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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1997
FILE NO. 333-30919
811-8287
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
PRE-EFFECTIVE AMENDMENT NO. 1 [x]
POST-EFFECTIVE AMENDMENT NO. ______ [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 1 [x]
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COHEN & STEERS EQUITY INCOME FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
757 THIRD AVENUE, NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 832-3232
ROBERT H. STEERS
COHEN & STEERS EQUITY INCOME FUND, INC.
757 THIRD AVENUE, NEW YORK, NEW YORK 10017
(NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS)
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IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485.
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485.
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
[ ] ON (DATE) PURSUANT TO PARAGRAPH (b) OF RULE 485.
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(1) OF RULE 485.
[ ] ON (DATE) PURSUANT TO PARAGRAPH (a)(2) OF RULE 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
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PURSUANT TO THE PROVISIONS OF RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940, REGISTRANT DECLARES THAT AN INDEFINITE NUMBER OF ITS SHARES OF COMMON
STOCK ARE BEING REGISTERED UNDER THE SECURITIES ACT OF 1933 BY THIS REGISTRATION
STATEMENT.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 8(a) OF THE SECURITIES
ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
________________________________________________________________________________
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COHEN & STEERS EQUITY INCOME FUND, INC.
CROSS REFERENCE SHEET
(AS REQUIRED BY 404(c))
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<CAPTION>
N-1A ITEM
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(CAPTION)
<S> <C> <C>
Item 1. Cover Page................................................... Cover Page
Item 2. Synopsis..................................................... Fee Table
Item 3. Condensed Financial Information.............................. Not Included
Item 4. General Description of Registrant............................ Investment Objective and Policies;
Investment Restrictions
Item 5. Management of the Registrant................................. Management of the Fund
Item 5A. Management's Discussion of Fund Performance.................. Not Applicable
Item 6. Capital Stock and Other Securities........................... Taxation; Organization and
Description of Capital Stock
Item 7. Purchase of Securities Being Offered......................... Determination of Net Asset Value;
Purchase of Shares
Item 8. Redemption or Repurchase..................................... Redemption of Shares
Item 9. Pending Legal Proceedings.................................... Not Applicable
<CAPTION>
LOCATION IN STATEMENT OF
PART B ADDITIONAL INFORMATION (CAPTION)
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Item 10. Cover Page................................................... Cover Page
Item 11. Table of Contents............................................ Table of Contents
Item 12. General Information and History.............................. Not Applicable
Item 13. Investment Objectives and Policies........................... Investment Objective and Policies;
Investment Restrictions
Item 14. Management of the Fund....................................... Management of the Fund
Item 15. Control Persons and Principal Holders of Securities.......... Organization and Description of
Capital Stock
Item 16. Investment Advisory and Other Services....................... Management of the Fund -- Adviser
and Investment Advisory Services
Item 17. Brokerage Allocation and Other Practices..................... Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities........................... Organization and Description of
Capital Stock
Item 19. Purchase, Redemption and Pricing of Securities Being Determination of Net Asset Value;
Offered.................................................... Redemption of Shares
Item 20. Tax Status................................................... Taxation
Item 21. Underwriters................................................. Principal Underwriter
Item 22. Calculation of Performance Data.............................. Performance Information
Item 23. Financial Statements......................................... Financial Statements
</TABLE>
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[Logo]
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Cohen & Steers Equity Income Fund, Inc. (the 'Fund') Inc. is a non-diversified,
open-end management investment company that seeks to achieve high current income
through investment in real estate securities. Capital appreciation is a
secondary objective. Under normal circumstances, the Fund will invest at least
65% of its total assets in the equity securities of real estate companies. Up to
35% of the Fund's total assets may be invested in debt securities issued or
guaranteed by real estate companies. The Fund may also invest in options,
financial futures and currency contracts. There can be no assurance
that the Fund will achieve its investment objectives. Cohen & Steers
Capital Management, Inc. serves as investment adviser to the Fund.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated , 1997, containing additional and more detailed information about
the Fund, has been filed with the Securities and Exchange Commission and is
hereby incorporated by reference into this Prospectus. It is available without
charge and can be obtained by writing or calling the Fund at the address and
telephone number printed on the back cover of this prospectus.
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INVESTORS ARE ADVISED TO READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
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The Fund's shares are not deposits or obligations of, or guaranteed or endorsed
by, any bank, and the
Fund's shares are not federally insured or guaranteed by the U.S. Government,
the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. Shares of the Fund
involve investment risks,
including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
, 1997
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FEE TABLE
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Shareholder Transaction Expenses
<TABLE>
<S> <C>
Maximum sales charge on purchases
(as a percentage of offering price)(1)........................... 4.50%
Maximum sales load imposed on reinvested dividends (and other
distributions)................................................... 0%
Maximum deferred sales load(2)...................................... 0%
</TABLE>
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(1) Sales charges are reduced for large purchases.
(2) A contingent deferred sales charge of 1% applies on certain redemptions made
within 12 months following purchases without a sales charge.
Annual Fund Operating Expenses (as a percentage of average net assets)
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Management fees..................................................... 0.75%
Rule 12b-1 fees..................................................... 0.25%*
Service fees........................................................ 0.10%
Other expenses...................................................... 0.40%`D'
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Total fund operating expenses....................................... 1.50%
</TABLE>
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* 12b-1 expenses may not exceed 0.25% per annum of the Fund's average net
assets. Due to these distribution expenses, long-term shareholders may pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc.
`D' After reimbursement of expenses.
Example
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return (cumulatively through the end of each time period):
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1 year.............................................................. $60
3 years............................................................. $91
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THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES WHICH
MAY BE MORE OR LESS THAN THOSE SHOWN. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY
TO PURCHASE SHARES AT A REDUCED OR NO SALES CHARGE.
2
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The purpose of this table is to assist the investor in understanding the various
costs and expenses that an investor in the Fund will bear directly or
indirectly. The assumption in the Example of a 5% annual return is required by
regulations of the Securities and Exchange Commission (the 'Commission')
applicable to all mutual funds. The assumed 5% annual return is not a prediction
of, and does not represent, the projected or actual performance of the Fund's
shares. 'Other Expenses' are based on estimated amounts for the Fund's current
fiscal year.
The investment adviser has voluntarily agreed to limit the total expenses of the
Fund (excluding interest, taxes, brokerage, and extraordinary expenses) to an
annual rate of 1.50% of the Fund's average net assets until December 31, 1998.
As long as this temporary expense limitation continues, it may lower the Fund's
expenses and increase its total return. After December 31, 1998, the expense
limitation may be terminated or revised at any time, at which time the Fund's
expenses may increase and its total return may be reduced depending on the total
assets of the Fund. Without the expense reimbursement, it is estimated that the
Fund's total operating expenses for the current fiscal year would have amounted
to 2.21% of the Fund's average net assets for the period.
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INVESTMENT OBJECTIVES AND POLICIES
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The Fund's investment objective is to achieve high current income through
investment in real estate securities. Capital appreciation is a secondary
objective. There can be no assurance that the Fund's investment objectives will
be achieved. The Fund's investment objectives cannot be changed without the
approval of a majority of its outstanding voting securities.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in the equity securities of real estate companies. Such equity securities
will consist of (i) common shares (including shares and units of beneficial
interest of REITs), (ii) rights or warrants to purchase common shares, (iii)
securities convertible into common shares where the conversion feature
represents, in the investment adviser's view, a significant element of the
securities' value, and (iv) preferred shares.
For purposes of the Fund's investment policies, a 'real estate company' is one
that derives at least 50% of its revenues from the ownership, construction,
financing, management or sale of commercial, industrial, or residential real
estate or that has at least 50% of its assets in such real estate. With the
exception of REITs, most real estate companies do not pay dividends at the
higher end of the range for common stocks as a group. The Fund's investment
adviser, however, anticipates that the Fund's equity investments in real estate
companies will primarily be in securities that do pay high dividends relative to
the stock market as a whole.
Up to 35% of the Fund's total assets may be invested in debt securities issued
or guaranteed by real estate companies. The Fund may also invest in options,
financial futures and currency contracts. When, in the judgment of the Adviser,
market or general economic conditions justify a temporary defensive position,
the Fund may deviate from its investment objectives and policies and invest all
or any portion of its assets in high-grade debt securities, including corporate
debt securities, U.S. government securities, and short-term money market
instruments, without regard to whether the issuer is a real estate company.
3
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REAL ESTATE INVESTMENT TRUSTS
The Fund is authorized to invest without limit in the equity securities of real
estate investment trusts or 'REITs.' A REIT is a corporation or a business trust
that would otherwise be taxed as a corporation, and which meets the definitional
requirements of the Internal Revenue Code of 1986, as amended (the 'Code'). The
Code permits a qualifying REIT to deduct dividends paid, thereby effectively
eliminating corporate level federal income tax and making the REIT a
pass-through vehicle for federal income tax purposes. To meet the definitional
requirements of the Code, a REIT must, among other things, invest substantially
all of its assets in interests in real estate (including mortgages and other
REITs) or cash and government securities; derive most of its income from rents
from real property or interest on loans secured by mortgages on real property;
and distribute to shareholders annually 95% or more of its otherwise taxable
income.
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DEBT SECURITIES
The Fund may invest a maximum of 35% of its total assets in investment grade and
non-investment grade debt securities of companies, including real estate
industry companies. Securities rated non-investment grade (lower than Baa by
Moody's Investor Services Inc. ('Moody's') or lower than BBB by Standard and
Poor's Corporation ('S&P')) are sometimes referred to as 'high yield' or 'junk'
bonds. Investors should consider the following risks associated with high yield,
high risk securities before investing in the Fund.
High yield securities may be regarded as speculative with respect to the
issuer's continuing ability to make principal and interest payments. Analysis of
the creditworthiness of issuers of high yield securities may be more complex
than for issuers of higher quality debt securities, and the ability of a Fund to
achieve its investment objective may, to the extent of its investment in high
yield securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher quality securities.
High yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than higher grade securities. The
prices of high yield securities have been found to be less sensitive to
interest-rate changes than more highly rated investments, but more sensitive to
adverse economic downturns or individual corporate developments. Yields on high
yield securities will fluctuate. If the issuer of high yield securities
defaults, the Fund may incur additional expenses to seek recovery.
The secondary markets in which high yield securities are traded may be less
liquid than the market for higher grade securities. Less liquidity in the
secondary trading markets could adversely affect the price at which the Fund
could sell a particular high yield security when necessary to meet liquidity
needs or in response to a specific economic event, such as a deterioration in
the creditworthiness of the issuer, and could adversely affect and cause large
fluctuations in the daily net asset value of the Fund's shares. Adverse
publicity and investor perceptions may decrease the values and liquidity of high
yield securities.
It is reasonable to expect that any adverse economic conditions could disrupt
the market for high yield securities, have an adverse impact on the value of
such securities, and adversely affect the ability of the issuers of such
securities to repay principal and pay interest thereon. New laws and proposed
new laws may adversely impact the market for high yield securities. See Appendix
A for additional information about the classifications of investment grade and
non-investment grade debt and preferred stocks.
4
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RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest a maximum of 15% of its net assets in restricted securities
(securities which are not registered or which are not deemed to be readily
marketable) and all other illiquid securities, including repurchase agreements
with maturities of more than seven days. Securities that may be resold without
registration pursuant to Rule 144A may be treated as liquid for these purposes,
subject to the supervision and oversight of, and in accordance with guidelines
established by, the Board of Directors to determine whether there is a readily
available market for such securities. Illiquid securities may include securities
issued by certain REITs or other real estate companies that are not listed on a
major stock exchange, options sold in the over-the-counter market, and forward
foreign currency contracts which are not exchange traded.
Restricted or non-registered securities may be sold only in privately negotiated
transactions, in a public offering with respect to which a registration
statement is in effect under the Securities Act of 1933 or pursuant to Rule 144
promulgated under such Act. Where registration is required, the Fund may be
obligated to pay all or part of the registration expense, and a considerable
period may elapse between the time of the decision to sell and the time the Fund
may be permitted to sell a security under an effective registration statement.
If during such a period adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to sell.
Restricted securities will be valued in such manner as the Board of Directors of
the Fund in good faith deems appropriate to reflect their fair market value.
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FOREIGN SECURITIES
The Fund may invest up to 15% of total assets in securities of foreign issuers
which meet the same criteria for investment as domestic companies, or sponsored
and unsponsored depositary receipts for such securities. The Fund may be subject
to additional investment risks for these securities that are different in some
respects from those incurred by investments in securities of domestic issuers.
Such risks include currency risks, future political and economic developments,
the possible imposition of foreign withholding taxes on interest income payable
on the securities, the possible establishment of exchange controls, the possible
seizure or nationalization of foreign deposits, or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on such securities. There can be no assurance that such laws may
not become applicable to certain of the Fund's investments. In addition, there
may be less publicly available information about a foreign issuer than about a
domestic issuer, and foreign issuers may not be subject to the same accounting,
auditing and financial recordkeeping standards and requirements as domestic
issuers.
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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.
Money market instruments in which the Fund may invest its cash reserves will
generally consist of obligations issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and such obligations which are subject to
repurchase agreements. A repurchase agreement is an instrument under which an
investor, such as the Fund,
5
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purchases a U.S. Government security from a vendor, with an agreement by the
vendor to repurchase the security at the same price, plus interest at a
specified rate. In such a case, the security is held by the Fund, in effect, as
collateral for the repurchase obligation. Repurchase agreements may be entered
into with member banks of the Federal Reserve System or 'primary dealers' (as
designated by the Federal Reserve Bank of New York) in United States Government
securities. Repurchase agreements usually have a short duration, often less than
one week. In entering into the repurchase agreement for the Fund, the investment
adviser will evaluate and monitor the creditworthiness of the vendor. In the
event that a vendor should default on its repurchase obligation, the Fund might
suffer a loss to the extent that the proceeds from the sale of the collateral
were less than the repurchase price. If the vendor becomes bankrupt, the Fund
might be delayed, or may incur costs or possible losses of principal and income,
in selling the collateral.
Other acceptable money market instruments include commercial paper rated by any
nationally recognized rating agency, such as Moody's or S&P's, certificates of
deposit, bankers' acceptances issued by domestic banks having total assets in
excess of one billion dollars, and money market mutual funds.
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RISK FACTORS
The risks related to the particular types of securities in which the Fund may
invest and the investment techniques which it may use are discussed in the
preceding sections describing those securities and techniques. In addition, the
following general investment risks should be considered.
Because the Fund will be concentrated in the real estate industry, the Fund may
be subject to the risks associated with the direct ownership of real estate. For
example, real estate values may fluctuate as a result of general and local
economic conditions, overbuilding and increased competition, increases in
property taxes and operating expenses, changes in zoning laws, casualty or
condemnation losses, regulatory limitations on rents, changes in neighborhood
values, changes in the appeal of properties to tenants and an increase in
interest rates. The value of securities of companies which service the real
estate business sector may also be affected by such risks. Thus, the value of
the Fund's shares may change at different rates compared to the value of shares
of a mutual fund with investments in many different industries.
Because the Fund may invest a substantial portion of its assets in REITs, the
Fund may also be subject to certain risks associated with direct investments in
REITs. REITs may be affected by changes in the value of their underlying
properties and/or by defaults by borrowers or tenants. Furthermore, REITs are
dependent upon specialized management skills, have limited diversification and
are, therefore, subject to risks inherent in financing a limited number of
projects. In certain cases, the organizational documents of a REIT may grant the
REIT's sponsors the right to exercise control over the operations of the REIT
notwithstanding their minority share ownership; a conflict of interest (for
example, the desire to postpone certain taxable events) could influence such
sponsors to not act in the best interests of the REIT's shareholders. Many REITs
are subject in their organizational documents to various anti-takeover
provisions that could have the effect of delaying or preventing a transaction or
change in control of the REIT that might involve a premium price for the REIT's
shares or otherwise may not be in the best interests of the REIT's shareholders.
REITs depend generally on their ability to generate cash flow to make
distributions to shareholders, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In
6
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addition, the performance of a REIT may be affected by changes in the tax laws
or by its failure to qualify for tax-free pass-through of income.
Because prices of equity securities fluctuate from day to day, the value of the
Fund's portfolio and the Fund's price per share will vary based upon general
market conditions. There is no assurance that the investment objectives of the
Fund can be achieved, and the value of your investment as a shareholder upon
redemption may be more or less than the purchase price.
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NON-DIVERSIFIED STATUS; PORTFOLIO TURNOVER
The Fund is classified as a 'non-diversified' investment company under the
Investment Company Act of 1940 (the '1940 Act'), which means the Fund is not
limited by the 1940 Act in the proportion of its assets that may be invested in
the securities of a single issuer. However, the Fund intends to conduct its
operations so as to qualify as a regulated investment company for purposes of
the Code, which generally will relieve the Fund of any liability for Federal
income tax to the extent its earnings are distributed to shareholders. See
'Taxation.' To so qualify, among other requirements, the Fund will limit its
investments so that, at the close of each quarter of the taxable year, (i) not
more than 25% of the market value of the Fund's total assets will be invested in
the securities of a single issuer, and (ii) with respect to 50% of the market
value of its total assets, not more than 5% of the market value of its total
assets will be invested in the securities of a single issuer and the Fund will
not own more than 10% of the outstanding voting securities of a single issuer.
To the extent that the Fund is less diversified, it may be more susceptible to
adverse economic, political, or regulatory developments affecting a single
issuer than would be the case if it were more broadly diversified.
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. Higher
portfolio turnover rates, such as rates in excess of 100%, and short-term
trading involve correspondingly greater commission expenses and transaction
costs.
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INVESTMENT TECHNIQUES
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The Fund is authorized to use the following investment techniques, subject to
the accompanying restrictions. Although these techniques or strategies are used
regularly by some investment companies, the investment adviser expects that the
Fund's use of these techniques will not be routine and will be limited to
special situations.
7
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OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may write (i.e., sell) covered put and call options and purchase put
and call options on securities or stock indices that are listed on a national
securities or commodities exchange. An option on a security is a contract that
gives the purchaser of the option, in return for the premium paid, the right to
buy a specified security (in the case of a call option) or to sell a specified
security (in the case of a put option) from or to the writer of the option at a
designated price during the term of the option. An option on a stock index gives
the purchaser of the option, in return for the premium paid, the right to
receive from the seller cash equal to the difference between the closing price
of the index and the exercise price of the option.
The Fund may write a call or put option only if the option is 'covered.' This
means that so long as the Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the call, or hold a call at the
same or lower exercise price, for the same exercise period, and on the same
securities as the written call. A put is covered if the Fund maintains
collateral consisting of cash or liquid portfolio securities with a value equal
to the exercise price in a segregated account, or holds a put on the same
underlying security at an equal or greater exercise price. The value of the
underlying securities on which options may be written at any one time will not
exceed 25% of the total assets of the Fund. The Fund will not purchase put or
call options if the aggregate premium paid for such options would exceed 5% of
its total assets at the time of purchase.
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FUTURES CONTRACTS
The Fund may buy and sell financial futures contracts, stock and bond index
futures contracts, foreign currency futures contracts and options on any of the
foregoing. A financial futures contract is an agreement between two parties to
buy or sell a specified debt security at a set price on a future date. An index
futures contract is an agreement to take or make delivery of an amount of cash
based on the difference between the value of the index at the beginning and at
the end of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.
The Fund may use financial futures contracts and related options for 'bona fide
hedging purposes,' as such term is defined in applicable regulations of the
Commodity Futures Trading Commission. The Fund will also be authorized to enter
into such contracts and options for nonhedging purposes, for example, to enhance
total return or provide market exposure pending the investment of cash balances,
but only to the extent that aggregate initial margin deposits plus premiums paid
by it for open futures options positions, less the amount by which any such
positions are 'in-the-money,' would not exceed 5% of the Fund's total assets.
The Fund may lose the expected benefit of the transactions if interest rates,
currency exchange rates or securities prices change in an unanticipated manner.
Such unanticipated changes in interest rates, currency exchange rates or
securities prices may also result in poorer overall performance of the Fund than
if the Fund had not entered into any futures transactions.
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FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency exchange contracts ('forward
contracts') to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers.
8
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The Fund will enter into forward contracts under the following circumstances.
First, when the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to 'lock in' the U.S.
dollar price of the security in relation to another currency by entering into a
forward contract to buy the amount of foreign currency needed to settle the
transaction. Second, when it is believed that the currency of a particular
foreign country may suffer or enjoy a substantial movement against another
currency, it may enter into a forward contract to sell or buy the amount of the
former foreign currency (or another currency which acts as a proxy for that
currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. The second investment practice
is generally referred to as 'cross-hedging.' The Fund's forward transactions may
call for the delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its portfolio
securities are denominated.
The Fund will not enter into forward foreign currency contracts if, as a result,
the Fund will have more than 15% of the value of its net assets committed to the
consummation of such contracts. To the extent such contracts would be deemed to
be illiquid, they will be included in the maximum limitation of 15% of net
assets invested in restricted or illiquid securities.
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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.
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SHORT SALES
The Fund may enter into short sales, provided the dollar amount of short sales
at any one time would not exceed 25% of the net assets of the Fund, and the
value of securities of any one issuer in which the Fund is short would not
exceed the lesser of 2% of the value of the Fund's net assets or 2% of the
securities of any class of any issuer. The Fund must maintain collateral in a
segregated account consisting of cash or liquid portfolio securities with a
value equal to the current market value of the shorted securities, which is
marked-to-market daily. If the Fund owns an equal amount of such securities or
securities convertible into or exchangeable for, without payment of any further
consideration, securities of the same issuer as, and equal in amount to, the
securities sold short (which sales are commonly referred to as 'short sales
against the box'), the above requirements are not applicable.
9
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- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
The overall management of the business and affairs of the Fund is vested with
the Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to it,
including the Fund's agreements with its investment adviser, administrator,
custodian and transfer agent. The management of the Fund's day-to-day operations
is delegated to its officers, the Adviser and the administrator, subject always
to the investment objective and policies of the Fund and to general supervision
by the Board of Directors. The Directors and officers of the Fund and their
principal occupations are set forth below.
Robert H. Steers, Director, Chairman and Secretary, is the Chairman and one of
the principals of Cohen & Steers Capital Management, Inc. ('Cohen & Steers' or
the 'Adviser').
Martin Cohen, Director, President and Treasurer, is the President and one of the
principals of the Adviser.
Gregory C. Clark, Director, is the principal of Wellspring Management Group.
George Grossman, Director, is an attorney at law in private practice.
Jeffrey H. Lynford, Director, is Chairman of Wellsford Group, Inc. and of
Wellsford Real Properties, Inc.
Willard H. Smith Jr., Director, is a board member of several REIT companies.
Elizabeth O. Reagan, Vice President, is a Senior Vice President of the Adviser.
Adam Derechin, Vice President and Assistant Treasurer, is a Vice President of
the Adviser.
- --------------------------------------------------------------------------------
THE 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, a registered investment adviser, was formed in 1986 and is
the leading U.S. manager of portfolios dedicated to investments in real estate
investment trusts ('REITs'). Its current clients include pension plans,
endowment funds and mutual funds, including Cohen & Steers Realty Income Fund,
Inc. and Cohen & Steers Total Return Realty Fund, Inc., both of which are
closed-end investment companies, and Cohen & Steers Realty Shares, Inc. and
Cohen & Steers Special Equity Fund, Inc., both of which are open-end investment
companies. All of Cohen & Steers' client accounts are invested principally in
real estate securities. Its principal officers include Robert H. Steers,
Chairman; and Martin Cohen, President. Mr. Cohen and Mr. Steers are, and have
been since the formation of the Adviser, responsible for the day-to-day
management of the Fund's portfolio. Mr. Cohen and Mr. Steers may be deemed
'controlling persons' of the Adviser on the basis of their ownership of the
Adviser's stock.
- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AGREEMENT
Pursuant to an investment advisory agreement (the 'Advisory Agreement') the
Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, and generally manages
the Fund's investments
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in accordance with the stated policies of the Fund, subject to the general
supervision of the Board of Directors of the Fund. The Adviser also selects
brokers and dealers to execute purchase and sale orders for the portfolio
transactions of the Fund. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, the Adviser may consider sales of shares of the Fund as a
factor in the selection of brokers and dealers to enter into portfolio
transactions with the Fund. The Adviser provides persons satisfactory to the
Directors of the Fund to serve as officers of the Fund. Such officers, as well
as certain other employees and Directors of the Fund, may be directors,
officers, or employees of the Adviser. Under the Advisory Agreement, the Fund
pays the Adviser a monthly management fee in an amount equal to 1/12th of 0.75%
of the average daily net assets of the Fund. This fee is higher than that
incurred by most other investment companies.
In addition to the payments to the Adviser under the Advisory Agreement
described above, the Fund pays certain other costs of its operations including
(a) custody, transfer and dividend disbursing expenses, (b) fees of Directors
who are not affiliated with the Adviser, (c) legal and auditing expenses, (d)
clerical, accounting and other office costs, (e) costs of printing the Fund's
prospectuses and shareholder reports, (f) costs of maintaining the Fund's
existence, (g) interest charges, taxes, brokerage fees and commissions, (h)
costs of stationery and supplies, (i) expenses and fees related to registration
and filing with the Securities and Exchange Commission and with state regulatory
authorities, and (j) upon the approval of the Board of Directors, costs of
personnel of the Adviser or its affiliates rendering clerical, accounting and
other office services.
