OMB APPROVAL
OMB Number: 3235-0570
Expires: November 30, 2005
Estimated average burden
hours per response..... 5.0
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 811-07379
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, 2003 through December 31, 2003
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.
PIONEER
-------
REAL
ESTATE
SHARES
Annual
Report
12/31/03
[LOGO] PIONEER
Investments(R)
Table of Contents
- --------------------------------------------------------------------------------
Letter to Shareowners 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 7
Schedule of Investments 11
Financial Statements 14
Notes to Financial Statements 22
Report of Independent Auditors 28
Trustees, Officers and Service Providers 29
Retirement Plans from Pioneer 36
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
LETTER TO SHAREOWNERS 12/31/03
- --------------------------------------------------------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
The nation's stock markets snapped back dramatically last year, following a
prolonged period of weakness. As it became clear that the war would not be a
long-term economic burden and that the U.S. economy was expanding at a
convincing pace, investors left safer havens like Treasury securities to seek
better returns elsewhere. The result was a powerful uptrend that began in March
and was intact at year-end.
Led by smaller-capitalization issues, stocks of all sizes across a range of
industries shared in the broad-based rally that saw major market indices rise
for the first time since 1999. Technology issues were the biggest beneficiaries,
as positive economic data suggested that increased capital outlays were
imminent. Corporate bonds also recorded strong returns, with the sharpest gains
coming in lower quality bonds whose issuers rely on economic growth to expand
earnings. Overseas, emerging market equities were standout performers as bonds
and stocks advanced in many global markets, thanks in part to currency gains
versus the sagging U.S. dollar.
Here at home, strong economic stimulants, including lower taxes and historically
low interest rates, had the desired effect, with domestic GDP growth coming in
at 8.2% in the third quarter. A striking increase in worker productivity
provided a boost to corporate profits and manufacturing activity rose broadly.
But the failure of the economy to consistently create jobs remained a
troublesome concern as the new year began.
Markets may segment
Last year's across-the-board strength is unusual and unlikely to continue for
long. Eventually, the markets should revert to historic form, favoring some
sectors and shunning others, depending on the prospects for each industry or
investment type. Under those more typical conditions, deciding which investments
to own more of, or where to cut exposure, can be challenging. Fortunately, it's
also an area in which the guidance of an experienced investment professional can
be most valuable.
New Investment Subadviser Agreement Proposed by Trustees
The Trustees of Pioneer Real Estate Shares have approved a proposal for a
sub-advisory agreement with AEW Management and Advisors, L.P. For the proposal
to become effective, it must be approved by shareowner vote. By now, you
probably have received your proxy voting materials. The trustees of your Fund
believe that in light of the unique characteristics of the real estate market,
shareowners will benefit from the services of an investment manager focused
exclusively on real estate investments. We encourage you to take a moment to
vote your shares. If you have any questions on the materials you receive, please
contact your financial representative or Pioneer at 800-225-6292.
Respectfully,
/s/ Osbert M. Hood
Osbert M. Hood
President
Pioneer Investment Management, 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.
1
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY 12/31/03
- --------------------------------------------------------------------------------
Portfolio Diversification
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[The following table was depicted as a pie chart in the printed material.]
U.S. Common Stocks 87.2%
Temporary Cash Investments 12.8%
Sector Diversification
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[The following table was depicted as a pie chart in the printed material.]
Retail 28.1%
Office 20.1%
Apartment 18.2%
Diversified 11.7%
Industrial 7.9%
Hotel 7.8%
Self Storage 4.7%
Manufactured Homes 1.5%
10 Largest Holdings
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)*
1. Simon DeBartolo Group, Inc. 5.81% 6. Starwood Hotels & Resorts 3.82%
2. Boston Properties, Inc. 4.87 7. General Growth Properties, Inc. 3.46
3. Equity Residential Property 4.48 8. Arden Realty Group, Inc. 3.40
Trust
4. Vornado Realty Trust 4.31 9. Prentiss Properties Trust 3.28
5. ProLogis Trust 4.16 10. Host Marriott Corp. 2.95
*This list excludes money market and derivative instruments. Portfolio holdings
will vary for other periods.
2
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/03 CLASS A SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value per Share 12/31/03 12/31/02
$19.55 $15.30
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/03 - 12/31/03) Income Capital Gains Capital Gains
$0.7308 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 Wilshire Real Estate Securities Index.
- -----------------------------------------
Average Annual Total Returns
(As of December 31, 2003)
Net Asset Public Offering
Period Value Price*
10 Years 10.42% 9.76%
5 Years 12.83 11.50
1 Year 33.27 25.63
- -----------------------------------------
* Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment+
Pioneer Real Wilshire Real Estate
Estate Shares* Securities Index
12/93 9425 10000
9446 10164
12/95 10590 11551
14451 15811
12/97 17303 18941
13881 15640
12/99 13228 15142
17105 19796
12/01 18382 21865
19046 22429
12/03 25383 30744
+ Index comparisons begin 10/31/93. The Wilshire Real Estate Securities Index is
a market-capitalization weighted measure of the performance of (equity and
hybrid) REITs and real estate operating companies, and its returns are
calculated monthly. 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.
Real estate investments may be subject to special risks, including risks
related to general and local economic conditions, and risks related to an
individual property.
Past performance does not guarantee future results. Returns and principal
value fluctuate, and your shares, when redeemed, may be worth more or less
than their original cost.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Fund distributions or the redemption of Fund shares.
3
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/03 CLASS B SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value per Share 12/31/03 12/31/02
$19.40 $15.17
Distributions per Share Income Short-Term Long-Term
(1/1/03 - 12/31/03) Dividends Capital Gains Capital Gains
$0.5847 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 Wilshire
Real Estate Securities Index.
- -----------------------------------------
Average Annual Total Returns
(As of December 31, 2003)
If If
Period Held Redeemed*
Life-of-Class
(1/31/96) 10.75% 10.75%
5 Years 11.96 11.83
1 Year 32.30 28.30
- -----------------------------------------
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions. The
maximum CDSC of 4% declines over six years.
