COHEN & STEERS REALTY SHARES INC, 485BPOS, 1996-03-12

COHEN & STEERS REALTY SHARES INC
485BPOS, 1996-03-12

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 12, 1996

FILE NO. 33-40215
811-6302
________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------------

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

PRE-EFFECTIVE AMENDMENT NO. [ ]

POST-EFFECTIVE AMENDMENT NO. 6 [x]

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

AMENDMENT NO. 7 [x]

----------------------

COHEN & STEERS REALTY SHARES, 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

MARTIN COHEN
COHEN & STEERS REALTY SHARES, 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)

[x] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)

[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)

[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (B)

[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(1)

[ ] 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.

----------------------

REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL
INTEREST UNDER THE SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. REGISTRANT FILED ITS 24F-2 NOTICE FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1995, ON FEBRUARY 26, 1996.

________________________________________________________________________________

<PAGE>
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY 404(c))
<TABLE>
<CAPTION>
N-1A ITEM
- -------------- LOCATION IN PROSPECTUS
------------------------------------
(CAPTION)

<S> <C> <C>
Item 1. Cover Page................................................... Cover Page
Item 2. Synopsis..................................................... Fee Table
Item 3. Condensed Financial Information.............................. Financial Highlights
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.................. *
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

LOCATION IN STATEMENT OF
PART B ADDITIONAL INFORMATION (CAPTION)
- -------------- ------------------------------------
<S> <C> <C>
Item 10. Cover Page................................................... Cover Page
Item 11. Table of Contents............................................ Table of Contents
Item 12. General Information and History.............................. Organization and Description of
Capital Stock
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................................................. Distributor
Item 22. Calculation of Performance Data.............................. Performance Information
Item 23. Financial Statements......................................... Financial Statements
</TABLE>

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* Contained in the annual report of Registrant

[Logo]

- --------------------------------------------------------------------------------
Cohen & Steers Realty Shares, Inc. is a non-diversified, open-end management
investment company that seeks total return through investment in real estate
securities. The Fund pursues its investment objective of total return by
seeking, with approximately equal emphasis, capital appreciation and current
income. 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 March 12, 1996, 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.

------------------------------------------
- --------------------------------------------------------------------------------
INVESTORS ARE ADVISED TO READ THIS PROSPECTUS AND RETAIN IT FOR FUTURE
REFERENCE.
- --------------------------------------------------------------------------------
------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

MARCH 12, 1996
- --------------------------------------------------------------------------------

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE
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Shareholder Transaction Expenses

None.

Annual Fund Operating Expenses (as a percentage of average net assets)

<TABLE>
<S> <C>
Management fees..................................................... 0.85%
Other expenses*..................................................... 0.29%
----
Total fund operating expenses....................................... 1.14%
</TABLE>

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* After fee waivers

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):

<TABLE>
<S> <C>
1 year............................................................. $ 12
3 years............................................................ $ 36
5 years............................................................ $ 63
10 years............................................................ $139
</TABLE>

THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES WHICH
MAY BE MORE OR LESS THAN THOSE SHOWN.

The purpose of this table is to assist the investor in understanding the various
costs and expenses that an investor in the Fund will bear.

With respect to the fiscal year ended December 31, 1995, the administrator has
waived fees in the amount of $117,113. Without such waiver, 'Total Fund
Operating Expenses' would have been 1.16%. The Adviser has directed certain
portfolio transactions to brokers who paid a portion of the Fund's expenses. For
the year ended December 31, 1995, the Fund's expenses were reduced by $131,488
under these arrangements. Although the Fund did not directly pay these expenses,
this amount has been added to the Fund's 'Other Expenses' in accordance with
recently-adopted disclosure regulations. Had these costs not been reflected in
this table, the Fund's total operating expenses would have been 1.12%.
Management of the Fund believes these arrangements benefit the Fund and the
Fund's shareholders and intends to continue such arrangements in the current
year.

<PAGE>
<PAGE>
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FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following information, which relates to the period from July 2, 1991
(commencement of operations) to December 31, 1995, has been audited by Coopers &
Lybrand L.L.P., independent accountants, whose report thereon appears in the
Statement of Additional Information. Further information concerning investment
performance is contained in the Fund's annual report to shareholders, which is
available without charge.

<TABLE>
<CAPTION>
YEAR ENDED PERIOD
--------------------------------------------------------- ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991*
- -------------------------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period........................ $ 32.90 $ 31.92 $ 29.58 $ 26.55 $ 25.00
------------ ------------ ------------ ------------ ------------
Income from investment
operations
Net investment income...... 1.86 1.66 1.29 1.51 0.88
Net gains or losses on
securities (both realized
and unrealized).......... 1.69 0.98 4.24 3.55 1.07
------------ ------------ ------------ ------------ ------------
Total from investment
operations.......... 3.55 2.64 5.53 5.06 1.95
------------ ------------ ------------ ------------ ------------
Less distributions from:
Net investment income...... (1.33) (1.09) (1.27) (1.80) (0.40)
Realized gain on
investment............... 0.00 0.00 (1.64) (0.18) 0.00
In excess of net realized
gains.................... 0.00 0.00 (0.04) 0.00 0.00
Return of capital.......... (0.50) (0.57) (0.24) (0.05) 0.00
------------ ------------ ------------ ------------ ------------
Total distributions... (1.83) (1.66) (3.19) (2.03) (0.40)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period........................ $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total investment return......... 11.13% 8.31% 18.76% 20.09% 7.91%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratios/Supplemental Data:
Net assets, end of period
(in millions)............ $793.084 $458.098 $163.478 $ 49.481 $ 24.434
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratio of expenses to
average net assets....... 1.12%`D' 1.14%`D' 1.18%`D' 1.25%`D' 1.25%**`D'
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Ratio of net investment
income to average net
assets................... 6.05%`D' 5.71%`D' 4.57%`D' 5.92%`D' 7.48%**`D'
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Portfolio turnover rate.... 22.68% 39.00% 65.28% 14.81% 57.40%**
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>

- ------------

* For the period July 2, 1991 (commencement of operations) to December 31,
1991.

** Annualized.

`D' The investment adviser and/or the administrator did not impose a portion of
their fees for the periods indicated. If these fees had been incurred by
the Fund, the ratios would have been:

<TABLE>
<S> <C> <C> <C> <C> <C>
Ratios (to average daily net assets):
Expenses...................... 1.16% 1.26% 1.35% 1.77% 1.94%**
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Net investment income......... 6.01% 5.59% 4.40% 5.40% 6.78%**
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------

The investment objective of Cohen & Steers Realty Shares, Inc. (the 'Fund') is
total return through investment in real estate securities. The Fund pursues its
investment objective of total return by seeking, with approximately equal
emphasis, capital appreciation (both realized and unrealized) and current
income. There can be no assurance that the Fund's investment objective will be
achieved. The Fund's investment objective cannot be changed without approval of
a majority of its outstanding voting securities. All of the Fund's policies,
other than its investment objective and the investment limitations described
below under 'Investment Restrictions,' may be changed by the Fund's Board of
Directors without shareholder approval.

Under normal circumstances, the Fund will invest substantially all of its assets
in the equity securities of real estate companies. Such equity securities will
consist of (i) common stocks (including shares in real estate investment
trusts), (ii) rights or warrants to purchase common stocks, (iii) securities
convertible into common stocks where the conversion feature represents, in the
investment adviser's view, a significant element of the securities' value, and
(iv) preferred stocks. 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. The Fund may invest up to 10% of its total assets in
securities of foreign real estate companies. See 'Risks of Investment in Foreign
Securities,' below. When, in the judgment of the Fund's investment adviser,
market or general economic conditions justify a temporary defensive position,
the Fund will deviate from its investment objective 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. The Fund may also
at any time invest funds awaiting investment or held as reserves to satisfy
redemption requests or to pay dividends and other distributions to shareholders
in short-term money market instruments.

The Fund will not invest more than 10% of its net assets in illiquid securities.
For this purpose illiquid securities include, among others, securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. Securities that have legal or contractual
restrictions on resale but have a readily available market are not deemed
illiquid for purposes of this limitation. Cohen & Steers Capital Management,
Inc., the Fund's investment adviser (the 'Adviser' or 'Cohen & Steers'), will
monitor the liquidity of such restricted securities under the supervision of the
Board of Directors. See the Fund's Statement of Additional Information for
further discussion of illiquid securities.

- --------------------------------------------------------------------------------

REAL ESTATE INVESTMENT TRUSTS

The Fund may invest without limit in shares of real estate investment trusts
('REITs'). REITs pool investors' funds for investment primarily in income
producing real estate or real estate related loans or interests. A REIT is not
taxed on income distributed to shareholders if it complies with several
requirements relating to its organization, ownership, assets, and income and a
requirement that it distribute to its shareholders at least 95% of its taxable
income (other than net capital gains) for each taxable year. REITs can generally
be classified as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs,
which invest

<PAGE>
<PAGE>
the majority of their assets directly in real property, derive their income
primarily from rents. Equity REITs can also realize capital gains by selling
properties that have appreciated in value. Mortgage REITs, which invest the
majority of their assets in real estate mortgages, derive their income primarily
from interest payments. Hybrid REITs combine the characteristics of both Equity
REITs and Mortgage REITs.

- --------------------------------------------------------------------------------

RISKS OF INVESTMENT IN REAL ESTATE SECURITIES

The Fund will not invest in real estate directly, but only in securities issued
by real estate companies. However, the Fund may be subject to risks similar to
those associated with the direct ownership of real estate (in addition to
securities markets risks) because of its policy of concentration in the
securities of companies in the real estate industry. These include declines in
the value of real estate, risks related to general and local economic
conditions, dependency on management skill, heavy cash flow dependency, possible
lack of availability of mortgage funds, overbuilding, extended vacancies of
properties, increased competition, increases in property taxes and operating
expenses, changes in zoning laws, losses due to costs resulting from the
clean-up of environmental problems, liability to third parties for damages
resulting from environmental problems, casualty or condemnation losses,
limitations on rents, changes in neighborhood values and the appeal of
properties to tenants and changes in interest rates.

In addition to these risks, Equity REITs may be affected by changes in the value
of the underlying property owned by the trusts, while Mortgage REITs may be
affected by the quality of any credit extended. Further, Equity and Mortgage
REITs are dependent upon management skills and generally may not be diversified.
Equity and Mortgage REITs are also subject to heavy cash flow dependency,
defaults by borrowers and self-liquidation. In addition, Equity and Mortgage
REITs could possibly fail to qualify for tax free pass-through of income under
the Internal Revenue Code of 1986, as amended (the 'Code'), or to maintain their
exemptions from registration under the Investment Company Act of 1940 (the '1940
Act'). The above factors may also adversely affect a borrower's or a lessee's
ability to meet its obligations to the REIT. In the event of a default by a
borrower or lessee, the REIT may experience delays in enforcing its rights as a
mortgagee or lessor and may incur substantial costs associated with protecting
its investments.

- --------------------------------------------------------------------------------

RISKS OF INVESTMENT IN FOREIGN SECURITIES

The Fund may invest up to 10% of its total assets in securities of foreign real
estate companies. Investing in securities issued by foreign corporations
involves considerations and possible risks not typically associated with
investing in securities issued by domestic corporations. The values of foreign
investments are affected by changes in currency rates or exchange control
regulations, application of foreign tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in the
United States or abroad) or changed circumstances in dealings between nations.
Costs are incurred in connection with conversions between various currencies. In
addition, foreign brokerage commissions are generally higher than in the United
States, and foreign securities markets may be less liquid, more volatile and
less subject to governmental supervision than in the United States. Investments
in foreign countries could be affected by other factors not present in the
United States, including expropriation, confiscatory taxation, lack of uniform
accounting and auditing standards and potential difficulties in enforcing
contractual obligations and could be subject to extended settlement periods.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

NON-DIVERSIFIED STATUS; PORTFOLIO TURNOVER

The Fund is classified as a 'non-diversified' investment company under 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. The Fund's investments in securities
issued by the U.S. Government, its agencies and instrumentalities are not
subject to these limitations. Because the Fund, as a non-diversified investment
company, may invest in a smaller number of individual issuers than a diversified
investment company, an investment in the Fund may present greater risk to an
investor than an investment in a diversified company.

The Fund anticipates that its annual portfolio turnover rate will not exceed
150%, but the turnover rate will not be a limiting factor when the Adviser deems
portfolio changes appropriate. The turnover rate may vary greatly from year to
year. An annual turnover rate of 150% occurs, for example, when all of the
securities held by the Fund are replaced one and one-half times in a period of
one year. A higher turnover rate results in correspondingly greater brokerage
commissions and other transactional expenses which are borne by the Fund. High
portfolio turnover may result in the realization of net short-term capital gains
by the Fund which, when distributed to shareholders, will be taxable as ordinary
income. See 'Taxation.'

- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

The Fund has adopted certain investment restrictions, which may not be changed
without the approval of the holders of a majority of the Fund's outstanding
voting securities as defined below. The percentage limitations set forth below,
as well as those described elsewhere in this Prospectus, apply only at the time
an investment is made or other relevant action is taken by the Fund.

In addition to other fundamental investment restrictions listed in the Statement
of Additional Information, the Fund will not:

1. Purchase more than 10% of the voting securities of any issuer;

2. Make loans except through the purchase of debt obligations in accordance with
its investment objective and policies;

3. 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

<PAGE>
<PAGE>
of 5% of the value of the Fund's total assets will be repaid before any
subsequent investments are made;

4. Invest in illiquid securities, as defined in 'Investment Objective and
Policies,' if immediately after such investment more than 10% of the Fund's net
assets (taken at market value) would be invested in such securities; or

5. Purchase or sell real estate, except that the Fund may purchase securities
issued by companies in the real estate industry and will, as a matter of
fundamental policy, concentrate its investments in such securities.

The foregoing restrictions are fundamental policies that may not be changed
without the approval of a majority of the Fund's outstanding voting securities.
As used in this Prospectus, a majority of the Fund's outstanding voting
securities means the lesser of (a) more than 50% of its outstanding voting
securities or (b) 67% or more of the voting securities present at a meeting at
which more than 50% of the outstanding voting securities are present or
represented by proxy. Fund policies and restrictions which are not fundamental
may be modified by the Board of Directors without shareholder approval if, in
the reasonable exercise of its business judgment, modification is determined to
be necessary or appropriate to carry out the Fund's objective. However, the Fund
will not change its investment policies or restrictions without written notice
to shareholders.

- --------------------------------------------------------------------------------
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 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, Chairman of the Board, is the Chairman and one of the
principals of the Adviser.

Martin Cohen, Director and President, is the President and one of the principals
of the Adviser.

Gregory C. Clark, Director, is the principal of Wellspring Management Group.

George Grossman, Director, is an attorney at law in private practice.

Jeffrey H. Lynford, Director, is Chairman of Wellsford Group, Inc. and of
Wellsford Residential Property Trust.

Elizabeth O. Reagan, Vice President, is a Senior 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 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

<PAGE>
<PAGE>
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. All of Cohen & Steers' client accounts are invested principally in
real estate securities. Its principal officers include Robert H. Steers,
Chairman; and Martin Cohen, President. Mr. Cohen and Mr. Steers are responsible
for the day-to-day management of the Fund's portfolio. Mr. Cohen and Mr. Steers
may be deemed 'controlling persons' of the Adviser on the basis of their
ownership of the Adviser's stock.

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INVESTMENT ADVISORY AGREEMENT

Pursuant to an investment advisory agreement (the 'Advisory Agreement') the
Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, and generally manages
the Fund's investments in accordance with the stated policies of the Fund,
subject to the general supervision of the Board of Directors of the Fund. The
Adviser also selects brokers and dealers to execute purchase and sale orders for
the portfolio transactions of the Fund. Consistent with the 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 .85%
of the average daily net assets of the Fund (approximately .85% on an annual
basis). This fee is higher than that incurred by most other investment
companies.

In addition to the payments to the Adviser under the Advisory Agreement
described above, the Fund pays certain other costs of its operations including
(a) custody, transfer and dividend disbursing expenses, (b) fees of Directors
who are not affiliated with the Adviser, (c) legal and auditing expenses, (d)
clerical, accounting and other office costs, (e) costs of printing the Fund's
prospectuses and shareholder reports, (f) costs of maintaining the Fund's
existence, (g) interest charges, taxes, brokerage fees and commissions, (h)
costs of stationery and supplies, (i) expenses and fees related to registration
and filing with the Securities and Exchange Commission and with state regulatory
authorities, and (j) upon the approval of the Board of Directors, costs of
personnel of the Adviser or its affiliates rendering clerical, accounting and
other office services. For the fiscal year ended December 31, 1995, the Fund's
expenses, including the management fee, equaled 1.12% of the Fund's average net
assets (net of administrative fee waived and directed brokerage arrangements,
equivalent to 0.04% of average net assets).

The Advisory Agreement provides that the Adviser will reimburse the Fund for its
expenses (exclusive of interest, taxes, brokerage, distribution expenditures and
extraordinary expenses, all to the extent permitted by applicable state
securities laws and regulations) which in any year exceed the limits prescribed
by any state in which the Fund's shares are qualified for sale. The Fund may not
qualify its shares for sale in every state. The Fund believes that presently the
most restrictive expense ratio limitation imposed by any state is 2.5% of the
first $30 million of the Fund's average net assets, 2.0% of the next $70 million
of its average net assets and 1.5% of its average net assets in excess of $100
million. Expense reimbursements, if any, are accrued daily and paid monthly.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

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 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.

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, N.A. ('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 terms of the Administration Agreement, the Fund
pays Chase a monthly administration fee at the annual rate of .08% on the first
$500 million of the Fund's average daily net assets and at lower rates on the
Fund's average daily net asssets 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.'

Under the Administration Agreement, the Adviser remains responsible for
monitoring and overseeing the performance by Chase and Chase Global Funds
Services Company of their obligations to the Fund under their respective
agreements with the Fund, subject to the overall authority of the Fund's Board
of Directors. For its services under the Administration Agreement, the Adviser
receives a monthly fee from the Fund at the annual rate of .02% of the Fund's
average daily net assets.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value per share will be determined on each day the New York Stock
Exchange is open for trading and on each other day on which there is a
sufficient degree of trading in the Fund's investments to affect the net asset
value, as of the close of trading on the New York Stock Exchange by adding the
market value of all securities in the Fund's portfolio and other assets,
subtracting liabilities, incurred or accrued, and dividing by the total number
of the Fund's shares then outstanding.

For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected on the
consolidated tape at the close of the New York Stock Exchange on the business
day as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Directors shall determine in good faith
to reflect its fair market value. Readily marketable securities not listed on
the New York Stock Exchange but listed on other domestic or foreign securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ('NASDAQ') National List are valued in a like
manner. Portfolio securities traded on more than one securities exchange are
valued at the last sale price on the business day as of which such value is
being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.

Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be over-
the-counter, but excluding securities admitted to trading on the NASDAQ National
List, are valued at the mean of the current bid and asked prices as reported by
NASDAQ or, in the case of securities not quoted by NASDAQ, the National
Quotation Bureau or such other comparable sources as the Directors deem
appropriate to reflect their fair market value. Where securities are traded on
more than one exchange and also over-the-counter, the securities will generally
be valued using the quotations the Board of Directors believes reflect most
closely the value of such securities.

- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------

Shares of the Fund may be purchased through Cohen & Steers Securities, Inc., the
Fund's distributor and an affiliate of the Adviser, acting as agent for the
Fund. The minimum initial investment is $10,000 and the minimum subsequent
investment is $500. The Fund reserves the right, in its sole discretion, to
waive the minimum initial investment amount for certain investors. The Fund
reserves the right to reject any purchase order. Shareholder accounts may be
maintained through brokerage firms or other financial institutions. Such
institutions, which may impose their own minimum investment amounts, may make
arrangements for their customers to purchase and redeem Fund shares by
telephone, in which event a transaction fee may be charged by the institution
(not by the Fund). The minimum for initial investments through such institutions
may be as low as $2,000 per investor.

<PAGE>
<PAGE>
Orders for shares of the Fund will become effective at the net asset value per
share next determined after receipt by Chase Global Funds Services Company, the
Transfer Agent, of a check drawn on any bank or domestic savings institution or
after receipt by Chase Manhattan Bank, N.A., the Fund's custodian, of a bank
wire or Federal Reserve Wire. Checks must be payable in United States dollars
and will be accepted subject to collection at full face value. All funds will be
invested in full and fractional shares.

By investing in the Fund, a shareholder appoints the Transfer Agent, as agent,
to establish an open account to which all shares purchased will be credited,
together with any dividends and capital gain distributions that are paid in
additional shares. See 'Dividends and Distributions.' Although most shareholders
elect not to receive stock certificates, certificates for full shares can be
obtained on specific written request to the Transfer Agent. No certificates are
issued for fractional shares. IT IS MORE COMPLICATED TO REDEEM SHARES HELD IN
CERTIFICATE FORM.

- --------------------------------------------------------------------------------

INITIAL PURCHASE BY WIRE

1. Telephone toll free from any continental state: (800) 437-9912 ((617)
557-8000 for Massachusetts residents). Give the name of the Fund, name(s) in
which shares are to be registered, address, social security or tax
identification number (where applicable), dividend payment election, amount to
be wired, name of the wiring bank and name and telephone number of the person to
be contacted in connection with the order. A wire reference control number will
be assigned.

2. Instruct the wiring bank to transmit the specified amount in federal funds
($10,000 or more) to the Custodian:

The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081-1000
ABA # 021000021
Account: DDA #910-2-733012
Attn: Cohen & Steers Realty Shares
For further credit to: (Account name)
Account Number:
Wire Reference Control #:

3. Complete the Subscription Agreement included at the end of this Prospectus.
Mail the Subscription Agreement to the Transfer Agent:

Chase Global Funds Services Company
73 Tremont St.
Boston, MA 02108-3913

- --------------------------------------------------------------------------------

ADDITIONAL PURCHASES BY WIRE

1. Telephone toll free from any continental state: (800) 437-9912 ((617)
557-8000 for Massachusetts residents). Give the name of the Fund, the account
number, the amount to be wired, name of the wiring bank and name and telephone
number of the person to be contacted in connection with the order. A wire
reference control number will be assigned.

2. Instruct the wiring bank to transmit the specified amount in federal funds
($500 or more) to the Custodian:

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

INITIAL PURCHASE BY MAIL

1. Complete the Subscription Agreement included at the end of this Prospectus.

2. Mail the Subscription Agreement and a check for $10,000 or more, payable to
the Fund, to the Transfer Agent at the address set forth above.

- --------------------------------------------------------------------------------

ADDITIONAL PURCHASES BY MAIL

1. Make a check ($500 or more) payable to the Fund. Write the shareholder's Fund
account number on the check.

2. Mail the check and the detachable stub from the Statement of Account (or a
letter providing the account number) to the Transfer Agent at the address set
forth above.

- --------------------------------------------------------------------------------
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.
See 'Determination of Net Asset Value.'

- --------------------------------------------------------------------------------

REDEMPTION BY TELEPHONE

You may submit redemption requests by telephone by calling Chase Global Funds
Services Company at (800) 437-9912 ((617) 557-8000 for Massachusetts residents)
and requesting that the proceeds be directed as indicated in the Subscription
Agreement. Requests for redemption made by telephone will be accepted if a
proper redemption request is received prior to 4:00 p.m., Eastern time. Shares
will be redeemed at the net asset value determined as of the closing of trading
on the New York Stock Exchange on that day. 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
73 Tremont St.
Boston, Massachusetts 02108-3913

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

<PAGE>
<PAGE>
form, the certificate must be endorsed for transfer (or be accompanied by a duly
executed stock power) and must be submitted to Chase Global Funds Services
Company together with a redemption request. When proceeds of a redemption are to
be paid to someone other than the shareholder, either by wire or check, the
signature(s) on the letter of instruction must be guaranteed regardless of the
amount of the redemption. The guarantor of a signature must be a trust company
or national bank, a member bank of the Federal Reserve System, a member firm of
a national securities exchange or any other guarantor approved by Chase Global
Funds Services Company. Chase Global Funds Services Company may require
additional supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be deemed
to be properly received until Chase Global Funds Services Company receives all
required documents in proper form.

- --------------------------------------------------------------------------------

OTHER REDEMPTION INFORMATION

Checks for redemption proceeds will normally be mailed within five business
days, but will not be mailed until all checks in payment for the purchase of the
shares to be redeemed have been collected, which may take up to 21 days or more.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption will be sent to the shareholder's address of record. The Custodian
may benefit from the use of redemption proceeds until the check issued to a
redeeming shareholder for such proceeds has cleared.

The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or that Exchange is closed, other
than customary weekend and holiday closings, (ii) the Securities and Exchange
Commission (the 'SEC') has by order permitted such suspension or (iii) an
emergency, as defined by rules of the SEC, exists making disposal of portfolio
securities or determination of the value of the net assets of the Fund not
reasonably practicable.

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 $2,000 or less as the result of
voluntary redemption. However, any shareholder affected by the exercise of this
right will be allowed to make additional investments prior to the date fixed for
redemption to avoid liquidation of the account.

- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------

Dividends from the Fund's investment income will be declared and distributed
quarterly. The Fund intends to distribute net realized capital gains, if any, at
least annually although the Board of Directors may in the future determine to
retain realized capital gains and not distribute them to shareholders. For
information concerning the tax treatment of the Fund's distribution policies for
the Fund and its shareholders, see 'Taxation.'

Distributions will automatically be paid in full and fractional shares of the
Fund based on the net asset value per share at the close of business on the
payable date unless the shareholder has elected to have them paid in cash.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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 continue to qualify annually and elect to be treated as a
regulated investment company under the Code. To qualify, the Fund must meet
certain income, distribution and diversification requirements. In any year in
which the Fund qualifies as a regulated investment company and timely
distributes all of its taxable income, the Fund generally will not pay any U.S.
federal income or excise tax.

Dividends paid out of the Fund's investment company taxable income (including
dividends, interest and net short-term capital gains) will be taxable to a U.S.
shareholder as ordinary income. Because a portion of the Fund's income may
consist of dividends paid by U.S. corporations, a portion of the dividends paid
by the Fund may be eligible for the corporate dividends-received deduction.
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses), if any, designated as capital gain
dividends are taxable as long-term capital gains, regardless of how long the
shareholder has held the Fund's shares. Dividends are taxable to shareholders in
the same manner whether received in cash or reinvested in additional Fund
shares.

A distribution will be treated as paid on December 31 of the current calendar
year if it is declared by the Fund in October, November or December with a
record date in such a month and paid by the Fund during January of the following
calendar year. Such distributions will be taxable to shareholders in the
calendar year in which the distributions are declared, rather than the calendar
year in which the distributions are received.

Each year the Fund will notify shareholders of the tax status of dividends and
distributions.

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.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
- --------------------------------------------------------------------------------

The Fund was incorporated on April 26, 1991 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.

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, NY 10081-1000, has been retained to act as Custodian of the Fund's
investments and to serve as the Fund's transfer and dividend disbursing agent.
Chase has retained its wholly-owned subsidiary, Chase Global Funds Services
Company, to provide transfer and dividend disbursing agency services to the
Fund. Neither Chase nor Chase Global Funds Services Company has any part in
deciding the Fund's investment policies or which securities are to be purchased
or sold for the Fund's portfolio.

- --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
- --------------------------------------------------------------------------------

The fiscal year of the Fund ends on December 31 of each year. The Fund sends to
its shareholders, at least semi-annually, reports showing the investments and
other information (including unaudited financial statements). An annual report,
containing financial statements audited by the Fund's independent accountants,
is sent to shareholders each year.

- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time, the Fund may advertise its 'average annual total return' over
various periods of time. This total return figure shows the average percentage
change in value of an investment in the

<PAGE>
<PAGE>
Fund from the beginning date of the measuring period to the ending date of the
measuring period. The figure reflects changes in the price of the Fund's shares
and assumes that any income dividends and/or capital gains distributions made by
the Fund during the period are reinvested in shares of the Fund. Figures will be
given for recent one-, five- and ten-year periods (when applicable), and may be
given for other periods as well (such as from commencement of the Fund's
operations, or on a year-by-year basis). When considering 'average' total return
figures for periods longer than one year, investors should note that the Fund's
annual total return for any one year in the period might have been greater or
less than the average for the entire period. The Fund also may use 'aggregate'
total return figures for various periods, representing the cumulative change in
value of an investment in the Fund for the specific period (again reflecting
changes in the Fund's share price and assuming reinvestment of dividends and
distributions). Aggregate total returns may be shown by means of schedules,
charts or graphs, and may indicate subtotals of the various components of total
return (that is, the change in value of initial investment, income dividends and
capital gains distributions).

It is important to note that total return figures are based on historical
earnings and are not intended to indicate future performance. The Statement of
Additional Information further describes the methods used to determine the
Fund's performance.

- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------

Any shareholder inquiries may be directed to the Fund at the address or
telephone number listed on the back cover of this Prospectus. This Prospectus,
including the Statement of Additional Information which has been incorporated by
reference herein, does not contain all the information set forth in the
Registration Statement filed by the Fund with the SEC under the Securities Act
of 1933. Copies of the Registration Statement may be obtained at a reasonable
charge from the SEC or may be examined, without charge, at the offices of the
SEC in Washington, D.C.

<PAGE>
<PAGE>
COHEN & STEERS REALTY SHARES, INC.

1 REGISTRATION OF SHARES (CHECK ONE BOX)

[ ] CORPORATION, PARTNERSHIP OR OTHER ENTITY

----------------------------------------------------------------- ------------------------------------
Name of Entity Taxpayer I.D. Number
[ ] Corporation [ ] Partnership [ ] Foundation [ ] Endowment
[ ] Non-Profit [ ] Bank [ ] Insurance Co. [ ] Other ( )
---------
---------------------------------------------------------------------------------------------------------
[ ] TRUST

-----------------------------------------------------------------
Trustee's Name

----------------------------------------------------------------- ------------------------------------
Name of Trust Agreement Date of Trust Agreement

----------------------------------------------------------------- ------------------------------------
Beneficiary's Name Taxpayer I.D. Number

---------------------------------------------------------------------------------------------------------

[ ] INDIVIDUAL OR JOINT REGISTRATION

----------------------------------------------------------------- ------------------------------------
Owner's Name (First, Initial, Last) Social Security Number

Citizen of U.S.? [ ] Yes [ ] No 18 or older? [ ] Yes [ ] No
-----------------------------
Country
------------------------------------------------------------------ ------------------------------------
Joint Owner's Name (First, Initial, Last) Social Security Number

Joint accounts will be registered joint tenants with the right of survivorship unless otherwise indicated.
----------------------------------------------------------------------------------------------------------

[ ] GIFT OR TRANSFER TO MINOR

----------------------------------------- Under the (specify state)
Custodian's Name (First, Initial, Last) ------------------------
Uniform Gifts/Transfer to Minor's Act

---------------------------------------- --------------------------------------------------
Minor's Name (First, Initial, Last) Minor's Social Security Number

2 MAILING ADDRESS OF REGISTERED OWNER(S)

( )
---------------------------------------- --------------------------------------------------
Street or P.O. Box Number Telephone Number

( )
---------------------------------------- --------------------------------------------------
City and State Zip Code FAX Number

3 INVESTMENT INFORMATION

Amount being invested $ ($10,000 minimum) Do not send cash. Investment will be paid for by
----------
(please check one):

[ ] Check or draft made payable to 'Cohen & Steers Realty [ ] Wire through Federal Reserve System.*
Shares, Inc.'
------------------------------------
Wire Reference Control Number

* Call (800) 437-9912 to notify the Fund of any investments by wire you wish to make and to obtain the
Fund's wire instructions and Wire Reference Control Number for making such investments.
</TABLE>

4 TELEPHONE REDEMPTION

Shares may be redeemed by calling (800) 437-9912 (See description in prospectus).
If no box is checked, the telephone redemption option will be declined.

[ ] Investor DECLINES the telephone redemption
[ ] Investor ELECTS the telephone redemption

Please specify below the bank to which redemption proceeds are to be wired, and enclose a voided check from
the bank you wish to use:

----------------------------------------------------- -----------------------------------------
Bank Name Bank Account Number

----------------------------------------------------- -----------------------------------------
Name in Which Account is Registered ABA Routing Number

( )
----------------------------------------------------- -----------------------------------------
Bank Address Bank Telephone Number

5 INCOME AND CAPITAL GAINS PAYMENT ELECTION

Check the applicable boxes (if none is checked, all distributions will be reinvested):

Dividends are to be: Capital Gains are to be:
[ ] Reinvested [ ] Reinvested
[ ] Paid in Cash by Check [ ] Paid in Cash by Check
[ ] Paid in Cash by Wire [ ] Paid in Cash by Wire

If you wish to have your distributions paid IN CASH BY WIRE, please specify the wire instructions below, and
enclose a voided check from the bank you wish to use:

----------------------------------------------------- -----------------------------------------
Bank Name Bank Account Number

----------------------------------------------------- -----------------------------------------
Name in Which Account is Registered ABA Routing Number

( )
----------------------------------------------------- -----------------------------------------
Bank Address Bank Telephone Number

6 CERTIFICATION AND SIGNATURE(S)

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.

Under penalties of perjury, the Investor certifies that (1) the number shown on this form is the Investor's
correct social security or taxpayer ID number and (2) the Investor is not subject to backup withholding
because (i) the Investor has not been notified by the Internal Revenue Service (IRS) that the Investor is
subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the IRS
has notified the Investor that the Investor is no longer subject to backup withholding (strike out Item (2)
if the Investor is currently subject to such backup withholding).

[ ] If this box is checked, under penalties of perjury, the Investor also certifies by signing this
form that the Investor is exempt from backup withholding. Retirement plans, corporations, common
trust funds, charitable organizations and financial institutions generally are exempt from backup
withholding. (See IRS Form W-9, which is available from the Fund, for more information).

Non-U.S. Investors who do not furnish a social security or taxpayer ID number must complete IRS Form W-8
(which is available from the Fund) and attach it to this registration form.

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.

x
---------------------------------------- --------- --------------------------------------------
Signature (Owner, Trustee, Etc.) Date Print Name Above

x
---------------------------------------- --------- --------------------------------------------
Signature (Joint Owner, Co-Trustee) Date Print Name Above

</TABLE>

01 MAIL TO: CHASE GLOBAL FUNDS SERVICES COMPANY, P.O. BOX 2798, BOSTON, MA 02208

<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
<PAGE>
____________________________________ ___________________________________

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
Financial Highlights.......................................................................................... 3
Investment Objective and Policies............................................................................. 4
Investment Restrictions....................................................................................... 6
Management of the Fund........................................................................................ 7
Determination of Net Asset Value.............................................................................. 10
Purchase of Shares............................................................................................ 10
Redemption of Shares.......................................................................................... 12
Dividends and Distributions................................................................................... 13
Taxation...................................................................................................... 14
Organization and Description of Capital Stock................................................................. 15
Custodian and Transfer and Dividend Disbursing Agent.......................................................... 15
Reports to Shareholders....................................................................................... 15
Performance Information....................................................................................... 15
Additional Information........................................................................................ 16
</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
MARCH 12, 1996

____________________________________ ___________________________________

<PAGE>
<PAGE>
[Logo]

757 Third Avenue
New York, New York 10017
(212) 832-3232
- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION

MARCH 12, 1996

Cohen & Steers Realty Shares, Inc. (the 'Fund') is a non-diversified, open-end
management investment company that seeks total return through investment in real
estate securities. The Fund pursues its investment objective of total return by
seeking, with approximately equal emphasis, capital appreciation and current
income. 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 MARCH 12, 1996 (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>
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----

<S> <C>
Investment Objective and Policies........................................................... 1

Investment Restrictions..................................................................... 2

Management of the Fund...................................................................... 3

Determination of Net Asset Value............................................................ 7

Redemption of Shares........................................................................ 8

Portfolio Transactions and Brokerage........................................................ 8

Taxation.................................................................................... 9

Organization and Description of Capital Stock............................................... 14

Distributor................................................................................. 15

Custodian and Transfer and Dividend Disbursing Agent........................................ 15

Performance Information..................................................................... 15

Counsel and Independent Accountants......................................................... 17

Financial Statements........................................................................ 17
</TABLE>

The following discussion of the Fund's investment objective and policies
supplements, and should be read in conjunction with, the information regarding
the Fund's investment objective and policies set forth in the Prospectus. Except
as otherwise provided below, the Fund's investment policies are not fundamental
and may be changed by the Board of Directors of the Fund without the approval of
the shareholders; however, the Fund will not change its investment policies
without written notice to shareholders.

- --------------------------------------------------------------------------------

ILLIQUID SECURITIES

The Fund will not invest in illiquid securities if immediately after such
investment more than 10% of the Fund's net assets (taken at market value) would
be invested in such securities. For this purpose, illiquid securities include,
among others, securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale. Securities that
have legal or contractual restrictions on resale but have a readily available
market are not deemed illiquid for purposes of this limitation.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the 'Securities Act')
and securities which are otherwise not readily marketable. Securities which have
not been registered under the Securities Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an adverse effect on the marketability of portfolio securities and a mutual
fund might be unable to dispose of restricted or other illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions within seven days. A mutual fund might also have to
register such restricted securities in order to dispose of them, resulting in
additional expense and delay. Adverse market conditions could impede such a
public offering of securities.

In recent years, however, a large institutional market has developed for certain
securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.

