<PAGE>
COHEN & STEERS
SPECIAL EQUITY FUND
757 THIRD AVENUE
NEW YORK, NY 10017
[GRAPHIC OMITTED]
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COHEN & STEERS
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SPECIAL EQUITY FUND
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SEMI-ANNUAL REPORT
JUNE 30, 2000
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
July 20, 2000
To Our Shareholders:
We are pleased to submit to you the semi-annual report for Cohen & Steers
Special Equity Fund for the quarter and six months ended June 30, 2000. The net
asset value per share on that date was $23.12. In addition, a semi-annual
dividend of $0.08 per share was declared for shareholders of record on June 22,
2000 and paid on June 23, 2000.
INVESTMENT REVIEW
During the quarter ended June 30, 2000, Cohen & Steers Special Equity Fund
had a total return, based on income and change in net asset value, of -7.6%. The
Fund under-performed both the NAREIT Equity REIT Index*, which had a total
return of 10.5%, and the Standard & Poor's 500 Index, which had a total return
of -2.7%. For the six months ended June 30, 2000 the Fund's total return was
-13.3% versus 13.2% for the NAREIT Equity REIT Index and -0.4% for the S&P 500.
The Fund's performance was disappointing, particularly considering that
REITs had a terrific second quarter -- the best relative to stocks since the
first quarter of 1993. Our holdings in the Real Estate Services sector
negatively impacted performance. These positions are concentrated in companies
that are applying the Internet and related technologies to the real estate
business. Specifically, FrontLine Capital Group, Cypress Communications, and
CAIS Internet were negatively affected by the correction in the technology
sector of the stock market. (In the second quarter the technology-heavy NASDAQ
Composite Index had a total return of -13.2%.)
The Real Estate Services sector was impacted by a pervasive theme in the
NASDAQ market: share prices of companies with new and untested business plans,
particularly those that require additional funding, were penalized. Our largest
position in this sector is FrontLine Capital Group (our #2 holding), whose most
significant asset is HQ Global Workplaces, the largest executive office suites
provider in the U.S. Ironically, this office suites company is both profitable
and self-financing. Therefore, we took advantage of the NASDAQ-induced weakness
and increased our position in FrontLine. In June, the market for these
securities began to stabilize, and the Fund's performance during the month
improved with a 5.5% total return versus the NAREIT Equity REIT Index return
of 2.8%.
The Fund's positions in owners of income properties performed well in the
quarter. In our view, REIT performance was significant enough to declare an end
to the bear market that began in December of 1997. Three primary factors served
to awaken REITs from their slumber, in our opinion. First, the 'break' in the
NASDAQ market, and significant volatility in most equity sectors, incited
investors to look for so-called 'defensive' equities, including REITs.
Accordingly, there was a notable shift in market sentiment toward fundamental
investment characteristics that typify real estate securities today -- asset
value, contractual earnings streams, and low valuation.
More important to REIT performance than the shift in market sentiment,
however, is that real estate fundamentals have improved. The combination of
limited new construction and continued strong economic
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
growth has caused net rental income to accelerate. This strength, in turn, has
caused us to increase our earnings growth estimates for the group to the 9%
range for 2000 -- about two percentage points higher than Wall Street's
expectations at the beginning of this year. Finally, the supply-demand
relationship for REIT shares has improved considerably. Low valuations and
improving market sentiment have spurred demand, while the market capitalization
for real estate securities has contracted -- a result of company share
repurchase plans, selected privatizations, no new equity issuance, and the
industry's adoption of business plans which are 'self-funding' through property
sales.
INVESTMENT OUTLOOK
Our current investment strategy revolves around three key themes: 1) real
estate securities that should outperform in a 'soft-landing' economic scenario;
2) application of technology and the Internet to the real estate industry; and
3) recovery in fundamentals for health care facilities. These themes are
summarized below.
SOFT-LANDING ECONOMIC SCENARIO
The story behind the acceleration in real estate fundamentals is
straightforward: the discipline of the capital markets has attenuated
construction, while at the same time robust U.S. economic growth has
stimulated demand. One yellow flag regarding the prospects for continued
growth is that the Federal Reserve has been tightening monetary policy for
fourteen months. We believe, and the evidence is beginning to show, that the
economy can cool, thereby tempering inflation, without falling into a
recession. If this scenario unfolds, then we could enjoy a period where the
Fed has finished raising interest rates and economic growth stabilizes at a
reasonable level.
