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, 2005
Date of reporting period: November 30, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
AllianceBernstein Real Estate Investment Fund
Annual Report
November 30, 2005
ANNUAL REPORT
Investment Products Offered
- ---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
- ---------------------------
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. Please read the prospectus carefully
before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com.
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, and information regarding how the Fund voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30,
without charge. Simply visit AllianceBernstein's web site at
www.alliancebernstein.com, or go to the Securities and Exchange Commission's
(the "Commission") web site at www.sec.gov, or call AllianceBernstein at (800)
227-4618.
The Fund files its complete schedule of portfolio holdings with the Commission
for the first and third quarters of each fiscal year on Form N-Q. The Fund's
Forms N-Q are available on the Commission's web site at www.sec.gov. The Fund's
Forms N-Q may also be reviewed and copied at the Commission's Public Reference
Room in Washington, DC; information on the operation of the Public Reference
Room may be obtained by calling (800) SEC-0330. AllianceBernstein publishes
full portfolio holdings for the Fund monthly at www.alliancebernstein.com.
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 27, 2006
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, 2005.
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 table on page 4 shows the Fund's performance compared to 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, 2005.
For the 12-month period ended November 30, 2005, the Fund underperformed its
sector-specific benchmark, but outperformed the broad market, as represented by
the S&P 500 Stock Index. Specifically, security selection in the diversified
and self-storage sectors was the main detractor from the Fund's performance.
The Fund surrendered relative performance in the self-storage sector as a
result of having a lower-than-market weight in this property type. A position
in a company that experienced accounting-related delays in both year-end
reporting and fulfillment of Sarbanes-Oxley reporting requirements was also a
detractor. One of the Fund's holdings with diversified sector exposure also
experienced negative performance on the back of lower growth guidance. Positive
sector selection in most property types partially offset poor security
selection. Sector selection was best in health care and residential, both
underweighted for the reporting period. The main detractor from a sector
perspective was lodging. The 12-month period for this property type was
characterized by recurring investor anxiety over a number of macro threats to
the economy. Investors have tended to link the current health of the economy to
their expectations for lodging. Investor concerns notwithstanding, lodging
fundamentals have continued to improve throughout the year; revenue per average
room growth has exceeded expectations for 2005 and prospects for 2006 remain
solid. Underpinning solid fundamentals is a healthy supply/demand balance.
Supply growth under 1.5% for 2006 is expected to lag lodging demand, which
should lend support to strong occupancy and pricing.
For the six-month period ended November 30, 2005 the Fund's Class A shares
modestly outperformed the NAREIT Equity Index and significantly outperformed
the S&P 500 Stock Index. The Fund's outperformance for the six-month period
under review was driven by favorable security selection while sector selection
provided a small negative offset to positive security returns.
Security selection was a positive contributor in the office/industrial and
health care sectors. The Fund's holdings in the office sector produced
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 1
strong performance as regionally-focused investments more than offset the poor
performance of some more broadly diversified office investments. Office players
with a focus in either specialized markets or niche geographies, characterized
by strong growth and low vacancy, have performed better than national office
companies. The latter continue to face challenging conditions as well as
persistent higher-than-expected vacancy rates in some of their markets. The
Fund also benefited from an underweight position in an underperforming office
company that has a large index weight.
Overall, the Fund's overweight positions in lodging properties detracted from
performance. Despite very strong fundamentals and revenue per average room
growth in the high single digits, investor anxiety over the effect of high oil
prices on the economy, and lodging in particular, continues to impact this
sector. Security selection within lodging modestly detracted from relative
performance as two of the Fund's holdings performed particularly poorly due to
investor concerns related to potential acquisitions. In one case, investors
feared the acquisition of a foreign company at a rich multiple, and in the
other case, investors worried about a large domestic acquisition and the need
to raise equity.
Market Review and Investment Strategy
Real estate investment trust performance, as measured by the NAREIT Equity
Index, gained 17.84% during the 12-month period ended November 30, 2005,
exceeding the S&P 500 Stock Index return of 8.44%. Real estate fundamentals
continued to improve during the annual reporting period, as the U.S. economy
strengthened and consumer spending remained robust. All sectors of the NAREIT
Equity Index contributed to the positive performance of the Index with
self-storage, residential and specialty contributing the most. Health care
lagged all other property types. Throughout most of the 12-month period, the
Fund held overweight positions in the office/industrial and lodging sectors and
underweight positions in the residential, health care, specialty/diversified
and self storage sectors. The Fund continues to maintain a pro-cyclical bias
and to overweight economically sensitive sectors.
For the six-month period ended November 30, 2005, the NAREIT Equity Index
returned 10.96%, outperforming the S&P 500 Stock Index which returned 5.88%.
REIT performance during the most recent six-month period was volatile and
investor sentiment vacillated between confidence in the progress of real estate
fundamentals and concern over the impact of energy prices on the economy.
Inflation, interest rate worries and doubts about the sustainability of
consumer spending also affected investor sentiment. During this period,
residential, self-storage and specialty REITs performed ahead of the NAREIT
Equity Index, while lodging, health care and retail lagged the Index. The Fund
held overweight positions in the lodging and office/industrial properties
sectors and underweight positions in the health care, self storage, diversified
and specialty REITs sectors during the six-month period.
_______________________________________________________________________________
2 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
HISTORICAL PERFORMANCE
An Important Note About the Value of Historical Performance
The performance shown on the following pages represents past performance and
does not guarantee future results. Current performance may be lower or higher
than the performance information shown. You may obtain performance information
current to the most recent month-end by visiting www.alliancebernstein.com.
The investment return and principal value of an investment in the Fund will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or
AllianceBernstein at (800) 227-4618. You should read the prospectus carefully
before you invest.
Returns are annualized for periods longer than one year. All fees and expenses
related to the operation of the Fund have been deducted. NAV returns do not
reflect sales charges; if sales charges were reflected, the Fund's quoted
performance would be lower. SEC returns reflect the applicable sales charges
for each share class: a 4.25% maximum front-end sales charge for Class A
shares; the applicable contingent deferred sales charge for Class B shares (4%
year 1, 3% year 2, 2% year 3, 1% year 4); a 1% 1 year contingent deferred sales
charge for Class C shares. Returns for Advisor Class, Class R, Class K and
Class I shares will vary due to different expenses associated with these
classes. Performance assumes reinvestment of distributions and does not account
for taxes.
Benchmark Disclosure
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 the performance for any specific
investment, including the Fund.
A Word About Risk
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. The Fund
concentrates its investments in real estate related investments and may
therefore be subject to greater risks and volatility than a fund with a more
diversified portfolio. While the Fund invests principally in common stocks and
other equity securities, in order to achieve its investment objectives, the
Fund may at times use certain types of investment derivatives, such as options,
futures, forwards and swaps. These instruments involve risks different from,
and in certain cases, greater than, the risks presented by more traditional
investments. These risks are fully discussed in the Fund's prospectus.
(Historical Performance continued on next page)
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 3
HISTORICAL PERFORMANCE
(continued from previous page)
Returns
THE FUND VS. ITS BENCHMARKS -------------------------
PERIODS ENDED NOVEMBER 30, 2005 6 Months 12 Months
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate Investment Fund
Class A 11.43% 16.83%
- -------------------------------------------------------------------------------
Class B 10.85% 15.89%
- -------------------------------------------------------------------------------
Class C 10.99% 16.04%
- -------------------------------------------------------------------------------
Advisor Class 11.56% 17.17%
- -------------------------------------------------------------------------------
Class R** 11.19% 16.99%*
- -------------------------------------------------------------------------------
Class K** 11.39% 17.27%*
- -------------------------------------------------------------------------------
Class I** 11.58% 17.48%*
- -------------------------------------------------------------------------------
NAREIT Equity Index 10.96% 17.84%
- -------------------------------------------------------------------------------
S&P 500 Stock Index 5.88% 8.44%
- -------------------------------------------------------------------------------
* Since Inception. (See inception dates below.)
** Please note that this is a new share class offering for investors
purchasing shares through institutional pension plans. The inception date for
Class R, Class K and Class I shares is 3/1/05.
GROWTH OF A $10,000 INVESTMENT IN THE FUND
9/30/96* TO 11/30/05
AllianceBernstein Real Estate Investment Fund Class A: $31,272
NAREIT Equity Index: $34,091
S&P 500 Stock Index: $20,991
[THE FOLLOWING DATA WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL]
AllianceBernstein
Real Estate Investment NAREIT S&P 500
Fund Class A Equity Index Stock Index
- -------------------------------------------------------------------------------
9/30/96* $ 9,575 $ 10,000 $ 10,000
11/30/96 $ 10,274 $ 10,766 $ 11,052
11/30/97 $ 13,872 $ 13,963 $ 14,202
11/30/98 $ 11,529 $ 12,096 $ 17,565
11/30/99 $ 10,071 $ 10,901 $ 21,234
11/30/00 $ 12,693 $ 13,277 $ 20,336
11/30/01 $ 14,263 $ 15,807 $ 17,853
11/30/02 $ 14,955 $ 16,687 $ 14,905
11/30/03 $ 20,173 $ 22,274 $ 17,153
11/30/04 $ 26,767 $ 28,930 $ 19,357
11/30/05 $ 31,272 $ 34,091 $ 20,991
* Since inception of the Fund's Class A shares on 9/30/96.
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
11/30/05) as compared to the performance of the Fund's benchmarks. 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.
See Historical Performance and Benchmark disclosures on previous page.
(Historical Performance continued on next page)
_______________________________________________________________________________
4 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
HISTORICAL PERFORMANCE
(continued from previous page)
AVERAGE ANNUAL RETURNS AS OF NOVEMBER 30, 2005
- --------------------------------------------------------------
NAV Returns SEC Returns
Class A Shares
1 Year 16.83% 11.87%
5 Years 19.76% 18.74%
Since Inception* 13.78% 13.25%
Class B Shares
1 Year 15.89% 11.89%
5 Years 18.91% 18.91%
Since Inception*(a) 13.09% 13.09%
Class C Shares
1 Year 16.04% 15.04%
5 Years 18.94% 18.94%
Since Inception* 13.00% 13.00%
Advisor Class Shares
1 Year 17.17%
5 Years 20.14%
Since Inception* 14.13%
Class R Shares+
Since Inception* 16.99%
Class K Shares+
Since Inception* 17.27%
Class I Shares+
Since Inception* 17.48%
SEC AVERAGE ANNUAL RETURNS (WITH SALES CHARGES)
AS OF THE MOST RECENT CALENDAR QUARTER-END (DECEMBER 31, 2005)
- --------------------------------------------------------------
Class A Shares
1 Year 6.86%
5 Year 17.68%
Since Inception* 13.19%
Class B Shares
1 Year 6.75%
5 Year 17.84%
Since Inception*(a) 13.03%
Class C Shares
1 Year 9.83%
5 Year 17.87%
Since Inception* 12.94%
(a) Assumes conversion of Class B shares into Class A shares after eight years.
* Inception dates: 9/30/96 for Class A, Class B, Class C and Advisor Class
shares; 3/1/05 for Class R, Class K and Class I shares.
+ Please note that this is a new share class offering for investors purchasing
shares through institutional pension plans. The inception dates for these share
classes are listed above.
See Historical Performance disclosures on page 3.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 5
FUND EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments, contingent
deferred sales charges on redemptions and (2) ongoing costs, including
management fees; distribution (12b-1) fees; and other Fund expenses. This
example is intended to help you understand your ongoing costs (in dollars) of
investing in the Fund and to compare these costs with the ongoing costs of
investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of
the period and held for the entire period as indicated below.
Actual Expenses
The table below provides information about actual account values and actual
expenses. You may use the information, together with the amount you invested,
to estimate the expenses that you paid over the period. Simply divide your
account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the result by the number under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
annual rate of return of 5% before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds by comparing this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), or contingent deferred sales charges on redemptions.
