UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07707
AllianceBernstein Real Estate Investment Fund, Inc.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: November 30, 2003
Date of reporting period: November 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
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Specialty Equity
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AllianceBernstein [LOGO](SM)
Investment Research and Management
AllianceBernstein Real Estate Investment Fund
Annual Report -- November 30, 2003
Investment Products Offered
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o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
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This shareholder report must be preceded or accompanied by the Fund's prospectus
for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and procedures,
without charge, upon request by visiting Alliance Capital's web site at
www.investor.alliancecapital.com or on the Securities and Exchange Commission's
web site at http://www.sec.gov, or by calling Alliance Capital at (800)
227-4618.
AllianceBernstein Investment Research and Management, Inc. is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
January 12, 2004
Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Real Estate Investment Fund (the "Fund") for the annual
reporting period ended November 30, 2003.
Investment Objective and Policies
This open-end fund seeks total return on its assets from long-term growth of
capital and from income principally through investing in a portfolio of equity
securities of issuers that are primarily engaged in, or related to, the real
estate industry.
Investment Results
The following table provides the performance results for the Fund and its
benchmarks, the National Association of Real Estate Investment Trusts (NAREIT)
Equity Index and the Standard & Poor's (S&P) 500 Stock Index, for the six- and
12-month periods ended November 30, 2003.
INVESTMENT RESULTS*
Periods Ended November 30, 2003
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Returns
---------------------------------
6 Months 12 Months
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AllianceBernstein
Real Estate
Investment Fund
Class A 19.92% 34.89%
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Class B 19.60% 34.05%
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Class C 19.56% 34.10%
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NAREIT Equity Index 18.89% 33.48%
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S&P 500 Stock Index 10.80% 15.08%
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* The Fund's investment results are for the periods shown and are based on the
net asset value (NAV) of each class of shares as of November 30, 2003. Returns
do not reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. All fees and expenses related to
the operation of the Fund have been deducted, but no adjustment has been made
for sales charges that may apply when shares are purchased or redeemed. Returns
for Advisor Class shares will vary due to different expenses associated with
this class. Returns for the Fund include the reinvestment of any distributions
paid during each period. Past performance is no guarantee of future results.
The unmanaged National Association of Real Estate Investment Trusts (NAREIT)
Equity Index and the unmanaged Standard & Poor's (S&P) 500 Stock Index do not
reflect fees and expenses associated with the active management of a mutual fund
portfolio. The NAREIT Equity Index is a market-value-weighted index based upon
the last closing price of the month for tax-qualified real estate investment
trusts (REITs) listed on the NYSE, AMEX and the NASDAQ. The S&P 500 Stock Index
includes 500 U.S. stocks and is a common measure of the performance of the
overall U.S. stock market. An investor cannot invest directly in an index, and
its results are not indicative of any specific investment, including
AllianceBernstein Real Estate Investment Fund.
Additional investment results appear on page 5.
For the six- and 12-month periods ended November 30, 2003, the Fund
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 1
outperformed both benchmarks, the NAREIT Equity Index and the S&P 500 Stock
Index. The Fund performed quite well throughout the fiscal year. Specifically,
the Fund benefited from strong sector selection and strong selection of
securities within sectors. During the period under review, the Fund was
overweighted towards retail real estate and underweighted in office and
residential properties. Retail outperformed the office and residential sectors.
In all three sectors, the Fund's holdings outperformed the Fund's benchmarks.
However, Fund gains were somewhat offset by the maintenance of a small cash
cushion throughout the year.
The Fund benefited from strong securities selection throughout the fiscal year.
Sector selection, however, was less pronounced in the six-month period where
health care real REITs, a group to which the Fund had little exposure, performed
quite well. The reduction in outperformance due to sector selection was offset
by the reduction in the Fund's cash cushion. As a result, the Fund performed
well versus its REIT and S&P benchmarks during this period.
Market Review and Investment Strategy
Real estate securities continued their strong performance in the recent six- and
12-month periods under review, in spite of weak underlying real estate dynamics.
Demand for office, industrial, hotel and apartment real estate was impacted by
the weak overall economy and poor job formations. However, strong consumer
spending buoyed retail real estate throughout the year. Furthermore, all real
estate sectors were lifted by ongoing investor appetite for the yield and
stability provided by real estate compared to other investment alternatives.
We maintained the Fund's high exposure to retail real estate throughout the
period to benefit from the strong consumer spending. Furthermore, we limited the
Fund's exposure to office and apartment securities in the face of weak job
growth and the continued attractiveness of home ownership. As the year
progressed, evidence of an economic rebound mounted. In response to this, we
increased the Fund's exposure to industrial and hotel property companies because
these sectors historically have benefited during the early stages of an economic
expansion. We have also been adding to the Fund's office exposure.
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2 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Performance Update
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PERFORMANCE UPDATE
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND CLASS A
GROWTH OF A $10,000 INVESTMENT
9/30/96* TO 11/30/03
NAREIT Equity Index: $22,274
AllianceBernstein Real Estate Investment Fund Class A: $20,181
S&P 500 Stock Index: $17,154
[THE FOLLOWING TABLE WAS DEPICTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
AllianceBernstein
Real Estate Investment S&P 500 NAREIT
Fund Class A Stock Index Equity Index
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9/30/96* $ 9,579 $ 10,000 $ 10,000
11/30/96 $ 10,278 $ 11,053 $ 10,766
11/30/97 $ 13,877 $ 14,202 $ 13,963
11/30/98 $ 11,533 $ 17,566 $ 12,096
11/30/99 $ 10,074 $ 21,235 $ 10,901
11/30/00 $ 12,698 $ 20,337 $ 13,277
11/30/01 $ 14,269 $ 17,854 $ 15,807
11/30/02 $ 14,961 $ 14,906 $ 16,687
11/30/03 $ 20,181 $ 17,154 $ 22,274
This chart illustrates the total value of an assumed $10,000 investment in
AllianceBernstein Real Estate Investment Fund Class A shares (from 9/30/96* to
11/30/03) as compared to the performance of appropriate broad-based indices.