The Securities and Exchange Commission (the 'SEC') has recently adopted Rule
144A which allows a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public. Rule 144A
establishes a 'safe harbor' from the registration requirements of the Securities
Act of resales of certain securities to qualified institutional buyers. The
Adviser anticipates that the market for certain restricted securities will
expand further as a result of this new regulation and the development of
automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers.

<PAGE>
<PAGE>
The Adviser will monitor the liquidity of restricted securities in the Fund's
portfolio under the supervision of the Board of Directors. In reaching liquidity
decisions, the Adviser will consider, inter alia, the following factors: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
wishing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer).

- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------

The Fund is subject to certain investment restrictions, in addition to those
listed in the Prospectus, which are deemed fundamental policies of the Fund.
Such fundamental policies are those which cannot be changed without the approval
of the holders of a majority of the Fund's outstanding shares which means the
vote of (i) 67% or more of the Fund's shares present at a meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (ii) more than 50% of the Fund's outstanding shares,
whichever is less.

The Fund may not:

1. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to
secure permitted borrowings;

2. Participate on a joint or joint and several basis in any securities trading
account;

3. Invest in companies for the purpose of exercising control;

4. Make short sales of securities or maintain a short position, unless at all
times when a short position is open 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 issue as, and equal in
amount to, the securities sold short ('short sales against the box'), and unless
not more than 10% of the Fund's net assets (taken at market value) is held as
collateral for such sales at any one time (it is the Fund's present intention to
make such sales only for the purpose of deferring realization of gain or loss
for Federal income tax purposes);

5. Purchase a security if, as a result (unless the security is acquired pursuant
to a plan of reorganization or an offer of exchange), the Fund would own any
securities of an open-end investment company or more than 3% of the value of the
Fund's total assets would be invested in securities of any closed-end investment
company or more than 10% of such value in closed-end investment companies in
general; or

6. (a) purchase or sell commodities or commodity contracts; (b) invest in
interests in oil, gas, or other mineral exploration or development programs; (c)
purchase securities on margin, except for such short-term credits as may be
necessary for the clearance of transactions and except for borrowings in an
amount not exceeding 10% of the value of the Fund's total assets; or (d) act as
an underwriter of securities, except that the Fund may acquire restricted
securities under circumstances in which, if such securities were sold, the Fund
might be deemed to be an underwriter for purposes of the Securities Act.

The Fund has made the following undertakings with state securities commissions:
(1) it will invest no more than 5% of its total assets in securities of

<PAGE>
<PAGE>
companies (including predecessors) that have been in continuous operation for
less than 3 years (except that such limitation shall not apply to securities of
real estate investment trusts); (2) it will not make direct investments in oil,
gas or other mineral leases; (3) it will not purchase or sell real property
(including limited partnership interests except that the Fund may purchase
publicly traded limited partnerships or master limited partnerships); (4) it
will not engage in options and futures trading; (5) it will not purchase
securities of any issuer if the officers, directors and the Adviser of the Fund
owning beneficially more than one-half of one percent of the securities of an
issuer together own beneficially more than five percent of the securities of
that issuer; (6) it will not invest more than five percent of its net assets in
illiquid securities as defined in the Fund's prospectus, provided, however, that
if the Adviser determines that it is in the best interest of the Fund to exceed
the five percent limit, the Fund will notify the Wisconsin Office of the
Commissioner of Securities and 'sticker' the Fund's prospectus in advance of the
effective date of such change disclosing that such activity is speculative and
involves relatively greater risk and cost to the shareholders; and (7) it will
invest only in REITs that are traded on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ national market system.

- --------------------------------------------------------------------------------
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.

<S> <C> <C>
*Robert H. Steers ............... Director, Chairman Chairman of Cohen & Steers Capital Management, Inc., the
757 Third Avenue Fund's investment adviser, since 1986. Chairman and
New York, New York President of Cohen & Steers Securities, Inc. since
1991.

*Martin Cohen ................... Director, President President of Cohen & Steers Capital Management, Inc.,
757 Third Avenue the Fund's investment adviser, since 1986. Senior Vice
New York, New York President of Cohen & Steers Securities, Inc. since
1991.

Gregory C. Clark ................ Director Principal of Wellspring Management Group since 1990.
P.O. Box 5697
Snowmass Village,
Colorado

George Grossman ................. Director Attorney at law.
17 Elm Place
Rye, New York
</TABLE>

<TABLE>
<CAPTION>
NAME AND ADDRESS OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- --------------------------------- ------------------- --------------------------------------------------------
<S> <C> <C>
Jeffrey H. Lynford .............. Director Chairman of Wellsford Group Inc. since 1986 and of
610 Fifth Avenue Wellsford Residential Property Trust since 1992. Mr.
New York, New York Lynford is also a Trustee of the National Trust for
Historic Preservation.

Elizabeth O. Reagan ............. Vice President Senior Vice President of Cohen & Steers Capital
757 Third Avenue Management, Inc., the Fund's investment adviser,
New York, New York since 1996 and prior to that Vice President of Cohen
& Steers Capital Management, Inc. since 1990. Ms.
Reagan has also been Vice President of Cohen & Steers
Securities, Inc. since 1991.
</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, 1995. Officers of the Fund and Directors who are
interested persons of the Fund do not receive any compensation from the Fund or
any other fund in the fund complex which is a U.S. registered investment
company. 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.

<TABLE>
<CAPTION>
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1995
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
AGGREGATE BENEFITS ANNUAL FROM REGISTRANT
COMPENSATION ACCRUED AS BENEFITS AND FUND
FROM PART OF FUND UPON COMPLEX PAID TO
NAME OF PERSON, POSITION REGISTRANT EXPENSES RETIREMENT DIRECTORS
- --------------------------------------------------- ------------ ------------- ----------- ---------------
<S> <C> <C> <C> <C>
Gregory C. Clark*, Director........................ $7,500 N/A N/A $22,500(3)
Martin Cohen**, Director and President............. 0 N/A N/A 0
George Grossman*, Director......................... 7,500 N/A N/A 22,500(3)
Arlen Kantarian*`D', Director...................... 6,500 N/A N/A 19,500(3)
Jeffrey H. Lynford*, Director...................... 7,500 N/A N/A 22,500(3)
Robert H. Steers**, Director and Chairman.......... 0 N/A N/A 0
</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.

`D' Resigned from the Board of Directors on December 6, 1995.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

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. Mr. Cohen and Mr. Steers may be deemed 'controlling persons' of the
Adviser on the basis of their ownership of the Adviser's stock.

Certain other clients of the Adviser may have investment objectives and policies
similar to those of the Fund. The Adviser may, from time to time, make
recommendations which result in the purchase or sale of a particular security by
its other clients simultaneously with the Fund. If transactions on behalf of
more than one client during the same period increase the demand for securities
being sold there may be an adverse effect on price. It is the policy of the
Adviser to allocate advisory recommendations and the placing of orders in a
manner which is deemed equitable by the Adviser to the accounts involved,
including the Fund. When two or more of the clients of the Adviser (including
the Fund) are purchasing or selling the same security on a given day through the
same broker-dealer, such transactions may be averaged as to price.

Pursuant to an investment advisory agreement (the 'Advisory Agreement'), the
Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, executes the purchase
and sale orders for the portfolio transactions of the Fund and generally manages
the Fund's investments in accordance with the stated policies of the Fund,
subject to the general supervision of the Board of Directors of the Fund.

Under the Advisory Agreement, the Fund will pay the Adviser a monthly management
fee in an amount equal to 1/12th of .85% of the average daily value of the net
assets of the Fund (approximately .85% on an annual basis). During the years
ended December 31, 1995, 1994 and 1993, the Adviser received a management fee
from the Fund in the amount of $4,956,723 $2,752,145 and $868,251, respectively
(net of a waiver of the management fee in the amount of $0, $0 and $133,865,
respectively). In addition, under the Advisory Agreement, the Adviser will pay
the Fund the amount, if any, by which the Fund's operating expenses for the
preceding quarter (exclusive of interest, taxes, brokerage, distribution
expenditures and extraordinary expenses, all to the extent permitted by
applicable state securities laws and regulations) which in any given year exceed
the most restrictive applicable state expense limitation prescribed by any state
in which the Fund's shares are qualified for sale. The Fund may not qualify its
shares for sale in every state. The Fund believes that presently the most
restrictive expense ratio limitation imposed by any state is 2.5% of the first
$30 million of the Fund's average net assets, 2.0% of the next $70 million of
its average net assets and 1.5% of its average net assets in excess of $100
million. Expense reimbursements, if any, are accrued daily and paid monthly. No
such reimbursements were accrued or paid with respect to the fiscal year ended
December 31, 1995.

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

<PAGE>
<PAGE>
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 June 5, 1991 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 and by the sole initial shareholder of the Fund on June 14, 1991.
The Advisory Agreement was approved by the shareholders of the Fund at their
first annual meeting held on April 28, 1992.

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 was most recently so approved by the Directors
at their meeting held on December 6, 1995.

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

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, N.A. ('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 terms of the Administration Agreement, the Fund
pays Chase a monthly administration fee at the annual rate of .08% on the first
$500 million of the Fund's average daily net assets and at lower rates on the
Fund's average daily net asssets 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.'

For the years ending December 31, 1994 and 1993 the Fund's prior Administrator
received an administration fee from the Fund in the amount of $326,609 (net of
reimbursement of $162,177) and $114,287 (net of reimbursement of $66,509),
respectively. For the year ended December 31, 1995, the Adviser received an
Administration fee from the fund in the amount of $61,772 and Chase received a
sub-administration fee from the Fund in the amount of $688,290 (net of waivers
of $117,113).

The Administration Agreement is terminable by either party on sixty days'
written notice to the other. The Administration Agreement provides that in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Administrator, or of reckless disregard of its obligations thereunder, U.S.
Trust shall not be liable for any action or failure to act in accordance with
its duties thereunder.

- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------

Net asset value per share is determined by the Fund on each day the New York
Stock Exchange is open for trading, and on any other day during which there is a
sufficient degree of trading in the investments of the Fund to affect materially
the Fund's net asset value. The New York Stock Exchange is closed on Saturdays,
Sundays, and on New Years' Day, Presidents' Day (the third Monday in February),
Good Friday, Memorial Day (the last Monday in May), Independence Day, Labor Day
(the first Monday in September), Thanksgiving Day and Christmas 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

<PAGE>
<PAGE>
Exchange is closed the following Monday. No redemptions will be made on Martin
Luther King Day (the third Monday in January), Columbus Day (the second Monday
in October) and Veteran's Day, nor on any of the Holidays.

For purposes of determining the Fund's net asset value per share, all assets and
liabilities initially expressed in foreign currencies will be converted into
United States dollars at the mean of the bid and asked prices of such currencies
against the United States dollar last quoted by a major bank which is a regular
participant in the institutional foreign exchange markets or on the basis of a
pricing service which takes into account the quotes provided by a number of such
major banks.

- --------------------------------------------------------------------------------
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected in the discretion of the Board of Directors
of the Fund and taken at their value used in determining the Fund's net asset
value per share as described in the Prospectus under 'Determination of Net Asset
Value'), or partly in cash and partly in portfolio securities. However, payments
will be made wholly in cash unless the Board of Directors believes that economic
conditions exist which would make such a practice detrimental to the best
interests of the Fund. If payment for shares redeemed is made wholly or partly
in portfolio securities, brokerage costs may be incurred by the investor in
converting the securities to cash. The Fund will not distribute in kind
portfolio securities that are not readily marketable. The Fund has filed a
formal election with the Securities and Exchange Commission pursuant to which
the Fund will only effect a redemption in portfolio securities where the
particular stockholder of record is redeeming more than $250,000 or 1% of the
Fund's total net assets, whichever is less, during any 90-day period. In the
opinion of the Adviser, however, the amount of a redemption request would have
to be significantly greater than $250,000 or 1% of total net assets before a
redemption wholly or partly in portfolio securities was made.

- --------------------------------------------------------------------------------
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------

Subject to the supervision of the Directors, decisions to buy and sell
securities for the Fund and negotiation of its brokerage commission rates are
made by the Adviser. Transactions on United States stock exchanges involve the
payment by the Fund of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market but the price paid by the Fund usually includes an undisclosed dealer
commission or mark-up. In certain instances, the Fund may make purchases of
underwritten issues at prices which include underwriting fees.

In selecting a broker to execute each particular transaction, the Adviser will
take the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; and the value of the expected contribution of
the broker to

<PAGE>
<PAGE>
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.

