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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 811-07870
Pioneer Real Estate Shares
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31
Date of reporting period: January 1, 2007 through December 31, 2007
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
-----------------------
REAL ESTATE
SHARES
PWREX
Ticker Symbol
Annual
Report
12/31/07
[LOGO] PIONEER
Investments (R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 14
Schedule of Investments 16
Financial Statements 19
Notes to Financial Statements 27
Report of Independent Registered Public Accounting Firm 34
Approval of Investment Advisory Agreement 35
Trustees, Officers and Service Providers 40
President's
Dear Shareowner,
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Staying diversified and keeping your portfolio invested in the markets are two
general investment principles that have served investors well over time. They
were particularly useful guides in the second half of 2007, when an otherwise
healthy long-term bull market was buffeted by problems in the financial
services industry and the emergence of worries about a slowing economy.
After an extended period of steady growth with sustained low unemployment and
low inflation, the U.S. economy ran into difficulty as 2007 drew to a close.
Problems in the financial system tied to poor practices in the mortgage
financing industry and the end of home price appreciation forced investors and
bankers to mark down the value of assets on their balance sheets by over one
hundred billion dollars. A late-summer credit crunch forced central banks in
the United States and Europe to act in the role of "lender of last resort" to
keep credit markets functioning. As the repercussions of the credit crunch and
falling home prices were felt in the real economy, unemployment rose and
consumer confidence fell. Inflation concerns moved to the back burner for the
Federal Reserve, which lowered interest rates, first gradually, then more
rapidly, as concern grew that falling home prices and disruptions in financial
markets posed a significant threat to economic growth.
Even against this "wall of worry" backdrop, the performance of major asset
classes in 2007 was generally positive. Despite several interim setbacks and
poor performance near year-end, the Standard & Poor's 500 Index increased 5% in
2007, the Dow Jones Industrial Average increased 9%, and the NASDAQ Composite
Index increased 10%. International developed and emerging markets equities
performed even better, reflecting both a weakening U.S. dollar, which boosts
returns for U.S. dollar-based investors, and solid local currency returns. The
MSCI EAFE Developed Market Index rose 12%, and the MSCI Emerging Markets Index
rose 40% over the same period. The U.S. bond market, as measured by the Lehman
Aggregate Bond Index, rose 7%, while the U.S. high-yield bond market, as
measured by the Merrill Lynch High Yield Bond Master II Index, rose 2%, as
higher-coupon yields could not compensate for falling bond prices as credit
spreads (differences between yields of higher- and lower-quality bonds) widened
during the second half of 2007.
2
Letter
Looking forward, a growing number of economists are concerned about a
recession. As always, though, emotions can get ahead of reality. Higher
mortgage defaults, a spreading of weakness to other consumer sectors or to
employment, and the possibility of a liquidity/
credit crunch represent risks to the economy. Conversely, economic growth in
the rest of the world remains relatively positive, and a weak U.S. dollar has
significantly benefited U.S. companies competing in the global marketplace.
While falling risk tolerances may continue to depress asset prices in the short
term, equity and corporate bond valuations look reasonable unless the U.S.
economy falls into a severe recession.
Sudden swings in the markets are always to be expected. The history of the
stock market demonstrates that sharp market downturns are frequently followed
by strong recoveries, but they are also difficult to time. Just as staying
diversified and invested are important investment principles, it is also
important to pay attention to asset allocation. As always, we encourage you to
work closely with your financial advisor to find the mix of stocks, bonds and
money market assets that is best aligned to your particular risk tolerance and
investment objective.
Respectfully,
/s/ Daniel K. Kingsbury
Daniel K. Kingsbury
President and CEO
Pioneer Investment Management USA, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
3
Pioneer Real Estate Shares
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/07
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After seven years of outperforming the major U.S. equity market indices, the
U.S. real estate market concluded an extremely volatile 2007 in negative
territory, posting its worst calendar year performance since 1998. While the
decline was due in part to profit taking, real estate investment trusts (REITs)
- - like the broader equity markets - came under significant pressure due to
several factors. Chief among them was the impact of the subprime mortgage
crisis and the resulting turmoil that spread through the credit markets, as
Matthew Troxell of AEW Capital Management and Advisors, L.P., the sub-adviser
to the Fund, explains in the following interview.
Q: Why did the real estate sector reverse course in 2007?
A: Problems originally seen as contained within the U.S. subprime mortgage
market generated more widespread credit concerns and an increased aversion
to risk in 2007. The difficulties seemed to weigh particularly heavy on
REITs, as higher financing costs resulted in a sharp decline in commercial
real estate transactions, which, in turn, put downward pressure on
valuations. Deteriorating credit conditions also heightened fears of a
potential recession, which raised concerns over the outlook for underlying
property fundamentals. REITs also were not immune to other factors
affecting the broader stock market, including rising energy costs.
Q: How did the Fund perform in 2007?
A: Reflecting the sector's weak performance, the Fund's Class A shares posted
a total return of -19.39% for the 12 months ended December 31, 2007. The
Fund's benchmark, the Dow Jones Wilshire Real Estate Securities Index,
returned -17.66% for the same period. An underweighting in the healthcare
sector relative to the benchmark was the primary cause for the Fund's
underperformance. Healthcare REITs, which were just added to the benchmark
index last September, significantly outperformed the broader REIT market,
as they were the only property sector that delivered positive performance
for 2007. The average return for 2007 for the 309 funds in the Fund's
Lipper category of real estate funds was -14.83%. Both stock selection and
sector allocation had a negative impact on the Fund's performance relative
to its peers.
4
Pioneer Real Estate Shares
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Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: Which of the Fund's investments proved most disappointing in 2007?
A: On an absolute basis, top individual detractors to the Fund's performance
in 2007 included Brandywine Realty Trust (office), Liberty Property Trust
(industrial) and Developers Diversified Realty (shopping centers).
Brandywine Realty Trust declined because of concerns about the company's
suburban market exposure, particularly in Philadelphia, which could
potentially come under increasing pressure from slowing job growth and a
weakening economy. Liberty Property Trust suffered in large part due to
unease over the company's acquisition of Republic Property Trust, a public
office REIT focused on owning and developing office properties in the
Washington, D.C. area, at peak pricing. Developers Diversified lagged in
response to fears about credit markets and consumer spending and their
impact on the company's robust development pipeline. We continue to believe
these companies represent solid values relative to their peers and
maintained the portfolio's overweight positions in all three stocks as of
the end of the period.
Q: Could you mention some of the holdings that contributed positively to
performance?
A: On an absolute basis, top individual contributors to the Fund's performance
during 2007 included Hilton Hotels and Spirit Finance, two positions not
included in the Fund's benchmark index, as well as Nationwide Health
Properties. Hilton Hotels and Spirit Finance benefited significantly from
their announcements that they were being acquired at a significant premium
to their respective share price. Nationwide Health Properties' solid
performance in 2007 was due in part to management's ability to continue
finding
5
Pioneer Real Estate Shares
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PORTFOLIO MANAGEMENT DISCUSSION 12/31/07 (continued)
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attractive acquisitions and adjusting its earnings estimates upwards
accordingly.
Q: Given the correction, have the fundamentals in the different property
sectors changed materially in your opinion?
A: Despite evidence of a slowing macroeconomic environment, the underlying
fundamentals for the major property sectors remain generally stable, though
some softness is emerging in scattered sectors and locations - particularly
those most affected by the housing market downturn. In the retail sector,
property occupancies are by and large still strong and above their
long-term averages, although vacancies did creep higher during 2007 in
response to weaker demand. Continued sluggishness is expected, as a
weakening housing sector, higher interest rates and higher energy costs may
restrain consumer spending. We do believe, however, that the sector should
be fairly well positioned, as supply growth remains in check.
Looking ahead, risk is shifting from supply to demand concerns. Supply
pipelines are likely to weaken in the wake of the credit crunch, while
demand may decelerate as a weaker economy slows leasing decisions. Within
the industrial sector, fundamentals have remained steady with occupancy
rates edging up very slightly over 2007, although demand growth has
moderated from the pace of 2005 and 2006.
Conditions in the apartment sector have been impacted, both negatively and
positively, by troubles in the single-family housing sector. Rising
foreclosures and stricter underwriting standards are forcing some home
buyers and would-be buyers to become renters, while rentals of
investor-owned homes and condominiums are providing housing alternatives to
would-be renters. These conditions are likely to persist as we head into
the first half of 2008. In the hotel sector, occupancies were down slightly
during the fourth quarter of 2007, although room rates were still more than
5% above comparable levels from a year earlier. Thus revenues per available
room still showed strong growth. We expect hotel occupancies to continue to
be under some pressure as both leisure and business travelers become more
cautious in a slowing economy.
