<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 25, 2000
FILE NOS. 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. [ ]
POST-EFFECTIVE AMENDMENT NO. 5 [x]
AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 5 [x]
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
757 THIRD AVENUE, NEW YORK, NY 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 832-3232
<TABLE>
<S> <C>
ROBERT H. STEERS
COHEN & STEERS SPECIAL EQUITY FUND, INC. COPY TO:
757 THIRD AVENUE, SARAH E. COGAN, ESQ.
NEW YORK, NY 10017 SIMPSON THACHER & BARTLETT
(NAME AND ADDRESS OF AGENT OF SERVICE OF 425 LEXINGTON AVE.
PROCESS) NEW YORK, NY 10017
</TABLE>
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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)
[x] ON MAY 1, 2000 PURSUANT TO PARAGRAPH (b)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1)
[ ] ON [DATE] PURSUANT TO PARAGRAPH (a)(1)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2)
[ ] ON [DATE] PURSUANT TO PARAGRAPH (a)(2) OF RULE 485
________________________________________________________________________________
<PAGE>
[Logo]
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
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A NO-LOAD MUTUAL FUND
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PROSPECTUS
Investment Adviser
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
Telephone: (212) 832-3233
Transfer Agent
Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208-2798
Telephone: (800) 437-9912
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THE FUND'S SHARES OR DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANYONE WHO INDICATES OTHERWISE IS
COMMITTING A CRIME.
MAY 1, 2000
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<PAGE>
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TABLE OF CONTENTS
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PAGE
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RISK/RETURN SUMMARY......................................... 1
Investment Objective and Principal Investment
Strategies........................................... 1
Who Should Invest....................................... 1
Principal Risks......................................... 1
Historical Fund Performance............................. 2
FEES AND EXPENSES OF THE FUND............................... 3
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND
RELATED RISKS............................................. 4
Objective............................................... 4
Principal Investment Strategies......................... 4
Principal Risks of Investing in the Fund................ 6
MANAGEMENT OF THE FUND...................................... 7
The Investment Adviser.................................. 7
Portfolio Managers...................................... 8
HOW TO PURCHASE AND SELL FUND SHARES........................ 8
Pricing of Fund Shares.................................. 8
Purchase Minimums....................................... 9
Form of Payment......................................... 9
Purchases of Fund Shares................................ 9
Exchange Privilege...................................... 10
How to Sell Fund Shares................................. 11
ADDITIONAL INFORMATION...................................... 12
Dividends and Distributions............................. 12
Tax Considerations...................................... 12
FINANCIAL HIGHLIGHTS........................................ 13
</TABLE>
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
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RISK/RETURN SUMMARY
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INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES
The investment objective of Cohen & Steers Special Equity Fund, Inc. (the
'Fund') is maximum capital appreciation over the long-term through investment
primarily in real estate oriented companies. Investments are selected for
long-term capital appreciation; current income is incidental to the Fund's
investment objective. The Fund may change its investment objective without
shareholder approval, although it has no current intention to do so.
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 securities of companies engaged
in any business.
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WHO SHOULD INVEST
Cohen & Steers Special Equity Fund, Inc. may be suitable for you if you are
willing to hold your 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.'
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PRINCIPAL RISKS
Investment Risk. An investment in the Fund is subject to investment risk,
including the possible loss of the entire principal amount that you invest.
Stock Market Risk. Your investment in Fund shares represents an indirect
investment in the REIT shares and other real estate securities owned by the
Fund. The value of these equity securities, like other stock market investments,
may move up or down, sometimes rapidly and unpredictably. Your Fund shares at
any point in time may be worth less than what you invested, even after taking
into account the reinvestment of Fund dividends and distributions.
Real Estate Markets and REIT Risk. Since the Fund concentrates its assets in the
real estate industry, your investment in the Fund will be closely linked to the
performance of the real estate markets. Property values may fall due to
increasing vacancies or declining rents resulting from unanticipated economic,
legal, cultural or technological developments. REIT prices also may drop because
of the failure of borrowers to pay their loans and poor management.
Smaller Companies. The Fund may invest significantly in small and medium-sized
companies, which are more volatile than, and will perform differently from,
larger company stocks. There may be less trading in a smaller company's stock,
which means that buy and sell transactions in that stock could have a larger
impact on the stock's price than is the case with larger company stocks.
Further, smaller companies may have fewer business lines; changes in any one
line of business, therefore, may have a greater impact on a smaller company's
stock price than is the case for a larger company.
As of March 31, 2000, the market capitalization of REITs ranged in size from
approximately $5 million to $6.3 billion.
Non-Diversification. As a 'non-diversified' investment company, the Fund can
invest in fewer individual companies than a diversified investment company.
Because a non-diversified
1
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portfolio is more likely to experience large market price fluctuations, the Fund
may be subject to a greater risk of loss than a fund that has no diversified
portfolio.
Your investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
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HISTORICAL FUND PERFORMANCE
You should review the following information regarding the past performance of
the Fund. It shows how the Fund's investment return can change from year to year
and how the Fund's returns can vary from the performance of selected broad
market indices over various time periods. This information is intended to give
you some indication of the risk associated with an investment in the Fund. Past
performance is not, however, an indication as to how the Fund may perform in the
future.
THIS CHART SHOWS THE FUND'S TOTAL RETURN FOR EACH YEAR SINCE THE FUND COMMENCED
OPERATIONS.
COHEN & STEERS SPECIAL EQUITY FUND, INC.
ANNUAL TOTAL RETURNS
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<S> <C>
1997 41.68%
1998 -33.83%
1999 28.76%
</TABLE>
<TABLE>
<S> <C>
HIGHEST QUARTERLY RETURN DURING THIS PERIOD: 29.30%
LOWEST QUARTERLY RETURN DURING THIS PERIOD: -24.69%
</TABLE>
THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PAST YEAR AND
THE PERIOD SINCE THE FUND COMMENCED OPERATIONS, AND COMPARES THESE RETURNS WITH
THE PERFORMANCE OF THREE INDICES.
AVERAGE ANNUAL TOTAL RETURNS
(for periods ended December 31, 1999)
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION**
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<S> <C> <C>
Cohen & Steers Special Equity Fund.......................... 28.76% 7.37%
NAREIT Equity REIT Index*................................... -4.62% -1.06%
Wilshire Real Estate Securities Index*...................... -3.17% -1.54%'D'
----- -----
S&P 500'r'*................................................. 21.04% 26.49%
</TABLE>
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* The NAREIT Index of Equity REITs is comprised of 165 real estate investment
trusts. The Wilshire Real Estate Securities Index is comprised of 119
companies operating in the real estate industry and includes REITs. This
Index does not include REITs with investments in health care facilities. The
Fund invests in REITs with health care facilities. The Standard & Poor's 500
Composite Stock Index ('S&P 500') is an unmanaged index of 500 large
capitalization, publicly traded stocks representing a variety of industries.
Performance figures include reinvestment of income dividends and capital
gains distributions. You should note that the Fund is a professionally
managed mutual fund while the indices are unmanaged, do not incur expenses
and are not available for investment.
'D' The NAREIT Equity REIT Index (prior to January 4, 1999) and the Wilshire
Real Estate Securities Index are published monthly. Returns are calculated
from April 30, 1997, the date nearest the Fund's inception for which
comparable performance data exists.
** The inception date was May 8, 1997.
2
<PAGE>
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FEES AND EXPENSES OF THE FUND
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU COULD PAY IF YOU BUY AND
HOLD SHARES OF THE FUND.
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<S> <C>
SHAREHOLDER FEES (fees paid directly from your
investment):
Sales load imposed on purchases....................... None
Sales load imposed on reinvestment of dividends....... None
Deferred sales load................................... None
Redemption charge (as a percentage of redemption 2.0% during
proceeds)........................................... the first
year;
0% thereafter
ANNUAL FUND OPERATING EXPENSES* (expenses that are
deducted from Fund assets):
Management Fee........................................ 0.90%
Other Operating Expenses.............................. 1.31%
----
Total Annual Fund Operating Expenses.................. 2.21%
----
----
</TABLE>
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* The investment adviser has directed certain portfolio transactions to brokers
who paid a portion of the Fund's expenses. For the years ended December 31,
1999, the Fund's expenses were reduced by $106,216 under these arrangements.
Although the Fund did not pay these expenses directly, this amount has been
added to the Fund's 'Other Operating Expenses' in accordance with disclosure
regulations. Had these costs not been reflected in the table, the Fund's
'Total Annual Fund Operating Expenses' would have been 1.96%. The management
of the Fund believes these arrangements benefit the Fund and the Fund's
shareholders and intends to continue such arrangements in the current year.
EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE FUND
WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE ASSUMES THAT YOU
INVEST $10,000 IN THE FUND FOR THE TIME PERIODS INDICATED AND THEN REDEEM ALL OF
YOUR SHARES AT THE END OF THOSE PERIODS. THE EXAMPLE ALSO ASSUMES THAT YOUR
INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S OPERATING EXPENSES
REMAIN THE SAME. ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON
THESE ASSUMPTIONS YOUR COSTS WOULD BE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------ ------- ------- --------
<S> <C> <C> <C>
$224 $691 $1,185 $2,544
</TABLE>
3
<PAGE>
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INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES
AND RELATED RISKS
- --------------------------------------------------------------------------------
OBJECTIVE
The investment objective of Cohen & Steers Special Equity Fund, Inc. is maximum
capital appreciation over the long-term through investment primarily in real
estate oriented companies. The Fund selects investments based upon the potential
for long-term capital appreciation; current income is incidental to the Fund's
investment objective. There can be no assurance that the Fund will achieve its
investment objective.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in the equity securities of a limited number of companies which:
engage in business in the real estate industry or related industries;
own significant real estate assets; and
are believed by the investment adviser to be undervalued.
The Fund may also invest up to 35% of its total assets in equity securities of
domestic or foreign companies engaged in any business.
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PRINCIPAL INVESTMENT STRATEGIES
In making investment decisions on behalf of the Fund, the investment adviser
relies on a fundamental analysis of each company. The investment adviser reviews
each company's potential for success in light of the company's current financial
condition, its industry position, and economic and market conditions. The
investment adviser evaluates a number of factors, including growth potential,
earnings estimates and the quality of management.
The following are the Fund's principal investment strategies. A more detailed
description of the Fund's investment policies and restrictions and more detailed
information about the Fund's investments are contained in the Fund's Statement
of Additional Information ('SAI').
Real Estate Oriented Companies
For purposes of the Fund's investment policies, a real estate oriented company
is one that:
derives at least 50% of its gross revenues or net profits from the ownership,
construction, financing, management, operation, 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; or
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.
The Fund will invest at least 65% of its assets 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
4
<PAGE>
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.
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 invest less than 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).
