ALLIANCE REAL ESTATE INVESTMENT FUND
ANNUAL REPORT
AUGUST 31, 1999
ALLIANCE CAPITAL
LETTER TO SHAREHOLDERS ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
October 28, 1999
Dear Shareholder:
This annual report provides an update on the performance and investment
activity of the Alliance Real Estate Investment Fund (the "Fund"). This report
covers the six- and 12-month periods ended August 31, 1999.
INVESTMENT RESULTS
The U.S. equity market has continued to be indifferent to real estate
companies. This sector of the market, as measured by the National Association
of Real Estate Investment Trusts ("NAREIT") Equity Index, produced a 2.74%
total return during the 12-month period ended August 31, 1999. Your Fund
outperformed this benchmark by delivering a total return of 3.86% to its
shareholders (Class A shares) over the same period. This modest outperformance
resulted primarily from our investments in companies that own property in
supply constrained markets, such as downtown office buildings in the
northeastern quadrant of the United States, and apartments on the west coast.
The real estate sector's performance during the second half of the fiscal year
was somewhat better than the first. The NAREIT Equity Index more than erased a
decline in value that occurred during the first six months of the Fund's fiscal
year by posting a 4.75% return during the last six months of the same fiscal
year. As shown on the accompanying table, your Fund lagged slightly during this
period. This result stemmed from outsized price declines being posted by
several of our smaller, higher yielding investments. The apparent lack of
support for companies with better than 10% cash dividends has been one of the
surprises of the past few months.
INVESTMENT RESULTS*
Periods ended August 31, 1999
TOTAL RETURNS
6 MONTHS 12 MONTHS
-------- ---------
ALLIANCE REAL ESTATE INVESTMENT FUND
Class A 3.23% 3.86%
Class B 2.96% 3.20%
Class C 2.85% 3.20%
S&P 500 STOCK INDEX 7.32% 39.81%
NAREIT EQUITY INDEX 4.75% 2.74%
* TOTAL RETURNS ARE BASED ON THE NET ASSET VALUE OF EACH CLASS OF SHARES AS
OF AUGUST 31, 1999. ALL FEES AND EXPENSES RELATED TO THE OPERATION OF THE FUND
HAVE BEEN DEDUCTED, BUT NO ADJUSTMENT HAS BEEN MADE FOR SALES CHARGES THAT MAY
APPLY WHEN SHARES ARE PURCHASED OR REDEEMED. TOTAL RETURN FOR ADVISOR CLASS
SHARES WILL DIFFER DUE TO DIFFERENT EXPENSES CHARGED TO THAT CLASS. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
THE S&P 500 STOCK INDEX IS AN UNMANAGED INDEX OF 500 U.S. COMPANIES, AND
IS A COMMON MEASURE OF THE PERFORMANCE OF THE OVERALL U.S. STOCK MARKET. 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. ALL COMPARATIVE INDICES ARE
UNMANAGED AND REFLECT NO FEES OR EXPENSES. AN INVESTOR CANNOT INVEST DIRECTLY
IN AN INDEX. INDEX RETURNS ARE NOT ADJUSTED FOR SALES CHARGES OR OPERATING
EXPENSES.
ADDITIONAL INVESTMENT RESULTS APPEAR ON PAGE 4.
MARKET OVERVIEW
Stock market returns notwithstanding, commercial real estate in the U.S.
remains quite healthy. By and large, construction activity is restrained and
orderly. Economic growth, the engine of real estate demand, continues to be
robust. Consequently, vacancy rates for most property types in most major
cities are hovering near all time lows. In addition, rental rates are at or
near all time highs and are continuing to grow, albeit more moderately than in
the recent past. This is a very positive scenario for owners of real estate.
In fact, most real estate companies are enjoying this superb operating
environment. The most recent reported results indicate that the industry
achieved 12% year-on-year growth in funds from operation per share ("FFO",
1
ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
the accepted performance measure for most real estate companies). This
relatively robust growth (by historical standards) has been fueled by several
factors. These factors include improving rental markets, the cumulative effects
of numerous portfolio additions, property level improvements over the past five
years, and the success of newly developed property. As more markets have come
into supply and demand equilibrium, acquisitions of additional properties have
slowed. However, in our view, the impact of prior acquisitions will continue to
add to growth for the foreseeable future. As a result, we do not anticipate a
sharp slowdown in growth for real estate companies. In fact, our current
expectation is for approximately 10% growth in FFO per share next year and an
ongoing 7% to 9% growth rate over the next several years.
Despite this healthy outlook, the stock market has, as we noted earlier, been
indifferent to real estate companies. During the 12-month period under review,
the average real estate investment trust ("REIT") has endured a price decline
of about 5%. This statistic, coupled with the aforementioned 12% FFO growth,
suggests a sharp decline in valuation over this period. In fact, these
companies are trading at their lowest absolute value in many years, and they
trade with a secure 8% dividend yield.
Why have equity investors penalized real estate companies to such an extent? We
must confess that we do not really know the answer to this question, as it
deals more with investor psychology than investment fundamentals. Moreover, we
do not really know what will trigger a change in investor psychology. We
recognize that this year's broad stock market advance has been extraordinarily
narrow. Large capitalization growth companies--primarily technology
providers--have produced the lion's share of this year's appreciation. Smaller
companies with less attractive businesses and more of a value orientation have
not fared well. Real estate fits squarely into this latter category and may be
considered an extreme example of a sector that is out of favor today. However,
substantial discounts below asset values, growing cash flows per share and high
and rising dividend payments by REITs are real. And they provide a striking
counterpoint to the high valuations and what we see as the profitless
prosperity of much of the U.S. stock market.