- --------------------------------------------------------------------------------
ADMINISTRATOR AND SUB-ADMINISTRATOR
The Adviser has also entered into an administration agreement with the Fund (the
'Administration Agreement') under which the Adviser performs certain
administrative functions for the Fund, including (i) providing office space,
telephone, office equipment and supplies for the Fund; (ii) paying compensation
of the Fund's officers for services rendered as such; (iii) authorizing
expenditures and approving bills for payment on behalf of the Fund; (iv)
supervising preparation of the periodic updating of the Fund's registration
statement, including the prospectus and statement of additional information, for
the purpose of filings with the Securities and Exchange Commission and state
securities administrators and monitoring and maintaining the effectiveness of
such filings, as appropriate; (v) supervising preparation of quarterly reports
to the Fund's shareholders, notices of dividends, capital gains distributions
and tax credits, and attending to routine correspondence and other
communications with individual shareholders; (vi) supervising the daily pricing
of the Fund's investment portfolio and the publication of the net asset value of
the Fund's shares, earnings reports and other financial data; (vii) monitoring
relationships with organizations providing services to the Fund, including the
custodian, transfer agent and printers; (viii) providing trading desk facilities
for the Fund; (ix) supervising compliance by the Fund with recordkeeping
requirements under the 1940 Act and regulations thereunder, maintaining books
and records for the Fund (other than those maintained by the custodian and
transfer agent) and preparing and filing of tax reports other than the Fund's
income tax returns; and (x) providing executive, clerical and secretarial help
needed to carry out these responsibilities. For its services under the
Administration Agreement, the Adviser receives a monthly fee from the Fund at
the
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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 Chase Manhattan Bank ('Chase') as sub-administrator under a mutual fund
services agreement (the 'Mutual Fund Services Agreement'). Under the Mutual Fund
Services Agreement, Chase has assumed responsibility for performing certain of
the foregoing administrative functions, including determining the Fund's net
asset value and preparing such figures for publication, maintaining certain of
the Fund's books and records that are not maintained by the Adviser, custodian
or transfer agent, preparing financial information for the Fund's income tax
returns, proxy statements, quarterly and annual shareholders reports, and
Commission filings, and responding to shareholder inquiries. The Adviser remains
responsible for monitoring and overseeing the performance by Chase in regards to
its obligations to the Fund under its agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors.
Under the terms of the Mutual Fund Services Agreement, the Fund pays Chase a
monthly 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 net assets in excess of that
amount. Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts 02108, 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.'
- --------------------------------------------------------------------------------
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act (the 'Distribution Plan'). Under the Distribution Plan, the Fund may pay
Cohen & Steers Securities, Inc., the Fund's principal underwriter ('CSSI'), a
quarterly distribution-related fee at a rate not to exceed 0.25% of the average
daily value of the Fund's net assets. CSSI is obligated to use the amounts
received under the Distribution Plan for payments to qualifying dealers for
their assistance in the distribution of the Fund's shares and the provision of
shareholder services and for other expenses such as advertising costs and the
payment for the printing and distribution of prospectuses to prospective
investors. CSSI bears distribution expenses to the extent they are not covered
by payments under the Distribution Plan. Any distribution expenses incurred by
CSSI in any fiscal year of the Fund, which are not reimbursed from payments
under the Plan accrued in such fiscal year, will not be carried over for payment
under the Distribution Plan in any subsequent year.
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE PLAN
The Fund has adopted a shareholder services plan which provides that the Fund
may obtain the services of qualified financial institutions to act as
shareholder servicing agents for their customers. Under this plan, the Fund may
enter into agreements pursuant to which the shareholder servicing agents perform
certain shareholder services not otherwise provided by the Fund's transfer
agent. For these services, the Fund may pay the shareholder servicing agent a
fee of up to 0.10% of the average daily net assets of the Fund owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.
Among the services provided by shareholder servicing agents are: answering
customer inquiries regarding
12
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account matters; assisting in designating and changing various account options;
aggregating and processing purchase and redemption orders and transmitting and
receiving funds for shareholder orders; transmitting, on behalf of the Fund,
proxy statements, prospectuses and shareholder reports to shareholders and
tabulating proxies; processing dividend payments and providing subaccounting
services for Fund shares held beneficially; and providing such other services as
the Fund or a shareholder may request.
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Net asset value per share will be determined on each day the New York Stock
Exchange is open for trading and on each other day on which there is a
sufficient degree of trading in the Fund's investments to affect the net asset
value, as of the close of trading on the New York Stock Exchange by adding the
market value of all securities in the Fund's portfolio and other assets,
subtracting liabilities (incurred or accrued) and dividing by the total number
of the Fund's shares then outstanding.
For purposes of determining the Fund's net asset value, 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 Board of 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. However, certain fixed-income
securities may be valued on the basis of prices provided by a pricing service
when such prices are believed by the Board of Directors to reflect the fair
market value of such securities. The prices provided by a pricing service take
into account institutional size trading in similar groups of securities and any
developments related to specific securities. 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.
13
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- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
The minimum initial investment to open a shareholder account is $1,000. The
minimum amount for subsequent investments is $250. The Fund's shares may be
purchased through authorized dealers or directly through CSSI, the Fund's
principal underwriter. A Subscription Agreement should accompany this
Prospectus. For accounts opened directly through CSSI, a completed and signed
Subscription Agreement is required for the initial account opened with the Fund.
- --------------------------------------------------------------------------------
PURCHASES THROUGH DEALERS
Investors may purchase the Fund's shares through selected securities dealers
with whom CSSI has sales agreements. A prospective investor may obtain
additional Subscription Agreements from such authorized dealers. For a list of
authorized dealers, please contact the Fund at (800) 437-9912.
Financial service firms that do not have a sales agreement with CSSI also may
place orders for purchases of the Fund's shares, but may charge the investor a
transaction fee in addition to the applicable sales load.
Authorized dealers and financial service firms are responsible for promptly
transmitting purchase orders to CSSI.
- --------------------------------------------------------------------------------
PURCHASES THROUGH CSSI
Shares of the Fund may be purchased through CSSI by mailing a check made payable
to Cohen & Steers Equity Income Fund, Inc. along with the completed Subscription
Agreement to Cohen & Steers Equity Income Fund, Inc. c/o Chase Global Funds
Services Company, P.O. Box 2798, Boston, MA 02208-9915. CSSI will deduct the
applicable sales charge from the investor's payment.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
The Fund's automatic investment plan (the 'Plan') provides a convenient way to
invest in the Fund. Under the Plan, you can have money transferred automatically
from your checking account to the Fund each month to buy additional shares. If
you are interested in this Plan, please refer to the automatic investment plan
section of Subscription Agreement included with this prospectus or contact your
dealer. The market value of the Fund's shares may fluctuate and a systematic
investment plan such as this will not assure a profit or protect against a loss.
You may discontinue the program at any time by notifying the Fund by mail or
phone.
- --------------------------------------------------------------------------------
SALES CHARGES
- --------------------------------------------------------------------------------
A sales charge may apply, as described below, when purchasing Fund shares. Sales
charges may be reduced for large purchases as indicated below.
14
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<TABLE>
<CAPTION>
SALES CHARGE AS
A PERCENTAGE OF DEALER
--------------------- CONCESSION
NET AS % OF
OFFERING AMOUNT OFFERING
INVESTMENT AMOUNT PRICE INVESTED PRICE
- ------------------------------------------------------------------------- --------- --------- ----------
<S> <C> <C> <C>
Less than $100,000....................................................... 4.50% 4.71% 4.00%
$100,000 but less than $250,000.......................................... 3.75% 3.90% 3.25%
$250,000 but less than $500,000.......................................... 2.75% 2.83% 2.50%
$500,000 but less than $1 million........................................ 2.25% 2.30% 2.00%
$1 million or more and certain other investments described below......... see below see below see below
</TABLE>
Investments of $1 million or more are sold with no initial sales charge. A 1%
CONTINGENT DEFERRED SALES CHARGE MAY BE IMPOSED ON CERTAIN REDEMPTIONS MADE
WITHIN ONE YEAR OF PURCHASE BY THESE ACCOUNTS. A dealer concession of up to 1%
may be paid by CSSI on these investments. Investments by certain individuals and
entities including employees and other associated persons of dealers authorized
to sell shares of the Fund and Cohen & Steers are not subject to a sales charge.
(see 'Sales at Net Asset Value,' below).
In addition to the discount or commission paid to dealers, CSSI may from time to
time pay additional cash or other incentives to dealers in connection with the
sale of shares of the Fund. Such additional amounts may be utilized, in whole or
in part, in some cases together with other revenues of such dealers, to provide
additional compensation to registered representatives who sell shares of the
Fund. On some occasions, such cash or other incentives will be conditioned upon
the sale of a specified minimum dollar amount of the shares of the Fund during a
specific period of time. Such incentives may take the form of payment for
attendance at seminars, meals, sporting events or theater performances, or
payment for travel, lodging and entertainment incurred in connection with travel
by persons associated with a dealer and their immediate family members to urban
or resort locations within or outside of the United States. Such dealer may
elect to receive cash incentives of equivalent amount in lieu of such payments.
- --------------------------------------------------------------------------------
REDUCING THE SALES CHARGE
As shown in the table above, the size of the total investment in the Fund will
affect the sales charge. Described below are several methods to reduce the
applicable sales charge. In order to obtain a reduction in the sales charge, an
investor must notify, at the time of purchase, his dealer, the transfer agent or
CSSI of the applicability of one of the following:
Rights of Aggregation. The investment schedule above applies to the total amount
being invested by any 'person,' which term includes an individual, his spouse
and children under the age of 21, a trustee or other fiduciary purchasing for a
single trust, estate or single fiduciary account (including a pension,
profit-sharing or other employee benefit trust created pursuant to a plan
qualified under the Code) although more than one beneficiary is involved, or any
United States bank or investment adviser purchasing shares for its investment
advisory clients or customers. Any such person purchasing for several accounts
at the same time may combine these investments into a single transaction in
order to reduce the applicable sales charge.
Rights of Accumulation. Shares of the Fund may be purchased at a reduced sales
charge by a
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'person' (as defined above) who is already a shareholder by taking into account
not only the amount then being invested, but also the current net asset value of
the shares of the Fund already held by such person. If the current net asset
value of the qualifying shares already held plus the net asset value of the
current purchase exceeds a point in the schedule of sales charges at which the
charge is reduced to a lower percentage, the entire current purchase is eligible
for the reduced charge. To be entitled to a reduced sales charge pursuant to the
Rights of Accumulation, the investor must notify his dealer, the transfer agent
or CSSI at the time of purchase that he wishes to take advantage of such
entitlement, and give the numbers of his account, and those accounts held in the
name of his spouse or for a minor child, and the specific relationship of each
such other person to the investor.
Letter of Intention. An investor may also qualify for a reduced sales charge by
completing a Letter of Intention (the 'Letter') set forth in the Subscription
Agreement or on a separate form for this purpose which is available from the
Fund. This enables the investor to aggregate purchases of shares of the Fund
during a 12-month period for purposes of calculating the applicable sales
charge. All shares of the Fund currently owned by the investor will be credited
as purchases toward the completion of the Letter at the greater of their net
asset value on the date the Letter is executed or their cost. No retroactive
adjustment will be made if purchases exceed the amount indicated in the Letter.
For each investment made, the investor must notify his dealer, the transfer
agent or CSSI that a Letter is on file along with all account numbers associated
with the Letter.
The Letter is not a binding obligation on the investor. However, 5% of the
amount specified in the Letter will be held in escrow, and if the investor's
purchases are less than the amount specified, the investor will be requested to
remit to the Fund an amount equal to the difference between the sales charge
paid and the sales charge applicable to the aggregate purchases actually made.
If not remitted within 20 days after written request, an appropriate number of
escrowed shares will be redeemed in order to realize the difference. However,
the sales charge applicable to the investment will in no event be higher than if
the shareholder had not submitted a Letter.
Sales at Net Asset Value. Shares of the Fund may be sold at net asset value
(i.e., without a sales charge) (i) to registered representatives or employees
(and their immediate families) of authorized dealers, or to any trust, pension,
profit-sharing or other benefit plan for only such persons, (ii) to banks or
trust companies or their affiliates when the bank, trust company, or affiliate
is authorized to make investment decisions on behalf of a client, (iii) to
investment advisers and financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services, (iv) to clients of such investment
advisers and financial planners who place trades for their own accounts if the
accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker, agent, investment
adviser or financial institution, and (v) to retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to those defined in Section 401(a), 403(b) or 457 of the Code and 'rabbi
trusts.' Investors may be charged a fee if they effect transactions in Fund
shares through a broker or agent. Shares of the Fund may also be sold at net
asset value to current officers, directors and employees (and their immediate
families) of the Fund, the Adviser, CSSI, employees (and their immediate
families) of certain firms
16
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providing services to the Fund (such as the custodian and shareholder servicing
agent), and to any trust, pension, profit-sharing or other benefit plan for only
such persons. The Fund may also issue shares at net asset value in connection
with the acquisition of, or merger or consolidation with, another investment
company. The sales of shares at net asset value described in this section are
made upon the written assurance of the purchaser that the purchase is made for
investment purposes and that the shares will not be resold except through
redemption. Such notice must be given to the transfer agent or CSSI at the time
of purchase on a form for this purpose as available from the Fund.
- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
You may exchange some or all of your Fund shares for shares of the other mutual
funds managed by Cohen & Steers as well as for shares of Cohen & Steers Vista
Cash Management Fund. If you acquire shares of other Cohen & Steers funds by
purchase (rather than by exchange of Fund shares), you may exchange these shares
for Fund shares, subject to the applicable Fund sales charge, if any.
An exchange of shares pursuant to the exchange privilege may result in a
shareholder realizing a taxable gain or loss for income tax purposes. The
exchange privilege is available to shareholders residing in any state in which
the shares being acquired may be legally sold. A shareholder wishing to utilize
the exchange privilege should read the prospectus of the fund whose shares are
being acquired. Certain dealers may limit or prohibit the right of shareholders
to utilize the exchange privilege.
The Fund reserves the right to limit or terminate the exchange privilege as to
any shareholder who makes exchanges more than four times a year. The Fund can
modify or revoke the exchange privilege for all shareholders upon 60 days prior
written notice. There is no charge for the exchange privilege. For additional
information concerning exchanges, or to effect exchanges, contact the Fund at
(800) 437-9912.
- --------------------------------------------------------------------------------
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
Upon receipt by the Transfer Agent of a redemption request in proper form,
shares of the Fund will be redeemed at their next determined net asset value,
less any applicable contingent deferred sales charge on certain redemptions
made within 12 months following purchases without a sales charge. See
'Determination of Net Asset Value.'
Shareholders may redeem either through authorized dealers, by telephone, or
through Chase. Shares held in the dealer's 'street name' must be redeemed
through the dealer.
17
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- --------------------------------------------------------------------------------
REDEMPTIONS THROUGH DEALERS
Shareholders who have an account with an authorized dealer may submit a
redemption request to such dealer. Authorized dealers are responsible for
promptly transmitting redemption requests to CSSI. Dealers may impose a charge
for handling redemption transactions placed through them and may have particular
requirements concerning redemptions. Accordingly, shareholders should contact
their authorized dealers for more information.
- --------------------------------------------------------------------------------
REDEMPTION BY TELEPHONE
You may submit redemption requests by telephone by calling Chase Global Funds
Services Company at (800) 437-9912 and requesting that the proceeds be directed
as indicated in the Subscription Agreement. Requests for redemption made by
telephone will be accepted if a proper redemption request is received prior to
4:00 p.m., Eastern time. Shares will be redeemed at the net asset value
determined as of the close of trading on the New York Stock Exchange on that
day. If a proper request is received after 4:00 p.m. Eastern time, the shares
will be redeemed as of the close of trading on the New York Stock Exchange on
the next business day. You may not make a redemption request by telephone if
the proceeds are to be wired or mailed to a bank account number or address
other than the one specified on the Subscription Agreement. Such requests must
be in writing accompanied by a signature guarantee. If you would like to change
your wiring instructions or the address to which your check should be mailed,
your written notification must be signed by all of the account's registered
shareholders, accompanied by a signature guarantee and sent to Chase Global
Funds Services Company, at the address listed above. The guarantor of a
signature must be a trust company or national bank, a member bank of the
Federal Reserve System, a member firm of a national securities exchange or any
other guarantor approved by Chase Global Funds Services Company. Telephone
redemption privileges may be modified or suspended without notice during periods
of drastic economic or market changes. TELEPHONE REDEMPTION PRIVILEGES MAY BE
MODIFIED OR TERMINATED AT ANY TIME BY THE FUND UPON 30 DAYS NOTICE TO
SHAREHOLDERS.
- --------------------------------------------------------------------------------
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to the
Transfer Agent:
Chase Global Funds Services Company
P.O. Box 2798
Boston, Massachusetts 02208-9915
Attn: Cohen & Steers Equity Income Fund, Inc.
A written redemption request must (i) state the number of shares or dollar
amount to be redeemed, (ii) identify the shareholder account number and tax
identification number, and (iii) be signed by each registered owner exactly as
the shares are registered. If the shares to be redeemed were issued in
certificate form, the certificate must be endorsed for transfer (or be
accompanied by a duly executed stock power) and must be submitted to Chase
Global Funds Services Company together with a redemption request. When proceeds
of a redemption are to be paid to someone other than the shareholder, either by
wire or check, the signature(s) on the letter of instruction must be guaranteed
regardless of the amount of the redemption. The guarantor of a signature must be
a trust company or national bank, a member bank of the Federal
18
<PAGE>
<PAGE>
Reserve System, a member firm of a national securities exchange or any other
guarantor approved by Chase Global Funds Services Company. Chase Global Funds
Services Company may require additional supporting documents evidencing the
authority of the person making the redemption (including evidence of appointment
or incumbency). A redemption request will not be deemed to be properly received
until Chase Global Funds Services Company receives all required documents in
proper form.
- --------------------------------------------------------------------------------
OTHER REDEMPTION INFORMATION
Checks for redemption proceeds will normally be mailed within five business
days, but will not be mailed until all checks in payment for the purchase of the
shares to be redeemed have been collected, which may take up to 15 days or more.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption will be sent to the shareholder's address of record. The Custodian
may benefit from the use of redemption proceeds until the check issued to a
redeeming shareholder for such proceeds has cleared.
The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that Exchange is closed, other
than customary weekend and holiday closings, (ii) the Securities and Exchange
Commission (the 'SEC') has by order permitted such suspension or (iii) an
emergency, as defined by rules of the SEC, exists making disposal of portfolio
securities or determination of the value of the net assets of the Fund not
reasonably practicable.
The proceeds of redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
The Fund reserves the right to redeem upon not less than 30 days written notice
the shares in an account that has a value of $1,000 or less as the result of
voluntary redemption. However, any shareholder affected by the exercise of this
right will be allowed to make additional investments prior to the date fixed for
redemption to avoid liquidation of the account.
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Fund's policy will be to make quarterly distributions from investment
company taxable income of the Fund. Net capital gain (net long-term capital gain
in excess of net short-term capital loss), if any, are expected to be
distributed at least annually. Investment company taxable income of the Fund
consists of all of the Fund's taxable income other than the excess, if any, of
net long-term capital gain over net short-term capital loss, reduced by
deductible expenses of the Fund. The expenses of the Fund are accrued each day.
In addition, the Fund currently expects that a portion of its dividends will
consist of amounts in excess of investment company taxable income derived from
non-taxable components of the cash flow from the real estate underlying the
Fund's portfolio investments. These amounts would be considered a return of
capital and thus would not be subject to current taxation. To the extent
practicable, the Fund will attempt to pay quarterly distributions to
shareholders at a constant rate, which may be
19
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adjusted from time to time by the Fund's Board of Directors, although there can
be no assurance that it will be able to do so. In order to maintain such
quarterly distributions, short-term capital gains, and amounts representing a
return of the shareholder's capital, may from time to time be included in
quarterly distributions. See 'Taxation.'
- --------------------------------------------------------------------------------
TAXATION
- --------------------------------------------------------------------------------
The following discussion is intended for general information only. An investor
should consult with his or her own tax adviser as to the tax consequences of an
investment in the Fund, including the status of distributions under applicable
state or local law.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
The Fund intends to elect and qualify annually to be treated as a regulated
investment company under the Code. To qualify, the Fund must meet certain
income, distribution and diversification requirements. In any year in which the
Fund qualifies as a regulated investment company and timely distributes all of
its taxable income, the Fund generally will not pay any U.S. federal income or
excise tax.
Dividends paid out of the Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to a U.S.
shareholder as ordinary income. Because a portion of the Fund's income may
consist of dividends paid by U.S. corporations, a portion of the dividends paid
by the Fund may be eligible for the corporate dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares. Dividends are taxable to shareholders in
the same manner whether received in cash or reinvested in additional Fund
shares.
A distribution 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.
A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by the Fund in October, November or December with a
record date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.
Each year the Fund will notify shareholders of the tax status of dividends and
distributions.
Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares.
20
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The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Backup withholding is not an additional tax. Any amounts
withheld may be credited against the shareholder's U.S. federal income tax
liability.
Further information relating to tax consequences is contained in the Statement
of Additional Information.
- --------------------------------------------------------------------------------
STATE AND LOCAL TAXES
Fund distributions also may be subject to state and local taxes. Shareholders
should consult their own tax advisers regarding the particular tax consequences
of an investment in the Fund.
- --------------------------------------------------------------------------------
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
- --------------------------------------------------------------------------------
The Fund was incorporated on July 3, 1997 as a Maryland corporation and is
authorized to issue 50,000,000 shares of common stock, $.001 par value (the
'Common Stock'). The Fund's Board of Directors may, without shareholder
approval, increase or decrease the number of authorized but unissued shares of
the Fund's Common Stock. Each of the Fund's shares has equal dividend,
distribution, liquidation and voting rights. There are no conversion or
preemptive rights in connection with any shares of the Fund. All shares of the
Fund when duly issued will be fully paid and nonassessible. The rights of the
holders of shares of Common Stock may not be modified except by the vote of a
majority of the shares outstanding. The Fund is empowered to establish, without
shareholder approval, additional portfolios, which may have different investment
objectives, or additional classes of shares.
The Fund is not required to hold regular annual shareholders' meetings. A
shareholders' meeting shall, however, be called by the secretary upon the
written request of the holders of not less than 10% of the outstanding shares of
the Fund. The Fund will assist shareholders wishing to communicate with one
another for the purpose of requesting such a meeting.
- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Chase, which has its principal business address at One Chase Manhattan Plaza,
New York, New York 10081-1000, has been retained to act as Custodian of the
Fund's investments and to serve as the Fund's transfer and dividend disbursing
agent. Chase has retained its wholly-owned subsidiary, Chase Global Funds
Services Company, to provide transfer and dividend disbursing agency services to
the Fund. Neither Chase nor Chase Global Funds Services Company has any role in
deciding the Fund's investment policies or which securities are to be purchased
or sold for the Fund's portfolio.
21
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- --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
The fiscal year of the Fund ends on December 31 of each year. The Fund sends to
its shareholders, at least semi-annually, reports showing the investments and
other information (including unaudited financial statements). An annual report,
containing financial statements audited by the Fund's independent accountants,
is sent to shareholders each year.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund may advertise its 'average annual total return' over
various periods of time. This total return figure shows the average percentage
change in value of an investment in the Fund from the beginning date of the
measuring period to the ending date of the measuring period. The figure reflects
changes in the price of the Fund's shares and assumes that any income dividends
and/or capital gains distributions made by the Fund during the period are
reinvested in shares of the Fund. Figures will be given for recent one-, five-
and ten-year periods (when applicable), and may be given for other periods as
well (such as from commencement of the Fund's operations, or on a year-by-year
basis). When considering 'average' total return figures for periods longer than
one year, investors should note that the Fund's annual total return for any one
year in the period might have been greater or less than the average for the
entire period. The Fund also may use 'aggregate' total return figures for
various periods, representing the cumulative change in value of an investment in
the Fund for the specific period (again reflecting changes in the Fund's share
price and assuming reinvestment of dividends and distributions). Aggregate total
returns may be shown by means of schedules, charts or graphs, and may indicate
subtotals of the various components of total return (that is, the change in
value of initial investment, income dividends and capital gains distributions).
Each type of total return will be calculated assuming the deduction of the
maximum sales commission of 4.50% and the reinvestment of all income dividends
and capital gains distributions.
Advertisements may quote performance rankings or ratings of the Fund by
financial publications or independent organizations such as Lipper
Analytical Services, Inc. and Morningstar, Inc. or compare the Fund's
performance to various indices.
It is important to note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information further describes the methods used to determine the
Fund's performance.
22
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- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
Any shareholder inquiries may be directed to the Fund at the address or
telephone number listed on the back cover of this Prospectus. This Prospectus,
including the Statement of Additional Information which has been incorporated by
reference herein, does not contain all the information set forth in the
Registration Statement filed by the Fund with the SEC under the Securities Act
of 1933. Copies of the Registration Statement may be obtained at a reasonable
charge from the SEC or may be examined, without charge, at the offices of the
SEC in Washington, D.C. (http://www.sec.gov).
- --------------------------------------------------------------------------------
APPENDIX A: DESCRIPTION OF BOND RATINGS
- --------------------------------------------------------------------------------
MOODY'S RATINGS
Bonds rated Aa by Moody's are judged by Moody's to be of high quality by all
standards. Together with bonds rated Aaa (Moody's highest rating), they comprise
what are generally known as high-grade bonds. Aa bonds are rated lower than Aaa
bonds because margins of protection may not be as large as those of Aaa bonds,
or fluctuations of protective elements may be of greater amplitude, or there may
be other elements present which make the long-term risks appear somewhat larger
than those applicable to Aaa securities. Bonds which are rated A by Moody's
possess many favorable investment attributes and are to be considered upper
medium-grade obligations. Factors giving security to payment of principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Moody's Baa rated bonds are considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present, but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements because their
future cannot be considered as well assured. Uncertainty of position
characterizes bonds in this class, because the protection of interest and
principal payments may be very moderate and not well safeguarded.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period of time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of attaining any real
investment standing.
23
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- --------------------------------------------------------------------------------
S&P'S RATINGS
Bonds rated AA by S&P have a very strong capacity to pay interest and differ
only in a small degree from issues rated AAA (S&P's highest rating). Bonds rated
AAA are considered by S&P to be the highest grade obligations and have an
extremely strong capacity to pay interest and principal. Bonds rated A by S&P
have a strong capacity to pay principal and interest, although they are somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions.
