COHEN & STEERS REALTY SHARES INC, 485BPOS, 1998-04-29

COHEN & STEERS REALTY SHARES INC
485BPOS, 1998-04-29

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1998

FILE NO. 33-40215
811-6302
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

PRE-EFFECTIVE AMENDMENT NO. [ ]

POST-EFFECTIVE AMENDMENT NO. 8 [x]

AND/OR

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

AMENDMENT NO. 9 [x]

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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)

[ ] 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)

[x] ON MAY 1, 1998 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.

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TITLE OF SECURITIES BEING REGISTERED
COHEN & STEERS REALTY SHARES, INC. -- COMMON STOCK

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<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

<PAGE>
<PAGE>
[Logo]

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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 (the 'Adviser').

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated May 1, 1998, 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.
- --------------------------------------------------------------------------------
------------------------------------------

THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND THE FUND'S SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY. SHARES OF THE FUND INVOLVE INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

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

MAY 1, 1998
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<PAGE>
<PAGE>
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FEE TABLE

Shareholder Transaction Expenses

None.

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

<TABLE>
<S> <C>
Management fees....................................................... 0.83%
Service fees*......................................................... 0%
Other expenses........................................................ 0.22%
----
Total fund operating expenses......................................... 1.05%
</TABLE>

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* The Fund does not currently pay or accrue any service fees. Upon notice to
shareholders, service fees may be accrued at a rate of up to 0.05% of the
Fund's average net assets.

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............................................................... $ 11
3 years.............................................................. $ 33
5 years.............................................................. $ 58
10 years.............................................................. $128
</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.

The Adviser has directed certain portfolio transactions to brokers who paid a
portion of the Fund's expenses. For the year ended December 31, 1997, the Fund's
expenses were reduced by $344,488 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 disclosure regulations. Had these costs not
been reflected in this table, the Fund's total operating expenses would have
been 1.06%. 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 has been audited by Coopers & Lybrand L.L.P.,
independent accountants, whose report dated February 3, 1998 is incorporated by
reference 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 DECEMBER 31,
---------------------------------------------------------------------------

PERIOD ENDED
DECEMBER 31,
PER SHARE OPERATING PERFORMANCE 1997 1996 1995 1994 1993 1992 1991*
- ------------------------------------ ---------- ---------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year.............................. $ 45.09 $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55 $ 25.00
---------- ---------- -------- -------- -------- ------- -------
Income from investment operations
Net investment income........... 1.87 1.86 1.86 1.66 1.29 1.51 0.88
Net realized and unrealized
gains on investments.......... 7.40 11.04 1.69 0.98 4.24 3.55 1.07
---------- ---------- -------- -------- -------- ------- -------
Total from investment
operations................ 9.27 12.90 3.55 2.64 5.53 5.06 1.95
---------- ---------- -------- -------- -------- ------- -------
Less distributions from:
Net investment income........... (1.88) (1.76) (1.33) (1.09) (1.27) (1.80) (0.40)
Realized gain on investments.... (2.30) (0.55) 0.00 0.00 (1.64) (0.18) --
In excess of net realized
gains......................... 0.00 0.00 0.00 0.00 (0.04) 0.00 --
Tax return of capital........... 0.00 (0.12) (0.50) (0.57) (0.24) (0.05) --
---------- ---------- -------- -------- -------- ------- -------
Total distributions......... (4.18) (2.43) (1.83) (1.66) (3.19) (2.03) (0.40)
---------- ---------- -------- -------- -------- ------- -------
Net asset value, end of year........ $ 50.18 $ 45.09 $ 34.62 $ 32.90 $ 31.92 $ 29.58 $ 26.55
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Total investment return............. 21.16% 38.48% 11.13% 8.31% 18.76% 20.09% 7.91%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Ratios/Supplemental Data:
Net assets, end of year (in
millions)..................... $3,432.995 $2,036.379 $793.084 $458.098 $163.478 $49.481 $24.434
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Ratio of expenses to average
daily net assets (before
expense reduction)............ 1.06% 1.10% 1.16% 1.26% 1.35% 1.77% 1.94%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Ratio of expenses to average
daily net assets (net of
expense reduction)............ 1.05% 1.08% 1.12% 1.14% 1.18% 1.25% 1.25%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Ratio of net investment income
to average daily net assets
(net of expense reduction).... 4.04% 5.28% 6.05% 5.71% 4.57% 5.92% 7.48%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Ratio of net investment income
to average daily net asset
(before expense reduction).... 4.02% 5.27% 6.01% 5.59% 4.40% 5.40% 6.78%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Portfolio turnover rate......... 40.44% 33.23% 22.68% 39.00% 65.28% 14.81% 57.40%
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------
Averge Commission Rate(a)....... $ 0.0626 $ 0.0678 N/A N/A N/A N/A N/A
---------- ---------- -------- -------- -------- ------- -------
---------- ---------- -------- -------- -------- ------- -------

</TABLE>

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

** Annualized.

(a) For fiscal year beginning on or after September 1, 1995, a portfolio
is required to disclose the average commission rate per share it
paid for trades on which commissions were charged.

3
<PAGE>
<PAGE>
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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 15% 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.

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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 the majority of their assets directly in real property, derive
their income primarily from rents. Equity REITs can also realize capital gains
by selling

<PAGE>
<PAGE>
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.

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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.

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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>
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INVESTMENT TECHNIQUES

The Fund is authorized to use the following investment techniques, subject to
the accompanying restrictions. Although these techniques or strategies are used
regularly by some investment companies, the investment adviser expects that the
Fund's use of these techniques will not be routine and will be limited to
special situations.

- --------------------------------------------------------------------------------
OPTIONS ON SECURITIES AND STOCK INDICES

The Fund may write (i.e., sell) covered put and call options and purchase put
and call options on securities or stock indices that are listed on a national
securities or commodities exchange. An option on a security is a contract that
gives the purchaser of the option, in return for the premium paid, the right to
buy a specified security (in the case of a call option) or to sell a specified
security (in the case of a put option) from or to the writer of the option at a
designated price during the term of the option. An option on a stock index gives
the purchaser of the option, in return for the premium paid, the right to
receive from the seller cash equal to the difference between the closing price
of the index and the exercise price of the option.

The Fund may write a call or put option only if the option is 'covered.' This
means that so long as the Fund is obligated as the writer of a call option, it
will own the underlying securities subject to the call, or hold a call at the
same or lower exercise price, for the same exercise period, and on the same
securities as the written call. A put is covered if the Fund maintains
collateral consisting of cash or liquid portfolio securities with a value equal
to the exercise price in a segregated account, or holds a put on the same
underlying security at an equal or greater exercise price. The value of the
underlying securities on which options may be written at any one time will not
exceed 25% of the total assets of the Fund. The Fund will not purchase put or
call options if the aggregate premium paid for such options would exceed 5% of
its total assets at the time of purchase.

- --------------------------------------------------------------------------------
FUTURES CONTRACTS

The Fund may buy and sell financial futures contracts, stock and bond index
futures contracts, foreign currency futures contracts and options on any of the
foregoing. A financial futures contract is an agreement between two parties to
buy or sell a specified debt security at a set price on a future date. An index
futures contract is an agreement to take or make delivery of an amount of cash
based on the difference between the value of the index at the beginning and at
the end of the contract period. A futures contract on a foreign currency is an
agreement to buy or sell a specified amount of a currency for a set price on a
future date.

The Fund may use financial futures contracts and related options for 'bona fide
hedging' purposes, as such term is defined in applicable regulations of the
Commodity Futures Trading Commission. The Fund will also be authorized to enter
into such contracts and options for nonhedging purposes, for example, to enhance
total return or provide market exposure pending the investment of cash balances,
but only to the extent that aggregate initial margin deposits plus premiums paid
by it for open futures options positions, less the amount by which any such
positions are 'in-the-money,' would not exceed 5% of the Fund's total assets.
The Fund may lose the expected benefit of the transactions if interest rates,
currency exchange rates or securities prices change in an unanticipated manner.
Such unanticipated changes in interest rates, currency exchange rates or
securities prices may also result in poorer overall performance of the Fund than
if the Fund had not entered into any futures transactions.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS

The Fund will enter into forward contracts under the following circumstances:
First, when the Fund enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to 'lock in' the U.S.
dollar price of the security in relation to another currency by entering into a
forward contract to buy the amount of foreign currency needed to settle the
transaction. Second, when it is believed that the currency of a particular
foreign country may suffer or enjoy a substantial movement against another
currency, it may enter into a forward contract to sell or buy the amount of the
former foreign currency (or another currency which acts as a proxy for that
currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. The second investment practice
is generally referred to as 'cross-hedging.' The Fund's forward transactions may
call for the delivery of one foreign currency in exchange for another foreign
currency and may at times not involve currencies in which its portfolio
securities are denominated.