INVESTMENT STRATEGY AND ACTIVITY
Throughout the three-year history of the Alliance Real Estate Investment Fund,
its portfolio has been focused on those companies that could generate better
than average growth through a combination of a sharp focus on strong real
estate markets and value-added management practices.
Over time, of course, the relative attractiveness of markets evolves. Most real
estate markets are in relative equilibrium today. That is to say, vacancies are
low, rental growth is slightly ahead of inflation, and anticipated supply is
likely to be in line with demand growth. Some markets, such as that for midtown
New York City offices, are very strong. Others, such as Houston apartments,
appear weaker than average. We have heavy exposure to the former and are little
invested in the latter. We continue to be dedicated to investing in companies
with a focus on the best real estate markets.
The ability of management to add value also changes over time, which is equally
important to the presence of strong real estate markets. The skills needed to
enhance the likelihood of success in today's capital constrained world appear
to be very different from those skills utilized during the robust acquisition
environment of three years ago.
Over the past six months, we have added four companies to the Fund's portfolio.
Two of these, Mission West Properties, Inc. and Alexandria Real Estate
Equities, Inc., were added because of the value they create through niche
developments and redevelopments. Mission West Properties, Inc. develops offices
in Silicon Valley, and Alexandria Real Estate Equities, Inc. specializes in
highly profitable life science laboratories. The other two additions,
Hospitality Properties Trust and AMB Property Corp., were chosen for the
strength of their balance sheets and their risk-averse approaches to investing
in hotel and industrial properties, respectively.
Additionally, we have disposed of three prior investments. These were Duke
Realty Investments, Inc., Great Lakes REIT, Inc., and New Plan Excel Realty
Trust. In each case, we felt that management had engaged in shifts of strategy
or focus that were unlikely to bear fruit in the current public market
environment for real estate. Subsequent price deterioration in two of the three
cases
2
ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
suggests that these were good moves. During the six-month period under review,
we pared back several other large holdings in order to reflect our lowered
confidence in near term results.
MARKET OUTLOOK AND CONCLUSIONS
The discrepancy between valuations of market "haves" and "have-nots" continues
to widen. Likewise, the discrepancy between real estate fundamentals and real
estate securities' valuations also continues to widen. Both of these phenomena
are beyond the realm of any historical precedents, and they appear to us to be
unsustainable. However, it is difficult to see any catalyst for change on the
immediate horizon. Consequently, we do not anticipate any major upward
revaluation of real estate stocks. Neither do we envision any further
deterioration of values. And while we do not know what will create the needed
change in investor sentiment, we do believe strongly that your Fund is poised
to benefit when and if that occurs.
In conclusion, we appreciate your continuing interest in and support of the
Alliance Real Estate Investment Fund. We look forward to reporting our progress
to you in the future.
Sincerely,
John D.Carifa
Chairman
Daniel G. Pine
Senior Vice President
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR ENDORSED
BY, ANY BANK; FURTHER, SUCH SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.
3
INVESTMENT OBJECTIVE AND POLICIES ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
Alliance Real Estate Investment Fund seeks a 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
_______________________________________________________________________________
NAV AND SEC AVERAGE ANNUAL TOTAL RETURNS AS OF AUGUST 31, 1999
CLASS A SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
---------------------------
One Year 3.86% -0.51%
Since Inception* 5.49% 3.95%
CLASS B SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
One Year 3.20% -0.70%
Since Inception* 4.77% 4.14%
CLASS C SHARES
WITHOUT WITH
SALES CHARGE SALES CHARGE
One Year 3.20% 2.22%
Since Inception* 4.77% 4.77%
SEC AVERAGE ANNUAL TOTAL RETURNS (AT MAXIMUM OFFERING PRICE) AS OF THE MOST
RECENT QUARTER-END (SEPTEMBER 30, 1999)
CLASS A CLASS B CLASS C
------------------------------------------
One Year -11.23% -11.38% -8.86%
Since Inception* 2.31% 2.47% 3.07%
The Fund's investment results represent average annual total returns. The NAV
and SEC returns reflect reinvestment of dividends and/or capital gains
distributions in additional shares without (NAV) and with (SEC) the effect of
the 4.25% maximum front-end sales charge for Class A shares or applicable
contingent deferred sales charge for Class B shares (4% year 1, 3% year 2, 2%
year 3, 1% year 4); and for Class C shares (1% year 1). Returns for Class A
shares do not reflect the imposition of the 1 year 1% contingent deferred sales
charge for accounts over $1,000,000. Total return for Advisor Class shares will
differ due to different expenses associated with that class.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* Inception date for Classes A, B, and C: 10/1/96.
4
ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
ALLIANCE REAL ESTATE INVESTMENT FUND
GROWTH OF A $10,000 INVESTMENT
9/30/96* TO 8/31/99
$21,000
$19,000
$17,000
$15,000
$13,000
$11,000
$10,000
$9,000
S&P 500 STOCK INDEX: $20,125
NAREIT EQUITY INDEX: $11,809
ALLIANCE REAL ESTATE INVESTMENT FUND CLASS A: $11,196
9/30/96 8/31/97 8/31/98 8/31/99
This chart illustrates the total value of an assumed $10,000 investment in
Alliance Real Estate Investment Fund Class A shares (from 9/30/96 to 8/31/99)
as compared to the performance of an appropriate broad-based index. The chart
reflects the deduction of the maximum 4.25% sales charge from the initial
$10,000 investment in the Fund and assumes the reinvestment of dividends and
capital gains. Performance for Class B, Class C and Advisor Class shares will
vary from the results shown above due to differences in expenses charged to
those classes. Past performance is not indicative of future results, and is not
representative of future gain or loss in capital value or dividend income.