S&P's BBB rated bonds are regarded as having adequate capacity to pay interest
and principal. Although these bonds normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and principal.
Bonds rated BB, B, CCC, CC and C are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and principal
in accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation. While such bonds may
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
24
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SUBSCRIPTION AGREEMENT
<PAGE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
- ---------------------------------------------------------------------------------------------------------------
1 ACCOUNT TYPE (Please print; indicate only one registration type)
[ ] INDIVIDUAL [ ] JOINT TENANT
_____________________________________________________________ ___________________________________________
Name Social Security Number(s) or Taxpayer
Identification Number(s)
_____________________________________________________________
Joint Registrant, if any (See Notes 1 and 2)
(1) Use only the Social Security number or Taxpayer Identification Number of the first listed joint tenant.
(2) 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
_____________________________________________________________
Name of Trustee
_____________________________________________________________ ___________________________________________
Name of Trust Agreement Date of Trust Agreement
_____________________________________________________________ ___________________________________________
Name of Beneficiary Taxpayer Identification Number
[ ] CORPORATION [ ] PARTNERSHIP [ ] OTHER ENTITY
_____________________________________________________________ ___________________________________________
Name of Entity Taxpayer Identification Number
[ ] 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 Date of Birth
_____________________________________________________________
Minor's Social Security Number
- ----------------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
( )
_____________________________________________________________ ___________________________________________
Street or P.O. Box Apartment Number
_____________________________________________________________ ___________________________________________
City State Zip Code
( ) ( )
_____________________________________________________________ ___________________________________________
Day Telephone Evening Telephone
- ----------------------------------------------------------------------------------------------------------------------
3 INVESTMENT INFORMATION
Method of Investment
$_________($1,000 minimum investment). Do not send cash. Investment will be paid for by (please check one):
[ ] Check or draft made payable to 'Cohen & Steers Equity Income Fund,Inc.'
[ ] Wire through the Federal Reserve System.*____________________________________________________________
Wire Reference Control Number
[ ] I have enclosed a check for $_______($1,000 minimum investment) and completed the Automatic Investment Plan
information in Section 11 of this application.
[ ] I purchased________________shares of the Cohen & Steers Equity Income Fund, Inc. through my broker on / / .
Confirm #_______________.
* Call (800) 437-9912 to notify the Fund of investments by wire and to obtain the Fund's wire instructions
and Wire Reference Control Number.
</TABLE>
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4 REDUCED SALES CHARGE
METHOD OF INVESTMENT
[ ] I apply for Right of Aggregation reduced sales charges based on the following accounts:
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
[ ] I apply for Right of Accumulation reduced sales charges based on the following accounts:
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
_____________________________________________________________ ___________________________________________
Account Name Account Number or Social Security Number
Letter of Intent
[ ] I am already investing under an existing Letter of Intent.
[ ] I agree to the Letter of Intent provisions in the Fund's current prospectus. During a 12 month period,
I plan to invest a dollar amount of at least: [ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
NET ASSET VALUE PURCHASE
[ ] I qualify for an exemption from the sales charge by meeting the conditions set forth in the
Prospectus. (Please attach certification to this form.)
- -----------------------------------------------------------------------------------------------------------------------
5 TELEPHONE REDEMPTION PRIVILEGE
Shares may be redeemed by calling 800-437-9912 (617-557-8000 for Massachusetts residents). See Redemption of
Shares section in the Prospectus. If the box is not checked, the telephone redemption option will be
declined.
[ ] I authorize the Transfer Agent to accept instructions from any person to redeem shares in my
account(s) by telephone, in accordance with the procedures and conditions set forth in the Fund's
current Prospectus.
Checks for redemption of proceeds will be sent via U.S. Mail to the address of record, unless the
information in Section 7 is completed for redemption by wire.
- -----------------------------------------------------------------------------------------------------------------------
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.
Dividends [ ] Pay by check. [ ] Reinvest.
Capital Gains [ ] Pay by check. [ ] Reinvest.
- ---------------------------------------------------------------------------------------------------------------
7 BANK OF RECORD (FOR TELEPHONE REDEMPTIONS AND/OR THE AUTOMATIC INVESTMENT PLAN)
Please attach a voided check from the bank you wish to use (for electronic credit to your checking account)
------------------------------------------------------------- -------------------------------------------
Bank Name Bank ABA Number
------------------------------------------------------------- -------------------------------------------
Street or P.O. Box Bank Account Number
( )
------------------------------------------------------------- -------------------------------------------
City State Zip Code Account Name
</TABLE>
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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 THAT
THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.
- ---------------------------------------------------------------------------------------------------------------
9 FOR AUTHORIZED DEALER USE ONLY (PLEASE PRINT)
We hereby authorized the Transfer Agent to act as our agent in connection with the transactions authorized
by the Account Information Form and agree to notify the Transfer Agent of any purchases made under a Letter
of Intent, Right of Accumulation or Right of Aggregation. If the Account Information Form includes a
Telephone Redemption Privilege, we guarantee the signature(s) above.
_____________________________________________________________ ___________________________________________
Dealer's Name Dealer Number
_____________________________________________________________ ___________________________________________
Main Office Address Branch Number
_____________________________________________________________ ___________________________________________
Representative's Name Rep. Number
( )
_____________________________________________________________ ___________________________________________
Branch Address Telephone Number
_____________________________________________________________ ___________________________________________
Authorized Signature of Dealer Title Date
- -----------------------------------------------------------------------------------------------------------------------
10 ADDITIONAL ACCOUNT STATEMENTS (PLEASE PRINT)
In addition to myself and my representative, please send copies of my account statement to:
_____________________________________________________________ ___________________________________________
Name Name
_____________________________________________________________ ___________________________________________
Address Address
_____________________________________________________________ ___________________________________________
City, State, Zip Code City, State, Zip Code
- -----------------------------------------------------------------------------------------------------------------------
11 AUTOMATIC INVESTMENT PLAN
The Automatic Investment Plan, which is available to shareholders, makes possible regularly scheduled
monthly purchases of Fund shares to allow dollar-cost averaging. The Fund's Transfer Agent can arrange for
an amount of money selected by you ($100 minimum) to be deducted from your checking account and used to
purchase shares of the Fund. A $250 minimum initial investment is required.
Please debit $_______from my checking account (named in Section 7) on or about the of the month. Depending
on the Application receipt date the plan may take 10 to 20 days to be in effect.
[ ] Monthly [ ] Semi-Annually
[ ] Quarterly [ ] Annually
IF YOU ARE APPLYING FOR THE TELEPHONE REDEMPTION PRIVILEGE OR AUTOMATIC INVESTMENT PLAN, PLEASE TAPE YOUR
VOIDED CHECK BELOW.
SERVICE ASSISTANCE MAILING INSTRUCTIONS
Our knowledgeable Client Service Representatives are Mail your completed Account Information
available to assist you between 8:30 a.m. and 5:00 p.m. Form and check to:
Eastern time at:
COHEN AND STEERS EQUITY INCOME FUND, INC.
(800) 437-9912 c/o Chase Global Funds Services Company
(617) 557-8000 FOR MASSACHUSETTS RESIDENTS P.O. Box 2798
Boston, MA 02208
</TABLE>
<PAGE>
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____________________________________ ___________________________________
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
- ---------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fee Table..................................................................................................... 2
Investment Objectives and Policies............................................................................ 3
Investment Techniques......................................................................................... 7
Management of the Fund........................................................................................ 10
Determination of Net Asset Value.............................................................................. 13
Purchase of Shares............................................................................................ 14
Sales Charges................................................................................................. 14
Exchange Privilege............................................................................................ 17
Redemption of Shares.......................................................................................... 17
Dividends and Distributions................................................................................... 19
Taxation...................................................................................................... 20
Organization and Description of Capital Stock................................................................. 21
Custodian and Transfer and Dividend Disbursing Agent.......................................................... 21
Reports to Shareholders....................................................................................... 22
Performance Information....................................................................................... 22
Additional Information........................................................................................ 23
Appendix A: Description of Bond Ratings....................................................................... 23
</TABLE>
[Logo]
------------------
PROSPECTUS
------------------
INVESTMENT ADVISER
COHEN & STEERS CAPITAL MANAGEMENT, INC.
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 832-3232
TRANSFER AGENT
CHASE GLOBAL FUNDS SERVICES COMPANY
73 TREMONT ST.
BOSTON, MASSACHUSETTS 02108-3913
TELEPHONE: (800) 437-9912
, 1997
____________________________________ ___________________________________
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[Logo]
757 Third Avenue
New York, New York 10017
(212) 832-3232
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
, 1997
Cohen & Steers Equity Income Fund, Inc. (the 'Fund') is a non-diversified,
open-end management investment company that seeks to achieve high current income
through investment in real estate securities. Capital appreciation is a
secondary objective. Under normal circumstances, the Fund will invest at least
65% of its total assets in the equity securities of real estate companies. Up to
35% of the Fund's total assets may be invested in debt securities issued or
guaranteed by real estate companies. The Fund may also invest in options,
financial futures and currency contracts. There can be no assurance that the
Fund will achieve its investment objectives. Cohen & Steers Capital Management,
Inc. serves as investment adviser (the 'Adviser' or 'Cohen & Steers') to the
Fund.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION ONLY WHEN PRECEDED OR ACCOMPANIED BY THE FUND'S PROSPECTUS
DATED , 1997 (THE 'PROSPECTUS'). THIS STATEMENT OF ADDITIONAL
INFORMATION CONTAINS ADDITIONAL AND MORE DETAILED INFORMATION THAN THAT SET
FORTH IN THE PROSPECTUS AND SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS,
ADDITIONAL COPIES OF WHICH MAY BE OBTAINED WITHOUT CHARGE BY WRITING OR CALLING
THE FUND AT THE ADDRESS AND TELEPHONE NUMBER GIVEN ABOVE.
- --------------------------------------------------------------------------------
<PAGE>
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Investment Restrictions and Policies........................................................ 1
Investment Techniques....................................................................... 2
Management of the Fund...................................................................... 6
Determination of Net Asset Value............................................................ 12
Redemption of Shares........................................................................ 12
Portfolio Transactions and Brokerage........................................................ 12
Taxation.................................................................................... 13
Organization and Description of Capital Stock............................................... 20
Principal Underwriter....................................................................... 20
Custodian and Transfer and Dividend Disbursing Agent........................................ 20
Performance Information..................................................................... 21
Legal Matters............................................................................... 23
Accountants................................................................................. 23
Report of Independent Accountants........................................................... 25
</TABLE>
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- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS AND POLICIES
- --------------------------------------------------------------------------------
Cohen & Steers Equity Income Fund, Inc. (the 'Fund') is a registered open-end
management investment company. The fundamental investment objectives and the
general investment policies and investment techniques are described in the
Prospectus. The Fund has also adopted certain investment restrictions limiting
the following activities except as specifically authorized:
The Fund may not:
(1) Borrow money, or pledge its assets, except that the Fund may borrow money
from banks for temporary or emergency purposes, including the meeting of
redemption requests which might require the untimely disposition of securities.
Borrowing in the aggregate may not exceed 15%, and borrowing for purposes other
than meeting redemptions may not exceed 5%, of the value of the Fund's total
assets (including the amount borrowed) less liabilities (not including the
amount borrowed) at the time the borrowing is made. Outstanding borrowings in
excess of 5% of the value of the Fund's total assets will be repaid before any
subsequent investments are made;
(2) Issue any senior securities, except that collateral arrangements with
respect to transactions such as forward contracts, futures contracts, short
sales or options, including deposits of initial and variation margin, shall not
be considered to be the issuance of a senior security for purposes of this
restriction;
(3) Act as an underwriter of securities issued by other persons, except insofar
as the Fund may be deemed an underwriter in connection with the disposition of
securities;
(4) Purchase or sell real estate, except that the Fund may invest in securities
of companies that deal in real estate or are engaged in the real estate
business, including real estate investment trusts, and securities secured by
real estate or interests therein and the Fund may hold and sell real estate
acquired through default, liquidation, or other distributions of an interest in
real estate as a result of the Fund's ownership of such securities:
(5) Purchase or sell commodities or commodity futures contracts, except that the
Fund may invest in financial futures contracts, options thereon and similar
instruments;
(6) Make loans to other persons except through the lending of securities held by
it (but not to exceed a value of one-third of total assets), through the use of
repurchase agreements, and by the purchase of debt securities, all in accordance
with its investment policies;
(7) Purchase restricted or 'illiquid' securities, including repurchase
agreements maturing in more than seven days, if as a result, more than 15% of
the Fund's net assets would then be invested in such securities (excluding
securities which are eligible for resale pursuant to Rule 144A under the
Securities Act of 1933);
(8) Acquire or retain securities of any investment company, except that the Fund
may (a) acquire securities of investment companies up to the limits permitted by
Sec. 12(d)(1) of the Investment Company Act of 1940, and (b) acquire securities
of any investment company as part of a merger, consolidation or similar
transaction;
(9) Make short sales whereby the dollar amount of short sales at any one time
would exceed 25% of the net assets of the Fund; provided the Fund maintains
collateral in a segregated account consisting of cash or liquid portfolio
securities with a value equal to the current market value of the shorted
securities, which
1
<PAGE>
<PAGE>
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.
- --------------------------------------------------------------------------------
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Investment Objectives and Policies set forth in the Prospectus and the
Investment Restrictions numbered 1 through 6 in this Statement of Additional
Information have been adopted as fundamental policies of the Fund. Under the
Investment Company Act of 1940, as amended (the '1940 Act'), a fundamental
policy may not be changed without the vote of a majority of the outstanding
voting securities of the Fund, as defined under the 1940 Act. 'Majority' means
the lesser of (1) 67% or more of the shares present at a meeting of shareholders
of the Fund, if the holders of more than 50% of the outstanding shares of the
Fund are present or represented by proxy, or (2) more than 50% of the
outstanding shares of the Fund. Investment restrictions numbered 7 through 13
above, are non-fundamental and may be changed at any time by vote of a majority
of the Board of Directors.
- --------------------------------------------------------------------------------
INVESTMENT TECHNIQUES
- --------------------------------------------------------------------------------
The following sections provide expanded discussion of several of the types of
investments and investment techniques which may be used by the Fund.
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS
REITs are sometimes informally characterized as equity REITs, mortgage REITs and
hybrid REITs. An equity REIT invests primarily in the fee ownership or leasehold
ownership of land and buildings and derives its income primarily from rental
income. An equity REIT may also realize capital gains (or losses)
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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 securities issued by equity REITs.
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts. A futures contract
is an agreement to buy or sell a specific security or financial instrument at a
particular price on a stipulated future date. Although some financial futures
contracts call for making or taking delivery of the underlying securities, in
most cases these obligations are closed out before the settlement date. The
closing of a contractual obligation is accomplished by purchasing or selling an
identical offsetting futures contract. Other financial futures contracts by
their terms call for cash settlements.
The Fund may also buy and sell index futures contracts with respect to any stock
or bond index traded on a recognized stock exchange or board of trade. An index
futures contract is a contract to buy or sell units of an index at a specified
future date at a price agreed upon when the contract is made. The stock index
futures contract specifies that no delivery of the actual stocks making up the
index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract.
At the time the Fund purchases a futures contract, an amount of cash or liquid
portfolio securities equal to the market value of the futures contract will be
deposited in a segregated account with the Fund's custodian. When writing a
futures contract, the Fund will maintain with its custodian similar liquid
assets that, when added to the amounts deposited with a futures commission
merchant or broker as margin, are equal to the market value of the instruments
underlying the contract. Alternatively, the Fund may 'cover' its position by
owning the instruments underlying the contract (or, in the case of an index
futures contract, a portfolio with a volatility substantially similar to that of
the index on which the futures contract is based), or holding a call option
permitting the Fund to purchase the same futures contract at a price no higher
than the price of the contract written by the Fund (or at a higher price if the
difference is maintained in liquid assets with the Fund's custodian).
The Fund will be authorized to use financial futures contracts and related
options for 'bona fide hedging' purposes, as such term is defined in applicable
regulations of the Commodity Futures Trading Commission ('CFTC'). The Fund will
also be authorized to enter into such contracts and related options for
nonhedging purposes, for example to enhance total return or provide market
exposure pending the investment of cash balances, but only to the extent that
aggregate initial margin deposits plus premiums paid by it for open futures
options positions, less the amount by which any such positions are 'in-the-
money,' would not exceed 5% of the Fund's total assets. The Fund may lose the
expected benefit of the transactions if interest rates, currency exchange rates
or securities prices change in an unanticipated manner. Such unanticipated
changes in interest rates, currency exchange rates or securities prices may also
result in poorer overall performance than if the Fund had not entered into any
futures transactions.
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OPTIONS ON SECURITIES AND STOCK INDICES
The Fund may write covered call and put options and purchase call and put
options on securities or stock indices that are traded on United States
exchanges.
An option on a security is a contract that gives the purchaser of the option, in
return for the premium paid, the right to buy a specified security (in the case
of a call option) or to sell a specified security (in the case of a put option)
from or to the writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of the option, in
return for the premium paid, the right to receive from the seller cash equal to
the difference between the closing price of the index and the exercise price of
the option.
The Fund may write a call or put option only if the option is 'covered.' A call
option on a security written by the Fund is covered if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option on a security is also covered if the Fund holds a call on the same
security and in the same principal amount as the call written where the exercise
price of the call held (a) is equal to or less than the exercise price of the
call written or (b) is greater than the exercise price of the call written if
the difference is maintained by the Fund in cash or liquid portfolio securities
in a segregated account with its custodian. A put option on a security written
by the Fund is 'covered' if the Fund maintains similar liquid assets with a
value equal to the exercise price in a segregated account with its custodian, or
else holds a put on the same security and in the same principal amount as the
put written where the exercise price of the put held is equal to or greater than
the exercise price of the put written.
The Fund will cover call options on stock indices by owning securities whose
price changes, in the opinion of the investment adviser are expected to be
similar to those of the index, or in such other manner as may be in accordance
with the rules of the exchange on which the option is traded and applicable laws
and regulations. Nevertheless, where the Fund covers a call option on a stock
index through ownership of securities, such securities may not match the
composition of the index. In that event, the Fund will not be fully covered and
could be subject to risk of loss in the event of adverse changes in the value of
the index. The Fund will cover put options on stock indices by segregating
assets equal to the option's exercise price, or in such other manner as may be
in accordance with the rules of the exchange on which the option is traded and
applicable laws and regulations.
The Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of a security or an index on which the
Fund has written a call option falls or remains the same, the Fund will realize
a profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the portfolio securities
being hedged. If the value of the underlying security or index rises, however,
the Fund will realize a loss in its call option position, which will reduce the
benefit of any unrealized appreciation in the Fund's stock investments. By
writing a put option, the Fund assumes the risk of a decline in the underlying
security or index. To the extent that the price changes of the portfolio
securities being hedged correlate with changes in the value of the underlying
security or index, writing covered put options on securities or indices will
increase the Fund's losses in the event of a market decline, although such
losses will be offset in part by the premium received for writing the option.
4
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The Fund may also purchase put options to hedge its investments against a
decline in value. By purchasing a put option, the Fund will seek to offset a
decline in the value of the portfolio securities being hedged through
appreciation of the put option. If the value of the Fund's investments does not
decline as anticipated, or if the value of the option does not increase, the
Fund's loss will be limited to the premium paid for the option plus related
transaction costs. The success of this strategy will depend, in part, on the
accuracy of the correlation between the changes in value of the underlying
security or index and the changes in value of the Fund's security holdings being
hedged.
The Fund may purchase call options on individual securities to hedge against an
increase in the price of securities that the Fund anticipates purchasing in the
future. Similarly, the Fund may purchase call options to attempt to reduce the
risk of missing a broad market advance, or an advance in an industry or market
segment, at a time when the Fund holds uninvested cash or short-term debt
securities awaiting investment. When purchasing call options, the Fund will bear
the risk of losing all or a portion of the premium paid if the value of the
underlying security or index does not rise.
There can be no assurance that a liquid market will exist when the Fund seeks to
close out an option position. Trading could be interrupted, for example, because
of supply and demand imbalances arising from a lack of either buyers or sellers,
or the options exchange could suspend trading after the price has risen or
fallen more than the maximum specified by the exchange. Although the Fund may be
able to offset to some extent any adverse effects of being unable to liquidate
an option position, the Fund may experience losses in some cases as a result of
such inability.
- --------------------------------------------------------------------------------
FOREIGN CURRENCY CONTRACTS AND CURRENCY HEDGING TRANSACTIONS
In order to hedge against foreign currency exchange rate risks, the Fund may
enter into forward foreign currency exchange contracts and foreign currency
futures contracts, as well as purchase put or call options on foreign
currencies, as described below. The Fund may also conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market.
The Fund may enter into forward foreign currency exchange contracts ('forward
contracts') to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers. The Fund may enter into a forward
contract, for example, when it enters into a contract for the purchase or sale
of a security denominated in a foreign currency in order to 'lock in' the U.S.
dollar price of the security. In addition, for example, when the Fund believes
that a foreign currency may suffer or enjoy a substantial movement against
another currency, it may enter into a forward contract to sell an amount of the
former foreign currency (or another currency which acts as a proxy for that
currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. This second investment practice
is generally referred to as 'cross-hedging.' Because in connection with the
Fund's foreign currency forward transactions an amount of the Fund's assets
equal to the amount of the purchase will be held aside or segregated to be used
to pay for the commitment, the Fund will always have cash or other liquid assets
available that is sufficient to cover any commitments under these contracts or
to limit
5
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any potential risk. The segregated account will be marked-to-market on a daily
basis. In addition, the Fund will not enter into such forward contracts if, as a
result, the Fund will have more than 15% of the value of its total assets
committed to such contracts. While these contracts are not presently regulated
by the CFTC, the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Fund's ability to utilize forward contracts in the
manner set forth above may be restricted. Forward contracts may limit potential
gain from a positive change in the relationship between the U.S. dollar and
foreign currencies. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not engaged in such
contracts.
The Fund may purchase and write put and call options on foreign currencies for
the purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the dollar cost of foreign
securities to be acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only a partial
hedge, up to the amount, of the premium received, and the Fund could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. The purchase of an option on foreign currency may
constitute an effective hedge against fluctuation in exchange rates although, in
the event of rate movements adverse to the Fund's position, the Fund may forfeit
the entire amount of the premium plus related transaction costs.
The Fund may enter into exchange-traded contracts for the purchase or sale for
future delivery of foreign currencies ('foreign currency futures'). This
investment technique will be used only to hedge against anticipated future
changes in exchange rates which otherwise might adversely affect the value of
the Fund's portfolio securities or adversely affect the prices of securities
that the Fund intends to purchase at a later date. The successful use of
currency futures will usually depend on the investment adviser's ability to
forecast currency exchange rate movements correctly. Should exchange rates move
in an unexpected manner, the Fund may not achieve the anticipated benefits of
foreign currency futures or may realize losses.
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MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
The directors and officers of the Fund and their principal occupations during
the past five years are set forth below. Each such director and officer is also
a director or officer of Cohen & Steers Realty Income Fund, Inc. and Cohen &
Steers Total Return Realty Fund, Inc., both of which are closed-end investment
companies sponsored by the Adviser, and Cohen & Steers Realty Shares, Inc. and
Cohen & Steers Special Equity Fund, Inc., both of which are open-end investment
companies sponsored by the Adviser.
<TABLE>
<CAPTION>
NAME AND ADDRESS OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- --------------------------------- ------------------- -------------------------------------------------------
<S> <C> <C>
*Robert H. Steers ............... Director, Chairman Chairman of Cohen & Steers Capital Management, Inc.,
757 Third Avenue and Secretary the Fund's investment adviser. Chairman and Presi-
New York, New York dent of Cohen & Steers Securities, Inc.
Age: 44
</TABLE>
6
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<TABLE>
<CAPTION>
NAME AND ADDRESS OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- --------------------------------- ------------------- -------------------------------------------------------
<S> <C> <C>
*Martin Cohen ................... Director, President President of Cohen & Steers Capital Management, Inc.,
757 Third Avenue and Treasurer the Fund's investment adviser. Vice President of
New York, New York Cohen & Steers Securities, Inc.
Age: 48
Gregory C. Clark ................ Director Principal of Wellspring Management Group.
P.O. Box 5697
Snowmass Village, Colorado
Age: 50
George Grossman ................. Director Attorney at law.
17 Elm Place
Rye, New York
Age: 43
Jeffrey H. Lynford .............. Director Chairman of Wellsford Group Inc. since 1986 and of
610 Fifth Avenue Wellsford Real Properties, Inc. since 1992. Mr.
New York, New York Lynford is also an Emeritus Trustee of the National
Age: 49 Trust for Historic Preservation.
Willard H. Smith Jr. ............ Director Board member Essex Property Trust, Inc., Highwoods
7 Slayton Drive Properties, Inc., Realty Income Corporation and
Short Hills, New Jersey Willis Lease Finance Corporation. Managing director
Age: 60 at Merrill Lynch & Co., Equity Capital Markets
Division from 1983 to 1995.
Elizabeth O. Reagan ............. Vice President Senior Vice President of Cohen & Steers Capital Manage-
757 Third Avenue ment, Inc., the Fund's investment adviser, since
New York, New York 1996 and prior to that Vice President of Cohen &
Age: 34 Steers Capital Management, Inc.
Adam Derechin ................... Vice President and Vice President of Cohen & Steers Capital Management,
757 Third Avenue Assistant Treasurer Inc., the Fund's investment adviser, since 1995. Ad-
New York, New York ministrator to Cohen & Steers Capital Management,
Age: 33 Inc. since 1993. Prior to that studied at the
University of Maryland at College Park.
</TABLE>
- ------------
* Directors who are 'interested persons' of the Fund, as defined in the
Investment Company Act of 1940.