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 may invest without limit in shares of real estate investment trusts
('REITs'). REITs pool investors' funds for investment primarily in income
producing real estate or real estate related loans or interests. A REIT is not
taxed on income distributed to shareholders if, among other things, it
distributes to its shareholders substantially all of its taxable income (other
than net capital gains) for each taxable year.
Types of REITs. REITs can generally be classified as Equity REITs, Mortgage
REITs and Hybrid REITs. Equity REITs invest the majority of their assets
directly in real property and derive their income primarily from rents. Equity
REITs can also realize capital gains by selling properties that have appreciated
in value. Mortgage REITs invest the majority of their assets in real estate
mortgages and derive their income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity REITs and Mortgage REITs.
Restricted and Illiquid Securities
The Fund will not invest more than 15% of its net assets in illiquid securities.
A security is illiquid if, for legal or market reasons, it cannot be promptly
sold (i.e., within seven days) at a price which approximates its fair value.
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 who
will 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 develop, the Fund might obtain
a less favorable price than prevailed when it decided to sell. The investment
adviser will monitor the liquidity of restricted securities in the Fund's
portfolio under the supervision of the Board of Directors. In reaching liquidity
5
<PAGE>
decisions, the investment adviser will consider, among other things, the
following factors:
the frequency of trades and quotes for the security;
the number of dealers wishing to purchase or sell the security and the number
of other potential purchasers;
dealer undertakings to make a market in the security; and
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 its 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.
Defensive Position
When the Fund's investment adviser believes that market or general economic
conditions justify a temporary defensive position, the Fund may deviate from its
investment objective and invest all or any portion of its assets in high-grade
debt securities without regard to whether the issuer is a real estate company.
When and to the extent the Fund assumes a temporary defensive position, it may
not pursue or achieve its investment objective.
- --------------------------------------------------------------------------------
PRINCIPAL RISKS OF INVESTING IN THE FUND
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.
General Risks of Securities Linked to the
Real Estate Market
The Fund will not invest in real estate directly, but only in securities issued
by real estate companies. However, because of its policy of concentration in the
securities of companies in the real estate industry, the Fund is also subject to
the risks associated with the direct ownership of real estate. These risks
include:
declines in the value of real estate;
risks related to general and local economic conditions;
possible lack of availability of mortgage funds;
overbuilding;
extended vacancies of properties;
increased competition;
increases in property taxes and operating expenses;
changes in zoning laws;
losses due to costs resulting from the clean-up of environmental problems;
liability to third parties for damages resulting from environmental problems;
casualty or condemnation losses;
limitations on rents;
changes in neighborhood values and the appeal of properties to tenants; and
changes in interest rates;
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 a mix of different
industries.
In addition to these risks, Equity REITs may be affected by changes in the value
of the underlying property owned by the trusts, while Mortgage REITs may be
affected by the quality of any credit extended. Further, Equity and Mortgage
REITs are dependent upon management skills and generally may not be diversified.
Equity and Mortgage REITs are also subject to heavy cash flow dependency,
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage
REITs could possibly fail to qualify for tax-free pass-through of income under
the Internal Revenue Code of 1986, as amended ('Code'), or to maintain their
exemptions from registration under the Investment Company Act of 1940, as
amended ('1940 Act'). The above factors may
6
<PAGE>
also adversely affect a borrower's or a lessee's ability to meet its obligations
to the REIT. In the event of a default by a borrower or lessee, the REIT may
experience delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting its investments.
In addition, even the larger REITs in the industry tend to be small to
medium-sized companies in relation to the equity markets as a whole. There may
be less trading in a smaller company's stock, which means that buy and sell
transactions in that stock could have a larger impact on the stock's price than
is the case with larger company stocks. Smaller companies also may have fewer
lines of business so that changes in any one line of business may have a greater
impact on a smaller company's stock price than is the case for a larger company.
Further, smaller company stocks may perform in different cycles than larger
company stocks. Accordingly, REIT shares can be more volatile than -- and at
times will perform differently from -- large company stocks such as those found
in the Dow Jones Industrial Average.
Risks of Investment in Foreign Securities
The Fund may be subject to additional investment risks for foreign securities
that are different in some respects from those incurred by investments in
securities of domestic issuers. Such risks include currency 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 will 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.
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% under normal circumstances.
However, there 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. A higher
turnover rate results in correspondingly greater brokerage commissions and other
transactional expenses which are borne by the Fund. High portfolio turnover may
result in the realization of net short-term capital gains by the Fund which,
when distributed to shareholders, will be taxable as ordinary income. See 'Tax
Considerations.'
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MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
Cohen & Steers Capital Management, Inc., 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 Board of Directors of the
Fund. Cohen & Steers Capital Management, Inc., a registered investment adviser,
was formed in 1986 and is a leading U.S. manager of portfolios dedicated to
investments in 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., which are closed-end investment
companies, and Cohen & Steers Equity Income Fund, Inc., Cohen & Steers
Institutional Realty Shares, Inc., Cohen & Steers
7
<PAGE>
Realty Shares, Inc. and the Fund, which are open-end investment companies. All
of Cohen & Steers' client accounts are invested principally in real estate
securities.
Under its Investment Advisory Agreement with the Fund, the investment 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 investment
adviser performs certain administrative services for the Fund and 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 investment adviser. Under
the Advisory Agreement, the investment adviser pays all employee costs and other
ordinary operating costs of the Fund. Excluded from ordinary operating costs are
interest charges, taxes, brokerage fees, extraordinary legal and accounting fees
and expenses and other extraordinary expenses.
The investment adviser also selects brokers and dealers to execute the Fund's
portfolio transactions. Consistent with the Conduct Rules of the National
Association of Securities Dealers, Inc., and subject to seeking best price and
execution, the investment adviser may consider sales of shares of the Fund as a
factor in the selection of brokers and dealers to execute portfolio transactions
on behalf of the Fund.
For its services under the Advisory Agreement, and for paying the ordinary
operating expenses of the Fund, the Fund pays the investment adviser a monthly
management fee at the annual rate of 0.90% of the average daily net asset value
of the Fund. This fee is higher than that incurred by most other investment
companies.
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PORTFOLIO MANAGERS
The Fund's portfolio managers, who have managed the Fund since its inception,
are:
Martin Cohen -- Mr. Cohen is a Director, President and Treasurer of the Fund.
He is, and has been since their inception, President of Cohen & Steers Capital
Management, Inc., the Fund's investment adviser, and Vice President of Cohen &
Steers Securities, Inc., the Fund's distributor.
Robert H. Steers -- Mr. Steers is a Director, Chairman and Secretary of the
Fund. He is, and has been since their inception, Chairman of Cohen & Steers
Capital Management, Inc., the Fund's investment adviser, and President of
Cohen & Steers Securities, Inc., the Fund's distributor.
Joseph M. Harvey -- Mr. Harvey joined Cohen & Steers in 1992 and currently
serves as Senior Vice President and Director of Investment Research for Cohen
& Steers Capital Management, Inc.
- --------------------------------------------------------------------------------
HOW TO PURCHASE AND SELL FUND SHARES
- --------------------------------------------------------------------------------
PRICING OF FUND SHARES
The price at which you can purchase and redeem the Fund's shares is the net
asset value of the shares next determined after we receive your order in proper
form, less any applicable redemption charge. Proper form means that your request
includes the Fund name and account number, states the amount of the transaction
(in dollars or shares), includes the signatures of all owners exactly as
registered in the account, signature guarantees (if necessary), any supporting
legal documentation that may be required and any outstanding certificates
representing shares to be redeemed. We calculate our net asset value per share
as of the close of trading on the New York Stock Exchange generally 4:00 p.m.
Eastern Time, on each day the
8
<PAGE>
Exchange is open for trading. We determine net asset value per share by adding
the market value of all securities and other assets in the Fund's portfolio,
subtracting the Fund's liabilities, and dividing by the total number of shares
of the Fund then outstanding. Securities for which market prices are unavailable
will be valued at fair value as determined by the Fund's Board of Directors.
- --------------------------------------------------------------------------------
PURCHASE MINIMUMS
You may open an account with the Fund with a minimum investment of $10,000. (We
are authorized to waive these minimums for particular investors.) Additional
investments must be at least $500 or, if as a result of redemption the value of
your account is less than $10,000, the minimum additional investment is the
greater of $500 or the amount necessary to increase the value of your account to
$10,000. We are free to reject any purchase order.
You may invest in the Fund through accounts with certain brokers, in which case
your broker may charge you a transaction fee when you purchase or redeem shares.
Brokers are free to increase or decrease the investment minimums, except that
the minimum for initial investments may not be reduced below $2,000.
- --------------------------------------------------------------------------------
FORM OF PAYMENT
We will accept payment for shares in two forms:
1. A check drawn on any bank or domestic savings institution. Checks must be
payable in U.S. dollars and will be accepted subject to collection at full
face value.
2. A bank wire or Federal Reserve Wire of federal funds.
- --------------------------------------------------------------------------------
PURCHASES OF FUND SHARES
Initial Purchase By Wire
1. Telephone toll free from any continental U.S. state: (800) 437-9912. When you
contact the transfer agent, you will need the following information:
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.
The transfer agent will assign you an account number and a wire reference
control number.
2. Instruct the wiring bank to transmit at least the required minimum amount
(see 'Purchase Minimums' above) 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: (provided by Transfer Agent)
Wire Reference Control #: (provided by Transfer Agent)
9
<PAGE>
3. Complete the Subscription Agreement attached to the end of this Prospectus.
Mail the Subscription Agreement to the transfer agent:
Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Initial Purchase By Mail
1. Complete the Subscription Agreement included at the end of this Prospectus.
2. Mail the Subscription Agreement and a check in at least the required minimum
amount (see 'Purchase Minimums' above), payable to the Fund, to the transfer
agent at the above address.
Additional Purchases By Wire
1. Telephone toll free from any continental U.S. state: (800) 437-9912. When you
contact the transfer agent, you will need the following information:
name of the Fund;
account number;
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.
The transfer agent will assign you a wire reference control number.
2. Instruct the wiring bank to transmit at least the required minimum amount
(see 'Purchase Minimums' above) in federal funds 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: (provided by Transfer Agent)
Wire Reference Control #: (provided by Transfer Agent)
Additional Purchases By Mail
1. Make a check payable to the Fund in at least the required minimum amount (see
'Purchase Minimums' above). Write your Fund account number on the check.
2. Mail the check and the detachable stub from your account statement (or a
letter providing your account number) to the transfer agent at the address set
forth above.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
You may exchange some or all of your Fund shares for shares of the other mutual
funds managed by Cohen & Steers, or for shares of Cohen & Steers Vista Cash
Management Fund, subject to any applicable initial sales charges or redemption
charges. If you acquire shares of other Cohen & Steers funds by purchase (rather
than by exchange of Fund shares), you may exchange those shares for Fund shares,
subject to any applicable contingent deferred sales charges.