6
Pioneer Real Estate Shares
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Q: What is your outlook for 2008?
A: We expect several factors will continue to play a role in the direction of
the U.S. REIT market in 2008, including the health of the economy, the pace
of job growth and conditions in the credit markets. We believe REITs will
continue to experience price volatility in response to the housing and
credit market contagion, although we are hopeful that it will be somewhat
diminished from the extreme levels exhibited in 2007.
At the beginning of 2008, REITs were trading at more than a 20% discount to
underlying net asset values, and we believe there remains some additional
future risk of repricing, particularly as investors cope with the housing
and credit market contagion. Overall, however, dedicated real estate
capital is largely institutional and allocation driven and supports asset
pricing in the private market. As long as this continues, underlying asset
value will likely provide a level of price support to REITs. Our investment
process focuses on security selection within each property sector, with the
goal of identifying real estate equity securities that we believe are
mispriced relative to their peers and, thus, represent the greatest
relative value and strongest price appreciation potential, as well as lower
downside risk.
The Fund invests in REIT securities, the value of which can fall for a variety
of reasons, such as declines in rental income, fluctuating interest rates, poor
property management, environmental liabilities, uninsured damage, increased
competition, or changes in real estate tax laws. At times, the Fund's
investments may represent industries or industry sectors that are interrelated
or have common risks, making it more susceptible to any economic, political, or
regulatory developments or other risks affecting those industries or sectors.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Fund's historical or future performance are
statements of the opinion of Fund management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
7
Pioneer Real Estate Shares
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PORTFOLIO SUMMARY 12/31/07
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[The following data is represented by a pie chart in the printed material.]
U.S. Common Stocks 85.6%
Temporary Cash Investments 14.4%
Sector Diversification
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(As a percentage of equity holdings)
[The following data is represented by a pie chart in the printed material.]
Office 17.9%
Regional Mall 16.2%
Apartment 14.7%
Industrial 13.2%
Shopping Center 12.4%
Hotel 7.1%
Storage 5.8%
Health Care 5.8%
Diversified 5.7%
Triple Net Lease 1.2%
10 Largest Holdings*
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(As a percentage of equity holdings)
1. Simon DeBartolo Group, Inc. 8.83%
2. Boston Properties, Inc. 6.34
3. Equity Residential Property Trust 5.52
4. Public Storage, Inc. 4.73
5. Vornado Realty Trust 4.67
6. ProLogis Trust 3.71
7. Host Hotels & Resorts, Inc. 3.56
8. AvalonBay Communities, Inc. 3.55
9. Developers Diversifies Realty Corp. 3.48
10. The Macerich Co. 3.42
* This list excludes temporary cash and derivative instruments. Portfolio
holdings will vary for other periods. The holdings listed should not be
considered recommendations to buy or sell any securities listed.
8
Pioneer Real Estate Shares
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 12/31/07 12/31/06
- ------- ---------- ---------
A $21.94 $33.07
B $21.68 $32.74
C $21.72 $32.80
Y $21.90 $33.03
Distributions Per Share
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1/1/07 - 12/31/07
-----------------------------------
Short-Term Long-Term
Capital Capital
Class Dividends Gains Gains
- ------- ----------- ------------ ----------
A $0.3566 $0.1073 $4.2661
B $0.0745 $0.1073 $4.2661
C $0.1094 $0.1073 $4.2661
Y $0.5023 $0.1073 $4.2661
9
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 12/31/07 CLASS A SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares at public offering price,
compared to that of the Dow Jones Wilshire Real Estate Securities Index.
[The following data is represented by a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Dow Jones Wilshire
Estate Shares Real Estate Securities Index
12/97 9,425 10,000
7,560 8,257
12/99 7,204 7,995
9,315 10,450
12/01 10,011 11,542
10,372 11,849
12/03 13,823 16,243
18,698 21,899
12/05 21,463 24,926
29,144 33,818
12/07 23,491 27,845
Average Annual Total Returns
(As of December 31, 2007)
Net Asset Public Offering
Period Value (NAV) Price (POP)
10 Years 9.56% 8.92%
5 Years 17.76 16.38
1 Year -19.39 -24.04
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Expense Ratio
(Per prospectus dated May 1, 2007)
Gross Net
1.37% 1.37%
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Dow Jones Wilshire Real Estate Securities Index measures the performance of
publicly traded real estate securities, such as real estate investment trusts
and real estate operating companies. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
10
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 12/31/07 CLASS B SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Dow
Jones Wilshire Real Estate Securities Index.
[The following data is represented by a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Dow Jones Wilshire
Estate Shares Real Estate Securities Index
12/97 10,000 10,000
7,964 8,257
12/99 7,530 7,995
9,676 10,450
12/01 10,297 11,542
10,590 11,849
12/03 14,010 16,243
18,801 21,899
12/05 21,379 24,926
28,757 33,818
12/07 22,964 27,845
Average Annual Total Returns
(As of December 31, 2007)
If If
Period Held Redeemed
10 Years 8.67% 8.67%
5 Years 16.74 16.74
1 Year -20.14 -22.79
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Expense Ratio
(Per prospectus dated May 1, 2007)
Gross Net
2.31% 2.31%
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied
to withdrawals was shortened to 5 years. The maximum CDSC for Class B shares
continues to be 4%. For more complete information, please see the prospectus
for details. Note: Shares purchased prior to December 1, 2004 remain subject to
the CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerinvestments.com/bshares.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses
will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Dow Jones Wilshire Real Estate Securities Index measures the performance of
publicly traded real estate securities, such as real estate investment trusts
and real estate operating companies. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
11
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 12/31/07 CLASS C SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Dow
Jones Wilshire Real Estate Securities Index.
[The following data is represented by a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Dow Jones Wilshire
Estate Shares Real Estate Securities Index
12/97 10,000 10,000
7,962 8,257
12/99 7,531 7,995
9,672 10,450
12/01 10,313 11,542
10,601 11,849
12/03 14,030 16,243
18,839 21,899
12/05 21,449 24,926
28,871 33,818
12/07 23,076 27,845
Average Annual Total Returns
(As of December 31, 2007)
If If
Period Held Redeemed
10 Years 8.72% 8.72%
5 Years 16.83 16.83
1 Year -20.07 -20.07
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Expense Ratio
(Per prospectus dated May 1, 2007)
Gross Net
2.24% 2.24%
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not
reflect the 1% front-end sales charge in effect prior to February 1, 2004. If
you paid a 1% sales charge, your returns would be lower than those shown above.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. All results are
historical and assume the reinvestment of dividends and capital gains. Other
share classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Dow Jones Wilshire Real Estate Securities Index measures the performance of
publicly traded real estate securities, such as real estate investment trusts
and real estate operating companies. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
12
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 12/31/07 CLASS Y SHARES
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Dow
Jones Wilshire Real Estate Securities Index.
[The following data is represented by a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Dow Jones Wilshire
Estate Shares Real Estate Securities Index
12/97 10,000 10,000
8,085 8,257
12/99 7,754 7,995
10,079 10,450
12/01 10,885 11,542
11,344 11,849
12/03 15,219 16,243
20,692 21,899
12/05 23,872 24,926
32,568 33,818
12/07 26,371 27,845
Average Annual Total Returns
(As of December 31, 2007)
If If
Period Held Redeemed
10 Years 10.18% 10.18%
5 Years 18.38 18.38
1 Year -19.03 -19.03
- ----------------------------------------------------------
Expense Ratio
(Per prospectus dated May 1, 2007)
Gross Net
0.87% 0.87%
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher than
the performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception, which occurred on April 19,
1998 of Class Y shares reflects the NAV performance of the Fund's Class A
shares. The performance does not reflect differences in expenses, including the
Rule 12b-1 fees applicable to Class A shares. Since fees for Class A shares are
generally higher than those of Class Y shares, the performance shown for Class
Y shares prior to its inception on April 9, 1998 would have been higher. Class
Y shares are not subject to sales charges and are available for limited groups
of eligible investors, including institutional investors. All results are
historical and assume the reinvestment of dividends, and capital gains. Other
share classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers
may not be in effect for all funds. Certain fee waivers are contractual through
a specified period. Otherwise, fee waivers can be rescinded at any time. See
the prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The Dow Jones Wilshire Real Estate Securities Index measures the performance of
publicly traded real estate securities, such as real estate investment trusts
and real estate operating companies. Index returns assume reinvestment of
dividends and, unlike Fund returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in an Index.
