<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
February 3, 2000
To Our Shareholders:
We are pleased to submit to you our annual report for Cohen & Steers Equity
Income Fund for the quarter and year ended December 31, 1999. The net asset
values per share at that date were $9.03, $8.98, and $8.97 for Class A,
Class B, and Class C shares, respectively. Class I shares had a net asset value
of $9.00. In addition, a distribution was declared for shareholders of record on
December 15, 1999 and paid on December 16, 1999 to all four classes of shares.
The distributions were as follows: Class A shares $0.21 per share ($0.17 regular
plus a $0.04 special income distribution), Class B shares $0.17 per share,
Class C shares $0.17 per share and Class I shares $0.24 per share ($0.17 regular
plus a $0.07 special income distribution). The Fund did not make capital gains
distributions in 1999.
1999 INVESTMENT REVIEW
The equity income strategy produced the following results last year:
<TABLE>
<CAPTION>
4TH QUARTER* 1999*
------------ -----
<S> <C> <C>
NAREIT Equity REIT Index**.................. - 1.01% - 4.62%
Class A shares.............................. - 2.67% - 5.42%
Class B shares.............................. - 2.83% - 5.98%
Class C shares.............................. - 2.84% - 5.99%
Class I shares.............................. - 2.65% - 5.12%
</TABLE>
The REIT bear market continued in earnest in 1999, and for only the second
time in history, and the first time in 25 years, REITs recorded back-to-back
years of negative returns. As is well known, this performance came in the face
of continued strong real estate fundamentals, rising inflation expectations and
historically attractive REIT valuations.
The relative underperformance of the Fund for the year was primarily due to
the allocation to both the Health Care sector and to fixed income investments.
The Health Care sector was the poorest performing property sector in 1999 as
these companies were buffeted by Medicare reforms that reduced the profitability
of nursing homes, and overbuilding in the assisted living industry that has
caused severe financial distress for their operators. Real estate fixed income
investments, consisting primarily of preferred stocks of REITs, performed poorly
as a result of a combination of real estate securities being out of favor, tax
loss selling and higher interest rates. In
- --------------------------------------------------------------------------------
1
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
addition, sporadic leveraged buyout or merger transactions raised the specter of
credit deterioration. Specifically, we believe our Health Care and fixed income
investments will contribute significantly to the account's performance in the
coming year during what we believe will be a general recovery in the overall
REIT market.
The best performing sectors in 1999 were Apartment and Office. Both were
positively affected by the strong economy, exposure to the growth of the
Internet and knowledge-based industries, and financial market discipline that
constrained capital flows and new construction that might have led to
overbuilding. In addition to the Health Care sector, the Hotel sector performed
poorly due to the increasing level of new hotel construction. The Retail sector,
of course, was adversely affected by investor fears about the growing threat of
the Internet on real estate based shopping.
What is perhaps most interesting about performance in 1999 is what
investment themes did not work, despite widely held beliefs that certain
valuation parameters and corporate policies would stem the tide of persistent
investor selling. While so-called 'value' investors in general suffered during
the year, in the REIT universe neither value nor growth styles of management
provided better returns. Net asset values (NAV) per share failed to provide a
floor to REIT share prices, and now most trade well below NAV. Current dividend
yield also provided little or no support as share price declines produced an
unprecedented number of double-digit dividend yields in the REIT universe. Share
buy-backs, which totaled several $billion, and were widely heralded as both
managements' strongest defense and their greatest investment opportunity, failed
to do more than barely cushion the fall of REIT prices. And finally, increased
merger and acquisition activity, nearly everyone's expected outcome of the bear
market, not only failed to materialize, but in the few transactions that did
take place, the premium paid for the acquired company was disappointingly
modest.
INVESTMENT OUTLOOK
As 2000 begins, little if anything has changed in the REIT investment
environment. The economy continues to grow at a substantial pace and real estate
fundamentals remain strong; we expect REIT earnings to grow by 8%, on average,
this year, which is about in line with the projections for the S&P 500. REITs
are generally very well capitalized and these companies are expected to again
record strong dividend growth. The REIT modernization legislation passed in 1999
has broadened these companies' power to control their destinies due to their new
ability, starting in 2001, to establish taxable subsidiary companies that can
engage in previously prohibited services and related businesses. Nonetheless,
REIT shares remain at record low valuations and investor sentiment continues to
strongly favor high technology and Internet-related companies.
In our opinion, REITs continue to suffer from the lack of cyclical tailwinds
from which they benefited in the mid-1990's, and from investor fears that
cyclical headwinds may be just around the corner, the result of either a slowing
economy (thereby reducing demand) or a boom in new construction (increasing
supply). Thus, to commit
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
to this sector one must be satisfied that neither of these are an issue or, if
they are, that the stocks are cheap enough and have discounted these factors.
While we are no better at predicting the economy than anyone else, it appears
that there are very few impediments to continued economic growth, although
perhaps not at the torrid pace of the past year. We also see ample evidence that
the combination of enhanced real estate information flow and capital market
discipline can be sufficient to control the amount of new construction in most
property types and major regions of the country. As a result, we are not
concerned that a supply/demand imbalance in the real estate market is about to
develop. Consequently, due to the current level of REIT valuations, we also do
not see a lot of risk in their share prices.
