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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07379
Pioneer Real Estate Fund
(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, 2005 through June 30, 2005
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
Semiannual
Report
6/30/05
[LOGO] PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 1
Portfolio Summary 2
Prices and Distributions 3
Performance Update 4
Comparing Ongoing Fund Expenses 8
Portfolio Management Discussion 10
Schedule of Investments 13
Financial Statements 16
Notes to Financial Statements 24
Factors Considered by the Independent Trustees in Approving
the Management Contract 31
Trustees, Officers and Service Providers 36
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
LETTER TO SHAREOWNERS 6/30/05
- --------------------------------------------------------------------------------
Dear Shareowner,
- --------------------------------------------------------------------------------
The U.S. economy has expanded at an annualized rate of at least three percent
for eight straight quarters, a feat it last achieved in the 1980s. Job
conditions are strengthening as well: by mid-year, the unemployment rate had
fallen to 5.0% for the first time since September 11, 2001. Retail sales trends
- - apart from automobiles - were upbeat as sunnier employment prospects sent
consumers to the malls. And with the economy expanding, corporate profits have
been moving ahead smartly.
But equity investors were unconvinced by this evidence and instead brooded
about the possibility of slowing growth later in the year. For one thing,
expectations were for a moderating pace of profit growth. For another, the
Federal Reserve Board has raised short-term interest rates nine times. And some
areas of the economy are feeling the impact of record high energy prices. So
investors were lukewarm toward stocks, with modest losses in the S&P 500 Stock
Index and the Dow Jones Industrials the result. The technology-heavy NASDAQ
Composite also slid, as did small-company stocks, as measured by the Russell
2000 Index. Value stocks, viewed as less vulnerable to declines in a less
robust economy, held up better than growth.
Corporate bonds felt the sting of ratings downgrades in the automobile sector.
Treasury issues fared better, as yields fell and prices rose among intermediate
and longer-term issues, which were little affected by rising short-term rates.
Low long-term yields may signal investor confidence that the Fed will succeed
in dousing inflationary fires; they also brought more affordable mortgages,
further boosting home construction. Municipal revenue bonds edged upward as
healthier economic conditions bolstered tax collections.
The dollar's rebound positively affected foreign markets. Europe's stock
markets performed better than business and political conditions might suggest,
and Japan's market inched higher.
Pioneer's analysts believe that, although the rate of growth may slow,
carefully selected, good quality stocks and bonds have the potential to deliver
solid results. Our global investment experts are well positioned to discover
what we believe are attractive opportunities in the world's markets.
Large or small? Bonds or stocks? Domestic or international?
Just what your mix of investments should be isn't a question to be taken
lightly. Much of your long-term return will depend on the kinds of investments
you own, not just the individual items in your portfolio. For an analysis of
your holdings and some ideas to help bring your investments in line with your
aspirations, talk to your financial professional.
Please consider a fund's investment objective, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about each fund and should be read carefully before you invest or send money.
To obtain a prospectus and for other information on any Pioneer fund, contact
your financial advisor, call 1-800-225-6292 or visit our web site at
www.pioneerfunds.com.
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
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PORTFOLIO SUMMARY 6/30/05
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 84.5%
Temporary Cash Investments 15.5%
Sector Diversification
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(As a percentage of equity holdings)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Office 18.8%
Apartment 18.0%
Regional Mall 13.9%
Shopping Center 12.0%
Industrial 11.6%
Hotel 9.6%
Diversified 7.4%
Storage 4.0%
Cash & Cash Equivalents 2.1%
Triple-Net 1.8%
Manufactured Homes 0.4%
Health Care 0.4%
10 Largest Holdings
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(As a percentage of equity holdings)
1. Simon DeBartolo Group, Inc. 7.32%
2. Boston Properties, Inc. 5.42
3. AvalonBay Communities, Inc. 4.87
4. Equity Residential Property Trust 4.19
5. Catellus Development Corp. 3.97
6. Archstone Communities Trust 3.93
7. Brookfield Properties Corp. 3.73
8. Liberty Property Trust 3.69
9. ProLogis Trust 3.31
10. Host Marriott Corp. 3.25
This list excludes temporary cash investments and derivative instruments.
Portfolio holdings will vary for other periods.
2
Pioneer Real Estate Shares
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 6/30/05 12/31/04
----- ------- --------
A $25.81 $24.52
B $25.59 $24.32
C $25.63 $24.35
Y $25.77 $24.49
Distributions Per Share
- --------------------------------------------------------------------------------
1/1/05 - 6/30/05
------------------------------------------------
Net
Investment Short-Term Long-Term
Class Income Capital Gains Capital Gains
----- ---------- ------------- -------------
A $0.29 $ - $ -
B $0.18 $ - $ -
C $0.19 $ - $ -
Y $0.35 $ - $ -
3
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/05 CLASS A SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares at public offering price,
compared to that of the Wilshire Real Estate Securities Index.