The Directors of the Fund who are employees of the Adviser or officers or
employees of any of its affiliates receive no remuneration from the Fund. Each
of the other Directors is paid an annual retainer of $5,500, and a fee of $500
for each meeting attended and is reimbursed for the expenses of attendance at
such meetings.
- --------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS
The following table sets forth information regarding 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, 1997. Officers of the Fund and Directors who are
interested persons of the Fund do not receive any compensation from the
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Fund or any other fund in the fund complex which is a U.S. registered investment
company. Neither the Fund nor any other fund in the fund complex of which the
Fund is a part provides compensation in the form of pension or retirement
benefits to any of its directors. In the Column headed 'Total Compensation From
Registrant and Fund Complex Paid to Directors,' the number in parentheses
indicates the total number of boards in the fund complex on which the Director
serves.
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1997
(ESTIMATED)
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
FROM REGISTRANT
AGGREGATE AND FUND
COMPENSATION COMPLEX PAID TO
NAME OF PERSON, POSITION FROM REGISTRANT DIRECTORS
- ------------------------------------------------ --------------- ---------------
<S> <C> <C>
Gregory C. Clark*, Director..................... $ 3,750 $32,575(5)
Martin Cohen**, Director and President.......... 0 0(5)
George Grossman*, Director...................... 3,750 32,375(5)
Jeffrey H. Lynford*, Director................... 3,750 32,375(5)
Willard H. Smith Jr.*........................... 3,750 32,375(5)
Robert H. Steers**, Director and Chairman....... 0 0(5)
</TABLE>
- ------------
* Member of the Audit Committee.
** 'Interested person,' as defined in the Investment Company Act of 1940, of the
Fund because of the affiliation with Cohen & Steers Capital Management, Inc.,
the Fund's investment adviser.
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ADVISER AND INVESTMENT ADVISORY AGREEMENT
Cohen & Steers, a registered investment adviser, was formed in 1986 and
specializes in the management of real estate securities portfolios. Its current
clients include pension plans of leading corporations, endowment funds and
mutual funds, including Cohen & Steers Realty Income Fund, Inc. and Cohen &
Steers Total Return Realty Fund, Inc., both of which are closed-end investment
companies and Cohen & Steers Realty Shares, Inc. and Cohen & Steers Special
Equity Fund, Inc., both of 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.
Certain other clients of the Adviser may have investment objectives and policies
similar to those of the Fund. The Adviser may, from time to time, make
recommendations which result in the purchase or sale of a particular security by
its other clients simultaneously with the Fund. If transactions on behalf of
more than one client during the same period increase the demand for securities
being sold there may be an adverse effect on price. It is the policy of the
Adviser to allocate advisory recommendations and the placing of orders in a
manner which is deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the Adviser (including
the Fund) are purchasing or selling the same security on a given day through the
same broker-dealer, such transactions may be averaged as to price.
8
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Pursuant to an investment advisory agreement (the 'Advisory Agreement'), the
Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, executes the purchase
and sale orders for the portfolio transactions of the Fund and generally manages
the Fund's investments in accordance with the stated policies of the Fund,
subject to the general supervision of the Board of Directors of the Fund.
Under the Advisory Agreement, the Fund will pay the Adviser a monthly management
fee in an amount equal to 1/12th of 0.75% of the average daily value of the net
assets of the Fund.
The Adviser also provides the Fund with such personnel as the Fund may from time
to time request for the performance of clerical, accounting and other office
services, such as coordinating matters with the administrator, the transfer
agent and the custodian, which the Adviser is not required to furnish under the
Advisory Agreement. The personnel rendering these services, who may act as
officers of the Fund, may be employees of the Adviser or its affiliates. The
cost to the Fund of these services must be agreed to by the Fund and is intended
to be no higher than the actual cost to the Adviser or its affiliates of
providing the services. The Fund does not pay for services performed by officers
of the Adviser or its affiliates. The Fund may from time to time hire its own
employees or contract to have services performed by third parties, and the
management of the Fund intends to do so whenever it appears advantageous to the
Fund.
The Advisory Agreement was approved on August 13, 1997 by the Fund's Directors,
including a majority of the Directors who are not interested persons as defined
in the Investment Company Act of 1940, as amended (the '1940 Act') of the Fund
or the Adviser.
The Advisory Agreement continues in effect from year to year, provided that its
continuance is specifically approved annually by the Directors or by a vote of
the shareholders, and in either case by a majority of the Directors who are not
parties to the Advisory Agreement or interested persons of any such party, by
vote cast in person at a meeting called for the purpose of voting on such
approval.
The Advisory Agreement is terminable without penalty by the Fund on sixty days
written notice when authorized either by majority vote of its outstanding voting
securities or by a vote of a majority of its Directors, or by the Adviser on
sixty days' written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Adviser, or of
reckless disregard of its obligations thereunder, the Adviser shall not be
liable for any action or failure to act in accordance with its duties
thereunder.
- --------------------------------------------------------------------------------
ADMINISTRATOR AND SUB-ADMINISTRATOR
The Adviser has also entered into an administration agreement with the Fund (the
'Administration Agreement') under which the Adviser performs certain
administrative functions for the Fund, including (i) providing office space,
telephone, office equipment and supplies for the Fund; (ii) paying compensation
of the Fund's officers for services rendered as such; (iii) authorizing
expenditures and approving bills for payment on behalf of the Fund; (iv)
supervising preparation of the periodic updating of the Fund's registration
statement, including prospectus and statement of additional information, for the
purpose of filings with the Securities and Exchange Commission and state
securities administrators and monitoring and maintaining the effectiveness of
such filings, as appropriate; (v) supervising preparation of quarterly reports
to the Fund's shareholders, notices of dividends, capital gains distributions
and tax credits, and attending to routine correspondence and other
communications with individual shareholders; (vi) supervising the
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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 Chase Manhattan Bank ('Chase') as sub-administrator under a fund
accounting and administration agreement (the 'Sub-Administration Agreement').
Under the Sub-Administration Agreement, Chase has assumed responsibility for
performing certain of the foregoing administrative functions, including
determining the Fund's net asset value and preparing such figures for
publication, maintaining certain of the Fund's books and records that are not
maintained by the Adviser, custodian or transfer agent, preparing financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholders reports, and Commission filings, and responding to
shareholder inquiries. Under the Administration Agreement, the Adviser remains
responsible for monitoring and overseeing the performance by Chase of its
obligations to the Fund under its agreement with the Fund, subject to the
overall authority of the Fund's Board of Directors.
Under the terms of the 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 net assets in excess of
that amount. Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts 02108, a wholly-owned subsidiary of Chase, has been retained by
Chase to provide to the Fund the administrative services described above. Chase
also serves as the Fund's custodian and transfer agent. See 'Custodian and
Transfer and Dividend Disbursing Agent,' below. Chase Global Funds Services
Company has been similarly retained by Chase to provide transfer agency services
to the Fund and is hereafter sometimes referred to as the 'Transfer Agent.'
The Sub-Administration Agreement is terminable by either party on sixty days
written notice to the other. The Sub-Administration Agreement provides that in
the absence of willful misfeasance, bad faith or gross negligence on the part of
the Sub-Administrator, or of reckless disregard of its obligations thereunder,
Chase shall not be liable for any action or failure to act in accordance with
its duties thereunder.
- --------------------------------------------------------------------------------
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan and related agreements pursuant to Rule
12b-1 under the Investment Company Act of 1940, which provides that investment
companies may pay distribution expenses, directly or indirectly, pursuant to a
Distribution Plan adopted by the investment company's Board and approved by its
shareholders. Under the Distribution Plan, the Fund makes assistance payments to
brokers, financial institutions and other financial intermediaries ('payee(s)')
for shareholder accounts ('qualified accounts') as to which a payee has rendered
distribution assistance services to shareholders at an annual rate of 0.25% of
the average net
10
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asset value of the shares. Substantially all such monies are paid by CSSI to
payees for their distribution assistance with any remaining amounts being used
to partially defray other expenses incurred by CSSI in distributing Fund shares.
In addition to the amounts required by the Distribution Plan, CSSI may, in its
discretion, pay additional amounts from its own resources. The Directors have
determined that there is a reasonable likelihood the Distribution Plan will
benefit the Fund and its shareholders.
The Glass-Steagall Act prohibits all entities which receive deposits from
engaging to any extent in the business of issuing, underwriting, selling, or
distributing securities, although national and state chartered banks are
permitted to purchase and sell securities upon the order and for the account of
their customers. Those persons who wish to provide assistance in the form of
activities not primarily intended to result in the sale of Fund shares (such as
administrative and account maintenance services) may include banks, upon advice
of counsel that they are permitted to do so under applicable laws and
regulations, including the Glass-Steagall Act. In such event, no preference will
be given to securities issued by such banks as investments and the assistance
payments received by such banks under the Distribution Plan may or may not
compensate the banks for their administrative and account maintenance services
for which the banks may also receive compensation from the bank accounts they
service. It is Fund management's position that payments to banks pursuant to the
Distribution Plan for activities not primarily intended to result in the sale of
Fund shares, such as administrative and account maintenance services, do not
violate the Glass-Steagall Act. However, this is an unsettled area of the law
and if a determination contrary to management's position is made by a bank
regulatory agency or court concerning payments to banks contemplated by the
Distribution Plan, any such payments will be terminated and any shares
registered in the bank's name, for its underlying customer, will be registered
in the name of that customer. Financial institutions providing distribution
assistance or administrative services for the Fund may be required to register
as securities dealers in certain states.
Under the Distribution Plan, the Fund's Treasurer reports quarterly the amounts
and purposes of assistance payments. During the continuance of the Distribution
Plan the selection and nomination of the disinterested Directors are at the
discretion of the disinterested Directors currently in office.
The Distribution Plan and related agreements were duly approved by the
shareholders and may be terminated at any time by a vote of the shareholders or
by vote of the disinterested Directors. The Distribution Plan and related
agreements may be renewed from year to year if approved by a vote of the
majority of the Board of Directors, and by the vote of a majority of the
disinterested Directors cast in person at a meeting called for the purpose of
voting on such renewal. The Distribution Plan may not be amended to increase
materially the amount to be spent for distribution without shareholder approval.
All material amendments to the Distribution Plan must be approved by a vote of
the Board of Directors and of the disinterested Directors, cast in person at a
meeting called for the purpose of such vote.
11
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- --------------------------------------------------------------------------------
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 materially affect
the Fund's net asset value. The New York Stock Exchange is closed on Saturdays,
Sundays, and on New Years' Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day (collectively, the 'Holidays'). When any Holiday falls on a
Saturday, the Exchange is closed the preceding Friday, and when any holiday
falls on a Sunday, the Exchange is closed the following Monday. No redemptions
will be made on Martin Luther King, Jr. Day, Columbus Day and Veteran's Day, nor
on any of the Holidays.
For purposes of determining the Fund's net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
United States dollars at the mean of the bid and asked prices of such currencies
against the United States dollar last quoted by a major bank which is a regular
participant in the institutional foreign exchange markets or on the basis of a
pricing service which takes into account the quotes provided by a number of such
major banks.
- --------------------------------------------------------------------------------
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected in the discretion of the Board of Directors
of the Fund and taken at their value used in determining the Fund's net asset
value per share as described in the Prospectus under 'Determination of Net Asset
Value' less any applicable contingent deferred sales charge on certain
redemptions made within 12 months following purchases without a sales charge),
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.
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PORTFOLIO TRANSACTIONS AND BROKERAGE
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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
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Fund may make purchases of underwritten issues at prices which include
underwriting fees.
In selecting a broker to execute each particular transaction, the Adviser will
take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; and the value of the expected contribution of
the broker to the investment performance of the Fund on a continuing basis.
Accordingly, the cost of the brokerage commissions to the Fund in any
transaction may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies and procedures as the Directors may
determine, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty solely by reason of its having caused the Fund to pay a broker
that provides research services to the Adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting that transaction, if
the Adviser determines in good faith that such amount of commission was
reasonable in relation to the value of the research service provided by such
broker viewed in terms of either that particular transaction or the Adviser's
ongoing responsibilities with respect to the Fund. Research and investment
information is provided by these and other brokers at no cost to the Adviser and
is available for the benefit of other accounts advised by the Adviser and its
affiliates, and not all of the information will be used in connection with the
Fund. While this information may be useful in varying degrees and may tend to
reduce the Adviser's expenses, it is not possible to estimate its value and in
the opinion of the Adviser it does not reduce the Adviser's expenses in a
determinable amount. The extent to which the Adviser makes use of statistical,
research and other services furnished by brokers is considered by the Adviser in
the allocation of brokerage business but there is no formula by which such
business is allocated. The Adviser does so in accordance with its judgment of
the best interests of the Fund and its shareholders. The Adviser may also take
into account payments made by brokers effecting transactions for the Fund to
other persons on behalf of the Fund for services provided to it for which it
would be obligated to pay (such as custodial and professional fees). In
addition, consistent with the Rules of Fair Practice 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.
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TAXATION
- --------------------------------------------------------------------------------
TAXATION OF THE FUND
The Fund intends to qualify annually and to elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
'Code').
To qualify as a regulated investment company, the Fund must, among other things,
(a) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock, securities or foreign currencies or other income
derived with respect to its business of investing in such stock, securities or
currencies; or (b) derive less than 30% of its gross income from the sale or
other disposition of certain assets (namely (i) stock or securities, (ii)
options, futures, and forward contracts (other than those on foreign
currencies), and (iii) foreign currencies (including options, futures, and
forward contracts on such currencies) not directly related to the Fund's
principal business of investing
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in stock or securities (or options and futures with respect to stocks or
securities)) held less than 3 months (this restriction will not be applicable
beginning in 1998); (c) diversify its holding so that, at end of each quarter of
the taxable year, (i) at least 50% of the market value of the Fund's assets is
represented by cash and cash items (including receivables), U.S. Government
securities, the securities of other regulated investment companies and other
securities, with such other securities of any one issuer limited for the
purposes of this calculation to an amount not greater than 5% of the value of
the Fund's total assets and not greater than 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its total
assets is invested in the securities of any one issuer (other than U.S.
Government securities or the securities of other regulated investment
companies); and (d) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and net
short-term capital gains in excess of net long-term capital losses) each taxable
year.
As a regulated investment company, the Fund generally will not be subject to
U.S. federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. The Funds 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 December
31 of the current calendar year if it is declared by the Fund in October,
November or December with a record date in such a month and paid by the Fund
during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.
- --------------------------------------------------------------------------------
DISTRIBUTIONS
Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. Because a portion of the
Fund's income may consist of dividends paid by U.S. corporations, a portion of
the dividends paid by the Fund may be eligible for the corporate dividends-
received deduction. Distributions of net capital gains, if any, designated as
capital gain dividends are taxable as long-term capital gains, regardless of how
long the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net value of a share of the Fund on the reinvestment
date.
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.
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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.
- --------------------------------------------------------------------------------
SALE OF SHARES
Upon the sale or other disposition of shares of the Fund, a shareholder may
realize a capital gain or loss which will be long-term or short-term, generally
depending upon the shareholder's holding period for the shares. Any loss
realized on a sale or exchange will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30 days before and
ending 30 days after disposition of the shares. In such a case, the basis of the
shares acquired will be adjusted to reflect the disallowed loss. Any loss
realized by a shareholder on a disposition of Fund shares held by the
shareholder for six months or less will be treated as a long-term capital loss
to the extent of any distributions of net capital gains received by the
shareholder with respect to such shares.
- --------------------------------------------------------------------------------
ORIGINAL ISSUE DISCOUNT SECURITIES
Investments by the Fund in zero coupon or other discount securities will result
in income to the Fund equal to a portion of the excess of the face value of the
securities over their issue price (the 'original issue discount') each year that
the securities are held, even though the Fund receives no cash interest
payments. This income is included in determining the amount of income which the
Fund must distribute to maintain its status as a regulated investment company
and to avoid the payment of federal income tax and the 4% excise tax. In
addition, if the Fund invests in certain high yield original issue discount
securities issued by corporations, a portion of the original issue discount
accruing on any such obligation may be eligible for the deduction for dividends
received by corporations. In such event, dividends of investment company taxable
income received from the Fund by its corporate shareholders, to the extent
attributable to such portion of accrued original issue discount, may be eligible
for this deduction for dividends received by corporations if so designated by
the Fund in a written notice to shareholders.
- --------------------------------------------------------------------------------
MARKET DISCOUNT BONDS
Gains 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.
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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
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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 is 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 ('60-40'); however, foreign currency gains or losses (as discussed below)
arising from certain section 1256 contracts may be treated as ordinary income or
loss. Also, section 1256 contracts held by the Fund at the end of each taxable
year (and, generally, for purposes of the 4% excise tax, on October 31 of each
year) are 'marked-to-market' (that is, treated as sold at fair market value),
resulting in unrealized gains or losses being treated as though they were
realized.
Generally, the hedging transactions undertaken by the Fund may result in
'straddles' for U.S. federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by the Fund. In addition, losses
realized by the Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which the losses are realized.
Because only a few regulations implementing the straddle rules have been
promulgated, the tax consequences to the Fund of engaging in hedging
transactions are not entirely clear. Hedging transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to shareholders.
The Fund may make one or more of the elections available under the Code which
are applicable to straddles. If the Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because the straddle rules may affect the character of gains or losses, defer
losses and/or accelerate the recognition of gains or losses from the affected
straddle positions, the amount which may be distributed to shareholders, and
which will be taxed to them as ordinary income or long-term capital gain, may be
increased or decreased as compared to a fund that did not engage in such hedging
transactions.
The 30% limitation described above and the diversification requirements
applicable to the Fund's assets may limit the extent to which the Fund will be
able to engage in transactions in options, future contracts and forward
contracts.
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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 foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency, and on disposition of certain options, futures and foreign
currency contracts, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security or contract and
the date of disposition also are treated as ordinary gain or loss. These gains
or losses, referred to under the Code as 'Section 988' gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to its shareholders as ordinary income.
A Fund will not realize gain or loss on a short sale of a security until it
closes the transaction by delivering the borrowed security to the lender. All or
a portion of any gain arising from a short sale may be treated as short-term
capital gain, regardless of the period for which the Fund held the security used
to close the short sale. In addition, the Fund's holding period for any security
which is substantially identical to that which is sold short may be reduced or
eliminated as a result of the short sale. In many cases, the Fund is required to
recognize gain (but not loss) upon entering into a short sale with respect to an
appreciated security that the Fund owns, as though the Fund constructively sold
the security at the time of entering into the short sale.
- --------------------------------------------------------------------------------
INVESTMENT 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
existing Treasury regulations, a portion of the Fund's income from a REIT that
is attributable to the REIT's residual interest in a REMIC (referred to in the
Code as an 'excess inclusion') will be subject to federal income tax in all
events. These regulations are also expected to provide that excess inclusion
income of a regulated investment company, such as the Fund, will be allocated to
shareholders of the regulated investment company in proportion to the dividends
received by such shareholders, with the same consequences as if the shareholders
held the related REMIC residual interest directly. In general, excess inclusion
income allocated to shareholders (i) cannot be offset by net operating losses
(subject to a limited exception for certain thrift institutions), (ii) will
constitute unrelated business taxable income to entities (including a qualified
pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or
other tax-exempt entity) subject to tax on unrelated business income, thereby
potentially requiring such an entity that is allocated excess inclusion income,
and otherwise might not be required to file a tax return, to file a tax return
and pay tax on such income, and (iii) in the case of a foreign shareholder, will
not qualify for any reduction in U.S. federal withholding tax. In addition, if
at any time during any taxable year a 'disqualified organization' (as defined in
the Code) is a record holder of a share in a regulated investment company, then
the regulated investment company will be subject to a tax equal to that portion
of its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest federal income tax rate
imposed on corporations. The Adviser does not intend on behalf of the Fund to
invest in REITs, a substantial portion of the assets of which consists of
residual interests in REMICs.
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PASSIVE FOREIGN INVESTMENT COMPANIES
If the Fund invests in stock of certain foreign investment companies, the Fund
may be subject to U.S. federal income taxation on a portion of any 'excess
distribution' with respect to, or gain from the disposition of, such stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of the Fund's holding period for the stock. The distribution or gain so
allocated to any taxable year of the Fund, other than the taxable year of the
excess distribution or disposition, would be taxed to the Fund at the highest
ordinary income tax rate in effect for such year, and the tax would be further
increased by an interest charge to reflect the value of the tax deferral deemed
to have resulted from the ownership of the foreign company's stock. Any amount
of distribution or gain allocated to the taxable year of the distribution or
disposition would be included in the Fund's investment company taxable income
and, accordingly, would not be taxable to the Fund to the extent distributed by
the Fund as a dividend to its shareholders.
The Fund may be able to make an election, in lieu of being taxable in the manner
described above, to include annually in income its pro rata share of the
ordinary earnings and net capital gain of the foreign investment company,
regardless of whether it actually received any distributions from the foreign
company. These amounts would be included in the Fund's investment company
taxable income and net capital gain which, to the extent distributed by the Fund
as ordinary or capital gain dividends, as the case may be, would not be taxable
to the Fund. In order to make this election, the Fund would be required to
obtain certain annual information from the foreign investment companies in which
it invests, which in many cases may be difficult to obtain. Alternatively, the
Fund may be eligible to elect to mark to market its foreign investment company
stock, resulting in the stock being treated as sold at fair market value on the
last business day of each taxable year. Any resulting gain would be reported as
ordinary income, and any resulting loss would not be recognized. If this
election were made, the special rules described above with respect to excess
distributions and dispositions would still apply.
- --------------------------------------------------------------------------------
FOREIGN WITHHOLDING TAXES
Income received by the Fund from sources within foreign countries may be subject
to withholding and other taxes imposed by such countries.
- --------------------------------------------------------------------------------
BACKUP WITHHOLDING
The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Corporate shareholders and certain other shareholders
specified in the Code generally are exempt from such backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the shareholder's U.S. federal income tax liability.
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FOREIGN SHAREHOLDERS
U.S. taxation of a shareholder who, as to the United States, is a nonresident
alien individual, a foreign trust or estate, a foreign corporation or foreign
partnership ('foreign shareholder') depends on whether the income of the Fund is
'effectively connected' with a U.S. trade or business carried on by the
shareholder.
Income Not Effectively Connected. If the income from the Fund is not
'effectively connected' with a U.S. trade or business carried on by the foreign
shareholder, distributions of investment company taxable income will be subject
to a U.S. tax of 30% (or lower treaty rate, except in the case of any excess
inclusion income allocated to the shareholder (see 'Taxation -- Investments in
Real Estate Investment Trusts' above)), which tax is generally withheld from
such distributions.
Distributions of capital gain dividends and any amounts retained by the Fund
which are designated as undistributed capital gains will not be subject to U.S.
tax at the rate of 30% (or lower treaty rate) unless the foreign shareholder is
a nonresident alien individual and is physically present in the United States
for more than 182 days during the taxable year and meets certain other
requirements. However, this 30% tax on capital gains of nonresident alien
individuals who are physically present in the United States for more than the
182 day period only applies in exceptional cases because any individual present
in the United States for more than 182 days during the taxable year is generally
treated as a resident for U.S. income tax purposes; in that case, he or she
would be subject to U.S. income tax on his or her worldwide income at the
graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In
the case of a foreign shareholder who is a nonresident alien individual, the
Fund may be required to withhold U.S. income tax at a rate of 31% of
distributions of net capital gains unless the foreign shareholder certifies his
or her non-U.S. status under penalties of perjury or otherwise establishes an
exemption. See 'Taxation -- Backup Withholding,' above. If a foreign shareholder
is a nonresident alien individual, any gain such shareholder realizes upon the
sale or exchange of such shareholder's shares of the Fund in the United States
will ordinarily be exempt from U.S. tax unless (i) the gain is U.S. source
income and such shareholder is physically present in the United States for more
than 182 days during the taxable year and meets certain other requirements, or
is otherwise considered to be a resident alien of the United States, or (ii) at
any time during the shorter of the period during which the foreign shareholder
held shares of the Fund and the five year period ending on the date of the
disposition of those shares, the Fund was a 'U.S. real property holding
corporation' and the foreign shareholder held more than 5% of the shares of the
Fund, in which event the gain would be taxed in the same manner as for a U.S.
shareholder as discussed above and a 10% U.S. withholding tax would be imposed
on the amount realized on the disposition of such shares to be credited against
the foreign shareholder's U.S. income tax liability on such disposition. A
corporation is a 'U.S. real property holding corporation' if the fair market
value of its U.S. real property interests equals or exceeds 50% of the fair
market value of such interests plus its interests in real property located
outside the United States plus any other assets used or held for use in a
business. In the case of the Fund, U.S. real property interests include
interests in stock in U.S. real property holding corporations (other than stock
of a REIT controlled by U.S. persons and holdings of 5% or less in the stock of
publicly traded U.S. real property holding corporations) and certain
participating debt securities.
Income Effectively Connected. If the income from the Fund is 'effectively
connected' with a U.S. trade or business carried on by a foreign shareholder,
then distributions of investment company taxable income and capital gain
dividends, any amounts retained by
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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 entited to claim the benefits of
an applicable tax treaty may differ from those described herein. Foreign
shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Fund.
- --------------------------------------------------------------------------------
OTHER TAXATION
Fund shareholders may be subject to state, local and foreign taxes on their Fund
distributions. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.
- --------------------------------------------------------------------------------
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
- --------------------------------------------------------------------------------
The Fund was incorporated on July 3, 1997 as a Maryland corporation and is
authorized to issue 50,000,000 shares of Common Stock, $.001 par value. The
Fund's shares have no preemptive, conversion. exchange or redemption rights.
Each share has equal voting, dividend, distribution and liquidation rights. All
shares of the Fund, when duly issued, will be fully paid and nonassessable.
Shareholders are entitled to one vote per share. All voting rights for the
election of directors are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Directors then nominated for
election if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Directors. The foregoing
description is subject to the provisions contained in the Fund's Articles of
Incorporation and By-Laws.