The continued strength of the economy has justifiably caused fears of
further interest rate increases this year, and many have suggested that this
will be negative for real estate and REITs. This conclusion, however, may not be
entirely correct and, again, recent experience is substantiating this. Again,
using the supply and demand analogy, as long as interest rate increases do not
choke off economic growth altogether, the demand side of the equation should
stay intact. Importantly, real estate development is very sensitive to interest
rates. Rising interest rates over the past year have already had the effect of
slowing construction. We would expect that any additional rise in rates will
further reduce development activity and nearly ensure limitations on new supply.
This may also precipitate a rise in required current returns (capitalization
rates) on both new development and property purchases and a concomitant decline
in property values. This situation may be exactly what the decline in REIT share
prices has been anticipating. Again, as long as the economy continues to grow,
rental income and, therefore, REIT earnings should not be negatively affected.
Thus, REIT share prices may hold up relatively well. Further, this may create a
new buying opportunity for the REITs that have retained or can access capital.
It is for this reason that we have advocated that companies marshal as much
liquidity as possible, and have focused our investments on those that have done
so.
Within the context of the entire REIT universe, we expect a continuation of
divergent trends between different property sectors and companies. Perhaps more
so than recently, we believe that sector selection will play an increasingly
important role in investment performance. We continue to like the Office sector,
but favor urban locations. We still favor the Health Care sector based on early
signs that the worst may be over for both the owners and operators of health
care facilities. Similarly, we have begun to increase our weighting in the Hotel
sector, as we see abatement in the growth of new hotel construction and
continued strong demand for rooms, particularly in the urban, upscale segment.
With an average current yield of over 13%, we believe, the account's preferred
holdings offer an exceptional investment opportunity as they all possess strong
fixed charge coverage. We are continuing to underweight the Retail sector due to
a peaking of earnings momentum and the continued threat of the Internet with
respect to retailers' sales and profit margins. Further, we are reducing or
eliminating any holdings where managements have not adapted well to a capital
constrained environment or have not adopted a business strategy that addresses
the changed fundamental trends. The wholesale decline in REIT prices over the
last two years has allowed the account to substantially upgrade its investment
in companies with these characteristics, consistent with the account's goal of
producing a high level of current income.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
In our opinion, waiting for REITs to return to investor favor is not like
waiting for bell-bottom pants and wide ties to come back into vogue. Real estate
remains a large and essential, albeit changing, industry and REITs continue to
be the prominent vehicle for investment. Our investment strategy remains focused
on owning a broadly diversified portfolio of above average yielding real estate
securities. In constructing the Fund's portfolio, we look for companies with
high current income coupled with healthy dividend increases and predictable
earnings growth. It is our view that 1999's performance, while disappointing,
reflects the tail end of the REIT securities bear market. We are optimistic
about the Fund's prospects and will continue to do our best to deliver rewarding
returns.
Sincerely,
<TABLE>
<S> <C>
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
STEVEN R. BROWN
STEVEN R. BROWN
Portfolio Manager
</TABLE>
- ---------------------------------------------------------------------
Cohen & Steers is online at WWW.COHENANDSTEERS.COM. Visit
our website for daily NAVs, portfolio information,
performance information, recent news articles, literature
and insights on the REIT market.
- -----------------------------------------------------------------------
* Without giving effect to sales loads or contingent deferred sales charges, if
any. Standardized performance information is provided in the Performance
Review following this letter.
** The NAREIT Equity REIT Index is an unmanaged, market capitalization weighted
index of all publicly-traded REITs that invest predominately in the equity
ownership of real estate. The index is designed to reflect the performance of
all publicly-traded REITs as a whole.
- --------------------------------------------------------------------------------
4
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
PERFORMANCE REVIEW
The investment objective of Cohen & Steers Equity Income Fund, Inc. is to
achieve high current income through investment in real estate securities.
Capital appreciation is a secondary objective. The Fund's investment adviser
anticipates that the Fund's equity investments in real estate companies will
primarily be in securities that pay higher dividends than the stock market as a
whole.
During the year, the Fund performed generally in line with its benchmark.
Negatively affecting performance were the Fund's weightings in the Health Care
sector and fixed income investments. The Health Care sector was the poorest
performing property sector in 1999 as these companies were buffeted by Medicare
reforms that reduced the profitability of nursing homes, and overbuilding in the
assisted living industry that has caused severe financial distress for their
operators. Real estate fixed income investments, consisting primarily of
preferred stocks of REITs, performed poorly as a result of a combination of real
estate securities being out of favor, tax loss selling and higher interest
rates.
