash Account
were parties.
5. Corporate Actions. You shall send us such proxies (signed in blank,
if issued in your name or the name of your nominee or a nominee of a Depository)
and communications with respect to securities in the Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by you for forwarding to customers. In addition, you shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in the Custody Account and advise us of rights issued, tender
offers or any other discretionary rights with respect to
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such securities, in each case, of which you receive notice at your central
corporate actions department from the issuer or from the Depository in which
such securities are held or notice published in publications and reported in
reporting services routinely used by you for this purpose.
6. Custodian Responsibility. Except as provided in the next following
paragraph, you shall be obligated to indemnify us for any loss of securities
credited to the Custody Account resulting from (i) the negligence or willful
misconduct of you or your officers, employees or agents retained by you to hold
such securities or (ii) the burglary, robbery, hold-up, theft or mysterious
disappearance, including loss by damage or destruction. In the event of a loss
of securities in the Custody Account for which you are required to indemnify us
pursuant to the immediately preceding sentence, at your option, you shall
promptly replace such securities (by among other means posting appropriate
security or bond with the Issuer(s) of such securities and obtaining their
reissue) or the value thereof (determined based upon the market value of the
securities which are the subject of such loss as of the date of the discovery of
such loss) and the value of any loss of rights or privileges resulting from the
loss of such securities. The foregoing indemnity shall be your exclusive
liability to us for your loss of securities from the Custody Account. In respect
of all your other duties and obligations pursuant to the terms of this
Agreement, you shall be liable to us only to the extent of our general damages
suffered or incurred as a result of any act or omission of you or your officers,
employees or agents which constitutes negligence or willful misconduct. General
damages shall mean only those damages as directly and necessarily result from
such act or omission without reference to any special conditions or
circumstances of ours or of any transaction, whether or not you have been
advised of any such special conditions or circumstances. Anything in this
Agreement to the contrary notwithstanding, in no event shall you be liable to us
under this Agreement for special, indirect or consequential loss or damage of
any kind whatsoever, whether or not you are advised as to the possibility of
such loss or damage and regardless of the form of action any such loss or damage
may be claimed.
You shall not be liable for the acts or omissions of (or the bankruptcy
or insolvency of) any Depository. If, however, as a result of any act or
omission of, or the bankruptcy or insolvency of, any Depository we suffer any
loss or liability, you will take such steps with respect thereto in order to
effect a recovery as you shall reasonably deem appropriate under the
circumstances (including the bringing and settling of legal proceedings),
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provided that unless you shall be liable as set forth in the immediately
preceding paragraph of this Agreement, for such loss or liability by virtue of
the negligence or misconduct of you or your officers, employees or agents, the
amount of any cost or expense in effecting, or attempting to effect, such
recovery shall be for our account, and you shall have the right to charge such
cost or expense to the Cash Account. We further agree to be bound by the
Depository rules and procedures applicable to you as a participant in respect of
any securities held by you in your account with such Depository. "Depository"
shall mean a federal reserve bank and any "clearing corporation" as defined
under Article 8 of the New York Uniform Commercial Code, as amended from time to
time.
All collection and receipt of funds or securities and all payment and
delivery of funds or securities under this Agreement shall be made by you as our
agent, at our risk with respect to our actions or omissions and those of persons
other than you, including, without limitation, the risk associated with the
securities processing practice of delivering securities against a receipt and
the risk that the counterparty in any transaction into which we enter will not
transfer funds or securities or otherwise perform in accordance with our
expectation of its obligations thereunder (including, without limitation, where,
as a result of such nonperformance, a Depository reverses, or requires repayment
of, any credit given in connection with the transfer of securities).
In no event shall you be responsible or liable for any loss due to
forces beyond your control, including, but not limited to, acts of God, flood,
fire, nuclear fusion, fission or radiation, war (declared or undeclared),
terrorism, insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, closure or disruption of any market, government action,
including any laws, ordinances, regulations or the like which restrict or
prohibit the providing of the services contemplated by this Agreement, inability
to obtain equipment or communications facilities, or the error in transmission
of information caused by any machines or systems or the failure of equipment or
interruption of communications facilities, and other causes whether or not of
the same class or kind as specifically named above. In the event that you are
unable substantially to perform for any of the reasons described in the
immediately preceding sentence, you shall so notify us as soon as reasonably
practicable.
You shall be responsible for only those duties expressly stated in this
Agreement or expressly contained in instructions
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to perform the services described herein given to you pursuant to the provisions
of this Agreement and accepted by you and, without limiting the foregoing, you
shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities relating to
the Custody Account, or to maintain any insurance on securities in the
Custody Account for our benefit;
(b) with regard to any security in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default;
(c) except as otherwise specifically provided in this section
under the heading "Custodian Responsibility", for any act or omission,
or for the solvency or insolvency, or notice to us of the solvency or
insolvency, of any broker or agent which is selected by you with
reasonable care or by us or any other person to effect any transaction
for the Custody Account or to perform any service under this Agreement;
(d) to evaluate, or report to us regarding, the financial
condition of any person, firm or corporation to which you deliver
securities or funds pursuant to this Agreement;
(e) for any loss occasioned by delay in the actual receipt of
notice by you of any payment, redemption or other transaction in respect
to which you are authorized to take some action pursuant to this
Agreement; or
(f) for any errors or omissions made by any securities pricing
service used by you to value securities credited to the Custody Account
as part of any service subscribed to by us from you.
7. Settlement. We agree with you that all credits of securities and
proceeds by you to the Custody Account and the Cash Account, respectively, on
the settlement or payable date shall be provisional when made and you shall be
entitled to reverse any such credits subject to actual receipt or collection of
immediately available funds.