- ----------------------------------------
Average Annual Total Returns
(As of June 30, 2005)
Public
Net Asset Offering
Period Value (NAV) Price (POP)
10 Years 14.07% 13.39%
5 Years 19.26 17.86
1 Year 34.50 26.75
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[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
6/95 $9,425 $10,000
$10,707 $11,845
6/97 $14,632 $15,818
$15,562 $16,846
6/99 $13,993 $15,687
$14,570 $16,386
6/01 $17,442 $20,410
$19,894 $23,219
6/03 $20,399 $23,905
$26,132 $30,882
6/05 $35,148 $41,593
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
NAV results represent the percent change in net asset value per share. Returns
would have been lower had sales charges been reflected. POP returns reflect
deduction of maximum 5.75% sales charge. All results are historical and assume
the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
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.
4
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/05 CLASS B SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000 invest
ment made in Pioneer Real Estate Shares, compared to that of the Wilshire Real
Estate Securities Index.
- ------------------------------------------
Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
Life-of-Class
1/31/1996 13.13% 13.13%
5 Years 18.30 18.30
1 Year 33.37 29.37
- ------------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
1/96 $10,000 $10,000
$10,427 $10,768
6/97 $14,156 $14,381
$14,945 $15,315
6/99 $13,329 $14,261
$13,786 $14,897
6/01 $16,371 $18,555
$18,522 $21,109
6/03 $18,845 $21,733
$23,947 $28,076
6/05 $31,938 $37,813
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
"If Held" results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. "If redeemed"
returns reflect the deduction of applicable contingent deferred sales charge
(CDSC). Effective December 1, 2004, the period during which a CDSC is applied to
withdrawals was shortened to 5 years. The maximum CDSC for class B shares
continues to be 4%. For more complete information, please see the prospectus for
details. Note: Shares purchased prior to December 1, 2004 remain subject to the
CDSC in effect at the time you purchased those shares. For performance
information for shares purchased prior to December 1, 2004, please visit
www.pioneerfunds.com/bshares.
All results are historical and assume the reinvestment of dividends and capital
gains. Other share classes are available for which performance and expenses will
differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The 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 an Index.
5
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/05 CLASS C SHARES
- --------------------------------------------------------------------------------
Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Wilshire
Real Estate Securities Index.
- ----------------------------------------
Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
Life-of-Class
1/31/1996 13.16% 13.16%
5 Years 18.34 18.34
1 Year 33.49 33.49
- ----------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
1/96 $10,000 $10,000
$10,418 $10,768
6/97 $14,150 $14,381
$14,941 $15,315
6/99 $13,312 $14,261
$13,794 $14,897
6/01 $16,369 $18,555
$18,530 $21,109
6/03 $18,867 $21,733
$23,985 $28,076
6/05 $32,017 $37,813
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Class C shares held for less than one year are also subject to a 1% contingent
deferred sales charge (CDSC). The performance of Class C shares does not reflect
the 1% front-end sales charge in effect prior to February 1, 2004. If you paid a
1% sales charge, your returns would be lower than those shown above. "If Held"
results represent the percent change in net asset value per share. Returns would
have been lower had sales charges been reflected. All results are historical and
assume the reinvestment of dividends and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
The 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 an Index.
6
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/05 CLASS Y SHARES
- --------------------------------------------------------------------------------
Investment Returns
- --------------------------------------------------------------------------------
The mountain chart on the right shows the change in value of a $10,000 invest
ment made in Pioneer Real Estate Shares, compared to that of the Wilshire Real
Estate Securities Index.
- --------------------------------------
Average Annual Total Returns
(As of June 30, 2005)
If If
Period Held Redeemed
10 Years 14.57% 14.57%
5 Years 19.90 19.90
1 Year 35.17 35.17
- --------------------------------------
[THE DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED MATERIAL]
Value of $10,000 Investment
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
6/95 $10,000 $10,000
$11,360 $11,845
6/97 $15,525 $15,818
$16,523 $16,846
6/99 $14,997 $15,687
$15,730 $16,386
6/01 $18,922 $20,410
$21,686 $23,219
6/03 $22,380 $23,905
$28,834 $30,882
6/05 $38,976 $41,593
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent month-end
performance results. Current performance may be lower or higher than the
performance data quoted.
The performance data quoted represents past performance, which is no guarantee
of future results. Investment return and principal value will fluctuate, and
shares, when redeemed, may be worth more or less than their original cost.
Performance for periods prior to the inception of Class Y shares reflects the
NAV performance of the Fund's Class A shares. The performance does not reflect
differences in expenses, including the Rule 12b-1 fees applicable to Class A
shares. Since fees for Class A shares are generally higher than those of Class Y
shares, the performance shown for Y shares prior to their inception would have
been higher. Class A shares are used as a proxy through 4/9/98. Class Y shares
are not subject to sales charges and are available for limited groups of
eligible investors, including institutional investors. All results are
historical and assume the reinvestment of dividends, and capital gains. Other
share classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during the
periods shown. Without such waivers Fund performance would be lower. Waivers may
not be in effect for all funds. Certain fee waivers are contractual through a
specified period. Otherwise, fee waivers can be rescinded at any time. See the
prospectus and financial statements for more information.