13
Pioneer Real Estate Shares
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COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (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 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares
Based on actual returns from July 1, 2007 through December 31, 2007
Share Class A B C Y
- ----------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 7/1/07
Ending Account Value $ 872.97 $ 868.42 $ 869.09 $ 874.78
On 12/31/07
Expenses Paid During Period* $ 6.37 $ 10.64 $ 10.18 $ 4.25
* Expenses are equal to the Fund's annualized expense ratio of 1.35%, 2.26%,
2.16% and 0.90% for Class A, Class B, Class C and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
14
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year 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. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below 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 transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares
Based on a hypothetical 5% return per year before expenses, reflect
ing the period from July 1, 2007 through December 31, 2007
Share Class A B C Y
- ----------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 7/1/07
Ending Account Value $1,018.40 $1,013.81 $1,014.32 $1,020.67
On 12/31/07
Expenses Paid During Period* $ 6.87 $ 11.47 $ 10.97 $ 4.58
* Expenses are equal to the Fund's annualized expense ratio of 1.35%, 2.26%,
2.16% and 0.90% for Class A, Class B, Class C and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 184/365 (to reflect the one-half year period).
15
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/07
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 98.0%
Consumer Services - 2.3%
Hotels, Resorts & Cruise Lines - 2.3%
91,000 Starwood Hotels & Resorts $ 4,006,730
------------
Total Consumer Services $ 4,006,730
------------
Real Estate - 94.6%
Diversified Real Estate Investment Trusts - 8.2%
165,000 Liberty Property Trust (b) $ 4,753,650
31,500 PS Business Parks, Inc. 1,655,325
91,500 Vornado Realty Trust 8,047,425
------------
$ 14,456,400
------------
Industrial Real Estate Investment Trusts - 10.0%
85,500 AMB Property Corp. $ 4,921,380
389,200 DCT Industrial Trust, Inc. (b) 3,623,452
80,500 First Potomac Realty Trust 1,391,845
101,000 ProLogis Trust 6,401,380
68,500 Dupont Fabros Technology, Inc. 1,342,600
------------
$ 17,680,657
------------
Mortgage Real Estate Investment Trusts - 1.2%
77,700 iStar Financial, Inc. (b) $ 2,024,085
------------
Office Real Estate Investment Trusts - 14.5%
76,900 BioMed Property Trust, Inc. $ 1,781,773
119,000 Boston Properties, Inc. (b) 10,925,390
142,000 Brandywine Realty Trust 2,546,060
81,800 Corporate Office Properties Trust, Inc. 2,576,700
37,500 Digital Realty Trust, Inc. 1,438,875
49,000 Highwoods Properties, Inc. 1,439,620
238,000 HRPT Properties Trust 1,839,740
55,000 Kilroy Realty Corp. 3,022,800
------------
$ 25,570,958
------------
Real Estate Management & Development - 3.2%
290,000 Brookfield Properties Corp. (b) $ 5,582,500
------------
16 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Residential Real Estate Investment Trusts - 14.4%
89,000 Apartment Investment & Management Co. (b) $ 3,090,970
65,000 AvalonBay Communities, Inc. 6,119,100
97,600 Camden Property Trust 4,699,440
261,000 Equity Residential Property Trust 9,518,670
16,000 Home Properties, Inc. 717,600
61,700 United Dominion Realty Trust, Inc. 1,224,745
------------
$ 25,370,525
------------
Retail Real Estate Investment Trusts - 28.1%
90,400 Cedar Shopping Centers, Inc. $ 924,792
156,600 Developers Diversifies Realty Corp. 5,996,214
62,000 Federal Realty Investment Trust 5,093,300
82,100 General Growth Properties, Inc. 3,380,878
83,200 Kimco Realty Corp. 3,028,480
38,700 Kite Realty Group Trust 590,949
90,000 Regency Centers Corp. 5,804,100
175,300 Simon DeBartolo Group, Inc. 15,226,558
70,400 Taubman Centers, Inc. (b) 3,462,976
83,000 The Macerich Co. 5,897,980
------------
$ 49,406,227
------------
Specialized Real Estate Investment Trusts - 15.0%
177,900 Ashford Hospitality Trust, Inc. $ 1,279,101
135,000 Extra Space Storage, Inc. 1,929,150
26,000 Hospitality Properties Trust 837,720
360,000 Host Hotels & Resorts, Inc. 6,134,400
166,000 Nationwide Health Properties, Inc. (b) 5,207,420
174,500 Omega Healthcare Investors, Inc. 2,800,725
111,000 Public Storage, Inc. 8,148,510
------------
$ 26,337,026
------------
Total Real Estate $166,428,378
------------
Telecommunication Services - 1.1%
Integrated Telecommunications Services - 1.1%
56,500 Health Care Property Investors, Inc. (b) $ 1,965,070
------------
Total Telecommunication Services $ 1,965,070
------------
TOTAL COMMON STOCKS
(Cost $137,193,059) $172,400,178
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/07 (continued)
- --------------------------------------------------------------------------------
Shares Value
TEMPORARY CASH INVESTMENTS - 16.5%
Commercial Paper - 16.5%
29,009,056 Securities Lending Investment Fund, 5.19% $ 29,009,056
------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $29,009,056) $ 29,009,056
------------
TOTAL INVESTMENT IN SECURITIES - 114.5%
(Cost $166,202,115) (a) $201,409,234
------------
OTHER ASSETS AND LIABILITIES - (14.5)% $(25,486,752)
------------
TOTAL NET ASSETS - 100.0% $175,922,482
============
* Non-income producing security.
(a) At December 31, 2007, the net unrealized gain on investments based on cost
for federal income tax purposes of $167,334,763 was as follows:
Aggregate gross unrealized gain for all investments in which there is
an excess of value over tax cost. $44,316,163
Aggregate gross unrealized loss for all investments in which there is
an excess of tax cost over value. (10,241,692)
-----------
Net unrealized gain $34,074,471
===========
(b) At December 31, 2007, the following securities were out on loan:
Shares Security Value
11,002 Apartment Investment & Management Co. $ 382,099
117,740 Boston Properties, Inc. 10,809,709
201,986 Brookfield Properties Corp. 3,888,231
97,700 DCT Industrial Trust, Inc. 909,587
16,335 Health Care Property Investors, Inc. 568,131
74,393 iStar Financial, Inc. 1,937,938
63,082 Nationwide Health Properties, Inc. 1,978,882
163,350 Liberty Property Trust 4,706,114
67,205 Taubman Centers, Inc. 3,305,814
-----------
Total $28,486,505
===========
Purchases and sales of securities (excluding temporary cash investments) for
the period ended December 31, 2007 aggregated 51,119,163 and 87,464,553
respectively.