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PRINCIPAL UNDERWRITER
- --------------------------------------------------------------------------------
Cohen & Steers Securities, Inc., an affiliate of the Adviser, serves as the
principal underwriter of the 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.
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CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT
- --------------------------------------------------------------------------------
Chase, which has its principal business at 770 Broadway, New York, New York
10003 has been retained to act as Custodian of the Fund's investments and as the
Fund's transfer and dividend disbursing agent.
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Chase Global Funds Services Co., a wholly-owned subsidiary of Chase, has been
retained by Chase to provide the Fund's transfer and dividend disbursing agency
services and serves as the Fund's Transfer and Dividend Disbursing Agent. Chase
Global Funds Services Co. has its principal business at 73 Tremont Street,
Boston, Massachusetts 02108-3913. Neither Chase nor Chase Global Funds Services
Co. determines the investment policies of the Fund or decides which securities
the Fund will buy or sell.
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PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Fund may quote the Fund's total return in advertisements
or in reports and other communications to shareholders. The Fund's performance
will vary from time to time depending upon market conditions, the composition of
its portfolio and its operating expenses. Consequently, any given performance
quotation should not be considered representative of the Fund's performance for
any specified period in the future. In addition, because performance will
fluctuate, it may not provide a basis for comparing an investment in the Fund
with certain bank deposits or other investments that pay a fixed yield for a
stated period of time. Investors comparing the Fund's performance with that of
other mutual funds should give consideration to the quality and maturity of the
respective investment companies' portfolio securities.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
The Fund's 'average annual total return' figures described in the Prospectus are
computed according to a formula prescribed by the SEC. The formula can be
expressed as follows:
P(1 + T)'pp'n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at
the beginning of a 1-, 5-, or 10-year period at the end of a
1-, 5-, or 10-year period (or fractional portion thereof),
assuming payment of the maximum sales charge and reinvestment of
all dividends and distributions.
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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
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
payment of the maximum sales charge and reinvestment of all
dividends and distributions.
- --------------------------------------------------------------------------------
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:
a - b
2[( ----- + 1)'pp'6 - 1]
cd
Where: a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends, and
d = the maximum offering price per share on the last day of the period.
In reports or other communications to shareholders of the Fund or in advertising
materials, the Fund may compare its performance with that of (i) other mutual
funds listed in the rankings prepared by Lipper Analytical Services, Inc.,
publications such as Barrons, Business Week, Forbes, Fortune, Institutional
Investor, Kiplinger's Personal Finance, Money, Morningstar Mutual Fund Values,
The New York Times, The Wall Street Journal and USA Today or other industry or
financial publications or (ii) the Standard and Poor's Index of 500 Stocks, the
Dow Jones Industrial Average and other relevant indices and industry
publications. The Fund may also compare the historical volatility of its
portfolio to the volatility of such indices during the same time periods.
(Volatility is a generally accepted barometer of the market risk associated with
a portfolio of securities and is generally measured in comparison to the stock
market as a whole -- the beta -- or in absolute terms -- the standard
deviation.)
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LEGAL MATTERS
- --------------------------------------------------------------------------------
Legal matters in connection with the issuance of the shares of the Fund offered
hereby will be passed upon by Dechert Price & Rhoads, 30 Rockefeller Center, New
York, New York 10112.
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ACCOUNTANTS
- --------------------------------------------------------------------------------
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York 10019
have been appointed as independent accountants for the Fund.
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COHEN & STEERS EQUITY INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 7, 1997
<TABLE>
<S> <C>
ASSETS:
Cash.......................................................................................... $100,000
Deferred organization expenses................................................................ 123,710
--------
Total Assets............................................................................ 223,710
--------
LIABILITIES
Accrued payables.............................................................................. 123,710
--------
Total Liabilities....................................................................... 123,710
--------
NET ASSETS applicable to 8,726.003 shares of $.001 par value common stock outstanding............... $100,000
--------
--------
Net asset value and redemption price per share ($100,000/8,726.003 shares outstanding).............. $ 11.46
--------
--------
Offering price per share (including 4.5% sales charge).............................................. $ 12.00
--------
--------
</TABLE>
NOTE 1: ORGANIZATION
Cohen & Steers Equity Income Fund, Inc. (the 'Fund') was incorporated under the
laws of the State of Maryland on July 3, 1997 and is registered under the
Investment Company Act of 1940 (the 'Act'), as amended, as an open-end
non-diversified management investment company. The Fund has been inactive since
that date except for matters relating to the Funds' establishment, designation,
registration of the Fund's shares of common stock ('Shares') under the
Securities Act of 1933, and the sale of 8,726.003 Fund shares ('Initial Shares')
for $100,000 to Cohen & Steers Capital Management, Inc. (the 'Adviser'). The
proceeds of such initial Shares in the Fund were invested in cash. There are
50,000,000 shares of $0.001 par value common stock authorized.
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements. Actual results could differ from these
estimates.
NOTE 2: AGREEMENTS
The Fund has entered into an Investment Advisory Agreement with the Adviser,
under which the Adviser will provide general investment advisory and
administrative services for the Fund. For providing these services, facilities
and for bearing the related expenses, the Adviser will receive a fee from the
Fund, accrued daily and paid monthly, at an annual rate equal to 0.75% of the
average daily net assets.
NOTE 3: ORGANIZATION COSTS
All costs incurred in connection with organizing and establishing the Fund will
be amortized on the straight-line basis over a period of five years from the
date on which the Fund commences operations. In the event that any of the
Initial Shares of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by any unamortized organization and
registration expenses in the same proportion as the number of shares being
redeemed bears to the number of Initial Shares outstanding at the time of such
redemption.
24
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- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of Cohen & Steers Equity Income Fund,
Inc.:
We have audited the accompanying statement of assets and liabilities of Cohen &
Steers Special Equity Fund, Inc. (the 'Fund') as of August 7, 1997. This
statement of assets and liabilities is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this statement of
assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Cohen &
Steers Equity Income Fund, Inc. as of August 7, 1997, in comformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
August 12, 1997
25
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<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Part A -- None.
Part B -- Report of Independent Certified Accountant, Statement of
Assets and Liabilities, Notes to Financial Statements.
Part C -- None.
(b) Exhibits
1. Articles of Incorporation*.
2. By-Laws*
3. Not Applicable
4. Specimen certificate for common stock, par value $.001 per share
5. Form of Investment Advisory Agreement
6. Form of Underwriting Agreement
7. Not Applicable
8. Form of Domestic Custody Agreement
9. (A) Form of Administration Agreement
(B) Mutual Fund Services (Sub-Administration) Agreement
(C) Shareholder Service Plan
(D) Form of Shareholder Service Agreement
10. Opinion and Consent of Dechert Price & Rhoads
11. Consent of Independent Accountants
12. Not Applicable
13. Investment Representation Letter
14. Not Applicable
15. Distribution Plan
16. Not Applicable
17. Not Applicable
18. Not Applicable
- ------------
* Filed with initial registration statement on July 9, 1997.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None. The Registrant is a recently organized corporation and has no
outstanding shares of common stock.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
None. The Registrant is a recently organized corporation and has not issued
any securities as of the date of this Registration Statement.
ITEM 27. 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
SEVENTH, Section 7.4 of Registrant's Articles of Incorporation, filed as Exhibit
1, and Article VIII of the Registrant's By-Laws, filed as Exhibit 2. The
Liability of the Registrant's directors and officers is dealt with in Article
SEVENTH, Section 7.4 of Registrant's Articles of Incorporation and Article VIII,
Section 1 through Section 6, of the Registrant's By-Laws. The liability of Cohen
& Steers Capital Management, Inc., the Registrant's investment adviser (the
'Adviser'), for
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<PAGE>
any loss suffered by the Registrant or its shareholders is set forth in Section
4 of the Investment Advisory Agreement, filed as Exhibit 5 to this Registration
Statement. The liability of Cohen & Steers Capital Management, Inc., the
Registrant's administrator, for any loss suffered by the Registrant or its
shareholders is set forth in Section 6 of the Administration Agreement, filed
as Exhibit 9 to this Registration Statement.
ITEM 28. 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. Mr. Robert H. Steers, Director and Chairman of the Adviser,
and Mr. Martin Cohen, Director and President of the Adviser, have had no other
business connections of a substantial nature during the past two fiscal years.
Cohen & Steers Capital Management, Inc. acts as investment adviser to, in
addition to the Registrant, the following investment companies:
Cohen & Steers Realty Shares, Inc.
Cohen & Steers Realty Income Fund, Inc.
Cohen & Steers Total Return Realty Fund, Inc.
Cohen & Steers Special Equity Fund, Inc.
Frank Russell Investment Management Company Real Estate Securities
Fund
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Cohen & Steers Securities, Inc. is the principal underwriter for the
Registrant.
(b) The following are directors and officers of Cohen & Steers Securities,
Inc. The principal address of these persons is 757 Third Avenue, N.Y., N.Y.
10017.
<TABLE>
<CAPTION>
POSITION AND POSITIONS AND
NAME OFFICES WITH DISTRIBUTOR OFFICES WITH REGISTRANT
- ------------------------------ ------------------------------ ------------------------------
<S> <C> <C>
Robert H. Steers.............. President and Chairman Chairman, Director and
Secretary
Martin Cohen.................. Vice President President, Director and
Treasurer
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained as follows: Journals, ledgers, securities records
and other original records will be maintained principally at the offices of the
Registrant's Sub-Administrator and Custodian, The Chase Manhattan Bank, One
Chase Manhattan Plaza, New York, New York 10081-1000. All other records so
required to be maintained will be maintained at the offices of Cohen & Steers
Capital Management, Inc., 757 Third Avenue, New York, New York 10017.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
The Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of a director, if requested to do so by
the holders of at least 10% of the Fund's outstanding shares, and that it will
assist communication with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
The Registrant undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of this post-effective amendment to the Registrant's 1933 Act
Registration Statement.
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<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 has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York, on the
21st day of August, 1997.
COHEN & STEERS EQUITY INCOME FUND, INC.
By /s/ MARTIN COHEN
...................................
MARTIN COHEN
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
1. Principal Executive Officer:
/s/ MARTIN COHEN President and Director August 21, 1997
.........................................
(MARTIN COHEN)
2. Principal Financial and
Accounting Officer:
/s/ MARTIN COHEN Treasurer August 21, 1997
.........................................
(MARTIN COHEN)
By /s/ ROBERT H. STEERS Director August 21, 1997
.........................................
(ROBERT H. STEERS)
By /s/ GREGORY C. CLARK Director August 21, 1997
.........................................
(GREGORY C. CLARK)
By /s/ GEORGE GROSSMAN Director August 21, 1997
.........................................
(GEORGE GROSSMAN)
By Director August 21, 1997
.........................................
(JEFFREY H. LYNFORD)
By Director August 21, 1997
.........................................
(WILLARD H. SMITH, JR.)
</TABLE>
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ------------------------------------------------------------------------------------------------- ------
<C> <S> <C>
4. -- Specimen certificate for common stock, par value $.001 per share..............................
5. -- Form of Investment Advisory Agreement.........................................................
6. -- Form of Underwriting Agreement................................................................
8. -- Form of Domestic Custody Agreement............................................................
9.(A) -- Form of Administration Agreement..............................................................
9.(B) -- Mutual Fund Services (Sub-Administration) Agreement...........................................
9.(C) -- Shareholder Service Plan......................................................................
9.(D) -- Form of Shareholder Service Agreement.........................................................
10. -- Opinion and Consent of Dechert Price & Rhoads.................................................
11. -- Consent of Independent Accountants............................................................
13. -- Investment Representation Letter..............................................................
15. -- Distribution Plan.............................................................................
</TABLE>
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as ................................ `D'
Characters normally expressed as superscript shall be preceded by ...... 'pp'
<PAGE>
<PAGE>
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
COHEN & STEERS
EQUITY INCOME FUND, INC.
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
SHARES OF COMMON STOCK
PAR VALUE $.001 EACH
This is to Certify that__________________________________________is the owner of
__________________________________________________________________fully paid and
non-assessable shares of the above Corporation transferable only on the books of
the Corporation by the holder hereof in person or by duly authorized Attorney
upon surrender of this Certificate properly endorsed.
WITNESS, the seal of the Corporation and the signatures of its duly authorized
officers.
DATED:
_____________________________ ____________________________
SECRETARY/TREASURER PRESIDENT
<PAGE>
<PAGE>
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as through they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C> <C> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT __ Custodian
-------------------------------
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants in common Act___________________________
(State)
</TABLE>
FOR VALUE RECEIVED ________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------
- ------------------------------
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING
POSTAL ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________SHARES
REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT
________________________________________________________________________ATTORNEY
TO TRANSFER THE SAID SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED_____________________19___
IN PRESENCE OF
________________________________________________________________________________
<PAGE>
<PAGE>
INVESTMENT ADVISORY AGREEMENT
COHEN & STEERS EQUITY INCOME FUND, INC.
757 Third Avenue
New York, New York 10017
August ___, 1997
COHEN & STEERS CAPITAL MANAGEMENT, INC.
757 Third Avenue
New York, New York 10017
Dear Sirs:
We, the undersigned Cohen & Steers Equity Income Fund, Inc., herewith
confirm our agreement with you as follows:
1. We are an open-end, non-diversified management investment company
registered under the Investment Company Act of 1940 (the "Act"). We are
currently authorized to issue separate classes of shares and our Directors are
authorized to reclassify and issue any unissued shares to any number of
additional classes or series (portfolios) each having its own investment
objective, policies and restrictions, all as more fully described in the
prospectus and the statement of additional information constituting parts of the
Registration Statement filed on our behalf under the Securities Act of 1933 and
the Act. We propose to engage in the business of investing and reinvesting our
assets in securities of the type and in accordance with the limitations
specified in our Articles of Incorporation, By-Laws, Registration Statement
filed and affecting our portfolio and on your own initiative will furnish us
from time to time with such information as you may believe appropriate for this
purpose, whether concerning the individual issuers whose securities are included
in our portfolio, the industries in which they engage, or the conditions
prevailing in the economy generally. You will also furnish us with such
statistical and analytical information with respect to our portfolio securities
as you may believe appropriate or as we reasonably may request. In making such
purchases and sales of our portfolio securities, you will bear in mind the
policies set from time to time by our Board of Directors as well as the
limitations imposed by our Articles of Incorporation and in our Registration
Statement under the Act and the Securities Act of 1933, the limitations in the
Act and of the Internal Revenue Code of 1986, as amended, in respect of
regulated investment companies.
<PAGE>
<PAGE>
2. It is understood that you will from time to time employ or associate
with yourselves such persons as you believe to be particularly fitted to assist
you in the execution of your duties hereunder, the cost of performance of such
duties to be borne and paid by you. No obligation may be incurred on our behalf
in any such respect. During the continuance of this agreement at our request you
will provide us persons satisfactory to our Board of Directors to serve as our
officers.
3. We hereby confirm that we shall be responsible and hereby assume the
obligation for payment of all our expenses, including: (a) payment of the fee
payable to you under paragraph 5 hereof; (b) charges and expenses of our
administrator, sub-administrator, custodian, transfer, and dividend disbursing
agent; (c) fees of directors who are not your affiliated persons; (d) legal and
auditing expenses; (e) compensation of our officers, Directors and employees who
do not devote any part of their time to your affairs or the affairs of your
affiliates other than us; (f) costs of printing our prospectuses and stockholder
reports; (g) costs of proxy solicitation; (h) cost of maintenance of corporate
existence; (i) interest charges, taxes, brokerage fees and commissions; (j)
costs of stationery and supplies; (k) expenses and fees related to registration
and filing with the Securities and Exchange commission and with state regulatory
authorities; and (l) upon the approval of the Board of Directors, costs of your
personnel or your affiliates rendering clerical, accounting and other office
services.
4. We shall expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect, or
purport to protect, you against any liability to us or to our security holders
to which you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in
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<PAGE>
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. In consideration of the foregoing we will pay you a monthly fee at an
annualized rate of .75 of 1% of our average daily net assets. Such fee shall be
payable in arrears on the last day of each calendar month for services performed
hereunder during such month. If our initial Registration Statement is declared
effective by the Securities and Exchange Commission after the beginning of a
month or this agreement terminates prior to the end of a month, such fee shall
be prorated according to the proportion which such portion of the month bears to
the full month.
6. This agreement shall become effective on the date on which our
pending Registration Statement on Form N-1A relating to our shares becomes
effective and shall remain in effect until the first meeting of our shareholders
held after such date and, if approved by the vote of a majority of the
outstanding voting securities, as defined in the Act, at such meeting, continue
in effect until December 31, 1998 and may be continued for successive
twelve-month periods (computed from each January 1) with respect to each
portfolio provided that such continuance is specifically approved at least
annually by the Board of Directors or by majority vote of the holders of the
outstanding voting securities of such portfolio (as defined in the Act), and, in
either case, by a majority of the Board of Directors who are not interested
persons as defined in the Act, of any party to this agreement (other than as
Directors of our corporation), provided further, however, that if the
continuation of this agreement is not approved, you may continue to render the
services described herein in the manned to the extent permitted by the Act and
the rules and regulations thereunder. Upon the effectiveness of this agreement,
it shall supersede all previous agreements between us covering the subject
matter hereof. This agreement may be terminated at any time, without the payment
of any penalty, by vote of a majority of the outstanding voting securities (as
so defined) or by a vote of a majority of the Board of Directors on 60 days'
written notice to you,
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<PAGE>
or by you on 60 days' written notice to us.
7. This agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing law and any
interpretation thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
8. Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right of
any of your officers, directors or employees, who may also be a Director,
officer or employee of ours, or persons otherwise affiliated with us (within the
meaning of the Act) to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
trust, corporation, firm, individual or association.
9. If you cease to act as our investment adviser, or, in any event, if
you so request in writing, we agree to take all necessary action to change our
name to a name not including the term "Cohen & Steers". You may from time to
time make available without charge to us for our use such marks or symbols owned
by you, including marks or symbols containing the term "Cohen & Steers" or any
variation thereof, as you may consider appropriate. Any such marks or symbols so
made available will remain your property and you shall have the right, upon
notice in writing, to require us to cease the use of such mark or symbol at any
time.
10. This agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
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<PAGE>
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
COHEN & STEERS EQUITY INCOME FUND, INC.
By: ______________________________
Name:
Title:
Agreed to and accepted
as of the date first set
forth above
COHEN & STEERS CAPITAL MANAGEMENT, INC.
By: ___________________________
Name:
Title:
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<PAGE>
COHEN & STEERS EQUITY INCOME FUND, INC.
757 Third Avenue
New York, New York 10017
August __, 1997
Cohen & Steers Securities, Inc.
757 Third Avenue
New York, New York 10017
Underwriting Agreement
----------------------
Dear Sirs:
Cohen & Steers Equity Income Fund, Inc. (the "Company"), a Maryland
corporation, is engaged in the business of an investment company. Its Board of
Directors has selected you to act as principal underwriter (as such term is
defined in Section 2(a)(29) of the Investment Company Act of 1940, as amended)
of the Company's common stock (the "Shares") and you are willing to act as such
principal underwriter and to perform the duties and functions of underwriter in
the manner and on the conditions hereinafter set forth. Accordingly, the Company
hereby agrees with you as follows:
1. Copies of Corporate Documents. The Company will furnish you promptly
with copies of any registration statements filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, together with any financial
statements and exhibits included therein, and all amendments or supplements
thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Company will from
time to time use its best efforts to register under the Securities Act of 1933,
as amended, such authorized Shares not already so registered as you may
reasonably be expected to sell as agent on behalf of the Company. To the end
that there will be available for sale such number of Shares as you may
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<PAGE>
<PAGE>
reasonably be expected to sell, the Company will, from time to time as may be
necessary, increase the number of authorized shares. This agreement relates to
the issue and sale of Shares that are duly authorized and registered and
available for sale by the Company, including repurchased and redeemed Shares if
and to the extent that they may be legally sold and if, but only if, the Company
sees fit to sell them. You and the Company will cooperate in taking such action
as may be necessary from time to time to qualify Shares for sale in New York and
in any other states mutually agreeable to you and the Company, and to maintain
such qualification, provided that such shares are duly registered under the
Securities Act of 1933, as amended.
3. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors orders for
Shares authorized for issue by the Company and registered under the Securities
Act of 1933, as amended, provided that you may in your discretion refuse to
accept orders for shares from any particular applicant. You may, as agent for
the Company, solicit dealers for orders to purchase Shares and may enter into
selling agreements to be as mutually agreed upon, from time to time, by you and
the Company. Each dealer must be a member of the National Association of
Securities Dealers, Inc. or a foreign dealer not eligible for membership in such
Association who has agreed in acting under the selling agreement to abide by the
rules and regulations of such Association and not to use the United States mails
or any means of interstate commerce in connection with the sales of such shares
unless such foreign dealer is registered under the Securities Exchange Act of
1934.
4. Sale of Shares. Subject to the provisions of paragraph 5 hereof and
to such minimum purchase requirements as may from time to time be currently
indicated in the Company's prospectus, you are authorized to sell as agent on
behalf of the Company authorized and unissued Shares registered under the
Securities Act of 1933, as amended. Such sales may be made by you on behalf of
the Company by accepting orders to purchase such shares placed with you by
investors. The sales price of such shares shall be the public offering price as
defined in
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<PAGE>
paragraph 6 hereof.
5. Sale of Shares to Investors. Any right granted to you to accept
orders for Shares or make sales on behalf of the Company will not apply to
Shares issued in connection with the merger or consolidation of any other
investment company with the Company or its acquisition, by purchase or
otherwise, of all or substantially all the assets of any investment company or
substantially all the outstanding shares of any such company, and such right
shall not apply to Shares that may be offered by the Company to shareholders by
virtue of their being shareholders of the Company, including shares issued in
payment of any dividend or distribution by the Company.
6. Public Offering Price. All Shares sold to investors by you as agent
for the Company will be sold at the public offering price. The public offering
price for all accepted orders will be the net asset value per Share next
computed after receipt of such an order, plus any applicable sales charge
adjusted to the nearest full cent, as may from time to time be currently
indicated in the Company's prospectus with respect to such order. Net asset
value per Share shall be computed in the manner provided in the Company's
Articles of Incorporation, as now in effect or as it may be amended. The time of
receipt of such an order shall be the time of its receipt by you or by a dealer
selected by you as provided in paragraph 3 if transmitted on the day of receipt
by such dealer to you prior to the close of your business on that day. The
Company will not, without your prior consent, change the sales charges or dealer
discounts applicable to the sales of its Shares from those set forth in its
Prospectus dated [August] ___, 1997. You may also purchase as principal Shares
at net asset value and sell such shares at the public offering price.
7. Underwriting Discount. The Company shall receive from you the
applicable net asset value on all orders for sales of Shares accepted by you as
agent of the Company if the net sale price thereof has been deemed, in
accordance with the Company's Articles of Incorporation, to be an asset of the
Company in connection with a computation of net asset value for the sale of
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any other shares or the purchase or redemption of any shares. You shall be
entitled to retain so much of the difference between the public offering price
and the applicable net asset value as is not reallowed by you as a discount to
dealers. Such reallowance shall be the same for all dealers and shall conform to
such dealer discounts, if any, as may from time to time be currently indicated
in the Company's prospectus. You will reimburse the Company for any increase in
any issue tax paid by it which is attributable to such sales charge.
8. Notice of Sale; Delivery of Payments. You will promptly notify the
Company's transfer agent of any orders for sales of Shares accepted by you, and
you will deliver to the Company's transfer agent all payments pursuant to orders
for sales accepted by you no later than the first business day following the
receipt by you in your home office of such payments, and, unless payment is not
required under paragraph 7, in no event later than seven days after the receipt
by you of such order, or, in case an extension of time is granted by the
National Association of Securities Dealers, Inc., to the dealer submitting the
order, in no event later than the expiration of such extension of time.
9. Purchase of Shares. You are authorized to purchase as agent on behalf
of the Company Shares from record holders thereof. Such purchases may be made by
you on behalf of the Company by accepting orders placed with you by such
holders. The purchase price per share for all accepted orders will be the net
asset value per share next computed after receipt of such an order, in the
manner provided in the Company's Articles of Incorporation, as now in effect or
as it may be amended, less any applicable redemption charge. The time of receipt
of such an order shall be the time of its receipt by you or by a dealer selected
by you as provided in paragraph 3 if transmitted on the day of receipt by such
dealer to the Company's transfer agent prior to the close of its business on
that day. You will promptly notify the Company's transfer agent of any such
order accepted by you and will, if the Shares subject to such order have been
deemed to be no longer outstanding in connection with a computation of net asset
value for the sale of any Shares
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by the Company or the purchase or redemption of any shares by it, deliver to
such agent a proper request for purchase of such shares by the Company and any
stock certificates for such shares not later than the first business day
following the receipt by you in your home office of such request and
certificates, and in no event later than seven days after the receipt by you of
such order.
10. Suspension of Sales and Purchases. If and whenever the determination
of asset value is suspended pursuant to the Company's Articles of Incorporation,
and such suspension has become effective, until such suspension is terminated no
further orders for the sale or purchase of Shares shall be accepted by you
except such orders placed with you before you had knowledge of the suspension.
In addition, the Company reserves the right to suspend sales and purchases and
your authority to accept orders for sales and purchases of Shares on behalf of
the Company if, in the judgment of a majority of its Board of Directors or a
majority of the Executive Committee of its Board of Directors, if such Committee
exists, it is in the best interests of the Company to do so, such suspension to
continue for such period as may be determined by such majority; and in that
event, no Shares will be sold or purchased by the Company or by you on behalf of
the Company while such suspension remains in effect except for shares necessary
to cover orders accepted by you before you had knowledge of the suspension. The
Company will notify you promptly of any such suspension of the determination of
net asset value or of any such suspension of sales and purchases of Shares.