Returns do not reflect the deduction of taxes that a shareholder would pay on
fund distributions or the redemption of fund shares. The chart reflects the
deduction of the maximum 4.25% sales charge from the initial $10,000 investment
in the Fund and assumes the reinvestment of dividends and capital gains.
Performance for Class B, Class C and Advisor Class shares will vary from the
results shown above due to differences in expenses charged to these classes.
Past performance is not indicative of future results, and is not representative
of future gain or loss in capital value or dividend income.
The unmanaged National Association of Real Estate Investment Trusts (NAREIT)
Equity Index and the unmanaged Standard & Poor's (S&P) 500 Stock Index do not
reflect fees and expenses associated with the active management of a mutual fund
portfolio. The NAREIT Equity Index is a market-value-weighted index based upon
the last closing price of the month for tax-qualified real estate investment
trusts (REITs) listed on the NYSE, AMEX and the NASDAQ. The S&P 500 Stock Index
is comprised of 500 U.S. companies and is a common measure of the performance of
the overall U.S. stock market. An investor cannot invest directly in an index,
and its results are not indicative of any specific investment, including
AllianceBernstein Real Estate Investment Fund.
* Fund and benchmark data are from the Fund's Class A share inception date of
9/30/96.
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 3
Portfolio Summary
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PORTFOLIO SUMMARY
November 30, 2003
INCEPTION DATES
Class A Shares
9/30/96
Class B Shares
9/30/96
Class C Shares
9/30/96
PORTFOLIO STATISTICS
Net Assets ($mil): $313.7
SECTOR/INDUSTRY BREAKDOWN
20.8% Regional Malls
18.7% Office
13.8% Apartment
12.7% Warehouse & Industrial [PIE CHART OMITTED]
12.2% Shopping Centers
8.6% Diversified
6.1% Hotels & Restaurants
2.6% Office-Industrial Mix
2.4% Storage
0.5% Industrial
1.6% Short-Term
All data as of November 30, 2003. The Fund's sector/industry breakdown is
expressed as a percentage of total investments and may vary over time.
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4 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Investment Results
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INVESTMENT RESULTS
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2003
Class A Shares
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Without Sales Charge With Sales Charge
1 Year 34.89% 29.17%
5 Years 11.84% 10.87%
Since Inception* 10.96% 10.29%
Class B Shares
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Without Sales Charge With Sales Charge
1 Year 34.05% 30.05%
5 Years 11.05% 11.05%
Since Inception* 10.19% 10.19%
Class C Shares
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Without Sales Charge With Sales Charge
1 Year 34.10% 33.10%
5 Years 11.08% 11.08%
Since Inception* 10.21% 10.21%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT QUARTER-END (DECEMBER 31, 2003)
Class A Class B Class C
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1 Year 32.68% 33.74% 36.71%
5 Years 12.11% 12.33% 12.32%
Since Inception* 10.71% 10.60% 10.61%
The Fund's investment results represent average annual returns. Returns do not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or the redemption of fund shares. The returns reflect reinvestment
of dividends and/or capital gains distributions in additional shares without and
with the effect of the 4.25% maximum front-end sales charge for Class A or
applicable contingent deferred sales charge for Class B (4% year 1, 3% year 2,
2% year 3, 1% year 4); and for Class C shares (1% year 1). Returns for Class A
shares do not reflect the imposition of the 1 year, 1% contingent deferred sales
charge for accounts over $1,000,000. Returns for Advisor Class shares will vary
due to different expenses associated with this class.
While the Fund invests principally in the equity securities of real estate
investment trusts, in order to achieve its investment objectives, the Fund may
invest up to 20% of its total assets in mortgage-backed securities, which
involve risks described in the prospectus. An investment in the Fund is subject
to certain risks associated with the direct ownership of real estate and with
the real estate industry in general, including declines in the value of real
estate, general and local economic conditions and interest rates.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception Date: 9/30/96 for all share classes.
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 5
Ten Largest Holdings
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TEN LARGEST HOLDINGS
November 30, 2003
Percent of
Company U.S. $ Value Net Assets
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ProLogis Trust $ 20,468,550 6.5%
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Simon Property Group, Inc. 20,394,010 6.5
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General Growth Properties, Inc. 16,805,100 5.4
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Developers Diversified Realty Corp. 14,513,506 4.6
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AMB Property Corp. 13,707,122 4.4
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Rouse Co. 13,677,426 4.4
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Vornado Realty Trust 12,966,270 4.1
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Equity Office Properties Trust 12,400,856 4.0
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Host Marriott Corp. 11,676,280 3.7
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Boston Properties, Inc. 10,198,125 3.2
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$ 146,807,245 46.8%
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6 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Portfolio of Investments
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PORTFOLIO OF INVESTMENTS
November 30, 2003
Company Shares U.S. $ Value
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COMMON STOCKS-97.7%
Real Estate Investment Trusts-95.8%
Apartment-13.7%
Apartment Investment & Management Co. Cl. A 197,400 $ 6,721,470
Archstone-Smith Trust 241,200 6,628,176
Avalonbay Communities, Inc. 49,700 2,375,660
Camden Property Trust 214,600 9,021,784
Equity Residential Properties Trust 249,600 7,328,256
Essex Property Trust, Inc. 68,700 4,393,365
United Dominion Realty Trust 358,100 6,606,945
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43,075,656
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Diversified-8.6%
Cousins Properties, Inc. 201,500 6,065,150
iStar Financial, Inc. 203,200 7,930,896
Vornado Realty Trust 237,000 12,966,270
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26,962,316
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Hotels & Restaurants-4.1%
Hersha Hospitality Trust 136,800 1,264,032
Host Marriott Corp.(a) 1,047,200 11,676,280
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12,940,312
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Industrial-0.5%
First Potomac Realty Trust 88,900 1,511,300
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Office-18.6%
Alexandria Real Estate Equities, Inc. 165,100 9,262,110
Boston Properties, Inc. 220,500 10,198,125
Corporate Office Properties Trust 355,700 7,359,433
Equity Office Properties Trust 447,200 12,400,856
Mack-Cali Realty Corp. 195,500 7,800,450
Maguire Properties, Inc. 177,300 4,060,170
SL Green Realty Corp. 196,500 7,341,240
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58,422,384
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Office-Industrial Mix-2.6%
Duke Realty Corp. 260,600 8,026,480
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Regional Malls-20.6%
General Growth Properties, Inc. 208,500 16,805,100
Macerich Co. 178,600 7,536,920
Mills Corp. 145,300 6,298,755
Rouse Co. 297,400 13,677,426
Simon Property Group, Inc. 429,800 20,394,010
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64,712,211
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 7
Portfolio of Investments
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Shares or
Principal
Amount
Company (000) U.S. $ Value
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Shopping Centers-12.1%
Developers Diversified Realty Corp. 460,600 $ 14,513,506
Heritage Property Investment Trust 78,700 2,215,405
Kimco Realty Corp. 127,900 5,627,600
Pan Pacific Retail Properties, Inc. 153,000 7,106,850
Regency Centers Corp. 213,200 8,421,400
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37,884,761
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Storage-2.4%
Shurgard Storage Centers, Inc. 200,300 7,471,190
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Warehouse & Industrial-12.6%
AMB Property Corp. 435,700 13,707,122
EastGroup Properties, Inc. 171,900 5,354,685
ProLogis Trust 671,100 20,468,550
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39,530,357
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Total Real Estate Investment Trusts 300,536,967
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Hotels & Restaurants-1.9%
Starwood Hotels & Resorts Worldwide, Inc. 175,700 6,056,379
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Total Common Stocks
(cost $222,499,808) 306,593,346
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SHORT-TERM INVESTMENT-1.6%
Time Deposit-1.6%
Bank of New York
0.563%, 12/01/03
(cost $4,900,000) $ 4,900 4,900,000
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Total Investments-99.3%
(cost $227,399,808) 311,493,346
Other assets less liabilities-0.7% 2,187,636
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Net Assets-100% $ 313,680,982
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(a) Non-income producing security.