The performance table and graph do not reflect the deduction of fees and taxes
that a shareowner would pay on Fund distributions or the redemption of Fund
shares.
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 an Index.
7
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
COMPARING ONGOING FUND EXPENSES
- --------------------------------------------------------------------------------
As a shareowner in the Fund, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service
(12b-1) fees, and other Fund expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The example is based on an investment
of $1,000 at the beginning of the Fund's latest six-month period and held
throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and
actual expenses. You may use the information in this table, together with the
amount you invested, to estimate the expenses that you paid over the period as
follows:
1. Divide your account value by $1,000
Example: an $8,600 account value [divided by] $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class's number
in the third row under the heading entitled "Expenses Paid During Period"
to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares
Based on actual returns from January 1, 2005 through June 30, 2005
Share Class A B C Y
- --------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/05
Ending Account Value $1,065.30 $1,060.20 $1,060.90 $1,067.60
On 6/30/05
Expenses Paid During Period* $ 7.63 $ 12.26 $ 11.75 $ 5.13
* Expenses are equal to the Fund's annualized expense ratio of 1.49%, 2.40%,
2.30% and 1.00% for Class A, Class B, Class C and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
8
Pioneer Real Estate Shares
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- --------------------------------------------------------------------------------
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the
5% hypothetical examples that appear in the shareholder reports of the other
funds.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) that are charged at the time of the transaction. Therefore, the
table below is useful in comparing ongoing costs only and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2005 through June 30, 2005
Share Class A B C R
- --------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/05
Ending Account Value $1,017.41 $1,012.89 $1,013.39 $1,019.84
On 6/30/05
Expenses Paid During Period* $ 7.45 $ 11.98 $ 11.48 $ 5.01
* Expenses are equal to the Fund's annualized expense ratio of 1.49%, 2.40%,
2.30% and 1.00% for Class A, Class B, Class C and Class Y shares,
respectively, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
9
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/05
- --------------------------------------------------------------------------------
Despite a sharp but brief pullback in prices during the first quarter, real
estate stocks delivered positive results for the six months ended June 30, 2005
- - the first half of Pioneer Real Estate Shares's fiscal year. As Matthew
Troxell of AEW Capital Management, L.P., explains in the following interview,
investors may be concerned about higher interest rates and the pace of economic
growth, but real estate investments continue to offer an attractive mix of
income, growth and diversification benefits.
Q: The rally in real estate stocks has entered its sixth year. Was the
momentum evenly spread across the sector's different property types?
A: During the first half of 2005, we began to see some differentiation among
the sub sectors of the real estate market as investors began to discern
relative value and absorb concerns about higher interest rates, the
strength of the economy and, quite frankly, the fact that real estate
stocks have delivered five years of outperformance relative to the broader
stock market.
We're pleased to see that real estate investments have taken on greater
appeal as the sector has matured over the last 20 years. However, such
strong performance warrants a note of caution, as it would for any asset
class. That being said, we continue to see improvement in the underlying
fundamentals across the real estate sector and will rely on our bottom-up,
company-focused strategy of selecting stocks in an effort to avoid
overvalued or troubled companies.
Q: How did the Fund perform in this environment?
A: For the six months ended June 30, 2005, the Fund's Class A shares posted a
total return at net asset value of 6.53%. The Fund slightly underperformed
the Wilshire Real Estate Securities Index, which increased 6.79% for the
same period. The Fund's performance surpassed the 5.50% average return of
the 226 real estate funds tracked by Lipper, Inc. (Lipper Inc. is an
independent firm that measures mutual fund performance.)
Call 1-800-225-6292 or visit www.pioneerfunds.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and
10
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
principal value will fluctuate, and shares, when redeemed, may be worth
more or less than their original cost.
Q: What investments had the most impact on performance?
A: The office sector was a major contributor to performance. Despite a smaller
position in office holdings relative to the benchmark, the Fund's selection
of office investments outperformed both the office sub sector within the
Wilshire Real Estate Securities Index and the index as a whole. In effect,
our stock selection more than made up for the Fund's smaller exposure to
office investments relative to this benchmark. Among the Fund's holdings,
Brookfield Properties was a standout performer. This Canadian operating
company owns high-quality office buildings in New York City and other major
markets. Our decision to emphasize the position was significant because the
stock outperformed, making its impact on the portfolio even more
significant.
In the lodging sector, hotel investments delivered mixed results, as did
the Fund's investments in the group. Although performance was positive
overall, this sector of the real estate market lagged the benchmark.
Starwood Hotels and Resorts, a sizable holding for the Fund (but not to the
degree that it is in the benchmark), was a disappointment. Several factors
may have contributed to the stock's weakness, including profit taking after
strong performance in 2004 and investor concerns that a slowing economy
might dampen the lodging recovery that had been priced into the stock. On
the other hand, Strategic Hotel Capital proved rewarding. This relatively
young company, which acquired two hotels during the period, is gaining
wider appeal among investors. A significant management change also may have
acted as a catalyst for the company's appreciating stock price.