18 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 12/31/07
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities (including securities loaned of
$28,486,505) (cost $166,202,115) $201,409,234
Cash 1,724,527
Receivables -
Investment securities sold 134,039
Fund shares sold 292,249
Dividends, interest and foreign taxes withheld 2,010,887
Other 45,596
------------
Total assets $205,616,532
------------
LIABILITIES:
Payables -
Investment securities purchased $ 333,598
Fund shares repurchased 226,696
Upon return of securities loaned 29,009,056
Due to affiliates 67,367
Accrued expenses 57,333
------------
Total liabilities $ 29,694,050
------------
NET ASSETS:
Paid-in capital $141,527,907
Undistributed net investment income 320,104
Accumulated net realized loss on investments (1,132,648)
Net unrealized gain on investments 35,207,119
------------
Total net assets $175,922,482
============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $97,690,576/4,452,757 shares) $ 21.94
============
Class B (based on $18,364,168/846,951 shares) $ 21.68
============
Class C (based on $15,138,859/696,931 shares) $ 21.72
============
Class Y (based on $44,728,879/2,041,980 shares) $ 21.90
============
MAXIMUM OFFERING PRICE:
Class A ($21.94 [divided by] 94.25%) $ 23.28
============
The accompanying notes are an integral part of these financial statements. 19
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 12/31/07
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $28,052) $5,897,065
Interest 210,070
Income from securities loaned, net 36,696
----------
Total investment income $ 6,143,831
------------
EXPENSES:
Management fees $1,968,708
Transfer agent fees and expenses
Class A 310,706
Class B 112,061
Class C 62,854
Class Y 721
Distribution fees
Class A 348,646
Class B 295,218
Class C 233,227
Administrative fees 55,370
Custodian fees 24,134
Registration fees 57,896
Professional fees 52,247
Printing expense 35,119
Fees and expenses of nonaffiliated trustees 8,428
Miscellaneous 9,044
----------
Total expenses $ 3,574,379
Less fees paid indirectly (21,006)
------------
Net expenses $ 3,553,373
------------
Net investment income $ 2,590,458
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 28,550,165
------------
Change in net unrealized gain on investments $(78,881,246)
------------
Net loss on investments $(50,331,081)
------------
Net decrease in net assets resulting from operations $(47,740,623)
============
20 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 12/31/07 and 12/31/06, respectively
Year Ended Year Ended
12/31/07 12/31/06
FROM OPERATIONS:
Net investment income $ 2,590,458 $ 1,903,072
Net realized gain on investments 28,550,165 15,089,781
Change in net unrealized gain (loss) on investments (78,881,246) 50,495,057
-------------- -------------
Net increase (decrease) in net assets resulting
from operations $ (47,740,623) $ 67,487,910
-------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.36 and $0.28 per share, respectively) $ (1,632,527) $ (1,258,729)
Class B ($0.07 and $0.01 per share, respectively) (65,436) (5,469)
Class C ($0.11 and $0.02 per share, respectively) (78,925) (14,555)
Class Y ($0.50 and $0.42 per share, respectively) (835,689) (512,542)
Net realized gain:
Class A ($4.37 and $1.68 per share, respectively) (17,216,824) (7,867,736)
Class B ($4.37 and $1.68 per share, respectively) (3,341,072) (1,751,645)
Class C ($4.37 and $1.68 per share, respectively) (2,655,779) (1,326,725)
Class Y ($4.37 and $1.68 per share, respectively) (7,701,384) (2,116,186)
-------------- -------------
Total distributions to shareowners $ (33,527,636) $ (14,853,587)
-------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 63,752,735 $ 78,862,717
Reinvestment of distributions 30,505,083 13,544,137
Cost of shares repurchased (109,241,936) (59,390,077)
-------------- -------------
Net increase (decrease) in net assets resulting
from fund share transactions $ (14,984,118) $ 33,016,777
-------------- -------------
Net increase (decrease) in net assets $ (96,252,377) $ 85,651,100
NET ASSETS:
Beginning of year 272,174,859 186,523,759
-------------- -------------
End of year $ 175,922,482 $ 272,174,859
============== =============
Undistributed net investment income $ 320,104 $ 662,296
============== =============
The accompanying notes are an integral part of these financial statements. 21
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'07 Shares '07 Amount '06 Shares '06 Amount
CLASS A
Shares sold 994,319 $ 32,914,661 1,601,496 $ 48,330,568
Reinvestment of distributions 743,988 16,861,749 260,538 8,359,232
Less shares repurchased (2,217,291) (68,683,661) (1,190,855) (35,412,699)
---------- ------------- ---------- -------------
Net increase (decrease) (478,984) $ (18,907,251) 671,179 $ 21,277,101
========== ============= ========== =============
CLASS B
Shares sold 209,823 $ 6,894,004 346,132 $ 10,451,504
Reinvestment of distributions 140,171 3,090,523 49,915 1,595,644
Less shares repurchased (585,583) (18,011,134) (483,202) (14,023,947)
---------- ------------- ---------- -------------
Net decrease (235,589) $ (8,026,607) (87,155) $ (1,976,799)
========== ============= ========== =============
CLASS C
Shares sold 226,661 $ 7,194,207 253,560 $ 7,680,650
Reinvestment of distributions 107,365 2,374,472 36,096 1,157,458
Less shares repurchased (466,697) (14,390,437) (232,129) (6,760,083)
---------- ------------- ---------- -------------
Net increase (decrease) (132,671) $ (4,821,758) 57,527 $ 2,078,025
========== ============= ========== =============
CLASS Y
Shares sold 564,016 $ 16,749,863 410,449 $ 12,399,995
Reinvestment of distributions 362,948 8,178,339 76,044 2,431,803
Less shares repurchased (290,653) (8,156,704) (105,997) (3,193,348)
---------- ------------- ---------- -------------
Net increase 636,311 $ 16,771,498 380,496 $ 11,638,450
========== ============= ========== =============
22 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/07 12/31/06 12/31/05 12/31/04 (a) 12/31/03
CLASS A
Net asset value, beginning of period $ 33.07 $ 25.87 $ 24.52 $ 19.55 $ 15.30
-------- -------- -------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.36 $ 0.28 $ 0.28 $ 0.39 $ 0.65
Net realized and unrealized gain (loss) on investments (6.76) 8.88 3.29 6.31 4.33
-------- -------- -------- ------- -------
Net increase (decrease) from investment operations $ (6.40) $ 9.16 $ 3.57 $ 6.70 $ 4.98
Distributions to shareowners:
Net investment income (0.36) (0.28) (0.24) (0.40) (0.73)
Net realized gain (4.37) (1.68) (1.84) (1.33) -
Tax return of capital - - (0.14) - -
-------- -------- -------- ------- -------
Net increase (decrease) in net asset value $ (11.13) $ 7.20 $ 1.35 $ 4.97 $ 4.25
-------- -------- -------- ------- -------
Net asset value, end of period $ 21.94 $ 33.07 $ 25.87 $ 24.52 $ 19.55
======== ======== ======== ======= =======
Total return* (19.39)% 35.79% 14.79% 35.26% 33.27%
Ratio of net expenses to average net assets+ 1.36% 1.37% 1.50% 1.56% 1.68%
Ratio of net investment income to average net assets+ 1.10% 0.98% 1.14% 1.85% 3.81%
Portfolio turnover rate 21% 20% 24% 34% 36%
Net assets, end of period (in thousands) $ 97,691 $163,088 $110,217 $94,198 $61,455
Ratios with no waiver of management fees by PIM and
no reduction for fees paid indirectly:
Net expenses 1.36% 1.37% 1.50% 1.56% 1.68%
Net investment income 1.10% 0.98% 1.14% 1.85% 3.81%
Ratios with waiver of management fees by PIM and reduction for
fees paid indirectly:
Net expenses 1.35% 1.36% 1.50% 1.56% 1.68%
Net investment income 1.11% 0.99% 1.14% 1.85% 3.81%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 23
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ende
12/31/07 12/31/06 12/31/05 12/31/04 (a) 12/31/03
CLASS B
Net asset value, beginning of period $ 32.74 $ 25.64 $ 24.32 $ 19.40 $ 15.17
-------- -------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.06 $ 0.01 $ 0.06 $ 0.19 $ 0.51
Net realized and unrealized gain (loss) on investments (6.68) 8.78 3.24 6.28 4.30
-------- -------- ------- ------- -------
Net increase (decrease) from investment operations $ (6.61) $ 8.79 $ 3.30 $ 6.47 $ 4.81
Distributions to shareowners:
Net investment income (0.07) (0.01) (0.05) (0.22) (0.58)
Net realized gain (4.37) (1.68) (1.84) (1.33) -
Tax return of capital - - (0.09) - -
-------- -------- ------- ------- -------
Net increase (decrease) in net asset value $ (11.06) $ 7.10 $ 1.32 $ 4.92 $ 4.23
-------- -------- ------- ------- -------
Net asset value, end of period $ 21.68 $ 32.74 $ 25.64 $ 24.32 $ 19.40
======== ======== ======= ======= =======
Total return* (20.14)% 34.51% 13.72% 34.20% 32.30%
Ratio of net expenses to average net assets+ 2.28% 2.31% 2.42% 2.37% 2.50%
Ratio of net investment income to average net assets+ 0.11% 0.00%(b) 0.14% 0.96% 2.98%
Portfolio turnover rate 21% 20% 24% 34% 36%
Net assets, end of period (in thousands) $ 18,364 $ 35,442 $29,992 $39,833 $37,325
Ratios with no waiver of management fees by PIM and
no reduction for fees paid indirectly:
Net expenses 2.28% 2.31% 2.42% 2.37% 2.50%
Net investment income 0.11% 0.00%(b) 0.14% 0.96% 2.98%
Ratios with waiver of management fees by PIM and reduction for
fees paid indirectly:
Net expenses 2.26% 2.30% 2.42% 2.37% 2.50%
Net investment income 0.13% 0.01% 0.14% 0.96% 2.98%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than 0.01% per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio with no reduction for fees paid indirectly.