COHEN & STEERS INCOME FUND -- CLASS A
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1999
----------------------------------
SINCE INCEPTION
1 YEAR (9/2/97)
------ ----------------
<S> <C> <C>
Fund -5.42% -3.26%
NAREIT Equity'D' -4.62% -5.77%
S&P 500 21.04% 23.61%
</TABLE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION
<TABLE>
<CAPTION>
9/2/97* 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- -------- ------ -------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COHEN & STEERS EQUITY INCOME
FUND--CLASS A 9,550 10,799 10,912 10,853 10,351 9,222 8,858 8,407 9,296 8,433 8,285
NAREIT Equity REIT Index'D' 10,000 10,873 11,063 11,011 10,506 9,401 9,126 8,687 9,562 8,793 8,705
S&P 500'D' 10,000 10,228 10,522 11,989 12,385 11,153 13,528 14,202 15,203 14,253 16,374
</TABLE>
COHEN & STEERS EQUITY INCOME FUND -- CLASS B
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1999
----------------------------------
SINCE INCEPTION
1 YEAR (1/15/98)
------ ----------------
<S> <C> <C>
Fund -10.68%'DD' -8.89%
NAREIT Equity'D' -4.62% -11.52%
S&P 500 21.04% 26.64%
</TABLE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION
<TABLE>
<CAPTION>
1/15/98** 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COHEN & STEERS EQUITY INCOME
FUND--CLASS B 10,000 10,066 9,739 9,063 8,863 8,419 9,362 8,576 8,333
NAREIT Equity REIT Index'D' 10,000 9,953 9,497 8,498 8,250 7,852 8,644 7,949 7,869
S&P 500'D' 10,000 11,625 12,009 10,814 13,117 13,770 14,741 13,820 15,876
</TABLE>
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5
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
COHEN & STEERS EQUITY INCOME FUND -- CLASS C
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1999
----------------------------------
SINCE INCEPTION
1 YEAR (1/14/98)
------ ----------------
<S> <C> <C>
Fund -5.99% -8.74%
NAREIT Equity'D' -4.62% -11.51%
S&P 500 21.04% 26.12%
</TABLE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION
<TABLE>
<CAPTION>
1/14/98** 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
------- ------- -------- ------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COHEN & STEERS EQUITY INCOME
FUND--CLASS C 10,000 10,099 9,771 9,093 8,892 8,445 9,383 8,603 8,359
NAREIT Equity REIT Index'D' 10,000 9,953 9,497 8,498 8,250 7,852 8,644 7,949 7,869
S&P 500'D' 10,000 11,538 11,919 10,733 13,019 13,667 14,631 13,716 15,757
</TABLE>
COHEN & STEERS EQUITY INCOME FUND -- CLASS I
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1999
----------------------------------
SINCE INCEPTION
1 YEAR (7/15/98)
------ ----------------
<S> <C> <C>
Fund -5.12% -10.07%
NAREIT Equity -4.62% -12.07%
S&P 500 21.04% 18.10%
</TABLE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION
<TABLE>
<CAPTION>
7/15/98** 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
-------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
COHEN & STEERS EQUITY INCOME
FUND--CLASS I 10,000 9,124 8,942 8,511 9,488 8,714 8,484
NAREIT Equity REIT Index'D' 10,000 8,948 8,687 8,268 9,102 8,370 8,285
S&P 500'D' 10,000 8,687 10,537 11,062 11,842 11,102 12,754
</TABLE>
Past performance is not predictive of future performance. Your investment return
and principal value will fluctuate. When shares are redeemed, they may be worth
more or less than the original cost.
* Commencement of operations.
** Initial offering of shares.
'D' The Comparative indices are not adjusted to reflect expenses or other fees
that the SEC requires to be reflected in the Fund's performance. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The NAREIT Equity REIT is comprised of 167 real estate investment trusts.
Prior to January 4, 1999, the NAREIT Equity REIT Index was published
monthly. Total returns and cumulative values of a $10,000 investment are
calculated from the date nearest each class' inception for which comparable
performance data exist. The S&P 500 Index is an unmanaged list of common
stocks that is frequently used as a general measure of stock market
performance. For more information, including charges and expenses, please
read the prospectus carefully before you invest.
'DD' Return includes a deferred sales charge of 5%. Without the deferred sales
charge, the total return would have been - 5.98%.
- --------------------------------------------------------------------------------
6
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF VALUE DIVIDEND
SHARES (NOTE 1) YIELD*
---------- ----------- ------------
<S> <C> <C> <C> <C>
EQUITIES 94.62%
COMMON STOCK 84.94%
APARTMENT/RESIDENTIAL 7.69%
Apartment Investment & Management
Co. -- Class A........................... 16,900 $ 672,831 6.28%
Camden Property Trust...................... 49,100 1,344,112 7.60
Charles E. Smith Residential Realty........ 20,700 732,263 6.22
Home Properties of New York................ 47,000 1,289,562 7.73
Summit Properties.......................... 47,100 841,913 9.34
-----------
4,880,681
-----------
HEALTH CARE 12.99%
ElderTrust................................. 67,200 411,600 19.59
Health Care Property Investors............. 105,400 2,516,425 11.90
Healthcare Realty Trust.................... 78,400 1,225,000 13.95
Nationwide Health Properties............... 169,700 2,333,375 13.09
Omega Healthcare Investors................. 92,900 1,178,669 22.07
**Ventas................................... 139,000 582,062 --
-----------
8,247,131
-----------
HOTEL 6.28%
FelCor Lodging Trust....................... 98,300 1,720,250 12.57
MeriStar Hospitality Corp.................. 141,900 2,270,400 12.63
-----------
3,990,650
-----------
INDUSTRIAL 7.57%
First Industrial Realty Trust.............. 93,700 2,570,894 9.04
Pacific Gulf Properties.................... 110,600 2,239,650 8.69
-----------
4,810,544
-----------
OFFICE 23.62%
Arden Realty Group......................... 103,000 2,066,437 8.87
Brandywine Realty Trust.................... 155,200 2,541,400 9.53
CarrAmerica Realty Corp.................... 87,500 1,848,438 8.76
Crescent Real Estate Equities Co........... 76,100 1,398,338 11.97
Highwoods Properties....................... 107,800 2,506,350 9.55
Mack-Cali Realty Corp...................... 104,500 2,723,531 8.90
SL Green Realty Corp....................... 88,000 1,914,000 6.11
-----------
14,998,494
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NUMBER OF VALUE DIVIDEND
SHARES (NOTE 1) YIELD*
---------- ----------- ------------
<S> <C> <C> <C> <C>
OFFICE/INDUSTRIAL 6.27%
Liberty Property Trust..................... 113,400 $ 2,749,950 8.58%