Finally, the mall sector contributed positively to performance. Strong
operating fundamentals at the property level and healthy consumer spending
patterns continue to have a favorable impact on the returns of the mall
REITs.
Q: Any notable sales or additions in the portfolio?
A: During the six-month period, we continued to reduce the portfolio's
exposure to Equity Office Properties, because of concerns about the price
of its stock relative to its future earnings prospects. Our decision to
limit the Fund's exposure to that REIT was a drawback,
11
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/05 (continued)
- --------------------------------------------------------------------------------
since it performed well. However, we were able to sell into that strength
as we pared back the position.
With the proceeds from the sale of Equity Office Properties, we initiated a
new position in Brandywine Realty Trust, an office REIT focused on
properties in the Mid-Atlantic States. In addition to its attractive
valuation, that REIT is developing a large office tower in Philadelphia,
which we think will be a catalyst for continued growth and value over time.
Q: What is your outlook?
A: With the real estate market posting total returns in excess of 30% in 2003
and 2004, finding bargain investment opportunities has become more
challenging. However, paying close attention to our valuation metrics, we
think our investment process, which relies more heavily on stock selection
than on sector allocation strategies, will help identify the most
attractive companies, which might be overlooked or undervalued by the
market. We think our analysis will help ensure that we are not paying too
much for future income and growth opportunities.
The portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, poor property
management, environmental liabilities, uninsured damage, increased
competition, or changes in real estate tax laws.
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.
12
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCK - 98.1%
Hotels, Restaurants & Leisure - 5.5%
Hotels, Resorts & Cruise Lines - 5.5%
176,000 Hilton Hotels Corp.* $ 4,197,600
97,000 Starwood Hotels & Resorts 5,681,290
------------
$ 9,878,890
------------
Total Hotels, Restaurants & Leisure $ 9,878,890
------------
Real Estate - 92.6%
Real Estate Management & Development - 3.7%
228,000 Brookfield Properties Corp. $ 6,566,400
------------
Real Estate Investment Trusts - 88.9%
98,000 AMB Property Corp. (b) $ 4,256,140
61,000 Apartment Investment & Management Co. 2,496,120
179,000 Archstone Communities Trust 6,912,980
33,000 Arden Realty Group, Inc. 1,187,340
106,000 AvalonBay Communities, Inc. 8,564,800
58,300 BioMed Property Trust, Inc. 1,390,455
136,200 Boston Properties, Inc. 9,534,000
66,500 Brandywine Realty Trust 2,038,225
83,000 Camden Property Trust 4,461,250
23,500 Capital Automotive Trust (b) 896,995
26,300 Carramerica Realty Corp. 951,534
213,100 Catellus Development Corp. 6,989,680
34,000 Corporate Office Properties 1,001,300
121,000 Developers Diversifies Realty Corp. 5,561,160
57,500 Duke Realty Investments, Inc. 1,820,450
18,000 Equity Lifestyle Properties, Inc. 715,680
94,000 Equity Office Properties Trust (b) 3,111,400
200,000 Equity Residential Property Trust 7,364,000
67,000 Federal Realty Investment Trust 3,953,000
20,500 First Potomac Realty Trust 508,400
133,000 General Growth Properties, Inc. (b) 5,464,970
17,000 Healthcare Realty Trust, Inc. 656,370
91,000 Highwoods Properties, Inc. 2,708,160
23,000 Hospitality Properties Trust 1,013,610
327,000 Host Marriott Corp. (b) 5,722,500
The accompanying notes are an integral part of these financial statements. 13
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
Shares Value
Real Estate Investment Trusts (continued)
45,100 iStar Financial, Inc. $ 1,875,709
30,000 Kilroy Realty Corp. 1,424,700
62,600 Kimco Realty Corp. (b) 3,687,766
48,000 Kite Realty Group Trust 720,000
146,500 Liberty Property Trust 6,491,415
41,800 Pan Pacific Retail Properties, Inc. 2,774,684
75,000 Prentiss Properties Trust 2,733,000
144,700 ProLogis Trust 5,822,728
45,000 PS Business Parks, Inc.* 2,000,250
76,000 Public Storage, Inc. 4,807,000
85,400 Regency Centers Corp. (b) 4,884,880
52,000 Shurgard Storage Centers, Inc. 2,389,920
177,500 Simon DeBartolo Group, Inc. (b) 12,866,975
44,000 Spirit Finance Corp. 517,000
34,700 Strategic Hotel Capital, Inc. 624,600
122,000 Taubman Centers, Inc. 4,158,980
35,500 The Macerich Co. 2,380,275
122,000 Trizec Properties, Inc. 2,509,540
103,000 United Dominion Realty Trust 2,477,150
62,000 Vornado Realty Trust 4,984,800
------------
$159,411,891
------------
Total Real Estate $165,978,291
------------
TOTAL COMMON STOCKS
(Cost $116,861,773) $175,857,181
------------
14 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 17.9%