The unmanaged 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.
The unmanaged NAREIT Equity Index is a market value weighted index, based upon
the last closing price of the month for tax-qualified REITs listed on the NYSE,
AMEX and the NASDAQ.
When comparing Alliance Real Estate Investment Fund to the indices shown above,
you should note that no charges or expenses are reflected in the performance of
the indices.
Alliance Real Estate Investment Fund
S&P 500 Stock Index
NAREIT Equity Index
* Closest month-end to Fund's Class A share inception date of 10/1/96.
5
TEN LARGEST HOLDINGS
AUGUST 31, 1999 ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
PERCENT OF
COMPANY VALUE NET ASSETS
- -------------------------------------------------------------------------------
Equity Office Properties Trust $ 13,165,224 5.3%
Brookfield Properties Corp. (Canada) 11,412,761 4.5
Vornado Realty Trust 10,394,475 4.1
Public Storage, Inc. 9,913,800 3.9
Pan Pacific Retail Properties, Inc. 9,851,119 3.9
ProLogis Trust 9,728,112 3.9
Avalonbay Communities, Inc. 9,440,479 3.8
SL Green Realty Corp. 9,011,812 3.6
Boston Properties, Inc. 8,964,394 3.6
Apartment Investment & Management Co. Cl. A 8,343,500 3.3
$100,225,676 39.9%
MAJOR PORTFOLIO CHANGES
SIX MONTHS ENDED AUGUST 31, 1999
_______________________________________________________________________________
SHARES
- -------------------------------------------------------------------------------
HOLDINGS
PURCHASES BOUGHT 8/31/99
- -------------------------------------------------------------------------------
Alexandria Real Estate Equities, Inc. 201,600 201,600
AMB Property Corp. 168,100 168,100
Apartment Investment & Management Co. Cl. A 61,500 203,500
Captec Net Lease Realty, Inc. 59,300 114,300
Correctional Properties Trust 26,700 406,550
Hospitality Properties Trust 199,900 199,900
Mission West Properties, Inc. 220,300 220,300
Ramco-Gershenson Properties 79,900 251,600
Regency Realty Corp. 229,056 242,056
Wyndham International, Inc. Cl. A 150,200 150,200
HOLDINGS
SALES SOLD 8/31/99
- -------------------------------------------------------------------------------
Arden Realty, Inc. 203,900 269,800
Burnham Pacific Properties, Inc. 435,800 104,900
Crescent Real Estate Equities Co. 168,800 280,000
Duke Realty Investments, Inc. 280,800 -0-
Glenborough Realty Trust, Inc. 199,400 406,700
Great Lakes REIT, Inc. 251,000 -0-
New Plan Excel Realty Trust 301,340 -0-
Pacific Retail Trust 591,577 -0-
Pan Pacific Retail Properties, Inc. 158,800 530,700
Patriot American Hospitality, Inc. 767,320 -0-
6
PORTFOLIO OF INVESTMENTS
August 31, 1999 Alliance Real Estate Investment Fund
_______________________________________________________________________________
Company Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS-99.1%
REAL ESTATE
INVESTMENT TRUSTS-94.6%
APARTMENTS-9.6%
Apartment Investment &
Management Co. Cl. A ..................... 203,500 $ 8,343,500
Avalonbay Communities,
Inc. ..................................... 267,815 9,440,479
Essex Property Trust, Inc. ................. 183,300 6,438,413
-----------
24,222,392
-----------
DIVERSIFIED-16.7%
Captec Net Lease Realty,
Inc. ..................................... 114,300 1,314,450
Correctional Properties
Trust .................................... 406,550 5,793,338
Entertainment Properties
Trust .................................... 405,100 6,203,094
Glenborough Realty Trust,
Inc. ..................................... 406,700 7,040,994
Golf Trust of America,
Inc. .................................... 265,200 5,121,675
Sun Communities, Inc. ..................... 168,100 6,009,575
Vornado Realty Trust ...................... 304,600 10,394,475
-----------
41,877,601
-----------
HOTELS &
RESTAURANTS-7.3%
Hospitality Properties
Trust ................................... 199,900 5,372,312
Innkeepers USA Trust ...................... 485,700 4,401,656
MeriStar Hospitality Corp. ................. 414,370 6,992,494
Starwood Hotels & Resorts
Worldwide, Inc. ......................... 42,900 1,021,556
Wyndham International,
Inc. Cl. A .............................. 150,200 535,087
-----------
18,323,105
-----------
OFFICE-17.2%
Arden Realty, Inc. ........................ 269,800 6,289,712
Boston Properties, Inc. ................... 269,100 8,964,394
Crescent Real Estate
Equities Co. ............................ 280,000 5,810,000
Equity Office Properties
Trust ................................... 515,021 13,165,224
SL Green Realty Corp. ..................... 433,000 9,011,812
-----------
43,241,142
-----------
OFFICE - INDUSTRIAL
MIX-14.8%
Alexandria Real Estate
Equities, Inc. .......................... 201,600 5,909,400
Brandywine Realty
Investments, Inc. ....................... 389,400 6,984,863
Highwoods Properties,
Inc. .................................... 264,400 6,560,425
Mission West Properties,
Inc. .................................... 220,300 1,762,400
Reckson Associates Realty
Corp. ................................... 392,300 8,140,225
Spieker Properties, Inc. .................. 201,700 7,715,025
-----------
37,072,338
-----------
REGIONAL MALLS-6.4%
Macerich Co. .............................. 320,000 8,020,000
Mills Corp. ............................... 421,600 8,089,450
-----------
16,109,450
-----------
SHOPPING CENTERS-10.4%
Burnham Pacific Properties,
Inc. .................................... 104,900 1,199,794
Pan Pacific Retail
Properties, Inc. ........................ 530,700 9,851,119
Prime Retail, Inc. ........................ 816,000 6,120,000
Ramco-Gershenson
Properties ............................... 251,600 3,758,275
Regency Realty Corp. ...................... 242,056 5,083,176
-----------
26,012,364
-----------
STORAGE-3.9%
Public Storage, Inc. ...................... 381,300 9,913,800
-----------
7
PORTFOLIO OF INVESTMENTS (continued) Alliance Real Estate Investment Fund
_______________________________________________________________________________
Company Shares Value
- --------------------------------------------------------------------------------
WAREHOUSE &
INDUSTRIAL-8.3%
AMB Property Corp. ........................ 168,100 $ 3,614,150
Cabot Industrial Trust .................... 365,200 7,372,475
ProLogis Trust ............................ 495,700 9,728,112
-----------
20,714,737
-----------
Total Real Estate Investment
Trusts
(cost $278,549,703) ..................... 237,486,929
-----------
REAL ESTATE
DEVELOPMENT &
MANAGEMENT-4.5%
Brookfield Properties
Corp. (Canada)
(cost $11,960,912) ...................... 932,400 11,412,761
-----------
Total Common Stocks
(cost $290,510,615) ..................... 248,899,690
-----------
Principal
Amount
Company (000) Value
- --------------------------------------------------------------------------------
TIME DEPOSIT-0.8%
Bank of New York
4.75%, 9/01/99
(amortized cost