Therefore, the hypothetical example is useful in comparing ongoing costs only,
and will not help you determine the relative total costs of owning different
funds. In addition, if these transactional costs were included, your costs
would have been higher.
Beginning Ending
Account Value Account Value Expenses Paid
June 1, 2005 November 30, 2005 During Period*
------------------------------- ------------------------------- ---------------------------
Actual Hypothetical Actual Hypothetical** Actual Hypothetical
----------- ----------------- ----------- ----------------- ----------- -------------
Class A $1,000 $1,000 $1,114.28 $1,018.00 $ 7.47 $ 7.13
- ---------------------------------------------------------------------------------------------------------------
Class B $1,000 $1,000 $1,108.49 $1,014.39 $11.26 $10.76
- ---------------------------------------------------------------------------------------------------------------
Class C $1,000 $1,000 $1,109.89 $1,014.49 $11.16 $10.66
- ---------------------------------------------------------------------------------------------------------------
Advisor
Class $1,000 $1,000 $1,115.57 $1,020.46 $ 4.88 $ 4.66
- ---------------------------------------------------------------------------------------------------------------
Class R $1,000 $1,000 $1,111.90 $1,016.24 $ 9.32 $ 8.90
- ---------------------------------------------------------------------------------------------------------------
Class K $1,000 $1,000 $1,113.90 $1,017.70 $ 7.79 $ 7.44
- ---------------------------------------------------------------------------------------------------------------
Class I $1,000 $1,000 $1,115.82 $1,019.25 $ 6.15 $ 5.87
- ---------------------------------------------------------------------------------------------------------------
* Expenses are equal to the classes' annualized expense ratios of 1.41%,
2.13%, 2.11%, 0.92%, 1.76%, 1.47% and 1.16%, respectively, multiplied by the
average account value over the period, multiply by the number of days in the
period/365.
** Assumes 5% return before expenses.
_______________________________________________________________________________
6 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
PORTFOLIO SUMMARY
November 30, 2005
PORTFOLIO STATISTICS
Net Assets ($mil): $264.3
SECTOR BREAKDOWN*
21.4% Office
16.2% Apartment
14.5% Regional Malls
12.9% Shopping Centers
10.5% Hotels & Restaurants [PIE CHART OMITTED]
9.6% Warehouse & Industrial
6.7% Diversified
5.4% Storage
1.9% Health Care
0.9% Short-Term
TEN LARGEST HOLDINGS
November 30, 2005
Percent of
Company U.S. $ Value Net Assets
_______________________________________________________________________________
Simon Property Group, Inc. $ 20,378,916 7.7%
- -------------------------------------------------------------------------------
ProLogis 16,547,328 6.3
- -------------------------------------------------------------------------------
General Growth Properties, Inc. 15,196,022 5.8
- -------------------------------------------------------------------------------
Public Storage, Inc. 11,959,640 4.5
- -------------------------------------------------------------------------------
Vornado Realty Trust 11,197,920 4.2
- -------------------------------------------------------------------------------
Host Marriott Corp. 10,050,850 3.8
- -------------------------------------------------------------------------------
Equity Residential 9,945,440 3.8
- -------------------------------------------------------------------------------
Alexandria Real Estate Equities, Inc. 9,769,200 3.7
- -------------------------------------------------------------------------------
Corporate Office Properties Trust 8,587,040 3.2
- -------------------------------------------------------------------------------
Archstone-Smith Trust 8,412,172 3.2
- -------------------------------------------------------------------------------
$122,044,528 46.2%
* All data are as of November 30, 2005. The Fund's sector/industry breakdown
is expressed as a percentage of total investments and may vary over time.
Please Note: The sector/industry classifications presented herein are based on
the sector/industry categorization methodology of the Adviser.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 7
PORTFOLIO OF INVESTMENTS
November 30, 2005
Company Shares U.S. $ Value
- -------------------------------------------------------------------------------
COMMON STOCKS-98.8%
Real Estate Investment Trusts-95.3%
Apartment-16.2%
Archstone-Smith Trust 201,200 $ 8,412,172
AvalonBay Communities, Inc. 78,000 7,133,100
Camden Property Trust 66,500 3,923,500
Equity Residential 244,000 9,945,440
Essex Property Trust, Inc. 38,800 3,557,960
Mid-America Apartment Communities, Inc. 93,800 4,555,866
United Dominion Realty Trust, Inc. 230,400 5,158,656
-------------
42,686,694
-------------
Diversified-6.7%
Cousins Properties, Inc. 67,100 1,868,064
Digital Realty Trust, Inc. 105,900 2,380,632
iStar Financial, Inc. 61,600 2,289,056
Vornado Realty Trust 131,200 11,197,920
-------------
17,735,672
-------------
Health Care-1.8%
Ventas, Inc. 82,300 2,594,919
Windrose Medical Properties Trust 149,100 2,236,500
-------------
4,831,419
-------------
Hotels & Restaurants-7.0%
Host Marriott Corp. 561,500 10,050,850
LaSalle Hotel Properties 72,500 2,440,350
Strategic Hotel Capital, Inc. 35,900 663,073
Sunstone Hotel Investors, Inc. 214,400 5,424,320
-------------
18,578,593
-------------
Office-21.3%
Alexandria Real Estate Equities, Inc. 116,300 9,769,200
Arden Realty, Inc. 71,400 3,247,272
Boston Properties, Inc. 102,100 7,678,941
Brookfield Properties Corp. (Canada) 281,600 8,394,496
CarrAmerica Realty Corp. 62,100 2,192,130
Corporate Office Properties Trust 238,000 8,587,040
Equity Office Properties Trust 114,700 3,576,346
Maguire Properties, Inc. 151,300 4,841,600
Reckson Associates Realty Corp. 58,000 2,130,340
SL Green Realty Corp. 79,050 5,837,843
-------------
56,255,208
-------------
Regional Malls-14.5%
General Growth Properties, Inc. 333,100 15,196,022
Simon Property Group, Inc. 263,600 20,378,916
The Macerich Co. 39,700 2,698,806
-------------
38,273,744
-------------
_______________________________________________________________________________
8 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Shares or
Principal
Amount
Company (000) U.S. $ Value
- -------------------------------------------------------------------------------
Shopping Centers-12.9%
Developers Diversified Realty Corp. 131,400 $ 5,952,420
Federal Realty Investment Trust 71,100 4,477,878
Kimco Realty Corp. 255,200 8,026,040
Pan Pacific Retail Properties, Inc. 66,300 4,461,990
Regency Centers Corp. 137,100 7,958,655
Tanger Factory Outlet Centers, Inc. 115,900 3,186,091
-------------
34,063,074
-------------
Storage-5.3%
Public Storage, Inc. 169,400 11,959,640
Sovran Self Storage, Inc. 42,400 2,103,040
-------------
14,062,680
-------------
Warehouse & Industrial-9.6%
EastGroup Properties, Inc. 133,600 6,029,368
First Potomac Realty Trust 100,900 2,789,885
ProLogis 364,800 16,547,328
-------------
25,366,581
-------------
Total Real Estate Investment Trusts 251,853,665
-------------
Consumer Services-3.5%
Hotels & Restaurants-3.5%
Hilton Hotels Corp. 114,200 2,503,264
Starwood Hotels & Resorts Worldwide, Inc. 109,100 6,600,550
-------------
9,103,814
-------------
Total Common Stocks
(cost $169,926,801) 260,957,479
-------------
SHORT-TERM INVESTMENT-0.9%
Time Deposit-0.9%
The Bank of New York
3.00%, 12/01/05
(cost $2,431,000) $2,431 2,431,000
-------------
Total Investments-99.7%
(cost $172,357,801) 263,388,479
Other assets less liabilities-0.3% 864,480
-------------
Net Assets-100% $ 264,252,959
=============
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 9
STATEMENT OF ASSETS & LIABILITIES
November 30, 2005
ASSETS
Investments in securities, at value (cost $172,357,801) $ 263,388,479
Cash 336
Receivable for capital stock sold 3,275,488
Receivable for investment securities sold 1,592,761
Dividends and interest receivable 135,438
--------------
Total assets 268,392,502
--------------
LIABILITIES
Payable for capital stock redeemed 3,534,767
Distribution fee payable 139,099
Advisory fee payable 117,416
Transfer agent fee payable 54,314
Accrued expenses 293,947
--------------
Total liabilities 4,139,543
--------------
Net Assets $ 264,252,959
==============
COMPOSITION OF NET ASSETS
Capital stock, at par $ 120,410
Additional paid-in capital 183,559,350
Accumulated net realized loss on investment transactions (10,457,479)
Net unrealized appreciation of investments 91,030,678
--------------
$ 264,252,959
==============
CALCULATION OF MAXIMUM OFFERING PRICE PER SHARE
Net Asset Value and:
---------------------------- Maximum
Shares Offering Redemption Offering
Class Net Assets Outstanding Price Price Price *
- -------------------------------------------------------------------------------------------------
A $128,889,708 5,849,291 -- $22.04 $23.02
- -------------------------------------------------------------------------------------------------
B $ 79,207,247 3,626,390 $21.84 -- --
- -------------------------------------------------------------------------------------------------
C $ 51,900,365 2,371,287 $21.89 -- --
- -------------------------------------------------------------------------------------------------
Advisor $ 3,096,885 141,351 $21.91 $21.91 --
- -------------------------------------------------------------------------------------------------
R $ 57,913 2,631 $22.01 $22.01 --
- -------------------------------------------------------------------------------------------------
K $ 41,676 1,892 $22.03 $22.03 --
- -------------------------------------------------------------------------------------------------
I $ 1,059,165 48,120 $22.01 $22.01 --
- -------------------------------------------------------------------------------------------------
* The maximum offering price per share for Class A shares includes a sales
charge of 4.25%.
See notes to financial statements.
_______________________________________________________________________________
10 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
STATEMENT OF OPERATIONS
Year Ended November 30, 2005
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $33,073) $ 9,585,382
Interest 150,453 $ 9,735,835
------------
EXPENSES
Advisory fee. 1,889,256
Distribution fee--Class A 322,693
Distribution fee--Class B 947,726
Distribution fee--Class C 538,570
Distribution fee--Class R 85
Distribution fee--Class K 26
Transfer agency 848,399
Printing 188,024
Custodian 178,399
Registration 108,222
Legal 100,093
Administrative 82,142
Audit 73,881
Directors' fees 27,941
Miscellaneous 23,604
------------
Total expenses 5,329,061
Less: expense offset arrangement
(see Note B) (5,627)
------------
Net expenses 5,323,434
------------
Net investment income 4,412,401
------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT TRANSACTIONS
Net realized gain on investment
transactions 105,963,419(a)
Net change in unrealized
appreciation/depreciation
of investments (55,680,334)
------------
Net gain on investment transactions 50,283,085
------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 54,695,486
============
(a) On August 5, 2005, the Fund had a redemption-in-kind with total proceeds
in the amount of $135,216,783. The net realized gains on investments of
$60,259,649 will not be realized for tax purposes.
See notes to financial statements.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 11
STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended
November 30, November 30,
2005 2004
============== ==============
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income $ 4,412,401 $ 5,432,670
Net realized gain on investment
transactions 105,963,419 31,396,460
Net change in unrealized
appreciation/depreciation
of investments (55,680,334) 62,617,474
-------------- --------------
Net increase in net assets
from operations 54,695,486 99,446,604
DIVIDENDS TO SHAREHOLDERS FROM
Net investment income
Class A (1,525,438) (2,123,448)
Class B (914,412) (2,938,088)
Class C (493,416) (1,379,809)
Advisor Class (2,099,245) (4,403,629)
Class R (194) -0-
Class K (103) -0-
Class I (3,330) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) (197,375,490) 9,686,489
-------------- --------------
Total increase (decrease) (147,716,142) 98,288,119
NET ASSETS
Beginning of period 411,969,101 313,680,982
-------------- --------------
End of period (including distributions
in excess of net investment income
of $0 and $0, respectively) $ 264,252,959 $ 411,969,101
============== ==============
See notes to financial statements.