Repurchase Agreement - 1.7%
$3,100,000 UBS Warburg, Inc., 3.13%, dated 6/30/05, with
repurchase price of $3,100,000 plus accrued
interest on 7/1/05 collateralized by $3,166,000
U.S. Treasury Note, 1.875%, 1/31/06 $ 3,100,000
------------
Shares
Security Lending Collateral - 16.2%
29,109,633 Securities Lending Investment Fund, 3.29% $ 29,109,633
------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $32,209,633) $ 32,209,633
------------
TOTAL INVESTMENT IN SECURITIES - 116.0%
(Cost $149,071,406) (a) $208,066,814
------------
OTHER ASSETS AND LIABILITIES - (16.0)% $(28,761,063)
------------
TOTAL NET ASSETS - 100.0% $179,305,751
============
* Non-income producing security
(a) At June 30, 2005, the net unrealized gain on investments
based on cost for federal income tax purposes of
$149,980,724 was as follows:
Aggregate gross unrealized gain for all investments in
which there is an excess of value over tax cost $58,086,090
Aggregate gross unrealized loss for all investments in
which there is an excess of tax cost over value -
-----------
Net unrealized gain $58,086,090
===========
(b) At June 30, 2005, the following securities were out on loan:
Market
Shares Security Value
92,350 AMB Property Corp. $ 4,007,990
22,325 Capital Automotive Trust 852,815
89,300 Equity Office Properties Trust 2,955,830
126,350 General Growth Properties, Inc. 5,192,985
174,140 Host Marriott Corp. 3,047,450
58,825 Kimco Realty Corp. 3,464,793
81,950 Regency Centers Corp. 4,687,540
58,751 Simon DeBartolo Group, Inc. 4,259,448
-----------
Total $28,468,850
===========
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 2005 aggregated $23,365,981 and $15,320,002,
respectively.
The accompanying notes are an integral part of these financial statements. 15
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities (including securities loaned of
$28,468,850) (cost $149,071,406) $208,066,814
Receivables -
Investment securities sold 342,257
Fund shares sold 217,899
Dividends, interest and foreign taxes withheld 800,493
Other 422
------------
Total assets $209,427,885
------------
LIABILITIES:
Payables -
Investment securities purchased $ 596,600
Fund shares repurchased 187,310
Upon return of securities loaned 29,109,633
Due to bank 69,038
Due to affiliates 63,052
Accrued expenses 96,501
------------
Total liabilities $ 30,122,134
------------
NET ASSETS:
Paid-in capital $117,522,780
Undistributed net investment income 446,155
Accumulated net realized gain on investments 2,341,408
Net unrealized gain on investments 58,995,408
------------
Total net assets $179,305,751
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $107,671,835/4,172,462 shares) $ 25.81
============
Class B (based on $35,986,085/1,406,165 shares) $ 25.59
============
Class C (based on $22,574,427/880,942 shares) $ 25.63
============
Class Y (based on $13,073,404/507,280 shares) $ 25.77
============
MAXIMUM OFFERING PRICE:
Class A ($25.81 [divided by] 94.25%) $ 27.38
============
16 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/05
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $12,742) $3,121,965
Interest 39,990
Income from securities loaned, net 4,352
----------
Total investment income $ 3,166,307
-----------
EXPENSES:
Management fees $ 626,260
Transfer agent fees and expenses
Class A 120,695
Class B 68,230
Class C 30,062
Class Y 195
Distribution fees
Class A 114,904
Class B 165,115
Class C 96,775
Administrative reimbursements 15,379
Custodian fees 13,542
Registration fees 46,713
Professional fees 39,053
Printing expense 26,451
Fees and expenses of nonaffiliated trustees 4,011
Miscellaneous 7,011
----------
Total expenses $ 1,374,396
Less fees paid indirectly (4,030)
-----------
Net expenses $ 1,370,366
-----------
Net investment income $ 1,795,941
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 3,250,726
Change in net unrealized gain on investments 5,683,630
-----------
Net gain on investments $ 8,934,356
-----------
Net increase in net assets resulting from operations $10,730,297
===========
The accompanying notes are an integral part of these financial statements. 17
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/05 and the Year Ended 12/31/04
Six Months Ended
6/30/05 Year Ended
(unaudited) 12/31/04
FROM OPERATIONS:
Net investment income $ 1,795,941 $ 1,975,620
Net realized gain on investments 3,250,726 11,634,942
Change in net unrealized gain on investments 5,683,630 26,245,811
------------ ------------
Net increase in net assets resulting from
operations $ 10,730,297 $ 39,856,373
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.29 and $0.40 per share, respectively) $ (1,156,339) $ (1,319,119)
Class B ($0.18 and $0.22 per share, respectively) (247,891) (417,097)
Class C ($0.19 and $0.23 per share, respectively) (157,398) (195,750)