$1,992,000) ....................... $ 1,992 $ 1,992,000
------------
TOTAL INVESTMENTS-99.9%
(cost $292,502,615) ............... 250,891,690
Other assets less
liabilities-0.1% .................. 157,808
------------
NET ASSETS-100% ..................... $251,049,498
============
- --------------------------------------------------------------------------------
See notes to financial statements.
8
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1999 Alliance Real Estate Investment Fund
_______________________________________________________________________________
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $292,502,615) .......................... $ 250,891,690
Cash ............................................................................. 148,509
Receivable for investment securities sold ........................................ 1,135,716
Receivable for capital stock sold ................................................ 244,337
Dividends and interest receivable ................................................ 168,121
Deferred organizational expenses ................................................. 126,895
-------------
Total assets ..................................................................... 252,715,268
-------------
LIABILITIES
Payable for capital stock redeemed ............................................... 894,418
Advisory fee payable ............................................................. 196,144
Distribution fee payable.......................................................... 194,548
Accrued expenses ................................................................. 380,660
-------------
Total liabilities ................................................................ 1,665,770
-------------
NET ASSETS ......................................................................... $ 251,049,498
=============
COMPOSITION OF NET ASSETS
Capital stock, at par ............................................................ $ 246,827
Additional paid-in capital ....................................................... 344,755,626
Accumulated net realized loss on investments and foreign currency transactions ... (52,341,964)
Net unrealized depreciation of investments and foreign currency denominated assets
and liabilities ................................................................ (41,610,991)
-------------
$ 251,049,498
=============
CALCULATION OF MAXIMUM OFFERING PRICE
Class A Shares
Net asset value and redemption price per share
($35,299,269 / 3,463,699 shares of capital stock issued and outstanding) ....... $10.19
Sales charge--4.25% of public offering price ..................................... .45
------
Maximum offering price ........................................................... $10.64
======
Class B Shares
Net asset value and offering price per share
($168,741,076 / 16,598,298 shares of capital stock issued and outstanding) ..... $10.17
======
Class C Shares
Net asset value and offering price per share
($44,738,695 / 4,398,134 shares of capital stock issued and outstanding) ....... $10.17
======
Advisor Class Shares
Net asset value, redemption and offering price per share
($2,270,458 / 222,538 shares of capital stock issued and outstanding) .......... $10.20
======
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
9
STATEMENT OF OPERATIONS
Year Ended August 31, 1999 Alliance Real Estate Investment Fund
_______________________________________________________________________________
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $15,534) .... $ 18,952,788
Interest ................................................ 255,453 $ 19,208,241
------------
EXPENSES
Advisory fee ............................................ 2,889,075
Distribution fee - Class A .............................. 125,363
Distribution fee - Class B .............................. 2,206,739
Distribution fee - Class C .............................. 560,012
Transfer agency ......................................... 764,508
Printing ................................................ 147,216
Custodian ............................................... 132,270
Administrative .......................................... 124,000
Audit and legal ......................................... 79,634
Amortization of organization expenses ................... 60,955
Directors' fees ......................................... 28,000
Miscellaneous ........................................... 25,512
------------
Total expenses .......................................... 7,143,284
------------
Net investment income ................................... 12,064,957
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized loss on investment transactions ............ (52,356,931)
Net realized loss on foreign currency transactions ...... (9,366)
Net change in unrealized depreciation of:
Investments ........................................... 51,625,228
Foreign currency denominated assets and liabilities ... (67)
------------
Net gain on investments and foreign currency transactions (741,136)
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS ................ $ 11,323,821
============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
10
STATEMENT OF CHANGES IN NET ASSETS Alliance Real Estate Investment Fund
_______________________________________________________________________________
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, August 31,
1999 1998
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income ................................................... $ 12,064,957 $ 14,025,396
Net realized gain (loss) on investments and foreign currency transactions (52,366,297) 6,488,125
Net change in unrealized depreciation of investments and foreign
currency denominated assets and liabilities ........................... 51,625,161 (113,565,407)
------------- -------------
Net increase (decrease) in net assets from operations ................... 11,323,821 (93,051,886)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ............................................................... (1,745,364) (2,204,713)
Class B ............................................................... (8,140,266) (9,402,948)
Class C ............................................................... (2,066,633) (2,290,119)
Advisor Class ......................................................... (112,694) (133,960)
Distributions in excess of net investment income
Class A ............................................................... (507,946) -0-
Class B ............................................................... (2,369,028) -0-
Class C ............................................................... (601,444) -0-
Advisor Class ......................................................... (32,797) -0-
Net realized gain on investments