Prime Group Realty Trust................... 26,900 408,544 8.89
Reckson Associates Realty Corp. -- Class
B........................................ 36,261 824,937 9.85
-----------
3,983,431
-----------
SHOPPING CENTER 19.58%
COMMUNITY CENTER 7.64%
Developers Diversified Realty Corp......... 137,100 1,765,163 10.87
Pan Pacific Retail Properties.............. 100,400 1,637,775 9.81
Philips International Realty Corp.......... 88,000 1,446,500 9.19
-----------
4,849,438
-----------
REGIONAL MALL 11.94%
JP Realty.................................. 114,100 1,782,812 12.29
Macerich Co................................ 108,400 2,256,075 9.80
Simon Property Group....................... 90,100 2,066,669 8.81
Taubman Centers............................ 137,200 1,474,900 9.12
-----------
7,580,456
-----------
TOTAL SHOPPING CENTER...................... 12,429,894
-----------
SPECIALTY 0.94%
Entertainment Properties Trust............. 45,300 597,394 12.74
-----------
TOTAL COMMON STOCK (Identified
cost -- $63,423,051)................ 53,938,219
-----------
PREFERRED STOCK 9.68%
Apartment Investment & Management Co.,
9.00%, Series C.......................... 52,000 887,250 13.19
Apartment Investment & Management Co.,
9.375%, Series G......................... 62,400 1,049,100 13.92
Camden Property Trust, $2.25, Series A
(Convertible)............................ 56,600 1,269,962 10.03
Crown American Realty Trust, 11.00%, Series
A........................................ 9,800 346,675 15.55
Liberty Properties Trust, 8.80%, Series
A........................................ 25,700 501,150 11.28
Prime Retail, 8.50%, Series B
(Convertible)............................ 14,100 166,556 18.03
Reckson Associates Realty Corp., 7.625%,
Series A (Convertible)................... 33,600 667,800 9.61
SL Green Realty Corp., 8.00%, Series A
(Convertible)............................ 53,100 1,261,125 8.42
-----------
TOTAL PREFERRED STOCK (Identified
cost -- $7,849,684)................. 6,149,618
-----------
TOTAL EQUITIES (Identified
cost -- $71,272,735)................ 60,087,837
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
8
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
#Macerich Co. 144A, Convertible, 7.25%, due
12/15/02
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------- -----------
<S> <C> <C> <C> <C>
CORPORATE BOND 2.00%
(Identified cost -- $1,243,666).......... $1,520,000 $ 1,269,200
-----------
COMMERCIAL PAPER 3.74%
Leggett & Platt Corp., 4.25%, due 1/3/00
(Identified cost -- $2,376,689).......... 2,377,250 2,376,689
-----------
TOTAL INVESTMENTS (Identified
cost -- $74,893,090) ..................... 100.36% 63,733,726
LIABILITIES IN EXCESS OF OTHER ASSETS ...... (0.36)% (230,636)
-------- -----------
NET ASSETS ................................. 100.00% $63,503,090
-------- -----------
-------- -----------
</TABLE>
- ---------
* Dividend yield is computed by dividing the security's current annual dividend
rate by the last sale price on the principal exchange, or market, on which
such security trades. The dividend yield has not been audited by
PricewaterhouseCoopers LLP.
** Non-income producing security.
# Security is restricted subject to rule 144A and trades infrequently. The Fund
prices this security by obtaining a bid and ask price from two market makers
on a weekly basis. The average of the bid and ask prices is used as the
security's price.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified
cost -- $74,893,090) (Note 1)........................ $63,733,726
Dividends and interest receivable....................... 825,139
Receivable for fund shares sold......................... 183,188
Receivable for investment securities sold............... 133,527
Unamortized organization costs and other assets (Note
1)................................................... 66,298
-----------
Total Assets....................................... 64,941,878
-----------
LIABILITIES:
Payable for investment securities purchased............. 769,620
Payable for fund shares redeemed........................ 465,738
Payable for distribution fees........................... 52,618
Payable to investment adviser........................... 38,789
Payable for shareholder service fees.................... 24,599
Payable to administrator................................ 1,088
Other liabilities....................................... 86,336
-----------
Total Liabilities.................................. 1,438,788
-----------
NET ASSETS.................................................. $63,503,090
-----------
-----------
NET ASSETS consist of:
Paid-in capital (Notes 1 and 4)......................... $79,907,477
Accumulated net realized loss on investments............ (5,245,023)
Net unrealized depreciation on investments.............. (11,159,364)
-----------
$63,503,090
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
10
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<S> <C>
CLASS A SHARES:
NET ASSETS.............................................. $25,954,600
Shares issued and outstanding ($0.001 par value common
stock outstanding) (Note 4).......................... 2,874,064
-----------
Net asset value and redemption value per share'D'....... $ 9.03
-----------
-----------
Maximum offering price per share
($9.03[div]0.955)'DD'................................ $ 9.46
-----------
-----------
CLASS B SHARES:
NET ASSETS.............................................. $15,139,498
Shares issued and outstanding ($0.001 par value common
stock outstanding) (Note 4).......................... 1,685,989
-----------
Net asset value and offering price per share'D'......... $ 8.98
-----------
-----------
CLASS C SHARES:
NET ASSETS.............................................. $19,649,851
Shares issued and outstanding ($0.001 par value common
stock outstanding) (Note 4).......................... 2,190,934
-----------
Net asset value and offering price per share'D'......... $ 8.97
-----------
-----------
CLASS I SHARES:
NET ASSETS.............................................. $ 2,759,141
Shares issued and outstanding ($0.001 par value common
stock outstanding) (Note 4).......................... 306,433
-----------
Net asset value, offering and redemption price per
share................................................ $ 9.00
-----------
-----------
</TABLE>
- ---------
'D' Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge which varies with the length
of time shares are held.