See notes to financial statements.
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8 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
STATEMENT OF ASSETS & LIABILITIES
November 30, 2003
ASSETS
Investments in securities, at value (cost $227,399,808) $ 311,493,346
Cash 90,791
Receivable for investment securities sold 2,724,154
Receivable for capital stock sold 2,015,558
Dividends and interest receivable 296,930
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Total assets 316,620,779
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LIABILITIES
Payable for investment securities purchased 1,711,318
Payable for capital stock redeemed 616,940
Advisory fee payable 227,441
Distribution fee payable 138,879
Accrued expenses 245,219
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Total liabilities 2,939,797
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Net Assets $ 313,680,982
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COMPOSITION OF NET ASSETS
Capital stock, at par $ 211,193
Additional paid-in capital 317,215,539
Accumulated net realized loss on investment transactions (87,839,288)
Net unrealized appreciation of investments 84,093,538
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$ 313,680,982
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CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and
redemption price per share
($57,700,859 / 3,871,640 shares of capital stock issued
and outstanding) $14.90
Sales charge--4.25% of public offering price .66
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Maximum offering price $15.56
======
Class B Shares
Net asset value and offering price per share
($106,146,613 / 7,151,178 shares of capital stock issued
and outstanding) $14.84
======
Class C Shares
Net asset value and offering price per share
($47,698,595 / 3,210,651 shares of capital stock issued
and outstanding) $14.86
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($102,134,915 / 6,885,876 shares of capital stock issued
and outstanding) $14.83
======
See notes to financial statements.
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 9
STATEMENT OF OPERATIONS
Year Ended November 30, 2003
INVESTMENT INCOME
Dividends $ 12,323,018
Interest 61,519 $ 12,384,537
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EXPENSES
Advisory fee 2,357,633
Distribution fee--Class A 140,309
Distribution fee--Class B 976,391
Distribution fee--Class C 400,463
Transfer agency 875,919
Administrative 136,000
Custodian 135,141
Audit and legal 104,794
Printing 102,775
Registration 53,400
Directors' fees 24,000
Miscellaneous 21,886
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Total expenses 5,328,711
Less: expense offset arrangement
(see Note B) (316)
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Net expenses 5,328,395
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Net investment income 7,056,142
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REALIZED AND UNREALIZED GAIN ON
INVESTMENT TRANSACTIONS
Net realized gain on investment
transactions 2,161,179
Net change in unrealized
appreciation/depreciation
of investments 70,676,081
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Net gain on investment transactions 72,837,260
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NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 79,893,402
============
See notes to financial statements.
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10 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Statement of Changes in Net Assets
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STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
November 30, November 30,
2003 2002
============== ==============
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 7,056,142 $ 4,511,700
Net realized gain on investment
transactions 2,161,179 4,122,116
Net change in unrealized
appreciation/depreciation
of investments 70,676,081 (6,090,113)
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Net increase in net assets from
operations 79,893,402 2,543,703
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income
Class A (1,825,360) (781,743)
Class B (3,493,592) (2,399,564)
Class C (1,402,889) (844,309)
Advisor Class (3,448,085) (485,661)
Tax return of capital
Class A -0- (480,876)
Class B -0- (1,476,054)
Class C -0- (519,364)
Advisor Class -0- (298,746)
CAPITAL STOCK TRANSACTIONS
Net increase 13,657,461 78,077,119
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Total increase 83,380,937 73,334,505
NET ASSETS
Beginning of period 230,300,045 156,965,540
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End of period $ 313,680,982 $ 230,300,045
============= =============
See notes to financial statements.
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 11
Notes to Financial Statements
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NOTES TO FINANCIAL STATEMENTS
November 30, 2003
NOTE A
Significant Accounting Policies
AllianceBernstein Real Estate Investment Fund, Inc. (the "Fund") was
incorporated in the state of Maryland on July 15, 1996 as a diversified,
open-end management investment company. The Fund offers Class A, Class B, Class
C and Advisor Class shares. Class A shares are sold with a front-end sales
charge of up to 4.25% for purchases not exceeding $1,000,000. With respect to
purchases of $1,000,000 or more, Class A shares redeemed within one year of
purchase may be subject to a contingent deferred sales charge of 1%. Class B
shares are currently sold with a contingent deferred sales charge which declines
from 4% to zero depending on the period of time the shares are held. Class B
shares will automatically convert to Class A shares eight years after the end of
the calendar month of purchase. Class C shares are subject to a contingent
deferred sales charge of 1% on redemptions made within the first year after
purchase. Advisor Class shares are sold without an initial or contingent
deferred sales charge and are not subject to ongoing distribution expenses.