The Fund will not enter into forward foreign currency contracts if, as a result,
the Fund will have more than 15% of the value of its net assets committed to the
consummation of such contracts. To the extent such contracts would be deemed to
be illiquid, they will be included in the maximum limitation of 15% of net
assets invested in restricted or illiquid securities.

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RISKS OF OPTIONS, FUTURES AND FOREIGN CURRENCY CONTRACTS

Options, futures, and foreign currency contracts are forms of derivatives. The
use of options and futures as hedging techniques may not succeed where the price
movements of the securities underlying the options and futures do not follow the
price movements of the portfolio securities subject to the hedge. Gains on
investments in options and futures depend on the portfolio manager's ability to
predict correctly the direction of stock prices, interest rates, and other
economic factors. Where a liquid secondary market for options or futures does
not exist, the Fund may not be able to close its position and, in such an event
would be unable to control its losses. The loss from investing in futures
contracts is potentially unlimited. The use of forward foreign currency
contracts may limit gains from a positive change in the relationship between the
U.S. dollar and foreign currencies. Unanticipated changes in currency prices may
cause poorer overall performance for the Fund than if it had not engaged in such
contracts.

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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

<PAGE>
<PAGE>
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.'

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

2. Borrow money, or pledge its assets, except that the Fund may borrow money
from banks for temporary or emergency purposes, including the meeting of
redemption requests which might require the untimely disposition of securities.
Borrowing in the aggregate may not exceed 15%, and borrowing for purposes other
than meeting redemptions may not exceed 5%, of the value of the Fund's total
assets (including the amount borrowed) less liabilities (not including the
amount borrowed) at the time the borrowing is made. Outstanding borrowings in
excess of 5% of the value of the Fund's total assets will be repaid before any
subsequent investments are made;

3. Invest in illiquid securities, as defined in 'Investment Objective and
Policies,' if immediately after such investment more than 15% of the Fund's net
assets (taken at market value) would be invested in such securities; or

4. 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 secur
ities 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.

<PAGE>
<PAGE>
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MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS

The overall management of the business and affairs of the Fund is vested with
the Board of Directors. The Board of Directors approves all significant
agreements between the Fund and persons or companies furnishing services to it,
including the Fund's agreements with its Adviser, administrator, custodian and
transfer agent. The management of the Fund's day-to-day operations is delegated
to its officers, the Adviser and the administrator, subject always to the
investment objective and policies of the Fund and to general supervision by the
Board of Directors. The Directors and officers of the Fund and their principal
occupations are set forth below.

Robert H. Steers, Director, Chairman and Secretary, is the Chairman and one of
the principals of the Adviser.

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

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

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

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

Willard H. Smith Jr., Director, is a board member of several REIT companies.

Elizabeth O. Reagan, Vice President, is a Senior Vice President of the Adviser.

Adam Derechin, Vice President and Assistant Treasurer, is a Vice President of
the Adviser.

- --------------------------------------------------------------------------------
THE ADVISER

Cohen & Steers Capital Management, Inc., with offices located at 757 Third
Avenue, New York, New York 10017, has been retained to provide investment
advice, and, in general, to conduct the management and investment program of the
Fund under the overall supervision and control of the Directors of the Fund.
Cohen & Steers, a registered investment adviser, was formed in 1986 and is the
leading U.S. manager of portfolios dedicated to investments in real estate
investment trusts ('REITs'). Its current clients include pension plans,
endowment funds and mutual funds, including Cohen & Steers Realty Income Fund,
Inc. and Cohen & Steers Total Return Realty Fund, Inc., both of which are
closed-end investment companies, and Cohen & Steers Equity Income Fund, Inc. and
Cohen & Steers Special Equity Fund, Inc., both of which are open-end investment
companies. All of Cohen & Steers' client accounts are invested principally in
real estate securities. Its principal officers include Robert H. Steers,
Chairman and Martin Cohen, President. Mr. Cohen and Mr. Steers are responsible
for the day-to-day management of the Fund's portfolio. Mr. Cohen and Mr. Steers
may be deemed 'controlling persons' of the Adviser on the basis of their
ownership of the Adviser's stock.

- --------------------------------------------------------------------------------
INVESTMENT ADVISORY AGREEMENT

Pursuant to an investment advisory agreement (the 'Advisory Agreement') the
Adviser furnishes a continuous investment program for the Fund's portfolio,
makes the day-to-day investment decisions for the Fund, and generally manages
the Fund's investments 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 Conduct Rules of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, the Adviser may

consider sales of shares of the Fund as a factor in the selection of brokers and
dealers to enter into portfolio transactions with the Fund. The Adviser provides
persons satisfactory to the Directors of the Fund to serve as officers of the
Fund. Such officers, as well as certain other employees and Directors of the
Fund, may be directors, officers, or employees of the Adviser. Under the
Advisory Agreement, the Fund pays the Adviser a monthly management fee in an
amount equal to 1/12th of 0.85% of the average daily net assets of the Fund up
to $2.5 billion, plus 1/12th of 0.75% of such assets in excess of $2.5 billion.
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, 1997, the Fund's
expenses, including the management fee, equaled 1.05% of the Fund's average net
assets (net of directed brokerage arrangements, equivalent to 0.01% of average
net assets).

- --------------------------------------------------------------------------------
YEAR 2000

Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser, the Distributor or other service providers
to the Fund do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the 'Year 2000
Problem.' The Adviser and the Distributor are taking steps that they believe are
reasonably designed to address the Year 2000 Problem with respect to computer
systems that they use and the Adviser is taking steps to obtain reasonable
assurances that comparable steps are being taken by the Fund's other service
providers. At this time, however, there can be no assurance that these steps
will be sufficient to avoid any adverse impact to the Fund.

The Year 2000 Problem is expected to impact corporations, which may include
issuers of portfolio securities held by the Fund, to varying degrees based upon
various factors, including, but not limited to, the corporation's industry
sector and degree of technological sophistication. The Fund is unable to predict
what impact, if any, the Year 2000 Problem will have on issuers of the portfolio
securities held by the Fund.

- --------------------------------------------------------------------------------
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. For its services under the Administration Agreement, the
Adviser receives a monthly fee from the Fund at the annual rate of 0.02% of the
Fund's average daily net assets.

In accordance with the terms of the Administration Agreement and with the
approval of the Fund's Board of Directors, the Adviser has caused the Fund to
retain The Chase Manhattan Bank ('Chase') as sub-administrator under a fund
accounting and administration agreement (the 'Sub-Administration Agreement').
Under the Sub-Administration Agreement, Chase has assumed responsibility for
performing certain of the foregoing administrative functions, including
determining the Fund's net asset value and preparing such figures for
publication, maintaining certain of the Fund's books and records that are not
maintained by the Adviser, custodian or transfer agent, preparing financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholders reports, and Commission filings, and responding to
shareholder inquiries. Under the Administration Agreement, the Adviser remains
responsible for monitoring and overseeing the performance by Chase and Chase
Global Funds Services Company of their obligations to the Fund under their
respective agreements with the Fund, subject to the overall authority of the
Fund's Board of Directors.

Under the terms of the Administration Agreement, the Fund pays Chase a monthly
administration fee at the annual rate of 0.08% on the first $500 million of the
Fund's average daily net assets and at lower rates on the Fund's average daily
net asssets in excess of that amount. Chase Global Funds Services Company, P.O.
Box 2798, Boston, Massachusetts 02208, a wholly-owned subsidiary of Chase, has
been retained by Chase to provide to the Fund the administrative services
described above. Chase also serves as the Fund's custodian and transfer agent.
See 'Custodian and Transfer and Dividend Disbursing Agent,' below. Chase Global
Funds Services Company has been similarly retained by Chase to provide transfer
agency services to the Fund and is hereafter sometimes referred to as the
'Transfer Agent.'

- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES PLAN

The Fund has adopted a shareholder services plan which provides that the Fund
may obtain the services of qualified financial institutions to act as
shareholder servicing agents for their customers. Under this plan, the Fund may
enter into agreements pursuant to which the shareholder servicing agents perform
certain shareholder services not otherwise provided by the Fund's transfer
agent. For these services, the Fund may pay the shareholder servicing agent a
fee of up to 0.05% of the average daily net assets of the Fund owned by
investors for which the shareholder servicing agent maintains a servicing
relationship.