24 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/07 12/31/06 12/31/05 12/31/04 (a) 12/31/03
CLASS C
Net asset value, beginning of period $ 32.80 $ 25.68 $ 24.35 $ 19.42 $ 15.20
-------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.10 $ 0.02 $ 0.08 $ 0.20 $ 0.52
Net realized and unrealized gain (loss) on investments (6.70) 8.80 3.26 6.29 4.31
-------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ (6.60) $ 8.82 $ 3.34 $ 6.49 $ 4.83
Distributions to shareowners:
Net investment income (0.11) (0.02) (0.07) (0.23) (0.61)
Net realized gain (4.37) (1.68) (1.84) (1.33) -
Tax return of capital - - (0.10) - -
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (11.08) $ 7.12 $ 1.33 $ 4.93 $ 4.22
-------- ------- ------- ------- -------
Net asset value, end of period $ 21.72 $ 32.80 $ 25.68 $ 24.35 $ 19.42
======== ======= ======= ======= =======
Total return* (20.07)% 34.60% 13.85% 34.27% 32.35%
Ratio of net expenses to average net assets+ 2.17% 2.24% 2.32% 2.34% 2.39%
Ratio of net investment income to average net assets+ 0.26% 0.10% 0.27% 1.02% 3.20%
Portfolio turnover rate 21% 20% 24% 34% 36%
Net assets, end of period (in thousands) $ 15,139 $27,209 $19,824 $20,675 $14,686
Ratios with no waiver of management fees by PIM and
no reduction for fees paid indirectly:
Net expenses 2.17% 2.24% 2.32% 2.34% 2.39%
Net investment income 0.26% 0.10% 0.27% 1.02% 3.20%
Ratios with waiver of management fees by PIM and reduction for
fees paid indirectly:
Net expenses 2.16% 2.23% 2.32% 2.34% 2.39%
Net investment income 0.27% 0.11% 0.27% 1.02% 3.20%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 25
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
12/31/07 12/31/06 12/31/05 12/31/04 (a) 12/31/03
CLASS Y
Net asset value, beginning of period $ 33.03 $ 25.84 $ 24.49 $ 19.53 $ 15.27
-------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.49 $ 0.42 $ 0.35 $ 0.50 $ 0.76
Net realized and unrealized gain (loss) on investments (6.75) 8.87 3.34 6.31 4.33
-------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ (6.26) $ 9.29 $ 3.69 $ 6.81 $ 5.09
Distributions to shareowners:
Net investment income (0.50) (0.42) (0.34) (0.52) (0.83)
Net realized gain (4.37) (1.68) (1.84) (1.33) -
Tax return of capital - - (0.16) - -
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (11.13) $ 7.19 $ 1.35 $ 4.96 $ 4.26
-------- ------- ------- ------- -------
Net asset value, end of period $ 21.90 $ 33.03 $ 25.84 $ 24.49 $ 19.53
======== ======= ======= ======= =======
Total return* (19.03)% 36.43% 15.36% 35.97% 34.16%
Ratio of net expenses to average net assets+ 0.90% 0.87% 1.00% 1.01% 1.05%
Ratio of net investment income to average net assets+ 1.81% 1.54% 1.84% 2.47% 4.47%
Portfolio turnover rate 21% 20% 24% 34% 36%
Net assets, end of period (in thousands) $ 44,729 $46,436 $26,490 $ 9,172 $ 4,984
Ratios with no waiver of management fees by PIM and
no reduction for fees paid indirectly:
Net expenses 0.90% 0.87% 1.00% 1.01% 1.05%
Net investment income 1.81% 1.54% 1.84% 2.47% 4.47%
Ratios with waiver of management fees by PIM and reduction for
fees paid indirectly:
Net expenses 0.90% 0.87% 1.00% 1.01% 1.05%
Net investment income 1.81% 1.54% 1.84% 2.47% 4.47%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
+ Ratio with no reduction for fees paid indirectly.
26 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/07
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Real Estate Shares (the Fund) is a Delaware statutory trust registered
under the Investment Company Act of 1940 as a diversified, open-end management
investment company. The investment objective of the Fund is to seek long-term
growth of capital. Current income is a secondary objective.
The Fund offers four classes of shares - Class A, Class B, Class C, and Class Y
shares. Each class of shares represents an interest in the same portfolio of
investments of the Fund and has equal rights to voting, redemptions, dividends
and liquidation, except that each class of shares can bear different transfer
agent and distribution fees and have exclusive voting rights with respect to
the distribution plans that have been adopted by Class A, Class B and Class C
shareowners, respectively. There is no distribution plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting year. Actual results could differ from those estimates.
Information regarding the Fund's principal risks is contained in the Fund's
prospectus. Please refer to those documents when considering the Fund's risks.
Because the Fund may invest a substantial portion of its assets in Real Estate
Investment Trusts (REITs), the Fund may be subject to certain risks associated
with direct investments in REITs. REITs may be affected by changes in the value
of their underlying properties and by defaults of their borrowers or tenants.
REITs depend generally on their ability to generate cash flow to make
distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a REIT
may be affected by its failure to qualify for tax-free pass-through of income
under the Internal Revenue Code or its failure to maintain exemption from
registration under the Investment Company Act of 1940.
27
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/07 (continued)
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are consistent with
those policies generally accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded on trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities are valued at the last sale price
on the principal exchange where they are traded. Securities that have not
traded on the date of valuation, or securities for which sale prices are
not generally reported, are valued at the mean between the last bid and
asked prices. Securities for which market quotations are not readily
available are valued at their fair values as determined by, or under the
direction of, the Board of Trustees. Trading in foreign securities is
substantially completed each day at various times prior to the close of the
NYSE. The values of such securities used in computing the net asset value
of the Fund's shares are determined as of such times. The Fund also may use
the fair value of a security, including a non-U.S. security, when the
closing market price on the principal exchange where the security is traded
no longer reflects the value of the security. At December 31, 2007 there
were no securities fair valued. Dividend income is recorded on the
ex-dividend date, except that certain dividends from foreign securities
where the ex-dividend date may have passed are recorded as soon as the Fund
becomes aware of the ex-dividend data in the exercise of reasonable
diligence. Interest income is recorded on the accrual basis. Temporary cash
investments are valued at cost which approximates market value.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
28
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
distribute all of its taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required. Tax years prior to 2004 are closed (not subject to examination
by tax authorities) due to the expiration of statute of limitations; all
other tax years are open.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may
be shown in the accompanying financial statements as either from or in
excess of net investment income or net realized gain on investment
transactions, or from paid-in capital, depending on the type of book/tax
differences that may exist. A portion of the dividend income recorded by
the Fund is from distributions by publicly traded REITs, and such
distributions for tax purposes may also consist of capital gains and
return of capital. The actual return of capital and capital gains portions
of such distributions will be determined by formal notifications from the
REITs subsequent to the calendar year-end. Distributions received from the
REITs that are determined to be a return of capital, are recorded by the
Fund as a reduction of the cost basis of the securities held.
The Fund has reclassified $320,073 to decrease undistributed net
investment income, $277,015 to decrease accumulated realized loss on
investments and $43,058 to increase paid in capital to reflect permanent
book/tax differences. The reclassification has no impact on the net asset
value and is designed to present the Fund's capital accounts on a tax
basis.
The tax character of distributions paid during the years ended December
31, 2007 and 2006 were as follows:
2007 2006
- ----------------------------------------------------------
Distributions paid from:
Ordinary income* $ 3,370,381 $ 1,791,295
Long-term capital gain 30,157,255 13,062,292
----------- -----------
Total $33,527,636 $14,853,587
=========== ===========
* Included in the Fund's distributions from 2006 ordinary income is $340,994
in excess of investment company taxable income, which, in accordance with
applicable U.S. tax law, is taxable to shareowners as ordinary income
distributions.
29
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/07 (continued)
- --------------------------------------------------------------------------------
The following shows the components of distributable earnings on a federal
income tax basis at December 31, 2007.
2007
- -----------------------------------------------------
Undistributed Net Investment Income $ 320,104
Unrealized appreciation 34,074,471
-----------
Total $34,394,575
===========
The difference between book basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
C. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Pioneer
Funds Distributor, Inc. (PFD), the principal underwriter for the Fund and a
wholly owned indirect subsidiary of UniCredito Italiano S.p.A. (UniCredito
Italiano). PFD earned $64,039 in underwriting commissions on the sale of
Class A shares during the year ended December 31, 2007.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. Class Y shares are not subject to a distribution plan (see
Note 4). Shareowners of each class share all expenses and fees paid to the
transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Fund level and allocated daily to
all classes of shares based on their respective percentage of adjusted net
assets at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C and Class Y can bear different
transfer agent and distribution fees.