'DD' On investments of $100,000 or more, the offering price is reduced.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
11
<PAGE>
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COHEN & STEERS EQUITY INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
Investment Income (Note 1):
Dividend income......................................... $ 5,708,751
Interest income......................................... 127,888
-----------
Total Income....................................... 5,836,639
-----------
Expenses:
Investment advisory fees (Note 2)....................... 467,165
Distribution fees -- Class A (Note 2)................... 72,346
Distribution fees -- Class B (Note 2)................... 94,647
Distribution fees -- Class C (Note 2)................... 138,445
Shareholder servicing fees -- Class A (Note 2).......... 29,766
Shareholder servicing fees -- Class B (Note 2).......... 31,549
Shareholder servicing fees -- Class C (Note 2).......... 46,148
Reports to shareholders................................. 97,325
Professional fees....................................... 85,130
Administration and transfer agent fees (Note 2)......... 65,765
Custodian fees and expenses............................. 18,644
Registration and filing fees............................ 48,095
Directors' fees and expenses (Note 2)................... 33,005
Amortization of organization expenses (Note 1).......... 24,291
Miscellaneous........................................... 14,165
-----------
Total Expenses..................................... 1,266,486
-----------
Reduction of expenses (Note 5).......................... (71,951)
-----------
Net Expenses....................................... 1,194,535
-----------
Net Investment Income....................................... 4,642,104
-----------
Net Realized and Unrealized Loss on Investments:
Net realized loss on investments........................ (3,922,609)
Net change in unrealized depreciation on investments.... (5,152,246)
-----------
Net realized and unrealized loss on investments.... (9,074,855)
-----------
Net Decrease in Net Assets Resulting from Operations........ $(4,432,751)
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998*
----------------- ------------------
<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income................. $ 4,642,104 $ 3,469,184
Net realized loss on investments...... (3,922,609) (3,215,018)
Net change in unrealized
appreciation/(depreciation) on
investments........................ (5,152,246) (7,042,185)
----------- -----------
Net decrease in net assets
resulting from operations...... (4,432,751) (6,788,019)
----------- -----------
Dividends and Distributions to Shareholders
from (Note 1):
Net investment income:
Class A.......................... (1,770,835) (1,727,901)
Class B.......................... (763,543) (384,680)
Class C.......................... (1,113,354) (407,655)
Class I.......................... (119,317) (7,540)
Tax return of capital:
Class A.......................... (362,892) (779,461)
Class B.......................... (156,256) (172,568)
Class C.......................... (228,696) (178,553)
Class I.......................... (23,720) (3,383)
----------- -----------
Total dividends and
distributions to
shareholders.............. (4,538,613) (3,661,741)
----------- -----------
Capital Stock Transactions (Note 4):
Increase in net assets from Fund share
transactions....................... 17,336,362 30,966,307
----------- -----------
Total increase in net assets..... 8,364,998 20,516,547
Net Assets:
Beginning of year..................... 55,138,092 34,621,545
----------- -----------
End of year........................... $63,503,090 $55,138,092
----------- -----------
----------- -----------
</TABLE>
- ---------
* Initial offering of Class B, Class C and Class I shares began on January 15,
1998, January 14, 1998 and July 15, 1998, respectively.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
Financial Statements. It should be read in conjunction with the Financial
Statements and notes thereto.