Advisor Class shares are offered to investors participating in fee based
programs and to certain retirement plan accounts. All four classes of shares
have identical voting, dividend, liquidation and other rights, except that each
class bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan. The financial statements have been prepared in
conformity with accounting principles generally accepted in the United States,
which require management to make certain estimates and assumptions that affect
the reported amounts of assets and liabilities in the financial statements and
amounts of income and expenses during the period. Actual results could differ
from those estimates. Additional information about some of the items discussed
in these Notes to Financial Statements is contained in the Fund's Statement of
Additional Information, which is available upon request. The following is a
summary of significant accounting policies followed by the Fund.
1. Security Valuation
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Management, L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at their
current market value. In general, the market value of these securities is
determined as follows:
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. 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 in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than
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12 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Notes to Financial Statements
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one exchange are valued by reference to the principal exchange on which the
securities are traded; securities not listed on an exchange but traded on The
Nasdaq Stock Market, Inc. ("NASDAQ") are valued in accordance with the NASDAQ
Official Closing Price; listed put or call options are valued at the last sale
price. If there has been no sale on that day, such securities will be valued at
the closing bid prices on that day; open futures contracts and options thereon
are valued using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price. If there are no quotations available
for the day of valuations, the last available closing settlement price is used;
securities traded in the over-the-counter market, (but excluding securities
traded on NASDAQ) are valued at the mean of the current bid and asked prices as
reported by the National Quotation Bureau or other comparable sources; U.S.
Government securities and other debt instruments having 60 days or less
remaining until maturity are valued at amortized cost if their original maturity
was 60 days or less, or by amortizing their fair value as of the 61st day prior
to maturity if their original term to maturity exceeded 60 days; fixed-income
securities, including mortgage backed and asset backed securities, may be valued
on the basis of prices provided by a pricing service or at a price obtained from
one or more of the major broker/dealers. In cases where broker/dealer quotes are
obtained, the Pricing Policies provide that the Adviser may establish procedures
whereby changes in market yields or spreads are used to adjust, on a daily
basis, a recently obtained quoted price on a security; and OTC and other
derivatives are valued on the basis of a quoted bid price or spread from a major
broker/dealer in such security. Securities for which market quotations are not
readily available are valued at fair value in accordance with the Pricing
Policies.
2. Currency Translation
Assets and liabilities denominated in foreign currencies and commitments under
forward exchange currency contracts are translated into U.S. dollars at the mean
of the quoted bid and asked prices of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized gain or loss on foreign currency transactions represents foreign
exchange gains and losses from sales and maturities of foreign fixed income
investments, foreign currency exchange contracts, holding of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
foreign investment transactions, and the difference between the amounts of
dividends, interest and foreign withholding taxes recorded on the Fund's books
and the U.S. dollar equivalent amounts actually received or paid. Net unrealized
currency gains and losses from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation or depreciation of investments and foreign currency
denominated assets and liabilities.
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ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 13
Notes to Financial Statements
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3. Taxes
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provision for federal income or excise taxes is
required.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Investment gains and losses are determined on the identified
cost basis. The Fund accretes discount as an adjustment to interest income.
5. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A and Advisor Class shares. Advisor Class shares have no distribution fee.
6. Dividends and Distributions
Dividends and distributions to shareholders, if any, are recorded on the
ex-dividend date. Income and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with accounting principles generally accepted in the United States.
To the extent these differences are permanent, such amounts are reclassified
with the capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of the Investment Advisory Agreement, the Fund pays the Adviser
an advisory fee at an annual rate of .90 of 1% of the average daily net assets
of the Fund. Such fee is accrued daily and paid monthly.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Fund at the reduced annual rate of .55% of the first
$2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5 billion, of
the average daily net assets of the Fund. The amount of the fee waiver may
increase or decrease as a result of a final, definitive agreement with the New
York Attorney General's Office ("NYAG"). For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Subsequent Events" below.
Pursuant to the advisory agreement, the Fund paid $136,000 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended November 30, 2003.
- -------------------------------------------------------------------------------
14 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
The Fund compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Fund. Such compensation amounted to $682,893 for the year ended November 30,
2003.
For the year ended November 30, 2003, the Fund's expenses were reduced by $316
under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc., (the "Distributor"),
formerly Alliance Fund Distributors, Inc., a wholly-owned subsidiary of the
Adviser serves as the distributor of the Fund's shares. The Distributor has
advised the Fund that it has retained front-end sales charge of $4,739 from the
sale of Class A shares and received $43,742, $109,894 and $3,230 in contingent
deferred sales charges imposed upon redemptions by shareholders of Class A,
Class B and Class C shares, respectively, for the year ended November 30, 2003.
Brokerage commissions paid on investment transactions for the year ended
November 30, 2003, amounted to $274,421, none of which was paid to Sanford C.
Bernstein Co., LLC, an affiliate of the Adviser.
NOTE C
Distribution Services Agreement
The Fund has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Fund pays distribution and servicing fees to the Distributor at
an annual rate of up to .30 of 1% of the Fund's average daily net assets
attributable to Class A shares and 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Fund that it has incurred expenses in excess of the
distribution costs reimbursed by the Fund in the amount of $10,944,562 and
$1,504,511, for Class B and C shares, respectively; such costs may be recovered
from the Fund in future periods so long as the Agreement is in effect. In
accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor beyond the current
fiscal year for Class A shares. The Agreement also provides that the Adviser may
use its own resources to finance the distribution of the Fund's shares.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 15
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended November 30, 2003 were as follows:
Purchases Sales
============= =============
Investment securities (excluding
U.S. government securities) $ 86,298,734 $ 74,963,696
U.S. government securities -0- -0-
The cost of investments for federal income tax purposes, gross unrealized
appreciation and unrealized depreciation are as follows:
Cost $ 228,608,858
=============
Gross unrealized appreciation $ 83,639,364
Gross unrealized depreciation (754,876)
-------------
Net unrealized appreciation $ 82,884,488
=============
NOTE E
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended November
30, 2003 and November 30, 2002 were as follows:
2003 2002
============= =============
Distributions paid from:
Ordinary income $ 10,169,926 $ 4,511,277
------------- -------------
Total taxable distributions 10,169,926 4,511,277
Total return of capital -0- 2,775,040
------------- -------------
Total distributions paid $ 10,169,926 $ 7,286,317
============= =============
As of November 30, 2003, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (86,630,238)(a)
Unrealized appreciation/(depreciation) 82,884,488(b)
-------------
Total accumulated earnings/(deficit) $ (3,745,750)
=============
(a) On November 30, 2003, the Fund had a net capital loss carryforward of
$86,630,238, of which $46,687,368 expires in the year 2007 and $39,942,870
expires in 2008. To the extent future capital gains are offset by capital
loss carryforward, such gains will not be distributed. During the fiscal
year, the Fund utilized loss carryforward of $2,973,417.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
- -------------------------------------------------------------------------------
16 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
During the current fiscal year, permanent differences, primarily due to
distribution in excess of net investment income resulted in a net decrease in
distribution in excess of net investment income and a corresponding decrease in
additional paid in capital. This reclassification had no effect on net assets.