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Wilshire Real Estate
Estate Shares* Securities Index
1/96 10000 10000
13481 13501
12/97 16023 16174
12761 13356
12/99 12065 12930
15504 16904
12/01 16499 18671
16968 19152
12/03 22448 26253
The Wilshire Real Estate Securities Index is a market capitalization-weighted
measure of the performance of (equity and hybrid) REITs and real estate
operating companies, and its returns are calculated monthly. 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.
Real estate investments may be subject to special risks, including risks
related to general and local economic conditions, and risks related to an
individual property.
Past performance does not guarantee future results. Returns and principal value
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Fund distributions or the redemption of Fund shares.
4
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/03 CLASS C SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value per Share 12/31/03 12/31/02
$19.42 $15.20
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/03 - 12/31/03) Income Capital Gains Capital Gains
$0.6100 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 Wilshire Real Estate Securities Index.
- -------------------------------------------
Average Annual Total Returns
(As of December 31, 2003)
Net Asset Public Offering
Period Value Price/CDSC*
Life-of-Class
(1/31/96) 10.77% 10.63%
5 Years 12.00 11.76
1 Year 32.36 31.06
- -------------------------------------------
* Reflects deduction of the 1% sales charge at the beginning of the period and
assumes reinvestment of distribu- tions. The 1% contingent deferred sales
charge (CDSC) applies to redemptions made within one year of purchase.
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment
Pioneer Real Wilshire Real Estate
Estate Shares* Securities Index
1/96 9900 10000
13344 13501
12/97 15861 16174
12629 13356
12/99 11945 12930
15341 16904
12/01 16357 18671
16814 19152
12/03 22254 26253
The Wilshire Real Estate Securities Index is a market capitalization-weighted
measure of the performance of (equity and hybrid) REITs and real estate
operating companies, and its returns are calculated monthly. 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.
Real estate investments may be subject to special risks, including risks
related to general and local economic conditions, and risks related to an
individual property.
Past performance does not guarantee future results. Returns and principal value
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Fund distributions or the redemption of Fund shares.
5
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 12/31/03 CLASS Y SHARES
- --------------------------------------------------------------------------------
Share Prices and Distributions
- --------------------------------------------------------------------------------
Net Asset Value per Share 12/31/03 12/31/02
$19.53 $15.27
Distributions per Share Income Short-Term Long-Term
(1/1/03 - 12/31/03) Dividends Capital Gains Capital Gains
$0.8293 $ - $ -
Investment Returns
- --------------------------------------------------------------------------------
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 Wilshire
Real Estate Securities Index.
- -------------------------------------
Average Annual Total Returns*
(As of December 31, 2003)
If If
Period Held Redeemed*
Life-of-Class
(4/9/98) 7.76% 7.76%
5 Year 13.49 13.49
1 Year 34.16 34.16
- -------------------------------------
* Assumes reinvestment of distributions.
[The following table was depicted as a mountain chart in the printed material.]
Value of $10,000 Investment+
Pioneer Real Wilshire Real Estate
Estate Shares* Securities Index
4/98 10000 10000
8391 8591
12/99 8047 8317
10461 10873
12/01 11298 12010
11774 12319
12/03 15795 16887
+ Index comparisons begin 4/30/98. The Wilshire Real Estate Securities Index is
a market capitalization weighted measure of the performance of (equity and
hybrid) REITs and real estate operating companies, and its returns are
calculated monthly. 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.
Real estate investments may be subject to special risks, including risks
related to general and local economic conditions, and risks related to an
individual property.
Past performance does not guarantee future results. Returns and principal
value fluctuate, and your shares, when redeemed, may be worth more or less
than their original cost.
The performance table and graph do not reflect the deduction of taxes that a
shareowner would pay on Fund distributions or the redemption of Fund shares.
6
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/03
- --------------------------------------------------------------------------------
The 12 months ended December 31, 2003, which constituted your Fund's fiscal
year, proved to be another extraordinary year for real-estate-related stocks. In
fact, the Wilshire Real Estate Securities Index surpassed the Standard & Poor's
500 Index, a broad measure of U.S. stock-market performance, for the fourth year
in a row. In this report, Walter Hunnewell, Jr., a member of the Fund's
management team, discusses the sector's impressive returns and the team's
expectations for 2004.
Q: Was the second half of the Fund's fiscal year as favorable as the first?
A: Even more so. After posting returns of approximately 11% by the midpoint of
its fiscal year, the Fund achieved even greater gains in the second half of
2003. For the 12 months ended December 31, the Fund's Class A, B and C shares
rose 33.27%, 32.30% and 32.36% at net asset value, respectively.
As strong as these returns were, they did fall short of the Wilshire Real
Estate Securities Index's return, which was 37.07% for the year. The Fund's
underperformance relative to this benchmark is due largely to the
disappointing performance of a single holding, Apartment Investment &
Management Co., which owns a diverse portfolio of multi-family apartment
complexes. Last autumn, this real-estate investment trust (REIT) preannounced
disappointing earnings that were driven by lower-than-expected fee income and
higher-than-expected apartment-turnover-related expenses. Management, in
turn, reduced its dividend significantly, precipitating a sharp decline in
its stock.
Q: What contributed to such a strong rally across the real estate market?
A: Undoubtedly, the improving economic outlook contributed to the positive
momentum in the real-estate sector. Perhaps as important, we've seen
increasing demand for real-estate stocks as an asset class. The relatively
high dividend yield of REITs, which generally fell in the range of 6% during
the fiscal year, is very attractive to investors disappointed with the
historically low yields offered by money market alternatives. Furthermore, we
believe REITs have gained wider acceptance among institutional and retail
7
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/03 (continued)
- --------------------------------------------------------------------------------
investors as their unique benefits are more widely understood. The heightened
interest helped to push prices higher in 2003.
Q: Has the Fund's strategy changed in response to the improving economic
environment?
A: While the Fund's overall strategy is unchanged, we have been fine-tuning the
portfolio to help it better respond to the improving outlook. During the last
half of the fiscal year, our efforts were focused on increasing the
portfolio's exposure to sectors that tend to rebound early in an economic
recovery. Naturally, that meant limiting the portfolio's weightings in
sectors that we believe may lag in the initial recovery or are less
attractive. Consequently, we marginally increased the Fund's investment in
the hospitality group by adding to our Host Marriott position. Even with this
increase, we are still maintaining an underweight in hotel REITs relative to
the benchmark. We are concerned with the financial outlook and valuation of
hospitality REITs and believe these factors could have repercussions on stock
prices ahead.