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We shall have sufficient immediately available funds each day in the
Cash Account to pay for the settlement of all securities delivered against
payment to you and credited to the Custody Account. Should we fail to have
sufficient immediately available funds in the Cash Account to settle these
deliveries of securities pursuant to the preceding sentence (a "Deficit"), you,
in your sole discretion, may elect (i) to reject the settlement of any or all of
the securities delivered to you that day to the Custody Account, (ii) to settle
the deliveries on our behalf and debit the Cash Account (A) for the amount of
such Deficit and (B) for the amount of the funding or other cost or expense
incurred or sustained by you for our failure to have sufficient immediately
available funds in the Cash Account by the applicable settlement deadline for
you, or (iii) to reverse the posting of the securities credited to the Custody
Account.
The foregoing rights are in addition to and not in limitation of any
other rights or remedies available to you under this Agreement or otherwise. Any
advances made by you to us in connection with the purchase, sale, redemption,
transfer or other designation of securities or in connection with disbursements
of funds to any party, which create or result in an overdraft in the Cash
Account shall be deemed a loan by you to us, payable on demand, and bear
interest on the amount of the loan each day that the loan remains unpaid at your
prime rate in effect as announced by you from time to time, plus the cost to you
of any required reserves. We shall also bear the cost of any Federal Reserve
Bank daylight overdraft charge incurred by you and allocated to transactions
effected for the Custody Account of the Cash Account.
No prior action or course of dealing on your part with respect to the
settlement of securities transactions on our behalf shall be used by or give
rise to any claim or action by us against you for your refusal to pay or settle
for a securities transaction we have not timely funded as required herein.
8. Responsible as Principal. We agree that we shall be responsible to
you as a principal for all of our obligations to you arising under or in
connection with this Agreement, notwithstanding that we may be acting on behalf
of other persons, and we warrant our authority to deposit in the Custody Account
and Cash Account, respectively, any securities and funds which you or your
agents receive therefor and to give instructions relative thereto. We further
agree that you shall not be subject to, nor shall your rights and obligations
with respect to this Agreement and the Custody Account or the Cash Account be
affected by, any agreement between us and any such person.
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9. Crediting and Debiting Procedures. With respect to all transactions
for the Custody Account and the Cash Account, including, without limitation,
divided and interest payments and sales and redemptions of securities,
availability of funds credited to the Custody Account and Cash Account shall be
based on the type of funds used in the trade settlement or payment, including,
but not limited to, same day availability for federal or same day funds and next
business day availability for clearing house or next day funds. Furthermore,
with respect to all purchases and sales of securities for the Custody Account,
the proceeds from the sale of securities shall be credited to the Cash Account
on the date proceeds are received by you and the cost of securities purchased
shall be debited to the Cash Account on the date securities are received by you,
unless we request your contractual settlement service for the Custody Account in
which case the following provisions shall apply with respect to the delivery and
receipt of securities for the Custody Account for those securities and
transaction as to which you customarily offer this service.
(a) When we instruct you to deliver or receive securities, on the
contractual settlement date you shall credit the Cash Account with the
expected proceeds of the transaction and debit the Custody Account for
the securities which we have instructed you to deliver, in the case of
deliveries, and debit the Cash Account for the cost of the Securities
which we have instructed you to receive and credit the Custody Account
with such accounting entire which you shall reverse on our instructions
and which you may reverse, even in the absence of instructions from us,
if the transaction with respect to which they were made fails to settle
within a reasonable period, determined by you in your discretion, after
the contractual settlement date, except that if you deliver securities
which are returned by the recipient thereof, you may reverse such
credits and debits at any time. You have no obligation to use this
crediting and debiting procedure with respect to a delivery or
securities if we do not have actually in our account sufficient to make
the delivery.
(b) As with other transactions processed by you, your
responsibility with respect to transactions for which you use this
crediting and debiting procedure shall be governed by the provisions of
this Custody Agreement, including the section headed "Custodian
Responsibility". We agree that your using this procedure is not an
assurance by you that the transaction will actually settle on the
contractual settlement date and does not impose any additional
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responsibility on you with respect to the transaction. Without limiting
your right to reverse credits and debits described above, the account
statements which you furnish to us shall reflect transactions as to
which you use this procedure as if they had actually settled on the
contractual settlement date, unless prior to the date to which the
statement relates, you have reversed such credits and debits.
(c) We agree that you may terminate this contractual settlement
service to us at any time and for any reason.
With respect to securities or transactions as to which you do not
customarily offer this service, you shall (i) in the case of deliveries of
securities, credit the proceeds of the transaction to the Cash Account on the
date they are received by you and debit the securities from the Custody Account
on the date they are delivered by you, and (ii) in the case of securities
received, debit the Cash Account for the cost of such securities and credit the
Custody Account with such securities on the date the securities are received by
you.
10. Sweep of Cash Balances. Unless you receive contrary instructions
from us, you are directed automatically to arrange for the investment of cash in
the Cash Account in mutual funds (including, without limitation, the VISTA Money
Market Funds and any other mutual fund with respect to which you or an affiliate
or subsidiary of yours serves as an investment adviser, administrator,
shareholder servicing agent, and/or custodian or subcustodian and regardless of
whether or not you or an affiliate or subsidiary of yours receives any fees for
services to this Agreement, all of which such fees you are specifically
authorized to retain) or money market accounts (including, without limitation,
accounts of yours or an affiliate or subsidiary of yours) which you make
available for such purposes and which we shall select through instructions to
you. Further, in this regard, you are directed automatically to arrange for the
redemption of such mutual fund shares or for the withdrawal of amounts from such
money market accounts as may be necessary to avoid any potential overdraft
hereunder that you perceive based upon the information available to you at the
time of such redemption or withdrawal. We agree that we shall read the
prospectus for any mutual fund prior to investing and acknowledge that
investments in mutual fund shares are not insured by the Federal Deposit
Insurance Corporation and are not obligations of or guaranteed by you.