An exchange of shares may result in your realizing a taxable gain or loss for
income tax purposes. See 'Tax Considerations.' The exchange privilege is
available to shareholders residing in any state in which the shares being
acquired may be legally sold. Before you exercise the exchange privilege, you
should read the prospectus of the fund whose shares you are acquiring. Your
broker may limit or prohibit your right to use the exchange privilege.
There is no charge for the exchange privilege (although your broker may impose a
transaction fee). We may limit or terminate your exchange privilege if you make
exchanges more than four times a year. We have adopted reasonable procedures
that are designed to ensure that any telephonic exchange instructions are
genuine. Neither the Fund nor its agents will be liable for any loss or expenses
if we act in accordance with these procedures. WE MAY MODIFY OR REVOKE THE
EXCHANGE PRIVILEGE FOR ALL SHAREHOLDERS UPON 60 DAYS PRIOR WRITTEN NOTICE. For
additional information concerning exchanges, or to make an exchange, please call
the transfer agent at (800) 437-9912.
10
<PAGE>
- --------------------------------------------------------------------------------
HOW TO SELL FUND SHARES
You may sell or 'redeem' your shares by telephone or through the transfer agent.
Redemption By Telephone
To redeem shares by telephone, call the Fund's transfer agent at (800) 437-9912.
In order to be honored at that day's price, we must receive any telephone
redemption requests by 4:00 p.m., Eastern Time. If we receive your telephone
redemption request after 4:00 p.m., Eastern Time, your redemption request will
be honored at the next day's price.
If you would like to change your telephone redemption instructions, you must
send the transfer agent written notification signed by all of the account's
registered owners, accompanied by signature guarantee(s), as described below.
We may modify or suspend telephone redemption privileges without notice during
periods of drastic economic or market changes. WE MAY MODIFY OR TERMINATE THE
TELEPHONE REDEMPTION PRIVILEGE AT ANY TIME ON 30 DAYS NOTICE TO SHAREHOLDERS.
Redemption By Mail
You can redeem Fund shares by sending a written request for redemption to the
transfer agent:
Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208-2798
Attn: Cohen & Steers Special Equity Fund, Inc.
A written redemption request must:
state the number of shares or dollar amount to be redeemed;
identify your account number and tax identification number; and
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 the transfer agent together with a redemption request.
Other Redemption Information
Payment of Redemption Proceeds. The Fund will send you the proceeds by check. If
you made the election to receive redemption proceeds by wire on the Subscription
Agreement, the Fund will send you the proceeds by wire to your designated bank
account. When proceeds of a redemption are to be paid to someone other than the
shareholder, either by wire or check, you must send a letter of instruction and
the signature(s) on the letter of instruction must be guaranteed, as described
below, regardless of the amount of the redemption. The transfer agent will
normally mail checks for redemption proceeds within five business days.
Redemptions by wire will normally be sent within two business days. The Fund
will delay the payment of redemption proceeds, however, if your check used to
pay for the shares to be redeemed has not cleared, which may take up to 15 days
or more.
The Fund will pay redemption proceeds in cash, by check or wire, unless the
Board of Directors believes that economic conditions exist which make redeeming
in cash detrimental to the best interests of the Fund. In the event that this
were to occur, all or a portion of your redemption proceeds would consist of
readily marketable portfolio securities of the Fund transferred into your name.
You would then incur brokerage costs in converting the securities to cash.
Signature Guarantee. 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 the Fund's
transfer agent. For redemptions made by corporations, executors, administrators
or guardians, the transfer agent may require additional supporting documents
evidencing the authority of the person making the redemption (including evidence
of appointment or incumbency). For additional information
11
<PAGE>
regarding the specific documentation required, contact the transfer agent at
(800) 437-9912. The transfer agent will not consider your redemption request to
be properly made until it receives all required documents in proper form.
Redemption of Small Accounts. If your Fund account has a value of $2,000 or less
as the result of any voluntary redemption, we may redeem your remaining shares.
We will, however, give you 30 days notice of our intention to do so. During this
30-day notice period, you may make additional investments to increase your
account value to $10,000 (the minimum purchase amount) or more and avoid having
the Fund automatically liquidate your account.
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
The Fund will declare and pay dividends from its investment income
semi-annually. The Fund intends to distribute net realized capital gains, if
any, at least once each year, normally in December. The transfer agent will
automatically reinvest your dividends and distributions in additional shares of
the Fund unless you elected on your Subscription Agreement to have them paid to
you in cash.
- --------------------------------------------------------------------------------
TAX CONSIDERATIONS
The following brief tax discussion assumes you are a U.S. shareholder. In the
SAI we have provided more detailed information regarding the tax consequences of
investing in the Fund.
Dividends paid to you out of the Fund's 'investment company taxable income'
(which includes dividends the Fund receives on REIT shares, interest income, and
net short-term capital gains) will be taxable to you as ordinary income.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, are taxable to you as long-term
capital gains, regardless of how long you have held your Fund shares. A
distribution of an amount in excess of the Fund's earnings is treated as a
non-taxable return of capital that reduces your tax basis in your Fund shares;
any such distributions in excess of your tax basis are treated as gain from a
sale of your shares. The tax treatment of your dividends and distributions will
be the same regardless of whether they were paid to you in cash or reinvested in
additional Fund shares.
A distribution will be treated as paid to you 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 during January of the following
year.
Each year, we will notify you of the tax status of dividends and other
distributions.
If you redeem your Fund shares, or exchange them for shares of another Cohen &
Steers fund, you may realize a capital gain or loss which will be long-term or
short-term, depending on your holding period for the shares.
We may be required to withhold U.S. federal income tax at the rate of 31% of all
taxable distributions payable if you:
fail to provide us with your correct tax payer identification number;
fail to make required certifications; or
have been notified by the IRS that you are subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld may be
credited against your U.S. federal income tax liability.
Fund distributions also may be subject to state and local taxes. You should
consult with your own tax adviser regarding the particular consequences of
investing in the Fund.
12
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since its inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, whose report, along
with the Fund's audited financial statements, are included in the current annual
report, which is available free of charge upon request.
<TABLE>
<CAPTION>
FOR THE YEAR
ENDED FOR PERIOD
DECEMBER 31, MAY 8, 1997'D'
----------------- THROUGH
PER SHARE OPERATING PERFORMANCE 1999 1998 DECEMBER 31, 1997
- ------------------------------- ---- ---- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 20.88 $ 32.25 $ 25.00
Income from investment operations
Net investment income.................................... 0.12 0.53 0.31
Net realized and unrealized gains/losses on
investments............................................. 5.87 (11.39) 9.92
------- ------- --------
Total from investment operations...................... 5.99 (10.86) 10.23
------- ------- --------
Less dividends and distributions to shareholders from:
Net investment income.................................... (0.07) (0.34) (0.27)
Net realized gain on investments......................... -- -- (2.59)
Tax return of capital.................................... (0.04) (0.17) (0.12)
------- ------- --------
Total dividends and distributions to shareholders..... (0.11) (0.51) (2.98)
------- ------- --------
Net asset value, end of period.............................. $ 26.76 $ 20.88 $ 32.25
------- ------- --------
------- ------- --------
- ---------------------------------------------------------------------------------------------------
Total investment return..................................... 28.76% - 33.83% 41.68%(1)
------- ------- --------
------- ------- --------
- ---------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions)........................................... $ 43.0 $ 55.2 $ 135.9
------- ------- --------
------- ------- --------
Ratios of expenses to average daily net assets (before
expense reduction)...................................... 2.21% 1.31% 1.35%(2)
------- ------- --------
------- ------- --------
Ratios of expenses to average daily net assets (net of
expense reduction)...................................... 1.96% 1.28% 1.35%(2)
------- ------- --------
------- ------- --------
Ratios of net investment income to average daily net
assets (before expense reduction)....................... 0.26% 1.68% 1.73%(2)
------- ------- --------
------- ------- --------
Ratios of net investment income to average daily net
assets (net of expense reduction)....................... 0.51% 1.71% 1.73%(2)
------- ------- --------
------- ------- --------
Portfolio turnover rate.................................. 115.43% 112.32% 96.68%
------- ------- --------
------- ------- --------
</TABLE>
- ---------
'D' Commencement of Operations.
(1) Not Annualized.
(2) Annualized.
13
<PAGE>
- -------------------------------------------------------------------------------
COHEN & STEERS SPECIAL EQUITY FUND, INC.
SUBSCRIPTION AGREEMENT
- -------------------------------------------------------------------------------
1 ACCOUNT TYPE (Please print; indicate only one registration type)
[ ] INDIVIDUAL OR JOINT ACCOUNT
<TABLE>
<S> <C> <C>
------------------------------------------------------------ ---------------------------------------------
Name Social Security Number
------------------------------------------------------------
Name of Joint Registrant, if any
(For joint registrations, the account registrants will be joint tenants with the right of survivorship and not
tenants in common unless tenants in common or community property registrations are requested.)
[ ] TRUST [ ] CORPORATION [ ] PARTNERSHIP [ ] OTHER ENTITY
------------------------------------------------------------ ---------------------------------------------
Name of Entity Tax Identification Number
------------------------------------------------------------ ---------------------------------------------
Name of Trust Agreement (if applicable) Date of Trust Agreement (if applicable)
[ ] UNIFORM GIFT TO MINORS, OR [ ] UNIFORM TRANSFER TO MINORS (where allowed by Law)
------------------------------------------------------------ Under the ______________ (state of residence
Name of Adult Custodian (only one permitted) of minor) Uniform Gifts/Transfer to
Minor's Act
------------------------------------------------------------ ---------------------------------------------
Name of Minor (only one permitted) Minor's Social Security Number
- -----------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
------------------------------------------------------------ ----------------------------------------------
Street or P.O. Box ( ) Home Telephone Number
------------------------------------------------------------ ----------------------------------------------
City and State Zip Code ( ) Business Telephone Number
</TABLE>
- --------------------------------------------------------------------------------
3 INVESTMENT INFORMATION
$_________ Amount to invest ($10,000 minimum investment). Do not send cash.
Investment will be paid for by
(please check one):
[ ] Check or draft made payable to 'Cohen & Steers Special Equity
Fund, Inc.'
[ ] Wire through the Federal Reserve System.*______________________________
Wire Reference Control Number
* Call (800) 437-9912 to notify the Fund of investments by wire and to
obtain a Wire Reference Control Number. See the PURCHASE OF FUND SHARES
section of the Prospectus for wire instructions.
- --------------------------------------------------------------------------------
4 EXCHANGE PRIVILEGES
Exchange privileges will be automatically granted unless you check the box
below. Shareholders wishing to exchange into other Cohen & Steers Funds
should consult the EXCHANGE PRIVILEGE section of the Prospectus. (Note: If
shares are being purchased through a dealer, please contact your dealer for
availability of this service.)
[ ] I decline the exchange privilege.
PLEASE CONTINUE APPLICATION ON REVERSE SIDE.