Class A ............................................................... (375,757) (39,960)
Class B ............................................................... (2,075,324) (201,260)
Class C ............................................................... (512,970) (44,722)
Advisor Class ......................................................... (23,058) (2,319)
Tax return of capital
Class A ............................................................... (62,310) -0-
Class B ............................................................... (308,086) -0-
Class C ............................................................... (77,463) -0-
Advisor Class ......................................................... (3,958) -0-
CAPITAL STOCK TRANSACTIONS
Net increase (decrease) ................................................. (133,803,420) 230,444,209
------------- -------------
Total increase (decrease) ............................................... (141,494,697) 123,072,322
NET ASSETS
Beginning of year ....................................................... 392,544,195 269,471,873
------------- -------------
End of year (including undistributed net investment income of $479,529
at August 31, 1998) ................................................... $ 251,049,498 $ 392,544,195
============= =============
</TABLE>
- --------------------------------------------------------------------------------
See notes to financial statements.
11
NOTES TO FINANCIAL STATEMENTS
August 31, 1999 Alliance Real Estate Investment Fund
_______________________________________________________________________________
NOTE A: Significant Accounting Policies
Alliance Real Estate Investment Fund, Inc. (the "Fund") was incorporated in the
state of Maryland on July 15, 1996 as a diversified, open-end management
investment company. The Fund offers Class A, Class B, Class C and Advisor Class
shares. Class A shares are sold with a front-end sales charge of up to 4.25% for
purchases not exceeding $1,000,000. With respect to purchases of $1,000,000 or
more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%. Class B shares are currently sold with a
contingent deferred sales charge which declines from 4% to zero depending on the
period of time the shares are held. Class B shares will automatically convert to
Class A shares eight years after the end of the calendar month of purchase.
Class C shares are subject to a contingent deferred sales charge of 1% on
redemptions made within the first year after purchase. Advisor Class shares are
sold without an initial or contingent deferred sales charge and are not subject
to ongoing distribution expenses. Advisor Class shares are offered to investors
participating in fee based programs and to certain retirement plan accounts. All
four classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The following is
a summary of significant accounting policies followed by the Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are generally
valued at the last reported sales price or if no sale occurred, at the mean of
the closing bid and asked prices of that day. Readily marketable securities
traded in the over-the-counter market, securities listed on a foreign securities
exchange whose operations are similar to the U.S. over-the-counter market, and
securities listed on a national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the current bid and
asked prices. U.S. government and fixed income securities which mature in 60
days or less are valued at amortized cost, unless this method does not represent
fair value. Securities for which current market quotations are not readily
available are valued at their fair value as determined in good faith by, or in
accordance with procedures adopted by, the Board of Directors. Fixed income
securities may be valued on the basis of prices obtained from a pricing service
when such prices are believed to reflect the fair market value of such
securities.
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 price of such currencies against the U.S. dollar.
Purchases and sales of portfolio securities are translated into U.S. dollars at
the rates of exchange prevailing when such securities were acquired or sold.
Income and expenses are translated into U.S. dollars at rates of exchange
prevailing when accrued.
Net realized foreign exchange gains and losses represent foreign exchange gains
and losses from sales and maturities of debt securities and forward currency
exchange contracts, holding of foreign currencies, exchange gains or losses
realized between the trade and settlement dates on security transactions, and
the difference between the amounts of dividends, interest and foreign taxes
receivable recorded on the Fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net currency gains and losses from valuing foreign
currency denominated assets and liabilities at year end exchange rates are
reflected as a component of net unrealized appreciation (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.
4. Organization Expenses
Organization costs of $304,750 have been deferred and are being amortized on a
straight-line basis through October 2001.
5. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions
12
Alliance Real Estate Investment Fund
_______________________________________________________________________________
are accounted for on the date the securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis. The Fund accretes
discounts as adjustments to interest income.
6. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities at August
31, 1999 and the reported amounts of income and expenses during the period.
Actual results could differ from those estimates.
Significant estimates may include the classification of distributions received
by the Fund from the issuers of the Fund's portfolio securities. These
distributions may be classified as either dividend income, capital gains or as
non-taxable distributions. The final classifications of these distributions
cannot be determined until reported to the Fund by the issuers of the Fund's
portfolio securities, which normally occurs in January after the end of the
calendar year. Reclassification of distributions made to the Fund will not
affect the net assets of the Fund. The reclassification of distributions
received by the Fund may require the Fund to reclassify a portion of its
distributions to Fund shareholders.
7. Income and Expenses
All income earned and expenses incurred by the Fund are borne on a pro-rata
basis by each outstanding class of shares, based on the proportionate interest
in the Fund represented by the shares of such class, except that the Fund's
Class B and Class C shares bear higher distribution and transfer agent fees than
Class A shares and Advisor Class shares (Advisor Class shares have no
distribution fees).