30
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
E. Securities Lending
The Fund lends securities in its Portfolio to certain broker-dealers or
other institutional investors, with the Fund's custodian acting as the
lending agent. When entering into a loan, the Fund receives collateral,
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on the
fair value of the loaned securities that may occur during the term of the
loan will be for the account of the Fund. The loans are secured by
collateral of at least 102%, at all times, of the fair value of the
securities loaned. The amount of the collateral will be adjusted daily to
reflect any price fluctuation in the value of the loaned securities. The
Fund has the right under the lending agreements to recover the securities
from the borrower on demand. The Fund invests cash collateral in the
Securities Lending Investment Fund, which is sponsored by Brown Brothers
Harriman & Co., the Fund's custodian.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The Fund's
investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. Management fees are calculated daily at the annual rate of
0.80% of the Fund's average daily net assets. PIM pays a portion of the fee it
receives from the Fund to AEW Management and Advisors L.P. as compensation for
sub-advisory services to the Fund.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At
31
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/07 (continued)
- --------------------------------------------------------------------------------
December 31, 2007, $11,780 was payable to PIM related to management fees,
administrative costs and certain other services and is included in due to
affiliates.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Fund at
negotiated rates. Included in due to affiliates is $50,864 in transfer agent
fees payable to PIMSS at December 31, 2007.
4. Distribution Plans
The Fund adopted a Plan of Distribution with respect to Class A, Class B and
Class C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with
Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class A Plan,
the Fund pays PFD a service fee of up to 0.25% of the Fund's average daily net
assets attributable to Class A shares in reimbursement of its actual
expenditures to finance activities primarily intended to result in the sale of
Class A shares. Pursuant to the Class B Plan and the Class C Plan, the Fund
pays PFD 1.00% of the average daily net assets attributable to each class of
shares. The fee consists of a 0.25% service fee and a 0.75% distribution fee
paid as compensation for personal services and/or account maintenance services
or distribution services with regard to Class B and Class C shares. Included in
due to affiliates is $4,723 in distribution fees payable to PFD at December 31,
2007.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be
imposed on redemptions of certain net asset value purchases of Class A shares
within 18 months of purchase. Class B shares that are redeemed within five
years of purchase are subject to a CDSC at declining rates beginning at 4.0%,
based on the lower of cost or market value of shares being redeemed.
Redemptions of Class C shares within one year of purchase are subject to a CDSC
of 1.00%. Proceeds from the CDSC are paid to PFD. For the year ended December
31, 2007, CDSCs in the amount of $64,362 were paid to PFD.
32
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Expense Offset Arrangements
The Fund has entered into certain expense offset arrangements with PIMSS
resulting in a reduction in the Fund's total expenses due to interest earned on
cash held by PIMSS. For the year ended December 31, 2007, the Fund's expenses
were not reduced by $21,006 under such arrangements.
6. Line of Credit Facility
The Fund along with certain other funds in the Pioneer Family of Funds (the
Funds) collectively participate in a $200 million committed, unsecured
revolving line of credit facility. Borrowings are used solely for temporary or
emergency purposes. The Fund may borrow up to the lesser of $200 million or the
limits set by its prospectus for borrowings. Interest on collective borrowings
is payable at the Federal Funds Rate plus 1/2% on an annualized basis. The
Funds pay an annual commitment fee for this facility. The commitment fee is
allocated among such Funds based on their respective borrowing limits. For the
year ended December 31, 2007, the Fund had no borrowings under this agreement.
7. New Pronouncements
In September 2006, Statement of Financial Accounting Standards No. 157, Fair
Value Measurements (SFAS 157), was issued and is effective for fiscal years
beginning after November 15, 2007. SFAS 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements. Management is currently evaluating the impact the adoption of
SFAS 157 will have on the Fund's financial statement disclosures.
33
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners of
Pioneer Real Estate Shares:
We have audited the accompanying statement of assets and liabilities of Pioneer
Real Estate Shares (the "Fund"), including the schedule of investments, as of
December 31, 2007, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. 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 December 31, 2007, by correspondence
with the custodian and broker or by other appropriate auditing procedures where
replies from brokers 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
Pioneer Real Estate Shares at December 31, 2007, 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 financial highlights for each of the five
years in the period then ended, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 19, 2008
34
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
- --------------------------------------------------------------------------------
Pioneer Investment Management, Inc. (PIM) serves as the Fund's investment
adviser pursuant to an investment advisory agreement between PIM and the Fund.
PIM has retained AEW Management and Advisors, L.P. to serve as the sub-adviser
to the Fund pursuant to a sub-advisory agreement between PIM and the
sub-adviser. The Trustees of the Fund, as required by law, determine annually
whether to continue the investment advisory agreement and the sub-advisory
agreement for the Fund.
In connection with their most recent consideration of the investment advisory
and sub-advisory agreements for the Fund, the Trustees received and reviewed a
substantial amount of information provided by PIM and the sub-adviser in
response to requests of the independent Trustees and their independent legal
counsel. The independent Trustees met on a number of occasions with PIM and
also separately with their independent legal counsel to evaluate and discuss
the information provided to them by PIM and the sub-adviser. At a meeting held
on November 13, 2007, based on their evaluation of the information provided by
PIM and the sub-adviser, the Trustees, including the independent Trustees
voting separately, unanimously approved the continuation of the investment
advisory agreement and the sub-advisory agreement for another year.
In considering the continuation of the investment advisory agreement and the
sub-advisory agreement, the Trustees considered various factors that they
determined were relevant, including the factors described below. The Trustees
did not identify any single factor as the controlling factor in determining to
approve the continuation of the agreements.
Nature, Extent and Quality of Services
The Trustees considered the nature, extent and quality of the services provided
by PIM and the sub-adviser to the Fund, taking into account the investment
objective and strategy of the Fund and the information related to the Fund
provided to the Trustees at each quarterly meeting. The Trustees reviewed the
terms of the investment advisory agreement and the sub-advisory agreement. The
Trustees also reviewed the sub-adviser's investment approach for the Fund and
its research process. The Trustees considered the resources of PIM and the
sub-adviser and the personnel of PIM and the sub-adviser who provide investment
management services to the Fund. They also considered PIM's compliance and
legal resources and personnel.
35
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT (continued)
- --------------------------------------------------------------------------------
In addition, the Trustees considered the other services that PIM provides to
the Fund under the investment advisory agreement and that, as administrator,
PIM is responsible for the administration of the Fund's business and other
affairs. It was noted that PIM supervises and monitors the performance of the
Fund's service providers (including the sub-adviser) and provides the Fund with
personnel (including officers) as are necessary for the Fund's operations. The
Trustees considered the fees paid to PIM for the provision of such services.
Based on these considerations, the Trustees concluded that the nature, extent
and quality of services provided by PIM and the sub-adviser to the Fund were
satisfactory and consistent with the terms of the investment advisory agreement
and the sub-advisory agreement.
Performance of the Fund
The Trustees considered the performance results of the Fund over various time
periods. They reviewed information comparing the Fund's performance with the
average performance of its peer group of funds as classified by Morningstar,
Inc. (Morningstar), an independent provider of investment company data, and
with the performance of the Fund's benchmark index. The Trustees considered
that the Fund's annualized total return was in the fourth quintile of its
Morningstar category for the one year period ended June 30, 2007, in the second
quintile of its Morningstar category for the three year period ended June 30,
2007 and in the third quintile of its Morningstar category for the five year
period ended June 30, 2007. (In all quintile rankings referred to throughout
this disclosure, first quintile is most favorable to the Fund's shareowners.
Thus, highest relative performance would be first quintile and lowest relative
expenses would also be first quintile.) After discussing the reasons for the
Fund's short-term underperformance with PIM, the Trustees concluded that the
investment performance of the Fund was satisfactory.
Management Fee and Expenses
The Trustees considered information on the fees and expenses of the Fund in
comparison to the management fees of its peer group of funds as classified by
Morningstar and the expense ratios of a peer group of funds selected on the
basis of criteria determined by the independent Trustees for this purpose using
data provided by Strategic Insight Mutual Fund Research and Consulting, LLC
(Strategic Insight), an independent third party. The Trustees also considered
that PIM, not the Fund, paid the sub-adviser pursuant to the sub-advisory
36
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agreement. The Trustees evaluated both the fee under the sub-advisory agreement
and the portion of the fee under the investment advisory agreement retained by
PIM.