<TABLE>
<CAPTION>
CLASS A CLASS B
---------------------------------- ---------------------------
FOR THE
PERIOD FOR THE
FOR THE YEAR SEPTEMBER 2, PERIOD
ENDED 1997'D' FOR THE JANUARY 15*
DECEMBER 31, THROUGH YEAR ENDED THROUGH
----------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
PER SHARE OPERATING PERFORMANCE: 1999 1998 1997 1999 1998
- -------------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $10.31 $ 12.32 $11.46 $10.27 $ 12.35
------ ------- ------ ------ -------
Income from investment operations:
Net investment income.................... 0.76 0.73 0.25 0.68 0.64
Net realized and unrealized gain/(loss)
on investments......................... (1.32) (2.00) 0.83 (1.29) (2.01)
------ ------- ------ ------ -------
Total from investment operations..... (0.56) (1.27) 1.08 (0.61) (1.37)
------ ------- ------ ------ -------
Less dividends and distributions to
shareholders from:
Net investment income.................... (0.60) (0.51) (0.17) (0.56) (0.49)
Net realized gain on investments......... -- -- (0.03) -- --
Tax return of capital.................... (0.12) (0.23) (0.02) (0.12) (0.22)
------ ------- ------ ------ -------
Total dividends and distributions to
shareholders....................... (0.72) (0.74) (0.22) (0.68) (0.71)
------ ------- ------ ------ -------
Net asset value, end of period............... $ 9.03 $ 10.31 $12.32 $ 8.98 $ 10.27
------ ------- ------ ------ -------
------ ------- ------ ------ -------
- ------------------------------------------------------------------------------------------------------------------------
Total investment return...................... - 5.42% - 10.56%(1) 9.46%(1)(2) - 5.98% - 11.37%(1)(2)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
- -----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (in millions).... $ 26.0 $ 31.6 $ 34.6 $ 15.1 $ 10.1
------ ------- ------ ------ -------
------ ------- ------ ------ -------
Ratios of expenses to average daily net
assets (before expense reduction)...... 1.70% 1.92% 3.49%(3) 2.40% 2.60%(3)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
Ratios of expenses to average daily net
assets (net of expense reduction)...... 1.60% 1.49% 1.50%(3) 2.26% 2.15%(3)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
Ratios of net investment income to
average daily net assets (before
expense reduction)..................... 7.50% 5.89% 9.47%(3) 7.09% 5.99%(3)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
Ratios of net investment income to
average daily net assets (net of
expense reduction)..................... 7.60% 6.32% 11.46%(3) 7.23% 6.44%(3)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
Portfolio turnover rate.................. 62.51% 96.47% 87.20%(2) 62.51% 96.47%(2)
------ ------- ------ ------ -------
------ ------- ------ ------ -------
</TABLE>
- ---------
'D' Commencement of operations.
* Initial offering of shares.
(1) Total investment return would have been lower had certain fees not been
reimbursed by the Adviser.
(2) Not annualized.
(3) Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
FINANCIAL HIGHLIGHTS -- (CONTINUED)
<TABLE>
<CAPTION>
CLASS C CLASS I
--------------------------- ---------------------------
FOR THE FOR THE
PERIOD PERIOD
FOR THE JANUARY 14* FOR THE JULY 15*
YEAR ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
PER SHARE OPERATING PERFORMANCE: 1999 1998 1999 1998
- -------------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net asset value, beginning of period....... $10.26 $ 12.31 $10.28 $ 11.99
------ ------- ------ -------
Income from investment operations:
Net investment income.................. 0.68 0.64 0.72 0.35
Net realized and unrealized gain/(loss)
on investments....................... (1.29) (1.97) (1.25) (1.62)
------ ------- ------ -------
Total from investment operations... (0.61) (1.33) (0.53) (1.27)
------ ------- ------ -------
Less dividends and distributions to
shareholders from:
Net investment income.................. (0.56) (0.49) (0.62) (0.20)
Net realized gain on investments....... -- -- -- --
Tax return of capital.................. (0.12) (0.23) (0.13) (0.24)
------ ------- ------ -------
Total dividends and distributions
to shareholders.................. (0.68) (0.72) (0.75) (0.44)
------ ------- ------ -------
Net asset value, end of period............. $ 8.97 $ 10.26 $ 9.00 $ 10.28
------ ------- ------ -------
------ ------- ------ -------
- --------------------------------------------------------------------------------------------------------------
Total investment return.................... - 5.99% - 11.08%(1)(2) - 5.12% - 10.59%(1)(2)
------ ------- ------ -------
------ ------- ------ -------
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- -------------------------
Net assets, end of period (in millions).... $ 19.6 $ 13.2 $ 2.8 $ 0.3
------ ------- ------ -------
------ ------- ------ -------
Ratios of expenses to average daily net
assets (before expense reduction).... 2.39% 2.59%(3) 1.34% 1.54%(3)
------ ------- ------ -------
------ ------- ------ -------
Ratios of expenses to average daily
net assets (net of expense
reduction)........................... 2.25% 2.15%(3) 1.26% 1.16%(3)
------ ------- ------ -------
------ ------- ------ -------
Ratios of net investment income to
average daily net assets (before
expense reduction)................... 7.09% 6.13%(3) 9.13% 7.48%(3)
------ ------- ------ -------
------ ------- ------ -------
Ratios of net investment income to
average daily net assets (net of
expense reduction)................... 7.23% 6.57%(3) 9.21% 7.86%(3)
------ ------- ------ -------
------ ------- ------ -------
Portfolio turnover rate................ 62.51% 96.47%(2) 62.51% 96.47%(2)
------ ------- ------ -------
------ ------- ------ -------
</TABLE>
- ---------
'D' Commencement of operations.
* Initial offering of shares.
(1) Total investment return would have been lower had certain fees not been
reimbursed by the Adviser.
(2) Not annualized.
(3) Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
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, as amended (the '1940 Act'), as an open-end,
non-diversified management investment company. The authorized shares of the Fund
are divided into four classes designated Class A, Class B, Class C and Class I
shares. Each of the Fund's shares has equal dividend, liquidation and voting
rights (except for matters relating to distribution and shareholder servicing of
such shares). The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Portfolio Valuation: Investments in securities that are listed on the New
York Stock Exchange are valued, except as indicated below, at the last sale
price reflected at the close of the New York Stock Exchange on the business day
as of which such value is being determined. If there has been no sale on such
day, the securities are valued at the mean of the closing bid and asked prices
for the day.