Among the services provided by shareholder servicing agents are: answering
customer inquiries regarding account matters; assisting in designating and
changing various account

<PAGE>
<PAGE>
options; aggregating and processing purchase and redemption orders and
transmitting and receiving funds for shareholder orders; transmitting, on behalf
of the Fund, proxy statements, prospectuses and shareholder reports to
shareholders and tabulating proxies; processing dividend payments and providing
subaccounting services for Fund shares held beneficially; and providing such
other services as the Fund or a shareholder may request.

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

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

For purposes of determining the Fund's net asset value 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. 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. Subsequent investments must be at least $500 except that if, as a
result of redemption, the value of the investor's account is less than $10,000,
the minimum subsequent investment is the amount necessary to increase the value
of the investor's account to $10,000. Financial institutions, however, may
impose different minimums for subsequent investments.

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, 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. See 'Redemption of Shares -- Redemption by Mail' below.

- --------------------------------------------------------------------------------
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
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
P.O. Box 2798
Boston, MA 02208

- --------------------------------------------------------------------------------
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, if greater, the amount necessary to increase the value of the
investor's account to $10,000) to the Custodian:

- --------------------------------------------------------------------------------
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
'Cohen & Steers Realty Shares, Inc.', to the Transfer Agent at the address set
forth above.

- --------------------------------------------------------------------------------
ADDITIONAL PURCHASES BY MAIL

1. Make a check ($500 or, if greater, the amount necessary to increase the value
of the investor's account to $10,000) payable to 'Cohen & Steers Realty Shares,
Inc.'. 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.

- --------------------------------------------------------------------------------
EXCHANGE PRIVILEGE

You may exchange some or all of your Fund shares for shares of the other mutual
funds managed by Cohen & Steers as well as for shares of Cohen & Steers Vista
Cash Management Fund, subject to any applicable initial sales charges. If you
acquire shares of other Cohen & Steers funds by purchase (rather than by
exchange of Fund shares), you may exchange those shares for Fund shares, subject
to any applicable contingent deferred sales charges.

An exchange of shares pursuant to the exchange privilege may result in a
shareholder realizing a taxable gain or loss for income tax purposes. The
exchange privilege is available to shareholders residing in any state in which
the shares being acquired may be legally sold. A shareholder wishing to utilize
the exchange privilege should read the prospectus of the fund whose shares are
being acquired. Certain dealers may limit or prohibit the right of shareholders
to utilize the exchange privilege.

The Fund reserves the right to limit or terminate the exchange privilege as to
any shareholder who makes exchanges more than four times a year. THE FUND CAN
MODIFY OR REVOKE THE EXCHANGE PRIVILEGE FOR ALL SHAREHOLDERS UPON 60 DAYS PRIOR
WRITTEN NOTICE. There is no charge for the exchange privilege. For additional
information concerning exchanges, or to effect exchanges, contact the Fund at
(800) 437-9912.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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
P.O. Box 2798
Boston, Massachusetts 02208

A written redemption request must (i) state the number of shares or dollar
amount to be redeemed, (ii) identify the shareholder account number and tax
identification number, and (iii) be signed by each registered owner exactly as
the shares are registered. If the shares to be redeemed were issued in
certificate form, the certificate must be endorsed for transfer (or be
accompanied by a duly executed stock power) and must be submitted to Chase
Global Funds Services Company together with a redemption request. When proceeds
of a redemption are to be paid to someone other than the shareholder, either by
wire or check, the signature(s) on the letter of instruction must be guaranteed
regardless of the amount of the redemption. The guarantor of a signature must be
a trust company or national bank, a member bank of the Federal Reserve System, a
member firm of a national securities exchange or any other guarantor approved by
Chase Global Funds Services Company. For redemptions made by corporations,
executors, administrators or guardians, Chase Global Funds Services Company may
require

additional supporting documents evidencing the authority of the person making
the redemption (including evidence of appointment or incumbency). For additional
information regarding the specific documentation required, contact the Transfer
Agent at (800) 437-9912. A redemption request will not be deemed to be properly
received until Chase Global Funds Services Company receives all required
documents in proper form.

- --------------------------------------------------------------------------------
OTHER REDEMPTION INFORMATION

Checks for redemption proceeds will normally be mailed within five business
days, but will not be mailed until all checks in payment for the purchase of the
shares to be redeemed have been collected, which may take up to 15 days or more.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption will be sent to the shareholder's address of record. The Custodian
may benefit from the use of redemption proceeds until the check issued to a
redeeming shareholder for such proceeds has cleared.

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

A redemption is a taxable event which may result in a gain or loss for federal
income tax purposes.

The Fund reserves the right to redeem upon 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.

- --------------------------------------------------------------------------------
TAXATION

thereunder, and judicial and administrative ruling authorities, all of which are
subject to change, which change may be retroactive. Prospective investors should
consult their own tax advisors with regard to the federal tax consequences of
the purchase, ownership, or disposition of Fund shares, as well as the tax
consequences arising under the laws of any state, foreign country, or other
taxing jurisdiction.

- --------------------------------------------------------------------------------
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 distributes
substantially 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 may be taxable to individuals and certain other shareholders at the
maximum federal 20% or 28% capital gains rate (depending upon the holding period
for the assets giving rise to the capital gains), regardless of how long the
shareholder has held Fund 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.

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

The Fund was incorporated on April 26, 1991 as a Maryland corporation and is
authorized to issue 200,000,000 shares of common stock, $0.001 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, New York 10081-1000, has been retained to act as Custodian of the
Fund's investments and to serve as the Fund's transfer and dividend disbursing
agent. Chase has retained its wholly-owned subsidiary, Chase Global Funds
Services Company, to provide transfer and dividend disbursing agency services to
the Fund. Neither Chase nor Chase Global Funds Services Company has any 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 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

<PAGE>
<PAGE>
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. (http://www.sec.gov).

19
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<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
COHEN & STEERS REALTY SHARES, INC.
SUBSCRIPTION AGREEMENT

- ---------------------------------------------------------------------------------------------------------------
1 ACCOUNT TYPE (Please print; indicate only one registration type)
[ ] INDIVIDUAL OR JOINT ACCOUNT
- -
----------------------------------------------- ------ --------- ---------
Name Social Security Number

-----------------------------------------------
Name of Joint Registrant, if any.
(For joint registrations, the account registrants will be joint tenants with the right of survivorship and
not tenants in common unless tenants in common or community property registrations are requested.)

[ ] TRUST [ ] CORPORATION [ ] PARTNERSHIP [ ] OTHER ENTITY
-
------------------------------------------------------ -------- --------------
Name of Entity Tax Identification Number

------------------------------------------------------ --------------------------------------
Name of Trust Agreement (if applicable) Date of Trust Agreement (if applicable)
[ ] UNIFORM GIFT TO MINORS, OR [ ] UNIFORM TRANSFER TO MINORS (where allowed by Law)

------------------------------------------------------ Under the _______ (state of residence
Name of Adult Custodian (only one permitted) of minor) Uniform Gifts/Transfer to Minor's
Act
- -
------------------------------------------------------ ------ --------- ---------
Name of Minor (only one permitted) Minor's Social Security Number

- ---------------------------------------------------------------------------------------------------------------
2 MAILING ADDRESS
( )
------------------------------------------------------ ------------------------------
Street or P.O. Box Home Telephone Number

( )
------------------------------------------------------ ------------------------------
City and State Zip Code Business Telephone Number

- ---------------------------------------------------------------------------------------------------------------
3 INVESTMENT INFORMATION

$ Amount to invest ($10,000 minimum investment). Do not send cash. Investment will be paid for by
(please check one):
[ ] Check or draft made payable to 'Cohen & Steers Realty Shares, Inc.'

[ ] Wire through the Federal Reserve System.* ______________________________________________
Wire Reference Control Number

* Call (800) 437-9912 to notify the Fund of investments by wire and to obtain a Wire Reference Control
Number. See the PURCHASE OF SHARES section of the Prospectus for wire instructions.

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4 EXCHANGE PRIVILEGES
Exchange privileges will be automatically granted unless you check the box below. Shareholders wishing to
exchange into other Cohen & Steers Funds should consult the EXCHANGE PRIVILEGE section of the Prospectus.
(Note: If shares are being purchased through a dealer, please contact your dealer for availability of this
service.)

[ ] I decline the exchange privilege.

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PLEASE CONTINUE APPLICATION ON REVERSE SIDE.