_______________________________________________________________________________
12 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 2005
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, Advisor Class, Class R, Class K and Class I 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. Class R and Class K shares are sold
without an initial or contingent deferred sales charge. Advisor Class and Class
I shares are sold without an initial or contingent deferred sales charge and
are not subject to ongoing distribution expenses. All seven 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 U.S. generally accepted accounting principles,
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 reporting 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
Portfolio securities are valued at their current market value determined on the
basis of market quotations or, if market quotations are not readily available
or are deemed unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors.
In general, the market value of securities which are readily available and
deemed reliable are 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. Securities listed on more than
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")
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 13
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 valuation, the last
available closing settlement price is used; securities traded in the
over-the-counter market, ("OTC") (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, Alliance Capital Management, L.P. (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 (including
restricted securities) or are deemed unreliable are valued at fair value.
Factors considered in making this determination may include, but are not
limited to, information obtained by contacting the issuer, analysts, analysis
of the issuer's financial statements or other available documents. In addition,
the Fund may use fair value pricing for securities primarily traded in non-U.S.
markets because, most foreign markets close well before the Fund values its
securities at 4:00 p.m., Eastern Time. The earlier close of these foreign
markets gives rise to the possibility that significant events, including broad
market moves, may have occurred in the interim and may materially affect the
value of those securities. To account for this, the Fund may frequently value
many of its foreign equity securities using fair value prices based on third
party vendor modeling tools to the extent available.
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.
_______________________________________________________________________________
14 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
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 and depreciation of investments
and foreign currency denominated assets and liabilities.
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 provisions for federal income or excise taxes are
required. The Fund may be subject to taxes imposed by countries in which it
invests. Such taxes are generally based on income and/or capital gains earned
or repatriated. Taxes are accrued and applied to net investment income, net
realized gains and net unrealized appreciation/depreciation as such income
and/or gains are earned.
4. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. 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 amortizes premiums and accretes discounts as adjustments 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 net assets of such class, except for class
specific expenses which are allocated to the respective class.
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 U.S. generally accepted accounting principles. To the extent
these differences are permanent, such amounts are reclassified within the
capital accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 15
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 .55% of the first $2.5 billion, .45% of
the next $2.5 billion and .40% in excess of $5 billion, of the Fund's average
daily net assets. Prior to September 7, 2004, the Fund paid the Adviser an
advisory fee at an annual rate of .90% of the Fund's average daily net assets.
The fee is accrued daily and paid monthly.
Effective January 1, 2004 through September 6, 2004, in contemplation of the
final agreement with the Office of New York Attorney General ("NYAG"), the
Adviser began waiving a portion of its advisory fee so as to charge the Fund at
the reduced annual rate discussed above. For a more complete discussion of the
Adviser's settlement with the NYAG, please see "Legal Proceedings" below.
Pursuant to the advisory agreement, the Adviser provides certain legal and
accounting services to the Fund. For the year ended November 30, 2005, such
fees amounted to $82,142.
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. AGIS may make payments to intermediaries that provide omnibus account
services, sub-accounting services and/or networking services. Such compensation
retained by AGIS amounted to $476,149 for the year ended November 30, 2005.
For the year ended November 30, 2005, the Fund's expenses were reduced by
$5,627 under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc., (the
"Distributor"), 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 charges of $15,361 from the sale of Class A shares
and received $3,314, $76,688 and $8,040 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, 2005.
Brokerage commissions paid on investment transactions for the year ended
November 30, 2005, amounted to $363,523, of which $174,021 and $0,
respectively, was paid to Sanford C. Bernstein Co., LLC and Sanford C.
Bernstein Limited, affiliates of the Adviser.
_______________________________________________________________________________
16 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
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 the Fund's average daily net assets
attributable to Class A shares, 1% of the Fund's average daily net assets
attributable to both Class B and Class C shares, .50% of the Fund's average
daily net assets attributable to Class R shares and .25% of the Fund's average
daily net assets attributable to Class K shares. There are no distribution and
servicing fees on the Advisor Class and Class I 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 incurred expenses in excess of the distribution
costs reimbursed by the Fund in the amount of $9,853,602, $1,716,505, $78 and
$26 for Class B, Class C, Class R and Class K 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.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the year ended November 30, 2005 were as follows:
Purchases Sales
============== ==============
Investment securities (excluding
U.S. government securities) $ 153,383,823 $ 342,715,224
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 $ 172,907,141
==============
Gross unrealized appreciation $ 90,665,632
Gross unrealized depreciation (184,294)
--------------
Net unrealized appreciation $ 90,481,338
==============
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 17
NOTE E
Capital Stock
There are 21,000,000,000 shares of $0.01 par value capital stock authorized,
divided into seven classes, designated Class A, Class B, Class C, Advisor
Class, Class R, Class K and Class I 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,
2005 2004 2005 2004
------------ ------------ -------------- --------------
Class A
Shares sold 1,965,153 2,172,366 $ 39,238,204 $ 35,850,337
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 64,601 99,633 1,287,159 1,622,179
- -------------------------------------------------------------------------------
Shares converted
from Class B 1,003,046 238,690 20,335,242 4,167,049
- -------------------------------------------------------------------------------
Shares redeemed (1,788,277) (1,777,561) (35,752,469) (28,604,884)
- -------------------------------------------------------------------------------
Net increase 1,244,523 733,128 $ 25,108,136 $ 13,034,681
===============================================================================
Class B
Shares sold 493,981 1,025,340 $ 9,768,677 $ 16,838,111
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 34,992 130,155 688,975 2,100,563
- -------------------------------------------------------------------------------
Shares converted
to Class A (1,010,587) (240,057) (20,335,242) (4,167,049)
- -------------------------------------------------------------------------------
Shares redeemed (1,569,620) (2,388,992) (31,087,235) (38,357,397)
- -------------------------------------------------------------------------------
Net decrease (2,051,234) (1,473,554) $ (40,964,825) $(23,585,772)
===============================================================================
Class C
Shares sold 283,150 663,469 $ 5,580,550 $ 10,815,929
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 13,651 45,712 269,261 739,088
- -------------------------------------------------------------------------------
Shares redeemed (896,204) (949,142) (17,804,921) (15,201,528)
- -------------------------------------------------------------------------------
Net decrease (599,403) (239,961) $ (11,955,110) $ (3,646,511)
===============================================================================
Advisor Class
Shares sold 641,667 1,341,210 $ 12,454,050 $ 21,592,616
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 106,902 270,363 2,093,525 4,371,116
- -------------------------------------------------------------------------------
Shares redeemed (8,975,690) (128,977) (185,245,938) (2,079,641)
- -------------------------------------------------------------------------------
Net increase
(decrease) (8,227,121) 1,482,596 $(170,698,363) $ 23,884,091
===============================================================================
_______________________________________________________________________________
18 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Shares Amount
--------------------------- ------------------------------
March 1, March 1,
2005(a) to 2005(a)to
November 30, November 30,
2005 2005
------------ --------------
Class R
Shares sold 2,786 $ 57,428
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 5 106
- -------------------------------------------------------------------------------
Shares redeemed (160) (3,441)
- -------------------------------------------------------------------------------
Net increase 2,631 $ 54,093
===============================================================================
Class K
Shares sold 1,901 $ 38,577
- -------------------------------------------------------------------------------
Shares redeemed (9) (195)
- -------------------------------------------------------------------------------
Net increase 1,892 $ 38,382
===============================================================================
Class I
Shares sold 53,614 $ 1,158,804
- -------------------------------------------------------------------------------
Shares issued in
reinvestment of
dividends 152 3,199
- -------------------------------------------------------------------------------
Shares redeemed (5,646) (119,806)
- -------------------------------------------------------------------------------
Net increase 48,120 $ 1,042,197
===============================================================================
(a) Commencement of distribution.
NOTE F
Risks Involved in Investing in the Fund
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.
Indemnification Risk--In the ordinary course of business, the Fund enters into
contracts that contain a variety of indemnifications.The Fund's maximum expo-
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 19
sure under these arrangements is unknown. However, the Fund has not had prior
claims or losses pursuant to these indemnification provisions and expects the
risk of loss thereunder to be remote.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $250 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, 2005.
NOTE H
Distributions to Shareholders
The tax character of distributions paid during the fiscal years ended November
30, 2005 and November 30, 2004 were as follows:
2005 2004
============== ==============
Distributions paid from:
Ordinary income $ 5,036,138 $ 10,844,974
-------------- --------------
Total taxable distributions 5,036,138 10,844,974
-------------- --------------
Total distributions paid $ 5,036,138 $ 10,844,974
============== ==============
As of November 30, 2005, the components of accumulated earnings/(deficit) on a
tax basis were as follows:
Accumulated capital and other losses $ (9,908,139)(a)
Unrealized appreciation/(depreciation) 90,481,338(b)
--------------
Total accumulated earnings/(deficit) $ 80,573,199
==============
(a) On November 30, 2005, the Fund had a net capital loss carryforward of
$9,908,139, which 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 $45,427,971.
(b) The difference between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
During the current fiscal year, permanent differences, primarily due to
distributions in excess of net investment income and the tax treatment of gains
from redemptions in kind resulted in a decrease to distribution in excess of
net investment income, a decrease to accumulated net realized gain on
investment transactions and an increase to additional paid in-capital. This
reclassification had no effect on net assets.
_______________________________________________________________________________
20 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
NOTE I
Legal Proceedings
As has been previously reported, 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
the Adviser provide information to them. The Adviser has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, the 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 memorialized in an
Assurance of Discontinuance dated September 1, 2004 ("NYAG Order"). Among the
key provisions of these agreements are the following:
(i) The Adviser 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) The Adviser agreed to reduce the advisory fees it receives from some of
the AllianceBernstein long-term, open-end retail funds until December 31, 2008;
and
(iii) The Adviser agreed to implement changes to its governance and compliance
procedures. Additionally, the SEC Order and the NYAG Order contemplate that the
Adviser's registered investment company clients, including the Fund, will
introduce governance and compliance changes.
In anticipation of final, definitive documentation of the NYAG Order and
effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee. On September 7, 2004, the Fund's investment advisory agreement was amended
to reflect the reduced advisory fee. For more information on this waiver and
amendment to the Fund's investment advisory agreement, please see "Advisory Fee
and Other Transactions with Affiliates" above.
A special committee of the Adviser's Board of Directors, comprised of the
members of the Adviser's Audit Committee and the other independent member of
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 21
the Adviser's 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 purported class action complaint entitled Hindo, et al.
v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was filed
against the Adviser, Alliance Capital Management Holding L.P. ("Alliance
Holding"), Alliance Capital Management Corporation, AXA Financial, Inc., the
AllianceBernstein Funds, certain officers of the Adviser ("Alliance
defendants"), and certain other defendants not affiliated with the Adviser, as
well as unnamed Doe defendants. 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 Funds. The Hindo Complaint alleges
that certain of the Alliance 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 the Adviser, including recovery of all fees paid to the Adviser pursuant
to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants, and others
may be filed. The plaintiffs in such lawsuits have asserted a variety of
theories for recovery including, but not limited to, violations of the
Securities Act, the Exchange Act, the Advisers Act, the Investment Company Act,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
certain state securities laws, and common law. On February 20, 2004, the
Judicial Panel on Multidistrict Litigation transferred all federal actions, and
removed all state court actions, to the United States District Court for the
District of Maryland (the "Mutual Fund MDL"). The plaintiffs in the removed
actions have since moved for remand, and that motion is pending.