8. Dividends and Distributions
Dividends and distributions to shareholders 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
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.
During the current fiscal year, permanent differences, primarily due to book/tax
differences, resulting from the Fund's investments in Real Estate Investment
Trusts and tax classifications of distributions, resulted in a decrease in
distributions in excess of net investment income and additional paid-in capital
and a corresponding increase in accumulated net realized loss on investments and
foreign currency transactions. This reclassification had no affect on net
assets.
- --------------------------------------------------------------------------------
NOTE B: Advisory Fee and Other Transactions With Affiliates
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Adviser") a monthly fee equal to the annualized
rate of .90 of 1% of the average daily net assets of the Fund. Such fee is
accrued daily and paid monthly.
Pursuant to the advisory agreement, the Fund paid $124,762 to the Adviser
representing the cost of certain legal and accounting services provided to the
Fund by the Adviser for the year ended August 31, 1999.
The Fund compensates Alliance Fund Services, Inc. (a wholly-owned subsidiary of
the Adviser) under a Transfer Agency Agreement for providing personnel and
facilities to perform transfer agency services for the Fund. Such compensation
amounted to $395,473 for the year ended August 31, 1999.
For the year ended August 31, 1999, the Fund's expenses were reduced by $28,989
under an expense offset arrangement with Alliance Fund Services.
Alliance Fund Distributors, Inc. (a wholly-owned subsidiary of the Adviser)
serves as the Distributor of the Fund's shares. The Distributor has advised the
Fund that it has received $1,241, $1,447,887 and $44,555 in contingent deferred
sales charges imposed upon redemptions by shareholders of Class A, Class B and
Class C shares, respectively, for the year ended August 31, 1999.
13
NOTES TO FINANCIAL STATEMENTS (continued) Alliance Real Estate Investment Fund
_______________________________________________________________________________
Brokerage commissions paid on investment transactions for the year ended August
31, 1999, amounted to $901,795, none of which was paid to brokers utilizing the
services of the Pershing Division of Donaldson, Lufkin & Jenrette Securities
Corp. ("DLJ"), an affiliate of the Adviser, nor to DLJ directly.
- --------------------------------------------------------------------------------
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 a distribution fee to the Distributor at an annual rate
of up to .30 of 1% of the Fund's average daily net assets attributable to Class
A shares and 1% of the average daily net assets attributable to the Class B and
Class C shares. There is no distribution fee on the Advisor Class shares. The
fees are accrued daily and paid monthly. The Agreement provides that the
Distributor will use such payments in their entirety for distribution assistance
and promotional activities. The Distributor has advised the Fund that it has
incurred expenses in excess of the distribution costs reimbursed by the Fund in
the amount of $11,892,181 and $666,846, for Class B and C shares, respectively;
such costs may be recovered from the Fund in future periods so long as the
Agreement is in effect. In accordance with the Agreement there is no provision
for recovery of unreimbursed distribution costs, incurred by the Distributor,
beyond the current fiscal year for Class A shares. The Agreement also provides
that the Adviser may use its own resources to finance the distribution of the
Fund's shares.
- --------------------------------------------------------------------------------
NOTE D: Investment Transactions
Purchases and sales of investment securities, (excluding short-term investments
and U.S. government or government agency obligations) aggregated $91,754,190 and
$228,604,466, respectively, for the year ended August 31, 1999. There were no
purchases or sales of U.S. government or government agency obligations for the
year ended August 31, 1999.
At August 31, 1999, the cost of investments for federal income tax purposes was
$293,099,232. Accordingly, gross unrealized appreciation of investments was
$1,171,226 and gross unrealized depreciation of investments was $43,378,768
resulting in net unrealized depreciation of $42,207,542 (excluding foreign
currency transactions).
At August 31, 1999, the Fund had a capital loss carryforward of $9,807,830 which
expires in the year 2007.
Capital losses incurred after October 31 (post-October losses) within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. The Fund incurred and will elect to defer net capital losses of
$41,937,517 during the fiscal year 1999. To the extent that the carryover losses
are used to offset future capital gains, it is probable that the gain so offset
will not be distributed to shareholders.
14
Alliance Real Estate Investment Fund
_______________________________________________________________________________
NOTE E: Capital Stock
There are 12,000,000,000 shares of $0.01 par value capital stock authorized,
divided into four classes, designated Class A, Class B, Class C and Advisor
Class shares. Each consists of 3,000,000,000 authorized shares. Transactions in
capital stock were as follows:
<TABLE>
<CAPTION>
-------------------------------- --------------------------------
SHARES AMOUNT
-------------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
August 31, August 31, August 31, August 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Class A
Shares sold .................... 1,764,409 4,031,794 $ 19,090,372 $ 54,670,681
Shares issued in reinvestment of
dividends and distributions .. 171,388 107,045 1,756,498 1,392,487
Shares converted from Class B .. 42,263 36,683 449,139 457,491
Shares redeemed ................ (3,407,716) (2,222,402) (35,576,653) (28,964,016)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (1,429,656) 1,953,120 $ (14,280,644) $ 27,556,643
============= ============= ============= =============
Class B
Shares sold .................... 3,270,822 16,336,188 $ 34,546,957 $ 221,327,921
Shares issued in reinvestment of
dividends and distributions .. 561,653 328,979 5,748,227 4,276,970
Shares converted to Class A .... (42,346) (36,750) (449,139) (457,491)
Shares redeemed ................ (12,946,430) (5,480,259) (135,195,797) (70,036,664)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (9,156,301) 11,148,158 $ (95,349,752) $ 155,110,736
============= ============= ============= =============
Class C
Shares sold .................... 1,216,451 5,180,658 $ 12,871,848 $ 70,280,469
Shares issued in reinvestment of
dividends and distributions .. 124,858 63,778 1,279,574 824,321
Shares redeemed ................ (3,605,389) (1,922,771) (37,755,412) (24,674,279)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (2,264,080) 3,321,665 $ (23,603,990) $ 46,430,511
============= ============= ============= =============
Advisor Class
Shares sold .................... 39,978 207,950 $ 424,030 $ 2,825,619
Shares issued in reinvestment of
dividends and distributions .. 11,392 8,017 116,904 105,015
Shares redeemed ................ (105,522) (119,760) (1,109,968) (1,584,315)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (54,152) 96,207 $ (569,034) $ 1,346,319
============= ============= ============= =============
</TABLE>
- --------------------------------------------------------------------------------
NOTE F: Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the Fund,
participate in a $750 million revolving credit facility (the "Facility") 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 the
miscellaneous expenses in the statement of operations. The Fund did not utilize
the Facility during the year ended August 31, 1999.