NOTE F
Concentration of Risk
Although the Fund does not invest directly in real estate, it invests primarily
in Real Estate Equity Securities and has a policy of concentration of its
investments in the real estate industry. Therefore, an investment in the Fund is
subject to certain risks associated with the direct ownership of real estate and
with the real estate industry in general. To the extent that assets underlying
the Fund's investments are concentrated geographically, by property type or in
certain other respects, the Fund may be subject to additional risks.
In addition, investing in Real Estate Investment Trusts ("REITs") involves
certain unique risks in addition to those risks associated with investing in the
real estate industry in general. REITs are dependent upon management skills, are
not diversified, and are subject to heavy cash flow dependency, default by
borrowers and self-liquidation. REITs are also subject to the possibilities of
failing to qualify for tax-free pass-through of income under the Code and
failing to maintain their exemptions from registration under the 1940 Act. REITs
(especially mortgage REITs) also are subject to interest rate risks.
NOTE G
Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
Shares Amount
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
2003 2002 2003 2002
------------ ------------ -------------- --------------
CLASS A
Shares sold 5,286,964 3,752,080 $ 65,564,174 $ 44,679,869
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 108,173 79,323 1,338,541 954,926
- -------------------------------------------------------------------------------
Shares converted
from Class B 639,290 214,822 7,791,481 2,503,795
- -------------------------------------------------------------------------------
Shares redeemed (5,255,265) (2,908,747) (65,402,372) (34,221,262)
- -------------------------------------------------------------------------------
Net increase 779,162 1,137,478 $ 9,291,824 $ 13,917,328
===============================================================================
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 17
Notes to Financial Statements
- -------------------------------------------------------------------------------
Shares Amount
--------------------------- ------------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
2003 2002 2003 2002
------------ ------------ -------------- --------------
CLASS B
Shares sold 1,172,711 2,963,213 $ 14,980,278 $ 35,892,929
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 190,600 185,672 2,340,218 2,227,895
- -------------------------------------------------------------------------------
Shares converted
to Class A (641,342) (215,424) (7,791,481) (2,503,795)
- -------------------------------------------------------------------------------
Shares redeemed (2,227,699) (2,840,848) (27,793,997) (33,585,981)
- -------------------------------------------------------------------------------
Net increase
(decrease) (1,505,730) 92,613 $(18,264,982) $ 2,031,048
===============================================================================
CLASS C
Shares sold 762,170 1,057,306 $ 9,913,486 $ 12,764,590
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 57,775 51,715 713,481 621,319
- -------------------------------------------------------------------------------
Shares redeemed (728,585) (1,018,813) (9,422,193) (12,103,557)
- -------------------------------------------------------------------------------
Net increase 91,360 90,208 $ 1,204,774 $ 1,282,352
===============================================================================
Advisor Class
Shares sold 1,571,498 5,183,243 $ 19,754,370 $ 62,778,715
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends and
distributions 276,848 63,399 3,420,318 749,710
- -------------------------------------------------------------------------------
Shares redeemed (141,581) (227,394) (1,748,843) (2,682,034)
- -------------------------------------------------------------------------------
Net increase 1,706,765 5,019,248 $ 21,425,845 $ 60,846,391
===============================================================================
NOTE H
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $500 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended November 30, 2003.
- -------------------------------------------------------------------------------
18 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Notes to Financial Statements
- -------------------------------------------------------------------------------
NOTE I
Legal Proceedings
As has been previously reported in the press, the Staff of the U.S. Securities
and Exchange Commission ("SEC") and the NYAG have been investigating practices
in the mutual fund industry identified as "market timing" and "late trading" of
mutual fund shares. Certain other regulatory authorities have also been
conducting investigations into these practices within the industry and have
requested that Alliance Capital Management L.P. ("Alliance Capital"), the Fund's
Adviser, provide information to them. Alliance Capital has been cooperating and
will continue to cooperate with all of these authorities. Please see "Subsequent
Events" below for a description of the agreements reached by Alliance Capital
and the SEC and NYAG in connection with the investigations mentioned above.
The special committee of Alliance Capital's Board of Directors, comprised of the
members of Alliance Capital's Audit Committee and the other independent member
of the Board, is continuing to direct and oversee an internal investigation and
a comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund (the "Independent Directors")
have initiated an investigation of the above-mentioned matters with the advice
of an independent economic consultant and independent counsel. The Independent
Directors have formed a special committee to supervise the investigation.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance
Capital Management Corporation; AXA Financial, Inc.; certain of the
AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles
Schaffran (collectively, the "Alliance Capital defendants"); and certain other
defendants not affiliated with Alliance Capital. The Hindo Complaint was filed
in the United States District Court for the Southern District of New York by
alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo
Complaint alleges that certain of the Alliance Capital defendants failed to
disclose that they improperly allowed certain hedge funds and other unidentified
parties to engage in late trading and market timing of AllianceBernstein Fund
securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b)
and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act.
Plaintiffs seek an unspecified amount of compensatory damages and rescission of
their contracts with Alliance Capital, including recovery of all fees paid to
Alliance Capital pursuant to such contracts.