On September 29, 2004, plaintiffs filed consolidated amended complaints with
respect to four claim types: mutual fund shareholder claims; mutual fund
derivative claims; derivative claims brought on behalf of Alliance Holding; and
claims brought under ERISA by participants in the Profit Sharing Plan for
Employees of the Adviser. All four complaints include substantially identical
factual alle-
_______________________________________________________________________________
22 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
gations, which appear to be based in large part on the SEC Order and the NYAG
Order. The claims in the mutual fund derivative consolidated amended complaint
are generally based on the theory that all fund advisory agreements,
distribution agreements and 12b-1 plans between the Adviser and the
AllianceBernstein Funds should be invalidated, regardless of whether market
timing occurred in each individual fund, because each was approved by fund
trustees on the basis of materially misleading information with respect to the
level of market timing permitted in funds managed by the Adviser. The claims
asserted in the other three consolidated amended complaints are similar to
those that the respective plaintiffs asserted in their previous federal
lawsuits. All of these lawsuits seek an unspecified amount of damages. The
Alliance defendants have moved to dismiss the complaints, and those motions are
pending.
On February 10, 2004, the Adviser received (i) a subpoena duces tecum from the
Office of the Attorney General of the State of West Virginia and (ii) a request
for information from West Virginia's Office of the State Auditor, Securities
Commission (the "West Virginia Securities Commission") (together, the
"Information Requests"). Both Information Requests require the Adviser to
produce documents concerning, among other things, any market timing or late
trading in the Adviser's sponsored mutual funds. The Adviser responded to the
Information Requests and has been cooperating fully with the investigation.
On April 11, 2005, a complaint entitled The Attorney General of the State of
West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Alliance Holding, and various other defendants not
affiliated with the Adviser. The WVAG Complaint was filed in the Circuit Court
of Marshall County, West Virginia by the Attorney General of the State of West
Virginia. The WVAG Complaint makes factual allegations generally similar to
those in the Hindo Complaint. On May 31, 2005, defendants removed the WVAG
Complaint to the United States District Court for the Northern District of West
Virginia. On July 12, 2005, plaintiff moved to remand. On October 19, 2005, the
WVAG Complaint was transferred to the Mutual Fund MDL.
On August 30, 2005, the deputy commissioner of securities of the West Virginia
Securities Commission signed a "Summary Order to Cease and Desist, and Notice
of Right to Hearing" addressed to the Adviser and Alliance Holding. The Summary
Order claims that the Adviser and Alliance Holding violated the West Virginia
Uniform Securities Act, and makes factual allegations generally similar to
those in the Commission Order and the NYAG Order. The Adviser intends to
vigorously defend against the allegations in the WVAG Complaint.
On June 22, 2004, a purported class action complaint entitled Aucoin, et al. v.
Alliance Capital Management L.P., et al. ("Aucoin Complaint") was filed against
the Adviser, Alliance Capital Management Holding L.P., Alliance Capital
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 23
Management Corporation, AXA Financial, Inc., AllianceBernstein Investment
Research & Management, Inc., certain current and former directors of the
AllianceBernstein Mutual Funds, and unnamed Doe defendants. The Aucoin
Complaint names certain of the AllianceBernstein mutual funds as nominal
defendants. The Aucoin Complaint was filed in the United States District Court
for the Southern District of New York by an alleged shareholder of an
AllianceBernstein mutual fund. The Aucoin Complaint alleges, among other
things, (i) that certain of the defendants improperly authorized the payment of
excessive commissions and other fees from fund assets to broker-dealers in
exchange for preferential marketing services, (ii) that certain of the
defendants misrepresented and omitted from registration statements and other
reports material facts concerning such payments, and (iii) that certain
defendants caused such conduct as control persons of other defendants. The
Aucoin Complaint asserts claims for violation of Sections 34(b), 36(b) and
48(a) of the Investment Company Act, Sections 206 and 215 of the Advisers Act,
breach of common law fiduciary duties, and aiding and abetting breaches of
common law fiduciary duties. Plaintiffs seek an unspecified amount of
compensatory damages and punitive damages, rescission of their contracts with
the Adviser, including recovery of all fees paid to the Adviser pursuant to
such contracts, an accounting of all fund-related fees, commissions and soft
dollar payments, and restitution of all unlawfully or discriminatorily obtained
fees and expenses.
Since June 22, 2004, numerous additional lawsuits making factual allegations
substantially similar to those in the Aucoin Complaint were filed against the
Adviser and certain other defendants, and others may be filed. On October 19,
2005, the District Court granted in part, and denied in part, defendants'
motion to dismiss the Aucoin Complaint and as a result the only claim remaining
was plaintiffs' Section 36(b) claim. On January 11, 2006, the District Court
dismissed the remaining claim.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the AllianceBernstein
Mutual Funds' shares or other adverse consequences to the AllianceBernstein
Mutual Funds. 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. However, the Adviser believes that these
matters are not likely to have a material adverse effect on its ability to
perform advisory services relating to the AllianceBernstein Mutual Funds.
_______________________________________________________________________________
24 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class A
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $19.15 $14.90 $11.52 $11.47 $10.70
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(a) .32 .27(b) .37 .34 .32
Net realized and
unrealized gain
on investment
transactions 2.87 4.50 3.53 .23 .97
Net increase
in net asset value
from operations 3.19 4.77 3.90 .57 1.29
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income (.30) (.52) (.52) (.32) (.32)
Tax return of capital -0- -0- -0- (.20) (.20)
Total dividends and
distributions (.30) (.52) (.52) (.52) (.52)
Net asset value,
end of period $22.04 $19.15 $14.90 $11.52 $11.47
TOTAL RETURN
Total investment return
based on net asset
value(c) 16.83% 32.70% 34.89% 4.85% 12.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $128,890 $88,162 $57,701 $35,626 $22,422
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 1.35% 1.31% 1.74% 1.75% 1.78%
Expenses, before waivers/
reimbursements 1.35% 1.55% 1.74% 1.75% 1.78%
Net investment income 1.58% 1.67%(b) 2.84% 2.87% 2.84%
Portfolio turnover rate 46% 39% 30% 37% 40%
See footnote summary on page 31.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 25
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class B
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $19.01 $14.84 $11.48 $11.44 $10.68
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income(a) .18 .20(b) .30 .28 .28
Net realized and
unrealized gain
on investment
transactions 2.82 4.42 3.51 .21 .93
Net increase
in net asset value
from operations 3.00 4.62 3.81 .49 1.21
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income (.17) (.45) (.45) (.28) (.28)
Tax return of capital -0- -0- -0- (.17) (.17)
Total dividends
and distributions (.17) (.45) (.45) (.45) (.45)
Net asset value,
end of period $21.84 $19.01 $14.84 $11.48 $11.44
TOTAL RETURN
Total investment return
based on net asset
value(c) 15.89% 31.69% 34.05% 4.15% 11.53%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $79,207 $107,943 $106,147 $99,370 $98,014
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.05% 2.03% 2.47% 2.47% 2.50%
Expenses, before waivers/
reimbursements 2.06% 2.27% 2.47% 2.47% 2.50%
Net investment income .91% 1.22%(b) 2.40% 2.35% 2.53%
Portfolio turnover rate 46% 39% 30% 37% 40%
See footnote summary on page 31.
_______________________________________________________________________________
26 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Class C
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $19.03 $14.86 $11.49 $11.46 $10.69
INCOME FROM INVESTMENT
OPERATIONS
Net investment
income(a) .18 .18(b) .29 .28 .28
Net realized and
unrealized gain
on investment
transactions 2.85 4.44 3.53 .20 .94
Net increase
in net asset value
from operations 3.03 4.62 3.82 .48 1.22
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income (.17) (.45) (.45) (.28) (.28)
Tax return of capital -0- -0- -0- (.17) (.17)
Total dividends
and distributions (.17) (.45) (.45) (.45) (.45)
Net asset value, end
of period $21.89 $19.03 $14.86 $11.49 $11.46
TOTAL RETURN
Total investment return
based on net asset
value(c) 16.04% 31.65% 34.10% 4.06% 11.62%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $51,900 $56,543 $47,698 $35,845 $34,699
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements 2.04% 2.02% 2.46% 2.46% 2.49%
Expenses, before waivers/
reimbursements 2.04% 2.26% 2.46% 2.46% 2.49%
Net investment income .91% 1.11%(b) 2.31% 2.35% 2.50%
Portfolio turnover rate 46% 39% 30% 37% 40%
See footnote summary on page 31.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 27
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Advisor Class
---------------------------------------------------------------
Year Ended November 30,
---------------------------------------------------------------
2005 2004 2003 2002 2001
----------- ----------- ----------- ----------- -----------
Net asset value,
beginning of period $19.04 $14.83 $11.48 $11.46 $10.71
INCOME FROM INVESTMENT
OPERATIONS
Net investment income(a) .29 .32(b) .40 .21 .37
Net realized and
unrealized gain
on investment
transactions 2.94 4.47 3.53 .39 .96
Net increase
in net asset value
from operations 3.23 4.79 3.93 .60 1.33
LESS: DIVIDENDS AND
DISTRIBUTIONS
Dividends from net
investment income (.36) (.58) (.58) (.36) (.37)
Tax return of capital -0- -0- -0- (.22) (.21)
Total dividends
and distributions (.36) (.58) (.58) (.58) (.58)
Net asset value,
end of period $21.91 $19.04 $14.83 $11.48 $11.46
TOTAL RETURN
Total investment return
based on net asset
value(c) 17.17% 33.07% 35.40% 5.12% 12.74%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $3,097 $159,321 $102,135 $59,459 $1,831
Ratio to average net assets of:
Expenses, net of waivers/
reimbursements .95% 1.00% 1.44% 1.51% 1.48%
Expenses, before waivers/
reimbursements .95% 1.25% 1.44% 1.51% 1.48%
Net investment income 1.54% 1.97%(b) 3.17% 1.73% 3.27%
Portfolio turnover rate 46% 39% 30% 37% 40%
See footnote summary on page 31.
_______________________________________________________________________________
28 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class R
--------------
March 1,
2005(d) to
November 30,
2005
--------------
Net asset value, beginning of period $18.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .39
Net realized and unrealized gain on investment transactions 2.81
Net increase in net asset value from operations 3.20
LESS: DIVIDENDS
Dividends from net investment income (.16)
Net asset value, end of period $22.01
TOTAL RETURN
Total investment return based on net asset value(c) 16.99%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $58
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.69%
Expenses, before waivers/reimbursements(e) 1.70%
Net investment income(e) 2.89%
Portfolio turnover rate 46%
See footnote summary on page 31.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 29
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class K
--------------
March 1,
2005(d) to
November 30,
2005
--------------
Net asset value, beginning of period $18.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .38
Net realized and unrealized gain on investment transactions 2.87
Net increase in net asset value from operations 3.25
LESS: DIVIDENDS
Dividends from net investment income (.19)
Net asset value, end of period $22.03
TOTAL RETURN
Total investment return based on net asset value(c) 17.27%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $42
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.37%
Expenses, before waivers/reimbursements(e) 1.37%
Net investment income(e) 2.72%
Portfolio turnover rate 46%
See footnote summary on page 31.
_______________________________________________________________________________
30 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
Class I
--------------
March 1,
2005(d) to
November 30,
2005
--------------
Net asset value, beginning of period $18.97
INCOME FROM INVESTMENT OPERATIONS
Net investment income(a) .53
Net realized and unrealized gain on investment transactions 2.76
Net increase in net asset value from operations 3.29
LESS: DIVIDENDS
Dividends from net investment income (.25)
Net asset value, end of period $22.01
TOTAL RETURN
Total investment return based on net asset value(c) 17.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $1,059
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(e) 1.15%
Expenses, before waivers/reimbursements(e) 1.15%
Net investment income(e) 4.03%
Portfolio turnover rate 46%
(a) Based on average shares outstanding.