After the 1994-95 Fed tightening, the Office, Hotel, Health Care, and
Homebuilding sectors led performance in the subsequent period. We believe
these groups can once again outperform if the soft-landing plays out.
Fundamentals for the Office sector, where we have 29% of the Fund's assets,
have improved more dramatically than any other property sector over the past
six months. Demand for space has substantially exceeded expectations,
attributable to the continued strength in the service sector of our economy
generally, and in the technology sector specifically. In markets where
technology jobs are concentrated and where there are barriers to supply, such
as in Northern California and the Northeast, rents have 'spiked'
significantly higher. Brookfield Properties (our #5 holding), Vornado Realty
and SL Green give the Fund terrific allocations to one of the best of these
markets -- New York City.
The soft-landing scenario should also facilitate the development strategy
at our largest New York City play, Alexander's (our #1 holding), where
progress is being made at its 59th Street mixed-use project. Starwood Hotels
& Resorts (our #4 holding) represents our sole Hotel sector investment, which
reflects our belief that it has the best combination of brands, fundamental
trends and valuation among its peers. We
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
have initiated moderate positions in the Homebuilding sector through Centex
and Kaufman & Broad -- both market leaders, whose valuations overly discount
the fundamental picture, in our view.
Despite the rally in real estate securities, we believe that valuations
are still attractive. Pricing relative to net asset value has improved from
discounts in the 15-20% range earlier this year to discounts of approximately
10% today. In our view, the acceleration in earnings and net asset value
growth justifies this valuation expansion, and leaves room for further
improvement.
REAL ESTATE SERVICES
Through the Real Estate Services sector (18% of the Fund's assets) we are
participating in the opportunity to utilize the Internet and related
technologies to enhance traditional business models for the ownership and
operation of real estate. These investments are concentrated in the office
suite business, where technology is changing the way Corporate America works,
and the provisioning of broadband Internet/telecommunication services for
property owners and tenants. While the telecom holdings face a degree of
uncertainty because their business plans require additional funding, we
believe these businesses are attractive due to their returns on capital, the
growth in broadband, the improving competitive landscape, and the strategic
position of building-centric providers relative to their customers. The
nearly-dormant IPO market has instigated a shakeout among the substantial
number of companies pursuing real estate technology business plans. We will
continue our research to attempt to identify the winners in this sector, and
to take advantage of the volatility in the market for these companies'
shares.
HEALTH CARE SECTOR
While owners of health care facilities, which comprise 19% of the Fund's
assets, continue to face operational and financial difficulties, we are
seeing light at the end of the tunnel for this out-of-favor sector. One
positive trend is that Medicare surpluses and political momentum point to
increases in provider reimbursement. President Clinton has proposed a
ten-year, $21 billion funding increase for hospitals, nursing homes and other
providers. In addition, major private equity investors are mobilizing to
re-capitalize both the nursing home and assisted living sectors (two
significant transactions with public companies were announced in the second
quarter). Finally, the bankruptcy/restructuring process for the operators in
the nursing home sector is well underway. We expect the first major
restructuring to occur later this summer at the nursing home operator Vencor,
the operator of properties owned by the REIT Ventas (our #3 holding).
In addition to the key investment themes reviewed in this Investment
Outlook, stock selection will be an important factor influencing the Fund. Our
top five holdings comprise nearly one-half of the Fund's assets, and each of
their underlying investment themes is uniquely different. However, these large
holdings share a common trait in that their share prices trade at a significant
discount to asset value -- 39% below asset value, in our opinion. In addition,
we believe that each of the top five holdings has fundamental trends or a
company specific
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
catalyst that should serve to surface its underlying value. We believe these
factors will translate to satisfactory investment results for the Fund over
time.
Sincerely,
<TABLE>
<S> <C>
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
JOSEPH M. HARVEY
JOSEPH M. HARVEY
Portfolio Manager
</TABLE>
Cohen & Steers is now online at WWW.COHENANDSTEERS.COM.
Visit our website for daily NAVs, portfolio information,
performance information, recent news articles, literature
and insights on the REIT market.