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5 REDEMPTION PRIVILEGES
Shareholders may select the following redemption privileges by checking the box(es) below. See REDEMPTION OF
SHARES section of the Prospectus for further details. Redemption privileges will be automatically declined
for boxes not checked.
[ ] I authorize the Transfer Agent to redeem shares in my account(s) by telephone, in accordance with the
procedures and conditions set forth in the Fund's current Prospectus.
[ ] I wish to have redemption proceeds paid by wire (please complete Section 7).

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6 DISTRIBUTION OPTIONS
Dividends and capital gains may be reinvested or paid by check. If no options are selected below, both
dividends and capital gains will be reinvested in additional Fund shares.
Dividends [ ] Reinvest. [ ] Pay in cash.
Capital Gains [ ] Reinvest. [ ] Pay in cash.
[ ] I wish to have my distributions paid by wire (please complete Section 7).

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7 BANK OF RECORD (FOR WIRE INSTRUCTIONS)
PLEASE ATTACH A VOIDED CHECK FROM YOUR BANK ACCOUNT.

------------------------------------------------------ ------------------------------------
Bank Name Bank ABA Number

------------------------------------------------------ ------------------------------------
Street or P.O. Box Bank Account Number

------------------------------------------------------ ------------------------------------
City and State Zip Code Account Name

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8 SIGNATURE AND TAXPAYER CERTIFICATION
By signing this form, the Investor represents and warrants that: (a) the Investor has the full right, power
and authority to invest in the Fund; and (b) the Investor has received a current prospectus of the Fund and
agrees to be bound by its terms. Persons signing as representatives or fiduciaries of corporations,
partnerships, trusts or other organizations are required to furnish corporate resolutions or similar
documents providing evidence that they are authorized to effect securities transactions on behalf of the
Investor (alternatively, the secretary or designated officer of the organization may certify the authority
of the persons signing on the space provided below). In addition, signatures of representatives or
fiduciaries of corporations and other entities must be accompanied by a signature guarantee by a commercial
bank that is a member of the Federal Deposit Insurance Corporation, a trust company or a member of a
national securities exchange.
PLEASE CHECK ONE:

[ ] U.S. CITIZEN/TAXPAYER

UNDER THE PENALTIES OF PERJURY, THE UNDERSIGNED CERTIFIES THAT: (1) THE TAXPAYER IDENTIFICATION NUMBER
PROVIDED IS CORRECT, AND (2) I/WE ARE NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE: (a) I/WE ARE EXEMPT FROM
BACKUP WITHHOLDING, OR (b) I/WE HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE ('IRS') THAT I/WE ARE
SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (c) THE IRS
HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. NOTE: IF YOU HAVE BEEN NOTIFIED BY THE
IRS THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDER-REPORTING INTEREST OF DIVIDENDS ON
YOUR TAX RETURN, YOU MUST CROSS OUT ITEM 2 ABOVE.

[ ] NON U.S. CITIZEN/TAXPAYER (FORM W-8 ATTACHED)

INDICATE COUNTRY OF RESIDENCE FOR TAX PURPOSES _______________________

UNDER PENALTY OF PERJURY, I/WE CERTIFY THAT I/WE ARE NOT U.S. CITIZENS AND I/WE ARE EXEMPT FOREIGN PERSONS
AS DEFINED BY THE IRS. THE IRS DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER THAN
THE CERTIFICATIONS REQUIRED TO AVOID BACKUP WITHHOLDING.

I certify that (1) the information provided on this Subscription Agreement is true, correct and complete,
(2) I have read the prospectus for the Fund and agree to the terms thereof, and (3) I am of legal age or an
emancipated minor.

x x
-------------------------------------- ------- -------------------------------------- ---------
Signature (Owner, Trustee, Etc.) Date Signature (Joint Owner, Co-Trustee) Date
</TABLE>

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

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[THIS PAGE INTENTIONALLY LEFT BLANK]

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____________________________________ ___________________________________

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

---------------------------------
TABLE OF CONTENTS

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PAGE
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<S> <C>
Fee Table..................................................................................................... 2
Financial Highlights.......................................................................................... 3
Investment Objective and Policies............................................................................. 4
Investment Techniques......................................................................................... 6
Investment Restrictions....................................................................................... 8
Management of the Fund........................................................................................ 9
Determination of Net Asset Value.............................................................................. 12
Purchase of Shares............................................................................................ 12
Exchange Privilege............................................................................................ 14
Redemption of Shares.......................................................................................... 15
Dividends and Distributions................................................................................... 16
Taxation...................................................................................................... 16
Organization and Description of Capital Stock................................................................. 18
Custodian and Transfer and Dividend Disbursing Agent.......................................................... 18
Reports to Shareholders....................................................................................... 18
Performance Information....................................................................................... 18
Additional Information........................................................................................ 19
</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
P.O. BOX 2798
BOSTON, MASSACHUSETTS 02208
TELEPHONE: (800) 437-9912
MAY 1, 1998

____________________________________ ___________________________________

<PAGE>
<PAGE>
[Logo]

757 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 832-3232
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION

MAY 1, 1998

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 MAY 1, 1998 (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.

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

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- --------------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Investment Objective and Policies.............................................................. 3

Investment Techniques.......................................................................... 4

Investment Restrictions........................................................................ 8

Management of the Fund......................................................................... 9

Determination of Net Asset Value............................................................... 13

Redemption of Shares........................................................................... 13

Portfolio Transactions and Brokerage........................................................... 13

Taxation....................................................................................... 14

Organization and Description of Capital Stock.................................................. 19

Distributor.................................................................................... 19

Custodian and Transfer and Dividend Disbursing Agent........................................... 19

Performance Information........................................................................ 20

Counsel and Independent Accountants............................................................ 21

Financial Statements........................................................................... 21
</TABLE>

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INVESTMENT OBJECTIVE AND POLICIES

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 15% 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.

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

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<PAGE>
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).

- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS

The Fund may also enter into repurchase agreements. A repurchase agreement is an
instrument under which an investor, such as the Fund, purchases a U.S.
Government security from a vendor, with an agreement by the vendor to repurchase
the security at the same price, plus interest at a specified rate. In such a
case, the security is held by the Fund, in effect, as collateral for the
repurchase obligation. Repurchase agreements may be entered into with member
banks of the Federal Reserve System or 'primary dealers' (as designated by the
Federal Reserve Bank of New York) in United States Government securities.
Repurchase agreements usually have a short duration, often less than one week.
In entering into the repurchase agreement for the Fund, the investment adviser
will evaluate and monitor the creditworthiness of the vendor. In the event that
a vendor should default on its repurchase obligation, the Fund might suffer a
loss to the extent that the proceed from the sale of the collateral were less
than the repurchase price. If the vendor becomes bankrupt, the Fund might be
delayed, or may incur costs or possible losses of principal and income, in
selling the collateral.

- --------------------------------------------------------------------------------
INVESTMENT TECHNIQUES

The following sections provide expanded discussion of several of the types of
investments and investment techniques which may be used by the Fund.

- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS

REITs are sometimes informally characterized as equity REITs, mortgage REITs and
hybrid REITs. An equity REIT invests primarily in the fee ownership or leasehold
ownership of land and buildings and derives its income primarily from rental
income. An equity REIT may also realize capital gains (or losses) by selling
real estate properties in its portfolio that have appreciated (or depreciated)
in value. A mortgage REIT invests primarily in mortgages on real estate, which
may secure construction, development or long-term loans. A mortgage REIT
generally derives its income primarily from interest payments on the credit it
has extended. A hybrid REIT combines the characteristics of equity REITs and
mortgage REITs, generally by holding both ownership interests and mortgage
interests in real estate. It is anticipated, although not required, that under
normal circumstances a majority of the Fund's investments in REITs will consist
of equity REITs.

- --------------------------------------------------------------------------------
FUTURES CONTRACTS

The Fund may purchase and sell financial futures contracts. A futures contract
is an agreement to buy or sell a specific security or financial instrument at a
particular price on a stipulated future date. Although some financial futures
contracts call for making or taking delivery of the underlying securities, in
most cases these obligations are closed out before the settlement date. The
closing of a contractual obligation is accomplished by purchasing or selling an
identical offsetting futures contract.

<PAGE>
<PAGE>
Other financial futures contracts by their terms call for cash settlements.

The Fund may also buy and sell index futures contracts with respect to any stock
or bond index traded on a recognized stock exchange or board of trade. An index
futures contract is a contract to buy or sell units of an index at a specified
future date at a price agreed upon when the contract is made. The stock index
futures contract specifies that no delivery of the actual stocks making up the
index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract.