For the years ended December 31, 1995, 1994 and 1993, the Fund paid a total of
$3,021,179, $3,049,221 and $637,716 in brokerage commissions with respect to
portfolio transactions aggregating $553,557,388, $490,721,086 and $188,733,911,
respectively. Of such amount, $572,896, $622,809 and $241,115 in brokerage
commissions with respect to portfolio transactions aggregating $104,969,223,
$100,230,685 and $71,341,418, respectively, was placed with brokers or dealers
who provide research and investment information. The Fund's annualized portfolio
turnover rate for the fiscal year ended December 31, 1995 was 22.7%.

- --------------------------------------------------------------------------------
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

<PAGE>
<PAGE>
derived with respect to its business of investing in such stock, securities or
currencies; (b) derive less than 30% of its gross income from the sale or other
disposition of certain assets (namely, (i) stock or securities, (ii) options,
futures, and forward contracts (other than those on foreign currencies), and
(iii) foreign currencies (including options, futures, and forward contracts on
such currencies) not directly related to the Fund's principal business of
investing in stock or securities (or options and futures with respect to stocks
or securities)) held less than 3 months; (c) diversify its holdings so that, at
the end of each quarter of the taxable year, (i) at least 50% of the market
value of the Fund's assets is represented by cash and cash items (including
receivables), U.S. Government securities, the securities of other regulated
investment companies and other securities, with such other securities of any one
issuer limited for the purposes of this calculation to an amount not greater
than 5% of the value of the Fund's total assets and not greater than 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or the securities of other regulated investment
companies); and (d) distribute at least 90% of its investment company taxable
income (which includes, among other items, dividends, interest and net
short-term capital gains in excess of net long-term capital losses) each taxable
year.

As a regulated investment company, the Fund generally will not be subject to
U.S. federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. The Fund intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that was not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by the Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the following calendar year. Such distributions will be
taxable to shareholders in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are received.
To prevent application of the excise tax, the Fund intends to make its
distributions in accordance with the calendar year distribution requirement.

- --------------------------------------------------------------------------------

DISTRIBUTIONS

Dividends paid out of the Fund's investment company taxable income will be
taxable to a U.S. shareholder as ordinary income. Because a portion of the
Fund's income may consist of dividends paid by U.S. corporations, a portion of
the dividends paid by the Fund may be eligible for the corporate dividends-
received deduction. Distributions of net capital gains, if any, designated as
capital gain dividends are taxable as long-term capital gains, regardless of how
long the shareholder has held the Fund's shares, and are not eligible for the
dividends-received deduction. Shareholders receiving distributions in the form
of

<PAGE>
<PAGE>
additional shares, rather than cash, generally will have a cost basis in each
such share equal to the net asset value of a share of the Fund on the
reinvestment date. 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.

- --------------------------------------------------------------------------------

CURRENCY FLUCTUATIONS -- 'SECTION 988' GAINS OR LOSSES

Under the Code, gains or losses attributable to fluctuations in exchange rates
which occur between the time the Fund accrues receivables or liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables, or pays such liabilities, generally are treated as ordinary income
or ordinary loss. Similarly, on disposition of debt securities denominated in a
foreign currency, gains or losses attributable to fluctuations in the value of
foreign currency between the date of acquisition of the security 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 lncome.

- --------------------------------------------------------------------------------

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.

- --------------------------------------------------------------------------------

INVESTMENTS IN REAL ESTATE INVESTMENT TRUSTS

The Fund may invest in real estate investment trusts ('REITs') that hold
residual interests in real estate mortgage investment conduits ('REMICs'). Under
Treasury regulations that have not yet been issued, but may apply retroactively,
a portion of the Fund's income from a REIT that is attributable to the REIT's
residual interest in a REMIC (referred to in the Code as an 'excess inclusion')
will be subject to federal income tax in all events. These regulations are also
expected to provide that excess inclusion income of a regulated investment
company, such as the Fund, will be allocated to shareholders of the regulated
investment company in proportion to the dividends received by such shareholders,
with the same consequences as if the shareholders held the related REMIC
residual interest directly. In general, excess inclusion income allocated to
shareholders (i) cannot be offset by net operating losses (subject to a limited
exception for certain thrift institutions), (ii) will constitute unrelated
business taxable income to entities (including a qualified pension plan, an
individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt
entity) subject to tax on unrelated business income, thereby potentially
requiring such an entity that is allocated excess inclusion income, and
otherwise might not be

<PAGE>
<PAGE>
required to file a tax return, to file a tax return and pay tax on such income,
and (iii) in the case of a foreign shareholder, will not qualify for any
reduction in U.S. federal withholding tax. In addition, if at any time during
any taxable year a 'disqualified organization' (as defined in the Code) is a
record holder of a share in a regulated investment company, then the regulated
investment company will be subject to a tax equal to that portion of its excess
inclusion income for the taxable year that is allocable to the disqualified
organization, multiplied by the highest federal income tax rate imposed on
corporations. The Adviser does not intend on behalf of the Fund to invest in
REITs, a substantial portion of the assets of which consists of residual
interests in REMICs.

- --------------------------------------------------------------------------------

PASSIVE FOREIGN INVESTMENT COMPANIES

If the Fund invests in stock of certain foreign investment companies, the Fund
may be subject to U.S. federal income taxation on a portion of any 'excess
distribution' with respect to, or gain from the disposition of, such stock. The
tax would be determined by allocating such distribution or gain ratably to each
day of the Fund's holding period for the stock. The distribution or gain so
allocated to any taxable year of the Fund, other than the taxable year of the
excess distribution or disposition, would be taxed to the Fund at the highest
ordinary income tax 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.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

BACKUP WITHHOLDING

The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Corporate shareholders and certain other shareholders
specified in the Code generally are exempt from such backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against the shareholder's U.S. federal income tax liability.

- --------------------------------------------------------------------------------

FOREIGN SHAREHOLDERS

U.S. taxation of a shareholder who, as to the United States, is a nonresident
alien individual, a foreign trust or estate, a foreign corporation or foreign
partnership ('foreign shareholder') depends on whether the income of the Fund is
'effectively connected' with a U.S. trade or business carried on by the
shareholder.

Income Not Effectively Connected. If the income from the Fund is not
'effectively connected' with a U.S. trade or business carried on by the foreign
shareholder, distributions of investment company taxable income will be subject
to a U.S. tax of 30% (or lower treaty rate, except in the case of any excess
inclusion income allocated to the shareholder (see 'Taxation -- Investments in
Real Estate Investment Trusts,' above)), which tax is generally withheld from
such distributions.

Distributions of capital gain dividends and any amounts retained by the Fund
which are designated as undistributed capital gains will not be subject to U.S.
tax at the rate of 30% (or lower treaty rate) unless the foreign shareholder is
a nonresident alien individual and is physically present in the United States
for more than 182 days during the taxable year and meets certain other
requirements. However, this 30% tax on capital gains of nonresident alien
individuals who are physically present in the United States for more than the
182-day period only applies in exceptional cases because any individual present
in the United States for more than 182 days during the taxable year is generally
treated as a resident for U.S. income tax purposes; in that case, he or she
would be subject to U.S. income tax on his or her worldwide income at the
graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In
the case of a foreign shareholder who is a nonresident alien individual, the
Fund may be required to withhold U.S. income tax at a rate of 31% of
distributions of net capital gains unless the foreign shareholder 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

<PAGE>
<PAGE>
Fund, U.S. real property interests include interests in stock in U.S. real
property holding corporations (other than stock of a REIT controlled by U.S.
persons and holdings of 5% or less in the stock of publicly traded U.S. real
property holding corporations) and certain participating debt securities.

Income Effectively Connected. If the income from the Fund is 'effectively
connected' with a U.S. trade or business carried on by a foreign shareholder,
then distributions of investment company taxable income and capital gain
dividends, any amounts retained by the Fund which are designated as
undistributed capital gains and any gains realized upon the sale or exchange of
shares of the Fund will be subject to U.S. income tax at the graduated rates
applicable to U.S. citizens, residents and domestic corporations. Foreign
corporate shareholders may also be subject to the branch profits tax imposed by
the Code.

The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty may differ from those described herein. Foreign
shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Fund.

- --------------------------------------------------------------------------------

OTHER TAXATION

Fund shareholders may be subject to state, local and foreign taxes on their Fund
distributions. Shareholders are advised to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the Fund.

- --------------------------------------------------------------------------------
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
- --------------------------------------------------------------------------------

The Fund was incorporated on April 26, 1991 as a Maryland corporation and is
authorized to issue 50,000,000 shares of Common Stock, $.001 par value. The
Fund's shares have no preemptive, conversion. exchange or redemption rights.
Each share has equal voting, dividend, distribution and liquidation rights. All
shares of the Fund, when duly issued, will be fully paid and nonassessable.
Shareholders are entitled to one vote per share. All voting rights for the
election of directors are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Directors then nominated for
election if they choose to do so and, in such event, the holders of the
remaining shares will not be able to elect any Directors. The foregoing
description is subject to the provisions contained in the Fund's Articles of
Incorporation and By-Laws.

The Board of Directors is authorized to reclassify and issue any unissued shares
of the Fund without shareholder approval. Accordingly, in the future, the
Directors may create additional series of shares with different investment
objectives, policies or restrictions. Any issuance of shares of another class
would he governed by the 1940 Act and Maryland law.

At March 4, 1996, there were 25,169,952 shares of the Fund's common stock
outstanding. At such date the Directors and officers as a group beneficially
owned, directly or indirectly, including the power to vote or to dispose of,
less than 1% of the outstanding shares of the Fund. Also as of that date, the
following persons owned of record 5% or more of the Fund's Shares:.

CHARLES SCHWAB & CO. INC.
101 Montgomery Street
San Francisco, CA 94104
Percentage of Total: 61.59%

NATIONAL FINANCIAL SERVICES CORP.
P.O. Box 3908
Church Street Station
New York, NY 10003
Percentage of Total: 8.97%

LELAND STANFORD JUNIOR UNIVERSITY
2770 Sand Hill Road
Menlo Park, CA 94025
Percentage of Total: 5.26%

- --------------------------------------------------------------------------------
DISTRIBUTOR
- --------------------------------------------------------------------------------

Cohen & Steers Securities, Inc., an affiliate of the Adviser, serves without
charge as the Distributor of shares of the Fund. Cohen & Steers Securities, Inc.
is not obligated to sell any specific amount of shares and will sell shares, as
agent for the Fund, on a continuous basis only against orders to purchase
shares.

Chase, which has its principal business at 770 Broadway, New York, New York
10003 has been retained to act as Custodian of the Fund's investments and as the
Fund's transfer and dividend disbursing agent. Chase Global Funds Services Co.,
a wholly-owned subsidiary of Chase, has been retained by Chase to provide the
Fund's transfer and dividend disbursing agency services and serves as the Fund's
Transfer and Dividend Disbursing Agent. Chase Global Funds Services Co. has its
principal business at 73 Tremont Street, Boston, Massachusetts 02108-3913.
Neither Chase nor Chase Global Funds Services Co. determines the investment
policies of the Fund or decides which securities the Fund will buy or sell.

- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------

From time to time, the Fund may quote the Fund's total return in advertisements
or in reports and other communications to shareholders. The Fund's performance
will vary from time to time depending upon market conditions, the composition of
its portfolio and its operating expenses. Consequently, any given performance
quotation should not be considered representative of the Fund's performance for
any specified period in the future. In addition, because performance will
fluctuate, it may not provide a basis for comparing an investment in the Fund
with certain bank deposits or other investments that pay a fixed yield for a
stated period of time. Investors comparing the Fund's performance with that of
other mutual funds should give consideration to the quality and maturity of the
respective investment companies' portfolio securities.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURN
The Fund's 'average annual total return' figures described in the Prospectus are
computed according to a formula prescribed by the SEC. The formula can be
expressed as follows:

P(1 + T)`PP'n = ERV

<TABLE>
<S> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at the beginning of a 1-, 5-,
or 10-year period at the end of a 1-, 5-, or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
</TABLE>

The Fund's average annual total return for the year ended December 31, 1995 and
for the period from July 2, 1991 (commencement of operations) to December 31,
1995 was 11.13% and 14.68%, respectively.

- --------------------------------------------------------------------------------

AGGREGATE TOTAL RETURNS
The Fund's aggregate total return figures described in the Prospectus represent
the cumulative change in the value of an investment in the Fund for the
specified period and are computed by the following formula.

AGGREGATE TOTAL RETURN = ERV - P
------
P

<TABLE>
<S> <C> <C>
Where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at the beginning of the 1-, 5-
or 10-year period at the end of the 1-, 5- or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
</TABLE>

- --------------------------------------------------------------------------------

YIELD

Quotations of yield for the Fund will be based on all investment income per
share earned during a particular 30-day period (including dividends and
interest), less expenses accrued during the period ('net investment income') and
are computed by dividing net investment income by the maximum offering price per
share on the last day of the period, according to the following formula:

<TABLE>
<S> <C> <C>
Where: a = dividends and interest earned during the period,
b = expenses accrued for the period (net of reimbursements),
c = the average daily number of shares outstanding during the period that were entitled to receive
dividends, and
d = the maximum offering price per share on the last day of the period.
</TABLE>

<PAGE>
<PAGE>
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.)