* The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly-traded REITs that invest predominantly in the equity
ownership of real estate. The index is designed to reflect the performance of
all publicly-traded REITs as a whole.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER VALUE % OF
OF SHARES (NOTE 1) NET ASSETS
--------- ----------- ----------
<S> <C> <C> <C>
EQUITIES
*Alexander's.............................. 62,200 $ 4,556,150 13.78%
*FrontLine Capital Group.................. 169,600 3,614,600 10.93
*Ventas................................... 1,012,400 3,227,025 9.76
Starwood Hotels & Resorts Worldwide...... 81,400 2,650,587 8.02
**Brookfield Properties Corp............... 192,000 2,546,264 7.70
Vornado Realty Trust..................... 47,900 1,664,525 5.04
Crescent Real Estate Equities Co......... 78,200 1,603,100 4.85
SL Green Realty Corp..................... 52,400 1,401,700 4.24
Equity Office Properties Trust Co........ 49,000 1,350,563 4.09
Health Care Property Investors........... 49,100 1,337,975 4.05
Centex Corp.............................. 53,000 1,245,500 3.77
Kaufman & Broad Home Corp................ 57,500 1,139,219 3.45
Mack-Cali Realty Corp.................... 43,200 1,109,700 3.36
Nationwide Health Properties............. 69,300 965,869 2.92
*Allied Riser Communications.............. 63,900 902,586 2.73
*Manor Care............................... 121,900 853,300 2.58
*CAIS Internet........................... 59,000 829,688 2.51
General Growth Properties................ 23,100 733,425 2.22
AvalonBay Communities.................... 17,200 718,100 2.17
*Six Flags................................ 31,300 712,075 2.15
Equity Residential Properties Trust...... 11,700 538,200 1.63
*Cypress Communications................... 53,000 384,250 1.16
*Crescent Operating....................... 261,400 375,763 1.14
----------- ------
TOTAL EQUITIES (Identified
cost -- $39,655,919)............. 34,460,164 104.25
----------- ------
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF
AMOUNT (NOTE 1) NET ASSETS
---------- ----------- ----------
<S> <C> <C> <C>
COMMERCIAL PAPER
Tampa Electric Co., 6.81%, due 7/5/00
(Identified cost -- $1,597,792)...... $1,599,000 $ 1,597,792 4.83%
----------- -------
TOTAL INVESTMENTS (Identified
cost -- $41,253,711)...................... 36,057,956 109.08
LIABILITIES IN EXCESS OF OTHER ASSETS....... (3,001,118) (9.08)
----------- -------
NET ASSETS (Equivalent to $23.12 per share
based on 1,430,083 shares of capital stock
outstanding).............................. $33,056,838 100.00%
----------- -------
----------- -------
</TABLE>
-------------------
* Non-income producing security.