11. Expenses. The Company will pay all fees and expenses in connection
with the preparation and filing of any registration statement and prospectus or
amendments thereto under the Securities Act of 1933, as amended, covering the
issue and sale of its Shares and in connection with the qualification of such
Shares for sale in the various states and countries in which the Company shall
determine it advisable to qualify such Shares for sale, the costs of all stock
certificates and the fees and expenses of its transfer agent or registrar. It
will also pay any issue taxes (subject to partial reimbursement under paragraph
7 hereof). You will pay all
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expenses of printing prospectuses and other sales literature (except copies of
prospectuses and other sales literature which may from time to time be sent to
existing shareholders of the Fund and except as may otherwise be provided
pursuant to a plan of distribution adopted by the Company pursuant to Rule 126-1
under the Investment Company Act of 1940), all fees and expenses in connection
with your qualification as a dealer in the various states and countries, and all
other expenses in connection with the sale and offering for sale of the Shares
of the Company which are not payable by the Company pursuant to the provisions
of this paragraph 11.
12. Conformity with Law. You agree that in selling and purchasing the
Shares you will duly conform in all respects with the laws of the United States
and any state or country in which such shares may be offered for sale by you
pursuant to this agreement.
13. Indemnification. You agree to indemnify and hold harmless the
Company and each of its directors and officers and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act of
1933, as amended, against any and all losses, claims, damages, liabilities or
litigation expenses (including legal and other expenses) to which the Company or
such directors, officers or controlling person may become subject under such
Act, under any other statute, at common law or otherwise, arising out of the
acquisition of any shares by any person or the sale of any shares by any person
to the Company through you which (i) may be based upon any wrongful act by you
or any of your employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement or prospectus covering shares of the Company or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading if such statement or omission was made in
reliance upon information furnished or confirmed in writing to the Company by
you, provided, however, that in no case is your indemnity in favor of a director
or officer or any other person deemed to protect such director or officer or
other person against any
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liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of his
duties or by reason of his reckless disregard of obligations and duties under
this agreement.
The Company agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the Securities Act of 1933, as amended, against any and
all losses, claims, damages, liabilities or litigation expenses (including legal
and other expenses) to which you or such directors, officers or controlling
person may become subject under such Act, under any other statute, at common law
or otherwise, arising out of the acquisition of any shares by any person or the
sale of any shares by any person to the Company through you which (i) may be
based upon any wrongful act by the Company or any of its employees or
representatives, or (ii) except as described in clause (ii) of the preceding
paragraph, may be based upon any untrue statement or alleged untrue statement or
a material fact contained in a registration statement or prospectus covering
shares of the Company or any amendment thereof or supplement thereto or omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, provided,
however, that in no case is the Company's indemnity in favor of a director or
officer or any other person deemed to protect such director or officer or other
person against any liability to which any such person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of his duties or by reason of his reckless disregard of obligations
and duties under this Agreement. You hereby waive any rights to indemnification
concerning your obligations and duties hereunder to which you might be entitled
under the Company's By-Laws.
You are not authorized to give any information or to make any
representations on behalf of the Company in connection with the sale or purchase
of shares of the Company other than the information and representations
contained in a registration statement or prospectus covering
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shares of the Company, as such registration statement and prospectus may be
amended or supplemented from time to time. No person other than you is
authorized to act as agent for the Company in connection with the offering or
sale of shares of the Company to the public or otherwise.
14. Duration and Termination of This Agreement. This agreement shall
remain in force until December 31, 1998 and from year to year thereafter, but
only so long as such continuance is specifically approved at least annually by
the Board of Directors of the Company or by vote of a majority of the
outstanding voting securities of the Company. In addition, the Company may not
renew or perform this agreement unless the terms thereof and any renewal thereof
have been approved by the vote of a majority of directors of the Company who are
not interested persons of you or of the Company cast in person at a meeting
called for the purpose of voting on such approval. This agreement may, on 60
days' written notice, be terminated at any time without the payment of any
penalty, by the Board of Directors of the Company, by vote of a majority of the
outstanding voting securities of the Company, or by you. This agreement shall
automatically terminate in the event of its assignment. In interpreting the
provisions of this paragraph 11, the definitions contained in Section 2(a) of
the 1940 Act, as amended, and Rules thereunder (particularly the definitions of
"interested person," "assignment," "voting security" and "vote of a majority of
the outstanding voting securities") shall be applied.
15. Amendment of This Agreement. No provision of this agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver
discharge or termination is sought. If the Company should at any time deem it
necessary or advisable in the best interests of the Company that any amendment
of this agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such
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amendment, and the reasons therefor, and if you should decline to assent to
such amendment, the Company may terminate this agreement forthwith. If you
should at any time request that a change be made in the Company's Articles of
Incorporation or By-Laws, or in its methods of doing business, in order to
comply with any requirements of federal law or regulations of the Securities
and Exchange Commission or of a national securities association of which you are
or may be a member, relating to the sale of shares of the Company, and the
Company should not make such necessary change within a reasonable time, you
may terminate this agreement forthwith.
16. Miscellaneous. The captions in this agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Company, whereupon this letter shall become a binding
contract.
Yours very truly,
COHEN & STEERS EQUITY INCOME FUND, INC.
By:_________________________________________
Name:
Title:
The foregoing agreement is
hereby accepted as of the
date thereof.
COHEN & STEERS SECURITIES, INC.
By:____________________________
Name:
Title:
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DOMESTIC CUSTODY AGREEMENT
To: The Chase Manhattan Bank
Institutional Client Services
4 New York Plaza, 4th Floor
New York, New York 10004
Gentlemen:
We hereby request you to open and to maintain a Custody Account in our
name and to hold therein as our custodian, upon the following terms and
conditions, all stocks, bonds, rights, warrants and other negotiable and
non-negotiable paper issued in certificated or book-entry form and commonly
treated or dealt with on securities exchanges or securities markets as shall be
received by and acceptable to you for the Custody Account (hereinafter refereed
to as "securities"). As used herein, the term Custody Account shall include all
such Custody Accounts opened pursuant to this Domestic Custody Agreement (the
"Agreement").
Securities held by you for the Custody Account shall be segregated at
all times from your proprietary assets.
1. Transactions. Unless you receive contrary written
instructions from us, and subject to the provisions of this
Agreement, you are authorized:
(a) to receive all interest and dividends payable on the
securities and (except as hereinafter set forth in the section entitled
"Miscellaneous") to credit such interest and dividends to the demand
deposit cash account of ours with you designated by us to receive all
sums collected in respect of transactions to the Custody Account (each
such account a "Cash Account");
(b) to credit all proceeds received from sales and
redemptions of securities to the Cash Account;
(c) to debit the Cash Account for the cost of
acquiring securities for the Custody Account;
(d) to present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are due;
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(e) to exchange securities for other securities where the
exchange is purely ministerial as, for example, the exchange of
securities in temporary form for securities in definitive form or the
mandatory exchange of certificates;
(f) to sell fractional interests resulting from a stock split or
a stock dividend and to credit the Cash Account with the proceeds
thereof;
(g) to execute in our name, whenever you deem it appropriate,
such ownership and other certificates as may be required to obtain
payments with respect to, or to effect the sale, transfer or other
disposition of, securities in the Custody Account and to guarantee as
our signature the signature so affixed;
(h) to receive and hold in the Custody Account securities which
have transfer limitations imposed upon them by the Securities Act of
1933, as amended; and
(i) to convert moneys received with respect to securities of
foreign issue into United States dollars whenever it is practical to do
so through customary banking channels. In effecting such conversion you
may use any method or agency available to you, including the facilities
of your own divisions, subsidiaries or affiliates. You shall incur no
liability on account of any loss suffered or expense incurred as a
result of such conversion, including, without limitation, losses arising
from fluctuations in exchange rates affecting any such conversion.
2. Instructions. You are authorized to rely and act upon all further
written instructions given or purported to be given by one or more officers,
employees or agents of ours (i) authorized by or in accordance with a corporate
resolution of ours delivered to you or (ii) described as authorized in a
certificate delivered to you by our Secretary or an Assistant Secretary or
similar officer of ours (each such officer, employee or agent or combination of
officers, employees and agents authorized pursuant to clause (i) or described
pursuant to clause (ii) of this paragraph is hereinafter referred to as an
"Authorized Officer"). (The term "instructions" includes, without limitation,
instructions to sell, assign, transfer, deliver, purchase or receive for the
Custody Account, any and all stocks, bonds and other securities or to transfer
funds in the Cash Account.) You may also rely and act upon instructions when
bearing or purporting to bear the facsimile signature of any of the individuals
designated by an Authorized Officer regardless of
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by whom or by what means the actual or purported facsimile signature or
signatures thereon may have been affixed thereto if such facsimile signature or
signatures resemble the facsimile specimen or specimens from time to time
furnished to you by any of such Authorized Officers, our Secretary or an
Assistant Secretary or similar officer of ours. In addition, you may rely and
act upon instructions received by telephone, telex, TWX, facsimile transmission,
bank wire or other teleprocess or electronic instruction or trade information
system acceptable to you which you believe in good faith to have been given by
an Authorized Officer or which are transmitted with proper testing or
authentication pursuant to terms and conditions which you may specify. You may
also rely and act upon instructions transmitted electronically through your
TITAN Data Entry System or any similar electronic instruction system acceptable
to you. You shall incur no liability to us or otherwise as a result of any act
or omission by you in accordance with instructions on which you are authorized
to rely pursuant to the provisions of this paragraph. Any instructions delivered
to you by telephone shall promptly thereafter be confirmed in writing by an
Authorized Officer, but you shall incur no liability for our failure to send
such confirmation in writing, the failure of any such written confirmation to
conform to the telephone instructions which you received, the failure of any
such written confirmation to be signed or properly signed, or your failure to
produce such confirmation at any subsequent time. You shall incur no liability
for refraining from acting upon any instructions which for any reason you, in
good faith, are unable to verify to your own satisfaction. With respect to
instructions received hereunder to transfer funds from the Cash Account to any
other account or party, we agree to implement any callback or other
authentication method or procedure or security device required by you at any
time or from time to time. Unless otherwise expressly provided, all
authorizations and instructions shall continue in full force and effect until
canceled or superseded by subsequent authorizations or instructions received by
your safekeeping account administrator with reasonable opportunity to act
thereon. Your authorization to rely and act upon instructions pursuant to this
paragraph shall be in addition to, and shall not limit, any other authorization
which we may give you regarding our accounts with you.
We agree that, if you require test arrangements, authentication methods
or procedures or other security devices to be used with respect to instructions
which we may give hereunder, thereafter instructions given by us shall be given
and processed in accordance with terms and conditions for the use of such
arrangements, methods or procedures or devices as you may put
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into effect and modify from time to time. We shall safeguard any testkeys,
identification codes or other security devices which you make available to us
and agree that we shall be responsible for any loss, liability or damage
incurred by you or by us as a result of your acting in accordance with
instructions from any unauthorized person using the proper security device. You
may electronically record any instructions given by telephone, and any other
telephone discussions with respect to the Custody Account or transactions
pursuant to this Agreement.
If you are instructed by us to purchase or sell securities for the
Custody Account you may enter purchase and sale orders and confirmations, and
perform any other acts incidental or necessary to the performance thereof with
brokers or dealers or similar agents selected by you, including any broker or
dealer or similar agent affiliated with you, for our account and risk in
accordance with accepted industry practices in the relevant market.
Except as may be provided otherwise herein, you are authorized to
execute our instructions and take other actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar to us
and, in accordance with such practices, you may retain agents, including
subsidiaries or affiliates of yours, to perform certain of such functions.
In acting upon instructions to deliver securities against payment, you
are authorized, in accordance with customary securities processing practices, to
deliver such securities to the purchaser thereof or dealer therefor (including
to an agent for any such purchaser or dealer) against a receipt, with the
expectation of collecting payment from the purchaser, dealer or agent to whom
the securities were so delivered before the close of business on the same day.
3. Registration. Unless you receive contrary instructions from us, you
are authorized to keep securities in your own vaults or in book entry form
registered in your name or in the name of your nominee or nominees or, where
securities are eligible for deposit in a Depository (hereinafter defined), such
as The Depository Trust Company, the Federal Reserve Bank of New York or
Participants Trust Company, you may use any such Depository and permit the
registration of registered securities in the name of its nominee or nominees,
and we agree to hold you and the nominees harmless from any liability as holders
of record. We shall accept the return or delivery of securities of the same
class and denomination as those deposited with you by us or
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otherwise received by you for the Custody Account, and you need not retain the
particular certificates so deposited or received.
If any of our securities registered in your name or the name of your
nominee or held in a Depository and registered in the name of the Depository's
nominee are called for partial redemption by the issuer of such securities, you
are authorized to allot the call portion to the respective beneficial holders of
the securities in any manner deemed to be fair and equitable by you in your sole
discretion.
4. Statements. You shall notify us of each securities transaction
effected for the Custody Account and of income on and redemptions of the
securities in the Custody Account, as well as furnish us a listing of such
securities, at such times upon which you and we mutually agree. Periodic
statements shall be rendered to us as we may reasonably require, but not less
frequently than monthly. You shall at all times maintain proper books and
records that shall identify the securities as ours. Your books and records
relating to the Custody Account shall be available for inspection upon
reasonable notice to you during your regular business hours by duly authorized
officers, employees, or agents of ours, or by legally authorized regulatory
officials who are then in the process of reviewing our financial affairs upon
proof to you of such official status.
Unless we shall send to you a written exception or objection to any
statement of account within 60 days of our receipt of such statement from you,
we shall be deemed to have approved such statement. In such event, or where we
have otherwise approved such statement, you shall, to the extent permitted by
law, be released, relieved and discharged with respect to all matters set forth
in such statement or reasonably implied therefrom as though it had been settled
by the decree of a court of competent jurisdiction in an action where we and all
persons having or claiming an interest in the Custody Account or Cash Account
were parties.
5. Corporate Actions. You shall send us such proxies (signed in blank,
if issued in your name or the name of your nominee or a nominee of a Depository)
and communications with respect to securities in the Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by you for forwarding to customers. In addition, you shall
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in the Custody Account and advise us of rights issued, tender
offers or any other discretionary rights with respect to
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such securities, in each case, of which you receive notice at your central
corporate actions department from the issuer or from the Depository in which
such securities are held or notice published in publications and reported in
reporting services routinely used by you for this purpose.
6. Custodian Responsibility. Except as provided in the next following
paragraph, you shall be obligated to indemnify us for any loss of securities
credited to the Custody Account resulting from (i) the negligence or willful
misconduct of you or your officers, employees or agents retained by you to hold
such securities or (ii) the burglary, robbery, hold-up, theft or mysterious
disappearance, including loss by damage or destruction. In the event of a loss
of securities in the Custody Account for which you are required to indemnify us
pursuant to the immediately preceding sentence, at your option, you shall
promptly replace such securities (by among other means posting appropriate
security or bond with the Issuer(s) of such securities and obtaining their
reissue) or the value thereof (determined based upon the market value of the
securities which are the subject of such loss as of the date of the discovery of
such loss) and the value of any loss of rights or privileges resulting from the
loss of such securities. The foregoing indemnity shall be your exclusive
liability to us for your loss of securities from the Custody Account. In respect
of all your other duties and obligations pursuant to the terms of this
Agreement, you shall be liable to us only to the extent of our general damages
suffered or incurred as a result of any act or omission of you or your officers,
employees or agents which constitutes negligence or willful misconduct. General
damages shall mean only those damages as directly and necessarily result from
such act or omission without reference to any special conditions or
circumstances of ours or of any transaction, whether or not you have been
advised of any such special conditions or circumstances. Anything in this
Agreement to the contrary notwithstanding, in no event shall you be liable to us
under this Agreement for special, indirect or consequential loss or damage of
any kind whatsoever, whether or not you are advised as to the possibility of
such loss or damage and regardless of the form of action any such loss or damage
may be claimed.
You shall not be liable for the acts or omissions of (or the bankruptcy
or insolvency of) any Depository. If, however, as a result of any act or
omission of, or the bankruptcy or insolvency of, any Depository we suffer any
loss or liability, you will take such steps with respect thereto in order to
effect a recovery as you shall reasonably deem appropriate under the
circumstances (including the bringing and settling of legal proceedings),
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provided that unless you shall be liable as set forth in the immediately
preceding paragraph of this Agreement, for such loss or liability by virtue of
the negligence or misconduct of you or your officers, employees or agents, the
amount of any cost or expense in effecting, or attempting to effect, such
recovery shall be for our account, and you shall have the right to charge such
cost or expense to the Cash Account. We further agree to be bound by the
Depository rules and procedures applicable to you as a participant in respect of
any securities held by you in your account with such Depository. "Depository"
shall mean a federal reserve bank and any "clearing corporation" as defined
under Article 8 of the New York Uniform Commercial Code, as amended from time to
time.
All collection and receipt of funds or securities and all payment and
delivery of funds or securities under this Agreement shall be made by you as our
agent, at our risk with respect to our actions or omissions and those of persons
other than you, including, without limitation, the risk associated with the
securities processing practice of delivering securities against a receipt and
the risk that the counterparty in any transaction into which we enter will not
transfer funds or securities or otherwise perform in accordance with our
expectation of its obligations thereunder (including, without limitation, where,
as a result of such nonperformance, a Depository reverses, or requires repayment
of, any credit given in connection with the transfer of securities).
In no event shall you be responsible or liable for any loss due to
forces beyond your control, including, but not limited to, acts of God, flood,
fire, nuclear fusion, fission or radiation, war (declared or undeclared),
terrorism, insurrection, revolution, riot, strikes or work stoppages for any
reason, embargo, closure or disruption of any market, government action,
including any laws, ordinances, regulations or the like which restrict or
prohibit the providing of the services contemplated by this Agreement, inability
to obtain equipment or communications facilities, or the error in transmission
of information caused by any machines or systems or the failure of equipment or
interruption of communications facilities, and other causes whether or not of
the same class or kind as specifically named above. In the event that you are
unable substantially to perform for any of the reasons described in the
immediately preceding sentence, you shall so notify us as soon as reasonably
practicable.
You shall be responsible for only those duties expressly stated in this
Agreement or expressly contained in instructions
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to perform the services described herein given to you pursuant to the provisions
of this Agreement and accepted by you and, without limiting the foregoing, you
shall have no duty or responsibility:
(a) to supervise the investment of, or make recommendations with
respect to the purchase, retention or sale of, securities relating to
the Custody Account, or to maintain any insurance on securities in the
Custody Account for our benefit;
(b) with regard to any security in the Custody Account as to
which a default in the payment of principal or interest has occurred, to
give notice of default, make demand for payment or take any other action
with respect to such default;
(c) except as otherwise specifically provided in this section
under the heading "Custodian Responsibility", for any act or omission,
or for the solvency or insolvency, or notice to us of the solvency or
insolvency, of any broker or agent which is selected by you with
reasonable care or by us or any other person to effect any transaction
for the Custody Account or to perform any service under this Agreement;
(d) to evaluate, or report to us regarding, the financial
condition of any person, firm or corporation to which you deliver
securities or funds pursuant to this Agreement;
(e) for any loss occasioned by delay in the actual receipt of
notice by you of any payment, redemption or other transaction in respect
to which you are authorized to take some action pursuant to this
Agreement; or
(f) for any errors or omissions made by any securities pricing
service used by you to value securities credited to the Custody Account
as part of any service subscribed to by us from you.
7. Settlement. We agree with you that all credits of securities and
proceeds by you to the Custody Account and the Cash Account, respectively, on
the settlement or payable date shall be provisional when made and you shall be
entitled to reverse any such credits subject to actual receipt or collection of
immediately available funds.
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We shall have sufficient immediately available funds each day in the
Cash Account to pay for the settlement of all securities delivered against
payment to you and credited to the Custody Account. Should we fail to have
sufficient immediately available funds in the Cash Account to settle these
deliveries of securities pursuant to the preceding sentence (a "Deficit"), you,
in your sole discretion, may elect (i) to reject the settlement of any or all of
the securities delivered to you that day to the Custody Account, (ii) to settle
the deliveries on our behalf and debit the Cash Account (A) for the amount of
such Deficit and (B) for the amount of the funding or other cost or expense
incurred or sustained by you for our failure to have sufficient immediately
available funds in the Cash Account by the applicable settlement deadline for
you, or (iii) to reverse the posting of the securities credited to the Custody
Account.
The foregoing rights are in addition to and not in limitation of any
other rights or remedies available to you under this Agreement or otherwise. Any
advances made by you to us in connection with the purchase, sale, redemption,
transfer or other designation of securities or in connection with disbursements
of funds to any party, which create or result in an overdraft in the Cash
Account shall be deemed a loan by you to us, payable on demand, and bear
interest on the amount of the loan each day that the loan remains unpaid at your
prime rate in effect as announced by you from time to time, plus the cost to you
of any required reserves. We shall also bear the cost of any Federal Reserve
Bank daylight overdraft charge incurred by you and allocated to transactions
effected for the Custody Account of the Cash Account.
No prior action or course of dealing on your part with respect to the
settlement of securities transactions on our behalf shall be used by or give
rise to any claim or action by us against you for your refusal to pay or settle
for a securities transaction we have not timely funded as required herein.
8. Responsible as Principal. We agree that we shall be responsible to
you as a principal for all of our obligations to you arising under or in
connection with this Agreement, notwithstanding that we may be acting on behalf
of other persons, and we warrant our authority to deposit in the Custody Account
and Cash Account, respectively, any securities and funds which you or your
agents receive therefor and to give instructions relative thereto. We further
agree that you shall not be subject to, nor shall your rights and obligations
with respect to this Agreement and the Custody Account or the Cash Account be
affected by, any agreement between us and any such person.
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9. Crediting and Debiting Procedures. With respect to all transactions
for the Custody Account and the Cash Account, including, without limitation,
divided and interest payments and sales and redemptions of securities,
availability of funds credited to the Custody Account and Cash Account shall be
based on the type of funds used in the trade settlement or payment, including,
but not limited to, same day availability for federal or same day funds and next
business day availability for clearing house or next day funds. Furthermore,
with respect to all purchases and sales of securities for the Custody Account,
the proceeds from the sale of securities shall be credited to the Cash Account
on the date proceeds are received by you and the cost of securities purchased
shall be debited to the Cash Account on the date securities are received by you,
unless we request your contractual settlement service for the Custody Account in
which case the following provisions shall apply with respect to the delivery and
receipt of securities for the Custody Account for those securities and
transaction as to which you customarily offer this service.
(a) When we instruct you to deliver or receive securities, on the
contractual settlement date you shall credit the Cash Account with the
expected proceeds of the transaction and debit the Custody Account for
the securities which we have instructed you to deliver, in the case of
deliveries, and debit the Cash Account for the cost of the Securities
which we have instructed you to receive and credit the Custody Account
with such accounting entire which you shall reverse on our instructions
and which you may reverse, even in the absence of instructions from us,
if the transaction with respect to which they were made fails to settle
within a reasonable period, determined by you in your discretion, after
the contractual settlement date, except that if you deliver securities
which are returned by the recipient thereof, you may reverse such
credits and debits at any time. You have no obligation to use this
crediting and debiting procedure with respect to a delivery or
securities if we do not have actually in our account sufficient to make
the delivery.
(b) As with other transactions processed by you, your
responsibility with respect to transactions for which you use this
crediting and debiting procedure shall be governed by the provisions of
this Custody Agreement, including the section headed "Custodian
Responsibility". We agree that your using this procedure is not an
assurance by you that the transaction will actually settle on the
contractual settlement date and does not impose any additional
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<PAGE>
responsibility on you with respect to the transaction. Without limiting
your right to reverse credits and debits described above, the account
statements which you furnish to us shall reflect transactions as to
which you use this procedure as if they had actually settled on the
contractual settlement date, unless prior to the date to which the
statement relates, you have reversed such credits and debits.
(c) We agree that you may terminate this contractual settlement
service to us at any time and for any reason.
With respect to securities or transactions as to which you do not
customarily offer this service, you shall (i) in the case of deliveries of
securities, credit the proceeds of the transaction to the Cash Account on the
date they are received by you and debit the securities from the Custody Account
on the date they are delivered by you, and (ii) in the case of securities
received, debit the Cash Account for the cost of such securities and credit the
Custody Account with such securities on the date the securities are received by
you.
10. Sweep of Cash Balances. Unless you receive contrary instructions
from us, you are directed automatically to arrange for the investment of cash in
the Cash Account in mutual funds (including, without limitation, the VISTA Money
Market Funds and any other mutual fund with respect to which you or an affiliate
or subsidiary of yours serves as an investment adviser, administrator,
shareholder servicing agent, and/or custodian or subcustodian and regardless of
whether or not you or an affiliate or subsidiary of yours receives any fees for
services to this Agreement, all of which such fees you are specifically
authorized to retain) or money market accounts (including, without limitation,
accounts of yours or an affiliate or subsidiary of yours) which you make
available for such purposes and which we shall select through instructions to
you. Further, in this regard, you are directed automatically to arrange for the
redemption of such mutual fund shares or for the withdrawal of amounts from such
money market accounts as may be necessary to avoid any potential overdraft
hereunder that you perceive based upon the information available to you at the
time of such redemption or withdrawal. We agree that we shall read the
prospectus for any mutual fund prior to investing and acknowledge that
investments in mutual fund shares are not insured by the Federal Deposit
Insurance Corporation and are not obligations of or guaranteed by you.