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11. Taxes. Unless we have already done so, we shall deliver promptly to
you with respect to each Custody Account established under this Agreement, two
duly completed and executed copies of the proper United States Internal Revenue
Service forms; (i) Form W-9, if we are a U.S. citizen or resident person; and
(ii) Form 1001, Form 4224, Form W-8 or Form 8709 (as applicable), if we are a
nonresident person, certifying our status as a nonresident person, and that we
are entitled to receive United States source payments under or in connection
with this Agreement without deduction as withholding or at a reduced rate of
withholding for Untied States federal income taxes. We agree to provide duly
executed and completed updates of such form(s) (or successor applicable forms),
on or before the date that such form(s) expire or become obsolete or after the
occurrence of an event requiring a change in the most recent form previously
delivered by us to you. We further agree to pay, indemnify, and hold you
harmless from and against any and all liabilities, penalties, interest or
additions to tax with respect to, or resulting from, any delay in, or failure
by, you (i) to pay, withhold or report any Federal, state or foreign taxes
imposed on, or in respect of, the property held in the Custody Account(s), or
this Agreement, or (ii) to report interest, dividend or other income paid or
credited to the Cash Account, whether such failure or delay by you to pay,
withhold or report tax or income is a result of (x) our failure to comply with
the terms of this sub-paragraph, or (y) your own acts or omissions; provided,
however, we shall not be liable to you for any penalty or additions to tax due
as a result of your failure to pay or withhold tax or to report to us interest,
dividend or other income paid or credited to the Cash Account solely as a result
of your negligent acts or omissions.
12. Other Accounts. From time to time we may instruct you
to open and maintain more than one Custody Account for us.
Unless we and you otherwise expressly agree, such accounts will
be governed by the provisions of this Agreement.
13. Fees, Indemnification. We agree to pay you compensation for your
services pursuant to this Agreement at the fees of which you shall notify us
from time to time. We also agree to hold you and your officers, employees and
agents harmless from, and to indemnify and reimburse you and them for, all
claims, liabilities, losses, damages and expenses (including out-of-pocket and
incidental expenses and legal fees) incurred by you or them in connection with
or relating to the Custody Account or your acting under this Agreement, provided
that you or they,as the case may be, have not acted with negligence or willful
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misconduct with respect to the events resulting in such claims, liabilities,
losses, damages or expenses.
14. Lien. We hereby pledge, assign and grant to you a continuing
security interest in, and a lien on the securities in the Custody Account and
any securities in your possession or under your control for credit to the
Custody Account, and you shall have all of the rights and remedies of a secured
party under the New York Uniform Commercial code, as amended, as security for
any and all obligations, matured or not matured, direct or indirect, absolute or
contingent, now due or hereafter to become due of us to you pursuant to this
Agreement; provided, however, if the Custody Account in which such securities
are credited is clearly designated on your records as an account in which our
interest is that of an agent or fiduciary for others, your security interest in
a particular security in such account will terminate at the time we pay to you
the settlement amount for such security in immediately available funds.
15. Set-Off. You may, without notice to us, setoff any sums held for us
or standing to the credit of any of our cash accounts with you in or towards the
satisfaction of any obligation of us to you under this Agreement, whether or not
any such sums or credits or obligations are matured or unmatured, direct or
indirect, absolute or contingent, and may do so notwithstanding that the
accounts may be maintained at different branches of yours and may not be
expressed in the same currency.
16. Termination. Either party may terminate this Agreement
at any time upon thirty days written notice. Our obligations
pursuant to the paragraphs under the headings "Registration",
"Settlements" and "Fees, Indemnification" shall survive the
termination of this Agreement.
17. Notices. Notices with respect to termination, specification of
Authorized Officers and terms and conditions for instructions required hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally, by courier service or by mail, postage prepaid, to the following
addresses (or to such other address as either party hereto may from time to time
designate by notice duly given in accordance with this paragraph):
To us at:
Cohen & Steers Special Equity Fund, Inc.
757 Third Avenue
New York, New York 10017
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To you, to the attention of the individual designated by you as
the safekeeping account administrator for our account, at:
The Chase Manhattan Bank
Institutional Client Services
4 New York Plaza, 4th Floor
New York, New York 10004
18. Governing Law, Successors and Assigns, Headings. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to laws as to conflicts of laws, and shall be binding
on our and your respective successors and assigns. We and you hereby irrevocably
submit to the exclusive jurisdiction of the state and federal courts in the
State and County of New York for the purposes of any suit, action or other
proceedings arising out of this Agreement. We and you hereby irrevocably waive
any objection on the ground of venue, forum non conveniens, or any similar
grounds, and irrevocably consent to service of process by mail or in any manner
permitted by New York law, and irrevocably waive our rights to any jury trial.
The headings of the paragraphs hereof are included for convenience of reference
only and do not form a part of this Agreement.
19. Prior Proposals. This Agreement (including any Riders relating to
additional services in respect of the Custody Account we may request of you)
shall contain the complete agreement of the parties hereto with respect to the
Custody Account (except as may be expressly provided to the contrary herein) and
supersedes and replaces any previously made proposals, representations,
warranties or agreements with respect thereto by either or both of the parties
hereto. This Agreement shall become effective upon execution hereof by us and
acceptance by you.
20. Separability. Any provisions of this Agreement, which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
21. Reservation of Right. You shall have the right not to
accept for deposit to the Custody Account any securities which
are in a form or condition which you, in your sole discretion,
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determine not be suitable for the services you provide under this
Agreement.