** Brookfield Properties Corp. is a Canadian company listed on the Toronto and
New York Stock Exchanges. The Toronto Stock Exchange is deemed the principal
exchange for valuation purposes. The market value of the Fund's position in
Canadian dollars on June 30, 2000 was $3,772,800 based on an exchange rate of
1 Canadian dollar to 0.6749 U.S. dollars.
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified
cost -- $41,253,711) (Note 1)........................ $ 36,057,956
Cash.................................................... 400
Receivable for investment securities sold............... 622,015
Dividends receivable.................................... 88,693
Unamortized organization costs and other assets
(Note 1)............................................. 41,712
Receivable for fund shares sold......................... 842
------------
Total Assets....................................... 36,811,618
------------
LIABILITIES:
Payable for outstanding borrowings (Note 6)............. 3,000,000
Payable for investment securities purchased............. 538,902
Payable for fund shares redeemed........................ 68,939
Payable to investment adviser........................... 24,083
Payable to administrator................................ 19,417
Other liabilities....................................... 103,439
------------
Total Liabilities.................................. 3,754,780
------------
NET ASSETS applicable to 1,430,083 shares of $0.001 par
value common stock outstanding (Note 4)................. $ 33,056,838
------------
------------
NET ASSET VALUE PER SHARE:
($33,056,838 [div] 1,430,083 shares outstanding)........ $ 23.12
------------
------------
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)......................... $ 65,452,952
Distributions in excess of net investment income........ (3,651)
Accumulated net realized loss on investments............ (27,196,708)
Net unrealized depreciation on investments.............. (5,195,755)
------------
$ 33,056,838
------------
------------
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income (Note 1):
Dividend income (net of $3,507 of foreign withholding
tax)................................................. $ 523,348
Interest income......................................... 64,590
-----------
Total Income....................................... 587,938
-----------
Expenses:
Investment advisory fees (Note 2)....................... 163,265
Interest expense (Note 6)............................... 123,402
Administration and transfer agent fees (Note 2)......... 70,218
Professional fees....................................... 53,743
Reports to shareholders................................. 24,541
Directors' fees and expenses (Note 2)................... 16,782
Amortization of organization expenses (Note 1).......... 11,171
Registration and filing fees............................ 9,584
Custodian fees and expenses............................. 8,372
Miscellaneous........................................... 8,309
-----------
Total Expenses..................................... 489,387
-----------
Reduction of Expenses (Note 5).......................... (12,353)
-----------
Net Expenses............................................ 477,034
-----------
Net Investment Income....................................... 110,904
-----------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain on investments........................ 1,095,990
Net change in unrealized appreciation/(depreciation) on
investments.......................................... (6,676,458)
-----------
Net realized and unrealized gain/(loss) on
investments..................................... (5,580,468)
-----------
Net Decrease in Net Assets Resulting from Operations........ $(5,469,564)
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
---------------- -----------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income................ $ 110,904 $ 220,029
Net realized gain/(loss) on
investments....................... 1,095,990 (7,132,338)
Net change in unrealized
appreciation/(depreciation) on
investments....................... (6,676,458) 16,766,295
----------- ------------
Net increase/(decrease) in net
assets resulting from
operations.................... (5,469,564) 9,853,986
----------- ------------
Dividends and Distributions to Shareholders
from (Note 1):
Net investment income................ (114,555) (121,783)
Tax return of capital................ -- (77,627)
----------- ------------
Total dividends and
distributions to
shareholders.................. (114,555) (199,410)
----------- ------------
Capital Stock Transactions (Note 4):
Decrease in net assets from Fund
share transactions................ (4,387,924) (21,784,897)
----------- ------------
Total decrease in net assets.... (9,972,043) (12,130,321)
Net Assets:
Beginning of period.................. 43,028,881 55,159,202
----------- ------------
End of period (including
distributions in excess of net
investment income of $3,651 at
June 30, 2000).................... $33,056,838 $ 43,028,881
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
Financial Statements. It should be read in conjunction with the Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
FOR THE
FOR THE YEAR ENDED FOR THE PERIOD
SIX MONTHS ENDED DECEMBER 31, MAY 8, 1997'D'
JUNE 30, 2000 ----------------- THROUGH
PER SHARE OPERATING PERFORMANCE: (UNAUDITED) 1999 1998 DECEMBER 31, 1997
-------------------------------- ---------------- ------- ------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 26.76 $ 20.88 $ 32.25 $ 25.00
------- ------- ------- ------
Income from investment operations:
Net investment income........... 0.08 0.12 0.53 0.31
Net realized and unrealized
gain/(loss) on investments.... (3.64) 5.87 (11.39) 9.92
------- ------- ------- ------
Total from investment
operations............... (3.56) 5.99 (10.86) 10.23
------- ------- ------- ------
Less dividends and distributions to
shareholders from:
Net investment income........... (0.08) (0.07) (0.34) 0.27)
Net realized gain on
investments................... -- -- -- .59)
Tax return of capital........... -- (0.04) (0.17) (0.12)
------- ------- ------- ------
Total dividends and
distributions to
shareholders............. (0.08) (0.11) (0.51) (2.98)
------- ------- ------- ------
Net asset value, end of period...... $ 23.12 $ 26.76 $ 20.88 32.25
------- ------- ------- ------
------- ------- ------- ------
----------------------------------------------------------------------------------------------
Total investment return............. - 13.30%(1) 28.76% - 33.83% 41.68%(1)
------- ------- ------- ------
------- ------- ------- ------
----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
-------------------------
Net assets, end of period (in
millions)........................... $ 33.1 $ 43.0 $ 55.2 $ 135.9
------- ------- ------- ------
------- ------- ------- ------
Ratios of expenses to average daily
net assets (before expense
reduction)...................... 2.69%(2) 2.21% 1.31% 1.35%(2)
------- ------- ------- ------
------- ------- ------- ------
Ratios of expenses to average daily
net assets (net of expense
reduction)...................... 2.62%(2) 1.96% 1.28% 1.35%(2)
------- ------- ------- ------
------- ------- ------- ------
Ratio of net investment income to
average daily net assets (before
expense reduction).............. 0.54%(2) 0.26% 1.68% 1.73%(2)
------- ------- ------- ------
------- ------- ------- ------
Ratio of net investment income to
average daily net assets (net of
expense reduction).............. 0.61%(2) 0.51% 1.71% 1.73%(2)
------- ------- ------- ------
------- ------- ------- ------
Portfolio turnover rate........... 28.47%(1) 115.43% 112.32% 96.68%(1)
------- ------- ------- ------
------- ------- ------- ------
</TABLE>
-------------------
'D' Commencement of operations.