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11. Taxes. Unless we have already done so, we shall deliver promptly to
you with respect to each Custody Account established under this Agreement, two
duly completed and executed copies of the proper United States Internal Revenue
Service forms; (i) Form W-9, if we are a U.S. citizen or resident person; and
(ii) Form 1001, Form 4224, Form W-8 or Form 8709 (as applicable), if we are a
nonresident person, certifying our status as a nonresident person, and that we
are entitled to receive United States source payments under or in connection
with this Agreement without deduction as withholding or at a reduced rate of
withholding for Untied States federal income taxes. We agree to provide duly
executed and completed updates of such form(s) (or successor applicable forms),
on or before the date that such form(s) expire or become obsolete or after the
occurrence of an event requiring a change in the most recent form previously
delivered by us to you. We further agree to pay, indemnify, and hold you
harmless from and against any and all liabilities, penalties, interest or
additions to tax with respect to, or resulting from, any delay in, or failure
by, you (i) to pay, withhold or report any Federal, state or foreign taxes
imposed on, or in respect of, the property held in the Custody Account(s), or
this Agreement, or (ii) to report interest, dividend or other income paid or
credited to the Cash Account, whether such failure or delay by you to pay,
withhold or report tax or income is a result of (x) our failure to comply with
the terms of this sub-paragraph, or (y) your own acts or omissions; provided,
however, we shall not be liable to you for any penalty or additions to tax due
as a result of your failure to pay or withhold tax or to report to us interest,
dividend or other income paid or credited to the Cash Account solely as a result
of your negligent acts or omissions.
12. Other Accounts. From time to time we may instruct you
to open and maintain more than one Custody Account for us.
Unless we and you otherwise expressly agree, such accounts will
be governed by the provisions of this Agreement.
13. Fees, Indemnification. We agree to pay you compensation for your
services pursuant to this Agreement at the fees of which you shall notify us
from time to time. We also agree to hold you and your officers, employees and
agents harmless from, and to indemnify and reimburse you and them for, all
claims, liabilities, losses, damages and expenses (including out-of-pocket and
incidental expenses and legal fees) incurred by you or them in connection with
or relating to the Custody Account or your acting under this Agreement, provided
that you or they,as the case may be, have not acted with negligence or willful
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misconduct with respect to the events resulting in such claims, liabilities,
losses, damages or expenses.
14. Lien. We hereby pledge, assign and grant to you a continuing
security interest in, and a lien on the securities in the Custody Account and
any securities in your possession or under your control for credit to the
Custody Account, and you shall have all of the rights and remedies of a secured
party under the New York Uniform Commercial code, as amended, as security for
any and all obligations, matured or not matured, direct or indirect, absolute or
contingent, now due or hereafter to become due of us to you pursuant to this
Agreement; provided, however, if the Custody Account in which such securities
are credited is clearly designated on your records as an account in which our
interest is that of an agent or fiduciary for others, your security interest in
a particular security in such account will terminate at the time we pay to you
the settlement amount for such security in immediately available funds.
15. Set-Off. You may, without notice to us, setoff any sums held for us
or standing to the credit of any of our cash accounts with you in or towards the
satisfaction of any obligation of us to you under this Agreement, whether or not
any such sums or credits or obligations are matured or unmatured, direct or
indirect, absolute or contingent, and may do so notwithstanding that the
accounts may be maintained at different branches of yours and may not be
expressed in the same currency.
16. Termination. Either party may terminate this Agreement
at any time upon thirty days written notice. Our obligations
pursuant to the paragraphs under the headings "Registration",
"Settlements" and "Fees, Indemnification" shall survive the
termination of this Agreement.
17. Notices. Notices with respect to termination, specification of
Authorized Officers and terms and conditions for instructions required hereunder
shall be in writing, and shall be deemed to have been duly given if delivered
personally, by courier service or by mail, postage prepaid, to the following
addresses (or to such other address as either party hereto may from time to time
designate by notice duly given in accordance with this paragraph):
To us at:
Cohen & Steers Equity Income Fund, Inc.
757 Third Avenue
New York, New York 10017
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To you, to the attention of the individual designated by you as
the safekeeping account administrator for our account, at:
The Chase Manhattan Bank
Institutional Client Services
4 New York Plaza, 4th Floor
New York, New York 10004
18. Governing Law, Successors and Assigns, Headings. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to laws as to conflicts of laws, and shall be binding
on our and your respective successors and assigns. We and you hereby irrevocably
submit to the exclusive jurisdiction of the state and federal courts in the
State and County of New York for the purposes of any suit, action or other
proceedings arising out of this Agreement. We and you hereby irrevocably waive
any objection on the ground of venue, forum non conveniens, or any similar
grounds, and irrevocably consent to service of process by mail or in any manner
permitted by New York law, and irrevocably waive our rights to any jury trial.
The headings of the paragraphs hereof are included for convenience of reference
only and do not form a part of this Agreement.
19. Prior Proposals. This Agreement (including any Riders relating to
additional services in respect of the Custody Account we may request of you)
shall contain the complete agreement of the parties hereto with respect to the
Custody Account (except as may be expressly provided to the contrary herein) and
supersedes and replaces any previously made proposals, representations,
warranties or agreements with respect thereto by either or both of the parties
hereto. This Agreement shall become effective upon execution hereof by us and
acceptance by you.
20. Separability. Any provisions of this Agreement, which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
21. Reservation of Right. You shall have the right not to
accept for deposit to the Custody Account any securities which
are in a form or condition which you, in your sole discretion,
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determine not be suitable for the services you provide under this
Agreement.
22. Additional Duties. If we shall ask you to perform duties or
responsibilities not specifically set forth in this Agreement and you choose to
perform such additional duties or responsibilities, you shall be held to the
same standard of care and you shall be entitled to all the protective provisions
(including but not limited to limitation of liability and indemnification) set
forth herein.
23. Counterparts. This Agreement may be executed in
several counterparts each of which shall be deemed to be an
original and together shall constitute one and the same agreement.
24. Miscellaneous. We understand that we may request to have a Custody
Account established under this Agreement which is not linked to a Cash Account.
We understand further that with respect to any such Custody Account so
established any funds received by you in respect of transactions for such
Custody Account will be credited to the Custody Account and, further, funds
credited to the Custody Account must be transferred by us by means of
instruction (a "payment order") to one of your account administrators assigned
by you for the Custody Account, which you will identify to us. We agree that
payment orders and communications seeking to cancel or amend payment orders
which are issued by telephone, telecopier or in writing shall be subject to a
mutually agreed security procedure and you may execute or pay payment orders
issued in our name when verified by you in accordance with such procedure.
In executing or paying a payment order you may rely upon the identifying
number (e.g. Fedwire routing number or account) or any party as instructed in
the payment order. We assume full responsibility for any inconsistency between
the name and identifying number of any party in payment orders issued to you in
our name.
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With respect to any Custody Account established under this Agreement
which is not linked to a Cash Account, all references to Cash Account shall be
read to mean Custody Account.
COHEN & STEERS EQUITY INCOME
FUND, INC.
By: __________________________
Title: _______________________
Date: ________________________
Accepted by:
THE CHASE MANHATTAN BANK
By: __________________________
Title: ______________________
Date: _______________________
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ADMINISTRATION AGREEMENT
AGREEMENT dated as of ______________, 1997 between COHEN & STEERS EQUITY
INCOME FUND, INC. (hereinafter referred to as the "Company"), a non-diversified,
open-end management investment company, and COHEN & STEERS CAPITAL MANAGEMENT,
INC. (hereinafter referred to as to the "Administrator").
In consideration of the mutual agreements herein made, the Company and
the Administrator understand and agree as follows:
1. The Administrator agrees, during the term of this Agreement, to
be responsible for:
(a) providing office space, telephone, office equipment and supplies
for the Company;
(b) paying compensation of the Company's officers for services
rendered as such;
(c) authorizing expenditures and approving bills for payment on
behalf of the Company;
(d) supervising preparation of the periodic updating of the Company's
registration statement, including prospectus and statement of
additional information, for the purpose of filings with the
Securities and Exchange Commission and state securities
administrators and monitoring and maintaining the effectiveness
of such filings, as appropriate;
(e) supervising preparation of quarterly reports to the Company's
shareholders, notices of dividends, capital gains distributions
and tax credits, and attending to routine correspondence and
other communications with individual shareholders;
(f) supervising the daily pricing of the Company's investment
portfolio and the publication of the net asset value of the
Company's shares, earnings reports and other financial data;
(g) monitoring relationships with organizations providing services
to the Company, including the Custodian, Transfer Agent and
printers;
(h) providing trading desk facilities for the Company;
(i) supervising compliance by the Company with recordkeeping
requirements under the Investment Company Act of 1940 (the "1940
Act") and regulations thereunder, maintaining books and records
for the Company (other than those maintained by the Custodian and
Transfer Agent) and preparing and filing of tax reports other
than the Company's income tax returns; and
(j) providing executive, clerical and secretarial help needed to
carry out these responsibilities.
2. In rendering the services required under this Agreement, the
Administrator may, subject to the approval of the Company's Board of Directors,
cause such services or any portion thereof to be provided by another person
pursuant to a sub-administration agreement; provided that in such event the
Administrator shall remain responsible for monitoring and overseeing the
performance by such person of its obligations to the Company under such
sub-administration agreement. Subject to the approval of the Company's Board of
Directors, the fees and appropriate out-of-pocket expenses of such other person
will be paid or reimbursed by the Company.
3. The Company agrees, during the term of this Agreement to pay to the
Administrator as compensation for the foregoing a fee equal on an annual basis
to 0.02% of the Company's average daily net assets, payable in arrears at the
end of each month. The Company shall reimburse the Administrator for its
reasonable out-of-pocket expenses incurred in carrying out its obligations under
this Agreement.
4. This Agreement shall remain in full force and effect through December
31, 1998 and thereafter from year to year, provided such continuance is approved
annually by the Board of Directors of the Company.
5. This Agreement may be terminated by either party at any time on sixty
(60) days' written notice without payment of penalty, provided that such
termination by the Company shall be directed or approved by the vote of a
majority of the Directors of the Company in office at the time or by the vote of
a majority of the
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outstanding voting securities of the Company (as defined in the 1940 Act); and
will terminate automatically and immediately in the event of its assignment (as
defined in the 1940 Act).
6. In the absence of willful misfeasance, bad faith or gross negligence
on the part of the Administrator, or of reckless disregard of its obligations
hereunder, the Administrator shall not be subject to liability for any act or
omission in the course of, or connected with, rendering services hereunder;
provided, however, that in no event shall the Administrator be subject to
liability for any act or omission of any sub-administrator for the Company
retained in accordance with paragraph 2 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized officers as of the date first set forth above.
COHEN & STEERS EQUITY INCOME FUND, INC.
By: ______________________________________
Name:
Title:
COHEN & STEERS CAPITAL MANAGEMENT, INC.
By: ______________________________________
Name:
Title:
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MUTUAL FUNDS SERVICE AGREEMENT
Fund Administration Services
Fund Accounting Services
Transfer Agency Services
CHASE GLOBAL FUNDS SERVICES COMPANY
August ___, 1997
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MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents
Section Page
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1. APPOINTMENT....................................................... 1
2. REPRESENTATIONS AND WARRANTIES.................................... 1
3. DELIVERY OF DOCUMENTS............................................. 4
4. SERVICES PROVIDED................................................. 5
5. FEES AND EXPENSES................................................. 6
6. LIMITATION OF LIABILITY AND INDEMNIFICATION....................... 9
7. TERM.............................................................. 13
8. NOTICES........................................................... 13
9. WAIVER............................................................ 14
10. FORCE MAJEURE..................................................... 14
11. AMENDMENTS........................................................ 14
11. SEVERABILITY...................................................... 15
12. GOVERNING LAW..................................................... 15
Signatures................................................................. 15
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MUTUAL FUNDS SERVICE AGREEMENT
Table of Contents (continued)
Page
----
Schedule A -- Fees and Expenses .......................................... A-1
Schedule B -- Fund Administration Services Description ................... B-1
Schedule C -- Fund Accounting Services Description........................ C-1
Schedule D -- Transfer Agency Services Description........................ D-1
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MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of August _, 1997 by and between Cohen &
Steers Equity Income Fund, Inc. (the "Fund"), a Maryland corporation, and Chase
Global Funds Services Company ("Chase"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the "
1940 Act"); and
WHEREAS, the Fund wishes to contract with Chase to provide
certain services with respect to the Fund;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Fund hereby appoints Chase to provide services for
the Fund, as described hereinafter, subject to the supervision of the Board of
Directors [Trustees] of the Fund (the "Board"), for the period and on the terms
set forth in this Agreement. Chase accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Section 5 of and Schedule A to this Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) Chase represents and warrants to the Fund that:
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(i) Chase is a corporation, duly organized and
existing under the laws of the State of Delaware;
(ii) Chase is duly qualified to carry on its
business in the Commonwealth of Massachusetts;
(iii) Chase is empowered under applicable laws and
by its Articles of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have
been taken to authorize Chase to enter into and perform this Agreement;
(v) Chase has, and will continue to have, access
to the facilities, personnel and equipment required to fully perform its duties
and obligations hereunder;
(vi) no legal or administrative proceedings have
been instituted or threatened which would impair Chase's ability to perform its
duties and obligations under this Agreement; and
(vii) Chase's entrance into this Agreement shall
not cause a material breach or be in material conflict with any other agreement
or obligation of Chase or any law or regulation applicable to Chase;
(b) The Fund represents and warrants to Chase that:
(i) the Fund is a Maryland corporation [business
trust], duly organized and existing and in good standing under the laws of the
State of Maryland; (ii) the Fund is empowered under applicable laws and by its
Charter Document and By-Laws to enter into and perform this Agreement;
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(ii) all requisite proceedings have been taken to
authorize the Fund to enter into and perform this Agreement;
(iii) the Fund is an investment company properly
registered under the 1940 Act;
(iv) a registration statement under the
Securities Act of 1933, as amended ("1933 Act") and the 1940 Act on Form N-1A
has been filed and will be effective and will remain effective during the term
of this Agreement, and all necessary filings under the laws of the states will
have been made and will be current during the term of this Agreement;
(v) no legal or administrative proceedings have
been instituted or threatened which would impair the Fund's ability to perform
its duties and obligations under this Agreement;
(vi) the Fund's registration statements comply in
all material respects with the 1933 Act and the 1940 Act (including the rules
and regulations thereunder) and none of the Fund's prospectuses and/or
statements of additional information contain any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein
not misleading; and
(vii) the Fund's entrance into this Agreement
shall not cause a material breach or be in material conflict with any other
agreement or obligation of the Fund or any law or regulation applicable to it.
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3. DELIVERY OF DOCUMENTS. The Fund will promptly furnish to Chase
such copies, properly certified or authenticated, of contracts, documents and
other related information that Chase may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Board authorizing the appointment of
Chase to provide certain services to the Fund and approving this Agreement;
(b) The Fund's Charter Document;
(c) The Fund's By-Laws;
(d) The Fund's Notification of Registration on Form
N-8A under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC");
(e) The Fund's registration statement including exhibits, as
amended, on Form N-1A (the "Registration Statement") under the 1933 Act and the
1940 Act, as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the
Fund and its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports;
(h) The Fund's prospectus(es) and statement(s) of
additional information relating to all funds, series, portfolios and classes, as
applicable, and all amendments and supplements thereto (such Prospectus(es) and
Statement(s) of Additional Information and supplements thereto, as presently in
effect and
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as from time to time hereafter amended and supplemented, herein called the
"Prospectuses"); and
(i) Such other agreements as the Fund may enter into from time
to time including securities lending agreements, futures and commodities account
agreements, brokerage agreements and options agreements.
4. SERVICES PROVIDED.
(a) Chase will provide the following services subject to the
control, direction and supervision of the Board and in compliance with the
objectives, policies and limitations set forth in the Fund's Registration
Statement, Charter Document and By-Laws; applicable laws and regulations; and
all resolutions and policies implemented by the Board:
(i) Fund Administration,
(ii) Fund Accounting, and
(iii) Transfer Agency.
A detailed description of each of the above services is contained in Schedules
B, C and D, respectively, to this Agreement.
(b) Chase will also:
(i) provide office facilities with respect to the
provision of the services contemplated herein (which may be in the offices of
Chase or a corporate affiliate of Chase);
(ii) provide the services of individuals to serve
as officers of the Fund who will be designated by Chase and elected by the
Board subject to reasonable Board approval;
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(iii) provide or otherwise obtain personnel
sufficient for provision of the services contemplated herein;
(iv) furnish equipment and other materials, which
are necessary or desirable for provision of the services contemplated herein;
and
(v) keep records relating to the services
provided hereunder in such form and manner as Chase may deem appropriate or
advisable. To the extent required by Section 31 of the 1940 Act and the rules
thereunder, Chase agrees that all such records prepared or maintained by Chase
relating to the services provided hereunder are the property of the Fund and
will be preserved for the periods prescribed under Rule 31a-2 under the 1940
Act, maintained at the Fund's expense, and made available in accordance with
such Section and rules.
5. FEES AND EXPENSES.
(a) As compensation for the services rendered to the Fund
pursuant to this Agreement the Fund shall pay Chase monthly fees determined as
set forth in Schedule A to this Agreement. Such fees are to be billed monthly
and shall be due and payable upon receipt of the invoice. Upon any termination
of the provision of services under this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full month period and
shall be payable upon the date of such termination.
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(b) For the purpose of determining fees calculated as a
function of the Fund's assets, the value of the Fund's assets and net assets
shall be computed as required by its currently effective Prospectus, generally
accepted accounting principles, and resolutions of the Board.
(c) The Fund may request additional services, additional
processing, or special reports, with such specifications and requirements
documentation as may be reasonably required by Chase. If Chase elects to provide
such services or arrange for the provision, it shall be entitled to additional
fees and expenses at its customary rates and charges.
(d) Chase will bear its own expenses in connection with the
performance of the services under this Agreement except as provided herein or as
agreed to by the parties. The Fund agrees to promptly reimburse Chase for any
services, equipment or supplies ordered by or for the Fund through Chase and for
any other expenses that Chase may incur on the Fund's behalf at the Fund's
request or as consented to by the Fund. Such other expenses to be incurred in
the operation of the Fund and to be borne by the Fund, include, but are not
limited to: taxes; interest; brokerage fees and commissions; salaries and fees
of officers and directors [trustees] who are not officers, directors,
shareholders or employees of Chase, or the Fund's investment adviser or
distributor; SEC and state Blue Sky registration and qualification fees, levies,
fines and other charges; EDGAR filing fees', processing services and related
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fees; postage and mailing costs; costs of share certificates; advisory and
administration fees; charges and expenses of pricing and data services,
independent public accountants and custodians; insurance premiums including
fidelity bond premiums; legal expenses; consulting fees; customary bank charges
and fees; costs of maintenance of corporate [or trust] existence; expenses of
typesetting and printing of Prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund (the Fund's distributor to bear
the expense of all other printing, production, and distribution of Prospectuses,
and marketing materials); expenses of printing and production costs of
shareholders' reports and proxy statements and materials; expenses of proxy
solicitation, proxy tabulation and annual meetings; costs and expenses of Fund
stationery and forms; costs and expenses of special telephone and data lines and
devices; costs associated with corporate [or trust], shareholder, and Board
meetings; trade association dues and expenses; reprocessing costs to Chase
caused by third party errors; and any extraordinary expenses and other customary
Fund expenses. In addition, Chase may utilize one or more independent pricing
services to obtain securities prices and to act as backup to the primary pricing
services, in connection with determining the net asset values of the Fund. The
Fund will reimburse Chase for the Fund's share of the cost of such services
based upon the actual usage, or a pro-rata estimate of the use, of the services
for the benefit of the Fund.
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(e) All fees, out-of-pocket expenses, or additional charges of
Chase shall be billed on a monthly basis and shall be due and payable upon
receipt of the invoice.
(f) Chase will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Charges remaining unpaid after thirty (30) days shall bear interest in
finance charges equivalent to, in the aggregate, the Prime Rate (as determined
by Chase) plus two percent per year and all costs and expenses of effecting
collection of any such sums, including reasonable attorney's fees, shall be paid
by the Fund to Chase.
(g) In the event that the Fund is more than sixty (60) days
delinquent in its payments of monthly billings in connection with this Agreement
(with the exception of specific amounts which may be contested in good faith by
the Fund), this Agreement may be terminated upon thirty (30) days' written
notice to the Fund by Chase. The Fund must notify Chase in writing of any
contested amounts within thirty (30) days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being
investigated.
6. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(a) Chase shall not be liable for any error of judgment
or mistake of law or for any loss or expense suffered by the Fund, in
connection with the matters to which this Agreement relates, except for a loss
or expense solely caused by or resulting from willful misfeasance, bad faith or
negligence on
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Chase's part in the performance of its duties or from reckless disregard by
Chase of its obligations and duties under this Agreement. In no event shall
Chase be liable for any indirect, incidental, special or consequential losses or
damages of any kind whatsoever (including but not limited to lost profits), even
if Chase has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(b) Subject to Section 6(a) above, Chase shall not be
responsible for, and the Fund shall indemnify and hold Chase harmless from and
against, any and all losses, damages, costs, reasonable attorneys' fees and
expenses, payments, expenses and liabilities incurred by Chase, any of its
agents, or the Fund's agents in the performance of its/their duties hereunder,
including but not limited to those arising out of or attributable to;
(i) any and all actions of Chase or its officers or
agents required to be taken pursuant to this Agreement;
(ii) the reliance on or use by Chase or its officers or agents
of information, records, or documents which are received by Chase or its
officers or agents and furnished to it or them by or on behalf of the Fund, and
which have been prepared or maintained by the Fund or any third party on behalf
of the Fund;
(iii) the Fund's refusal or failure to comply with the
terms of this Agreement or the Fund's lack of good faith, or its
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actions, or lack thereof, involving negligence or willful misfeasance;
(iv) the breach of any representation or warranty of
the Fund hereunder;
(v) the taping or other form of recording of telephone
conversations or other forms of electronic communications with investors and
shareholders, or reliance by Chase on telephone or other electronic instructions
of any person acting on behalf of a shareholder or shareholder account for which
telephone or other electronic services have been authorized:
(vi) the reliance on or the carrying out by Chase or its
officers or agents of any proper instructions reasonably believed to be duly
authorized, or requests of the Fund or recognition by Chase of any share
certificates which are reasonably believed to bear the proper signatures of the
officers of the Fund and the proper countersignature of any transfer agent or
registrar of the Fund;
(vii) any delays, inaccuracies, errors in or omissions from
information or data provided to Chase by data services, corporate action
services, pricing services or securities brokers and dealers;
(viii) the offer or sale of shares by the Fund in violation of
any requirement under the Federal securities laws or regulations or the
securities laws or regulations of any state, or in violation of any stop order
or other determination or ruling by any Federal agency or any state agency with
respect to
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the offer or sale of such shares in such state (1) resulting from activities,
actions, or omissions by the Fund or its other service providers and agents, or
(2) existing or arising out of activities, actions or omissions by or on behalf
of the Fund prior to the effective date of this Agreement;
(ix) any failure of the Fund's registration statement to
comply with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus;
(x) the actions taken by the Fund, its investment adviser, and
its distributor in compliance with applicable securities, tax, commodities and
other laws, rules and regulations, or the failure to so comply; and
(xi) all actions, inactions, omissions, or errors caused by
third parties to whom Chase or the Fund has assigned any rights and/or delegated
any duties under this Agreement at the request of or as required by the Fund,
its investment advisers, distributor, administrator or sponsor.
(c) In performing its services hereunder, Chase shall be
entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Fund and its
custodians, officers and directors, investors, agents and other since providers
which Chase reasonably believes to be genuine, valid and authorized, and shall
be indemnified by
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the Fund for any loss or expense caused by such reliance. Chase shall also be
entitled to consult with and rely on the advice and opinions of outside legal
counsel retained by the Fund, as necessary or appropriate.
7. TERM. This Agreement shall become effective on the date first
hereinabove written and may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall continue in effect
unless terminated by either party on 180 days' prior written notice. Upon
termination of this Agreement, the Fund shall pay to Chase such compensation and
any out-of-pocket or other reimbursable expenses which may become due or payable
under the terms hereof as of the date of termination or after the date that the
provision of services ceases, whichever is later.
8. NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be deemed effective on the date of personal delivery (by
private messenger, courier service or otherwise) or upon confirmed receipt of
telex or facsimile, whichever occurs first or upon receipt if by mail to the
parties at the following address (or such other address as a party may specify
by notice to the other):
If to the Fund:
Cohen & Steers Equity Income Fund, Inc.
757 Third Avenue
New York, New York 10017
Attention:
Fax: 212-832-3622
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If to Chase:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
Attention: Karl Hartmann, General Counsel
Fax: 617-557-8616
9. WAIVER. The failure of a party to insist upon strict adherence to
any tenn of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be writing
signed by the waiving party.
10. FORCE MAJEURE. Chase shall not be responsible or liable for any
harm, loss of damage suffered by the Fund, its investors, or other third parties
or for any failure or delay in performance of Chase's obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond Chase's control. In the event of a force majeure, any resulting harm,
loss, damage, failure or delay by Chase will not give the Fund the right to
terminate this Agreement.
11. AMENDMENTS. This Agreement may be modified or amended from
time to time by mutual written agreement between the parties. No provision of
this Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
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11. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
COHEN & STEERS EQUITY INCOME
FUND, INC.
By: _________________________
Name: _______________________
Title: ______________________
CHASE GLOBAL FUNDS
SERVICES COMPANY
By: _________________________
Name: _______________________
Title: ______________________
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
Fund Administration and Accounting Fees
A. For the services rendered under this Agreement, the Fund shall pay to
the Administrator an annual fee based on the following schedule:
8 basis points of 1% on the first $500 million in total
assets, plus
5 basis points of 1% on the next $500 million in total
assets, plus
3 basis points of 1% of the total assets in excess of
$1 billion
There will be a $120,000 minimum per year, which will be waived for the
first three months of operation.
B. The foregoing calculation is based on the average daily net assets of
the Fund. The fees will be computed, billed and payable monthly.
C. Out-of-pocket expenses, including but not limited to those in Section
5(d), will be computed, billed and payable monthly.
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND ADMINISTRATION SERVICES
I. Financial and Tax Reporting
A. Prepare management reports and Board of Directors [Trustees]
materials, such as unaudited financial statements and
summaries of dividends and distributions.
B. Report Fund performance to outside services as directed
by Fund management.
C. Calculate dividend and capital gain distributions in
accordance with distribution policies detailed in the
Fund's prospectus(es). Assist Fund management in
making final determinations of distribution amounts.