(b) Net of expenses waived by the Adviser and Transfer Agent.
(c) 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.
(d) Commencement of distribution.
(e) Annualized.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 31
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2005, 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. We were not engaged to perform an audit of the Fund's internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Fund's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. Our procedures included
confirmation of securities owned as of November 30, 2005 by correspondence with
the custodian and others, or by other appropriate auditing procedures where
replies from others were not received. 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, 2005, 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 U.S. generally
accepted accounting principles.
/s/ Ernst & Young LLP
New York, New York
January 11, 2006
_______________________________________________________________________________
32 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
TAX INFORMATION
(unaudited)
For the fiscal year ended November 30, 2005, certain dividends paid by the Fund
may be subject to a maximum tax rate of 15%, as provided for by the Jobs and
Growth Tax Relief Reconciliation Act of 2003. The Fund designates a maximum
amount of $49,458 as qualified dividend income, which is taxed at a maximum
rate of 15%.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your income tax returns, will be included
with your Form 1099-DIV which will be sent to you separately in January 2006.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 33
RESULTS OF SHAREHOLDERS MEETING
(unaudited)
A Special Meeting of the Stockholders of the AllianceBernstein Real Estate
Investment Fund (the "Fund") was held on November 15, 2005 and adjourned until
December 6, 2005, December 19, 2005, December 21, 2005, and December 22, 2005.
At the November 15, 2005 Meeting, with respect to the first item of business,
the election of Directors, the required number of outstanding shares were voted
in favor of the proposal, and the proposal was approved. At the December 6,
2005 Meeting, with respect to the third item of business, the amendment,
elimination, or reclassification as non-fundamental of the fundamental
investment restrictions, and the fourth item of business, the reclassification
of the Fund's fundamental investment objective as non-fundamental with changes
to the Fund's investment objective, the required number of outstanding shares
voted in favor of each proposal, and each proposal was approved. With respect
to the second item of business, to amend and restate the charter of the Fund
which will repeal in its entirety all currently existing provisions and
substitute in lieu thereof new provisions set forth in the Form of Articles of
Amendment and Restatement as attached to the Proxy Statement as Appendix D, an
insufficient number of required outstanding shares voted in favor of the
proposal, and therefore the proposal was not approved. A description of each
proposal and number of shares voted at the Meetings are as follows (the
proposal numbers shown below correspond to the proposal numbers in the Fund's
proxy statement):
1. To elect eight Directors of the Fund, each such Director to hold office
until his or her successor is duly elected and qualified.
Withheld
Voted For Authority
-------------------------------------------
Ruth Block 6,724,496 169,151
David H. Dievler 6,730,880 162,767
John H. Dobkin 6,735,162 158,484
Michael J. Downey 6,735,635 158,011
William H. Foulk, Jr. 6,733,812 159,835
D. James Guzy 6,455,012 438,634
Marc O. Mayer 6,734,846 158,801
Marshall C. Turner, Jr. 6,735,564 158,082
2. To amend and restate the charter of the Fund which will repeal in its
entirety all currently existing charter provisions and substitute in lieu
thereof new provisions set forth in the Form of Articles of Amendment and
Restatement.
Voted
Voted For Against Abstained
- -----------------------------------------------------------------
5,826,455 164,907 623,095
_______________________________________________________________________________
34 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
3. To amend, eliminate, or reclassify as non-fundamental of the fundamental
investment restrictions regarding:
Voted Broker
Voted For Against Abstained Non-Votes
-----------------------------------------------------------
3.A. Diversification 5,354,042 195,361 138,568 1,359,246
3.B. Issuing Senior Securities 5,323,652 230,149 134,170 1,359,246
and Borrowing Money
3.C. Underwriting Securities 5,323,542 224,963 139,465 1,359,246
3.D. Concentration of 5,331,170 222,668 134,133 1,359,246
Investments
3.E. Real Estate and 5,325,510 222,670 139,791 1,359,246
Companies That Deal
In Real Estate
3.F. Commodity Contracts 5,318,259 229,974 139,739 1,359,246
and Futures Contracts
3.G. Loans 5,323,751 223,807 140,414 1,359,246
3.H. Joint Securities Trading 5,319,521 226,980 141,471 1,359,246
Accounts
3.I. Exercising Control 5,334,219 220,260 133,452 1,359,246
3.K. Oil, Gas and Other 5,335,914 219,628 132,429 1,359,246
Types of Minerals or
Mineral Leases
3.L. Purchase of Securities 5,326,806 228,297 132,868 1,359,246
on Margin
3.M. Short Sales 5,337,490 217,804 132,678 1,359,246
3.N. Pledging, Hypothecating, 5,344,121 211,190 132,660 1,359,246
Mortgaging, or Otherwise
Encumbering Assets
4. The reclassification of the 4,889,761 453,525 344,685 1,359,246
Fund's fundamental
investment objective as
non-fundamental with
changes to the Fund's
investment objective.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 35
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Michael J. Downey(1)
D. James Guzy(1)
Marshall C. Turner, Jr.(1)
OFFICERS(2)
Philip L. Kirstein, Senior Vice President and Independent Compliance Officer
Teresa Marziano, Senior Vice President
Joseph G.Paul, Senior Vice President
Thomas J. Bardong, Vice President
Emilie D. Wrapp, Secretary
Mark D. Gersten, Treasurer and 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 Registered Public Accounting Firm
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, the Independent Directors Committee and the
Governance and Nominating Committee.
(2) The day-to-day management of and investment decisions for the Fund are
made by the REIT Investment Policy Group. Teresa Marziano and Joseph G. Paul
are the investment professionals with the most significant responsibility for
the day-to-day management of the Fund.
_______________________________________________________________________________
36 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT 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, ADDRESS PRINCIPAL COMPLEX DIRECTORSHIPS
AND DATE OF BIRTH OCCUPATION(S) OVERSEEN HELD
(First Year Elected*) DURING PAST 5 YEARS BY DIRECTOR BY DIRECTOR
- ------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
William H. Foulk, Jr., #,++ Investment adviser and an 108 None
Suite 100 independent consultant. He
2 Sound View Drive was formerly Senior Manager
Greenwich, CT 06830 of Barrett Associates, Inc., a
Chairman of the Board registered investment adviser,
9/7/32 with which he had been associated
(1996) since prior to 2001. 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, #,+ Formerly an Executive Vice President 106 None
500 S.E. Mizner Blvd. and Chief Insurance Officer of
Boca Raton, FL 33432 The Equitable Life Assurance
11/11/30 Society of the United States;
(1996) Chairman and Chief Executive
Officer of Evlico (insurance); Director
of Avon, BP (oil and gas), Ecolab
Incorporated (specialty chemicals),
Tandem Financial Group and
Donaldson, Lufkin & Jenrette
Securities Corporation;
Governor at Large, National
Association of Securities Dealers, Inc.
David H. Dievler, # Independent consultant. Until 107 None
P.O. Box 167 December 1994 he was Senior
Spring Lake, NJ 07762 Vice President of Alliance Capital
10/23/29 Management Corporation ("ACMC")
(1996) 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 Waterhouse &
Co. Member of American Institute
of Certified Public Accountants
since 1953.
John H. Dobkin, # Consultant. Formerly President 106 None
P.O. Box 12 of Save Venice, Inc. (preservation
Annandale, NY 12504 organization) from 2001-2002,
2/19/42 Senior Advisor from June 1999 -
(1996) 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, Director and Chairman of the
Audit Committee of ACMC.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 37
PORTFOLIOS
IN FUND OTHER
NAME, ADDRESS PRINCIPAL COMPLEX DIRECTORSHIPS
AND DATE OF BIRTH OCCUPATION(S) OVERSEEN HELD
(First Year Elected*) DURING PAST 5 YEARS BY DIRECTOR BY DIRECTOR
- ------------------------------------------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
(continued)
Michael J. Downey, # Consultant since January 2004. 106 Asia
c/o Alliance Capital Formerly managing partner of Pacific
Management L.P. Lexington Capital, LLC (investment Fund, Inc.;
Attention: advisory firm) from December 1997 and The
Philip L. Kirstein until December 2003. Prior thereto, Merger
1345 Avenue of the Chairman and CEO of Prudential Fund
Americas Mutual Fund Management from
New York, NY 10105 1987to1993.
1/26/44
(2005)
D. James Guzy, # Chairman of the Board of PLX 106 Intel Corporation,
P.O. Box 128 Technology (semi-conductors) Cirrus Logic
Glenbrook, NV 89413 and of SRC Computers, Inc., Corporation,
3/7/36 with which he has been associated Novellus
(2005) since prior to 2001. He is also Corporation,
President of the Arbor Company Micro Component
(private family investments). Technology, the
Davis Selected
Advisors Group
of Mutual Funds,
and LogicVision
Marshall C. Turner, Jr., # Principal of Turner Venture 106 Toppan
220 Montgomery Street Associates (venture capital and Photomasks, Inc.,
Penthouse 10 consulting) since prior to 2001. the George
San Francisco, Chairman and CEO, DuPont Lucas
CA 94104 Photomasks, Inc., Austin, Texas, Educational
10/10/41 2003-2005, and President and Foundation, and
(2005) CEO since company acquired, Chairman of the
and name changed to Toppan Board of the
Photomasks, Inc. in 2005 (semi- Smithsonian's
conductor manufacturing services). National
Museum of
Natural History
INTERESTED DIRECTORS
Marc O. Mayer, ** Executive Vice President of ACMC 106 SCB Partners,
1345 Avenue of the since 2001 and Chairman of the Inc.; and
Americas Board of AllianceBernstein Investment SCB, Inc.
New York, NY 10105 Research and Management, Inc.
10/2/57 ("ABIRM") since 2000; prior thereto,
(2003) Chief Executive Officer of Sanford C.
Bernstein & Co., LLC (institutional
research and brokerage arm of
Bernstein and Co., LLC ("SCB & Co."))
and its predecessor since prior to
2001.
_______________________________________________________________________________
38 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
* There is no stated term of office for the Fund's Directors.
** Mr. Mayer is an "interested person", as defined in the 1940 Act, due to his
position as an Executive Vice President of ACMC.
# Member of the Audit Committee, the Governance and Nominating Committee and
the Independent Directors Committee.
+ Ms. Block was an "interested person", as defined in the 1940 Act, until
October 21, 2004 by reason of her ownership of equity securities of a
controlling person of the Adviser. Such securities were sold for approximately
$2,400 on October 21, 2004. Ms. Block received shares of The Equitable
Companies Incorporated ("Equitable") as part of the demutualization of The
Equitable Life Assurance Society of the United States. Her Equitable shares
were subsequently converted through a corporate action into 116 American
Depositary Shares of AXA.
++ Member of the Fair Value Pricing Committee.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 39
Officer Information
Certain information concerning the Fund's officers is set forth below.
NAME, ADDRESS,* POSITION(S) PRINCIPAL OCCUPATION
AND DATE OF BIRTH HELD WITH FUND DURING PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------------
Marc O. Mayer President See biography above.
10/2/57
Philip L. Kirstein Senior Vice President Senior Vice President and Independent
5/29/45 and Independent Compliance Officer of the AllianceBernstein
Compliance Funds, with which he has been
associated since October 2004. Prior
thereto, he was Of Counsel to
Kirkpatrick & Lockhart, LLP from
October 2003 to October 2004, and
General Counsel of Merrill Lynch
Investment Managers, L.P. since prior to
2001 until March 2003.