Since October 2, 2003, approximately forty additional lawsuits making factual
allegations similar to those in the Hindo Complaint were filed against Alliance
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 19
Notes to Financial Statements
- -------------------------------------------------------------------------------
Capital and certain other defendants, some of which name the Fund as a
defendant. All of these lawsuits seek an unspecified amount of damages.
As a result of the matters more fully discussed in the note entitled "Subsequent
Events" below, investors in the AllianceBernstein Mutual Funds may choose to
redeem their investments. This may require the AllianceBernstein Mutual Funds to
sell investments held by those funds to provide for sufficient liquidity and
could also have an adverse effect on the investment performance of the
AllianceBernstein Mutual Funds.
NOTE J
Subsequent Events
On December 18, 2003, Alliance Capital, the Fund's Adviser, confirmed that it
had reached terms with the SEC and the NYAG for the resolution of regulatory
claims relating to the practice of "market timing" mutual fund shares in some of
the AllianceBernstein Mutual Funds. The agreement with the SEC is reflected in
an Order of the Commission ("SEC Order"). The agreement with the NYAG is subject
to final, definitive documentation. Among the key provisions of these agreements
are the following:
(i) Alliance Capital agreed to establish a $250 million fund (the "Reimbursement
Fund") to compensate mutual fund shareholders for the adverse effects of market
timing attributable to market timing relationships described in the SEC Order.
According to the SEC Order, the Reimbursement Fund is to be paid, in order of
priority, to fund investors based on (i) their aliquot share of losses suffered
by the fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) Alliance Capital agreed to reduce the advisory fees it receives from some
of the AllianceBernstein long-term, open-end retail funds, commencing January 1,
2004, for a period of at least five years. The determination of which funds will
have their fees reduced and to what degree is subject to the terms of the
definitive agreement with the NYAG; and
(iii) Alliance Capital agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that Alliance
Capital's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation and effective January 1,
2004, the Adviser began waiving a portion of its advisory fee. For a more
complete description of this waiver, please see "Advisory Fee and Other
Transactions with Affiliates" above.
- -------------------------------------------------------------------------------
20 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Financial Highlights
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
----------------------------------------------------------------------------
September 1,
2000 to Year Ended
Year Ended November 30, November August 31,
------------------------------------- 30, ------------------------
2003 2002 2001 2000* 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.52 $11.47 $10.70 $10.85 $10.19 $10.47
----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .37 .34 .32 .13 .37 .46
Net realized and unrealized
gain (loss) on investment
transactions 3.53 .23 .97 (.13) .89 (.06)
----------------------------------------------------------------------------
Net increase in net asset
value from operations 3.90 .57 1.29 -0- 1.26 .40
----------------------------------------------------------------------------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from
net investment income (.52) (.32) (.32) (.10) (.42) (.46)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.10)
Distributions from net realized gain
on investments -0- -0- -0- -0- -0- (.10)
Tax return of capital -0- (.20) (.20) (.05) (.18) (.02)
----------------------------------------------------------------------------
Total dividends and distributions (.52) (.52) (.52) (.15) (.60) (.68)
----------------------------------------------------------------------------
Net asset value, end of period $14.90 $11.52 $11.47 $10.70 $10.85 $10.19
============================================================================
TOTAL RETURN
Total investment return based on
net asset value(b) 34.89% 4.85% 12.33% (.05)% 13.46% 3.86%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $57,701 $35,626 $22,422 $20,942 $22,221 $35,299
Ratio to average net assets of:
Expenses 1.74% 1.75% 1.78% 1.87%(c) 1.71% 1.58%
Net investment income 2.84% 2.87% 2.84% 4.98%(c) 3.81% 4.57%
Portfolio turnover rate 30% 37% 40% 6% 26% 29%
See footnote summary on page 24.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 21
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
----------------------------------------------------------------------------
September 1,
2000 to Year Ended
Year Ended November 30, November August 31,
------------------------------------- 30, ------------------------
2003 2002 2001 2000* 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.48 $11.44 $10.68 $10.84 $10.17 $10.44
----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .30 .28 .28 .11 .30 .38
Net realized and unrealized
gain (loss) on investment
transactions 3.51 .21 .93 (.14) .89 (.05)
----------------------------------------------------------------------------
Net increase (decrease) in net
asset value from operations 3.81 .49 1.21 (.03) 1.19 .33
----------------------------------------------------------------------------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from
net investment income (.45) (.28) (.28) (.09) (.36) (.38)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.10)
Distributions from net realized gain
on investments -0- -0- -0- -0- -0- (.10)
Tax return of capital -0- (.17) (.17) (.04) (.16) (.02)
----------------------------------------------------------------------------
Total dividends and distributions (.45) (.45) (.45) (.13) (.52) (.60)
----------------------------------------------------------------------------
Net asset value, end of period $14.84 $11.48 $11.44 $10.68 $10.84 $10.17
============================================================================
TOTAL RETURN
Total investment return based on
net asset value(b) 34.05% 4.15% 11.53% (.31)% 12.68% 3.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $106,147 $99,370 $98,014 $108,711 $113,542 $168,741
Ratio to average net assets of:
Expenses 2.47% 2.47% 2.50% 2.57%(c) 2.41% 2.31%
Net investment income 2.40% 2.35% 2.53% 4.22%(c) 3.13% 3.82%
Portfolio turnover rate 30% 37% 40% 6% 26% 29%
See footnote summary on page 24.
