Q: What is a closed-end mutual fund?
A: A closed-end fund is an investment company that issues a fixed number of shares through an initial public offering (IPO). The assets of the fund (a portfolio of securities) are professionally managed. After the IPO, closed-end fund shares trade in the secondary market, either on an exchange or on the over-the-counter market, much like a stock. The trading price of the fund's shares is determined by its market price, not by the fund's net asset value (NAV).

Q: What is the difference between a closed-end mutual fund and an open-end mutual fund?
A: Open-end funds continuously sell and redeem shares for investors. Closed-end funds sell a fixed number of shares once, in an initial public offering. Closed-end fund shares cannot be redeemed directly, only sold in a secondary market, typically the American Stock Exchange, New York Stock Exchange or the Nasdaq. Open-end fund share prices are determined by the fund's net asset value (NAV), which is calculated at the end of each business day. Closed-end fund share prices fluctuate throughout the day, as they are driven by market price, which is determined by supply and demand.

Q: What is the difference between a closed-end mutual fund and an open-end mutual fund that is "closed"?
A: Closed-end mutual funds issue a fixed number of shares, which are bought and sold on a stock exchange or market. When an open-end mutual fund is "closed", this means the fund is no longer allowing new investors into the fund.

Q: What is the difference between net asset value (NAV) and the market price of closed-end mutual funds?
A: Per share net asset value (NAV) is the current value of a fund's assets, less liabilities, divided by the total shares outstanding. Market price is the price an investor pays or receives when he or she purchases or sells shares of a closed-end mutual fund. Again, this price is determined by supply and demand for the closed-end fund on a stock exchange or market. Both open-end and closed-end mutual funds calculate NAV per share, but only open-end mutual funds allow transactions at the fund's NAV.

Q: What does it mean when a closed-end mutual fund trades at a discount or premium?
A: A premium occurs when the market price of a closed-end mutual fund share is more than its net asset value per share (NAV). Conversely, a discount occurs when the market price of a closed-end mutual fund share is less than its NAV per share.

Q: What is a "leveraged" closed-end mutual fund?
A: Generally, a fund is "leveraged" if it borrows money or issues debt securities or preferred shares to increase its total assets. The additional capital raised by leveraging is traditionally used to purchase additional portfolio securities in accordance with the fund's investment objectives and policies.

Q: Why does a fund use "leverage"?
A: Traditionally, funds use leverage in an effort to produce higher returns for their common stockholders. If a fund can invest the additional capital raised through leverage in securities that produce a higher rate of return than the cost of the leverage, the fund produces what is called a positive "spread" on its leverage. That additional income, or "spread", is then available to be distributed to the fund's common shareholders. However, leverage is not without risks. (Please see next question).

Q: Is a leveraged fund more risky than a non-leveraged fund, and why?
A: While a leveraged fund offers the potential for greater returns, a leveraged fund also presents greater risk . Leverage increases the likelihood that a fund's net asset value and market price per share will be more volatile, and decline more rapidly, than a fund that does not use leverage. In addition, if the cost of the leverage increases because of rising short-term interest rates, and/or the returns earned on the fund's portfolio securities decline, this could negatively impact the returns to the fund's common shareholders.

Q: Can a closed-end mutual fund take steps that are designed to reduce these leverage risks?
A: Yes, there are a number of steps that a fund can take in an effort to reduce the risks of leverage. As discussed above, one of the primary reasons leveraged funds are more risky than non-leveraged funds is because the cost of the leverage may rise with the overall increase in interest rates. All of our leveraged closed-end funds have entered into "interest rate swap" transactions with respect to a portion of each fund's leverage. Interest rate swaps can be used to "lock in" the cost of leverage and reduce the negative impact that rising short-term interest rates would have on a fund's leveraging costs. A leveraged fund that did not engage in this or a similar type of portfolio hedging/management technique might be forced to reduce its distributions when short-term interest rates rise. Please note that the use of interest rate swaps may not protect our leveraged closed-end mutual funds from the negative impact that overall rising interest rates could have on a fund's portfolio holdings and share price, or on the ability of our these funds to pay their distributions.

Q: Are there any potential downsides to using portfolio techniques such as interest rate swaps?
A: Yes, there are several potential downsides. The use of investment instruments such as interest rate swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio security transactions. In addition, interest rate swaps only work if the other party the fund has contracted with - called the counterparty - honors its obligations. In this regard, RLF, RQI, RPF, RNP, RTU, UTF, RWF and INB have entered into interest rate swaps with only highly rated organizations that Cohen & Steers believes offer sufficient creditworthiness. Moreover, if short-term interest rates decline, the use of interest rate swaps detracts from the ability a fund might otherwise have to earn additional returns for common shareholders. Also, the preferred shares a fund issues to create the leverage are rated by national rating agencies pursuant to certain investment guidelines that must be met. If the fund fails to meet these guidelines, it may have to take certain steps, including reducing the amount of leverage, which could negatively impact common shareholders.

Q: Which Cohen & Steers closed-end mutual funds are leveraged?
A: RLF, RQI, RPF, RNP, RTU, UTF, RWF and INB are leveraged. The percentage of leverage varies over time with market conditions, but is generally approximately 35% of each closed-end mutual fund's total assets. None of the open-end Cohen & Steers funds uses leverage.