22. Additional Duties. If we shall ask you to perform duties or
responsibilities not specifically set forth in this Agreement and you choose to
perform such additional duties or responsibilities, you shall be held to the
same standard of care and you shall be entitled to all the protective provisions
(including but not limited to limitation of liability and indemnification) set
forth herein.
23. Counterparts. This Agreement may be executed in
several counterparts each of which shall be deemed to be an
original and together shall constitute one and the same agreement.
24. Miscellaneous. We understand that we may request to have a Custody
Account established under this Agreement which is not linked to a Cash Account.
We understand further that with respect to any such Custody Account so
established any funds received by you in respect of transactions for such
Custody Account will be credited to the Custody Account and, further, funds
credited to the Custody Account must be transferred by us by means of
instruction (a "payment order") to one of your account administrators assigned
by you for the Custody Account, which you will identify to us. We agree that
payment orders and communications seeking to cancel or amend payment orders
which are issued by telephone, telecopier or in writing shall be subject to a
mutually agreed security procedure and you may execute or pay payment orders
issued in our name when verified by you in accordance with such procedure.
In executing or paying a payment order you may rely upon the identifying
number (e.g. Fedwire routing number or account) or any party as instructed in
the payment order. We assume full responsibility for any inconsistency between
the name and identifying number of any party in payment orders issued to you in
our name.
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With respect to any Custody Account established under this Agreement
which is not linked to a Cash Account, all references to Cash Account shall be
read to mean Custody Account.
COHEN & STEERS SPECIAL EQUITY
FUND, INC.
By: __________________________
Title: _______________________
Date: ________________________
Accepted by:
THE CHASE MANHATTAN BANK
By: __________________________
Title: ______________________
Date: _______________________
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MUTUAL FUNDS SERVICE AGREEMENT
Fund Administration Services
Fund Accounting Services
Transfer Agency Services
CHASE GLOBAL FUNDS SERVICES COMPANY
June ___, 1997
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MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents
Section Page
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1. APPOINTMENT....................................................... 1
2. REPRESENTATIONS AND WARRANTIES.................................... 1
3. DELIVERY OF DOCUMENTS............................................. 4
4. SERVICES PROVIDED................................................. 5
5. FEES AND EXPENSES................................................. 6
6. LIMITATION OF LIABILITY AND INDEMNIFICATION....................... 9
7. TERM.............................................................. 13
8. NOTICES........................................................... 13
9. WAIVER............................................................ 14
10. FORCE MAJEURE..................................................... 14
11. AMENDMENTS........................................................ 14
11. SEVERABILITY...................................................... 15
12. GOVERNING LAW..................................................... 15
Signatures................................................................. 15
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MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents (continued)
Page
----
Schedule A -- Fees and Expenses .......................................... A-1
Schedule B -- Fund Administration Services Description ................... B-1
Schedule C -- Fund Accounting Services Description........................ C-1
Schedule D -- Transfer Agency Services Description........................ D-1
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MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of June _, 1997 by and between Cohen &
Steers Special Equity Fund, Inc. (the "Fund"), a Maryland corporation, and Chase
Global Funds Services Company ("Chase"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the "
1940 Act"); and
WHEREAS, the Fund wishes to contract with Chase to provide
certain services with respect to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Chase to provide services for
the Fund, as described hereinafter, subject to the supervision of the Board of
Directors [Trustees] of the Fund (the "Board"), for the period and on the terms
set forth in this Agreement. Chase accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Section 5 of and Schedule A to this Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) Chase represents and warrants to the Fund that:
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(i) Chase is a corporation, duly organized and
existing under the laws of the State of Delaware;
(ii) Chase is duly qualified to carry on its
business in the Commonwealth of Massachusetts;
(iii) Chase is empowered under applicable laws and
by its Articles of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have
been taken to authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access
to the facilities, personnel and equipment required to fully perform its duties
and obligations hereunder;
(vi) no legal or administrative proceedings have
been instituted or threatened which would impair Chase's ability to perform its
duties and obligations under this Agreement; and
(vii) Chase's entrance into this Agreement shall
not cause a material breach or be in material conflict with any other agreement
or obligation of Chase or any law or regulation applicable to Chase;
(b) The Fund represents and warrants to Chase that:
(i) the Fund is a Maryland corporation [business
trust], duly organized and existing and in good standing under the laws of the
State of Maryland; (ii) the Fund is empowered under applicable laws and by its
Charter Document and By-Laws to enter into and perform this Agreement;
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(ii) all requisite proceedings have been taken to
authorize the Fund to enter into and perform this Agreement;
(iii) the Fund is an investment company properly
registered under the 1940 Act;
(iv) a registration statement under the
Securities Act of 1933, as amended ("1933 Act") and the 1940 Act on Form N-1A
has been filed and will be effective and will remain effective during the term
of this Agreement, and all necessary filings under the laws of the states will
have been made and will be current during the term of this Agreement;
(v) no legal or administrative proceedings have
been instituted or threatened which would impair the Fund's ability to perform
its duties and obligations under this Agreement;
(vi) the Fund's registration statements comply in
all material respects with the 1933 Act and the 1940 Act (including the rules
and regulations thereunder) and none of the Fund's prospectuses and/or
statements of additional information contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein
not misleading; and
(vii) the Fund's entrance into this Agreement
shall not cause a material breach or be in material conflict with any other
agreement or obligation of the Fund or any law or regulation applicable to it.