On the other hand, we decreased the Fund's slightly heavier exposure to
office REITs by eliminating our position in industry leader Equity Office
Properties Trust. We're concerned that the high vacancy rates in many of that
REIT's metropolitan markets are pressuring revenues and squeezing cash flow
reserved for paying dividends. The situation may cause management to sell
assets to sustain the dividend. Secondly, the per square foot rates are lower
today given the amount of available office space on the market, which means
that office REITs are locking in lower rates for several years, depending on
the terms of the contractual rent agreements. Finally, office REITs are
generally lacking negotiating leverage with their tenants. So the cost of
renewing leases has risen as managers are forced to offer incentives to gain
commitments.
Q: Given their short-term leases, aren't apartments a timely opportunity since
they can respond quickly to an improving economic outlook?
A: Generally, yes. Unlike office leases, which typically span five to seven
years, apartment leases usually run one year. Their shorter duration makes
them very responsive to changes in economic
8
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
growth. So apartments are a logical group to focus on during a recovery. We
recently increased our weighting to equal the benchmark weighting by adding
to our Avalon Bay position. Before significantly overweighting the group, we
would like to see signs of stronger employment numbers, which would
positively affect demand for these properties. Also, since continuing low
interest rates have encouraged potential renters to buy instead of rent, a
reversal in this trend would make us more positive.
Industrial REITs are another property type held by the Fund that is highly
correlated to positive economic growth. That group had attractive gains for
the fiscal year, but underperformed the benchmark on a relative basis. We
believe stronger economic growth and a commensurate rise in employment should
bode well for this group, and we continue to emphasize it.
Q: Did retail REITs contribute strongly to the Fund's performance?
A: Retail REITs turned in the best performance of all the groups in the real
estate market for 2003, and our decision to invest heavily in that
top-performing group proved to be very positive for your Fund. Your portfolio
is invested in shopping centers, retail malls and factory outlets, all of
which generated strong returns. One of the Fund's most successful investments
was General Growth Properties, a large regional mall operator. Towards the
end of the reporting period, we pared back the Fund's position in that REIT
because of concern over its reliance on floating-rate debt and the scale of
acquisitions necessary to support the future earnings growth rate. The Fund
also benefited from its investments in Chelsea Property Group. That REIT is
one of the largest owners of outlet shopping centers and has been able to
generate some of the highest revenues per square foot in the industry. The
REIT also holds a promising development pipeline, which should continue to
fuel earnings growth over the longer term.
Q: What is your outlook for 2004?
A: We have positioned the portfolio to respond to the improving economy while
still providing protection from the possibility of a stalled or jobless
recovery. We believe that valuation will become more important for investors
in 2004, given the strong appreciation we witnessed last year. Since
investors seeking the compara-
9
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 12/31/03 (continued)
- --------------------------------------------------------------------------------
tively high dividends offered by REIT investments drove a portion of the
appreciation in 2003, we would not be surprised to see some of that demand
ease were interest rates to rise. If that comes to pass, we could see some
price correction in the REIT market as investors seek lower risk, current
yield alternatives.
Our research efforts will continue to focus on the more dominant REITs, which
can generate internal growth from their effective management of the
properties they own. This will most certainly include a review of the
financial strength of each of the Fund's holdings to ensure that these REITs
can support their dividend payouts and will not need to rely on the sale of
assets or cash to meet earnings expectations.
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.
10
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/03
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 91.4%
Hotels, Restaurants & Leisure - 3.5%
Hotels, Resorts & Cruise Lines - 3.5%
114,872 Starwood Hotels & Resorts $ 4,131,945
------------
Total Hotels, Restaurants & Leisure $ 4,131,945
------------
Real Estate - 87.9%
Real Estate Management & Development - 2.6%
18,396 American Financial Realty Trust $ 313,652
115,422 Catellus Development Corp. 2,783,979
------------
$ 3,097,631
------------
Real Estate Investment Trusts - 85.3%
26,584 Alexandria Real Estate Equities, Inc. $ 1,539,214
64,756 AMB Property Corp. 2,129,177
89,424 Apartment Investment & Management Co. 3,085,128
107,927 Archstone Communities Trust 3,019,797
121,270 Arden Realty Group, Inc. 3,679,332
60,034 AvalonBay Communities, Inc. 2,869,625
109,468 Boston Properties, Inc. 5,275,263
63,799 Brandywine Realty Trust 1,707,899
47,424 Camden Property Trust 2,100,883
49,656 CBL & Associates Properties 2,805,564
47,424 Chelsea Property Group, Inc. 2,599,309
94,954 Duke Realty Investments, Inc. 2,943,574
164,282 Equity Residential Property Trust 4,847,962
10,633 Essex Property Trust, Inc. 682,851
49,656 Federal Realty Investment Trust 1,906,294
134,988 General Growth Properties, Inc. 3,745,917
31,899 Home Properties, Inc. * 1,288,401
259,310 Host Marriott Corp. * 3,194,699
119,696 Innkeepers USA Trust 1,001,856
59,333 Liberty Property Trust 2,308,054
53,910 The Macerich Co. 2,398,995
43,383 Manufactured Home Communities, Inc. 1,633,370
19,352 MeriStar Hospitality Corp. * 125,982
69,588 Mills Corp. 3,061,872
The accompanying notes are an integral part of these financial statements. 11
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 12/31/03 (continued)
- --------------------------------------------------------------------------------
Shares Value
Real Estate Investment Trusts (continued)
46,360 Pan Pacific Retail Properties, Inc. $ 2,209,054
107,679 Prentiss Properties Trust 3,552,330
140,357 ProLogis Trust 4,504,056
45,297 PS Business Parks, Inc. * 1,868,954
5,354 Public Storage, Inc. (Series A) 160,085
69,008 Public Storage, Inc. 2,994,257
46,786 Regency Centers Corp. 1,864,422
51,784 Shurgard Storage Centers, Inc. 1,949,668
135,892 Simon DeBartolo Group, Inc. 6,297,235
76,657 SL Green Realty Corp. 3,146,770
76,919 Taubman Centers, Inc. 1,584,531
184,815 Trizec Properties, Inc. 2,846,151
80,917 United Dominion Realty Trust 1,553,606
85,278 Vornado Realty Trust 4,668,971
43,170 Western Resources, Inc. 1,914,590
------------
$101,065,698
------------
Total Real Estate $104,163,329
------------
TOTAL COMMON STOCKS
(Cost $81,290,709) $108,295,274
------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 13.4%
Repurchase Agreement - 8.9%
$10,600,000 UBS Warburg, Inc., 0.73%, Dated 12/30/03,
repurchase price of $10,600,000 plus accrued
interest on 1/2/04 collateralized by $10,758,000
U.S. Treasury Bill, 1.750%, 12/31/04. $ 10,600,000
------------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Security Lending Collateral - 4.5%
5,278,548 Securities Lending Investment Fund, 1.02% $ 5,278,548
------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $15,878,548) $ 15,878,548
------------
TOTAL INVESTMENT IN SECURITIES - 104.8%
(Cost $97,169,257)(a)(b) $124,173,822
------------
OTHER ASSETS AND LIABILITIES - (4.8)% $ (5,723,156)
------------
TOTAL NET ASSETS - 100.0% $118,450,666
============
* Non-income producing security.