- -------------------------------------------------------------------------------
22 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
----------------------------------------------------------------------------
September 1,
2000 to Year Ended
Year Ended November 30, November August 31,
------------------------------------- 30, ------------------------
2003 2002 2001 2000* 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.49 $11.46 $10.69 $10.85 $10.17 $10.44
----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .29 .28 .28 .11 .29 .38
Net realized and unrealized
gain (loss) on investment
transactions 3.53 .20 .94 (.14) .91 (.05)
----------------------------------------------------------------------------
Net increase (decrease)in net
asset value from operations 3.82 .48 1.22 (.03) 1.20 .33
----------------------------------------------------------------------------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from
net investment income (.45) (.28) (.28) (.09) (.36) (.38)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.10)
Distributions from net realized gain
on investments -0- -0- -0- -0- -0- (.10)
Tax return of capital -0- (.17) (.17) (.04) (.16) (.02)
----------------------------------------------------------------------------
Total dividends and distributions (.45) (.45) (.45) (.13) (.52) (.60)
----------------------------------------------------------------------------
Net asset value, end of period $14.86 $11.49 $11.46 $10.69 $10.85 $10.17
============================================================================
TOTAL RETURN
Total investment return based on
net asset value(b) 34.10% 4.06% 11.62% (.31)% 12.78% 3.20%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $47,698 $35,845 $34,699 $33,463 $34,217 $44,739
Ratio to average net assets of:
Expenses 2.46% 2.46% 2.49% 2.58%(c) 2.40% 2.30%
Net investment income 2.31% 2.35% 2.50% 4.21%(c) 3.02% 3.77%
Portfolio turnover rate 30% 37% 40% 6% 26% 29%
See footnote summary on page 24.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 23
Financial Highlights
- -------------------------------------------------------------------------------
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
----------------------------------------------------------------------------
September 1,
2000 to Year Ended
Year Ended November 30, November August 31,
------------------------------------- 30, ------------------------
2003 2002 2001 2000* 2000 1999
----------- ----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $11.48 $11.46 $10.71 $10.87 $10.20 $10.48
----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .40 .21 .37 .14 .38 .48
Net realized and unrealized
gain (loss) on investment
transactions 3.53 .39 .96 (.14) .92 (.05)
----------------------------------------------------------------------------
Net increase in net asset
value from operations 3.93 .60 1.33 -0- 1.30 .43
----------------------------------------------------------------------------
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from
net investment income (.58) (.36) (.37) (.11) (.44) (.48)
Distributions in excess of
net investment income -0- -0- -0- -0- -0- (.11)
Distributions from net realized gain
on investments -0- -0- -0- -0- -0- (.10)
Tax return of capital -0- (.22) (.21) (.05) (.19) (.02)
----------------------------------------------------------------------------
Total dividends and distributions (.58) (.58) (.58) (.16) (.63) (.71)
----------------------------------------------------------------------------
Net asset value, end of period $14.83 $11.48 $11.46 $10.71 $10.87 $10.20
============================================================================
TOTAL RETURN
Total investment return based on
net asset value(b) 35.40% 5.12% 12.74% (.07)% 13.94% 4.18%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $102,135 $59,459 $1,831 $1,925 $1,943 $2,270
Ratio to average net assets of:
Expenses 1.44% 1.51% 1.48% 1.58%(c) 1.40% 1.30%
Net investment income 3.17% 1.73% 3.27% 5.21%(c) 3.83% 4.75%
Portfolio turnover rate 30% 37% 40% 6% 26% 29%
(a) Based on average shares outstanding.
(b) Total investment return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charge or contingent
deferred sales charge is not reflected in the calculation of total
investment return. Total return does not reflect the deduction of taxes that
a shareholder would pay on fund distributions or the redemption of fund
shares. Total investment return calculated for a period of less than one
year is not annualized.
(c) Annualized.
* During the year 2000 the Fund changed its fiscal year end from August 31 to
November 30.
- -------------------------------------------------------------------------------
24 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Report of Ernst & Young LLP, Independent Auditors
- -------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of AllianceBernstein Real Estate
Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of
AllianceBernstein Real Estate Investment Fund, Inc. (the "Fund"), including the
portfolio of investments, as of November 30, 2003, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assur-ance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of November 30, 2003, by correspondence with
the custodian and others. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
AllianceBernstein Real Estate Investment Fund, Inc. at November 30, 2003, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the indicated periods, in conformity with accounting
principles generally accepted in the United States.
/s/ Ernst & Young LLP
New York, New York
January 9, 2004
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 25
Board of Directors
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Howard E. Hassler(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Daniel G. Pine(2), Senior Vice President
Thomas Bardong, Vice President
David A. Kruth(2), Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
The Bank of New York
One Wall Street
New York, NY 10286
Principal Underwriter
AllianceBernstein Investment Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-free (800) 221-5672
(1) Member of the Audit Committee.
(2) Messrs. Pine and Kruth are the persons primarily responsible for the
day-to-day management of the Fund's investment portfolio.
- -------------------------------------------------------------------------------
26 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Management of the Fund
- -------------------------------------------------------------------------------
MANAGEMENT OF THE FUND
Board of Directors Information
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #, 71 Investment adviser and an inde- 116 None
2 Sound View Drive pendent consultant. He was for-
Suite 100 merly Senior Manager of Barrett
Greenwich, CT 06830 Associates, Inc., a registered
(7) investment adviser, with which he
Chairman of the Board had been associated since prior
to 1999. He was formerly Deputy Comptroller
and Chief Investment Officer of the State of
New York and, prior thereto, Chief
Investment Officer of the New York Bank for
Savings.
Ruth Block, #, 73 Formerly Executive Vice President 96 None
500 SE Mizner Blvd. and Chief Insurance Officer of The
Boca Raton, FL 33432 Equitable Life Assurance Society
(7) of the United States; Chairman and
Chief Executive Officer of Evlico; Director
of Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals), Tandem
Financial Group and Donaldson, Lufkin &
Jenrette Securities Corporation; former
Governor at Large National Association of
Securities Dealers, Inc.
David H. Dievler, #, 74 Independent consultant. Until 100 None
P.O. Box 167 December 1994, he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
(7) Management Corporation ("ACMC")
responsible for mutual fund administration.
Prior to joining ACMC in 1984, he was Chief
Financial Officer of Eberstadt Asset
Management since 1968. Prior to that, he was
a Senior Manager at Price Water- house & Co.
Member of American Institute of Certified
Public Accountants since 1953.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 27
Management of the Fund
- -------------------------------------------------------------------------------
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
John H. Dobkin, #, 61 Consultant. Formerly President of 98 None
P.O. Box 12 Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002, a
(7) Senior Advisor from June 1999- June 2000 and
President of Historic Hudson Valley
(historic preservation) from December
1989-May 1999. Previously, Director of the
National Academy of Design and during
1988-1992, he was Director and Chairman of
the Audit Committee of ACMC.