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3. DELIVERY OF DOCUMENTS. The Fund will promptly furnish to Chase
such copies, properly certified or authenticated, of contracts, documents and
other related information that Chase may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Board authorizing the appointment of
Chase to provide certain services to the Fund and approving this Agreement;
(b) The Fund's Charter Document;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC");
(e) The Fund's registration statement including exhibits, as
amended, on Form N-1A (the "Registration Statement") under the 1933 Act and the
1940 Act, as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the
Fund and its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports;
(h) The Fund's prospectus(es) and statement(s) of
additional information relating to all funds, series, portfolios and classes, as
applicable, and all amendments and supplements thereto (such Prospectus(es) and
Statement(s) of Additional Information and supplements thereto, as presently in
effect and
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as from time to time hereafter amended and supplemented, herein called the
"Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time
to time including securities lending agreements, futures and commodities account
agreements, brokerage agreements and options agreements.
4. SERVICES PROVIDED.
(a) Chase will provide the following services subject to the
control, direction and supervision of the Board and in compliance with the
objectives, policies and limitations set forth in the Fund's Registration
Statement, Charter Document and By-Laws; applicable laws and regulations; and
all resolutions and policies implemented by the Board:
(i) Fund Administration,
(ii) Fund Accounting, and
(iii) Transfer Agency.
A detailed description of each of the above services is contained in Schedules
B, C and D, respectively, to this Agreement.
(b) Chase will also:
(i) provide office facilities with respect to the
provision of the services contemplated herein (which may be in the offices of
Chase or a corporate affiliate of Chase);
(ii) provide the services of individuals to serve
as officers of the Fund who will be designated by Chase and elected by the
Board subject to reasonable Board approval;
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(iii) provide or otherwise obtain personnel
sufficient for provision of the services contemplated herein;
(iv) furnish equipment and other materials, which
are necessary or desirable for provision of the services contemplated herein;
and
(v) keep records relating to the services
provided hereunder in such form and manner as Chase may deem appropriate or
advisable. To the extent required by Section 31 of the 1940 Act and the rules
thereunder, Chase agrees that all such records prepared or maintained by Chase
relating to the services provided hereunder are the property of the Fund and
will be preserved for the periods prescribed under Rule 31a-2 under the 1940
Act, maintained at the Fund's expense, and made available in accordance with
such Section and rules.
5. FEES AND EXPENSES.
(a) As compensation for the services rendered to the Fund
pursuant to this Agreement the Fund shall pay Chase monthly fees determined as
set forth in Schedule A to this Agreement. Such fees are to be billed monthly
and shall be due and payable upon receipt of the invoice. Upon any termination
of the provision of services under this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full month period and
shall be payable upon the date of such termination.
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(b) For the purpose of determining fees calculated as a
function of the Fund's assets, the value of the Fund's assets and net assets
shall be computed as required by its currently effective Prospectus, generally
accepted accounting principles, and resolutions of the Board.
(c) The Fund may request additional services, additional
processing, or special reports, with such specifications and requirements
documentation as may be reasonably required by Chase. If Chase elects to provide
such services or arrange for the provision, it shall be entitled to additional
fees and expenses at its customary rates and charges.
(d) Chase will bear its own expenses in connection with the
performance of the services under this Agreement except as provided herein or as
agreed to by the parties. The Fund agrees to promptly reimburse Chase for any
services, equipment or supplies ordered by or for the Fund through Chase and for
any other expenses that Chase may incur on the Fund's behalf at the Fund's
request or as consented to by the Fund. Such other expenses to be incurred in
the operation of the Fund and to be borne by the Fund, include, but are not
limited to: taxes; interest; brokerage fees and commissions; salaries and fees
of officers and directors [trustees] who are not officers, directors,
shareholders or employees of Chase, or the Fund's investment adviser or
distributor; SEC and state Blue Sky registration and qualification fees, levies,
fines and other charges; EDGAR filing fees', processing services and related
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fees; postage and mailing costs; costs of share certificates; advisory and
administration fees; charges and expenses of pricing and data services,
independent public accountants and custodians; insurance premiums including
fidelity bond premiums; legal expenses; consulting fees; customary bank charges
and fees; costs of maintenance of corporate [or trust] existence; expenses of
typesetting and printing of Prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund (the Fund's distributor to bear
the expense of all other printing, production, and distribution of Prospectuses,
and marketing materials); expenses of printing and production costs of
shareholders' reports and proxy statements and materials; expenses of proxy
solicitation, proxy tabulation and annual meetings; costs and expenses of Fund
stationery and forms; costs and expenses of special telephone and data lines and
devices; costs associated with corporate [or trust], shareholder, and Board
meetings; trade association dues and expenses; reprocessing costs to Chase
caused by third party errors; and any extraordinary expenses and other customary
Fund expenses. In addition, Chase may utilize one or more independent pricing
services to obtain securities prices and to act as backup to the primary pricing
services, in connection with determining the net asset values of the Fund. The
Fund will reimburse Chase for the Fund's share of the cost of such services
based upon the actual usage, or a pro-rata estimate of the use, of the services
for the benefit of the Fund.
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(e) All fees, out-of-pocket expenses, or additional charges of
Chase shall be billed on a monthly basis and shall be due and payable upon
receipt of the invoice.
(f) Chase will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Charges remaining unpaid after thirty (30) days shall bear interest in
finance charges equivalent to, in the aggregate, the Prime Rate (as determined
by Chase) plus two percent per year and all costs and expenses of effecting
collection of any such sums, including reasonable attorney's fees, shall be paid
by the Fund to Chase.
(g) In the event that the Fund is more than sixty (60) days
delinquent in its payments of monthly billings in connection with this Agreement
(with the exception of specific amounts which may be contested in good faith by
the Fund), this Agreement may be terminated upon thirty (30) days' written
notice to the Fund by Chase. The Fund must notify Chase in writing of any
contested amounts within thirty (30) days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being
investigated.
6. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(a) Chase shall not be liable for any error of judgment
or mistake of law or for any loss or expense suffered by the Fund, in
connection with the matters to which this Agreement relates, except for a loss
or expense solely caused by or resulting from willful misfeasance, bad faith or
negligence on
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Chase's part in the performance of its duties or from reckless disregard by
Chase of its obligations and duties under this Agreement. In no event shall
Chase be liable for any indirect, incidental, special or consequential losses or
damages of any kind whatsoever (including but not limited to lost profits), even
if Chase has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(b) Subject to Section 6(a) above, Chase shall not be
responsible for, and the Fund shall indemnify and hold Chase harmless from and
against, any and all losses, damages, costs, reasonable attorneys' fees and
expenses, payments, expenses and liabilities incurred by Chase, any of its
agents, or the Fund's agents in the performance of its/their duties hereunder,
including but not limited to those arising out of or attributable to;
(i) any and all actions of Chase or its officers or
agents required to be taken pursuant to this Agreement;
(ii) the reliance on or use by Chase or its officers or agents
of information, records, or documents which are received by Chase or its
officers or agents and furnished to it or them by or on behalf of the Fund, and
which have been prepared or maintained by the Fund or any third party on behalf
of the Fund;
(iii) the Fund's refusal or failure to comply with the
terms of this Agreement or the Fund's lack of good faith, or its
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actions, or lack thereof, involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of
the Fund hereunder;
(v) the taping or other form of recording of telephone
conversations or other forms of electronic communications with investors and
shareholders, or reliance by Chase on telephone or other electronic instructions
of any person acting on behalf of a shareholder or shareholder account for which
telephone or other electronic services have been authorized:
(vi) the reliance on or the carrying out by Chase or its
officers or agents of any proper instructions reasonably believed to be duly
authorized, or requests of the Fund or recognition by Chase of any share
certificates which are reasonably believed to bear the proper signatures of the
officers of the Fund and the proper countersignature of any transfer agent or
registrar of the Fund;
(vii) any delays, inaccuracies, errors in or omissions from
information or data provided to Chase by data services, corporate action
services, pricing services or securities brokers and dealers;
(viii) the offer or sale of shares by the Fund in violation of
any requirement under the Federal securities laws or regulations or the
securities laws or regulations of any state, or in violation of any stop order
or other determination or ruling by any Federal agency or any state agency with
respect to
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the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement;
(ix) any failure of the Fund's registration statement to
comply with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus;
(x) the actions taken by the Fund, its investment adviser, and
its distributor in compliance with applicable securities, tax, commodities and
other laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by
third parties to whom Chase or the Fund has assigned any rights and/or delegated
any duties under this Agreement at the request of or as required by the Fund,
its investment advisers, distributor, administrator or sponsor.
(c) In performing its services hereunder, Chase shall be
entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Fund and its
custodians, officers and directors, investors, agents and other since providers
which Chase reasonably believes to be genuine, valid and authorized, and shall
be indemnified by
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the Fund for any loss or expense caused by such reliance. Chase shall also be
entitled to consult with and rely on the advice and opinions of outside legal
counsel retained by the Fund, as necessary or appropriate.
7. TERM. This Agreement shall become effective on the date first
hereinabove written and may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall continue in effect
unless terminated by either party on 180 days' prior written notice. Upon
termination of this Agreement, the Fund shall pay to Chase such compensation and
any out-of-pocket or other reimbursable expenses which may become due or payable
under the terms hereof as of the date of termination or after the date that the
provision of services ceases, whichever is later.
8. NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be deemed effective on the date of personal delivery (by
private messenger, courier service or otherwise) or upon confirmed receipt of
telex or facsimile, whichever occurs first or upon receipt if by mail to the
parties at the following address (or such other address as a party may specify
by notice to the other):
If to the Fund:
Cohen & Steers Special Equity Fund, Inc.
757 Third Avenue
New York, New York 10017
Attention:
Fax: 212-832-3622
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If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl Hartmann, General Counsel
Fax: 617-557-8616
9. WAIVER. The failure of a party to insist upon strict adherence to
any tenn of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be writing
signed by the waiving party.
10. FORCE MAJEURE. Chase shall not be responsible or liable for any
harm, loss of damage suffered by the Fund, its investors, or other third parties
or for any failure or delay in performance of Chase's obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond Chase's control. In the event of a force majeure, any resulting harm,
loss, damage, failure or delay by Chase will not give the Fund the right to
terminate this Agreement.
11. AMENDMENTS. This Agreement may be modified or amended from
time to time by mutual written agreement between the parties. No provision of
this Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
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11. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
COHEN & STEERS SPECIAL
EQUITY FUND, INC.
By: _________________________
Name: _______________________
Title: ______________________
CHASE GLOBAL FUNDS
SERVICES COMPANY
By: _________________________
Name: _______________________
Title: ______________________
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Fund Administration and Accounting Fees
A. For the services rendered under this Agreement, the Fund shall pay to
the Administrator an annual fee based on the following schedule:
8 basis points of 1% on the first $500 million in total
assets, plus
5 basis points of 1% on the next $500 million in total
assets, plus
3 basis points of 1% of the total assets in excess of
$1 billion
There will be a $120,000 minimum per year, which will be waived for the
first three months of operation.
B. The foregoing calculation is based on the average daily net assets of
the Fund. The fees will be computed, billed and payable monthly.
C. Out-of-pocket expenses, including but not limited to those in Section
5(d), will be computed, billed and payable monthly.
A-1
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND ADMINISTRATION SERVICES
I. Financial and Tax Reporting
A. Prepare management reports and Board of Directors [Trustees]
materials, such as unaudited financial statements and
summaries of dividends and distributions.