Teresa Marziano Senior Vice President Senior Vice President of ACMC**, with
9/1/54 which she has been associated since
prior to 2001.
Joseph G. Paul Senior Vice President Senior Vice President of ACMC**, with
2/8/60 which he has been associated since
prior to 2001.
Thomas J. Bardong Vice President Senior Vice President of ACMC**, with
4/28/45 which he has been associated since
prior to 2001.
Emilie D. Wrapp Secretary Senior Vice President, Assistant
11/13/55 General Counsel and Assistant Secretary
of ABIRM**, with which she has been
associated since prior to 2001.
Mark D. Gersten Treasurer and Chief Senior Vice President of Alliance Global
10/4/50 Financial Officer Investor Services, Inc. ("AGIS")** and
Vice President of ABIRM**, with which
he has been associated since prior to
2001.
Vincent S. Noto Controller Vice President of AGIS**, with which he
12/14/64 has been associated since prior to 2001.
* The address for each of the Fund's Officers is 1345 Avenue of the Americas,
New York, NY 10105.
** ACMC, ABIRM, AGIS and SCB & Co. 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.
_______________________________________________________________________________
40 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Information Regarding the Review and Approval of the Fund's Advisory Agreement
The Fund's disinterested directors (the "directors") unanimously approved the
continuance of the Advisory Agreement between the Fund and the Adviser at a
meeting held on June 15, 2005.
In preparation for the meeting, the directors had requested from the Adviser
and evaluated extensive materials, including performance and expense
information for other investment companies with similar investment objectives
as the Fund derived from data compiled by Lipper Inc. ("Lipper"), which is not
affiliated with the Adviser. The directors also reviewed an independent
evaluation from the Fund's Senior Officer (who is also the Fund's Independent
Compliance Officer) of the reasonableness of the advisory fees in the Fund's
Advisory Agreement (as contemplated by the Assurance of Discontinuance between
the Adviser and the New York Attorney General) wherein the Senior Officer
concluded that such fees were reasonable. In addition, the directors received a
presentation from the Adviser and had an opportunity to ask representatives of
the Adviser various questions relevant to the proposed approval. The directors
noted that the Senior Officer's evaluation considered the following factors:
management fees charged to institutional and other clients of the Adviser for
like services; management fees charged by other mutual fund companies for like
services; cost to the Adviser and its affiliates of supplying services pursuant
to the management fee agreement, excluding any intra-corporate profit; profit
margins of the Adviser and its affiliates from supplying such services;
possible economies of scale as the Fund grows larger; and nature and quality of
the Adviser's services including the performance of the Fund.
Prior to voting, the directors reviewed the proposed continuance of the
Advisory Agreement with management and with experienced counsel who are
independent of the Adviser and received a memorandum from such counsel
discussing the legal standards for their consideration of the proposed
continuance. The directors also discussed the proposed continuance in three
private sessions at which only the directors, their independent counsel and the
Fund's Independent Compliance Officer were present. In reaching their
determinations relating to continuance of the Advisory Agreement, the directors
considered all factors they believed relevant, including the following:
1. information comparing the performance of the Fund to other investment
companies with similar investment objectives and to an index;
2. the nature, extent and quality of investment, compliance, administrative
and other services rendered by the Adviser;
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 41
3. payments received by the Adviser from all sources in respect of the Fund
and all investment companies in the AllianceBernstein Funds complex;
4. the costs borne by, and profitability of, the Adviser and its affiliates in
providing services to the Fund and to all investment companies in the
AllianceBernstein Funds complex;
5. comparative fee and expense data for the Fund and other investment
companies with similar investment objectives;
6. the extent to which economies of scale would be realized to the extent the
Fund grows and whether fee levels reflect any economies of scale for the
benefit of investors;
7. the Adviser's policies and practices regarding allocation of portfolio
transactions of the Fund, including the extent to which the Adviser benefits
from soft dollar arrangements;
8. information about "revenue sharing" arrangements that the Adviser has
entered into in respect of the Fund;
9. portfolio turnover rates for the Fund compared to other investment
companies with similar investment objectives;
10. fall-out benefits which the Adviser and its affiliates receive from their
relationships with the Fund;
11. information about fees charged by the Adviser to other clients with
similar investment objectives;
12. the Senior Officer's evaluation of the reasonableness of the fee payable
to the Adviser in the Advisory Agreement;
13. the professional experience and qualifications of the Fund's portfolio
management team and other senior personnel of the Adviser; and
14. the terms of the Advisory Agreement.
The directors also considered their knowledge of the nature and quality of the
services provided by the Adviser to the Fund gained from their experience as
directors or trustees of most of the funds advised by the Adviser, their
overall confidence in the Adviser's integrity and competence they have gained
from that experience and the Adviser's responsiveness to concerns raised by
them in the
_______________________________________________________________________________
42 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
past, including the Adviser's willingness to consider and implement
organizational and operational changes designed to improve investment results
and the services provided to the AllianceBernstein Funds.
In their deliberations, the directors did not identify any particular
information that was all-important or controlling, and each director attributed
different weights to the various factors.
The directors determined that the overall arrangements between the Fund and the
Adviser, as provided in the Advisory Agreement, were fair and reasonable in
light of the services performed, expenses incurred and such other matters as
the directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the directors
reaching their determinations to approve the continuance of the Advisory
Agreement (including their determinations that the Adviser should continue to
be the investment adviser for the Fund, and that the fees payable to the
Adviser pursuant to the Advisory Agreement are appropriate) were separately
discussed by the directors.
Nature, extent and quality of services provided by the Adviser
The directors noted that, under the Advisory Agreement, the Adviser, subject to
the control of the directors, administers the Fund's business and other
affairs. The Adviser manages the investment of the assets of the Fund,
including making purchases and sales of portfolio securities consistent with
the Fund's investment objective and policies. Under the Advisory Agreement, the
Adviser also provides the Fund with such office space, administrative and other
services (exclusive of, and in addition to, any such services provided by any
others retained by the Fund) and executive and other personnel as are necessary
for the Fund's operations. The Adviser pays all of the compensation of
directors of the Fund who are affiliated persons of the Adviser and of the
officers of the Fund.
The directors also considered that the Advisory Agreement provides that the
Fund will reimburse the Adviser for the cost of certain clerical, accounting,
administrative and other services provided at the Fund's request by employees
of the Adviser or its affiliates. Requests for these "at no more than cost"
reimbursements are approved by the directors on a quarterly basis and (to the
extent requested and paid) result in a higher rate of total compensation from
the Fund to the Adviser than the stated fee rates in the Fund's Advisory
Agreement.
The directors considered the scope and quality of services provided by the
Adviser under the Advisory Agreement and noted that the scope of services
provided by advisers of funds had expanded over time as a result of regulatory
and other developments. The directors noted, for example, that the Adviser is
responsible for maintaining and monitoring its own and, to varying degrees, the
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 43
Fund's compliance programs, and that these compliance programs have recently
been refined and enhanced in light of new regulatory requirements. The
directors considered the quality of the in-house investment research
capabilities of the Adviser and the other resources it has dedicated to
performing services for the Fund. The quality of administrative and other
services, including the Adviser's role in coordinating the activities of the
Fund's other service providers, also were considered. The directors also
considered the Adviser's response to recent regulatory compliance issues
affecting a number of the investment companies in the AllianceBernstein Funds
complex. The directors concluded that, overall, they were satisfied with the
nature, extent and quality of services provided to the Fund under the Advisory
Agreement.
Costs of Services Provided and Profitability to the Adviser
The directors reviewed a schedule of the revenues, expenses and related notes
indicating the profitability of the Fund to the Adviser for calendar years 2003
and 2004. The directors reviewed the assumptions and methods of allocation used
by the Adviser in preparing fund-specific profitability data, and noted the
Adviser's representation to them that it believed that the methods of
allocation used in preparing the profitability information were reasonable and
appropriate and that the Adviser had previously discussed with the directors
that there is no generally accepted allocation methodology for information of
this type. The directors also noted that the methodology for preparing
fund-by-fund profitability information was being reviewed and that it was
expected that an updated methodology would be implemented later in the year,
and that it would differ in various respects from the methodology used
previously.
The directors recognized that it is difficult to make comparisons of
profitability from fund advisory contracts because comparative information is
not generally publicly available and is affected by numerous factors, including
the structure of the particular adviser, the types of funds it manages, its
business mix, numerous assumptions regarding allocations and the adviser's
capital structure and cost of capital. In considering profitability
information, the directors considered the effect of fall-out benefits on the
Adviser's expenses, as well as the "revenue sharing" arrangements the Adviser
has entered into with certain entities that distribute shares of the Fund. The
directors focused on the profitability of the Adviser's relationship with the
Fund before taxes and distribution expenses. The directors recognized that the
Adviser should generally be entitled to earn a reasonable level of profits for
the services it provides to the Fund and, based on their review, concluded that
they were satisfied that the Adviser's level of profitability from its
relationship with the Fund was not excessive.
Fall-Out Benefits
The directors considered that the Adviser benefits from soft dollar
arrangements whereby it receives brokerage and research services from many of
the brokers and dealers that execute purchases and sales of securities on
behalf of its clients on an
_______________________________________________________________________________
44 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
agency basis. They noted that the Adviser makes presentations to the directors
regarding its trading practices and brokerage allocation policies, including
its policies with respect to soft dollar arrangements, from time to time and
had made a special presentation to the directors in May 2005 on this subject.
The directors noted that the Adviser has represented to them that all of its
soft dollar arrangements are consistent with applicable legal requirements
including the achievement of best execution. At the special presentation, the
directors received and reviewed information concerning the Adviser's soft
dollar arrangements, which included a description of the Adviser's policies and
procedures with respect to allocating portfolio transactions for brokerage and
research services, data on the dollar amount of commissions allocated for
third-party research and brokerage services and for proprietary research and
brokerage services, and a list of firms providing third-party research and
brokerage to the Adviser.
The directors also considered that the Distributor, which is a wholly-owned
subsidiary of the Adviser: receives 12b-1 fees from the Fund in respect of
classes of shares of the Fund that are subject to the Fund's 12b-1 plan;
retains a portion of the 12b-1 fees from the Fund; and receives all or a
portion of the sales charges on sales or redemptions of certain classes of
shares. The directors also noted that certain affiliates of the Adviser
distribute shares of the Fund and receive compensation in that connection, that
a subsidiary of the Adviser provides transfer agency services to the Fund and
receives compensation from the Fund for such services, and that brokers who are
affiliated with the Adviser are permitted to execute brokerage transactions for
the Fund subject to satisfaction of certain requirements.
The directors recognized that the Adviser's profitability would be somewhat
lower if it did not receive research for soft dollars or if the Adviser's
affiliates did not receive the other benefits described above. The directors
believe that the Adviser derives reputational and other benefits from its
association with the Fund.