- --------------------------------------------------------------------------------
COUNSEL AND INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

Legal matters in connection with the issuance of the shares of the Fund offered
hereby will be passed upon by Dechert Price & Rhoads, 477 Madison Avenue, New
York, New York 10022. Dechert Price & Rhoads has relied on the opinion of
Venable, Baetjer and Howard, 1800 Mercantile Bank & Trust Building, 2 Hopkins
Plaza, Baltimore, Maryland 21201, for matters relating to Maryland law.

Coopers & Lybrand L.L.P., 1301 Ave of the Americas, New York, New York 10019
have been appointed as independent accountants for the Fund.

- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

The Fund's audited financial statements for the year ended December 31, 1995,
including notes thereto, are incorporated by reference in this Statement of
Additional Information from the Fund's Annual Report dated as of December 31,
1995.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

February 6, 1996

To Our Shareholders:

We are pleased to submit to you the annual report for Cohen & Steers Realty
Shares, Inc. for the year ended December 31, 1995. The net asset value per share
at that date was $34.62. In addition, a distribution of $0.57 per share
(including a regular $0.43 per share distribution plus a $0.14 extra
distribution representing additional income earned during the year) was declared
for shareholders of record December 26, 1995 and paid on December 27, 1995.

1995 REVIEW

The year just ended can best be characterized as one in which balance
returned to nearly every aspect of the real estate and real estate securities
markets. The total investment return of REITs in 1995 was both satisfactory and
above their long-term record; for the past ten years REITs have produced average
annual total returns of 10.3%. The Fund's total return for 1995 based on income
and change in net asset value was 11.1%. In addition, returns from direct real
estate were the highest in seven years.

Many investors, however, have expressed disappointment over recent REIT
performance because it lagged, by a considerable margin, the unusually high
returns registered by the stock (+37.6%) and long-term bond (+34.2%) markets.
While many observers have gone to great lengths to try to explain the
performance of REITs relative to other financial market assets, we believe that
REIT returns were very much in line with what should be rationally expected.
Importantly, in our opinion, 1995 performance substantiated the low correlation
between REIT returns and interest rates and it further demonstrated the low
volatility that is characteristic of REITs. The low 'beta' of REITs in general,
and our portfolio in particular, would imply relative returns that are in line
with those achieved in 1995.

The performance of REITs in 1995 reflects the balanced supply/demand
situation which exists in today's real estate markets between both landlords and
tenants and buyers and sellers of property. Vacancy rates for most major
property types have declined and market rents have risen as the economy has
grown and new development has been held in check. This improvement in real
estate conditions has resulted in the return of liquidity to the real estate
markets, an increase in transactions and, therefore, a reversion of investment
returns to a more normal level. Naturally, investment returns were not uniform
among the various property sectors as shown in the table below.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
1995 TOTAL INVESTMENT RETURNS OF MAJOR SECTORS*
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
All Equity REITs.............................. 15.3% Office REITs.................................. 38.8%
Apartment REITs............................... 12.3 Self Storage REITs............................ 34.9
Health Care REITs............................. 24.9 Shopping Center REITs......................... 5.1
Hotel REITs................................... 30.8 S&P 500 Index................................. 37.6
Industrial REITs.............................. 15.9 Long-term Treasury............................ 34.2
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

*Source: National Association of Real Estate Investment Trusts, Inc.

- --------------------------------------------------------------------------------
1

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

Our underperformance of the NAREIT Equity REIT Index in 1995 was a direct
result of our heavier than average weighting in owners of shopping centers. At
the beginning of the year we had expected the economy to experience moderate
growth which would translate into a good year for owners of retail properties.
Although the companies in our portfolio actually did experience healthy cash
flow growth, uncertainties surrounding the retail environment, particularly
towards year end, caused the share price performance of shopping center owners
to lag that of most other property types. We were also somewhat overweighted in
the apartment sector. Again, our companies experienced strong cash flow growth
but fears of increasing development activity suppressed the share prices of many
apartment-owning REITs.

The better performing sectors during 1995 tended to be either somewhat less
mainstream areas or ones which have a limited number of companies available in
the public market but are enjoying extremely strong fundamentals. These include
owners of office, hotel and self-storage facilities. Of the $1.0 billion in
initial public offerings of REITs underwritten during 1995, over 80% were in the
storage and hotel sectors. Most of the balance of the $5.7 billion of common
equity raised by REITs during 1995 was in the form of secondary stock offerings,
essentially by the better-positioned companies that used the proceeds primarily
to retire debt or finance property acquisitions. Here too, on the underwriting
side, balance was restored to the REIT market as equity offerings were completed
by high-quality companies and in amounts that satisfied but did not overwhelm
demand.

In summary, 1995 represented a year of great balance with regard to real
estate fundamentals, the supply and demand for properties, and the supply and
demand for REIT shares. This, in turn, led to investment returns which were in
line with historic trends.

1996 OUTLOOK

While we have maintained that interest rates alone do not exert the most
influence on REIT share prices, we believe that as we start 1996, the single
most important element in both the real estate and REIT picture is the
prevailing level of interest rates. With long-term treasury bond rates at around
the 6% level and credit readily available, we believe the real estate industry
is faced with a financing opportunity not seen in decades. Whereas the last time
interest rates were at this level (more than two years ago) REITs began a period
of below-average performance, the financial market and valuation conditions were
considerably different than they are today, as shown in the following table.

- --------------------------------------------------------------------------------
2

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
OCTOBER 1993 DECEMBER 1995
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
30-year Treasury Yield............................................................. 5.96% 5.96%
10-year Treasury Yield............................................................. 5.43% 5.58%
S&P 500 Dividend Yield............................................................. 2.68% 2.24%
Equity REIT Dividend Yield......................................................... 6.16% 7.37%
divided by 30-year Treasury Yield............................................ 1.04 1.24
divided by 10-year Treasury Yield............................................ 1.13 1.32
divided by S&P 500 Yield..................................................... 2.30 3.29
S&P 500 P/E Ratio.................................................................. 24.20 17.51
Equity REIT Market Capitalization.................................................. $27.6 billion $46.7 billion
Assets in Real Estate Mutual Funds................................................. $1.0 billion $2.2 billion
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The last time long-term interest rates were at today's level equity REITs
had completed almost three years of exceptional returns and were trading at
valuation levels, based on dividend yields, which were unsustainably high on an
absolute basis, albeit still attractive relative to the stock and bond markets.
In contrast, at the end of 1995 equity REIT yields were considerably higher on
an absolute basis; relative to stocks and bonds REITs were trading at an
historically low valuation level. In our opinion, one important difference is
that although interest rates were quite low in 1993, there was not a great
amount of mortgage debt available to the real estate industry. In addition,
because many REITs were newly formed, the credit markets were not yet fully open
to these companies. Currently, because of the return to health of the real
estate industry, mortgage lenders are once again actively making loans and the
commercial mortgage-backed securities market is enjoying significant growth.
Further, the maturation of the REIT industry over the past several years has
opened the credit markets to many companies for a wide spectrum of corporate
debt instruments. In 1995, REITs raised approximately $2.6 billion in such
capital, nearly double what was raised in 1994.

With income returns (or 'capitalization rates') on property purchases
higher today than they were in 1993 and debt financing now more readily
available, we believe that the current environment for acquisitions is the most
advantageous in a generation. We believe that a continuation of the present low
interest rate environment is likely to precipitate a great deal of acquisition
activity and eventually cause property values to rise. Low interest rates are of
particular benefit to the REIT industry today which, unlike in 1993, is much
larger, more mature, dominated by strong and proven companies and better
accepted by investors at large. While the cost of equity financing may vary
based on the way it is computed, we believe that there is no calculation which
can show that cost to be less expensive than the cost of debt capital. It is
therefore our belief that those companies which either fail to take advantage of
today's borrowing opportunity or choose to sell equity in anything but a
judicious manner will find that their stock prices suffer as a result.

- --------------------------------------------------------------------------------
3

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

In summary, in our opinion there are three important underpinnings that the
low current interest rate environment provides to the REIT industry. Mortgage
interest rates, which are influenced by long-term bond yields, and are well
below the income returns available in the property markets, provide an
exceptional financing opportunity for acquisitions and therefore a strong
foundation for property values. Second, those companies that properly take
advantage of current financing opportunities may be expected to enjoy an
increase in their growth rates and share prices. And third, because REIT
dividend yields are currently significantly higher than other financial market
yields this should attract investors and provide strong support for REIT share
prices.

Our investment strategy for 1996 will focus on our ability to invest in
those sectors that we believe show the strongest fundamentals along with those
companies whose valuations have declined to what we consider to be unwarranted
levels. We anticipate a continuation of moderate economic growth due to what
appears to be a bias towards monetary stimulus by the Federal Reserve and a lack
of excesses in the economy. As a result, we believe that our holdings in the
shopping center sector are likely to achieve healthy profit growth. In addition,
consolidation of the retail industry may well provide the stronger companies
with uncommon re-leasing, upgrading and acquisition opportunities. Further, with
Wall Street almost unanimously negative on the shopping center sector, we
believe that nearly all the bad news has been adequately factored into share
prices. Similarly, apartments are likely to be our next highest weighting due to
the continuing improvement that we expect to see in rental rates. Although there
is some apartment construction taking place, it is at a rate which we believe
cannot meet the underlying demand for rental housing. We are increasingly
attracted to the office sector, which has been the last major property type to
stage a recovery and where high-quality acquisition opportunities may still be
plentiful. We also expect both occupancy and rent growth to accelerate in the
next five years in the office sector.

While a return to normal and stable conditions in the real estate industry
is welcomed by most, it has resulted in a market environment which is more
competitive and efficient. We nonetheless remain confident in our investment
strategy and security selection criteria. Ultimately, we expect this to result
in superior investment results.

Sincerely,

<TABLE>
<S> <C>
MARTIN COHEN ROBERT H. STEERS
MARTIN COHEN ROBERT H. STEERS
President Chairman
</TABLE>

- --------------------------------------------------------------------------------
4

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

Performance Review
The investment objective of Cohen & Steers Realty Shares, Inc. is total
return through investment in real estate securities. The Fund pursues its
investment objective by seeking both current income and capital appreciation.
Securities in the portfolio are selected by the adviser based on the outlook for
various property types and regions of the country, and fundamental research on
the individual companies. Among the investment criteria applied to individual
companies are organizational structure, management depth, track record of
profitability, balance sheet strength and growth potential.

The Fund's investment performance in 1995 was exceeded by that of its
benchmarks and the stock market in general. Real estate securities (and the
Fund) underperformed the stock market in general in 1995, in the adviser's view,
due to the slower than expected growth of the economy, particularly the retail
sector, and consequently, shopping center REITs. In comparison to real estate
securities benchmarks, the Fund's underperformance is attributable to its
heavier than average weighting in the underperforming shopping center REITs. The
Fund has also emphasized companies specialized in the ownership of apartments
which experienced strong cash flow growth but whose share prices were suppressed
due to fears of increasing development activity.

Notwithstanding the performance of the Fund in 1995, its cumulative return
since its inception in 1991 has comfortably exceeded that of its benchmarks and
has been competitive with that of the stock market in general.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
FOR PERIODS ENDED DEC. 31, 1995

1 YEAR SINCE INCEPTION 7/2/91
-------- ----------------------
<C> <C>
Fund 11.13% 14.68%
NAREIT All 15.27% 12.76%
Wilshire 13.65% 8.03%
S&P 500 37.57% 15.13%
</TABLE>

<TABLE>
<CAPTION>
7/2/91 12/31/91 12/31/92
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cohen & Steers Reality Share, Inc. 10000.0 10112.0 10792.0 10962.0 11226.0 12111.0 12959.0 15615.0 15014.0 16523.0
Nareit All Reit Index 10000.0 10396.0 10823.0 10930.0 11170.0 11723.0 12142.0 14462.0 14056.0 15304.0
Wilshire Real Estate Securities Index 10000.0 9725.00 9906.00 10121.0 9692.00 9988.00 10680.0 12779.0 12176.0 13258.0
S&P 500 10000.0 10535.0 11418.0 11129.0 11340.0 11698.0 12287.0 12824.0 12887.0 13219.0

<CAPTION>
12/31/93 12/31/94 12/31/95

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cohen & Steers Reality Share, Inc. 15389.0 16314.0 16517.0 16219.0 16669.0 16268.0 16996.0 17910.0 18523.0
Nareit All Reit Index 14394.0 14723.0 14935.0 14675.0 14515.0 14677.0 15645.0 16421.0 17173.0
Wilshire Real Estate Securities Index 12308.0 12585.0 12735.0 12542.0 12511.0 12558.0 13105.0 13726.0 14219.0
S&P 500 13526.0 13014.0 13068.0 13707.0 13704.0 15038.0 16474.0 17784.0 18854.0

</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.