B. Report Fund performance to outside services as directed
by Fund management.
C. Calculate dividend and capital gain distributions in
accordance with distribution policies detailed in the
Fund's prospectus(es). Assist Fund management in
making final determinations of distribution amounts.
D. Estimate and recommend year-end dividend and capital gain
distributions necessary to establish Fund's status as a
regulated investment company ("RIC") under Section 4982 of the
Internal Revenue Code of 1986, as amended (the "Code")
regarding minimum distribution requirements.
E. Working with the Fund's public accountants or other
professionals, prepare and file Fund's Federal tax
return on Form 1120-RIC along with all state and local
tax returns where applicable. Prepare and file Federal
Excise Tax Return (Form 8613).
F. Prepare and file Fund's Form N-SAR with the SEC.
G. Prepare and coordinate printing of Fund's Semiannual
and Annual Reports to Shareholders.
H. In conjunction with transfer agent, notify shareholders as to
what portion, if any, of the distributions made by the Funds
during the prior fiscal year were exempt- interest dividends
under Section 852 (b)(5)(A) of the Code.
I. Provide Form 1099-MISC to persons other than
corporations (i.e., Trustees [Directors]) to whom the
Fund paid more than $600 during the year.
B-1
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J. Prepare and file California State Expense Limitation Report,
if applicable.
K. Provide financial information for Fund proxies and
prospectuses (Expense Table).
II. Portfolio Compliance
A. Assist with monitoring each Investment Fund's compliance with
investment restrictions (e.g., issuer or industry
diversification, etc.) listed in the current prospectus(es)
and Statement(s) of Additional Information, although primary
responsibility for such compliance shall remain with the
Fund's investment adviser or investment manager.
B. Assist with monitoring each Investment Fund's compliance with
the requirements of Section 851 of the Code for qualification
as a RIC (i.e., 90% Income, 30% Income - Short Three,
Diversification Tests), although primary responsibility for
such compliance shall remain with the Fund's investment
adviser or investment manager.
C. Assist with monitoring investment manager's compliance with
Board directives such as "Approved Issuers Listings for
Repurchase Agreements", Rule 17a-7, and Rule 12d-3 procedures,
although primary responsibility for such compliance shall
remain with the Fund's investment adviser or investment
manager.
D. Mail quarterly requests for "Securities Transaction Reports"
to the Fund's Directors [Trustees] and Officers and "access
persons" under the terms of the Fund's Code of Ethics and SEC
regulations.
III. Regulatory Affairs and Corporate Governance
A. Prepare and file post-effective amendments to the Fund's
registration statement and supplements as needed.
B. Prepare and file proxy materials and administer shareholder
meetings.
C. Prepare and file all state registrations of the Fund's
securities including annual renewals; registering new funds,
portfolios, or classes; preparing and filing sales reports;
filing copies of the registration statement, prospectus and
statement of additional
B-2
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information; and increasing registered amounts of securities
in individual states.
D. Prepare Board materials for Board meetings.
E. Assist with the review and monitoring of fidelity bond
and errors and omissions insurance coverage and the
submission of any related regulatory filings.
F. Prepare and update documents such as charter document,
by-laws, and foreign qualification filings.
G. Provide support with respect to routine regulatory
examinations or investigations of the Fund.
H. File copies of financial reports to shareholders with
the SEC under Rule 30b2-1.
IV. General Administration
A. Furnish officers of the Fund, subject to reasonable
Board approval.
B. Prepare fund, portfolio or class expense projections,
establish accruals and review on a periodic basis, including
expenses based on a percentage of average daily net assets
(advisory and administrative fees) and expenses based on
actual charges annualized and accrued daily (audit fees,
registration fees, directors' fees, etc.).
C. For new funds, portfolios and classes, obtain Employer
or Taxpayer Identification Number and CUSIP numbers, as
necessary. Estimate organizational costs and expenses
and monitor against actual disbursements.
D. Coordinate all communications and data collection with regard
to any regulatory examinations and yearly audits by
independent accountants.
B-3
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF FUND ACCOUNTING SERVICES
I. General Description
Chase shall provide, the following accounting services to the Fund:
A. Maintenance of the books and records for the Fund's
assets, including records of all securities transactions.
B. Calculation of each funds', portfolios' or classes' Net Asset
Value in accordance with the Prospectus, and after the fund,
portfolio or class meets eligibility requirements,
transmission to NASDAQ and to such other entities as directed
by the Fund.
C. Accounting for dividends and interest received and
distributions made by the Fund.
D. Coordinate with the Fund's independent auditors with respect
to the annual audit, and as otherwise requested by the Fund.
E. As mutually agreed upon, Chase will provide domestic and/or
international reports.
C-1
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE D
DESCRIPTION OF TRANSFER AGENCY SERVICES
The following is a general description of the transfer agency services
Chase shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each
Fund shareholder the following: (i) name, address, appropriate
tax certification and tax identifying number; (ii) number of
shares of each fund, portfolio or class; (iii) historical
information including, but not limited to, dividends paid,
date and price of all transactions including individual
purchases and redemptions, based upon appropriate supporting
documents; and (iv) any dividend reinvestment order,
application, specific address, payment and processing
instructions and correspondence relating to the current
maintenance of the account.
B. Shareholder Issuance. Record the issuance of shares of each
fund, portfolio or class. Except as specifically agreed in
writing between Chase and the Fund, Chase shall have no
obligation when countersigning and issuing and/or crediting
shares to take cognizance of any other laws relating to the
issue and sale of such shares except insofar as policies and
procedures of the Stock Transfer Association recognize such
laws.