(a) At December 31, 2003, the net unrealized gain on investments based on cost for federal
income tax purposes of $98,160,176 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $26,807,612
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (793,966)
-----------
Net unrealized gain $26,013,646
-----------
(b) At December 31, 2003, the Fund had a net capital loss carryforward of $3,258,674 which
will expire between 2007 and 2008 if not utilized.
$3,120,189 in 2007
$138,485 in 2008
Purchases and sales of securities (excluding temporary cash investments) for the year
ended December 31, 2003 aggregated $37,868,836 and $34,155,853, respectively.
The accompanying notes are an integral part of these financial statements. 13
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 12/31/03
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities
loaned of $5,124,615) (cost $97,169,257) $124,173,822
Cash 47,075
Receivables -
Fund shares sold 124,021
Dividends and interest 714,964
Other 2,612
------------
Total assets $125,062,494
------------
LIABILITIES:
Payables -
Investment securities purchased $ 931,195
Fund shares repurchased 149,777
Upon return of securities loaned 5,278,548
Due to affiliates 184,183
Accrued expenses 68,125
------------
Total liabilities $ 6,611,828
------------
NET ASSETS:
Paid-in capital $ 95,451,916
Accumulated undistributed net investment income 243,778
Accumulated net realized loss on investments (4,249,593)
Net unrealized gain on investments 27,004,565
------------
Total net assets $118,450,666
============
NET ASSET VALUE PER SHARES:
(Unlimited number of shares authorized)
Class A (based on $61,455,344/3,142,924 shares) $ 19.55
============
Class B (based on $37,325,407/1,924,465 shares) $ 19.40
============
Class C (based on $14,686,405/756,070 shares) $ 19.42
============
Class Y (based on $4,983,510/255,200 shares) $ 19.53
============
MAXIMUM OFFERING PRICE:
Class A ($19.55 [divided by] 94.25%) $ 20.74
============
Class C ($19.42 [divided by] 99.00%) $ 19.62
============
14 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 12/31/03
INVESTMENT INCOME:
Dividends $5,141,998
Interest 35,777
Income from securities loaned, net 3,272
----------
Total investment income $ 5,181,047
-----------
EXPENSES:
Management fees $ 754,252
Transfer agent fees
Class A 191,589
Class B 137,625
Class C 34,920
Class Y 382
Distribution fees
Class A 124,630
Class B 301,627
Class C 100,669
Administrative fees 37,500
Custodian fees 20,384
Registration fees 83,019
Professional fees 32,935
Printing 32,105
Fees and expenses of nonaffiliated trustees 9,064
Miscellaneous 15,203
----------
Total expenses $ 1,875,904
Less fees paid indirectly (3,392)
-----------
Net expenses $ 1,872,512
-----------
Net investment income $ 3,308,535
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 2,065,947
Change in net unrealized gain on investments 21,707,312
-----------
Net gain on investments $23,773,259
-----------
Net increase in net assets resulting from operations $27,081,794
===========
The accompanying notes are an integral part of these financial statements. 15
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 12/31/03 and 12/31/02
Year Ended Year Ended
12/31/03 12/31/02
FROM OPERATIONS:
Net investment income $ 3,308,535 $ 2,965,893
Net realized gain on investments 2,065,947 3,534,194
Change in net unrealized gain (loss) on investments 21,707,312 (6,269,519)
------------- -------------
Net increase in net assets resulting from
operations $ 27,081,794 $ 230,568
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.73 and $0.65 per share, respectively) $ (2,136,644) $ (1,850,041)
Class B ($0.58 and $0.53 per share, respectively) (1,045,629) (1,102,867)
Class C ($0.61 and $0.52 per share, respectively) (381,771) (276,969)
Class Y ($0.83 and $0.74 per share, respectively) (204,310) (147,486)
------------- -------------
Total distributions to shareowners $ (3,768,354) $ (3,377,363)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 51,343,766 $ 56,130,051
Reinvestment of distributions 3,219,823 2,856,732
Cost of shares repurchased (43,551,199) (50,162,172)
------------- -------------
Net increase in net assets resulting from
fund share transactions $ 11,012,390 $ 8,824,611
------------- -------------
Net increase in net assets $ 34,325,830 $ 5,677,816
NET ASSETS:
Beginning of year 84,124,836 78,447,020
------------- -------------
End of year (including accumulated undistributed net
investment income of $243,778 and $190,574,
respectively) $ 118,450,666 $ 84,124,836
============= =============
16 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
For the Years Ended 12/31/03 and 12/31/02
'03 Shares '03 Amount '02 Shares '02 Amount
CLASS A
Shares sold 1,558,174 $26,765,266 1,589,375 $25,219,955
Reinvestment of distributions 111,803 1,941,045 104,380 1,655,498
Less shares repurchased (1,462,481) (24,457,271) (1,311,752) (20,085,837)
---------- ----------- ---------- -----------
Net increase 207,496 $ 4,249,040 382,003 $ 6,789,616
========== =========== ========== ===========
CLASS B
Shares sold 832,016 $14,474,777 1,262,820 $20,177,940
Reinvestment of distributions 47,633 822,408 53,916 851,204
Less shares repurchased (808,671) (13,512,675) (1,475,871) (22,257,992)
---------- ----------- ---------- -----------
Net increase (decrease) 70,978 $ 1,784,510 (159,135) $(1,228,848)
========== =========== ========== ===========
CLASS C
Shares sold 559,503 $ 9,703,420 573,021 $ 9,117,393
Reinvestment of distributions 16,894 296,428 14,085 222,382
Less shares repurchased (309,049) (5,275,979) (500,057) (7,470,836)
---------- ----------- ---------- -----------
Net increase 267,348 $ 4,723,869 87,049 $ 1,868,939
========== =========== ========== ===========
CLASS Y
Shares sold 23,449 $ 400,303 102,295 $ 1,614,763
Reinvestment of distributions 9,254 159,942 8,068 127,648
Less shares repurchased (17,963) (305,274) (23,013) (347,507)
---------- ----------- ---------- -----------
Net increase 14,740 $ 254,971 87,350 $ 1,394,904
========== =========== ========== ===========
The accompanying notes are an integral part of these financial statements. 17
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS A 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 15.30 $ 15.38 $ 15.04 $ 12.18 $ 13.46
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.65 $ 0.57 $ 0.38 $ 0.64 $ 0.65