(1) Not annualized.
(2) Annualized.
See accompanying notes to financial statements.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
Cohen & Steers Special Equity Fund, Inc. (the 'Fund') was incorporated under
the laws of the State of Maryland on February 14, 1997 and is registered under
the Investment Company Act of 1940, as amended, as an open-end, non-diversified
management investment company. The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reported period. Actual results could differ from those
estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day.
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
Market System are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by Cohen & Steers
Capital Management, Inc. 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, the National Quotation
Bureau or such other comparable sources as the Board of Directors deems
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.
Short-term debt securities, which have a maturity value of 60 days or less,
are valued at amortized cost which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost for accounting and tax purposes.
Interest income is recorded on the accrual basis. Dividend income is recorded on
the ex-dividend date.
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid semi-annually. A portion of the Fund's dividend may
consist of amounts in excess of net investment income derived from non-taxable
components of the dividends from the Fund's portfolio investments. Net realized
capital
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
gains, unless offset by any available capital loss carryforward, are distributed
to shareholders annually. Distributions to shareholders are recorded on the
ex-dividend date.
Dividends will automatically be reinvested in full and fractional shares of
the Fund based on the net asset value per share at the close of business on the
ex-dividend date unless the shareholder has elected to have them paid in cash.
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. Federal income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to return of capital and capital gain distributions received by
the Fund on portfolio securities.
Federal Income Taxes: It is the policy of the Fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary.
Organization Costs: All costs incurred in connection with organizing and
establishing the Fund are being amortized on the straight-line basis over a
period of five years from the date on which the Fund commenced operations. For
the six months ended June 30, 2000, the Fund amortized $11,171 in organization
expenses.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
'Adviser') serves as the Fund's investment adviser pursuant to an investment
advisory agreement (the 'Advisory Agreement'). Under the terms of the Advisory
Agreement, the Adviser provides the Fund with the day-to-day investment
decisions and generally manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the supervision of the Fund's Board of
Directors. For the services provided to the Fund, the Adviser receives a monthly
fee in an amount equal to 1/12th of 0.90% of the average daily net assets of the
Fund. For the six months ended June 30, 2000, the Fund incurred $163,265 in
advisory fees.
Administration Fees: The Fund has entered into an administration agreement
with the Adviser under which the Adviser performs certain administrative
functions for the Fund and receives a fee of 0.02% of the Fund's average daily
net assets. For the six months ended June 30, 2000, the Fund paid the Adviser
$3,606 in fees under this administration agreement.
In addition, Cohen & Steers Special Equity Fund, Inc., Cohen & Steers Realty
Shares, Inc., Cohen & Steers Institutional Realty Shares, Inc., Cohen & Steers
Equity Income Fund, Inc. and Cohen & Steers Realty Income Fund, Inc. (the
'Funds') have entered into a fund accounting, transfer agency and
sub-administration agreement with The Chase Manhattan Bank ('Chase') pursuant to
which an affiliate of Chase performs administration functions for the Funds.
Chase receives a monthly sub-administration fee at the annual rate 0.08% on the
first $500 million of the Funds' average daily net assets and at lower rates on
the Funds' average daily bet assets in excess of that amount.
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
Directors' Fees: Certain directors and officers of the Fund are also
directors, officers and/or employees of the Adviser. None of the directors and
officers so affiliated received compensation for their services as directors of
the Fund. For the six months ended June 30, 2000, fees and related expenses
accrued for non-affiliated directors totaled $16,782.