C. Transfer, Purchase and Redemption Orders. Process all orders
for the transfer, purchase and redemption of shares of the
Fund in accordance with the Fund's current prospectus and
customary transfer agency policies and procedures, including
electronic transmissions which the Fund acknowledges it has
authorized, or in accordance with any instructions of the Fund
or its agents which Chase reasonably believes to be
authorized.
D. Shareholder Communications. Transmit all communications by the
Fund to its shareholders promptly following the delivery by
the Fund of the material to be transmitted by mail, telephone,
courier service or electronically.
E. Proxy Materials. Assist with the mailing or transmission of
proxy materials, tabulating votes, and
D-1
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compiling and certifying voting results. Services may include
the provision of inspectors of election at any meeting of
shareholders.
F. Share Certificates. If permitted by Fund policies, and if a
shareholder of the Fund requests a certificate representing
shares, Chase as Transfer Agent, will countersign and mail a
share certificate to the investor at his/her address as it
appears on the Fund's shareholder records.
G. Returned Checks. In the event that any check or other
negotiable instrument for the payment of shares is returned
unpaid for any reason, Chase will take such steps, as Chase
may, in its discretion, deem appropriate and notify the Fund
of such action. However, the Fund remains ultimately liable
for any returned checks or negotiable instruments of its
shareholders.
H. Shareholder Correspondence. Acknowledge all correspondence
from shareholders relating to their share accounts and
undertake such other shareholder correspondence as may from
time to time be mutually agreed upon.
I. Tax Reporting. Chase shall issue appropriate shareholder tax
forms as required.
J. Dividend Disbursing. Chase will prepare and mail checks, place
wire transfers or credit income and capital gain payments to
shareholders. The Fund will advise Chase of the declaration of
any dividend or distribution and the record and payable date
thereof at least five (5) days prior to the record date. Chase
will, on or before the payment date of any such dividend or
distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of such dividend or
distribution payable in cash, and on or before the payment
date of such distribution, the Fund will instruct its
Custodian to make available to Chase sufficient funds for the
cash amount to be paid out. If a shareholder is entitled to
receive additional shares by virtue of any such distribution
or dividend, appropriate credits will be made to each
shareholder's account.
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K. Escheatment. Chase shall provide escheatment services only
with respect to the escheatment laws of the Commonwealth of
Massachusetts, including those which relate to reciprocal
agreements with other states.
L. Telephone Services. Chase will provide staff coverage,
training and supervision in connection with the Fund's
telephone line for shareholder inquiries, and will respond to
inquiries concerning shareholder records, transactions
processed by Chase, procedures to effect the shareholder
records and inquiries of a general nature relative to
shareholder services. All other telephone calls will be
referred to the Fund, as appropriate.
M. Fulfillment Services. As directed by the Fund, the Fund
Adviser or the Distributor, or upon the request of prospective
shareholders either by telephone or in writing, Chase will
mail reasonable quantities of prospectuses, applications to
purchase shares, and other information normally sent to
prospective shareholders.
D-3
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April 7, 1997
Cohen & Steers Special Equity Fund, Inc.
757 Third Avenue
New York, New York 10017
Ladies and Gentlemen:
We have acted as counsel to Cohen & Steers Special Equity Fund, Inc., a
Maryland corporation ("CSSEF"), in connection with the preparation and filing of
its Registration Statement on Form N-1A (the "Registration Statement") covering
shares of common stock, $.001 par value per share, of CSSEF.
We have examined copies of the Articles of Incorporation and By-Laws of
CSSEF, the Registration Statement, and such other records, proceedings and
documents as we have deemed necessary for the purpose of this opinion. We have
also examined such other documents, papers, statutes and authorities as we
deemed necessary to form a basis for the opinion hereinafter expressed. In our
examination of such material, we have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to us.
Based upon the foregoing, we are of the opinion that the shares of
common stock, $.001 par value per share, of CSSEF to be issued in accordance
with the terms of the offering, as set forth in the Registration Statement, when
so issued and paid for will constitute validly authorized and legally issued
shares of common stock, fully paid and non-assessable by CSSEF.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm as set forth under the
caption "Legal Counsel" in the above-referenced Registration Statement. In
giving such consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Very truly yours,
/s/ Dechert Price & Rhoads
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Pre-Effective Amendment No. 1 to the
Registration Statement of Cohen & Steers Special Equity Fund, Inc. on Form N-IA
(File No. 333-21993) of our report dated April 4, 1997, on our audit of the
statement of assets and liabilities of Cohen & Steers Special Equity Fund, Inc.
as of April 1, 1997, which report is included in this Pre-Effective Amendment to
the Registration Statement.
We also consent to the reference to our firm under the caption 'Accountants' in
the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
New York, New York
April 7, 1997
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert H. Steers and Martin Cohen, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him in his name, place, and stead, to sign any and all
registration statements applicable to Cohen & Steers Special Equity Fund, Inc.
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
April 1, 1997 /s/ Willard H. Smith Jr.
------------------------
Willard H. Smith Jr.
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert H. Steers and Martin Cohen, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him in his name, place, and stead, to sign any and all
registration statements applicable to Cohen & Steers Special Equity Fund, Inc.
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
April 1, 1997 /s/ Gregory C. Clark
--------------------
Gregory C. Clark
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert H. Steers and Martin Cohen, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him in his name, place, and stead, to sign any and all
registration statements applicable to Cohen & Steers Special Equity Fund, Inc.
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
April 1, 1997 /s/ Jeffrey H. Lynford
----------------------
Jeffrey H. Lynford
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Robert H. Steers and Martin Cohen, and each of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for him in his name, place, and stead, to sign any and all
registration statements applicable to Cohen & Steers Special Equity Fund, Inc.
and any amendments or supplements thereto, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
April 1, 1997 /s/ George Grossman
-------------------
George Grossman
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