At the time the Fund purchases a futures contract, an amount of cash or liquid
portfolio securities equal to the market value of the futures contract will be
deposited in a segregated account with the Fund's custodian. When writing a
futures contract, the Fund will maintain with its custodian similar liquid
assets that, when added to the amounts deposited with a futures commission
merchant or broker as margin, are equal to the market value of the instruments
underlying the contract. Alternatively, the Fund may 'cover' its position by
owning the instruments underlying the contract (or, in the case of an index
futures contract, a portfolio with a volatility substantially similar to that of
the index on which the futures contract is based), or holding a call option
permitting the Fund to purchase the same futures contract at a price no higher
than the price of the contract written by the Fund (or at a higher price if the
difference is maintained in liquid assets with the Fund's custodian).

The Fund will be authorized to use financial futures contracts and related
options for 'bona fide hedging' purposes, as such term is defined in applicable
regulations of the Commodity Futures Trading Commission ('CFTC'). The Fund will
also be authorized to enter into such contracts and related options for
nonhedging purposes, for example to enhance total return or provide market
exposure pending the investment of cash balances, but only to the extent that
aggregate initial margin deposits plus premiums paid by it for open futures
options positions, less the amount by which any such positions are
'in-the-money,' would not exceed 5% of the Fund's total assets. The Fund may
lose the expected benefit of the transactions if interest rates, currency
exchange rates or securities prices change in an unanticipated manner. Such
unanticipated changes in interest rates, currency exchange rates or securities
prices may also result in poorer overall performance than if the Fund had not
entered into any futures transactions.

- --------------------------------------------------------------------------------
OPTIONS ON SECURITIES AND STOCK-INDICES

The Fund may write covered call and put options and purchase call and put
options on securities or stock indices that are traded on United States
exchanges.

An option on a security is a contract that gives the purchaser of the option, in
return for the premium paid, the right to buy a specified security (in the case
of a call option) or to sell a specified security (in the case of a put option)
from or to the writer of the option at a designated price during the term of the
option. An option on a securities index gives the purchaser of the option, in
return for the premium paid, the right to receive from the seller cash equal to
the difference between the closing price of the index and the exercise price of
the option.

The Fund may write a call or put option only if the option is 'covered.' A call
option on a security written by the Fund is covered if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash

<PAGE>
<PAGE>
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option on a security
is also covered if the Fund holds a call on the same security and in the same
principal amount as the call written where the exercise price of the call held
(a) is equal to or less than the exercise price of the call written or (b) is
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash or liquid portfolio securities in a segregated
account with its custodian. A put option on a security written by the Fund is
'covered' if the Fund maintains similar liquid assets with a value equal to the
exercise price in a segregated account with its custodian, or else holds a put
on the same security and in the same principal amount as the put written where
the exercise price of the put held is equal to or greater than the exercise
price of the put written.

The Fund will cover call options on stock indices by owning securities whose
price changes, in the opinion of the investment adviser are expected to be
similar to those of the index, or in such other manner as may be in accordance
with the rules of the exchange on which the option is traded and applicable laws
and regulations. Nevertheless, where the Fund covers a call option on a stock
index through ownership of securities, such securities may not match the
composition of the index. In that event, the Fund will not be fully covered and
could be subject to risk of loss in the event of adverse changes in the value of
the index. The Fund will cover put options on stock indices by segregating
assets equal to the option's exercise price, or in such other manner as may be
in accordance with the rules of the exchange on which the option is traded and
applicable laws and regulations.

The Fund will receive a premium from writing a put or call option, which
increases the Fund's gross income in the event the option expires unexercised or
is closed out at a profit. If the value of a security or an index on which the
Fund has written a call option falls or remains the same, the Fund will realize
a profit in the form of the premium received (less transaction costs) that could
offset all or a portion of any decline in the value of the portfolio securities
being hedged. If the value of the underlying security or index rises, however,
the Fund will realize a loss in its call option position, which will reduce the
benefit of any unrealized appreciation in the Fund's stock investments. By
writing a put option, the Fund assumes the risk of a decline in the underlying
security or index. To the extent that the price changes of the portfolio
securities being hedged correlate with changes in the value of the underlying
security or index, writing covered put options on securities or indices will
increase the Fund's losses in the event of a market decline, although such
losses will be offset in part by the premium received for writing the option.

The Fund may also purchase put options to hedge its investments against a
decline in value. By purchasing a put option, the Fund will seek to offset a
decline in the value of the portfolio securities being hedged through
appreciation of the put option. If the value of the Fund's investments does not
decline as anticipated, or if the value of the option does not increase, the
Fund's loss will be limited to the premium paid for the option plus related
transaction costs. The success of this strategy will depend, in part, on the
accuracy of the correlation between the changes in value of the underlying
security or index and the changes in value of the Fund's security holdings being
hedged.

The Fund may purchase call options on individual securities to hedge against an
increase in the price of securities that the Fund anticipates purchasing in the
future. Similarly, the Fund may purchase call options to attempt to reduce the
risk of missing a broad market advance, or an advance in an industry or market
segment, at a time when the Fund holds uninvested cash or short-term debt
securities awaiting investment. When purchasing call options, the Fund will bear
the risk of losing all

<PAGE>
<PAGE>
or a portion of the premium paid if the value of the underlying security or
index does not rise.

There can be no assurance that a liquid market will exist when the Fund seeks to
close out an option position. Trading could be interrupted, for example, because
of supply and demand imbalances arising from a lack of either buyers or sellers,
or the options exchange could suspend trading after the price has risen or
fallen more than the maximum specified by the exchange. Although the Fund may be
able to offset to some extent any adverse effects of being unable to liquidate
an option position, the Fund may experience losses in some cases as a result of
such inability.

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FOREIGN CURRENCY CONTRACTS AND CURRENCY HEDGING TRANSACTIONS

In order to hedge against foreign currency exchange rate risks, the Fund may
enter into forward foreign currency exchange contracts and foreign currency
futures contracts, as well as purchase put or call options on foreign
currencies, as described below. The Fund may also conduct its foreign currency
exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing
in the foreign currency exchange market.

The Fund may enter into forward foreign currency exchange contracts ('forward
contracts') to attempt to minimize the risk to the Fund from adverse changes in
the relationship between the U.S. dollar and foreign currencies. A forward
contract is an obligation to purchase or sell a specific currency for an agreed
price at a future date which is individually negotiated and privately traded by
currency traders and their customers. The Fund may enter into a forward
contract, for example, when it enters into a contract for the purchase or sale
of a security denominated in a foreign currency in order to 'lock in' the U.S.
dollar price of the security. In addition, for example, when the Fund believes
that a foreign currency may suffer or enjoy a substantial movement against
another currency, it may enter into a forward contract to sell an amount of the
former foreign currency (or another currency which acts as a proxy for that
currency) approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency. This second investment practice
is generally referred to as 'cross-hedging.' Because in connection with the
Fund's foreign currency forward transactions an amount of the Fund's assets
equal to the amount of the purchase will be held aside or segregated to be used
to pay for the commitment, the Fund will always have cash or other liquid assets
available sufficient to cover any commitments under these contracts or to limit
any potential risk. The segregated account will be marked-to-market on a daily
basis. In addition, the Fund will not enter into such forward contracts if, as a
result, the Fund will have more than 15% of the value of its total assets
committed to such contracts. While these contracts are not presently regulated
by the CFTC, the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Fund's ability to utilize forward contracts in the
manner set forth above may be restricted. Forward contracts may limit potential
gain from a positive change in the relationship between the U.S. dollar and
foreign currencies. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not engaged in such
contracts.

The Fund may purchase and write put and call options on foreign currencies for
the purpose of protecting against declines in the dollar value of foreign
portfolio securities and against increases in the dollar cost of foreign
securities to be acquired. As is the case with other kinds of options, however,
the writing of an option on foreign currency will constitute only a partial
hedge, up to the amount of the premium received, and the Fund could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby

<PAGE>
<PAGE>
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against fluctuation in exchange rates although, in the event
of rate movements adverse to the Fund's position, the Fund may forfeit the
entire amount of the premium plus related transaction costs.

The Fund may enter into exchange-traded contracts for the purchase or sale for
future delivery of foreign currencies ('foreign currency futures'). This
investment technique will be used only to hedge against anticipated future
changes in exchange rates which otherwise might adversely affect the value of
the Fund's portfolio securities or adversely affect the prices of securities
that the Fund intends to purchase at a later date. The successful use of
currency futures will usually depend on the investment adviser's ability to
forecast currency exchange rate movements correctly. Should exchange rates move
in an unexpected manner, the Fund may not achieve the anticipated benefits of
foreign currency futures or may realize losses.

- --------------------------------------------------------------------------------
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;

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) invest in interests in oil, gas, or other mineral exploration or
development programs; (b) 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 (c) 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.