<PAGE>
- --------------------------------------------------------------------------------
5 REDEMPTION PRIVILEGES
Shareholders may select the following redemption privileges by checking
the box(es) below. See HOW TO SELL FUND SHARES section of the Prospectus for
further details. Redemption privileges will be automatically declined for
boxes not checked.
[ ] I authorize the Transfer Agent to redeem shares in my account(s) by
telephone, in accordance with the procedures and conditions set forth
in the Fund's current Prospectus.
[ ] I wish to have redemption proceeds paid by wire (please complete
Section 7).
- --------------------------------------------------------------------------------
6 DISTRIBUTION OPTIONS
Dividends and capital gains may be reinvested or paid by check. If no
options are selected below, both dividends and capital gains will be
reinvested in additional Fund shares.
<TABLE>
<S> <C> <C>
Dividends [ ] Reinvest. [ ] Pay in cash.
Capital Gains [ ] Reinvest. [ ] Pay in cash.
</TABLE>
[ ] I wish to have my distributions paid by wire (please complete
Section 7).
- --------------------------------------------------------------------------------
7 BANK OF RECORD (FOR WIRE INSTRUCTIONS)
PLEASE ATTACH A VOIDED CHECK FROM YOUR BANK ACCOUNT.
<TABLE>
<S> <C>
------------------------------------------------------------------ ---------------------------
Bank Name Bank ABA Number
------------------------------------------------------------------ ---------------------------
Street or P.O. Box Bank Account Number
------------------------------------------------------------------ ---------------------------
City and State Zip Code Account Name
</TABLE>
- --------------------------------------------------------------------------------
8 SIGNATURE AND TAXPAYER CERTIFICATION
By signing this form, the Investor represents and warrants that: (a) the
Investor has the full right, power and authority to invest in the Fund;
and (b) the Investor has received a current prospectus of the Fund and
agrees to be bound by its terms. Persons signing as representatives or
fiduciaries of corporations, partnerships, trusts or other organizations
are required to furnish corporate resolutions or similar documents providing
evidence that they are authorized to effect securities transactions on
behalf of the Investor (alternatively, the secretary or designated
officer of the organization may certify the authority of the persons signing
on the space provided below). In addition, signatures of representatives or
fiduciaries of corporations and other entities must be accompanied by a
signature guarantee by a commercial bank that is a member of the Federal
Deposit Insurance Corporation, a trust company or a member of a national
securities exchange.
PLEASE CHECK ONE:
[ ] U.S. CITIZEN/TAXPAYER
UNDER THE PENALTIES OF PERJURY, THE UNDERSIGNED CERTIFIES THAT: (1) THE
TAXPAYER IDENTIFICATION NUMBER PROVIDED IS CORRECT, AND (2) I/WE ARE NOT
SUBJECT TO BACKUP WITHHOLDING BECAUSE: (A) I/WE ARE EXEMPT FROM BACKUP
WITHHOLDING, OR (B) I/WE HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE
SERVICE ('IRS') THAT I/WE ARE SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF
A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (C) THE IRS HAS NOTIFIED
ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. NOTE: IF YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING
BECAUSE OF UNDER-REPORTING INTEREST OF DIVIDENDS ON YOUR TAX RETURN, YOU
MUST CROSS OUT ITEM 2 ABOVE.
[ ] NON U.S. CITIZEN/TAXPAYER (FORM W-8 ATTACHED)
INDICATE COUNTRY OF RESIDENCE FOR TAX PURPOSES _____________________________
UNDER PENALTY OF PERJURY, I/WE CERTIFY THAT I/WE ARE NOT U.S. CITIZENS AND
I/WE ARE EXEMPT FOREIGN PERSONS AS DEFINED BY THE IRS. THE IRS DOES NOT
REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN THE
CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
I certify that (1) the information provided on this Subscription Agreement
is true, correct and complete, (2) I have read the prospectus for the Fund
and agree to the terms thereof, and (3) I am of legal age or an emancipated
minor.
<TABLE>
<S> <C> <C> <C> <C>
x x
----------------------------------- ------------ ----------------------------------- ------------
Signature (Owner, Trustee, Etc.) Date Signature (Joint Owner, Co-Trustee) Date
</TABLE>
Mail to: Chase Global Funds Services Company, P.O. Box 2798, Boston, MA 02208
<PAGE>
[Logo]
- --------------------------------------------------------------------------------
TO OBTAIN ADDITIONAL INFORMATION ABOUT THE FUND
If you would like additional information about Cohen & Steers Special Equity
Fund, Inc., the following documents are available to you without any charge,
upon request:
Annual/Semi-Annual Reports -- Additional information about the Fund's
investments is available in the Fund's annual and semi-annual report to
shareholders. In these reports, you will find a discussion of the market
conditions and investment strategies that significantly affected the Fund's
performance during its most recent fiscal year.
Statement of Additional Information -- Additional information about the Fund's
structure and operations can be found in the Statement of Additional
Information ('SAI'). The information presented in the SAI is incorporated by
reference into the prospectus and is legally considered to be part of this
prospectus.
To request a free copy of any of the materials described above, or to make any
other inquiries, please contact us:
<TABLE>
<S> <C>
By telephone (800) 437-9912
By mail Cohen & Steers Special Equity Fund, Inc.
c/o Chase Global Fund Services Company
P.O. Box 2798
Boston, Massachusetts 02208-2798
By e-mail [email protected]
On the Internet http://www.cohenandsteers.com
</TABLE>
Our prospectus and SAI may also be available from your broker or financial
investment adviser. Reports and other information about the Fund (including the
Fund's SAI) may also be obtained from the Securities and Exchange Commission
(the 'SEC'):
By going to the SEC's Public Reference Room in Washington, D.C. where you can
review and copy the information. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090.
By accessing the SEC's Internet site at http://www.sec.gov where you can view,
download and print the information.
By electronic request at the following e-mail address: public [email protected],
or by writing to the Public Reference Section of the SEC, Washington, D.C.
20549-0102. Upon payment of a duplicating fee, copies of the information will
be sent to you.
SEC File No. 811-08059
757 THIRD AVENUE, NEW YORK, NEW YORK 10019
<PAGE>
[Logo]
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
(800) 437-9912
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, BUT SHOULD BE READ
IN CONJUNCTION WITH THE PROSPECTUS OF COHEN & STEERS SPECIAL EQUITY FUND, INC.,
DATED THE SAME DATE AS THE STATEMENT OF ADDITIONAL INFORMATION, AS SUPPLEMENTED
FROM TIME TO TIME (THE 'PROSPECTUS').
THIS STATEMENT OF ADDITIONAL INFORMATION IS INCORPORATED BY REFERENCE IN ITS
ENTIRETY INTO THE PROSPECTUS. THE FINANCIAL STATEMENTS AND NOTES CONTAINED IN
THE ANNUAL REPORT AND SEMI-ANNUAL REPORT ARE INCORPORATED BY REFERENCE INTO THIS
STATEMENT OF ADDITIONAL INFORMATION. COPIES OF THE STATEMENT OF ADDITIONAL
INFORMATION, PROSPECTUS, ANNUAL AND SEMI-ANNUAL REPORTS MAY BE OBTAINED FREE OF
CHARGE BY WRITING OR CALLING THE ADDRESS OR PHONE NUMBER SHOWN ABOVE.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investment Objective and Policies........................... 3
Investment Restrictions..................................... 9
Management of the Fund...................................... 11
Compensation of Directors and Certain Officers.............. 12
Investment Advisory and Other Services...................... 13
Portfolio Transactions and Brokerage........................ 15
Organization and Description of Capital Stock............... 16
Determination of Net Asset Value............................ 17
Sale of Fund Shares......................................... 17
Taxation.................................................... 18
Performance Information..................................... 24
Counsel and Independent Accountants......................... 26
Financial Statements........................................ 26
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
Cohen & Steers Special Equity Fund, Inc. (the 'Fund') is an open-end, management
investment company organized as a Maryland corporation on February 14, 1997.
Much of the information contained in this Statement of Additional Information
expands on subjects discussed in the Prospectus. No investment in the shares of
the Fund should be made without first reading the Prospectus.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION REGARDING FUND INVESTMENTS
The following descriptions supplement the descriptions of the principal
investment objectives, strategies and risks as set forth in the Prospectus.
Except as otherwise provided below, the Fund's investment policies are not
fundamental and may be changed by the Board of Directors of the Fund without the
approval of the shareholders; however, the Fund will not change its investment
policies without written notice to shareholders.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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. 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 U.S. government securities. Other
acceptable money market instruments include commercial paper rated by any
nationally recognized rating agency, such as Moody's or S&P, certificates of
deposit, bankers' acceptances issued by domestic banks having total assets in
excess of one billion dollars, and money market
3
<PAGE>
investment companies (limited to a maximum of 5% of total assets).
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.
- --------------------------------------------------------------------------------
FIXED INCOME SECURITIES
The Fund may invest a maximum of 25% of its total 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 Ratings Services, a
division of The McGraw Hill Companies, Inc. ('S&P')), are sometimes referred to
as 'high yield' or 'junk' bonds.
High yield securities may be considered 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. New laws and proposed new laws
may adversely impact the market for high yield securities.
- --------------------------------------------------------------------------------
BORROWING
The Fund may borrow up to 30% of the value of 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
4
<PAGE>
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 the portfolio securities or 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.
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts. A financial 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 on 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.
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 used 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 transactions in financial futures contracts 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.
5
<PAGE>
- --------------------------------------------------------------------------------
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 U.S. 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 owns a call option on the same
security and in the same principal amount as the call option written where the
exercise price of the call option held (a) is equal to or less than the exercise
price of the call option written or (b) is greater than the exercise price of
the call option 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 owns a put option on the same security and
in the same principal amount as the put option written where the exercise price
of the put option held is equal to or greater than the exercise price of the put
option written. 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.
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 for writing a put or call option, which will
increase 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 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.
6
<PAGE>
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 ('forward contracts') and
foreign currency futures contracts ('foreign currency futures'), 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 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 on 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
7
<PAGE>
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. 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. While these contracts are not
presently regulated by the CFTC, the CFTC may 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 enter into exchange-traded foreign currency futures for the
purchase or sale for future delivery of foreign currencies. 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 foreign 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.
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.
- --------------------------------------------------------------------------------
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 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.
8
<PAGE>
- --------------------------------------------------------------------------------
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 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.
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The investment objective and the general investment policies and investment
techniques of the Fund 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 or commodities, 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
9
<PAGE>
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 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.
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 of the
outstanding voting securities' 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.