Class Y ($0.35 and $0.52 per share, respectively) (172,603) (144,389)
Net realized gain:
Class A ($0.00 and $1.34 per share, respectively) - (4,710,452)
Class B ($0.00 and $1.34 per share, respectively) - (2,109,461)
Class C ($0.00 and $1.34 per share, respectively) - (1,075,722)
Class Y ($0.00 and $1.34 per share, respectively) - (425,102)
------------ ------------
Total distributions to shareowners $ (1,734,231) $(10,397,092)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 48,976,260 $ 61,331,263
Reinvestment of distributions 1,526,060 9,054,579
Cost of shares repurchased (44,071,246) (54,417,178)
------------ ------------
Net increase in net assets resulting from fund
share transactions $ 6,431,074 $ 15,968,664
------------ ------------
Net increase in net assets $ 15,427,140 $ 45,427,945
NET ASSETS:
Beginning of period 163,878,611 118,450,666
------------ ------------
End of period (including undistributed net investment
income of $446,155 and $445,847, respectively) $179,305,751 $163,878,611
============ ============
18 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'05 Shares '05 Amount
(unaudited) (unaudited) '04 Shares '04 Amount
CLASS A
Shares sold 1,170,945 $ 27,623,016 1,657,338 $ 35,581,231
Reinvestment of distributions 42,884 1,035,514 241,199 5,471,749
Less shares repurchased (882,431) (20,845,375) (1,200,397) (24,862,587)
--------- ------------ ---------- ------------
Net increase 331,398 $ 7,813,155 698,140 $ 16,190,393
========= ============ ========== ============
CLASS B
Shares sold 472,446 $ 11,072,997 656,972 $ 13,894,429
Reinvestment of distributions 9,074 216,494 94,700 2,127,268
Less shares repurchased (713,190) (16,534,775) (1,038,302) (21,196,977)
--------- ------------ ---------- ------------
Net decrease (231,670) $ (5,245,284) (286,630) $ (5,175,280)
========= ============ ========== ============
CLASS C
Shares sold 290,623 $ 6,805,940 420,763 $ 8,861,166
Reinvestment of distributions 5,310 127,876 46,099 1,038,534
Less shares repurchased (264,074) (6,161,445) (373,849) (7,732,176)
--------- ------------ ---------- ------------
Net increase 31,859 $ 772,371 93,013 $ 2,167,524
========= ============ ========== ============
CLASS Y
Shares sold 149,146 $ 3,474,307 131,276 $ 2,994,437
Reinvestment of distributions 6,076 146,176 18,292 417,028
Less shares repurchased (22,402) (529,651) (30,308) (625,438)
--------- ------------ ---------- ------------
Net increase 132,820 $ 3,090,832 119,260 $ 2,786,027
========= ============ ========== ============
The accompanying notes are an integral part of these financial statements. 19
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/04 (a) 12/31/03 12/31/02 12/31/01 12/31/00
CLASS A
Net asset value, beginning of period $ 24.52 $ 19.55 $ 15.30 $ 15.38 $ 15.04 $ 12.18
-------- ------- ------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.29 $ 0.39 $ 0.65 $ 0.57 $ 0.38 $ 0.64
Net realized and unrealized gain on investments 1.29 6.31 4.33 0.00(b) 0.70 2.86
-------- ------- ------- ------- ------- -------
Net increase from investment operations $ 1.58 $ 6.70 $ 4.98 $ 0.57 $ 1.08 $ 3.50
Distributions to shareowners:
Net investment income (0.29) (0.40) (0.73) (0.65) (0.74) (0.50)
Net realized gain - (1.33) - - - -
Tax return of capital - - - - - (0.14)
-------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.29 $ 4.97 $ 4.25 $ (0.08) $ 0.34 $ 2.86
-------- ------- ------- ------- ------- -------
Net asset value, end of period $ 25.81 $ 24.52 $ 19.55 $ 15.30 $ 15.38 $ 15.04
======== ======= ======= ======= ======= =======
Total return* 6.53% 35.26% 33.27% 3.58% 7.47% 29.31%
Ratio of net expenses to average net assets+ 1.50%** 1.56% 1.68% 1.67% 1.58% 1.65%
Ratio of net investment income to average net assets+ 2.55%** 1.85% 3.81% 3.70% 4.31% 4.56%
Portfolio turnover rate 20%** 34% 36% 39% 37% 25%
Net assets, end of period (in thousands) $107,672 $94,198 $61,455 $44,904 $39,263 $43,129
Ratios with reductions for fees paid indirectly:
Net expenses 1.50%** 1.56% 1.68% 1.67% 1.58% 1.65%
Net investment income 2.55%** 1.85% 3.81% 3.70% 4.31% 4.56%
Ratios with waiver of management fees and reduction
for fees paid indirectly:
Net expenses 1.49%** 1.56% 1.68% 1.67% 1.57% 1.63%
Net investment income 2.56%** 1.85% 3.81% 3.70% 4.32% 4.58%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio 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
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/04 (a) 12/31/03 12/31/02 12/31/01 12/31/00
CLASS B
Net asset value, beginning of period $ 24.32 $ 19.40 $ 15.17 $ 15.25 $ 14.94 $ 12.11
------- ------- ------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.20 $ 0.19 $ 0.51 $ 0.43 $ 0.54 $ 0.52
Net realized and unrealized gain on investments 1.25 6.28 4.30 0.02 0.39 2.87
------- ------- ------- ------- ------- -------
Net increase from investment operations $ 1.45 $ 6.47 $ 4.81 $ 0.45 $ 0.93 $ 3.39