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- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUND

The directors and officers of the Fund and their principal occupations during
the past five years are set forth below. Each such director and officer is also
a director or officer of Cohen & Steers Realty Income Fund, Inc. and Cohen &
Steers Total Return Realty Fund, Inc., both of which are closed-end investment
companies sponsored by the Adviser, and Cohen & Steers Equity Income Fund, Inc.
and Cohen & Steers Special Equity Fund, Inc., both of which are open-end
investment companies also sponsored by the investment adviser.

<TABLE>
<CAPTION>
NAME AND ADDRESS OFFICE PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- --------------------------------- ------------------- -------------------------------------------------------------------
<S> <C> <C>
*Robert H. Steers ............... Director, Chairman Chairman of Cohen & Steers Capital Management, Inc., the Fund's
757 Third Avenue and Secretary investment adviser. Chairman and President of Cohen & Steers
New York, New York Securities, Inc.
Age: 45

*Martin Cohen ................... Director, President President of Cohen & Steers Capital Management, Inc., the Fund's
757 Third Avenue and Treasurer investment adviser. Vice President of Cohen & Steers Securities,
New York, New York Inc.
Age: 49

Gregory C. Clark ................ Director Principal of Wellspring Management Group.
376 Mountain Laurel Drive
Aspen, Colorado
Age: 51

George Grossman ................. Director Attorney at law.
17 Elm Place
Rye, New York
Age: 44

Jeffrey H. Lynford .............. Director Chairman of Wellsford Group Inc. since 1986 and of Wellsford
610 Fifth Avenue Residential Property Trust from 1992 to May 1997. Mr. Lynford is
New York, New York also a Trustee of Equity Residential Properties Trust and an
Age: 50 Emeritus Trustee of the National Trust for Historic Preservation.

Willard H. Smith Jr. ............ Director Board member Essex Property Trust, Inc., Highwoods Properties,
7 Slayton Drive Inc., Realty Income Corporation and Willis Lease Finance
Short Hills, New Jersey Corporation. Managing director at Merrill Lynch & Co., Equity
Age: 61 Capital Markets Division from 1983 to 1995.

Elizabeth O. Reagan ............. Vice President Senior Vice President of Cohen & Steers Capital Management, Inc.,
757 Third Avenue the Fund's investment adviser, since 1996 and prior to that Vice
New York, New York President of Cohen & Steers Capital Management, Inc.
Age: 35

Adam Derechin ................... Vice President and Vice President of Cohen & Steers Capital Management, Inc., the
757 Third Avenue Assistant Treasurer Fund's investment adviser, since 1995.
New York, New York
Age: 33
</TABLE>

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

* Directors who are 'interested persons' of the Fund, as defined in the
Investment Company Act of 1940.

<PAGE>
<PAGE>
The Directors of the Fund who are employees of the Adviser or officers or
employees of any of its affiliates receive no remuneration from the Fund. Each
of the other Directors is paid an annual retainer of $5,500, and a fee of $500
for each meeting attended and is reimbursed for the expenses of attendance at
such meetings.

- --------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS AND CERTAIN OFFICERS

The following table sets forth information regarding compensation of Directors
by the Fund and by the fund complex of which the Fund is a part for the fiscal
year ended December 31, 1997. Officers of the Fund and Directors who are
interested persons of the Fund do not receive any compensation from the Fund or
any other fund in the fund complex which is a U.S. registered investment
company. In the Column headed 'Total Compensation to Directors by Fund Complex,'
the compensation paid to each Director represents the five funds that each
Director serves in the fund complex. The Directors do not receive any pensions
or retirement benefits from the fund complex.

<TABLE>
<CAPTION>
COMPENSATION TABLE
FISCAL YEAR ENDED DECEMBER 31, 1997
TOTAL
AGGREGATE COMPENSATION
COMPENSATION PAID TO
FROM DIRECTORS BY
NAME OF PERSON, POSITION REGISTRANT FUND COMPLEX
- --------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Gregory C. Clark*, Director............................................................ $7,500 $31,458
Martin Cohen**, Director and President................................................. 0 0
George Grossman*, Director............................................................. 7,500 31,458
Jeffrey H. Lynford*, Director.......................................................... 7,500 31,458
Willard H. Smith Jr.*, Director........................................................ 7,500 31,458
Robert H. Steers**, Director and Chairman.............................................. 0 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.

- --------------------------------------------------------------------------------
ADVISER AND INVESTMENT ADVISORY AGREEMENT

Cohen & Steers, a registered investment adviser, was formed in 1986 and
specializes in the management of real estate securities portfolios. Its current
clients include pension plans of leading corporations, endowment funds and
mutual funds, including Cohen & Steers Realty Income Fund, Inc. and Cohen &
Steers Total Return Realty Fund, Inc., both of which are closed-end investment
companies and Cohen & Steers Equity Income Fund, Inc. and Cohen & Steers Special
Equity Fund, Inc., both of which are open-end investment companies. Mr. Cohen
and Mr. Steers may be deemed 'controlling persons' of the Adviser on the basis
of their ownership of the Adviser's stock.

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

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

Under the Advisory Agreement, the Fund will pay the Adviser a monthly management
fee in an amount equal to 1/12th of 0.85% of the average daily value of the net
assets of the Fund up to $2.5 billion, plus 1/12th of 0.75% of such assets in
excess of $2.5 billion. (Prior to April 1, 1997, the monthly management fee was
1/12th of .85% of the average daily value of all net assets of the Fund.) During
the years ended December 31, 1997, 1996 and 1995, the Adviser received a
management fee from the Fund in the amount of $23,991,224, $9,704,419 and
$4,956,723, respectively.

The Adviser also provides the Fund with such personnel as the Fund may from time
to time request for the performance of clerical, accounting and other office
services, such as coordinating matters with the administrator, the transfer
agent and the custodian, which the Adviser is not required to furnish under the
Advisory Agreement. The personnel rendering these services, who may act as
officers of the Fund, may be employees of the Adviser or its affiliates. The
cost to the Fund of these services must be agreed to by the Fund and is intended
to be no higher than the actual cost to the Adviser or its affiliates of
providing the services. The Fund does not pay for services performed by officers
of the Adviser or its affiliates. The Fund may from time to time hire its own
employees or contract to have services performed by third parties, and the
management of the Fund intends to do so whenever it appears advantageous to the
Fund.

The Advisory Agreement was approved on 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 10, 1997.

The Advisory Agreement is terminable without penalty by the Fund on 60 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

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. For its services
under the Administration Agreement, the Adviser receives a monthly fee from the
Fund at the annual rate of 0.02% of the Fund's average daily net assets.

In accordance with the terms of the Administration Agreement and with the
approval of the Fund's Board of Directors, the Adviser has caused the Fund to
retain Chase Manhattan Bank ('Chase') as sub-administrator under a fund
accounting and administration agreement (the 'Sub-Administration Agreement').
Under the Sub-Administration Agreement, Chase has assumed responsibility for
performing certain of the foregoing administrative functions, including
determining the Fund's net asset value and preparing such figures for
publication, maintaining certain of the Fund's books and records that are not
maintained by the Adviser, custodian or transfer agent, preparing financial
information for the Fund's income tax returns, proxy statements, quarterly and
annual shareholders reports, and Commission filings, and responding to
shareholder inquiries. 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 the years ended December 31, 1997, 1996 and 1995, the Adviser received
Administration fees from the Fund in the amounts of $572,847, $228,410 and
$61,772, respectively, and Chase received sub-administration fees from the Fund
in the amounts of $1,215,695, $772,468 and $688,290.

The Administration Agreement is terminable by either party on 60 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, Chase
shall not be liable for any action or failure to act in accordance with its
duties thereunder.

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

Net asset value per share is determined by the Fund on each day the New York
Stock Exchange is open for trading, and on any other day during which there is a
sufficient degree of trading in the investments of the Fund to affect materially
the Fund's net asset value.

For purposes of determining the Fund's net asset value per share, 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 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 Conduct Rules of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Adviser may consider sales of shares of the Fund as a factor in the selection of
brokers and dealers to enter into portfolio transactions with the Fund.

For the years ended December 31, 1997, 1996 and 1995, the Fund paid a total of
$5,415,596, $2,724,912 and $1,423,060 in brokerage commissions with respect to
portfolio transactions aggregating $3,172,339,236, $1,522,810,641 and
$553,557,388, respectively. Of such amount, $1,244,671, $733,405 and $572,896 in
brokerage commissions with respect to portfolio transactions aggregating
$630,412,065, $274,587,726 and $104,969,223, 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, 1997
was 40.4%.