The Trustees considered that the Fund's management fee for the twelve months
ended June 30, 2007 was in the second quintile relative to the management fees
paid by other funds in its peer group Morningstar category for the comparable
period. The Trustees also considered that the Fund's expense ratio for the
twelve months ended June 30, 2007 was in the second quintile relative to its
Strategic Insight peer group.
The Trustees also reviewed management fees charged by the sub-adviser to its
separate account clients with a similar investment strategy as the Fund. The
Trustees noted that in some instances the fee rates for those separate accounts
were lower than the management fees for the Fund and considered that, under the
sub-advisory agreement for the Fund, the sub-adviser performs additional
services for the Fund that it does not provide to those other clients,
including regulatory compliance and other services. It was noted that PIM did
not currently manage any accounts with an investment objective and strategies
that were similar to the Fund.
The Trustees concluded that the management fee payable by the Fund to PIM, as
well as the fees payable by PIM to the sub-adviser of the Fund, were reasonable
in relation to the nature and quality of services provided, taking into account
the fees charged by other advisers for managing comparable mutual funds with
similar strategies. The Trustees also concluded that the Fund's expense ratio
was reasonable, taking into account the size of the Fund, the quality of
services provided by PIM and the sub-adviser and the investment performance of
the Fund.
Profitability
The Trustees considered information provided by PIM regarding the profitability
of PIM with respect to the advisory services provided by PIM to the Fund,
including the methodology used by PIM in allocating certain of its costs to the
management of the Fund. The Trustees also considered PIM's profit margin in
connection with the overall operation of the Fund. They further reviewed the
financial results realized by PIM and its affiliates from non-fund businesses.
The Trustees considered PIM's profit margins with respect to the Fund in
comparison to the limited industry data available and noted that the
profitability of any
37
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
APPROVAL OF INVESTMENT ADVISORY AGREEMENT (continued)
- --------------------------------------------------------------------------------
adviser was affected by numerous factors, including its organizational
structure and method for allocating expenses. The Trustees recognized that PIM
should be entitled to earn a reasonable level of profit for the services
provided to the Fund. The Trustees concluded that PIM's profitability with
respect to the management of the Fund was not unreasonable.
Economies of Scale
The Trustees considered the economies of scale with respect to the management
of the Fund, whether the Fund had appropriately benefited from any economies of
scale, and whether there was potential for realization of any further economies
of scale.
The Trustees considered that, although the Fund pays a management fee at a
fixed rate as a percentage of the Fund's net assets, without any breakpoints,
the management fee rate paid by the Fund for the twelve months ended June 30,
2007 was in the second quintile relative to the management fees paid by other
funds in its peer group Morningstar category for the comparable period and
that, on a hypothetical basis, such fee would be in the second or third
quintile relative to the peer group at higher asset levels. The Trustees also
considered the relatively small size of the Fund compared to its peer group
Morningstar category. The Trustees concluded that, at current and reasonably
foreseeable asset levels, breakpoints in the management fee were not currently
necessary.
Other Benefits
The Trustees considered the other benefits to each of PIM and the sub-adviser
from its relationship with the Fund. The Trustees considered that affiliates of
PIM serve as the Fund's transfer agent and distributor. The Trustees considered
the receipt by PIM and its affiliates of sales loads and payments under Rule
12b-1 plans in respect of the Fund and the other Pioneer funds. The Trustees
further considered the intangible benefits to each of PIM and the sub-adviser
by virtue of its relationship with the Fund and the other Pioneer funds. The
Trustees concluded that the receipt of these benefits was reasonable in the
context of the overall relationship between each of PIM and the sub-adviser and
the Fund.
38
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Conclusion
After consideration of the factors described above as well as other factors,
the Trustees, including all of the independent Trustees, concluded that the
terms of each of the investment advisory agreement between PIM and the Fund and
the sub-advisory agreement between PIM and the sub-adviser, including the fees
payable thereunder, were fair and reasonable and voted to approve the proposed
continuation of each of the investment advisory agreement and sub-advisory
agreement for the Fund.
39
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Registered Public Accounting Firm
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Bingham McCutchen LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Trustees and Officers
The Board of Trustees provides broad supervision over the fund's affairs. The
officers of the fund are responsible for the fund's operations. The Trustees
and officers are listed below, together with their principal occupations during
the past five years. Trustees who are interested persons of the fund within the
meaning of the 1940 Act are referred to as Interested Trustees. Trustees who
are not interested persons of the fund are referred to as Independent Trustees.
Each of the Trustees (except Mr. Kingsbury, Mr. West and Mr. Bock) serves as a
Trustee of each of the 77 U.S. registered investment portfolios for which
Pioneer serves as investment adviser (the "Pioneer Funds"). Mr. Kingsbury
serves as Trustee of 34 of the 77 Pioneer Funds, Mr. West serves as Trustee of
33 of the 77 Pioneer Funds, and Mr. Bock serves as Trustee of 76 of the 77
Pioneer Funds. The address for all Trustees and all officers of the fund is 60
State Street, Boston, Massachusetts 02109.
The Fund's statement of additional information provides more detailed
information regarding the Fund's Trustees and is available upon request,
without charge, by calling 1-800-225-6292.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30 is publicly available to
shareowners at www.pioneerinvestments.com and on the SEC's web site at
http://www.sec.gov.
40
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
INTERESTED TRUSTEES
- --------------------------------------------------------------------------------
Positions Held Length of Service and
Name and Age With the Fund Term of Office
John F. Cogan, Jr. (81)* Chairman of the Trustee since 1995.
Board, Trustee and Serves until a succes-
President sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Daniel K. Kingsbury (49)* Trustee and Executive Trustee since March
Vice President 2007. Serves until a
successor trustee is
elected or earlier
retirement or removal.
- --------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the fund's investment adviser and certain of its
affiliates.
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
John F. Cogan, Jr. (81)* Deputy Chairman and a Director of Pioneer Global Asset None
Management S.p.A. ("PGAM"); Non-Executive Chairman
and a Director of Pioneer Investment Management USA
Inc. ("PIM-USA"); Chairman and a Director of Pioneer;
Chairman and Director of Pioneer Institutional Asset
Management, Inc. (since 2006); Director of Pioneer
Alternative Investment Management Limited (Dublin);
President and a Director of Pioneer Alternative Investment
Management (Bermuda) Limited and affiliated funds; Direc-
tor of PIOGLOBAL Real Estate Investment Fund (Russia)
(until June 2006); Director of Nano-C, Inc. (since 2003);
Director of Cole Management Inc. (since 2004); Director of
Fiduciary Counseling, Inc.; President and Director of
Pioneer Funds Distributor, Inc. ("PFD") (until May 2006);
President of all of the Pioneer Funds; and Of Counsel,
Wilmer Cutler Pickering Hale and Dorr LLP
- -----------------------------------------------------------------------------------------------------------------
Daniel K. Kingsbury (49)* Director, CEO and President of Pioneer Investment None
Management USA Inc., Pioneer Investment Management,
Inc. and Pioneer Institutional Asset Management, Inc.
(since March 2007); Executive Vice President of all of the
Pioneer Funds (since March 2007); Director of Pioneer
Global Asset Management S.p.A. (since March 2007);
Head of New Markets Division, Pioneer Global Asset
Management S.p.A. (2000 - 2007)
- -----------------------------------------------------------------------------------------------------------------
* Mr. Cogan and Mr. Kingsbury are Interested Trustees because they are
officers or directors of the fund's investment adviser and certain of its
affiliates.
41
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------
Positions Held Length of Service and
Name and Age With the Fund Term of Office
David R. Bock (64) Trustee Trustee since 2005.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Mary K. Bush (59) Trustee Trustee since 1997.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Margaret B.W. Graham (60) Trustee Trustee since 1995.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
David R. Bock (64) Executive Vice President and Chief Financial Officer, I-trax, Director of The Enterprise
Inc. (publicly traded health care services company) Social Investment
(2004 - present); Partner, Federal City Capital Advisors Company (privately-held
(boutique merchant bank) (1997 to 2004); and Executive affordable housing
Vice President and Chief Financial Officer, Pedestal Inc. finance company); and
(internet-based mortgage trading company) (2000 - 2002) Director of New York
Mortgage Trust (publicly
traded mortgage REIT)
- -------------------------------------------------------------------------------------------------------------------------
Mary K. Bush (59) President, Bush International, LLC (international financial Director of Brady Corpora-
advisory firm) tion (industrial identifica-
tion and specialty coated
material products
manufacturer); Director of
Briggs & Stratton Co.