Distributions to shareowners:
Net investment income (0.18) (0.22) (0.58) (0.53) (0.62) (0.43)
Net realized gain - (1.33) - - - -
Tax return of capital - - - - - (0.13)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.27 $ 4.92 $ 4.23 $ (0.08) $ 0.31 $ 2.83
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 25.59 $ 24.32 $ 19.40 $ 15.17 $ 15.25 $ 14.94
======= ======= ======= ======= ======= =======
Total return* 6.02% 34.20% 32.30% 2.84% 6.42% 28.50%
Ratio of net expenses to average net assets+ 2.41%** 2.37% 2.50% 2.40% 2.36% 2.39%
Ratio of net investment income to average net assets+ 1.58%** 0.96% 2.98% 2.90% 3.50% 3.82%
Portfolio turnover rate 20%** 34% 36% 39% 37% 25%
Net assets, end of period (in thousands) $35,986 $39,833 $37,325 $28,121 $30,699 $35,848
Ratios with reduction for fees paid indirectly:
Net expenses 2.41%** 2.37% 2.50% 2.40% 2.36% 2.39%
Net investment income 1.58%** 0.96% 2.98% 2.90% 3.50% 3.82%
Ratios with waiver of management fees and reduction
for fees paid indirectly:
Net expenses 2.40%** 2.37% 2.50% 2.40% 2.36% 2.38%
Net investment income 1.59%** 0.96% 2.98% 2.90% 3.50% 3.83%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
21
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/04 (a) 12/31/03 12/31/02 12/31/01 12/31/00
CLASS C
Net asset value, beginning of period $ 24.35 $ 19.42 $ 15.20 $15.28 $14.96 $12.12
------- ------- ------- ------ ------ ------
Increase from investment operations:
Net investment income $ 0.20 $ 0.20 $ 0.52 $ 0.44 $ 0.55 $ 0.51
Net realized and unrealized gain on investments 1.27 6.29 4.31 0.00(b) 0.41 2.87
------- ------- ------- ------ ------ ------
Net increase from investment operations $ 1.47 $ 6.49 $ 4.83 $ 0.44 $ 0.96 $ 3.38
Distributions to shareowners:
Net investment income (0.19) (0.23) (0.61) (0.52) (0.64) (0.42)
Net realized gain - (1.33) - - - -
Tax return of capital - - - - - (0.12)
------- ------- ------- ------ ------ ------
Net increase (decrease) in net asset value $ 1.28 $ 4.93 $ 4.22 $(0.08) $ 0.32 $ 2.84
------- ------- ------- ------ ------ ------
Net asset value, end of period $ 25.63 $ 24.35 $ 19.42 $15.20 $15.28 $14.96
======= ======= ======= ====== ====== ======
Total return* 6.09% 34.27% 32.35% 2.79% 6.63% 28.42%
Ratio of net expenses to average net assets+ 2.30%** 2.34% 2.39% 2.46% 2.28% 2.40%
Ratio of net investment income to average net assets+ 1.73%** 1.02% 3.20% 2.95% 3.57% 3.78%
Portfolio turnover rate 20%** 34% 36% 39% 37% 25%
Net assets, end of period (in thousands) $22,574 $20,675 $14,686 $7,429 $6,136 $6,276
Ratios with reduction for fees paid indirectly:
Net expenses 2.30%** 2.34% 2.39% 2.46% 2.28% 2.40%
Net investment income 1.73%** 1.02% 3.20% 2.95% 3.57% 3.78%
Ratios with waiver of management fees and reduction
for fees paid indirectly:
Net expenses 2.30%** 2.34% 2.39% 2.46% 2.27% 2.38%
Net investment income 1.73%** 1.02% 3.20% 2.95% 3.58% 3.80%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
22
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/05 Year Ended Year Ended Year Ended Year Ended Year Ended
(unaudited) 12/31/04 (a) 12/31/03 12/31/02 12/31/01 12/31/00
CLASS Y
Net asset value, beginning of period $ 24.49 $19.53 $15.27 $15.35 $15.01 $12.16
------- ------ ------ ------ ------ ------
Increase from investment operations:
Net investment income $ 0.33 $ 0.50 $ 0.76 $ 0.66 $ 0.63 $ 0.72
Net realized and unrealized gain on investments 1.30 6.31 4.33 0.00(b) 0.52 2.84
------- ------ ------ ------ ------ ------
Net increase from investment operations $ 1.63 $ 6.81 $ 5.09 $ 0.66 $ 1.15 $ 3.56
Distributions to shareowners:
Net investment income (0.35) (0.52) (0.83) (0.74) (0.81) (0.55)
Net realized gain - (1.33) - - - -
Tax return of capital - - - - - (0.16)
------- ------ ------ ------ ------ ------
Net increase (decrease) in net asset value $ 1.28 $ 4.96 $ 4.26 $(0.08) $ 0.34 $ 2.85
------- ------ ------ ------ ------ ------
Net asset value, end of period $ 25.77 $24.49 $19.53 $15.27 $15.35 $15.01
======= ====== ====== ====== ====== ======
Total return* 6.76% 35.97% 34.16% 4.21% 8.00% 29.99%
Ratio of net expenses to average net assets+ 1.00%** 1.01% 1.05% 1.10% 1.12% 1.02%
Ratio of net investment income to average net assets+ 3.15%** 2.47% 4.47% 4.39% 4.36% 5.16%
Portfolio turnover rate 20%** 34% 36% 39% 37% 25%
Net assets, end of period (in thousands) $13,073 $9,172 $4,984 $3,671 $2,349 $1,196
Ratios with reduction for fees paid indirectly:
Net expenses 1.00%** 1.01% 1.05% 1.10% 1.12% 1.02%
Net investment income 3.15%** 2.47% 4.47% 4.39% 4.36% 5.16%
Ratios with waiver of management fees and reduction
for fees paid indirectly:
Net expenses 1.00%** 1.01% 1.05% 1.10% 1.11% 1.02%
Net investment income 3.15%** 2.47% 4.47% 4.39% 4.37% 5.16%
(a) Effective 5/31/04 AEW Management and Advisors, L.P. became sub-advisor to
the Fund.