Securities not listed on the New York Stock Exchange but listed on other
domestic or foreign securities exchanges or admitted to trading on the National
Association of Securities Dealers Automated Quotations, Inc. ('NASDAQ') National
Market System are valued in a similar manner. Securities traded on more than one
securities exchange are valued at the last sale price on the business day as of
which such value is being determined as reflected on the tape at the close of
the exchange representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by Cohen & Steers
Capital Management, Inc. to be over-the-counter, but excluding securities
admitted to trading on the NASDAQ National List, are valued at the mean of the
current bid and asked prices as reported by NASDAQ, the National Quotation
Bureau or such other comparable sources as the Board of Directors deems
appropriate to reflect their fair market value. Fixed income securities are
stated on the basis of valuations provided by a pricing service when such prices
are believed by the Board of Directors to reflect the fair market value of such
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.
Short-term debt securities, which have a maturity value of 60 days or less,
are valued at amortized cost which approximates value.
Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost for accounting and tax purposes.
Dividend income is recorded on the ex-dividend date. Interest income is
recognized on the accrual basis.
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid quarterly. A portion of the Fund's dividends may
consist of amounts in excess of net investment income derived from non-taxable
components of the dividends from the Fund's portfolio investments. As a result
the Fund had a return of capital of $771,564 for the year ended December 31,
1999, which has been deducted from paid-in capital. Net realized capital gains,
unless offset by any available capital loss carryforward, are distributed to
shareholders annually. Distributions to shareholders are recorded on the
ex-dividend date.
Dividends will automatically be reinvested in full and fractional shares of
the Fund based on the net asset value per share at the close of business on the
ex-dividend date unless the shareholder has elected to have them paid in cash.
Dividends from net investment income and capital gain distributions are
determined in accordance with U.S. Federal income tax regulations which may
differ from generally accepted accounting principles. During the year ended
December 31, 1999, the Fund decreased undistributed net investment income and
decreased accumulated net realized loss on investments sold by $875,055. These
differences are primarily due to return of capital and capital gain
distributions received by the Fund on portfolio securities.
Federal Income Taxes: It is the policy of the Fund to qualify as a regulated
investment company, if such qualification is in the best interest of the
shareholders, by complying with the requirements of Subchapter M of the Internal
Revenue Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders. Accordingly, no
provision for federal income or excise tax is necessary. At December 31, 1999,
the Fund had capital loss carryforwards of $22,652, $2,702,036 and $3,024,225
expiring in 2005, 2006 and 2007, respectively.
Organization Costs: All costs incurred in connection with organizing and
establishing the Fund are being amortized on the straight-line basis over a
period of five years from the date on which the Fund commenced operations. For
the year ended December 31, 1999, the Fund amortized $24,291 in organization
costs.
NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATION FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
'Adviser') serves as the Fund's investment adviser pursuant to an investment
advisory agreement (the 'Advisory Agreement'). Under the terms of the Advisory
Agreement, the Adviser provides the Fund with the day-to-day investment
decisions and generally manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the supervision of the Fund's Board of
Directors. For the services provided to the Fund, the Adviser receives a monthly
Management fee in an amount equal to 1/12th of 0.75% of the average daily net
assets of the Fund. For the year ended December 31, 1999, the Fund incurred
$467,165 in advisory fees.
Administration Fees: The Fund has entered into an administration agreement
with the Adviser under which the Adviser performs certain administrative
functions for the Fund and receives a fee of 0.02% of the Fund's
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
average daily net assets. For the year ended December 31, 1999, the Fund has
paid the Adviser $12,458 in fees under this administrative agreement.
In addition, Cohen & Steers Equity Income Fund, Inc., Cohen & Steers Realty
Shares, Inc., Cohen & Steers Special Equity Fund, Inc. and Cohen & Steers Realty
Income Fund, Inc. (the 'Funds') have entered into a fund accounting, transfer
agency and sub-administration agreement with Chase Manhattan Bank ('Chase')
pursuant to which an affiliate of Chase performs administration functions for
the Fund. Chase receives a monthly sub-administration fee at the annual rate of
0.08% on the first $500 million of the Funds' average daily net assets and at
lower rates on the Funds' average daily net assets in excess of that amount.
Distribution Fees: Cohen & Steers Securities, Inc. (the 'Distributor'), a
wholly-owned subsidiary of Cohen & Steers Capital Management, Inc., distributes
the shares of the Fund.
The Fund has adopted a Distribution Plan (the 'Plan') on behalf of the Fund
pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund may not
incur distribution fees which exceed an annual rate of 0.25% of the average
daily net assets attributable to the Class A shares and 0.75% of the average
daily net assets attributable to the Class B and Class C shares. For the year
ended December 31, 1999, the Fund has paid $305,438 in fees under the Plan.
Shareholder Servicing Fees: 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. For
these services, the Fund may pay the shareholder servicing agent a fee at an
annual rate of up to 0.10% of the average daily net asset value of the Fund's
Class A shares and up to 0.25% of the average daily net asset value of the
Fund's Class B and Class C shares. For the year ended December 31, 1999, the
Fund paid $107,463 under the shareholder servicing plan.
Directors' Fees: Certain directors and officers of the Fund are also
directors, officers and/or employees of the Adviser. None of the directors and
officers so affiliated received compensation for their services as directors of
the Fund. For the year ended December 31, 1999, fees and related expenses
accrued for non-affiliated directors totaled $33,005.
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, excluding short-term investments, for the
year ended December 31, 1999 totaled $54,483,665 and $37,560,862, respectively.