10
<PAGE>
- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The overall management of the business and affairs of the Fund is vested with
the Board of Directors. The Directors approve all significant agreements between
the Fund and persons or companies furnishing services to it, including the
Fund's agreements with its investment adviser, administrator, custodian and
transfer agent. The management of the Fund's day-to-day operations is delegated
to its officers, the investment adviser and the Fund's administrator, subject
always to the investment objective and policies of the Fund and to the general
supervision of the Directors. As of April 14, 2000, the Directors and officers
as a group beneficially owned, directly or indirectly, less than 1% of the
outstanding shares of the Fund.
The Directors and officers of the Fund and their principal occupations during
the past five years are set forth below. Each Director and officer of the Fund
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
Equity Income Fund, Inc., Cohen & Steers Institutional Realty Shares, Inc. and
Cohen & Steers Realty Shares, Inc., which are open-end investment companies also
sponsored by the investment adviser. An asterisk (*) has been placed next to the
name of each Director who is an 'interested person' of the Fund, as such term is
defined in the 1940 Act, by virtue of such person's affiliation with the Fund or
the Adviser.
<TABLE>
<CAPTION>
POSITION(S)
HELD WITH
NAME, ADDRESS AND AGE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS
--------------------- ---- -----------------------------------------------
<S> <C> <C>
Robert H. Steers* Director, Chairman Chairman of Cohen & Steers Capital Management, Inc., the Fund's investment
757 Third Avenue and Secretary adviser. President of Cohen & Steers Securities, Inc.
New York, New York
Age: 47
Martin Cohen* .................. Director, President of Cohen & Steers Capital Management, Inc., the Fund's
757 Third Avenue President and investment adviser. Vice President of Cohen & Steers Securities, Inc.
New York, New York Treasurer
Age: 51
Gregory C. Clark ............... Director President of Wellspring Management Group.
376 Mountain Laurel Drive
Aspen, Colorado
Age: 53
George Grossman ................ Director Attorney at law.
17 Elm Place
Rye, New York
Age: 46
Jeffrey H. Lynford ............. Director Chairman of Wellsford Group Inc. since 1986 and of Wellsford Residential
610 Fifth Avenue Property Trust from 1992 to May 1997. Mr. Lynford is also a Trustee of
New York, New York Equity Residential Properties Trust and an Emeritus Trustee of the
Age: 52 National Trust for Historic Preservation.
Willard H. Smith Jr. ........... Director Board member of Essex Property Trust, Inc., Highwoods Properties, Inc.,
5208 Renaissance Avenue Realty Income Corporation and Willis Lease Finance Corporation. Managing
San Diego, California director at Merrill Lynch & Co., Equity Capital Markets Division from
Age: 63 1983 to 1995.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
POSITION(S)
HELD WITH
NAME, ADDRESS AND AGE FUND PRINCIPAL OCCUPATION(S) DURING THE PAST 5 YEARS
--------------------- ---- -----------------------------------------------
<S> <C> <C>
Elizabeth O. Reagan ............ Vice President Senior Vice President of Cohen & Steers Capital
757 Third Avenue Management, Inc., the Fund's investment adviser, since
New York, New York 1996 and prior to that Vice President of Cohen &
Age: 37 Steers Capital Management, Inc.
Adam Derechin .................. Vice President and Senior Vice President of Cohen & Steers Capital
757 Third Avenue Assistant Management, Inc., the Fund's investment adviser, since
New York, New York Treasurer 1998 and prior to that Vice President of Cohen &
Age: 35 Steers Capital Management, Inc.
Lawrence B. Stoller ............ Assistant Senior Vice President and General Counsel, Cohen &
757 Third Avenue Secretary Steers Capital Management, Inc., the Fund's investment
New York, New York adviser, since 1999. Prior to that, Associate
Ate: 36 General Counsel, Neuberger Berman Management Inc.
(money manager); Assistant General Counsel, The
Dreyfus Corporation (money manager); and Associate,
Dechert Price & Rhoads (law firm).
</TABLE>
- --------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS
- --------------------------------------------------------------------------------
The following table sets forth information regarding compensation of Directors
by the Fund and by the fund complex of which the Fund is a part for the fiscal
year ended December 31, 1999. Officers of the Fund and Directors who are
interested persons of the Fund do not receive any compensation from the Fund or
any other fund in the fund complex which is a U.S. registered investment
company. 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. In the Column headed 'Total Compensation From Fund
and Fund Complex Paid to Directors,' the compensation paid to each Director
represents five of the six funds that each Director serves in the fund complex
(Cohen & Steers Institutional Realty Shares, Inc. commenced operations in
January of 2000.) The Directors do not receive any pension or retirement
benefits from the fund complex.
<TABLE>
<CAPTION>
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1999
TOTAL
COMPENSATION
AGGREGATE FROM FUND
COMPENSATION AND FUND COMPLEX
NAME OF PERSON, POSITION FROM FUND PAID TO DIRECTORS
------------------------ --------- -----------------
<S> <C> <C>
Gregory C. Clark*, Director................................. $7,500 $37,500
Martin Cohen**, Director and President...................... 0 0
George Grossman*, Director.................................. 7,500 37,500
Jeffrey H. Lynford*, Director............................... 7,000 35,000
Willard H. Smith Jr.*, Director............................. 7,500 37,500
Robert H. Steers**, Director and Chairman................... 0 0
</TABLE>
- ---------
* Member of the Audit Committee.
** 'Interested person,' as defined in the 1940 Act, of the Fund because of the
affiliation with Cohen & Steers Capital Management, Inc., the Fund's
investment adviser.
12
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AND OTHER SERVICES
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
Cohen & Steers Capital Management, Inc. ('Cohen & Steers'), with offices located
at 757 Third Avenue, New York, New York 10017 is the investment adviser to the
Fund.
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 Equity Income Fund, Inc., Cohen & Steers
Institutional Realty Shares, Inc. and Cohen & Steers Realty Shares, Inc., which
are open-end investment companies. Mr. Cohen and Mr. Steers may be deemed
'controlling persons' of the Adviser on the basis of their ownership of the
Adviser's stock.
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 advisory
fee in an amount equal to 1/12th of 0.90% of the average daily value of the net
assets of the Fund (approximately 0.90% on an annual basis). For the fiscal year
ended December 31, 1999, December 31, 1998, and for the period May 8, 1997
(commencement of operations) through December 31, 1997, the Adviser received the
following advisory fees from the Fund:
<TABLE>
<CAPTION>
GROSS ADVISORY NET
FISCAL YEAR ENDED ADVISORY FEE FEE WAIVERS ADVISORY FEES
- ----------------- ------------ ----------- -------------
<S> <C> <C> <C>
December 31, 1999.................................. $ 385,250 $0 $ 385,250
December 31, 1998.................................. $1,035,302 $0 $1,035,302
December 31, 1997.................................. $ 484,023 $0 $ 484,023
</TABLE>
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. 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.
- --------------------------------------------------------------------------------
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
13
<PAGE>
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 SEC 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 0.02% 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 mutual
funds service agreement (the 'Sub-Administration Agreement'). Under the
Sub-Administration Agreement, Chase has assumed responsibility for performing
certain of the foregoing administrative functions, including (i) determining the
Fund's net asset value and preparing these figures for publication; (ii)
maintaining certain of the Fund's books and records that are not maintained by
the Adviser, custodian or transfer agent; (iii) preparing financial information
for the Fund's income tax returns, proxy statements, shareholders reports, and
SEC filings; (iv) 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 0.08% 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.'
For the fiscal year ended December 31, 1999, and December 31, 1998, and for the
period May 8, 1997 (commencement of operations) through December 31, 1997, the
Adviser received administration fees from the Fund in the amounts of $8,561,
$23,033 and $10,756, respectively, and Chase received sub-administration fees
from the Fund in the amounts of $50,674, $143,033 and $56,663, respectively.
14
<PAGE>
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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 One Chase Manhattan Plaza, New York,
New York 10081-1000 has been retained to act as custodian of the Fund's
investments and 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.
- --------------------------------------------------------------------------------
CODE OF ETHICS
The Fund, and the Investment Adviser and Distributor, have adopted codes of
ethics that are designed to ensure that the interests of Fund shareholders come
before the interests of those involved in managing the Fund. The codes of
ethics, among other things, prohibit management personnel from investing in
REITS and real estate securities, prohibit purchases in an initial public
offering and require pre-approval for investments in private placements. The
Fund's Independent Directors are prohibited from purchasing or selling any
security if they knew or reasonably should have known at the time of the
transaction that, within the most recent 15 days, the security is being or has
been considered for purchase or sale by the Fund, or is being purchased or sold
by the Fund.
- --------------------------------------------------------------------------------
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
15
<PAGE>
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 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.
For the fiscal year ended December 31, 1999, and December 31, 1998, and for the
period May 8, 1997 (commencement of operations) through December 31, 1997, the
Fund paid a total of $404,994, $718,040 and $473,887 in brokerage commissions,
respectively. Of such amount, $195,081, $351,447 and $0 in brokerage commissions
was placed with brokers or dealers who provide research and investment
information to the Fund. The Fund's annualized portfolio turnover rate for the
fiscal year ended December 31, 1999 was 115.43%.
- --------------------------------------------------------------------------------
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, $0.001 par value. The
Fund presently has one class of shares. 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.
As of April 14, 2000, there were 1,467,884 shares of the Fund's common stock
outstanding. Also as of that date, the Fund knew of no person who owned 5% or
more of the Fund's shares.
16
<PAGE>
- --------------------------------------------------------------------------------
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.
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.
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
U.S. dollars at the mean of the bid and asked prices of such currencies against
the U.S. 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.
- --------------------------------------------------------------------------------
SALE OF FUND SHARES
- --------------------------------------------------------------------------------
Payment of the price for shares that are sold or '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 and in this Statement
of Additional Information), 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.
17
<PAGE>
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TAXATION
- --------------------------------------------------------------------------------
Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Fund and the purchase, ownership and disposition of Fund shares.
This discussion does not purport to be complete or to deal with all aspects of
federal income taxation that may be relevant to shareholders in light of their
particular circumstances. This discussion is based upon present provisions of
the Internal Revenue Code of 1986, as amended (the 'Code'), the regulations
promulgated thereunder, and judicial and administrative ruling authorities, all
of which are subject to change, which change may be retroactive. Prospective
investors should consult their own tax advisors with regard to the federal tax
consequences of the purchase, ownership, or disposition of Fund shares, as well
as the tax consequences arising under the laws of any state, foreign country, or
other taxing jurisdiction.
- --------------------------------------------------------------------------------
TAXATION OF THE FUND
The Fund intends to qualify annually and to elect to be treated as a regulated
investment company under 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) 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 (c) 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
18
<PAGE>
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. If a portion of the Fund's
income consists 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 to a shareholder as long-term capital gains,
regardless of how long the shareholder has held Fund shares. 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. A distribution of an amount in
excess of the Fund's current and accumulated earnings and profits will be
treated by a shareholder as a return of capital which is applied against and
reduces the shareholder's basis in his or her shares. To the extent that the
amount of any such distribution exceeds the shareholder's basis in his or her
shares, the excess will be treated by the shareholder as gain from a sale or
exchange of the shares.