- --------------------------------------------------------------------------------
TAXATION

Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Fund and the purchase, ownership, and disposition of Fund shares.
This discussion does not purport to be complete or to deal with all aspects of
federal income taxation that may be relevant to shareholders in light of their
particular circumstances. This discussion is based upon present provisions of
the Internal Revenue Code of 1996, as amended (the 'Code'), the regulations
promulgated thereunder, and judicial and administrative ruling authorities, all
of which are subject to change, which change may be retroactive. Prospective
investors should consult their own tax advisors with regard to the federal tax
consequences of the purchase, ownership, or disposition of Fund shares, as well
as the tax consequences arising under the laws of any state, foreign country, or
other taxing jurisdiction.

- --------------------------------------------------------------------------------
TAXATION OF THE FUND

The Fund intends to qualify annually and to elect to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
'Code').

To qualify as a regulated investment company, the Fund must, among other things,
(a) derive in each taxable year at least 90% of its gross income from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of stock, securities or foreign currencies or other income
derived with respect to its business of investing in such stock, securities or
currencies; (b) diversify its holdings

so that, at the end of each quarter of the taxable year, (i) at least 50% of the
market value of the Fund's assets is represented by cash and cash items
(including receivables), U.S. Government securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of the Fund's total assets and not greater than 10%
of the outstanding voting securities of such issuer, and (ii) not more than 25%
of the value of its total assets is invested in the securities of any one issuer
(other than U.S. Government securities or the securities of other regulated
investment companies); and (c) distribute at least 90% of its investment company
taxable income (which includes, among other items, dividends, interest and net
short-term capital gains in excess of net long-term capital losses) each taxable
year.

As a regulated investment company, the Fund generally will not be subject to
U.S. federal income tax on its investment company taxable income and net capital
gains (the excess of net long-term capital gains over net short-term capital
losses), if any, that it distributes to shareholders. The Fund intends to
distribute to its shareholders, at least annually, substantially all of its
investment company taxable income and net capital gains. Amounts not distributed
on a timely basis in accordance with a calendar year distribution requirement
are subject to a nondeductible 4% excise tax. To prevent imposition of the
excise tax, the Fund must distribute during each calendar year an amount equal
to the sum of (1) at least 98% of its ordinary income (not taking into account
any capital gains or losses) for the calendar year, (2) at least 98% of its
capital gains in excess of its capital losses (adjusted for certain ordinary
losses) for the one-year period ending on October 31 of the calendar year, and
(3) any ordinary income and capital gains for previous years that was not
distributed during those years. A distribution will be treated as paid on
December 31 of the current calendar year if it is declared by the Fund in
October, November or December with a record date in such a month and paid by the
Fund during January of the 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 (the excess of
net long-term capital gains over net short-term capital losses), if any,
designated as capital gain dividends may be taxable to individuals and certain
other shareholders at the maximum federal 20% or 28% capital gains rate
(depending upon the holding period for the assets giving rise to the capital
gains), regardless of how long the shareholder has held Fund shares.
Shareholders receiving distributions in the form of additional shares, rather
than cash, generally will have a cost basis in each such share equal to the net
asset value of a share of the Fund on the reinvestment date.

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.

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
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 OR EXCHANGE OF SHARES

Upon the sale or other disposition of shares of the Fund, including an exchange
of shares in the Fund for shares of another Cohen & Steers fund, a shareholder
may realize a capital gain or loss for federal income tax purposes. Capital
gains may be taxable to individuals and certain other shareholders at the
maximum federal 20% or 28% capital gains rate (depending upon the shareholder's
holding period for the shares). A shareholder who exchanges shares in the Fund
for shares of another Cohen & Steers fund will have a tax basis in the
newly-acquired fund shares equal to the amount invested and will begin a new
holding period for federal income tax purposes.

If a shareholder exchanges shares in the Fund for shares in another Cohen &
Steers fund pursuant to a reinvestment right, the sales charge incurred in the
purchase of the Fund shares exchanged may not be added to tax basis in
determining gain or loss for federal income tax purposes. Instead, the sales
charge for the exchanged Fund shares shall be added to basis for purposes of
determining gain or loss on the disposition of the newly-acquired fund shares,
if such newly-acquired fund shares are not disposed of in a similar exchange
transaction. Any loss realized on a sale or exchange will be disallowed to the
extent the shares disposed of are replaced (including through reinvestment of
dividends) within a period of 61 days beginning 30 days before and ending 30
days after disposition of the shares. 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

<PAGE>
<PAGE>
individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt
entity) subject to tax on unrelated business income, thereby potentially
requiring such an entity that is allocated excess inclusion income, and
otherwise might not be required to file a tax return, to file a tax return and
pay tax on such income, and (iii) in the case of a foreign shareholder, will not
qualify for any reduction in U.S. federal withholding tax. In addition, if at
any time during any taxable year a 'disqualified organization' (as defined in
the Code) is a record holder of a share in a regulated investment company, then
the regulated investment company will be subject to a tax equal to that portion
of its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest federal income tax rate
imposed on corporations. The Adviser does not intend on behalf of the Fund to
invest in REITs, a substantial portion of the assets of which consists of
residual interests in REMICs.

- --------------------------------------------------------------------------------
PASSIVE FOREIGN INVESTMENT COMPANIES

The Fund may invest in shares of foreign corporations that may be classified
under the Code as passive foreign investment companies ('PFICs'). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of its gross income is
investment-type income. If the Fund receives a so-called 'excess distribution'
with respect to PFIC stock, the Fund itself may be subject to a tax on a portion
of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund will itself be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.

The Fund may be eligible to elect alternative tax treatment with respect to PFIC
shares. Under an election that currently is available in come circumstances, the
Fund would be required to include in its gross income its share of the earnings
of a PFIC on a current basis, regardless of whether distributions were received
from the PFIC in a given year. If this election were made, the special rules,
discussed above, relating to the taxation of excess distributions, would not
apply. In addition, another election would involve marking to market the Fund's
PFIC shares at the end of each taxable year, with the result that unrealized
gains would be treated as though they were realized and reported as ordinary
income. Any mark-to-market losses and any loss from an actual disposition of
PFIC shares would be deductible as ordinary losses to the extent of any net
mark-to-market gains included in income in prior years.

- --------------------------------------------------------------------------------
FOREIGN WITHHOLDING TAXES

Income received by the Fund from sources within foreign countries may be subject
to withholding and other taxes imposed by such countries.

- --------------------------------------------------------------------------------
BACKUP WITHHOLDING

The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund with their correct

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

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

Distributions of capital gain dividends and any amounts retained by the Fund
which are designated as undistributed capital gains will not be subject to U.S.
tax at the rate of 30% (or lower treaty rate) unless the foreign shareholder is
a nonresident alien individual and is physically present in the United States
for more than 182 days during the taxable year and meets certain other
requirements. However, this 30% tax on capital gains of nonresident alien
individuals who are physically present in the United States for more than the
182 day period only applies in exceptional cases because any individual present
in the United States for more than 182 days during the taxable year is generally
treated as a resident for U.S. income tax purposes; in that case, he or she
would be subject to U.S. income tax on his or her worldwide income at the
graduated rates applicable to U.S. citizens, rather than the 30% U.S. tax. In
the case of a foreign shareholder who is a nonresident alien individual, the
Fund may be required to withhold U.S. income tax at a rate of 31% of
distributions of net capital gains unless the foreign shareholder certifies his
or her non-U.S. status under penalties of perjury or otherwise establishes an
exemption. See 'Taxation -- Backup Withholding,' above. If a foreign shareholder
is a nonresident alien individual, any gain such shareholder realizes upon the
sale or exchange of such shareholder's shares of the Fund in the United States
will ordinarily be exempt from U.S. tax unless (i) the gain is U.S. source
income and such shareholder is physically present in the United States for more
than 182 days during the taxable year and meets certain other requirements, or
is otherwise considered to be a resident alien of the United States, or (ii) at
any time during the shorter of the period during which the foreign shareholder
held shares of the Fund and the five year period ending on the date of the
disposition of those shares, the Fund was a 'U.S. real property holding
corporation' and the foreign shareholder held more than 5% of the shares of the
Fund, in which event the gain would be taxed in the same manner as for a U.S.
shareholder as discussed above and a 10% U.S. withholding tax would be imposed
on the amount realized on the disposition of such shares to be credited against
the foreign shareholder's U.S. income tax liability on such disposition. A
corporation is a 'U.S. real property holding corporation' if the fair market
value of its U.S. real property interests equals or exceeds 50% of the fair
market value of such interests plus its interests in real property located
outside the United States plus any other assets used or held for use in a
business. In the case of the Fund, U.S. real property interests include
interests in stock in U.S. real property holding corporations (other than stock
of a

<PAGE>
<PAGE>
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.