Other: At June 30, 2000, there was one institutional investor owning 29% of
the Funds' outstanding shares. Investment activities of this shareholder could
have a material impact on the Fund.
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
six months ended June 30, 2000 totaled $10,718,132 and $14,671,346,
respectively.
At June 30, 2000, the cost and unrealized appreciation or depreciation in
value of the investments owned by the Fund, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost..................................... $41,253,711
-----------
Gross unrealized appreciation...................... $ 4,578,412
Gross unrealized depreciation...................... $(9,774,167)
-----------
Net unrealized depreciation........................ $(5,195,755)
-----------
-----------
</TABLE>
NOTE 4. CAPITAL STOCK
The Fund is authorized to issue 50 million shares of capital stock, par
value $0.001 per share. The Board of Directors of the Fund may increase or
decrease the aggregate number of shares of common stock that the Fund has
authority to issue. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 2000 FOR THE YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold....................... 91,897 $ 2,300,330 255,578 $ 5,946,184
Issued as reinvestment of
dividends................ 3,186 73,789 5,940 139,354
Redeemed................... (272,804) (6,762,043) (1,296,024) (27,870,435)
-------- ----------- ---------- ------------
Net decrease............... (177,721) $(4,387,924) (1,034,506) $(21,784,897)
-------- ----------- ---------- ------------
-------- ----------- ---------- ------------
</TABLE>
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13
<PAGE>
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COHEN & STEERS SPECIAL EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
NOTE 5. DIRECTED BROKERAGE ARRANGEMENTS
The Adviser has directed certain portfolio trades to brokers who paid a
portion of the Fund's expenses. For the six months ended June 30, 2000, the
Fund's expenses were reduced by $12,353 under this arrangement.
NOTE 6. BORROWINGS
The Fund, in conjunction with Cohen & Steers Realty Shares, Inc., Cohen &
Steers Institutional Realty Shares, Inc. and Cohen & Steers Equity Income Fund,
Inc., has entered into a Line of Credit Agreement with Chase Manhattan Bank for
$200,000,000. At June 30, 2000, the Fund had loans outstanding totaling
$3,000,000. For the six months ended June 30, 2000, the average daily balance of
loans outstanding was $3,604,396 at a weighted average interest rate of 6.80%.
The maximum amount of loans outstanding at any time during the six months ended
was $4,000,000. The loan is collaterized by the Fund's portfolio to the extent
of the loan outstanding.
-------------------
AVERAGE ANNUAL TOTAL RETURNS
(PERIODS ENDED JUNE 30, 2000)
<TABLE>
<CAPTION>
One Year Since Inception (5/8/97)
-------- ------------------------
<S> <C>
0.77 % 1.54%
</TABLE>
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14
<PAGE>
--------------------------------------------------------------------------------
COHEN & STEERS SPECIAL EQUITY FUND, INC.
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS KEY INFORMATION
Robert H. Steers INVESTMENT ADVISER
Director and Chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and President (212) 832-3232
Gregory C. Clark FUND SUB-ADMINISTRATOR AND TRANSFER AGENT
Director Chase Global Funds Services Co.
73 Tremont Street
George Grossman Boston, MA 02108
Director (800) 437-9912
Jeffrey H. Lynford CUSTODIAN
Director The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
Willard H. Smith, Jr. New York, NY 10081
Director
LEGAL COUNSEL
Elizabeth O. Reagan Simpson Thacher & Bartlett
Vice President 425 Lexington Avenue
New York, NY 10017
Adam Derechin
Vice President and Assistant DISTRIBUTOR
Treasurer Cohen & Steers Securities, Inc.
757 Third Avenue
Lawrence B. Stoller New York, NY 10017
Assistant Secretary
NASDAQ Symbol: CSSPX
Website: www.cohenandsteers.com
Net asset value (NAV) can be found in
the daily mutual fund listings in the
financial section of most major
newspapers under Cohen & Steers.
This report is authorized for delivery
only to shareholders of Cohen & Steers
Special Equity Fund, Inc. unless
accompanied or preceded by the
delivery of a currently effective
prospectus setting forth details of
the Fund. Past performance, of course,
is no guarantee of future results and
your investment may be worth more or
less at the time you sell.
</TABLE>
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15
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as................ 'D'
The division sign shall be expressed as................ [div]