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 OR EXCHANGE OF FUND SHARES
Upon the sale or other disposition of shares of the Fund, including an exchange
of shares in the Fund for shares of another Cohen & Steers fund, a shareholder
may realize a capital gain or loss which will be long-term or short-term,
depending upon the shareholder's holding period for the shares. A shareholder
who exchanges shares in the Fund for shares of another Cohen & Steers fund will
have a tax basis in the newly-acquired fund shares equal to the amount invested
and will begin a new holding period for federal income tax purposes.
If a shareholder exchanges shares in the Fund for shares in another Cohen &
Steers fund pursuant to a reinvestment right, the sales charge incurred in the
purchase of the Fund shares exchanged may not be added to the tax basis in
determining gain or loss for federal income tax purposes. Instead, the sales
charge for the exchanged Fund shares shall be added to the cost basis for
purposes of determining gain or loss on the disposition of the newly-acquired
fund shares, if such newly-acquired fund shares are not disposed of in a similar
exchange transaction. Any loss realized on a sale or exchange will be disallowed
to the extent the shares disposed of are replaced (including through
reinvestment of dividends) 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.
19
<PAGE>
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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 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; 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 though they were
realized.
20
<PAGE>
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.
Notwithstanding any of the foregoing, the Fund may recognize gain (but not loss)
from a constructive sale of certain 'appreciated financial positions' if the
Fund enters into a short sale, offsetting notional principal contract, futures
or forward contract transaction with respect to the appreciated position or
substantially identical property. Appreciated financial positions subject to
this constructive sale treatment are interests (including options, futures and
forward contracts and short sales) in stock, partnership interests, certain
actively traded trust instruments and certain debt instruments. Constructive
sale treatment does not apply to certain transactions closed prior to the end of
the 30th day after the close of the taxable year, if certain conditions are met.
- --------------------------------------------------------------------------------
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 gains or losses. 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.
- --------------------------------------------------------------------------------
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
21
<PAGE>
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 to invest a substantial portion of the Fund's assets in
REITs which hold residual interest in REMICs.
- --------------------------------------------------------------------------------
PASSIVE FOREIGN INVESTMENT COMPANIES
The Fund may invest in shares of foreign corporations that may be classified
under the Code as passive foreign investment companies ('PFICs'). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of its gross income is
investment-type income. If the Fund receives a so-called 'excess distribution'
with respect to PFIC stock, the Fund itself may be subject to a tax on a portion
of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund will itself be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect to PFIC
shares. Under an election that currently is available in some circumstances, the
Fund would be required to include in its gross income its share of the earnings
of a PFIC on a current basis, regardless of whether distributions were received
from the PFIC in a given year. If this election were made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. In addition, another election would involve marking to market the Fund's
PFIC shares at the end of each taxable year, with the result that unrealized
gains would be treated as though they were realized and reported as ordinary
income. Any marked-to-market losses and any loss from an actual disposition of
PFIC shares would be deductible as ordinary losses to the extent of any net
marked-to-market gains included in income in prior years.
22
<PAGE>
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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 Internal Revenue Service 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 income from the Fund to 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 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
23
<PAGE>
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.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund may quote the Fund's total return, aggregate total
return or yield 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.
24
<PAGE>
- --------------------------------------------------------------------------------
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
<TABLE>
<S> <C> <C>
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.
</TABLE>
The Fund's average annual total return for the year ended December 31, 1999 and
the period from May 8, 1997 (commencement of operations) to December 31, 1999
were 28.76% and 7.37%, respectively.
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS
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
<TABLE>
<S> <C> <C>
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 the 1-, 5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
</TABLE>
- --------------------------------------------------------------------------------
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:
<TABLE>
<S> <C> <C>
a - b
2[( ----- + 1)6 - 1]
cd
</TABLE>
<TABLE>
<S> <C> <C>
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.
</TABLE>
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, In.,
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
25
<PAGE>
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.)
- --------------------------------------------------------------------------------
COUNSEL AND INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
Simpson Thacher & Bartlett serves as counsel to the Fund, and is located at 425
Lexington Avenue, New York, New York 10017-3909.
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036 have been appointed as independent accountants for the Fund.
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Fund's audited financial statements for the year ended December 31, 1999,
including notes thereto, are incorporated by reference in this Statement of
Additional Information from the Fund's Annual Report dated December 31, 1999.
26
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation(1)
(b) By-Laws(1)
(c) The rights of security holders are defined in the Registrant's Articles
of Incorporation (Article FIFTH and Article SEVENTH, Sections (b) and (c)) filed
as Exhibit (a) to this Registration Statement and the Registrant's By-Laws
(Article II and Article VI) filed as Exhibit (b) to this Registration Statement.
(d) Form of Investment Advisory Agreement(1)
(e) Distribution Agreement(2)
(f) Not Applicable
(g) Form of Domestic Custody Agreement(2)
(h) (i) Administration Agreement(1)
(ii) Mutual Funds Service (Sub-Administration) Agreement(2)
(i) Opinion and Consent of Dechert Price & Rhoads(2)
(j) Consent of Independent Certified Public Accountants*
(k) Not Applicable
(l) Investment Representation Letter(3)
(m) Not Applicable
(n) Not Applicable
(p) Code of Ethics
(i) Fund*
(ii) Adviser/Distributor*
(q) Powers of Attorney(2)
- ---------
(1) Filed with initial registration statement on February 19, 1997 and
incorporated by reference herein.
(2) Filed with Pre-Effective Amendment No. 1 dated April 9, 1997 and
incorporated by reference herein.
(3) Filed with Post-Effective Amendment No. 1 dated October 22, 1997 and
incorporated by reference herein.
* Filed herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
ITEM 25. INDEMNIFICATION
It is the Registrant's policy to indemnify its directors, officers,
employees and other agents to the maximum extent permitted by Section 2-418 of
the General Corporation Law of the State of Maryland as set forth in Article
EIGHTH of Registrant's Articles of Incorporation, filed as Exhibit (a), and
Article VIII, Section 1, of the Registrant's By-Laws, filed as Exhibit (b). The
Liability of the Registrant's directors and officers is dealt with in Article
EIGHTH of Registrant's Articles of Incorporation and Article VIII, Section 1
through Section 6, of the Registrant's By-Laws. The liability of Cohen & Steers
Capital Management, Inc., the Registrant's investment adviser (the 'Adviser'),
for any loss suffered by
C-1
<PAGE>
the Registrant or its shareholders is set forth in Section 5 of the Investment
Advisory Agreement, filed as Exhibit (d) to this Registration Statement. The
liability of Cohen & Steers Capital Management, Inc., the Registrant's
administrator, for any loss suffered by the Registrant or its shareholders is
set forth in Section 6 of the Administration Agreement, filed as Exhibit (h)(i)
to this Registration Statement. The liability of Cohen & Steers Securities,
Inc., the Registrant's distributor, for any loss suffered by the Registrant of
its shareholders is set forth in Section 8 of the Distribution Agreement filed
as Exhibit (e) to this Registration Statement.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
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.
The following is a list of the directors and officers of the Adviser. None
of the persons listed below has had other business connections of a substantial
nature during the past two fiscal years.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
Robert H. Steers..................... Chairman, Director
Martin Cohen......................... President, Director
Joseph M. Harvey..................... Senior Vice President & Director of
Research
Steven R. Brown...................... Senior Vice President
Elizabeth O. Reagan.................. Senior Vice President
John J. McCombe...................... Senior Vice President
Adam Derechin........................ Senior Vice President
Lawrence B. Stoller.................. Senior Vice President and General
Counsel
William J. Frischling................ Senior Vice President
James S. Corl........................ Senior Vice President
Sheila J. Stoltz..................... Vice President
Michael J. Kozoriz................... Vice President
Jay J. Chen.......................... Vice President
Terrance R. Ober..................... Vice President
</TABLE>
Cohen & Steers Capital Management, Inc. acts as investment adviser to, in
addition to the Registrant, the following investment companies:
Cohen & Steers Equity Income Fund, Inc.
Cohen & Steers Institutional Realty Shares, Inc.
Cohen & Steers Realty Income Fund, Inc.
Cohen & Steers Realty Shares, Inc.
Cohen & Steers Total Return Realty Fund, Inc.
Frank Russell Investment Management Company -- Real Estate Securities
Fund
Russell Insurance Funds -- Real Estate Securities Fund
American Skandia Trust -- AST Cohen & Steers Realty Portfolio
ITEM 27. 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.
<TABLE>
<CAPTION>
POSITION AND POSITION AND
NAME OFFICES WITH DISTRIBUTOR OFFICES WITH REGISTRANT
---- ------------------------ -----------------------
<S> <C> <C>
Robert H. Steers................ President Chairman, Director and
Secretary
Martin Cohen.................... Vice President President, Director and
Treasurer
Jay J. Chen..................... Assistant Treasurer None
</TABLE>
(c) Not Applicable
C-2
<PAGE>
ITEM 28. 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, as amended
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 29. MANAGEMENT SERVICES
Not Applicable
ITEM 30. UNDERTAKINGS
Not Applicable
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all the requirements for effectiveness of this Registration Statement
under Rule 485(b) under the Securities Act of 1933, as amended and has duly
caused this Post-Effective Amendment No. 5 to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York and the State of New York, on the 25th day of April, 2000.
COHEN & STEERS SPECIAL EQUITY FUND, INC.
By: /s/ MARTIN COHEN
..................................
NAME: MARTIN COHEN
TITLE: PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
By: /s/ MARTIN COHEN President, Treasurer and Director April 25, 2000
......................................
(MARTIN COHEN)
By: /s/ ROBERT H. STEERS Director April 25, 2000
......................................
(ROBERT H. STEERS)
By: * Director April 25, 2000
......................................
(GREGORY C. CLARK)
By: * Director April 25, 2000
......................................
(GEORGE GROSSMAN)
By: * Director April 25, 2000
......................................
(JEFFREY H. LYNFORD)
By: * Director April 25, 2000
......................................
(WILLARD H. SMITH JR.)
By: /s/ ROBERT H. STEERS April 25, 2000
......................................
* ROBERT H. STEERS
AS ATTORNEY-IN-FACT
</TABLE>
C-4
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as..................... 'r'
Characters normally expressed as superscript shall be preceded by......... 'pp'
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 5 to the registration statement on Form N-1A ("Registration
Statement") (File Nos. 333-21993 and 811-08059) of our report dated
February 3, 2000, relating to the financial statements and financial highlights
which appears in the December 31, 1999 Annual Report to shareholders of
Cohen & Steers Special Equity Fund, Inc., which is also incorporated by
reference into the Registration Statement. We also consent to the references
to us under the headings "Financial Highlights" and "Counsel and Independent
Accountants" in such Registration Statement.