Net realized and unrealized gain (loss) on investments 4.33 0.00(a) 0.70 2.86 (1.28)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 4.98 $ 0.57 $ 1.08 $ 3.50 $ (0.63)
Distributions to shareowners:
Net investment income (0.73) (0.65) (0.74) (0.50) (0.60)
Tax return of capital - - - (0.14) (0.05)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.25 $ (0.08) $ 0.34 $ 2.86 $ (1.28)
------- ------- ------- ------- -------
Net asset value, end of period $ 19.55 $ 15.30 $ 15.38 $ 15.04 $ 12.18
======= ======= ======= ======= =======
Total return* 33.27% 3.58% 7.47% 29.31% (4.70)%
Ratio of net expenses to average net assets+ 1.68% 1.67% 1.58% 1.65% 1.69%
Ratio of net investment income to average net assets+ 3.81% 3.70% 4.31% 4.56% 4.45%
Portfolio turnover rate 36% 39% 37% 25% 39%
Net assets, end of period (in thousands) $61,455 $44,904 $39,263 $43,129 $40,113
Ratios with reductions for fees paid indirectly:
Net expenses 1.68% 1.67% 1.58% 1.65% 1.83%
Net investment income 3.81% 3.70% 4.31% 4.56% 4.31%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 1.68% 1.67% 1.57% 1.63% 1.67%
Net investment income 3.81% 3.70% 4.32% 4.58% 4.47%
(a) 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
18
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS B 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 15.17 $ 15.25 $ 14.94 $ 12.11 $ 13.38
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.51 $ 0.43 $ 0.54 $ 0.52 $ 0.52
Net realized and unrealized gain (loss) on investments 4.30 0.02 0.39 2.87 (1.25)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 4.81 $ 0.45 $ 0.93 $ 3.39 $ (0.73)
Distributions to shareowners:
Net investment income (0.58) (0.53) (0.62) (0.43) (0.49)
Tax return of capital - - - (0.13) (0.05)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.23 $ (0.08) $ 0.31 $ 2.83 $ (1.27)
------- ------- ------- ------- -------
Net asset value, end of period $ 19.40 $ 15.17 $ 15.25 $ 14.94 $ 12.11
======= ======= ======= ======= =======
Total return* 32.30% 2.84% 6.42% 28.50% (5.45)%
Ratio of net expenses to average net assets+ 2.50% 2.40% 2.36% 2.39% 2.45%
Ratio of net investment income to average net assets+ 2.98% 2.90% 3.50% 3.82% 3.75%
Portfolio turnover rate 36% 39% 37% 25% 39%
Net assets, end of period (in thousands) $37,325 $28,121 $30,699 $35,848 $33,069
Ratios with reduction for fees paid indirectly:
Net expenses 2.50% 2.40% 2.36% 2.39% 2.59%
Net investment income 2.98% 2.90% 3.50% 3.82% 3.61%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.50% 2.40% 2.36% 2.38% 2.44%
Net investment income 2.98% 2.90% 3.50% 3.83% 3.76%
* 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
19
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS C 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 15.20 $ 15.28 $ 14.96 $ 12.12 $ 13.37
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.52 $ 0.44 $ 0.55 $ 0.51 $ 0.52
Net realized and unrealized gain (loss) on investments 4.31 0.00(a) 0.41 2.87 (1.24)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 4.83 $ 0.44 $ 0.96 $ 3.38 $ (0.72)
Distributions to shareowners:
Net investment income (0.61) (0.52) (0.64) (0.42) (0.48)
Tax return of capital - - - (0.12) (0.05)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.22 $ (0.08) $ 0.32 $ 2.84 $ (1.25)
------- ------- ------- ------- -------
Net asset value, end of period $ 19.42 $ 15.20 $ 15.28 $ 14.96 $ 12.12
======= ======= ======= ======= =======
Total return* 32.35% 2.79% 6.63% 28.42% (5.41)%
Ratio of net expenses to average net assets+ 2.39% 2.46% 2.28% 2.40% 2.52%
Ratio of net investment income to average net assets+ 3.20% 2.95% 3.57% 3.78% 3.63%
Portfolio turnover rate 36% 39% 37% 25% 39%
Net assets, end of period (in thousands) $14,686 $ 7,429 $ 6,136 $ 6,276 $ 6,566
Ratios with reduction for fees paid indirectly:
Net expenses 2.39% 2.46% 2.28% 2.40% 2.66%
Net investment income 3.20% 2.95% 3.57% 3.78% 3.49%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.39% 2.46% 2.27% 2.38% 2.51%
Net investment income 3.20% 2.95% 3.58% 3.80% 3.64%
(a) 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
20
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended
CLASS Y 12/31/03 12/31/02 12/31/01 12/31/00 12/31/99
Net asset value, beginning of period $ 15.27 $ 15.35 $ 15.01 $ 12.16 $ 13.46
------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.76 $ 0.66 $ 0.63 $ 0.72 $ 0.70
Net realized and unrealized gain (loss) on investments 4.33 0.00(a) 0.52 2.84 (1.25)
------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 5.09 $ 0.66 $ 1.15 $ 3.56 $ (0.55)
Distributions to shareowners:
Net investment income (0.83) (0.74) (0.81) (0.55) (0.70)
Tax return of capital - - - (0.16) (0.05)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.26 $ (0.08) $ 0.34 $ 2.85 $ (1.30)
------- ------- ------- ------- -------
Net asset value, end of period $ 19.53 $ 15.27 $ 15.35 $ 15.01 $ 12.16
======= ======= ======= ======= =======
Total return* 34.16% 4.21% 8.00% 29.99% (4.10)%
Ratio of net expenses to average net assets+ 1.05% 1.10% 1.12% 1.02% 1.10%
Ratio of net investment income to average net assets+ 4.47% 4.39% 4.36% 5.16% 5.14%
Portfolio turnover rate 36% 39% 37% 25% 39%
Net assets, end of period (in thousands) $ 4,984 $ 3,671 $ 2,349 $ 1,196 $ 907
Ratios with reduction for fees paid indirectly:
Net expenses 1.05% 1.10% 1.12% 1.02% 1.24%
Net investment income 4.47% 4.39% 4.36% 5.16% 5.00%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 1.05% 1.10% 1.11% 1.02% 1.10%
Net investment income 4.47% 4.39% 4.37% 5.16% 5.14%
(a) 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.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
21
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/03
- --------------------------------------------------------------------------------
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 non-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
accounting principles generally accepted in the United States of America 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 period. Actual results could differ from
those estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded on trade date. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. 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
22
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Board of Trustees. 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
amortized cost.
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 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.