Howard E. Hassler, #, 74 Currently a consultant specializing 1 None
25 Sutton Place in retailing, finance and real estate.
South New York, NY 10022 Former Chairman and Chief Execu-
(7) tive Officer of Brooks Fashion Stores,
Inc. (specialty clothing stores); Former
Chairman, President and Chief Operating
Officer of Allied Stores Corporation
(department and specialty stores), 1987;
Executive Vice President, Chief Financial
and Accounting Officer and Director, Allied
Stores Corporation from June 1984 to June
1987.
Clifford L. Michel, #, 64 Senior Counsel of the law firm 97 Placer
15 St. Bernard's Road of Cahill Gordon & Reindel since Dome, Inc.
Gladstone, NJ 07934 February 2001 and a partner of
(7) that firm for more than twenty-five
years prior thereto. He is President
and Chief Executive Officer of
Wenonah Development Company
(investments) and a Director of Placer
Dome, Inc. (mining).
Donald J. Robinson, #, 69 Senior Counsel to the law firm of 96 None
98 Hell's Peak Road Orrick, Herrington & Sutcliffe LLP
Weston, VT 05161 since prior to 1999. Formerly a
(7) senior partner and a member of
the Executive Committee of that firm. He was
also a member and Chairman of the Municipal
Securities Rulemaking Board and a Trustee of
the Museum of the City of New York.
- -------------------------------------------------------------------------------
28 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Management of the Fund
- -------------------------------------------------------------------------------
PORTFOLIOS
IN FUND OTHER
NAME, AGE OF DIRECTOR, PRINCIPAL COMPLEX DIRECTORSHIPS
ADDRESS OCCUPATION(S) OVERSEEN BY HELD BY
(YEARS OF SERVICE*) DURING PAST 5 YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTOR
Marc O. Mayer, +, 46 Executive Vice President of ACMC 68 None
1345 Avenue of the since 2001; prior thereto, Chief
Americas Executive Officer of Sanford C.
New York, NY 10105 Bernstein & Co., LLC and its
(Elected November 18, predecessor since prior to 1999.
2003)
* There is no stated term of office for the Fund's Directors.
# Member of the Audit Committee and the Nominating Committee.
+ Mr. Mayer is an "interested Director", as defined in the 1940 Act, due to his
position as Executive Vice President of ACMC.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 29
Management of the Fund
- -------------------------------------------------------------------------------
Officer Information
Certain information concerning the Fund's Officers is listed below.
NAME, PRINCIPAL POSITION(S) PRINCIPAL OCCUPATION
ADDRESS* AND AGE HELD WITH FUNDS DURING PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------------
Marc O. Mayer, 46 Chairman and President See biography above.
Daniel G. Pine, 52 Senior Vice President Senior Vice President of Alliance Capital
Management Corporation ("ACMC")**,
with which he has been associated
since prior to 1999.
David A. Kruth, 40 Vice President Vice President of ACMC**, with which
he has been associated since 1999.
Thomas J. Bardong, 58 Vice President Senior Vice President of ACMC**, with
which he has been associated since
prior to 1999.
Mark R. Manley, 41 Secretary Senior Vice President and Acting
General Counsel of ACMC**, with
which he has been associated since
prior to 1999.
Mark D. Gersten, 53 Treasurer and Chief Senior Vice President of Alliance Global
Financial Officer Investor Services, Inc. ("AGIS")**, and
a Vice President of AllianceBernstein
Investment Research and Management,
Inc. ("ABIRM")**, with which he has
been associated since prior to 1999.
Vincent S. Noto, 39 Controller Vice President of AGIS**, with which
he has been associated since prior to
1999.
* The address for each of the Fund's officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM and AGIS are affiliates of the Fund.
The Fund's Statement of Additional Information ("SAI") has additional
information about the Fund's Directors and officers and is available without
charge upon request. Contact your financial representative or Alliance Capital
at (800) 227-4618 for a free prospectus or SAI.
- -------------------------------------------------------------------------------
30 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
AllianceBernstein Family of Funds
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN FAMILY OF FUNDS
- --------------------------------------------
Wealth Strategies Funds
- --------------------------------------------
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy*
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy**
- --------------------------------------------
Blended Style Series
- --------------------------------------------
U.S. Large Cap Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund +
Technology Fund
Global & International
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
- --------------------------------------------
Taxable Bond Funds
- --------------------------------------------
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
- --------------------------------------------
Municipal Bond Funds
- --------------------------------------------
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
- --------------------------------------------
Intermediate Municipal Bond Funds
- --------------------------------------------
Intermediate California
Intermediate Diversified
Intermediate New York
- --------------------------------------------
Closed-End Funds
- --------------------------------------------
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
We also offer Exchange Reserves,++ which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus.
Please read the prospectus carefully before you invest or send money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
+ Quasar Fund changed its name to Small Cap Growth Fund on 11/3/03.
++ An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
- -------------------------------------------------------------------------------
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 31
NOTES
- -------------------------------------------------------------------------------
32 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
AllianceBernstein [LOGO](SM)
Investment Research and Management
SM This service mark used under license from the owner, Alliance Capital
Management L.P.
ACBVIREITAR1103
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting officer.
A copy of the registrant's code of ethics is filed herewith as Exhibit 10(a)(1)
(b) During the period covered by this report, no amendments were made to the
provisions of the code of ethics adopted in 2(a) above.
(c) During the period covered by this report, no implicit or explicit waivers to
the provisions of the code of ethics adopted in 2(a) above were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's Board of Directors has determined that independent directors
David H. Dievler and William H. Foulk, Jr. qualify as audit committee financial
experts.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended)
are effective at the reasonable assurance level based on their evaluation of
these controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There were no significant changes in the registrant's internal controls that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
10 (a) (1) Code of ethics that is subject to the disclosure of Item 2
hereof
10 (b) (1) Certification of Principal Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
10 (b) (2) Certification of Principal Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
10 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Real Estate Investment Fund, Inc.
By: /s/ Marc O. Mayer
------------------
Marc O. Mayer
President
Date: January 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Marc O. Mayer
------------------
Marc O. Mayer
President
Date: January 29, 2004
By: /s/ Mark D. Gersten
--------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: January 29, 2004