15
FINANCIAL HIGHLIGHTS Alliance Real Estate Investment Fund
_______________________________________________________________________________
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS A
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $10.47 $12.80 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b) ................................ .46 .52 .30
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .......................... (.06) (2.33) 2.88
------ ------ ------
Net increase (decrease) in net asset value from operations .40 (1.81) 3.18
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income ..................... (.46) (.51) (.30)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital .................................... (.02) -0- (.08)
------ ------ ------
Total dividends and distributions ........................ (.68) (.52) (.38)
------ ------ ------
Net asset value, end of period ........................... $10.19 $10.47 $12.80
====== ====== ======
Total Return
Total investment return based on net asset value (c) ..... 3.86% (14.90)% 32.24%
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ................ $35,299 $51,214 $37,638
Ratio to average net assets of:
Expenses net of waivers/reimbursements ................. 1.58% 1.55% 1.77%(d)(e)
Expenses before waivers/reimbursements ................. 1.58% 1.55% 1.79%(d)
Net investment income .................................. 4.57% 3.87% 2.73%(d)
Portfolio turnover rate .................................. 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
16
Alliance Real Estate Investment Fund
_______________________________________________________________________________
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS B
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.44 $12.79 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .38 .42 .23
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.33) 2.89
------ ------ ------
Net increase (decrease) in net asset value from operations .33 (1.91) 3.12
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.38) (.43) (.24)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.09)
------ ------ ------
Total dividends and distributions......................... (.60) (.44) (.33)
------ ------ ------
Net asset value, end of period............................ $10.17 $10.44 $12.79
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 3.20% (15.56)% 31.49%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $168,741 $268,856 $186,802
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 2.31% 2.26% 2.44%(d)(e)
Expenses before waivers/reimbursements.................. 2.31% 2.26% 2.45%(d)
Net investment income................................... 3.82% 3.16% 2.08%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
17
FINANCIAL HIGHLIGHTS (continued) Alliance Real Estate Investment Fund
_______________________________________________________________________________
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
CLASS C
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.44 $12.79 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .38 .42 .23
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.33) 2.89
------ ------ ------
Net increase (decrease) in net asset value from operations .33 (1.91) 3.12
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.38) (.43) (.25)
Distributions in excess of net investment income ......... (.10) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.08)
------ ------ ------
Total dividends and distributions......................... (.60) (.44) (.33)
------ ------ ------
Net asset value, end of period............................ $10.17 $10.44 $12.79
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 3.20% (15.56)% 31.49%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $44,739 $69,575 $42,719
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 2.30% 2.26% 2.43%(d)(e)
Expenses before waivers/reimbursements.................. 2.30% 2.26% 2.45%(d)
Net investment income................................... 3.77% 3.15% 2.06%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
See footnote summary on page 19.
18
Alliance Real Estate Investment Fund
_______________________________________________________________________________
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
<TABLE>
<CAPTION>
----------------------------------------
ADVISOR CLASS
----------------------------------------
Year Ended August 31, October 1, 1996(a)
--------------------- to
1999 1998 August 31, 1997
------ ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period...................... $10.48 $12.82 $10.00
------ ------ ------
Income From Investment Operations
Net investment income (b)................................. .48 .55 .35
Net realized and unrealized gain (loss) on investments and
foreign currency transactions........................... (.05) (2.34) 2.88
------ ------ ------
Net increase (decrease) in net asset value from operations .43 (1.79) 3.23
------ ------ ------
Less: Dividends and Distributions
Dividends from net investment income...................... (.48) (.54) (.38)
Distributions in excess of net investment income ......... (.11) -0- -0-
Distributions from net realized gains on investments ..... (.10) (.01) -0-
Tax return of capital..................................... (.02) -0- (.03)
------ ------ ------
Total dividends and distributions......................... (.71) (.55) (.41)
------ ------ ------
Net asset value, end of period............................ $10.20 $10.48 $12.82
====== ====== ======
Total Return
Total investment return based on net asset value (c)...... 4.18% (14.74)% 32.72%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)................. $2,270 $2,899 $2,313
Ratio to average net assets of:
Expenses net of waivers/reimbursements.................. 1.30% 1.25% 1.45%(d)(e)
Expenses before waivers/reimbursements.................. 1.30% 1.25% 1.47%(d)
Net investment income................................... 4.75% 4.08% 3.07%(d)
Portfolio turnover rate................................... 29% 23% 20%
</TABLE>
- --------------------------------------------------------------------------------
(a) Commencement of operations.