Investment Results
In addition to the information reviewed by the directors in connection with the
meeting, the directors receive detailed comparative performance information for
the Fund at each regular Board meeting during the year. At the meeting, the
directors reviewed information prepared by the Adviser based on information
obtained from Lipper showing performance for Class A shares of the Fund as
compared to other funds in the Lipper Real Estate Funds Average for periods
ending March 31, 2005 over the year to date ("YTD"), 1-, 3- and 5-year and
since inception periods (inception September 1996) and for calendar years 1997
to 2004 and compared to the National Association of Real Estate Investment
Trusts Equity Index. The directors also reviewed information from a report
prepared by Lipper showing performance for Class A shares of the Fund as
compared to a group of 12 to 8 funds (depending on the year) in its Lipper
category selected by Lipper (the "Performance Group") and as compared to a
universe of
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 45
39 to 21 funds (depending on the year) in its Lipper category selected by
Lipper (the "Performance Universe") for periods ended March 31, 2005 over the
1-, 3- and 5-year periods. The directors noted that the Lipper category data
showed the Fund's performance for the periods ending March 31, 2005 was
significantly below the Lipper median in the YTD period, slightly above the
Lipper median in the 1-year period, materially above the Lipper median in the
3-year period, slightly below the Lipper median in the 5-year period and
materially below the Lipper median in the since inception period, and that the
Fund's calendar year performance was significantly above the Lipper medians in
2004, 2003 and 1997, materially above the Lipper median in 2001, materially
below the Lipper median in 2000 and significantly below the Lipper medians in
2002, 1999 and 1998. The directors further noted that in the Performance Group
and Performance Universe comparisons, the Fund was in the third quintile for
all periods reviewed except that it was in the fourth quintile in the
Performance Group comparison in the 1- and 5-year periods. Based on their
review, the directors concluded that the Fund's relative investment performance
over time was satisfactory. The directors informed the Adviser that they
planned to closely monitor the Fund's performance.
Advisory Fees and Other Expenses
The directors considered the advisory fee rate paid by the Fund to the Adviser
and information prepared by Lipper concerning fee rates paid by other funds in
the same Lipper category as the Fund at a common asset level. The directors
recognized that it is difficult to make comparisons of advisory fees because
there are variations in the services that are included in the fees paid by
other funds.
The directors also considered the fees the Adviser charges other clients with
investment objectives similar to those of the Fund. For this purpose, they
reviewed information in the Adviser's Form ADV and a chart prepared by the
Adviser disclosing the institutional fee schedule for institutional products
that have a substantially similar investment style as the Fund. They also
received an oral presentation from the Adviser that supplemented the
information on the Form ADV. The Adviser manages accounts for institutional
clients with a comparable investment style to the Fund. The directors noted
that the institutional fee schedule for these accounts had much lower
breakpoints than the fee schedule in the Fund's Advisory Agreement. The
directors also noted that the application of such fee schedule to the level of
assets of the Fund would result in a fee rate that would be significantly lower
than that in the Fund's Advisory Agreement. The directors noted that the
Adviser may, in some cases, negotiate fee rates with large institutional
clients that are lower than those reviewed by the directors and discussed with
the Adviser the level of such negotiated fees for strategies similar to those
of the Fund.
The Adviser reviewed with the directors the significant differences in the
scope of services it provides to institutional clients and to the Fund. For
example, the
_______________________________________________________________________________
46 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
Advisory Agreement requires the Adviser to provide, in addition to investment
advice, office facilities and officers (including officers to provide required
certifications). The Adviser also coordinates the provision of services to the
Fund by non-affiliated service providers and is responsible for the
compensation of the Fund's Independent Compliance Officer and certain related
expenses. The provision of these non-advisory services involves costs and
exposure to liability. The Adviser explained that many of these services
normally are not provided to non-investment company clients, and that fees
charged to the Fund reflect the costs and risks of the additional obligations.
The Adviser also noted that since the Fund is constantly issuing and redeeming
its shares, it is more difficult to manage than an institutional account, where
the assets are relatively stable. In light of these facts, the directors did
not place significant weight on these fee comparisons.
The directors also considered the total expense ratio of the Class A shares of
the Fund in comparison to the fees and expenses of funds within two comparison
groups created by Lipper: an Expense Group and an Expense Universe. Lipper
described an Expense Group as a representative sample of comparable funds and
an Expense Universe as a broader group, consisting of all funds in the Fund's
investment classification/ objective with a similar load type as the Fund. The
Class A expense ratio of the Fund was based on the Fund's latest fiscal year
expense ratio. The directors recognized that the expense ratio information for
the Fund potentially reflected on the Adviser's provision of services, as the
Adviser is responsible for coordinating services provided to the Fund by
others. The directors noted that it was likely that the expense ratios of some
funds in the Fund's Lipper category also were lowered by waivers or
reimbursements by those funds' investment advisers, which in some cases were
voluntary and perhaps temporary.
The directors noted that the Fund's at approximate current size contractual
effective fee rate of 55 basis points was significantly lower than the median
for the Expense Group. The directors noted that the latest fiscal year
administrative expense reimbursement by the Fund pursuant to the Advisory
Agreement was 3 basis points. The directors also noted that the Adviser advises
two other AllianceBernstein funds with similar investment objectives and
strategies as the Fund for the same fee rate as the Fund. The directors further
noted that the Fund's expense ratio was somewhat lower than the median for the
Expense Group and materially lower than the median for the Expense Universe.
The directors concluded that the Fund's expense ratio was satisfactory.
Economies of Scale
The directors noted that the advisory fee schedule for the Fund contains
breakpoints so that, if assets were to increase over the breakpoint levels, the
fee rates would be reduced on the incremental assets. The directors also
considered a presentation by an independent consultant discussing economies of
scale issues in
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 47
the mutual fund industry. The directors believe that economies of scale are
realized (if at all) by the Adviser across a variety of products and services,
and not only in respect of a single fund. The directors noted that there is no
uniform methodology for establishing breakpoints that give effect to
fund-specific services provided by the Adviser and to the economies of scale
that the Adviser may realize in its overall mutual fund business or those
components of it which directly or indirectly affect the Fund's operations. The
directors observed that in the mutual fund industry as a whole, as well as
among funds similar to the Fund, there is no uniformity or pattern in the fees
and asset levels at which breakpoints (if any) apply. Depending on the age and
size of a particular fund and its adviser's cost structure, different
conclusions can be drawn as to whether there are economies of scale to be
realized at any particular level of assets, notwithstanding the intuitive
conclusion that such economies exist, or will be realized at some level of
total assets. Moreover, because different advisers have different cost
structures and service models, it is difficult to draw meaningful conclusions
from the comparison of a fund's advisory fee breakpoints with those of
comparable funds. The directors also noted that the advisory agreements for
many funds do not have breakpoints at all. Having taken these factors into
account, the directors concluded that the Fund's breakpoint arrangements would
result in a sharing of economies of scale in the event of a very significant
increase in the Fund's net assets.
_______________________________________________________________________________
48 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
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 Funds
- --------------------------------------------
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
- --------------------------------------------
Growth Funds
- --------------------------------------------
Domestic
Growth Fund
Mid-Cap Growth Fund
Large Cap Growth Fund
Small Cap Growth Portfolio
Global & International
Global Health Care Fund
Global Research Growth Fund
Global Technology Fund
Greater China '97 Fund
International Growth Fund*
International Research Growth Fund*
- --------------------------------------------
Value Funds
- --------------------------------------------
Domestic
Balanced Shares
Focused Growth & Income Fund
Growth & Income Fund
Real Estate Investment Fund
Small/Mid 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. You should read the prospectus carefully before you invest.
* Prior to February 1, 2005, Small/Mid Cap Value Fund was named Small Cap
Value Fund. Prior to May 16, 2005, International Growth Fund was named
Worldwide Privatization Fund and International Research Growth Fund was named
International Premier Growth Fund. On June 24, 2005, All-Asia Investment Fund
merged into International Research Growth Fund. On July 8, 2005, New Europe Fund
merged into International Research Growth Fund. On February 1, 2006, Americas
Government Income Trust will be renamed Global Government Income Trust and
Quality Bond Portfolio will be renamed Intermediate Bond Portfolio.
** 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 49
SUMMARY OF SENIOR OFFICER'S EVALUATION OF INVESTMENT ADVISORY AGREEMENT*
The following is a summary of the evaluation of the investment advisory
agreement between Alliance Capital Management L.P., (the "Adviser") and the
AllianceBernstein Real Estate Investment Fund, Inc., (the "Fund"), prepared by
Philip L. Kirstein, the Senior Officer, for the independent directors of the
Fund, as required by the Assurance of Discontinuance between the New York State
Attorney General and the Adviser. The Senior Officer's evaluation of the
investment advisory agreement is not meant to diminish the responsibility or
authority of the Boards of Directors to perform their duties pursuant to
Section 15 of the Investment Company Act of 1940 (the "40 Act") and applicable
state law. The purpose of the summary is to provide shareholders with a
synopsis of the independent evaluation of the reasonableness of the advisory
fees which was provided to the independent directors in connection with their
review of the proposed continuance of the investment advisory agreement. The
Senior Officer's evaluation considered the following factors:
1. Management fees charged to institutional and other clients of the Adviser
for like services.
2. Management fees charged by other mutual fund companies for like services.
3. Costs to the Adviser and its affiliates of supplying services pursuant to
the advisory agreement, excluding any intra-corporate profit.
4. Profit margins of the Adviser and its affiliates from providing such
services.
5. Possible economies of scale as the Fund grows larger.
6. Nature and quality of the Adviser's services, including the performance of
the Fund.
FUND ADVISORY FEES, EXPENSE REIMBURSEMENTS & RATIOS
The table below describes the Fund's advisory fee pursuant to the Investment
Advisory Agreement. This is the fee schedule the Adviser implemented in January
2004 as a result of the settlement with the New York State Attorney General.
Advisory Fee Based on % of
Average Daily Net Assets
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate First $2.5 billion .55%
Investment Fund, Inc. Next $2.5 billion .45%
Excess over $5 billion .40%
* It should be noted that the information in the fee summary was completed on
June 8, 2005 and presented to the Board of Directors and Trustees on June 15,
2005 in accordance with the Assurance of Discontinuance with the New York State
Attorney General. It also should be noted that references in the fee summary
pertaining to performance and expense ratios refer to Class A shares of the
Fund.
_______________________________________________________________________________
50 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
The table below shows pro-forma expense ratio information for the Fund for its
most recent fiscal year.
Pro-Forma Fiscal
Expense Ratio* Year End
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate Advisor - 1.94% November
Investment Fund, Inc. Class A - 1.26% 30, 2004
Class B - 1.98%
Class C - 1.96%
The Adviser is reimbursed as specified in the Investment Advisory Agreement for
certain clerical, legal, accounting, administrative and other services provided
to the Fund as indicated below:
Latest
Fiscal Year As % of Average
Amount Daily Net Assets
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate
Investment Fund, Inc. $88,601.00 .03
I. MANAGEMENT FEES CHARGED TO INSTITUTIONAL AND OTHER CLIENTS OF THE ADVISER
The management fees charged to investment companies which the Adviser manages
and sponsors may be higher than those charged to institutional accounts,
including pension plans and sub-advised investment companies. The fee
differential reflects, among other things, different services provided to such
clients, and different liabilities assumed. Services provided by the Adviser to
the Fund that are not provided to non-investment company clients include
providing office space and personnel to serve as Fund Officers and coordinating
with and monitoring the Fund's third party service providers such as Fund
counsel, auditors, custodians, transfer agents and pricing services. The
accounting, administrative and legal/compliance requirements for the Fund are
more costly than those for institutional assets due to the greater complexities
and time required for investment companies. A portion of the expenses related
to these services are reimbursed by the Fund to the Adviser. Managing the cash
flow of an investment company may be more difficult than for other accounts,
particularly if the Fund is in net redemptions, as the Adviser is forced to
sell securities to meet redemptions.
Notwithstanding the Adviser's view that managing an investment company is not
comparable to managing other institutional accounts because the services
provided are different, the Senior Officer believes it is worth noting the
information from the Adviser's ADV regarding the advisory fees charged to
institutional accounts in the same asset class as the Fund.
* This pro-forma expense ratio information shows what would have been the
Fund's expense ratio in the indicated fiscal year had the current fee been in
effect throughout the fiscal year.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 51
Total
Net Assets
03/31/05 Alliance Institutional
($MIL) Fee Schedule
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate 349.6 Domestic REIT Strategy
Investment Fund, Inc. Schedule
70 bp on 1st $25 m
60 bp on next $25 m
50 bp on next $25 m
negotiable on the balance
Minimum account size $10 m
The Adviser also manages and sponsors retail mutual funds organized in
jurisdictions outside the United States, generally Luxembourg, and sold to
non-United States investors. The Adviser charges the following fee for an
offshore mutual fund with a similar investment style as the Fund:
Asset Class Fee
- --------------------------------------------------------
Real Estate .95%
The Adviser represented that it does not sub-advise any registered investment
companies with a similar investment style as the Fund.