PricewaterhouseCoopers LLP
New York, New York
April 24, 2000
<PAGE>
COHEN & STEERS FUNDS
Code of Ethics
Adopted Pursuant to Rule 17j-1
Under the Investment Company Act of 1940
1. Purposes
This Code of Ethics has been adopted by the Board of Directors of each
Cohen & Steers Fund in accordance with Rule 17j-l(c) under the Investment
Company Act of 1940 (the "Act"). Rule 17j-1 generally proscribes fraudulent or
manipulative practices with respect to purchases or sales of securities held or
to be acquired by investment companies. The purpose of this Code of Ethics is to
provide regulations and procedures consistent with the Act and Rule 17j-1
designed to give effect to the general prohibitions set forth in Rule 17j-l(b),
which read as follows:
"(b) Unlawful actions. It shall be unlawful for any affiliated
person of or principal underwriter for a Fund, or any affiliated person
of an investment adviser of or principal underwriter for a Fund, in
connection with the purchase or sale, directly or indirectly, by such
person of a Security Held or to be Acquired by the Fund:
(1) To employ any device, scheme or artifice to
defraud the Fund;
(2) To make any untrue statement of a material fact
to the Fund or omit to state a material fact necessary in
order to make the statements made to the Fund, in light of the
circumstances under which they are made, not misleading;
(3) To engage in any act, practice, or course of
business which operates or would operate as a fraud or deceit
on the Fund; or
(4) To engage in any manipulative practice with
respect to the Fund.
All material changes to this Code also shall be subject to Board
approval. In approving the Code and any material changes, the Directors shall
determine that the Code contains provisions reasonably necessary to prevent
"Access Persons" (as defined below) from engaging in any conduct specified in
Rule 17j-1(b). Prior to approving this Code or any material changes, the
Investment Adviser, on behalf of itself and each Fund, shall provide a
certification that the Fund has adopted procedures reasonably necessary to
prevent Access Persons from violating this Code of Ethics.
2. Application
(a) This Code of Ethics applies to the "Access Persons" of each Fund
(as such term is defined in Section 3).
(b) Each Fund will maintain a list of all its Access Persons and will
provide each
<PAGE>
Access Person with a copy of this Code of Ethics.
3. Definitions
(a) "Fund" means each Cohen & Steers Fund.
(b) "Investment Adviser" means Cohen & Steers Capital Management, Inc.
(c) "Access Person" means any director, officer, or Advisory Person of
the Fund, or of the Investment Adviser.
(d) "Advisory Person" of the Fund or of the Investment Adviser means
(a) any employee of the Fund or of the Investment Adviser (or of any company in
a control relationship to the Fund or Investment Adviser, including any
subsidiary or affiliate of the Investment Adviser), and (b) any other natural
person in a control relationship to the Fund or the Investment Adviser who
obtains information concerning recommendations made to the Fund with regard to
the purchase or sale of Covered Securities by the Fund.
(e) A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and communicated or,
with respect to the person making the recommendation, when the person gives
serious consideration to making a recommendation.
(f) "Beneficial ownership" shall be interpreted in the same manner as
it would be in determining whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, and the rules and regulations
thereunder.
(g) "Control" shall have the same meaning as that set forth in Section
2(a)(9) of the Act.
(h) "Independent Director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19) of the
Act.
(i) "Purchase or Sale of a Covered Security" includes, among other
things, the writing of an option to purchase or sell a Covered Security.
(j) "Covered Security" shall have the meaning set forth in Section
2(a)(36) of the Investment Company Act of 1940, except that it shall not include
direct obligations of the Government of the United States; bankers' acceptances,
bank certificates of deposit, commercial paper, and high-quality short-term debt
instruments, including repurchase agreements; or shares issued by registered
open-end Funds.
4. Exempted Transactions
The prohibitions of Section 5 of this Code shall not apply to:
<PAGE>
(a) Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control (including any account
that is managed on a discretionary basis by a person other than the Access
Person and with respect to which the Access Person does not in fact influence or
control the transactions).
(b) Purchases or sales of securities that are not eligible for purchase
or sale by a Fund.
(c) Purchases or sales that are non-volitional on the part of either
the Access Person or a Fund.
(d) Purchases that are part of an automatic dividend reinvestment plan.
(e) Purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent those rights
were acquired from the issuer, and sales of rights so acquired.
(f) Purchases or sales of securities that receive the prior approval of
the Chairman or the President of a Fund (such approving officer having no
personal interest in the purchases or sales) because they: (i) are only remotely
potentially harmful to a Fund, (ii) would be very unlikely to affect a highly
institutional market, or (iii) clearly are not related economically to the
securities to be purchased, or sold or held by a Fund.
5. Prohibited Purchases and Sales
(a) Unless prior approval is obtained in accordance with Section 4(f)
above, no officer, director or employee of the Fund, and no Advisory Person of
the Fund or of the Investment Adviser, shall purchase or sell, directly or
indirectly, any Covered Security in which he has, or by reason of such
transactions acquires, any direct or indirect beneficial ownership and which the
person knew or reasonably should have known at the time of such purchase or sale
that, within the most recent 15 days:
(1) is being or has been considered for purchase or
sale by a Fund; or
(3) is being purchased or sold by a Fund.
(b) No Access Person shall reveal to any other person (except in the
normal course of his duties on behalf of the Fund or the Investment Adviser) any
information regarding securities transactions by the Fund or the consideration
by the Fund or the Investment Adviser of any securities transactions.
<PAGE>
(c) With the exception of the Independent Directors, no Access Person
shall purchase any Covered Security issued in an initial public offering
("IPO"). No Independent Director shall invest in any shares issued in an IPO if,
at the time of that transaction, the Independent Director knew or, in the
ordinary course of fulfilling his official duties, should have known that,
during the 15-day period immediately preceding or after the date of the
transaction, the Covered Security is or was purchased or sold by the Fund, or is
or was being considered for purchase or sale by the Fund.
(d) With the exception of the Independent Directors, no Access Person
shall purchase any Covered Security issued in a private placement unless the
Chairman or President approves the transaction in advance. In determining
whether or not to grant such approval, the Chairman or President will consider
whether the investment opportunity should be reserved for the Fund and whether
the opportunity is being offered by virtue of the Access Person's position with
the Fund or the Investment Adviser. The Assistant Secretary shall maintain a
written record of decisions to permit these transactions, along with the reasons
supporting the decision. Any Access Person who has been authorized to acquire
securities in a private placement must disclose the investment to the Chairman
or President if the Access Person is involved in any subsequent consideration of
an investment in the issuer, and these investment decisions will be subject to
independent review by the Board of Directors.
No Independent Director shall invest in any shares issued in a
private placement if, at the time of that transaction, the Independent Director
knew or, in the ordinary course of fulfilling his official duties, should have
known that, during the 15-day period immediately preceding or after the date of
the transaction, the Covered Security is or was being purchased or sold by the
Fund, or is or was being considered for purchase or sale by the Fund.
6. Reporting
(a) Every Access Person, except the Independent Directors, shall report
to the Secretary or Assistant Secretary of the Fund (i) a list of all Covered
Securities held, and any account held with a broker, dealer or bank, at the time
the person becomes an Access Person; (ii) each year thereafter, a list of all
Covered Securities and accounts held; and (iii) the information described in
Section 6(c) of this Code with respect to transactions in any Covered Security
in which the Access Person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership in the Covered Security; provided,
however, that an Access Person shall not be required to make a report with
respect to transactions effected in any account over which the Access Person
does not have any direct or indirect influence or control or in any account that
is managed on a discretionary basis by a person other than the Access Person and
with respect to which the Access Person does not in fact influence or control
the transactions. The Secretary or Assistant Secretary of each Fund shall
maintain the reports and other records required by Rule 17j-1 under the Act.
(b) An Independent Director need only report to the Secretary or
Assistant Secretary of the Fund a transaction if the Independent Director, at
the time of that transaction, knew or, in the ordinary course of fulfilling his
official duties, should have known that, during the 15-day
<PAGE>
period immediately preceding or after the date of the transaction, the Covered
Security is or was being purchased or sold by the Fund, or is or was being
considered for purchase or sale by the Fund. An Independent Director need not
provide an initial or annual report of portfolio holdings and accounts.
(c) Every report shall be in writing and shall be delivered not later
than (i) 10 days after the person becomes an Access Person, with respect to the
initial portfolio holdings and accounts report; and (ii) 10 days after the end
of the calendar quarter in which a transaction to which the report relates was
effected. Quarterly reports shall contain the following information:
(1) The date of the transaction, the title, interest rate
and maturity date (if applicable), the number of
shares and the principal amount of each Covered
Security involved;
(2) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(3) The price at which the transaction was effected;
(4) The name of the broker, dealer or bank with or
through whom the transaction was effected;
(5) The name of any broker, dealer or bank with whom an
account was opened during the quarter; and
(6) The date the report is submitted.
(d) Any report may contain a statement that the report shall not be
construed as an admission by the person making the report that he has any direct
or indirect beneficial ownership in the security to which the report relates.
(e) All reports furnished pursuant to this Section shall be reviewed by
the Funds' Assistant Secretary, who shall report to the Chairman and President
all potential violations of the Code of Ethics. These will be kept confidential,
subject to the rights of inspection by the Directors of each Fund and by the
Securities and Exchange Commission.
(f) The Investment Adviser, on behalf each Fund, shall furnish annually
to the Directors a written report (i) describing any issues arising under this
Code of Ethics or the related supervisory procedures, including but not limited
to information about material violations of the Code of Ethics or procedures,
and sanctions imposed in response to the material violations; and (ii)
certifying that the Fund has adopted procedures reasonably necessary to prevent
Access Persons from violating the Code of Ethics.
<PAGE>
7. Sanctions
Upon receiving notice of a violation of this Code, the Directors of the
each Fund may impose such sanctions as they deem appropriate, including, among
other things, a letter of censure or suspension or termination of the employment
of the violator.
Explanatory Notes to Code of Ethics
1. The information on portfolio holdings, and securities transactions,
received and recorded by the Investment Adviser pursuant to the requirements of
Rule 204-2(a)(12) under the Investment Advisers Act of 1940 shall be deemed to
satisfy the reporting requirements imposed on Access Persons of the Investment
Adviser by Section 6 of this Code of Ethics.
2. For purposes of Section 3(c), 3(d) and 5 of this Code of Ethics, all
employees of the Investment Adviser, and its affiliates and subsidiaries, shall
be deemed Advisory Persons of the Fund or of the Investment Adviser.
September 1999
<PAGE>
COHEN & STEERS CAPITAL MANAGEMENT, INC.
CODE OF ETHICS
INTRODUCTION
This Code of Ethics shall apply to all directors, officers and employees of
Cohen & Steers Capital Management, Inc., and of each of its subsidiaries and
affiliates.
FOR PURPOSES OF THIS CODE:
(a) "Access Person" means any director, officer or employee of Cohen & Steers
Capital Management, Inc., and of each of its subsidiaries or affiliates ("Cohen
& Steers").