`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 Index of All REITs is comprised of 219 real estate investment
trusts. The Wilshire Real Estate Securities Index is comprised of 117
companies operating in the real estate industry and includes REITs. This
index does not include REITs with investments in health care facilities,
which as a group have produced investment returns in recent years higher
than the market as a whole. The Fund invests in REITs with investments in
health care facilities. 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.

- --------------------------------------------------------------------------------
5
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

SCHEDULE OF INVESTMENTS
DECEMBER 31, 1995

<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
EQUITIES 95.73%
APARTMENT 23.94%
Associated Estates Realty Corp.............................. 610,400 $ 13,123,600
Avalon Properties........................................... 1,005,500 21,618,250
Camden Property Trust....................................... 655,000 15,638,125
Charles E. Smith Residential Realty......................... 500,800 11,831,400
Colonial Properties Trust................................... 596,000 15,198,000
Columbus Realty Trust....................................... 546,400 10,586,500
Equity Residential Properties Trust......................... 216,200 6,621,125
Merry Land & Investment..................................... 1,066,000 25,184,250
Oasis Residential........................................... 662,300 15,067,325
Post Properties............................................. 833,400 26,564,625
Security Capital Pacific Trust.............................. 364,200 7,192,950
Summit Properties........................................... 314,700 6,254,662
United Dominion Realty Trust................................ 996,100 14,941,500
------------
189,822,312
------------
HEALTH CARE 7.15%
Health Care Property Investors.............................. 702,300 24,668,287
Nationwide Health Properties................................ 761,800 31,995,600
------------
56,663,887
------------
HOTEL 4.81%
*Bristol Hotel Co........................................... 126,600 3,085,875
Felcor Suite Hotels......................................... 400,400 11,111,100
Patriot American Hospitality................................ 441,300 11,363,475
Starwood Lodging Trust...................................... 423,500 12,599,125
------------
38,159,575
------------
INDUSTRIAL 8.05%
Duke Realty Investments..................................... 491,200 15,411,400
Liberty Property Trust...................................... 778,700 16,158,025
Security Capital Industrial Trust........................... 268,300 4,695,250
Spieker Properties.......................................... 489,300 12,293,663
`D'Weeks Corp............................................... 609,400 15,311,175
------------
63,869,513
------------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
6

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
OFFICE 12.11%
Beacon Properties Corp...................................... 487,500 $ 11,212,500
Cali Realty Corp............................................ 732,200 16,016,875
Carr Realty Corp............................................ 338,100 8,241,187
Cousins Properties.......................................... 931,700 18,866,925
Crescent Real Estate Equities............................... 453,000 15,458,625
Highwoods Properties........................................ 531,100 15,003,575
Reckson Associates Realty Corp.............................. 383,100 11,253,563
------------
96,053,250
------------
SELF STORAGE 2.34%
Shurgard Storage Centers.................................... 262,200 7,079,400
Storage USA................................................. 351,900 11,480,737
------------
18,560,137
------------
SHOPPING CENTER 37.33%
COMMUNITY CENTER 17.02%
Bradley Real Estate......................................... 484,300 6,538,050
Developers Diversified Realty Corp.......................... 898,600 26,958,000
Federal Realty Investment Trust............................. 1,205,500 27,425,125
Kimco Realty Corp........................................... 1,207,200 32,896,200
Price REIT, Series B........................................ 386,500 10,725,375
Sizeler Property Investors.................................. 112,100 994,888
Vornado Realty Trust........................................ 784,000 29,400,000
------------
134,937,638
------------
FACTORY OUTLET CENTER 2.39%
Chelsea GCA Realty.......................................... 305,300 9,159,000
HGI Realty.................................................. 40,000 915,000
`D'Tanger Factory Outlet Centers............................ 356,200 8,905,000
------------
18,979,000
------------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
7

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

SCHEDULE OF INVESTMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ------------
<S> <C> <C>
REGIONAL MALL 17.92%
CBL & Associates Properties................................. 589,700 $ 12,825,975
DeBartolo Realty Corp....................................... 1,609,400 20,922,200
Glimcher Realty Trust....................................... 1,105,400 19,068,150
`D'J.P. Realty.............................................. 834,300 18,250,313
Macerich Co................................................. 960,100 19,202,000
Rouse Co.................................................... 1,492,000 30,399,500
Simon Property Group........................................ 473,600 11,544,000
Taubman Centers............................................. 724,700 7,247,000
The Mills Corp.............................................. 125,300 2,130,100
Urban Shopping Centers...................................... 26,200 560,025
------------
142,149,263
------------
TOTAL SHOPPING CENTER....................................... 296,065,901
------------
TOTAL EQUITIES (Identified cost $710,748,829)......... 759,194,575
------------
</TABLE>

PRINCIPAL
AMOUNT
------------
<S> <C> <C>
COMMERCIAL PAPER 3.48%
General Electric Capital Corp., 5.20%, 1/2/96
(Identified cost $27,645,007)........................... $27,649,000 27,645,007
------------
TOTAL INVESTMENTS (Identified cost $738,393,836)............... 99.21% 786,839,582
OTHER ASSETS, LESS LIABILITIES................................. .79% 6,244,492
------ ------------
NET ASSETS (Equivalent to $34.62 per share based on 22,907,765
shares of capital stock outstanding)........................ 100.00% $793,084,074
------ ------------
------ ------------
</TABLE>

- ------------

* This security did not pay a dividend in 1995. Dividends are expected to
commence in 1996.

`D' The Fund owns 5% or more of this company's outstanding voting securities
(Note 5).

See notes to financial statements.
- --------------------------------------------------------------------------------
8

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (Identified cost $738,393,836) (Note 1).................. $786,839,582
Receivable for fund shares sold.............................................................. 4,458,419
Dividends receivable......................................................................... 4,982,953
Receivable for investment securities sold.................................................... 837,642
Unamortized organization costs and other assets (Note 1)..................................... 78,653
------------
Total Assets........................................................................... 797,197,249
------------
LIABILITIES:
Payable for investment securities purchased.................................................. 2,759,549
Payable to investment adviser................................................................ 554,672
Payable for fund shares redeemed............................................................. 381,140
Payable to administrator..................................................................... 182,493
Payable to custodian bank.................................................................... 25,644
Other liabilities............................................................................ 209,677
------------
Total Liabilities...................................................................... 4,113,175
------------
NET ASSETS applicable to 22,907,765 shares of $.001 par value common stock
outstanding (Note 4)............................................................................ $793,084,074
------------
------------
NET ASSET VALUE PER SHARE:
($793,084,074[div]22,907,765 shares outstanding)............................................. $ 34.62
------------
------------
NET ASSETS consist of:
Paid-in capital (Note 4)..................................................................... $736,108,375
Accumulated net realized gain on investments................................................. 8,529,953
Net unrealized appreciation on investments................................................... 48,445,746
------------
$793,084,074
------------
------------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
9

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Investment Income:
Dividend income............................................................................... $39,748,746
Interest income............................................................................... 2,050,938
-----------
Total Income............................................................................ 41,799,684
-----------
Expenses:
Investment advisory fees (Note 2)............................................................. 4,956,723
Administrative and transfer agent fees (Note 2)............................................... 1,113,329
Registration and filing fees.................................................................. 192,366
Custodian fees................................................................................ 154,159
Reports to shareholders....................................................................... 109,943
Professional fees............................................................................. 99,483
Directors' fees and expenses (Note 2)......................................................... 29,000
Amortization of organization expenses (Note 1)................................................ 27,598
Miscellaneous................................................................................. 83,192
-----------
Total Expenses.......................................................................... 6,765,793
Reduction of expenses (Notes 2 and 6)......................................................... (248,601)
-----------
Net Expenses............................................................................ 6,517,192
-----------
Net Investment Income............................................................................... 35,282,492
-----------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments.............................................................. (5,735,142)
Increase in unrealized appreciation on investments............................................ 41,783,548
-----------
Net realized and unrealized gain on investments......................................... 36,048,406
-----------
Net increase in net assets resulting from operations................................................ $71,330,898
-----------
-----------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
10

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------

<S> <C> <C>
Change in Net Assets:
From Operations:
Net investment income.................................. $ 35,282,492 $ 18,529,456
Net realized loss on investments....................... (5,735,142) (3,075,892)
Increase in unrealized appreciation on investments..... 41,783,548 3,511,446
----------------- -----------------
Net increase in net assets resulting from
operations.................................... 71,330,898 18,965,010
----------------- -----------------
Dividends and Distributions From:
Net investment income.................................. (25,186,847) (12,475,826)
Tax return of capital.................................. (9,488,813) (6,053,363)
----------------- -----------------
Total distributions to shareholders.............. (34,675,660) (18,529,189)
----------------- -----------------
Capital Stock Transactions (Note 4):
Increase in net assets from Fund share transactions.... 298,330,768 294,184,084
----------------- -----------------
Total increase in net assets..................... 334,986,006 294,619,905
Net Assets:
Beginning of year...................................... 458,098,068 163,478,163
----------------- -----------------
End of year............................................ $793,084,074 $458,098,068
----------------- -----------------
----------------- -----------------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
11

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, 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>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
PER SHARE OPERATING PERFORMANCE 1995 1994 1993 1992 1991*
- ---------------------------------------------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period................ $ 32.90 $ 31.92 $ 29.58 $ 26.55 $ 25.00
-------- -------- -------- ------- -------
Income from investment operations:
Net investment income......................... 1.86 1.66 1.29 1.51 0.88
Net realized and unrealized gains (losses) on
investments................................ 1.69 0.98 4.24 3.55 1.07
-------- -------- -------- ------- -------
Total from investment operations........ 3.55 2.64 5.53 5.06 1.95
-------- -------- -------- ------- -------
Less distributions from:
Net investment income......................... (1.33) (1.09) (1.27) (1.80) (0.40)
Realized gains on investments................. 0.00 0.00 (1.64) (0.18) 0.00
In excess of net realized gains............... 0.00 0.00 (0.04) 0.00 0.00
Tax return of capital......................... (0.50) (0.57) (0.24) (0.05) 0.00
-------- -------- -------- ------- -------
Total distributions..................... (1.83) (1.66) (3.19) (2.03) (0.40)
-------- -------- -------- ------- -------
Net asset value, end of period...................... $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------
Total investment return`D'.......................... 11.13% 8.31% 18.76% 20.09% 7.91%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in millions)....... $793.084 $458.098 $163.478 $49.481 $24.434
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratio of expenses to average daily net
assets(1).................................. 1.12% 1.14% 1.18% 1.25% 1.25%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Ratio of net investment income to average
daily net assets(1)........................ 6.05% 5.71% 4.57% 5.92% 7.48%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Portfolio turnover rate....................... 22.68% 39.00% 65.28% 14.81% 57.40%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
</TABLE>

- ------------------------

* For the period July 2, 1991 (commencement of operations) to December 31,
1991.
** Annualized.
`D' Total returns for periods of less than one year are not annualized.
(1) Net of expense reduction and fees waived. If such agreements had not been in
effect, the expense and net investment income ratios would have been:

<TABLE>
<S> <C> <C> <C> <C> <C>
Ratios (to average daily net assets):
Expenses................................ 1.16% 1.26% 1.35% 1.77% 1.94%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Net investment income................... 6.01% 5.59% 4.40% 5.40% 6.78%**
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
</TABLE>

See notes to financial statements.
- --------------------------------------------------------------------------------
12

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Cohen & Steers Realty Shares, Inc. (the 'Fund') was incorporated under the
laws of the State of Maryland on April 26, 1991 and is registered under the
Investment Company Act of 1940, as amended, as an open-end, non-diversified
management investment company. The following is a summary of significant
accounting policies followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles. The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures on the
financial statements. Actual results could differ from those estimates.

Portfolio Valuation: Investment in securities that are listed on the New
York Stock Exchange are valued 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 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, the National Quotation Bureau or such other comparable
sources as the Directors deem appropriate to reflect their fair market value.
Where securities are traded on more than one exchange and also over-the-counter,
the securities will generally be valued using the quotations the Board of
Directors believes reflect most closely the value of such securities.

Commercial paper instruments, which have a maturity value of 60 days or
less, are valued at amortized cost which approximates value.