II. MANAGEMENT FEES CHARGED BY OTHER MUTUAL FUND COMPANIES FOR LIKE SERVICES.
Lipper, Inc., an analytical service that is not affiliated with the Adviser,
compared the fees charged to the Fund with fees charged to other investment
companies for similar services by other investment advisers. Lipper's analysis
included the Fund's ranking with respect to the proposed advisory fees relative
to the Lipper group median at the approximate current asset level for the Fund.*
Lipper Group
Fee Median Rank
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate
Investment Fund, Inc. 0.55 0.775 2/12
Lipper also analyzed the expense ratio of the Fund in comparison to its Lipper
Expense Group** and Lipper Expense Universe***. Lipper describes a Lipper
Expense Group as a representative sample of comparable funds and a Lipper
Universe as a broader group, consisting of all funds in the investment
classifica-
* A ranking of "1" means that the AllianceBernstein Fund has the lowest
effective fee rate in the Lipper peer group.
** Lipper uses the following criteria in screening funds to be included in
each Fund's expense group: fund type, investment classification/objective, load
type and similar 12b-1/non-12b-1 service fees, asset (size) comparability, and
expense components and attributes. An expense group will typically consist of
seven to twenty funds.
*** Except for asset (size) comparability, Lipper uses the same criteria for
selecting an expense group when selecting an expense universe. Unlike an
expense group, an expense universe allows for the same advisor to be
represented by more than just one fund.
_______________________________________________________________________________
52 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
tion/objective with a similar load type as the subject Fund. The results of
that analysis are set forth below:
Lipper Lipper Lipper Lipper
Expense Universe Universe Group Group
Ratio Median Rank Rank Median
- -------------------------------------------------------------------------------------------------
AllianceBernstein Real Estate
Investment Fund, Inc. 1.306 1.523 7/32 5/12 1.385
Based on this analysis, the Fund has a more favorable ranking on an advisory
fee basis than on a total expense ratio basis. This has resulted in a variety
of efforts by the Adviser to lower non-management expenses.
III. COSTS TO THE ADVISER AND ITS AFFILIATES OF SUPPLYING SERVICES PURSUANT TO
THE ADVISORY AGREEMENT, EXCLUDING ANY INTRA-CORPORATE PROFIT.
The profitability information for the Fund prepared by the Adviser for the
Board of the Directors was reviewed by the Senior Officer. An independent
consultant is working with the Adviser's personnel on a new system to produce
profitability information at the Fund level which will reflect the Adviser's
management reporting approach. It is possible that future Fund profitability
information may differ from previously reviewed information due to changes in
methodologies and allocations. See Section IV for additional discussion.
IV. PROFIT MARGINS OF THE ADVISER AND ITS AFFILIATES FOR SUPPLYING SUCH
SERVICES.
The Adviser's profitability for the Fund increased slightly during calendar
2004 relative to 2003 as a result of the reduction in fee waivers and expense
reimbursements.
In addition to the Adviser's direct profits from managing the Fund pursuant to
the investment advisory agreement, certain of the Adviser's affiliates have
business relationships with the Fund and may earn a profit from providing other
services to the Fund. These affiliates provide transfer agency and distribution
related services and receive transfer agent fees, Rule 12b-1 payments,
front-end sales loads, contingent deferred sales charges ("CDSC") and
commissions for providing brokerage services. In addition, the Adviser benefits
from soft dollar arrangements which offset expenses the Adviser would otherwise
incur. Additional information regarding distribution related fees can be found
in the prospectus of the Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 53
Different classes of shares are charged different types of distribution fees.
The Adviser's affiliate, AllianceBernstein Investment Research and Management
Inc. ("ABIRM"), is the Fund's principal underwriter. ABIRM and the Adviser may
make payments* from their own resources, in addition to sales loads and Rule
12b-1 fees, to firms that sell shares of the Fund. In 2004, ABIRM paid from its
own resources approximately .04% of the average monthly assets of the Fund for
distribution services and educational support. For 2005, it is anticipated that
ABIRM will pay approximately .04% of average monthly assets of the Fund for
such purposes.
After payments to third party intermediaries, ABIRM retained the following
amount in Class A front-end load sales charges from sales of the Fund's shares
in the Fund's most recent fiscal year:
Amount Received
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate Investment Fund, Inc. $9,117
ABIRM received the amounts set forth below in Rule 12b-1 fees and CDSC for the
Fund during the Fund's most recent fiscal year. A significant percentage of
such amounts were paid out to third party intermediaries by ABIRM.
12b-1 Fee CDSC
Received** Received
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate Investment Fund, Inc. $1,749,031 $97,511
Fees and reimbursements for out of pocket expenses charged by Alliance Global
Investor Services, Inc. ("AGIS"), the affiliated transfer agent, are based on
the level of the network account and the class of share held by the account.
AGIS also receives a fee per shareholder sub-account for each account
maintained by an intermediary on an omnibus basis. AGIS' after-tax
profitability decreased in 2004 in comparison to 2003.
AGIS received the following fee from the Fund in the most recent fiscal year:
AGIS Fee
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate Investment Fund, Inc. $646,000
* The total amount paid to the financial intermediary in connection with the
sale of shares will generally not exceed the sum of (a) .25% of the current
year's Fund sales by that firm and (b) .10% of the average daily net assets
attributable to that firm over the year.
** 12b-1 amounts are gross amounts paid to ABIRM.
_______________________________________________________________________________
54 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
The Fund effected brokerage transactions through the Adviser's affiliate,
Sanford C. Bernstein & Co. LLC ("SCB"), and paid commissions during the Fund's
recent fiscal year. The Adviser represented that SCB's profitability from
business conducted with the Fund is comparable to the profitability of SCB's
dealings with other third party clients.
V. POSSIBLE ECONOMIES OF SCALE
The Adviser has indicated that the breakpoints in the fee schedule for the Fund
reflect a sharing of economies of scale to the extent they exist. Based on some
of the professional literature that have considered economies of scale in the
mutual fund industry it is thought that to the extent economies of scale exist,
they may more often exist across a fund family as opposed to a specific fund.
This is because the costs incurred by the Adviser, such as investment research
or technology for trading or compliance systems can be spread across a greater
asset base as the fund family increases in size. It is also possible that as
the level of services required to operate a successful investment company has
increased over time, and advisory firms have made such investments in their
business to provide improved services, there may be a sharing of economies of
scale without a reduction in advisory fees.
An independent consultant made a presentation to the Board of Directors and the
Senior Officer regarding possible economies of scale or scope in the mutual
fund industry. Based on the presentation, it was evident that fund management
companies benefit from economies of scale. However, due to the lack of cost
data which forced the researchers to infer facts about the costs from the
behavior of fund expenses, there was a lack of consensus among researchers as
to whether economies of scale were being passed on to the shareholders. It is
contemplated that additional work will be performed to determine if the
benefits of economies of scale or scope are being passed to shareholders by the
Adviser. In the meantime, it is clear that to the extent the Fund's assets
exceed the initial breakpoint its shareholders benefit from a lower fee rate.
VI. NATURE AND QUALITY OF THE ADVISER'S SERVICES INCLUDING PERFORMANCE OF THE
FUND.
With assets under management of $534.4 billion as of March 31, 2005, the
Adviser has the investment experience and resources necessary to effectively
manage the Fund and provide non-investment services (described in Section II)
to the Fund.
_______________________________________________________________________________
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND o 55
The information prepared by Lipper showed the 1, 3 and 5 year performance
ranking of the Fund relative to its Lipper universe:
Performance Year
Rank in Performance Universe for
Periods Ended March 31, 2005
- -------------------------------------------------------------------------------
1 3 5
- -------------------------------------------------------------------------------
AllianceBernstein Real Estate
Investment Fund, Inc. 20/39 12/26 13/21
CONCLUSION:
Based on the factors discussed above the Senior Officer's conclusion is that
the proposed fee for the Fund is reasonable and within the range of what would
have been negotiated at arms-length in light of all the surrounding
circumstances. This conclusion in respect of the Fund is based on an evaluation
of all of these factors and no single factor was dispositive.
Dated: July 22, 2005
_______________________________________________________________________________
56 o ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
ALLIANCEBERNSTEIN REAL ESTATE INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] ALLIANCEBERNSTEIN (R)
Investment Research and Management
ABREIFAR1105
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 12(a)(1).
(b) During the period covered by this report, no material 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.
(a) - (c) The following table sets forth the aggregate fees billed by the
independent registered public accounting firm Ernst & Young LLP, for the Fund's
last two fiscal years for professional services rendered for: (i) the audit of
the Fund's annual financial statements included in the Fund's annual report to
stockholders; (ii) assurance and related services that are reasonably related
to the performance of the audit of the Fund's financial statements and are not
reported under (i), which include advice and education related to accounting
and auditing issues and quarterly press release review (for those Funds which
issue press releases), and preferred stock maintenance testing (for those Funds
that issue preferred stock); and (iii) tax compliance, tax advice and tax
return preparation.
Audit Audit-Related Tax
Fees Fees Fees
--------- ------------- --------
2004 $48,000 $3,080 $15,531
2005 $50,000 $4,047 $17,704
(d) Not applicable.
(e) (1) Beginning with audit and non-audit service contracts entered into on
or after May 6, 2003, the Fund's Audit Committee policies and procedures
require the pre-approval of all audit and non-audit services provided to the
Fund by the Fund's independent registered public accounting firm. The Fund's
Audit Committee policies and procedures also require pre-approval of all audit
and non-audit services provided to the Adviser and Service Affiliates to the
extent that these services are directly related to the operations or financial
reporting of the Fund.
(e) (2) All of the amounts for Audit Fees, Audit-Related Fees and Tax Fees in
the table under Item 4 (a) - (c) are for services pre-approved by the Fund's
Audit Committee.
(f) Not applicable.
(g) The following table sets forth the aggregate non-audit services provided
to the Fund, the Fund's Adviser and entities that control, are controlled by or
under common control with the Adviser that provide ongoing services to the
Fund, which include preparing an annual internal control report pursuant to
Statement on Auditing Standards No. 70 ("Service Affiliates"):
Total Amount of
Foregoing Column Pre-
approved by the Audit
All Fees for Committee
Non-Audit Services (Portion Comprised of
Provided to the Audit Related Fees)
Portfolio, the Adviser (Portion Comprised of
and Service Affiliates Tax Fees)
- -------------------------------------------------------------------------------------------------------------
2004 $1,156,711 [ $168,611 ]
( $153,080 )
( $ 15,531 )
2005 $ 900,747 [ $189,454 ]
( $171,750 )
( $ 17,704 )
(h) The Audit Committee of the Fund has considered whether the provision of
any non-audit services not pre-approved by the Audit Committee provided by the
Fund's independent registered public accounting firm to the Adviser and Service
Affiliates is compatible with maintaining the auditor's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. SCHEDULE OF INVESTMENTS.
Please see Schedule of Investments contained in the Report to Shareholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the Fund's Board of Directors since the Fund last
provided disclosure in response to this item.
ITEM 11. 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 changes in the registrant's internal controls over financial
reporting that occurred during the second fiscal quarter of the period that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
12 (a) (1) Code of Ethics that is subject to the disclosure of Item 2
hereof
12 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
12 (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 27, 2006
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 27, 2006
By: /s/ Mark D. Gersten
-------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: January 27, 2006