(engine manufacturer);
Director of UAL Corpora-
tion (airline holding
company); Director of
Mantech International
Corporation (national
security, defense, and
intelligence technology
firm): and Member, Board
of Governors, Investment
Company Institute
- -------------------------------------------------------------------------------------------------------------------------
Margaret B.W. Graham (60) Founding Director, Vice-President and Corporate Secretary, None
The Winthrop Group, Inc. (consulting firm); and Desautels
Faculty of Management, McGill University
- -------------------------------------------------------------------------------------------------------------------------
42
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Positions Held Length of Service and
Name and Age With the Fund Term of Office
Thomas J. Perna (57) Trustee Trustee since 2006.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Marguerite A. Piret (59) Trustee Trustee since 1995.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Stephen K. West (79) Trustee Trustee since 1995.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
John Winthrop (71) Trustee Trustee since 1995.
Serves until a succes-
sor trustee is elected
or earlier retirement or
removal.
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Trustee
Thomas J. Perna (57) Private investor (2004 - present); and Senior Executive Director of Quadriserv
Vice President, The Bank of New York (financial and securi- Inc. (technology products
ties services) (1986 - 2004) for securities lending
industry)
- -------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (59) President and Chief Executive Officer, Newbury, Piret & Director of New America
Company, Inc. (investment banking firm) High Income Fund, Inc.
(closed-end investment
company)
- -------------------------------------------------------------------------------------------------------------------
Stephen K. West (79) Senior Counsel, Sullivan & Cromwell (law firm) Director, The Swiss
Helvetia Fund, Inc.
(closed-end investment
company)
- -------------------------------------------------------------------------------------------------------------------
John Winthrop (71) President, John Winthrop & Co., Inc. (private investment None
firm)
- -------------------------------------------------------------------------------------------------------------------
43
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FUND OFFICERS
- --------------------------------------------------------------------------------
Positions Held Length of Service and
Name and Age With the Fund Term of Office
Dorothy E. Bourassa (59) Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Christopher J. Kelley (43) Assistant Secretary Since 2003. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Vincent Nave (62) Treasurer Since 2000. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Mark E. Bradley (48) Assistant Treasurer Since 2004. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Luis I. Presutti (42) Assistant Treasurer Since 2000. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Gary Sullivan (49) Assistant Treasurer Since 2002. Serves at
the discretion of the
Board
- --------------------------------------------------------------------------------
Other Directorships Held
Name and Age Principal Occupation During Past Five Years by this Officer
Dorothy E. Bourassa (59) Secretary of PIM-USA; Senior Vice President - Legal None
of Pioneer; Secretary/Clerk of most of PIM-USA's
subsidiaries; and Secretary of all of the Pioneer Funds
since September 2003 (Assistant Secretary from
November 2000 to September 2003)
- -------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (43) Associate General Counsel of Pioneer since January 2008 None
and Assistant Secretary of all of the Pioneer Funds since
September 2003; Vice President and Senior Counsel of
Pioneer July 2002 to December 2007
- -------------------------------------------------------------------------------------------------------------------
Vincent Nave (62) Vice President - Fund Accounting, Administration and None
Controllership Services of Pioneer; and Treasurer of all of
the Pioneer Funds
- -------------------------------------------------------------------------------------------------------------------
Mark E. Bradley (48) Deputy Treasurer of Pioneer since 2004 and As- None
sistant Treasurer of all of the Pioneer Funds since
November 2004; Treasurer and Senior Vice President, CDC
IXIS Asset Management Services from 2002 to 2003
- -------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (42) Assistant Vice President - Fund Accounting, Administration None
and Controllership Services of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
- -------------------------------------------------------------------------------------------------------------------
Gary Sullivan (49) Fund Accounting Manager - Fund Accounting, Administra- None
tion and Controllership Services of Pioneer; and Assistant
Treasurer of all of the Pioneer Funds
- -------------------------------------------------------------------------------------------------------------------
44
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Positions Held Length of Service and
Name and Age With the Fund Term of Office
Katherine Kim Sullivan (34) Assistant Treasurer Since 2003. Serves at
the discretion of the
Board
- -----------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (48) Chief Compliance Since January 2007.
Officer Serves at the discre-
tion of the Board
- ----------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
Name and Age Principal Occupation During Past Five Years Other Directorships Held
by this Officer
Katherine Kim Sullivan (34) Fund Administration Manager - Fund Accounting, None
Administration and Controllership Services since
June 2003 and Assistant Treasurer of all of the Pioneer
Funds since September 2003; Assistant Vice Predident -
Mutual Fund Operations of State Street Corporation
from June 2002 to June 2003 (formerly Deutsche Bank
Asset Management)
- --------------------------------------------------------------------------------------------------------------------------
Teri W. Anderholm (48) Chief Compliance Officer of Pioneer since December 2006 None
and of all the Pioneer Funds since January 2007; Vice
President and Compliance Officer, MFS Investment
Management (August 2005 to December 2006); Consult-
ant, Fidelity Investments (February 2005 to July 2005);
Independent Consultant (July 1997 to February 2005)
- --------------------------------------------------------------------------------------------------------------------------
The outstanding capital stock of PFD, Pioneer and PIMSS is indirectly wholly
owned by UniCredito Italiano S.p.A. ("UniCredito Italiano"), one of the largest
banking groups in Italy. Pioneer, the fund's investment adviser, provides
investment management and financial services to mutual funds, institutional and
other clients.
45
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HOW TO CONTACT PIONEER
- --------------------------------------------------------------------------------
We are pleased to offer a variety of convenient ways for you to contact us
for assistance or information.
Call us for:
Account Information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerinvestments.com
Before investing consider the Fund's investment objectives, risks, charges and
expenses. Contact your advisor or Pioneer Investments for a prospectus
containing this information. Read it carefully.
The Fund files a complete schedule of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, DC.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
Audit Fees
Fees for audit services provided to the Fund, including fees
associated with the routine and non routine filings of its Form
N-1A, totaled approximately $35,270 in 2007 and $33,910 in
2006.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
Audit-Related Fees
There were no audit-related services provided to the
Fund during the fiscal years ended December 31, 2007 and
2006.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
Tax Fees
Fees for tax compliance services, primarily for tax returns,
totaled $7,820 in 2007 and $7,515 in 2006.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
Other Fees
There were no other services provided to the
Fund during the fiscal years ended December 31, 2007 and
2006.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
Non-Audit Services
Beginning with non-audit service contracts entered into on or
after May 6, 2003, the effective date of the new SEC pre-
approval rules, the Fund's audit committee is required to pre-
approve services to affiliates defined by SEC rules to the
extent that the services are determined to have a direct impact
on the operations or financial reporting of the Fund.
For the years ended December 31, 2007 and 2006, there were
no services provided to an affiliate that required the Fund's
audit committee pre-approval.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
N/A
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
The aggregate non-audit fees for the Fund and affiliates, as
previously defined, totaled $7,820 in 2007 and $7,515 in 2006.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of
Rule 2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence.
The Fund's audit committee of the Board of Trustees has
considered whether the provision of non-audit services that
were rendered to the Affiliates (as defined) that were not pre-
approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal
accountant's independence.
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer
and principal financial officer have
concluded that the registrant's disclosure
controls and procedures are effective based
on their evaluation of these controls and
procedures as of a date within 90 days of the
filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the
registrant's internal control over financial
reporting that occurred during the second
fiscal quarter of the period covered by this
report that have materially affected, or are
reasonably likely to materially affect, the
registrant's internal control over financial
reporting.
The registrant's principal executive officer and principal financial
officer, however, voluntarily are reporting the following information:
In August of 2006 the registrant's investment adviser
enhanced its internal procedures for reporting performance
information required to be included in prospectuses.
Those enhancements involved additional internal controls
over the appropriateness of performance data
generated for this purpose. Such enhancements were made
following an internal review which identified
prospectuses relating to certain classes of shares of
a limited number of registrants where, inadvertently,
performance information not reflecting the deduction of
applicable sales charges was included. Those prospectuses
were revised, and the revised prospectuses were distributed to
shareholders.
ITEM 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
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) Pioneer Real Estate Shares
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date February 29, 2008
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 (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date February 29, 2008
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date February 29, 2008
* Print the name and title of each signing officer under his or her signature.