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 distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The amount and characterization of distributions to shareowners for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source 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
23
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/03 (continued)
- --------------------------------------------------------------------------------
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 tax character of distributions paid during the years ended December 31,
2003 and 2002 were as follows:
- --------------------------------------------------------
2003 2002
---------- ----------
Distributions paid from:
Ordinary income* $3,768,354 $3,377,363
Long-term capital gain - -
---------- ----------
$3,768,354 $3,377,363
========== ==========
Return of capital - -
---------- ----------
Total $3,768,354 $3,377,363
========== ==========
- --------------------------------------------------------
* Included in the Fund's distributions from 2003 and 2002 ordinary income are
$1,536,017 and $993,124, respectively, in excess of investment company
taxable income, which, in accordance with applicable U.S. tax law, is taxable
to shareowners as ordinary income distributions.
The following shows components of distributable earnings on a federal income
tax basis at December 31, 2003.
- --------------------------------------------------------
2003
-----------
Undistributed ordinary income $ -
Capital Loss Carryforward (3,258,674)
Unrealized appreciation 26,013,646
-----------
Total $22,754,972
-----------
- --------------------------------------------------------
The difference between book basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
24
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At December 31, 2003 the Fund has reclassified $513,023 to increase
accumulated undistributed net investment income, $985,414 to decrease
accumulated realized loss on investments and $1,498,437 to decrease paid in
capital. The reclassification has no impact on the net assets of the Fund and
presents the Fund's capital accounts on a tax basis.
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 $24,663 in underwriting commissions on the sale of Fund
shares during the year ended December 31, 2003.
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.
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.
F. 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
25
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 12/31/03 (continued)
- --------------------------------------------------------------------------------
in the form of negotiated lenders' fees. The Fund also continues to receive
interest or 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 managed by Brown Brothers Harriman & Co., the Fund's
custodian.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the annual rate of
0.80% of the Fund's average daily net assets.
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 December 31, 2003, $91,971 was payable to
PIM related to management fees, administration fees 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 $29,093 in transfer agent
fees payable to PIMSS at December 31, 2003.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of 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
26
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 $63,119
in distribution fees payable to PFD at December 31, 2003.
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 one year of purchase. Class B shares that are redeemed within six 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, 2003,
CDSCs in the amount of $49,609 were paid to PFD.
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, 2003, the Fund's expenses
were reduced by $3,392 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 $50 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 $50 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, 2003, the Fund had no borrowings under this agreement.
27
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareowners of
Pioneer Real Estate Shares:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Pioneer Real Estate Shares (the "Fund") as of
December 31, 2003, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for each of the two 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. The financial highlights for each of
the three years in the period ended December 31, 2001 were audited by other
auditors who have ceased operations and whose report, dated February 15, 2002,
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 2003, by correspondence
with the custodian and brokers or by other appropriate auditing procedures
where replies from brokers were not received. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Real Estate Shares at December 31, 2003, the results of its operations
for the year then ended, the changes in its net assets and the financial
highlights for each of the two years in the period then ended, in conformity
with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 17, 2004
28
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Auditors
Ernst & Young LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Trustees and Officers
The Fund's Board of Trustees provides broad supervision over the Fund's
affairs. The officers of the Fund are responsible for the Fund's operations.
The Fund's 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 Investment Company Act of 1940
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
serves as a trustee of each of the 51 U.S. registered investment portfolios for
which Pioneer Investment Management, Inc. ("Pioneer") serves as investment
adviser (the "Pioneer Funds"). The address for all Interested 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). This
information is also available at pioneerfunds.com.
29
- ------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------
Name and Age Positions Held With the Fund Term of Office and Length of Service
John F. Cogan, Jr. (77)* Chairman of the Board, Since 1995.
Trustee and President Serves until a successor trustee is
elected or earlier retirement or removal.
*Mr. Cogan is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------
Osbert M. Hood (51)** Trustee and Since June, 2003.
Executive Vice President Serves until a successor trustee is
elected or earlier retirement or removal.