(b) Based on average shares outstanding.
(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 investment return calculated for a period
of less than one year is not annualized.
(d) Annualized.
(e) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the year ended August 31, 1997, the ratios of expenses
net of waivers/reimbursements were 1.77%, 2.43%, 2.42% and 1.44% for Class
A, B, C and Advisor Class shares, respectively.
19
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS Alliance Real Estate Investment Fund
_______________________________________________________________________________
To the Shareholders and Board of Directors
Alliance Real Estate Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Alliance
Real Estate Investment Fund, Inc. (the "Fund"), including the portfolio of
investments, as of August 31, 1999, 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 generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of August 31, 1999, by correspondence with the custodian and
others. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Alliance Real Estate Investment Fund, Inc. at August 31, 1999, 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 generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
October 8, 1999
TAX INFORMATION (unaudited)
_______________________________________________________________________________
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $2,987,109 of the capital gain distributions paid by the Fund
during the fiscal year August 31, 1999 are from long term capital gains.
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 2000.
20
ALLIANCE REAL ESTATE INVESTMENT FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN
RUTH BLOCK (1)
DAVID H. DIEVLER (1)
JOHN H. DOBKIN (1)
WILLIAM H. FOULK, JR. (1)
HOWARD E. HASSLER (1)
JAMES M. HESTER (1)
CLIFFORD L. MICHEL (1)
DONALD J. ROBINSON (1)
OFFICERS
KATHLEEN A. CORBET, SENIOR VICE PRESIDENT
DANIEL G. PINE, SENIOR VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
DAVID A. KRUTH, VICE PRESIDENT
EDMUND P. BERGAN JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
VINCENT S. NOTO, CONTROLLER
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
PRINCIPAL UNDERWRITER
ALLIANCE FUND DISTRIBUTORS, INC.
1345 Avenue of the Americas
New York, NY 10105
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT AUDITORS
ERNST & YOUNG LLP
787 Seventh Avenue
New York, NY 10019
TRANSFER AGENT
ALLIANCE FUND SERVICES, INC.
P.O. Box 1520
Secaucus, NJ 07096-1520
Toll-free 1-(800) 221-5672
(1) Member of the Audit Committee.
21
THE ALLIANCE FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
FIXED INCOME
Alliance Bond Fund
U.S. Government Portfolio
Corporate Bond Portfolio
Quality Bond Portfolio
Alliance Global Dollar Government Fund
Alliance Global Strategic Income Trust
Alliance High Yield Fund
Alliance Mortgage Securities Income Fund
Alliance Limited Maturity Government Fund
Alliance Multi-Market Strategy Trust
Alliance North American Government Income Trust
Alliance Short-Term U.S. Government Fund
TAX-FREE INCOME
Alliance Municipal Income Fund
California Portfolio
Insured California Portfolio
Insured National Portfolio
National Portfolio
New York Portfolio
Alliance Municipal Income Fund II
Arizona Portfolio
Florida Portfolio
Massachusetts Portfolio
Michigan Portfolio
Minnesota Portfolio
New Jersey Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Virginia Portfolio
MONEY MARKET
AFD Exchange Reserves
GROWTH
The Alliance Fund
Alliance Global Environment Fund
Alliance Growth Fund
Alliance Premier Growth Fund
Select Investors Series - Premier Portfolio
GROWTH & INCOME
Alliance Balanced Shares
Alliance Conservative Investors Fund
Alliance Growth & Income Fund
Alliance Growth Investors Fund
Alliance Real Estate Investment Fund
Alliance Utility Income Fund
AGGRESSIVE GROWTH
Alliance Global Small Cap Fund
Alliance Health Care Fund
Alliance Quasar Fund
Alliance Technology Fund
INTERNATIONAL
Alliance All-Asia Investment Fund
Alliance Greater China '97 Fund
Alliance International Fund
Alliance International Premier Growth Fund
Alliance New Europe Fund
Alliance Worldwide Privatization Fund
INSTITUTIONAL
Premier Growth
Quasar
Real Estate Investment
CLOSED-END FUNDS
Alliance All-Market Advantage Fund
ACM Government Income Fund
ACM Government Opportunity Fund
ACM Government Securities Fund
ACM Government Spectrum Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
Alliance World Dollar Government Fund
Alliance World Dollar Government Fund II
The Austria Fund
The Korean Investment Fund
The Spain Fund
The Southern Africa Fund
CASH MANAGEMENT SERVICES
Alliance Capital Reserves
Alliance Government Reserves
Alliance Institutional Reserves
Prime Portfolio
Government Portfolio
Tax-Free Portfolio
Treasury Portfolio
Trust Portfolio
Alliance Insured Account
Alliance Money Reserves
Alliance Municipal Trust
California Portfolio
Connecticut Portfolio
Florida Portfolio
General Portfolio
Massachusetts Portfolio
New Jersey Portfolio
New York Portfolio
Virginia Portfolio
Alliance Treasury Reserves
Alliance Money Market Fund
Prime Portfolio
General Municipal Portfolio
Government Portfolio
22
ALLIANCE REAL ESTATE INVESTMENT FUND
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
ALLIANCE CAPITAL
THIS REPORT IS INTENDED SOLELY FOR DISTRIBUTION TO CURRENT SHAREHOLDERS
OF THE FUND.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER,
ALLIANCE CAPITAL MANAGEMENT L.P.
REIAR899
