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<PAGE> PAGE 2
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<PAGE> PAGE 3
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SIGNATURE WILLIAM MINOVICH
TITLE ASST. TREASURER
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Report of Independent Auditors
To the Shareholders and Board of Directors of
Alliance Real Estate Investment Fund, Inc.
In planning and performing our audit of the financial statements of Alliance
Real Estate Investment Fund, Inc. for the year ended August 31, 1998, we
considered its internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for
the purpose of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide assurance on the
internal control.
The management of Alliance Real Estate Investment Fund, Inc. is responsible
for establishing and maintaining internal control. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of controls. Generally,
controls that are relevant to an audit pertain to the entity's objective of
preparing financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting principles.
Those controls include the safeguarding of assets against unauthorized
acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control would not necessarily disclose
all matters in the internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce
to a relatively low level the risk that errors or fraud in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no
matters involving the internal control and its operation, including
controls for safeguarding securities, that we consider to be material
weaknesses as defined above at August 31, 1998.
This report is intended solely for the information and use of the board of
directors and management of Alliance Real Estate Investment Fund, Inc. and
the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
October 5, 1998
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
10f-3 TRANSACTIONS FOR THE PERIOD SEPTEMBER 1, 1997 THROUGH OCTOBER 5, 1997
REAL ESTATE INVESTMENT FUND
Date Shares % of Fund Price Per
Security Purchased Purchased Assets (1) Share
Highwoods Properties 09/25/97 56,700 0.60% $35.00
Total
Shares Shares % of Issue Shares
Purchased by Issued Purchased Held
Fund Group (000) By Group (2) Broker(s) 10/05/97
59,000 7,500 0.79% Merrill Lynch 303,700
(1) Purchase may not exceed 3% of Fund's Total Assets.
(2) Purchases by all Alliance funds may not exceed the greater of (i) 4% of
the principal amount of the offering or (ii) $500,000 in principal
amount, but in no event may exceed 10% of the principal amount of the
offering.
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
10f-3 TRANSACTIONS FOR THE PERIOD OCTOBER 6, 1997 THROUGH NOVEMBER 30, 1997
ALLIANCE REAL ESTATE INVESTMENT FUND
Shares
Purchased
Date Shares Price per by Fund
Security* Purchased Purchased Share Group
Sunstone Hotel
Investors 10/08/97 184,600 $17.25 194,000
Cali Realty Corp. 10/09/97 201,400 $39.81 211,700
Spiker
Properties Inc. 10/29/97 13,800 $38.88 325,600
% of
Total Offering
Shares Purchased Shares
offered By Purchased Held
(000) Group (1) From 11/30/97
9,000 2.16% Merrill Lynch 354,800
13,000 1.63% Prudential Securities 237,400
10,000 3.26% Prudential Securities 296,800
* Unless otherwise indicated, the securities were part of an issue
registered under the Securities Act of 1933 and offered to the public.
** Indicates the purchase of an Eligible Rule 144A Security.
1) Purchases by all Alliance Funds, including the Fund, may not exceed:
a) if purchased in an offering other than an Eligible Rule 144A
Offering, 25% of the principal amount of the offering of such class;
or
b) if purchased in an Eligible Rule 144A Offering, 25% of the total of
(i) the principal amount of the offering of such class sold by
underwriters or members of the selling syndicate to qualified
institutional buyers, plus (ii) the principal amount of the
offering of such class in any concurrent public offering.
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
10f-3 TRANSACTIONS FOR THE PERIOD DECEMBER 1, 1997 THROUGH FEBRUARY 28, 1998
ALLIANCE REAL ESTATE INVESTMENT FUND
Shares
Purchased
Date Shares Price per by Fund
Security* Purchased Purchased Share Group
Boston
Properties Inc. 1/26/98 155,000 $35.13 848,700
Brandywine
Realty Inc. 1/29/98 82,000 $24.00 120,000
% of
Total Offering
Shares Purchased
offered By Purchased
(000) Group (1) From
20,000 4.24% Goldman Sachs
10,000 1.20% Smith Barney
* Unless otherwise indicated, the securities were part of an issue
registered under the Securities Act of 1933 and offered to the public.
** Indicates the purchase of an Eligible Rule 144A Security.
1) Purchases by all Alliance Funds, including the Fund, may not exceed:
a) if purchased in an offering other than an Eligible Rule 144A
Offering, 25% of the principal amount of the offering of such class;
or
b) if purchased in an Eligible Rule 144A Offering, 25% of the total of
(i) the principal amount of the offering of such class sold by
underwriters or members of the selling syndicate to qualified
institutional buyers, plus (ii) the principal amount of the
offering of such class in any concurrent public offering.
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
10f-3 TRANSACTIONS FOR THE PERIOD MARCH 1, 1998 THROUGH MAY 31, 1998
ALLIANCE REAL ESTATE INVESTMENT FUND
Shares
Purchased
Date Shares Price per by Fund
Security* Purchased Purchased Share Group
Pan Pacific
Retail Properties 05/12/98 17,000 $21.13 19,000
SL Green
Realty Corp. 05/12/98 89,400 $22.25 100,400
% of
Total Offering
Shares Purchased Shares
offered By Purchased Held
(000) Group (1) From 05/31/98
2,000 0.95% Prudential Securities 852,700
10,000 1.00% Lehman Brothers 910,500
* Unless otherwise indicated, the securities were part of an issue
registered under the Securities Act of 1933 and offered to the public.
** Indicates the purchase of an Eligible Rule 144A Security.
1) Purchases by all Alliance Funds, including the Fund, may not exceed:
a) if purchased in an offering other than an Eligible Rule 144A
Offering, 25% of the principal amount of the offering of such class;
or
b) if purchased in an Eligible Rule 144A Offering, 25% of the total of
(i) the principal amount of the offering of such class sold by
underwriters or members of the selling syndicate to qualified
institutional buyers, plus (ii) the principal amount of the
offering of such class in any concurrent public offering.
Securities Purchased in Underwritings Involving
Transactions with Donaldson, Lufkin, & Jenrette Securities Corporation
Subject to Rule 10f-3 Under the Investment Company Act of 1940
10f-3 TRANSACTIONS FOR THE PERIOD JUNE 1, 1998 THROUGH AUGUST 31, 1998
ALLIANCE REAL ESTATE INVESTMENT FUND
Shares
Purchased
Date Shares Price per by Fund
Security* Purchased Purchased Share Group
NONE
% of
Total Offering
Shares Purchased Shares
offered By Purchased Held
(000) Group (1) From 08/31/98
* Unless otherwise indicated, the securities were part of an issue
registered under the Securities Act of 1933 and offered to the public.
** Indicates the purchase of an Eligible Rule 144A Security.
1) Purchases by all Alliance Funds, including the Fund, may not exceed:
a) if purchased in an offering other than an Eligible Rule 144A
Offering, 25% of the principal amount of the offering of such class;
or
b) if purchased in an Eligible Rule 144A Offering, 25% of the total of
(i) the principal amount of the offering of such class sold by
underwriters or members of the selling syndicate to qualified
institutional buyers, plus (ii) the principal amount of the
offering of such class in any concurrent public offering.