(b) Purchase or sale of a security includes, among other things, the writing of
any option to purchase or sell a security or any transaction by reason of which
a person acquires or disposes of any direct or indirect ownership in a security.
(c) A security is "being considered for purchase or sale" when a recommendation
to purchase or sell a security has been made and communicated and, with respect
to the person making the recommendation, when a person seriously considers
making such a recommendation.
THIS CODE APPLIES TO ALL TRANSACTIONS (OTHER THAN BONA FIDE CLIENT TRANSACTIONS)
IN ALL ACCOUNTS IN WHICH AN ACCESS PERSON MAY EXERCISE CONTROL OR HAS A
BENEFICIAL INTEREST. UPON DISCOVERING A VIOLATION OF THIS CODE, THE CHAIRMAN OR
PRESIDENT MAY IMPOSE SUCH SANCTIONS AS DEEMED APPROPRIATE, INCLUDING A LETTER OF
CENSURE OR SUSPENSION OR EVEN TERMINATION OF THE EMPLOYMENT OF THE VIOLATOR.
FURTHER, ANY PROFITS REALIZED IN CONNECTION WITH A VIOLATION OF THIS CODE WILL
BE REQUIRED TO BE DISGORGED.
PROHIBITED TRANSACTIONS
The following transactions are prohibited, except as provided for below:
(a) No Access Person shall purchase or sell any security that the Access Person
knew or reasonably should have known is being or has been considered for
purchase or sale for a Client, or is being purchased or sold by a Client.
<PAGE>
(b) No Access Person shall purchase or sell any security issued or guaranteed
by a real estate investment trust or other company engaged in the real estate
business (as defined below), except that an Access Person may invest in shares
of Cohen & Steers Realty Shares, Inc., Cohen & Steers Special Equity Fund, Inc.
and Cohen & Steers Equity Income Fund, Inc. and, with the written prior approval
of the Chairman or President, shares of Cohen & Steers Realty Income Fund, Inc.
and Cohen & Steers Total Return Realty Fund, Inc. (see Attachment A).
(c) No Access Person shall purchase any security issued in an initial public
offering.
(d) No Access Person shall purchase any security issued in a private placement
unless the Chairman or President approves the transaction in advance. In
determining whether or not to grant approval, the Chairman or President will
consider whether the investment opportunity should be reserved for a Client and
whether the opportunity is being offered by virtue of the Access Person's
position with Cohen & Steers. The general counsel shall maintain a written
record of decisions to permit these transactions, along with the reasons
supporting the decision. Any Access Person who has been authorized to acquire
securities in a private placement must disclose the investment to the Chairman
or President if the Access Person is involved in any subsequent consideration of
an investment in the issuer, and these investment decisions will be subject to
independent review by investment personnel with no personal interest in the
issuer.
(e) No Access Person shall execute any securities transaction on a day during
which any Client has a pending buy or sell order in that same security until
that order is executed or withdrawn. Furthermore, no Access Person shall buy or
sell a security within seven calendar days before or after a Client trades in
that security.
(f) No Access Person shall receive any gift of more than de minimis value from
any person or entity that does business with or on behalf of Cohen & Steers, its
affiliates and subsidiaries, or a Client.
(g) No Access Person shall serve on the board of directors of a publicly traded
company, unless approved in advance by the Chairman or President. This
authorization will be provided only if the Chairman or President concludes that
service on the board would be consistent with the interests of Clients. Access
Persons who have received this approval shall not trade for a Client or their
own account in the securities of the company while in possession of material,
non-public information ("Inside Information"). Cohen & Steers' Inside
Information Policy and Procedures provide further details on the obligations of
Access Persons concerning Inside Information.
EXEMPTED TRANSACTIONS
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The prohibitions of this Code shall not apply to:
(a) Purchases or sales effected in any account over which the Access Person has
no direct or indirect influence (including any account that is managed on a
discretionary basis by a person other than the Access Person and with respect to
which the Access Person does not in fact influence or control the transactions).
(b) Purchases or sales that are non-volitional on the part of either the Access
Person or a Client.
(c) Purchases that are part of an automatic dividend reinvestment plan.
(d) Purchases effected upon the exercise of rights issued by an issuer pro rata
to all holders of a class of its securities, to the extent these rights were
acquired from the issuer, and sales of rights so acquired.
(e) Purchases or sales that receive the prior approval of the Chairman or
President of Cohen & Steers (such approving officer having no personal interest
in such purchases or sales) because they: (i) are only remotely potentially
harmful to any Client account, (ii) would be very unlikely to affect a highly
institutional market, or (iii) clearly are not related economically to the
securities to be purchased, or sold or held on behalf of a Client or (iv) are a
result of the sale of securities that were acquired prior to February 1995 (and
such person was an employee of Cohen & Steers Capital Management, Inc. prior to
February 1995) or acquired prior to the time a person became an employee of
Cohen & Steers. The general counsel shall maintain a written record of decisions
to permit these transactions, along with the reasons supporting the decision.
REPORTING
(a) Every Access Person shall report all transactions in any security in which
the Access Person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership in the security; provided, however, that an Access
Person shall not be required to report transactions effected for any account
over which the Access Person does not have any direct or indirect influence or
control.
(b) Every report shall be made not later than 10 days after the end of the
calendar quarter in which the transaction to which the report relates was
effected, and shall contain the following information:
(i) the date of the transaction, the title, interest rate and maturity
date (if applicable), the number of shares, and the principal amount of
the security involved;
(ii) the nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
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(iii) the price at which the transaction was effected;
(iv) the name of the broker, dealer or bank with or through whom the
transaction was effected;
(v) with respect to any account established by the Access Person during
the quarter, the name of the broker, dealer or bank with whom the
Access Person established the account and the date the account was
established; and
(vi) the date the report is submitted.
(c) Any report may contain a statement that the report shall not be construed
as an admission that the person making the report has any direct or indirect
beneficial ownership in the security to which the report relates.
(d) Every Access Person must provide a list of all personal securities holdings
no later than 10 days after commencement of employment ("Initial Holdings
Report") and no later than 30 days after the beginning of each year ("Annual
Holdings Report") thereafter (see Attachment B). Both the Initial Holdings
Report and Annual Holdings Report also shall provide the name of any broker,
dealer or bank with whom the Access Person maintained an account in which any
securities were held for the direct or indirect benefit of the Access Person.
Each Annual Holdings Report must provide information that is current as of a
date no more than 30 days before the report is submitted. Both the Initial
Holdings Report and the Annual Holdings Report shall state the date the report
is submitted by the Access Person.
(e) The Applicant's compliance administrator and general counsel shall be
responsible for reviewing all quarterly securities transaction reports, the
Initial Holdings Report and the Annual Holdings Report, and shall report to the
Chairman and President all potential violations of this Code of Ethics. The
Chairman and President, in consultation with the general counsel, shall
determine the appropriate response to any violation.
(f) All Access Persons must certify on the attached form initially and annually
thereafter that they have read and understand this Code of Ethics and that they
recognize that they are subject to the provisions of this Code. Furthermore, all
Access Persons must certify annually that they have complied with the
requirements of the Code of Ethics and that they have reported all personal
securities transactions and accounts required to be reported pursuant to the
Code.
FUND BOARD APPROVAL AND REPORTING
The Board of Directors of each Cohen & Steers Fund, including a majority of the
Directors who are not "interested persons" (as defined in the Investment Company
Act of
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1940), must approve this Code and any material changes to the Code. This
approval shall be based on a determination that the Code contains provisions
reasonably necessary to prevent Access Persons from engaging in any conduct
prohibited by Rule 17j-1 under the Investment Company Act of 1940. In connection
with this approval, Cohen & Steers shall provide a certification to the Board
that Cohen & Steers has adopted procedures reasonably necessary to prevent
Access Persons from violating the Code.
Cohen & Steers shall furnish annually to the Directors a written report (i)
describing any issues arising under the Code of Ethics and related supervisory
procedures, including but not limited to information about material violations
of the Code or procedures and sanctions imposed in response to the material
violations, and (ii) certifying that Cohen & Steers has adopted procedures that
are reasonably necessary to prevent Access Persons from violating the Code.
ADDITIONAL DEFINITIONS
(a) "Beneficial ownership" shall be interpreted in the same manner as it would
be in determining whether a person is subject to the provisions of Section 16 of
the Securities Exchange Act of 1934, and the rules and regulations thereunder,
except that the determination of direct or indirect beneficial ownership shall
apply to all securities which an Access Person has or acquires.
(b) "Security" shall have the meaning set forth in Section 2(a) (36) of the
Investment Company Act, except that it shall not include direct obligations of
the Government of the United States; bankers' acceptances, bank certificates of
deposit, commercial paper and high-quality short-term debt instruments,
including repurchase agreements; and shares of registered open-end investment
companies.
(c) A company is engaged in the "real estate business" if it derives at least
50% of its revenues from the ownership, construction, financing, management or
sale of commercial, industrial or residential real estate or has at least 50% of
its assets in such real estate. Any questions as to whether a company is engaged
in the real estate business should be referred to the Chairman or President.
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COHEN & STEERS CAPITAL MANAGEMENT, INC.
CERTIFICATION OF PERSONAL SECURITIES TRANSACTIONS
AND COMPLIANCE WITH THE CODE OF ETHICS
I hereby certify that I have received, read and understand the
Cohen & Steers Code of Ethics. Furthermore, I understand that I am
subject to the Code of Ethics and that any failure to follow the Code
could subject me to discipline, including the possible termination of
my employment with Cohen & Steers.
I further certify that, for the preceding calendar year, I
have complied with the requirements of the Code of Ethics in effect
for the year and that I have reported all personal securities
transactions, holdings and accounts required to be reported pursuant
to this Code.
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Name
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Signature
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Date
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ATTACHMENT B
COHEN & STEERS CAPITAL MANAGEMENT INC.
Personal Securities Holdings and Accounts
Name: ___________________________________
As agreed by signing the Code of Ethics, my personal securities holdings are as
follows:
<TABLE>
<CAPTION>
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# OF SHARES/FACE VALUE SECURITY
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<S> <C>
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</TABLE>
In addition, I maintain accounts with the following brokers, dealers or banks:
1. _______________________________________________________
2. _______________________________________________________
3. _______________________________________________________
4. _______________________________________________________
5. _______________________________________________________
<PAGE>
ATTACHMENT B
Attach an additional schedule if necessary.
*Include all transactions which: (a) involve securities (except direct
obligations of the U.S. Government; money market instruments; and mutual funds)
in which you have direct or indirect "beneficial ownership" (beneficial
ownership meaning yourself, your spouse, minor children or relatives of yours or
your spouse sharing your home) and, (b) occurred in accounts over which you have
direct or indirect influence or control.
SIGNATURE
DATE