At December 31, 1999, the cost and unrealized appreciation or depreciation
in value of the investments owned by the Fund, as computed on a federal income
tax basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost.................................... $ 74,389,201
------------
Gross unrealized appreciation..................... $ 1,277,956
Gross unrealized depreciation..................... $(11,933,431)
------------
Net unrealized depreciation....................... $(10,655,475)
------------
------------
</TABLE>
NOTE 4. CAPITAL STOCK
The Fund is authorized to issue 200 million shares of capital stock, par
value $0.001 per share. The Board of Directors of the Fund may increase or
decrease the aggregate number of shares of common stock that the Fund has
authority to issue. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A:
Sold....................... 1,210,998 $ 11,853,588 2,253,885 $ 26,810,260
Issued as reinvestment of
dividends................ 76,115 704,671 84,674 960,259
Redeemed................... (1,476,937) (14,412,028) (2,085,114) (23,575,022)
---------- ------------ ---------- ------------
Net increase/(decrease).... (189,824) $ (1,853,769) 253,445 $ 4,195,497
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE JANUARY 15, 1998*
YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS B:
Sold......................... 931,596 $ 9,074,475 1,078,288 $12,729,525
Issued as reinvestment of
dividends.................. 7,295 67,734 9,109 102,701
Redeemed..................... (237,413) (2,272,888) (102,886) (1,076,867)
-------- ----------- --------- -----------
Net increase................. 701,478 $ 6,869,321 984,511 $11,755,359
-------- ----------- --------- -----------
-------- ----------- --------- -----------
</TABLE>
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE JANUARY 14, 1998*
YEAR ENDED THROUGH
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
CLASS C:
Sold......................... 1,864,885 $18,374,227 1,425,149 $16,222,303
Issued as reinvestment of
dividends.................. 14,281 132,084 9,712 109,331
Redeemed..................... (970,251) (8,987,021) (152,842) (1,632,255)
--------- ----------- --------- -----------
Net increase................. 908,915 $ 9,519,290 1,282,019 $14,699,379
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE JULY 15, 1998*
YEAR ENDED THROUGH
DECEMNBER 31, 1999 DECEMBER 31, 1998
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- ------ --------
<S> <C> <C> <C> <C>
CLASS I:
Sold............................. 304,835 $3,051,047 26,796 $308,430
Issued as reinvestment of
dividends...................... 2,989 27,276 959 9,946
Redeemed......................... (28,923) (276,803) (223) (2,304)
------- ---------- ------ --------
Net increase..................... 278,901 $2,801,520 27,532 $316,072
------- ---------- ------ --------
------- ---------- ------ --------
</TABLE>
- ---------
* Initial offering of shares.
NOTE 5. DIRECTED BROKERAGE ARRANGEMENTS
The Adviser has directed certain portfolio trades to brokers who paid a
portion of the Fund's expenses. For the year ended December 31, 1999, the Fund's
expenses were reduced by $71,951 under this arrangement.
NOTE 6. BORROWINGS
The Fund, in conjunction with Cohen & Steers Realty Shares, Inc. and Cohen &
Steers Special Equity Fund, Inc., has entered into a Line of Credit Agreement
with Chase Manhattan Bank for $200,000,000. The loan, if used, will be
collateralized by the Fund's portfolio. During the year ended December 31, 1999,
the Fund did not have any loans outstanding.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Cohen & Steers Equity Income Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Cohen & Steers Equity Income Fund,
Inc. (the 'Fund') at December 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the two years in the
period then ended and for the period from September 2, 1997 (commencement of
operations) to December 31, 1997, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
December 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 3, 2000
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS EQUITY INCOME FUND, INC.
OFFICERS AND DIRECTORS
Robert H. Steers
Director and Chairman
Martin Cohen
Director and President
Gregory C. Clark
Director
George Grossman
Director
Jeffrey H. Lynford
Director
Willard H. Smith, Jr.
Director
Elizabeth O. Reagan
Vice President
Adam Derechin
Vice President and Assistant Treasurer
Lawrence B. Stoller
Assistant Secretary
KEY INFORMATION
INVESTMENT ADVISER
Cohen & Steers Capital Management, Inc.
757 Third Avenue
New York, NY 10017
(212) 832-3232
SUB-ADMINISTRATOR AND TRANSFER AGENT
Chase Global Funds Services Co.
73 Tremont Street
Boston, MA 02108
(800) 437-9912
CUSTODIAN
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, NY 10081
LEGAL COUNSEL
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
DISTRIBUTOR
Cohen & Steers Securities, Inc.
757 Third Avenue
New York, NY 10017
NASDAQ Symbol: Class A - CSEIX
Class B - CSBIX
Class C - CSCIX
Website: www.cohenandsteers.com
Net asset value (NAV) can be found in the daily mutual fund listings in the
financial section of most major newspapers under Cohen & Steers.
This report is authorized for delivery only to shareholders of Cohen & Steers
Equity Income Fund, Inc. unless accompanied or preceded by the delivery of a
currently effective prospectus setting forth details of the Fund. Past
performance is of course no guarantee of future results and your investment may
be worth more or less at the time you sell.
- --------------------------------------------------------------------------------
22
<PAGE>
COHEN & STEERS
EQUITY INCOME FUND
757 THIRD AVENUE
NEW YORK, NY 10017
[COHEN & STEERS LOGO]
ANNUAL REPORT
DECEMBER 31, 1999
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as .......................'D'
The double dagger symbol shall be expressed as............... 'DD'
The division sign shall be expressed as .....................[div]