**Mr. Hood is an Interested Trustee because he is an officer or director of
Pioneer and certain of its affiliates.
- ------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Fund Term of Office and Length of Service
Mary K. Bush (55) Trustee Since 1995.
3509 Woodbine Street, Serves until a successor trustee is
Chevy Chase, MD 20815 elected or earlier retirement or removal.
- ------------------------------------------------------------------------------------------------------------------
Richard H. Egdahl, M.D. (79) Trustee Since 1995.
Boston University Healthcare Serves until a successor trustee is
Entrepreneurship Program, elected or earlier retirement or removal.
53 Bay State Road,
Boston, MA 02215
- ------------------------------------------------------------------------------------------------------------------
30
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
Deputy Chairman and a Director of Pioneer Global Director of Harbor Global Company,
Asset Management S.p.A. ("PGAM"); Non-Executive Ltd.
Chairman and a Director of Pioneer Investment
Management USA Inc. ("PIM-USA"); Chairman and a
Director of Pioneer; Director of Pioneer Alternative
Investment Management Limited (Dublin); President
and a Director of Pioneer Alternative Investment
Management (Bermuda) Limited and affiliated funds;
President and Director of Pioneer Funds Distributor, Inc.
("PFD"); President of all of the Pioneer Funds; and Of
Counsel (since 2000, partner prior to 2000), Hale and
Dorr LLP (counsel to PIM-USA and the Pioneer Funds)
- ------------------------------------------------------------------------------------------------------------------
President and Chief Executive Officer, PIM-USA since None
May, 2003 (Director since January, 2001); President
and Director of Pioneer since May, 2003; Chairman
and Director of Pioneer Investment Management
Shareholder Services, Inc. ("PIMSS") since May, 2003;
Executive Vice President of all of the Pioneer Funds
since June, 2003; Executive Vice President and Chief
Operating Officer of PIM-USA, November 2000 to May
2003; Executive Vice President, Chief Financial Officer
and Treasurer, John Hancock Advisers, L.L.C., Boston,
MA, November 1999 to November 2000; Senior Vice
President and Chief Financial Officer, John Hancock
Advisers, L.L.C., April 1997 to November 1999
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this Trustee
President, Bush International (international financial Director of Brady Corporation
advisory firm) (industrial identification and
specialty coated material products
manufacturer), Millennium
Chemicals, Inc. (commodity
chemicals), Mortgage Guaranty
Insurance Corporation, and R.J.
Reynolds Tobacco Holdings, Inc.
(tobacco)
- ------------------------------------------------------------------------------------------------------------------
Alexander Graham Bell Professor of Health Care None
Entrepreneurship, Boston University; Professor of
Management, Boston University School of Management;
Professor of Public Health, Boston University School of
Public Health; Professor of Surgery, Boston University
School of Medicine; and University Professor, Boston
University
- ------------------------------------------------------------------------------------------------------------------
31
- ------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------
Name, Age and Address Positions Held With the Fund Term of Office and Length of Service
Margaret B.W. Graham (56) Trustee Since 1995.
1001 Sherbrooke Street West, Serves until a successor trustee is
Montreal, Quebec, Canada elected or earlier retirement or removal.
H3A 1G5
- ------------------------------------------------------------------------------------------------------------------
Marguerite A. Piret (55) Trustee Since 1995.
One Boston Place, 28th Floor, Serves until a successor trustee is
Boston, MA 02108 elected or earlier retirement or removal.
- ------------------------------------------------------------------------------------------------------------------
Stephen K. West (75) Trustee Since 1995.
125 Broad Street, Serves until a successor trustee is
New York, NY 10004 elected or earlier retirement or removal.
- ------------------------------------------------------------------------------------------------------------------
John Winthrop (67) Trustee Since 1995.
One North Adgers Wharf, Serves until a successor trustee is
Charleston, SC 29401 elected or earlier retirement or removal.
- ------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------
Name and Age Positions Held With the Fund Term of Office and Length of Service
Dorothy E. Bourassa (56) Secretary Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (39) Assistant Secretary Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
David C. Phelan (46) Assistant Secretary Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
Vincent Nave (58) Treasurer Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
Luis I. Presutti (38) Assistant Treasurer Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
32
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this
Trustee
Founding Director, The Winthrop Group, Inc. (consulting None
firm); Professor of Management, Faculty of Management,
McGill University
- ------------------------------------------------------------------------------------------------------------------
President and Chief Executive Officer, Newbury, Piret & None
Company, Inc. (investment banking firm)
- ------------------------------------------------------------------------------------------------------------------
Senior Counsel, Sullivan & Cromwell (law firm) Director, The Swiss Helvetia
Fund, Inc. (closed-end investment
company) and AMVESCAP PLC
(investment managers)
- ------------------------------------------------------------------------------------------------------------------
President, John Winthrop & Co., Inc. None
(private investment firm)
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this
Officer
Secretary of PIM-USA; Senior Vice President-Legal of None
Pioneer; and Secretary/Clerk of most of PIM-USA's
subsidiaries since October 2000; Secretary of all of the
Pioneer Funds since September 2003 (Assistant Secretary
from November 2000 to September 2003); and Senior
Counsel, Assistant Vice President and Director of
Compliance of PIM-USA from April 1998 through October
2000
- ------------------------------------------------------------------------------------------------------------------
Assistant Vice President and Senior Counsel of Pioneer None
since July 2002; Vice President and Senior Counsel of
BISYS Fund Services, Inc. (April 2001 to June 2002);
Senior Vice President and Deputy General Counsel of
Funds Distributor, Inc. (July 2000 to April 2001; Vice
President and Associate General Counsel from July 1996
to July 2000); Assistant Secretary of all of the Pioneer
Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------
Partner, Hale and Dorr LLP; Assistant Secretary of all of None
Pioneer Funds since September 2003
- ------------------------------------------------------------------------------------------------------------------
Vice President-Fund Accounting, Administration and Custody None
Services of Pioneer (Manager from September 1996 to
February 1999); and Treasurer of all of the Pioneer Funds
(Assistant Treasurer from June 1999 to November 2000)
- ------------------------------------------------------------------------------------------------------------------
Assistant Vice President-Fund Accounting, Administration None
and Custody Services of Pioneer (Fund Accounting Manager
from 1994 to 1999); and Assistant Treasurer of all of the
Pioneer Funds since November 2000
- ------------------------------------------------------------------------------------------------------------------
33
- ------------------------------------------------------------------------------------------------------------------
FUND OFFICERS
- ------------------------------------------------------------------------------------------------------------------
Name and Age Positions Held With the Fund Term of Office and Length of Service
Gary Sullivan (45) Assistant Treasurer Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
Katherine Kim Sullivan (30) Assistant Treasurer Serves at the discretion of board.