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

The Fund was incorporated on April 26, 1991 as a Maryland corporation and is
authorized to issue 200,000,000 shares of Common Stock, $0.001 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 outstanding 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 April 20, 1998, there were 64,652,843 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
Fund knew of no person who owned 5% or more of the Fund's shares.

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

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

- --------------------------------------------------------------------------------
CUSTODIAN AND TRANSFER AND DIVIDEND DISBURSING AGENT

Chase, which has its principal business at One Chase Manhattan Plaza, New York,
New York 10081-1000 has been retained to act as custodian of the Fund's
investments and as the Fund's transfer and dividend disbursing agent. Chase
has retained its wholly-owned subsidiary, Chase

Global Funds Services Company, to provide transfer and dividend disbursing
agency services to the Fund. Neither Chase nor Chase Global Funds Services
Company has any part in deciding the Fund's investment policies
or which securities are to be purchased or sold for the Fund's portfolio.

- --------------------------------------------------------------------------------
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 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 in the future. In
addition, because performance will fluctuate, it may not provide a basis for
comparing an investment in the Fund with certain bank deposits or other
investments that pay a fixed yield for a stated period of time. Investors
comparing the Fund's performance with that of other mutual funds should give
consideration to the quality and maturity of the respective investment
companies' portfolio securities.

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN

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

P(1 + T)'pp'n = ERV

<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, 1997, for
the five years ended December 31, 1997 and for the period from July 2, 1991
(commencement of operations) to December 31, 1997 were 21.2%, 19.1% and 19.1%,
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
20

<PAGE>
<PAGE>
during the period ('net investment income') and are computed by dividing net
investment income by the maximum offering price per share on the last day of
the period, according to the following formula:

a - b
2[( ------- + 1)'pp'6 - 1]
cd

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

In reports or other communications to shareholders of the Fund or in advertising
materials, the Fund may compare its performance with that of (i) other mutual
funds listed in the rankings prepared by Lipper Analytical Services, 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, 30 Rockefeller Center, New
York, New York 10112.

Coopers & Lybrand L.L.P., 1301 Avenue 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, 1997,
including notes thereto, are incorporated by reference in this Statement of
Additional Information from the Fund's Annual Report dated as of December 31,
1997.

<PAGE>
<PAGE>
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, 1997,
including notes thereto are incorporated by reference in the Statement of
Additional Information from the Fund's Annual Report dated as of December
31, 1997.

(b) Exhibits

1. Articles of Incorporation*, with Articles Supplementary filed with
the Secretary of State of the State of Maryland on December 26, 1996.****

2. By-Laws**

3. Not Applicable

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

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

(B) Form of Administration Agreement***

6. Not Applicable

7. Not Applicable

8. Form of Custodian Agreement**

9. (A) Form of Transfer Agency Agreement**

(B) Shareholder Service Plan****

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. 6 on March 12, 1996.

**** Filed with Post-Effective Amendment No. 7 on March 31, 1997.

C-1

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

None.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

The Registrant had 10,815 record holders of Common Stock, par value $.001
per share, as of March 31, 1998.

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 Equity Income Fund, Inc.

Cohen & Steers Realty Income Fund, Inc.

Cohen & Steers Total Return Realty Fund, Inc.

Cohen & Steers Special Equity Fund, Inc.

Frank Russell Investment Management Company Real Estate Securities Fund

ITEM 29. PRINCIPAL UNDERWRITERS

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

(b) The following are directors and officers of Cohen & Steers Securities,
Inc. The principal address of these persons is 757 Third Avenue, N.Y., N.Y.
10017.

<TABLE>
<CAPTION>
POSITION AND POSITIONS AND
NAME OFFICES WITH DISTRIBUTOR OFFICES WITH REGISTRANT
- ------------------------------ ------------------------------ ------------------------------

<S> <C> <C>
Robert H. Steers.............. President and Chairman 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

<PAGE>
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that
it meets all of the requirements for effectiveness of this Post-Effective
Amendment No. 8 to its Registration Statement pursuant to Rule 485(b) uner the
Securities Act of 1933 and has duly caused this Post-Effective Amendment
No. 8 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 29th day of April, 1998.

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
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
1. Acting Principal Executive Officer:

/s/ MARTIN COHEN President April 29, 1998
.........................................
(MARTIN COHEN)

2. Principal Financial and
Accounting Officer:

/s/ MARTIN COHEN Treasurer April 29, 1998
.........................................
(MARTIN COHEN)

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

By /s/ MARTIN COHEN April 29, 1998
.........................................
(MARTIN COHEN)
ATTORNEY-IN-FACT

/S/ MARTIN COHEN April 29, 1998
.........................................
(MARTIN COHEN)
</TABLE>

C-3

<PAGE>
<PAGE>
EXHIBIT INDEX

EXHIBIT
- -------
<C> <S>
11. Consent of Independent Accountants
16. Schedule for Computation of Performance Quotation
17. Financial Data Schedule
</TABLE>

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

Characters normally expressed as superscript shall be preceded by ......... 'pp'

<PAGE>

[COOPERS & LYBRAND LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the Post-Effective Amendment
No. 8 to the Registration Statement of Cohen & Steers Realty Shares, Inc. on
Form N-1A (File Nos. 33-40215 and 811-6302) of our report dated February 3,
1998, on our audit of the financial statements and financial highlights of
Cohen & Steers Realty Shares, Inc., which report is included in the Annual
Report to Shareholders for the year ended December 31, 1997, which is also
incorporated by reference in this Post-Effective Amendment to the Registration
Statement.

We consent to the reference to our Firm under the caption "Financial Highlights"
in the Prospectus and the caption "Counsel and Independent Accountants" in the
Statement of Additional Information.

/s/ Coopers & Lybrand, L.L.P.
Coopers & Lybrand, L.L.P.

New York, New York
April 24, 1998

<PAGE>

Principal Only Performance Calculation
- --------------------------------------
T = Average Annual Total Return
P = A hypothetical initial investment of $1,000
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 investment made at the
beginning of a 1, 5, 10 year period at the end of a 1, 5, 10 year (or
fractional portion thereof), assuming reinvestment of all dividends and
distributions

where,

T = ( ERV-P )'pp'1/n
-----------
P

Cohen & Steers Realty Shares, Inc.
- ----------------------------------
Year ended December 31, 1997
T = ($1,212-$1,000)/$1,000
T = 0.212 or 21.2%

Five Years ended December 31, 1997

T = (($2,399-$1,000)/$1,000)'pp'1/5

T = 0.1912 or 19.1%

Inception to December 31, 1997

T = (($3,115-$1,000)/$1,000)'pp'1/6.5

T = 0.1910 or 19.1%

<PAGE>

<ARTICLE> 6
<CIK> 0000874505
<NAME> COHEN & STEERS REALTY SHARES, INC.
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 2,721,739
<INVESTMENTS-AT-VALUE> 3,432,660
<RECEIVABLES> 51,676
<ASSETS-OTHER> 54
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 3,484,390
<PAYABLE-FOR-SECURITIES> 44,616
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 6,779
<TOTAL-LIABILITIES> 51,395
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,684,592
<SHARES-COMMON-STOCK> 68,415
<SHARES-COMMON-PRIOR> 60,713
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37,482
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 710,921
<NET-ASSETS> 3,432,995
<DIVIDEND-INCOME> 136,801
<INTEREST-INCOME> 8,827
<OTHER-INCOME> 0
<EXPENSES-NET> (29,990)
<NET-INVESTMENT-INCOME> 115,638
<REALIZED-GAINS-CURRENT> 163,378
<APPREC-INCREASE-CURRENT> 291,843
<NET-CHANGE-FROM-OPS> 570,859
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (116,293)
<DISTRIBUTIONS-OF-GAINS> (149,114)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 42,163
<NUMBER-OF-SHARES-REDEEMED> (22,803)
<SHARES-REINVESTED> 4,893
<NET-CHANGE-IN-ASSETS> 1,396,616
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 65,717
<OVERDISTRIB-NII-PRIOR> (2,262)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 23,991
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 30,334
<AVERAGE-NET-ASSETS> 2,865,855
<PER-SHARE-NAV-BEGIN> 45.09
<PER-SHARE-NII> 1.87
<PER-SHARE-GAIN-APPREC> 7.40
<PER-SHARE-DIVIDEND> (1.88)
<PER-SHARE-DISTRIBUTIONS> (2.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 50.18
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

<PAGE>