D. Estimate and recommend year-end dividend and capital gain
distributions necessary to establish Fund's status as a
regulated investment company ("RIC") under Section 4982 of the
Internal Revenue Code of 1986, as amended (the "Code")
regarding minimum distribution requirements.
E. Working with the Fund's public accountants or other
professionals, prepare and file Fund's Federal tax
return on Form 1120-RIC along with all state and local
tax returns where applicable. Prepare and file Federal
Excise Tax Return (Form 8613).
F. Prepare and file Fund's Form N-SAR with the SEC.
G. Prepare and coordinate printing of Fund's Semiannual
and Annual Reports to Shareholders.
H. In conjunction with transfer agent, notify shareholders as to
what portion, if any, of the distributions made by the Funds
during the prior fiscal year were exempt- interest dividends
under Section 852 (b)(5)(A) of the Code.
I. Provide Form 1099-MISC to persons other than
corporations (i.e., Trustees [Directors]) to whom the
Fund paid more than $600 during the year.
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J. Prepare and file California State Expense Limitation Report,
if applicable.
K. Provide financial information for Fund proxies and
prospectuses (Expense Table).
II. Portfolio Compliance
A. Assist with monitoring each Investment Fund's compliance with
investment restrictions (e.g., issuer or industry
diversification, etc.) listed in the current prospectus(es)
and Statement(s) of Additional Information, although primary
responsibility for such compliance shall remain with the
Fund's investment adviser or investment manager.
B. Assist with monitoring each Investment Fund's compliance with
the requirements of Section 851 of the Code for qualification
as a RIC (i.e., 90% Income, 30% Income - Short Three,
Diversification Tests), although primary responsibility for
such compliance shall remain with the Fund's investment
adviser or investment manager.
C. Assist with monitoring investment manager's compliance with
Board directives such as "Approved Issuers Listings for
Repurchase Agreements", Rule 17a-7, and Rule 12d-3 procedures,
although primary responsibility for such compliance shall
remain with the Fund's investment adviser or investment
manager.
D. Mail quarterly requests for "Securities Transaction Reports"
to the Fund's Directors [Trustees] and Officers and "access
persons" under the terms of the Fund's Code of Ethics and SEC
regulations.
III. Regulatory Affairs and Corporate Governance
A. Prepare and file post-effective amendments to the Fund's
registration statement and supplements as needed.
B. Prepare and file proxy materials and administer shareholder
meetings.
C. Prepare and file all state registrations of the Fund's
securities including annual renewals; registering new funds,
portfolios, or classes; preparing and filing sales reports;
filing copies of the registration statement, prospectus and
statement of additional
B-2
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information; and increasing registered amounts of securities
in individual states.
D. Prepare Board materials for Board meetings.
E. Assist with the review and monitoring of fidelity bond
and errors and omissions insurance coverage and the
submission of any related regulatory filings.
F. Prepare and update documents such as charter document,
by-laws, and foreign qualification filings.
G. Provide support with respect to routine regulatory
examinations or investigations of the Fund.
H. File copies of financial reports to shareholders with
the SEC under Rule 30b2-1.
IV. General Administration
A. Furnish officers of the Fund, subject to reasonable
Board approval.
B. Prepare fund, portfolio or class expense projections,
establish accruals and review on a periodic basis, including
expenses based on a percentage of average daily net assets
(advisory and administrative fees) and expenses based on
actual charges annualized and accrued daily (audit fees,
registration fees, directors' fees, etc.).
C. For new funds, portfolios and classes, obtain Employer
or Taxpayer Identification Number and CUSIP numbers, as
necessary. Estimate organizational costs and expenses
and monitor against actual disbursements.
D. Coordinate all communications and data collection with regard
to any regulatory examinations and yearly audits by
independent accountants.
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF FUND ACCOUNTING SERVICES
I. General Description
Chase shall provide, the following accounting services to the Fund:
A. Maintenance of the books and records for the Fund's
assets, including records of all securities transactions.
B. Calculation of each funds', portfolios' or classes' Net Asset
Value in accordance with the Prospectus, and after the fund,
portfolio or class meets eligibility requirements,
transmission to NASDAQ and to such other entities as directed
by the Fund.
C. Accounting for dividends and interest received and
distributions made by the Fund.
D. Coordinate with the Fund's independent auditors with respect
to the annual audit, and as otherwise requested by the Fund.
E. As mutually agreed upon, Chase will provide domestic and/or
international reports.
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE D
DESCRIPTION OF TRANSFER AGENCY SERVICES
The following is a general description of the transfer agency services
Chase shall provide to the Fund.
A. Shareholder Recordkeeping. Maintain records showing for each
Fund shareholder the following: (i) name, address, appropriate
tax certification and tax identifying number; (ii) number of
shares of each fund, portfolio or class; (iii) historical
information including, but not limited to, dividends paid,
date and price of all transactions including individual
purchases and redemptions, based upon appropriate supporting
documents; and (iv) any dividend reinvestment order,
application, specific address, payment and processing
instructions and correspondence relating to the current
maintenance of the account.
B. Shareholder Issuance. Record the issuance of shares of each
fund, portfolio or class. Except as specifically agreed in
writing between Chase and the Fund, Chase shall have no
obligation when countersigning and issuing and/or crediting
shares to take cognizance of any other laws relating to the
issue and sale of such shares except insofar as policies and
procedures of the Stock Transfer Association recognize such
laws.
C. Transfer, Purchase and Redemption Orders. Process all orders
for the transfer, purchase and redemption of shares of the
Fund in accordance with the Fund's current prospectus and
customary transfer agency policies and procedures, including
electronic transmissions which the Fund acknowledges it has
authorized, or in accordance with any instructions of the Fund
or its agents which Chase reasonably believes to be
authorized.
D. Shareholder Communications. Transmit all communications by the
Fund to its shareholders promptly following the delivery by
the Fund of the material to be transmitted by mail, telephone,
courier service or electronically.
E. Proxy Materials. Assist with the mailing or transmission of
proxy materials, tabulating votes, and
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compiling and certifying voting results. Services may include
the provision of inspectors of election at any meeting of
shareholders.
F. Share Certificates. If permitted by Fund policies, and if a
shareholder of the Fund requests a certificate representing
shares, Chase as Transfer Agent, will countersign and mail a
share certificate to the investor at his/her address as it
appears on the Fund's shareholder records.
G. Returned Checks. In the event that any check or other
negotiable instrument for the payment of shares is returned
unpaid for any reason, Chase will take such steps, as Chase
may, in its discretion, deem appropriate and notify the Fund
of such action. However, the Fund remains ultimately liable
for any returned checks or negotiable instruments of its
shareholders.
H. Shareholder Correspondence. Acknowledge all correspondence
from shareholders relating to their share accounts and
undertake such other shareholder correspondence as may from
time to time be mutually agreed upon.
I. Tax Reporting. Chase shall issue appropriate shareholder tax
forms as required.
J. Dividend Disbursing. Chase will prepare and mail checks, place
wire transfers or credit income and capital gain payments to
shareholders. The Fund will advise Chase of the declaration of
any dividend or distribution and the record and payable date
thereof at least five (5) days prior to the record date. Chase
will, on or before the payment date of any such dividend or
distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of such dividend or
distribution payable in cash, and on or before the payment
date of such distribution, the Fund will instruct its
Custodian to make available to Chase sufficient funds for the
cash amount to be paid out. If a shareholder is entitled to
receive additional shares by virtue of any such distribution
or dividend, appropriate credits will be made to each
shareholder's account.
D-2
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K. Escheatment. Chase shall provide escheatment services only
with respect to the escheatment laws of the Commonwealth of
Massachusetts, including those which relate to reciprocal
agreements with other states.
L. Telephone Services. Chase will provide staff coverage,
training and supervision in connection with the Fund's
telephone line for shareholder inquiries, and will respond to
inquiries concerning shareholder records, transactions
processed by Chase, procedures to effect the shareholder
records and inquiries of a general nature relative to
shareholder services. All other telephone calls will be
referred to the Fund, as appropriate.
M. Fulfillment Services. As directed by the Fund, the Fund
Adviser or the Distributor, or upon the request of prospective
shareholders either by telephone or in writing, Chase will
mail reasonable quantities of prospectuses, applications to
purchase shares, and other information normally sent to
prospective shareholders.
D-3
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COHEN & STEERS EQUITY INCOME FUND, INC.
SHAREHOLDER SERVICE PLAN
August , 1997
This Shareholder Service Plan (the "Plan") is adopted by Cohen & Steers
Equity Income Fund, Inc. (the "Fund") with respect to the shares of common stock
of the Fund.
SECTION 1. ADMINISTRATOR
The Fund has entered into an Administration Agreement (the "Agreement")
with Cohen & Steers Capital Management, Inc. ("CSCM") whereby CSCM provides
certain administrative services for the Fund.
SECTION 2. SERVICE AGREEMENTS; PAYMENTS
(a) CSCM is authorized to enter into Shareholder Service Agreements
(the"Agreements"), the form of which shall be approved by the Board of Directors
of the Fund (the "Board"), with financial institutions and other persons who
provide services for and maintain shareholder accounts ("Service Providers") as
set forth in this Plan.
(b) Pursuant to the Agreements, as compensation for the services
described in Section 4 below, CSCM may pay the Service Provider, on behalf of
the Fund, a fee at an annual rate of up to 0.10% of the average daily net assets
of the Fund represented by the shareholder accounts for which the Service
Provider maintains a service relationship.
Provided, however, that the Fund shall not directly or indirectly pay
any amounts, whether Payments (as defined in the Agreements) or otherwise, that
exceed any applicable limits imposed by law or the National Association of
Securities Dealers, Inc.
(c) Each Agreement shall contain a representation by the Service
Provider that any compensation payable to the Service Provider in connection
with an investment in a Fund of the assets of its customers (i) will be
disclosed by the Service Provider to its customers, (ii) will be authorized by
its customers, and (iii) will not result in an excessive fee to the Service
Provider.
SECTION 3. SHAREHOLDER SERVICE FEE
Pursuant to this Plan, the Fund shall daily accrue and monthly pay CSCM
a Shareholder Service Fee not to exceed the lessor of (i) 0.10% per annum of the
average daily net assets of the Fund or (ii) the combined Payments made by CSCM
with respect to the Fund for the month.
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SECTION 4. SERVICE ACTIVITIES
Service activities include (a) establishing and maintaining accounts and
records relating to clients of Service Provider; (b) answering shareholder
inquiries regarding the manner in which purchases, exchanges and redemptions of
shares of the Fund may be effected and other matters pertaining to the Fund's
services; (c) providing necessary personnel and facilities to establish and
maintain shareholder accounts and records; (d) assisting shareholders in
arranging for processing purchase, exchange and redemption transactions; (e)
arranging for the wiring of funds; (f) guaranteeing shareholder signatures in
connection with redemption orders and transfers and changes in
shareholder-designated accounts; (g) integrating periodic statements with other
shareholder transactions; and (h) providing such other related services as the
shareholder may request.
SECTION 5. AMENDMENT AND TERMINATION
(a) Any material amendment to the Plan shall be effective only upon
approval of the Board, including a majority of the directors who are not
interested persons of the Fund as defined in the Investment Company Act of 1940
(the "Disinterested Directors"), pursuant to a vote cast in person at a meeting
called for the purpose of voting on the amendment to the Plan.
(b) The Plan may be terminated without penalty at any time by a vote of
a majority of the Disinterested Directors.
2
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COHEN & STEERS EQUITY INCOME FUND, INC.
SHAREHOLDER SERVICE AGREEMENT
AGREEMENT made this _ day of , 199_, between Cohen & Steers Capital
Management, Inc. ("CSCM"), a corporation organized under the laws of State of
Delaware with its principal place of business at 757 Third Avenue, New York, New
York 10017 and the institution executing this document below (the
"Institution").
WHEREAS, CSCM acts as administrator of Cohen & Steers Equity Income
Fund, Inc. (the "Fund"), a Maryland corporation registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end management investment
company, which may issue its shares of common stock in separate series; and
WHEREAS, the Fund has adopted a Shareholder Service Plan with respect to
the Fund (the "Service Plan") that authorizes CSCM to pay fees to qualified
financial institutions for maintaining and providing services to shareholder
accounts of the Fund; and
WHEREAS, CSCM desires that Institution perform certain service
activities on behalf of CSCM and the Fund with respect to the Fund and
Institution is willing to perform those services on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, for and in consideration of the representations,
covenants and agreements contained herein and other valuable consideration, the
undersigned parties do hereby agree as follows:
SECTION 1. SERVICE ACTIVITIES
In connection with providing services and maintaining shareholder
accounts of the Fund with respect to its various customers, Institution may
provide services including: (a) establishing and maintaining accounts and
records relating to clients of Institution; (b) answering shareholder inquiries
regarding the manner in which purchases, exchanges and redemptions of shares of
the Fund may be effected and other matters pertaining to the Fund's services;
(c) providing necessary personnel and facilities to establish and maintain
shareholder accounts and records; (d) assisting shareholders in arranging for
processing purchase, exchange and redemption transactions; (e) arranging for the
wiring of funds; (f) guaranteeing shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
(g) integrating periodic statements with other shareholder transactions; and (h)
providing such other related services as the shareholder may request.
Institution shall not be obligated to perform any specific service for its
clients. Institution's appointment shall be nonexclusive and CSCM may enter into
similar agreements with other persons.
SECTION 2. COMPENSATION
(a) As compensation for Institution's service activities with respect to
the Fund, CSCM shall pay Institution fees in the amounts listed on Schedule A to
this Agreement (the "Payments"); provided, however, that in no event will CSCM
be required to make any payments for service activities in an amount greater
than that which CSCM is paid by the Fund for such services.
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(b) The Payments shall be accrued daily and paid monthly or at such
other interval as CSCM and Institution shall agree.
(c) On behalf of the Fund, Institution may spend such amounts and incur
such expenses as it deems appropriate or necessary on any service activities.
Such expenses may include compensation to employees and expenses, including
overhead and telephone and other communication expenses, of Institution.
Institution shall be solely liable for any expenses it incurs.
SECTION 3. REPRESENTATIONS OF INSTITUTION
Institution represents that:
(a) the compensation payable to it under this Agreement in connection
with the investment in the Fund of the assets of its customers (i) will be
disclosed by the Institution to its customers, (ii) will be authorized by its
customers, and (iii) will not result in an excessive fee to Institution;
(b) if it is a member of the National Association of Securities Dealers,
Inc. ("NASD"), it shall abide by the Rules of Conduct of the NASD;
(c) it will, in connection with sales and offers to sell shares, furnish
to or otherwise insure that each person to whom any such sale or offer is made
receives a copy of the Fund's then current prospectus;*
(d) it will purchase shares only as agent of the Fund and that it will
purchase shares only for the purpose of covering purchase orders already
received or for its own bona fide investment purposes;*
(e) the performance of all its obligations hereunder will comply with
all applicable laws and regulations, including any applicable Federal securities
laws and any requirements to deliver confirmations to its customers, the
provisions of its charter documents and bylaws and all material contractual
obligations binding upon the Institution; and
(f) it will promptly inform the Fund of any change in applicable laws or
regulations (or interpretations thereof) or in its charter or bylaws or material
contracts which would prevent or impair full performance of any of its
obligations hereunder.
SECTION 4. FUND LITERATURE*
Institution is not authorized to make any representations concerning
shares of the Fund except those contained in the Fund's then current prospectus
and statement of additional information
- --------
* To be included only in Agreements with dealers with whom the Fund's
Underwriter has entered into a Dealer Agreement.
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("SAI") and printed information issued by the Fund or by CSCM as information
supplemental to the prospectus. CSCM will supply Institution upon its request
with prospectuses, SAIs, reasonable quantities of supplemental sales literature
and additional information. Institution agrees not to use other advertising or
sales material relating to the Fund unless approved in writing by CSCM in
advance of such use. Any printed information furnished by CSCM other than the
then current prospectus and SAI, periodic reports and proxy solicitation
materials are CSCM's sole responsibility and are not the responsibility of the
Fund and the Fund shall have no liability or responsibility to Institution in
these respects unless expressly assumed in connection therewith. Institution
shall have no responsibility with regard to the accuracy or completeness of any
of the printed information furnished by Fund and shall be held harmless by Fund
from and against any cost or loss arising therefrom.
SECTION 5. REPORTS
Institution shall prepare and furnish to CSCM, at CSCM's request,
written reports seeing forth all amounts expended by Institution and identifying
the activities for which the expenditures were made.
SECTION 6. INDEMNIFICATION
Institution agrees to indemnify and hold harmless CSCM and the Fund from
any claims, expenses, or liabilities incurred by CSCM or the Fund as a result of
any act or omission of the Institution in connection with its services under
this Agreement.
SECTION 7. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective on the date hereof and, upon
its effectiveness, shall supersede all previous agreements between the parties
covering the subject matter hereof.
(b) This Agreement may be terminated as follows:
(i) at any time, without the payment of any penalty, by the
vote of a majority of the Directors of the Fund;
(ii) automatically in the event of the termination of the
Administration agreement between the Fund and CSCM or the Service Plan;
(iii) automatically in the event of the assignment of this
Agreement as defined in the Act; and
(iv) by either party to the Agreement without cause by giving the
other party at least sixty (60) days' written notice of its intention
to terminate.
SECTION 8. NOTICES
Any notice under this Agreement shall be in writing and shall be
addressed and delivered, or
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mailed postage prepaid, to the other party's principal place of business, or to
such other place as shall have been previously specified by written notice given
to the other party.
4
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SECTION 9. AMENDMENTS
Subject to approval of material amendments to the form of this Agreement
by the Fund's Board of Directors, this Agreement may be amended by the parties
at any time. In addition, this Agreement may be amended by CSCM from time to
time by the following procedure: CSCM will mail a copy of the amendment to
Institution at its principal place of business or such other address as
Institution shall in writing provide to CSCM. If Institution does not object to
the amendment within thirty (30) days after its receipt, the amendment will
become part of the Agreement. The Institution's objection must be in writing and
be received by CSCM within the thirty days.
SECTION 10. USE OF THE FUND'S NAME
Institution shall not use the name of the Fund on any checks, bank
drafts, bank statements or forms for other than internal use in a manner not
approved by the Fund prior thereto in writing; provided, however, that the
approval of the Fund shall not be required for the use of the Fund's name which
merely refers in accurate and factual terms to the Fund in connection with the
Institution's role hereunder or which is required by any appropriate regulatory,
governmental or judicial authority; and further provided that in no event shall
such approval be unreasonably withheld or delayed.
SECTION 11. MISCELLANEOUS
(a) This Agreement shall be construed in accordance with the laws of the
State of New York.
(b) If any provision of this Agreement shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
INSTITUTION:
_______________________________________
Name of Institution
By:____________________________________
Name:__________________________________
Title:_________________________________
COHEN & STEERS EQUITY INCOME FUND, INC.
By:____________________________________
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Name: Martin Cohen
Title: President
6
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COHEN & STEERS EQUITY INCOME FUND, INC.
SHAREHOLDER SERVICE AGREEMENT
SCHEDULE A
PAYMENTS PURSUANT TO THE SERVICE PLAN
0.10% of the average annual daily net assets of the Fund represented by shares
owned by investors for which Institution provides services pursuant to this
Agreement.
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August 21, 1997
Cohen & Steers Equity Income Fund, Inc.
757 Third Avenue
New York, New York 10017
Ladies and Gentlemen:
We have acted as counsel to Cohen & Steers Equity Income Fund, Inc., a
Maryland corporation ("EIF"), in connection with the preparation and filing of
its Registration Statement on Form N-1A (the "Registration Statement") covering
shares of common stock, $.001 par value per share, of EIF.
We have examined copies of the Articles of Incorporation and By-Laws of
EIF, the Registration Statement, and such other records, proceedings and
documents as we have deemed necessary for the purpose of this opinion. We have
also examined such other documents, papers, statutes and authorities as we
deemed necessary to form a basis for the opinion hereinafter expressed. In our
examination of such material, we have assumed the genuineness of all signatures
and the conformity to original documents of all copies submitted to us.
Based upon the foregoing, we are of the opinion that the shares of
common stock, $.001 par value per share, of EIF to be issued in accordance with
the terms of the offering, as set forth in the Registration Statement, when so
issued and paid for will constitute validly authorized and legally issued shares
of common stock, fully paid and non-assessable by EIF.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm as set forth under the
caption "Legal Counsel" in the above-referenced Registration Statement. In
giving such consent, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Very truly yours,
/s/ Dechert Price & Rhoads
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[LETTERHEAD OF COOPERS & LYBRAND]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in the Pre-Effective Amendment No. 1 to the
Registration Statement of Cohen & Steers Equity Income Fund, Inc. on Form N-1A
(File Nos. 333-30919 and 811-8287) of our report dated August 12, 1997, on our
audit of the statement of assets and liabilities of Cohen & Steers Equity Income
Fund, Inc. as of August 7, 1997, which report is included in the Pre-Effective
Amendment to the Registration Statement.
We also consent to the reference to our firm under the caption "Accountants"
in the Statement of Additional Information.
New York, New York
August 19, 1997
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Cohen & Steers Equity Income Fund, Inc.
757 Third Avenue
New York, New York 10017
August 6, 1997
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, New York 10017
Dear Sirs:
Cohen & Steers Equity Income, Inc. (the "Fund") hereby accepts your offer
to purchase 8,726.003 shares at a price of $11.46 per share for an aggregate
purchase price of $100,000. This agreement is subject to the understanding that
you have no present intention of selling or redeeming the shares so acquired.
Any redemption of these shares by you will be reduced by a pro rata portion
of any then unamortized organization expenses of the Fund. This proration will
be calculated by dividing the number of shares to be redeemed by the aggregate
number of shares held which represent the initial capital of the Fund.
Sincerely,
COHEN & STEERS EQUITY
INCOME FUND, INC.
By: /s/ Martin Cohen, President
Accepted:
COHEN & STEERS CAPITAL
MANAGEMENT, INC.
By: /s/ Martin Cohen, President
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COHEN & STEERS EQUITY INCOME FUND, INC.
DISTRIBUTION PLAN
Distribution Plan (the "Plan") of Cohen & Steers Equity Income
Fund, Inc. (the "Fund"), a Maryland corporation, Cohen & Steers Capital
Management, Inc. ("CSCM"), a New York corporation, and Cohen & Steers
Securities, Inc. ("CSSI"), a Delaware corporation, which acts as the principal
underwriter for the Fund.
WHEREAS, it is expected that a substantial percentage of the
Fund's assets attributable to the shares of the Fund will be derived through the
efforts of such brokers or other financial intermediaries receiving assistance
(as defined herein) payments under this Plan. The likelihood is that such assets
would not remain invested in the Fund should such assistance cease and the
Fund's ratio of expenses to average net assets would thus increase with a
corresponding decrease in the yield to Fund shareholders.
NOW THEREFORE, in consideration of the foregoing and in
consideration of the mutual covenants herein contained the Fund, CSCM, and CSSI
agree that the following Plan is hereby adopted under Rule 12b-1 under the
Investment Company Act of 1940 (the "Act"):
1. CSSI shall act as the principal underwriter of the Fund
pursuant to an underwriting agreement.
2. The Fund shall make payments to CSSI for distribution
assistance or other distribution services ("assistance") at a
rate not to exceed an annual rate of 0.25% of the average net
assets. CSSI may use such amounts (i) to make payments to brokers
(if qualified in CSCM's sole discretion) or other financial
intermediaries (if qualified in CSSI's sole discretion) who have
rendered assistance and (ii) for other expenses such as
advertising costs and the payment for the printing and
distribution of prospectuses to prospective investors. CSSI will
make such payments, pursuant to the terms of written agreements
complying with Rule 12b-1 ("Rule 12b-1 Agreement").
3. Quarterly in each year that this Plan remains in effect the
Fund's Treasurer shall prepare and furnish to the Board of
Directors of the Fund a written report, complying with the
requirements of Rule 12b-1, of the amounts expended under the
Plan and purposes for which such expenditures were made.
4. This Plan shall become effective upon approval by majority
votes of (a) the Fund's Board of Directors and the Qualified
Directors (as defined in Section 6), cast in person at a meeting
called for the purpose of voting hereon and (b) the outstanding
voting securities of the Fund, as defined in Section 2(a)(42) of
the Act.
5. This Plan shall remain in effect for one year from its
adoption date and may be continued thereafter if this Plan and
any related agreement are approved at least annually by a
majority vote of the Directors of the Fund, including a majority
of the Qualified Directors, cast in person at a meeting called
for the purpose of voting on such Plan and agreement. This Plan
may not be amended in order to increase materially the amount to
be spent for distribution assistance without Fund shareholder
approval in accordance with Section 4 hereof. All material
amendments to this Plan must be approved by a vote of the Board
of Directors of the Fund, and of the Qualified Directors, cast in
person at a meeting called for the purpose of voting thereon.
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6. This Plan may be terminated at any time by a majority vote of
the Directors who are not interested persons (as defined in
Section 2(a)(19) of the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in
any agreements related to the Plan ("Qualified Directors") or by
vote of a majority of the outstanding voting securities of the
Fund, as defined in Section 2(a)(42) of the Act.
7. While this Plan shall be in effect, the selection and
nomination of the "Disinterested" Directors of the Fund shall be
committed to the discretion of the "Disinterested" Directors then
in office.
8. Any termination or non-continuance of (i) a selected dealer
agreement by CSSI with a particular broker or (ii) a Rule 12b-1
Agreement with a particular financial intermediary shall have no
effect on similar agreements between (i) other brokers and CSSI
or (ii) other financial intermediaries and the Fund pursuant to
this Plan.
9. Neither CSSI nor the Fund is obligated by this Plan to execute
a selected dealer agreement with a qualifying broker or a Rule
12b-1 Agreement with a qualifying financial intermediary,
respectively.
10. All agreements with any person relating to the implementation
of this Plan shall be in writing and any agreement related to
this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Section 6 hereof.
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