Security Transactions and Investment Income: Security transactions are
recorded on trade date. Realized gains and losses on investments sold are
recorded on the basis of identified cost for accounting and tax purposes.
Interest income is recorded on the accrual basis. Dividend income is recorded on
the ex-dividend date.

Dividends and Distributions to Shareholders: Dividends from net investment
income are declared and paid quarterly. 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.

- --------------------------------------------------------------------------------
13

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Distributions 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 payable date unless the shareholder has elected to have them
paid in cash.

Dividends from net 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,
1995, the Fund decreased paid-in capital by $9,103,193, decreased undistributed
net investment income by $606,832 and increased accumulated net realized gains
on investments by $9,710,025. These differences are primarily due to return of
capital 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, 1995, the Fund had, for Federal income tax purposes, an unused
capital loss carryforward of $4,139,954 to be applied against future realized
gains, if any. If not applied, the capital loss carryforward will expire in as
follows, $2,310,026 in 2002 and $1,829,928 in 2003.

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.

NOTE 2. INVESTMENT ADVISORY AND ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES

Investment Advisory Fees: Cohen & Steers Capital Management, Inc. (the
'Adviser') serves as the Fund's Investment Adviser pursuant to an investment
advisory agreement (the 'Advisory Agreement'). Under the terms of the Advisory
Agreement, the Adviser provides the Fund with the day-to-day investment
decisions and generally manages the Fund's investments in accordance with the
stated policies of the Fund, subject to the supervision of the Fund's Board of
Directors. For the services provided to the Fund, the Adviser receives a monthly
fee in an amount equal to 1/12th of .85% of the average daily net assets of the
Fund (approximately .85% on an annual basis). For the year ended December 31,
1995, the Fund incurred $4,956,723 in advisory fees.

The Investment Adviser has agreed to reduce its fee and reimburse the Fund
for other expenses, to the extent necessary to comply with the most stringent
state expense limitation applicable to the Fund in which the Fund's shares are
sold. The most stringent limitation requires the Adviser to reduce or eliminate
its fee to the extent that aggregate operating expenses of the Fund (excluding
interest, taxes, brokerage and extraordinary expenses) exceed 2 1/2% of the
first $30 million of average annual net assets, 2% of the next $70 million of
average annual net assets and 1 1/2% of average annual net assets in excess of
$100 million. However, the Adviser has voluntarily agreed to

- --------------------------------------------------------------------------------
14

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

limit the total operating expenses of the Fund, excluding expenses listed above,
to an annual rate of 1.25% of the average annual net assets of the Fund until
December 31, 1995. For the year ended December 31, 1995, no reduction of
expenses was required as a result of the limitation.

Administrative Fees: The Fund has entered into an administrative agreement
with the Adviser and Chase Global Funds Services Company ('CGFSC') under which
the Adviser performs certain administrative functions for the Fund and receives
a fee of .02% of the Fund's average daily net assets. The Fund has paid the
Adviser $61,772 in fees under this and prior administrative agreements. For the
year ended December 31, 1995, CGFSC waived $117,113 of administrative fees.

Directors' Fees: Certain directors of the Fund are also directors, officers
and/or employees of the Adviser. None of the directors so affiliated received
compensation for their services as directors of the Fund with the exception of
out-of-pocket expenses relating to attendance at Board and committee meetings.
Similarly, none of the Fund's officers received compensation from the Fund. Fees
and related expenses accrued for non-affiliated directors totaled $29,000 for
the year ended December 31, 1995.

NOTE 3. PURCHASES AND SALES OF SECURITIES

Purchases and sales of securities, excluding short-term investments, for
the year ended December 31, 1995 aggregated $429,206,888 and $124,350,500,
respectively.

At December 31, 1995, 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......................................................................... $725,607,336
------------
Gross unrealized appreciation.......................................................... $ 72,742,979
Gross unrealized depreciaiton.......................................................... $(11,510,733)
------------
Net unrealized appreciation............................................................ $ 61,232,246
------------
------------
</TABLE>

- --------------------------------------------------------------------------------
15

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4. CAPITAL STOCK

The Fund is authorized to issue fifty million (50,000,000) shares of
capital stock, par value $.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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold...................................... 15,202,637 $ 499,162,840 13,553,253 $ 448,861,740
Issued as reinvestment of dividends....... 794,839 26,664,507 416,846 13,794,953
Redeemed.................................. (7,012,384) (227,496,579) (5,169,130) (168,472,609)
---------- ------------- ---------- -------------
Net increase.............................. 8,985,092 $ 298,330,768 8,800,969 $ 294,184,084
---------- ------------- ---------- -------------
---------- ------------- ---------- -------------
</TABLE>

NOTE 5. INVESTMENT IN AFFILIATES

The market value of investments in affiliates (as defined in the Investment
Company Act of 1940, 'Affiliated Companies' are those which the Fund holds 5% or
more of the outstanding voting securities) at December 31, 1995 aggregated
$42,466,488. The Fund earned $1,855,060 on dividend income from its investments
in affiliates.

NOTE 6. 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, 1995, the Fund's
expenses were reduced by $131,488 under this arrangement.

- --------------------------------------------------------------------------------
16

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

To The Shareholders and Board of Directors of
Cohen & Steers Realty Shares, Inc:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Cohen & Steers Realty Shares, Inc., as
of December 31, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the four years in
the period then ended and for the period from July 2, 1991 (commencement of
operations) to December 31, 1991. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian and brokers. An audit
also 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 audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Cohen & Steers Realty Shares, Inc. as of December 31, 1995, 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 four years in the period then ended and for the period from July 2, 1991
(commencement of operations) to December 31, 1991, in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

New York, New York
February 8, 1996

- --------------------------------------------------------------------------------
17

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

[This page intentionally left blank]

- --------------------------------------------------------------------------------
18

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.

<TABLE>
<S> <C>
OFFICERS AND DIRECTORS KEY INFORMATION

Robert H. Steers INVESTMENT ADVISER
Director and Chairman Cohen & Steers Capital Management, Inc.
757 Third Avenue
Martin Cohen New York, NY 10017
Director and President (212) 832-3232

Gregory C. Clark FUND ADMINISTRATOR AND TRANSFER AGENT
Director Chase Global Funds Services Co.
73 Tremont Street
George Grossman Boston, MA 02108
Director (800) 437-9912

Jeffrey H. Lynford CUSTODIAN
Director The Chase Manhattan Bank, N.A.
770 Broadway
Elizabeth O. Reagan New York, NY 10003
Vice President
LEGAL COUNSEL
Dechert Price & Rhoads
477 Madison Avenue
New York, NY 10022
NASDAQ Symbol: CSRSX

Net asset value (NAV) can be found in the daily mutual
fund listings in the financial section of most major
newspapers under the Fund's abbreviation 'C&SRlty'.

This report is authorized for delivery to other than
shareholders of Cohen & Steers Realty Shares, Inc. only
when accompanied or preceded by the delivery of a
currently effective prospectus setting forth details of
the Fund.
</TABLE>

- --------------------------------------------------------------------------------
19

COHEN & STEERS
REALTY SHARES
757 THIRD AVENUE
NEW YORK, N.Y. 10017

FIRST CLASS MAIL
U.S. POSTAGE
PAID
BOSTON, MA
PERMIT NO. 56712

COHEN & STEERS
REALTY SHARES

ANNUAL REPORT
DECEMBER 31, 1995

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PART C

OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

Part A -- Condensed Financial Information

Part B -- Financial Statements for the year ended December 31, 1995,
including notes thereto are incorporated by reference in the Statement of
Additional Information from the Fund's Annual Report dated as of December
31, 1995. A copy of the Annual Report is included following the Statement
of Additional Information.

(b) Exhibits

1. Articles of Incorporation*

2. By-Laws**

3. Not Applicable

4. Specimen certificate for common stock, par value $.001 per share**

5. (A) Form of Investment Advisory Agreement**

(B) Form of Administration Agreement

6. Not Applicable

7. Not Applicable

8. Form of Custodian Agreement**

9. Form of Transfer Agency Agreement**

10. (A) Opinion and Consent of Dechert Price & Rhoads**

(B) Opinion and Consent of Venable, Baetjer and Howard**

11. Consent of Independent Accountants

12. Not Applicable

13. Investment Representation Letter**

14. Not Applicable

15. Not Applicable

16. Schedule for Computation of Performance Quotation***

17. Financial Data Schedule

- ------------

* Filed with initial registration statement on April 29, 1991.

** Filed with Pre-Effective Amendment No. 1 on June 17, 1991.

*** Filed with Post-Effective Amendment No. 3 on March 17, 1993.

C-1

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ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

2671 record holders of Common Stock, par value $.001 per share, as of
March 11, 1996.

ITEM 27. INDEMNIFICATION

Registrant incorporates herein by reference its response to this item
contained in Pre-Effective Amendment No. 1 filed on June 17, 1991.

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 Income Fund, Inc.

Cohen & Steers Total Return Realty Fund, Inc.

Frank Russell Investment Management Company Real Estate Securities
Fund

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Cohen & Steers Securities, Inc. is the principal underwriter for the
Registrant.

(b) The following are directors and officers of Cohen & Steers Securities,
Inc. The principal address of these persons is 757 Third Avenue, 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 of the Chairman, Director
Board
Martin Cohen.................. Senior Vice President President, Director
Elizabeth Reagan.............. Vice President Vice President
</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

Registrant incorporates herein by reference its response to this item
contained in Pre-Effective Amendment No. 1 filed on June 17, 1991.

ITEM 31. MANAGEMENT SERVICES

Registrant incorporates herein by reference its response to this item
contained in Pre-Effective Amendment No. 1 filed on June 17, 1991.

ITEM 32. UNDERTAKINGS

Registrant incorporates herein by reference its response to this item
contained in Pre-Effective Amendment No. 1 filed on June 17, 1991.

C-2

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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 Post-Effective Amendment No. 6 to the 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 12th day of March, 1996, and certifies that
this Amendment meets all of the requirements for effectiveness pursuant to
paragraph (b) of Rule 485 under the Securities Act of 1933, as amended.

COHEN & STEERS REALTY SHARES, INC.

By /s/ MARTIN COHEN
...................................
MARTIN COHEN
PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the 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. Acting Principal Executive Officer:

/s/ MARTIN COHEN President March 12, 1996
.........................................
(MARTIN COHEN)

2. Principal Financial and
Accounting Officer:

/s/ MARTIN COHEN Treasurer March 12, 1996
.........................................
(MARTIN COHEN)

3. Majority of Directors:
Gregory C. Clark
George Grossman
Jeffrey H. Lynford
Robert H. Steers

By /s/ MARTIN COHEN March 12, 1996
...............................
(MARTIN COHEN)
ATTORNEY-IN-FACT

/S/ MARTIN COHEN March 12, 1996
.........................................
(MARTIN COHEN)
</TABLE>

C-3

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EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
5(b). Administration Agreement
11. Consent of Independent Accountants
17. Financial Data Schedule
</TABLE>

STATEMENT OF DIFFERENCES
------------------------

The dagger symbol shall be expressed as........ `D'
Any superscript shall be represented by .......`PP'
The division sign shall be expressed as .......[div]

EXHIBIT 5(B)

ADMINISTRATION AGREEMENT

AGREEMENT dated as of September 1, 1995 between COHEN & STEERS REALTY
SHARES, 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 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;

(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.
The Company is currently a party to the 'Fund Accounting and Administration
Agreement' with United States Trust Company of New York, dated as of June
3, 1991, as amended by the Amendment dated as of June 30, 1995. The Company
hereby confirms its approval of such agreement as a sub-administration
agreement within the meaning of this paragraph 2 and further confirms such
approval notwithstanding the assignment of such agreement by United States
Trust Company of New York to Chase Manhattan Bank, N.A., or affiliate
thereof.

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, 1996 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 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 REALTY SHARES, INC.

By: .................................

COHEN & STEERS CAPITAL MANAGEMENT,
INC.

By: .................................

EXHIBIT 11

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Post-Effective Amendment
No. 6 to the Registration Statement of Cohen & Steers Realty Shares, Inc., on
Form (N-1A) of our report dated February 8, 1996 on our audit of the financial
statements and financial highlights of Cohen & Steers Realty Shares, Inc., which
report is included in its Annual Report to Shareholders which is also
incorporated by reference in this Post-Effective Amendment to the Registration
Statement.

We also consent to the reference to our firm under the captions 'Financial
Highlights' in the prospectus and 'Counsel and Independent Accountants' in the
Statement of Additional Information.

COOPERS AND LYBRAND L.L.P.
COOPERS AND LYBRAND L.L.P.

New York, New York
March 7, 1996

<PAGE>

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