- ------------------------------------------------------------------------------------------------------------------
34
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years Other Directorships Held by this
Officer
Fund Accounting Manager-Fund Accounting, Administration None
and Custody Services of Pioneer; and Assistant Treasurer of
all of the Pioneer Funds since May 2002
- ------------------------------------------------------------------------------------------------------------------
Fund Administration Manager-Fund Accounting, None
Administration and Custody Services since June 2003;
Assistant Vice President-Mutual Fund Operations of
State Street Corporation from June 2002 to June 2003
(formerly Deutsche Bank Asset Management); Pioneer
Fund Accounting, Administration and Custody Services
(Fund Accounting Manager from August 1999 to May 2002,
Fund Accounting Supervisor from 1997 to July 1999);
Assistant Treasurer of all of the Pioneer Funds since
September 2003
- ------------------------------------------------------------------------------------------------------------------
35
- --------------------------------------------------------------------------------
RETIREMENT PLANS FROM PIONEER
- --------------------------------------------------------------------------------
Pioneer has a long history of helping people work toward their retirement
goals, offering plans suited to the individual investor and businesses of all
sizes. For more information on Pioneer retirement plans, contact your
investment professional, or call Pioneer at 1-800-622-0176.
Individual Retirement Accounts (IRAs)
Traditional IRA*
For anyone under age 70-1/2 earning income. Individuals can contribute up to
$3,000 annually. Earnings are tax-deferred, and contributions may be
tax-deductible.
Roth IRA*
Available to single individuals earning less than $110,000 in income annually,
and married couples with joint income less than $160,000. Contributions of up
to $3,000 a year are not tax-deductible, but all earnings are tax-free for
qualified withdrawals. Distributions are tax and penalty-free if certain
conditions are met.
Employer-Sponsored Plans
Uni-K Plan*
A 401(k) plan designed specifically for any business that employs only owners
and their spouses. Participants can make salary deferral contributions up to
$11,000 per year. In addition, each year the business may contribute up to 25%
of pay.
401(k) Plan*
Allows employees to make pre-tax contributions through payroll deduction, up to
$11,000 per year. Employers' contributions are discretionary. The 401(k) offers
companies maximum flexibility.
SIMPLE IRA Plan*
The Savings Incentive Match PLan for Employees (SIMPLE) is designed for
employers with 100 or fewer eligible employees. Employees can decide whether to
contribute. Employers must contribute.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
* Special Catch-Up Provisions are available to individuals age 50 and older to
contribute additional amounts to their retirement accounts. For more
information, call our Retirement Plans Information line at 1-800-622-0176.
36
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
403(b) Plan*
Also known as a Tax-Sheltered Account (TSA), this plan lets employees of public
schools, non-profit hospitals and other tax-exempt organizations make pre-tax
contributions through payroll deduction.
SEP-IRA
The Simplified Employee Pension (SEP) plan lets self-employed people and
small-business owners make tax-deductible contributions of up to 25% of income,
while maintaining complete contribution flexibility each year.
Profit Sharing Plan
Companies can decide each year whether - and how much - to contribute to
participants, up to 25% of each participant's pay. Can include vesting
schedules that are not available with a SEP-IRA.
Age-Based Profit Sharing Plan
Employer contributions are flexible, but are based on a formula using age and
salary. Each year, a business can contribute up to 25% of the total eligible
payroll.
Money Purchase Pension Plan (MPP)
Allows employer contributions, up to 25% of pay annually. Companies must
contribute a fixed percentage of pay each year.
Defined Benefit Pension Plan
Requires a business to contribute enough each year to fund a specific future
benefit. Most beneficial to older employees who need to accumulate assets
rapidly.
Most retirement plan withdrawals must meet specific conditions to avoid
penalties.
* Special Catch-Up Provisions are available to individuals age 50 and older to
contribute additional amounts to their retirement accounts. For more
information, call our Retirement Plans Information line at 1-800-622-0176.
37
- --------------------------------------------------------------------------------
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@pioneerinvest.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current
Fund prospectus.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
www.pioneerfunds.com
14702-00-0204
(C) 2004 Pioneer Funds Distributor, Inc.
Underwriter of Pioneer mutual funds, Member SIPC
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.
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 Pioneer Real Estate
Shares Fund, including fees associated with the annual filings
of its Form N-1A, totaled approximately $22,200 in 2003 and
approximately $23,650 in 2002.
(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 and Other Fees
There were no other services provided to the Fund during the
fiscal years ended December 31, 2002 and 2003.
(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, and
tax advice services totaled approximately $48,200 and $3,750
for 2003 and 2002, respectively. Additionally, there were fees
for tax compliance services in 2002 that totaled approximately
$4,100 for the 2001 tax returns.
(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.
Audit-Related Fees and Other Fees
There were no other services provided to the Fund during the
fiscal years ended December 31, 2002 and 2003.
(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 recognizes 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 recognizes 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.
N/A
(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.
Aggregate Non-Audit Fees
The aggregate non-audit fees for the Fund and affiliates as
previously defined, totaled approximately $71,500 in 2003
and $7,850 in 2002. These fees include services provided prior to
May 6, 2003, the effective date of the pre-approval process.
(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.
ITEMS 5-6. [RESERVED]
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. [RESERVED]
ITEM 9. 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 certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation of
these controls and procedures as of a date within 90 days prior to 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 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.
ITEM 10. 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.
Filed herewith.
(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 March 05, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date March 05, 2004
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date March 05, 2004
* Print the name and title of each signing officer under his or her signature.