(b) Amount rounds to less than one cent per share.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of all distributions, and the complete redemption of
the investment at net asset value at each end of each period.
** Annualized
+ Ratio with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
23
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited)
- --------------------------------------------------------------------------------
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 U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting year. Actual results could differ from those estimates. The following
is a summary of significant accounting policies followed by the Fund in the
preparation of its financial statements, which are consistent with those
policies generally accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded on trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that
have not traded on the date of valuation, or securities for which sale
prices are not generally reported, are valued at the mean between the last
bid and asked prices. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees. Trading in foreign
securities is substantially completed each day at various times prior to
the close of
24
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the NYSE. The values of such securities used in computing the net asset
value of the Fund's shares are determined as of such times. The Fund also
may use the fair value of a security, including a non-U.S. security, when
the closing market price on the principal exchange where the security is
traded no longer reflects the value of the security. At June 30, 2005
there were no securities fair valued. Dividend income is recorded on the
ex-dividend date, except that certain dividends from foreign securities
where the ex-dividend date may have passed are recorded as soon as the
Fund becomes aware of the ex-dividend data in the exercise of reasonable
diligence. Interest income is recorded on the accrual basis. Temporary
cash investments are valued at 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 of
their borrowers or tenants. REITs depend generally on their ability to
generate cash flow to make distributions to shareowners, and certain REITs
have self-liquidation provisions by which mortgages held may be paid in
full and distributions of capital returns may be made at any time. In
addition, the performance of a REIT may be affected by its failure to
qualify for tax-free pass-through of income under the Internal Revenue
Code or its failure to maintain exemption from registration under the
Investment Company Act of 1940.
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 amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the sources of the Fund's distributions may
be shown in the accompanying financial statements
25
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
as either from or in excess of net investment income or net realized gain
on investment transactions, or from paid-in capital, depending on the type
of book/tax differences that may exist. A portion of the dividend income
recorded by the Fund is from distributions by publicly traded REITs, and
such distributions for tax purposes may also consist of capital gains and
return of capital. The actual return of capital and capital gains portions
of such distributions will be determined by formal notifications from the
REITs subsequent to the calendar year-end. Distributions received from the
REITs that are determined to be a return of capital, are recorded by the
Fund as a reduction of the cost basis of the securities held.
The tax character of current year distributions will be determined at the
end of the fiscal year. The tax character of distributions paid during the
year ended December 31, 2004 was as follows:
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary income* $ 3,660,098
Long-term capital gain 6,736,994
-----------
$10,397,092
Return of capital -
-----------
Total $10,397,092
===========
- --------------------------------------------------------------------------------
* Included in the Fund's distributions from 2004 ordinary income is
$360,268 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 the components of distributable earnings on a federal
income tax basis at December 31, 2004.
- --------------------------------------------------------------------------------
2004
- --------------------------------------------------------------------------------
Other Temporary Differences $ 445,847
Unrealized appreciation 52,341,058
-----------
Total $52,786,905
===========
- --------------------------------------------------------------------------------
The difference between book basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
26
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 $26,831 in underwriting commissions on
the sale of Class A shares during the six months ended June 30, 2005.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset
value attributable to Class A, Class B and Class C shares of the Fund,
respectively. Class Y shares are not subject to a distribution plan (see
Note 4). Shareowners of each class share all expenses and fees paid to the
transfer agent, Pioneer Investment Management Shareholder Services, Inc.
(PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). Income, common expenses and realized and unrealized
gains and losses are calculated at the Fund level and allocated daily to
all classes of shares based on their respective percentage of adjusted net
assets at the beginning of the day.
Distributions to shareowners are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, Class C and Class Y can bear different
transfer agent and distribution fees.
E. Securities Lending
The Fund lends securities in its Portfolio to certain broker-dealers or
other institutional investors, with the Fund's custodian acting as the
lending agent. When entering into a loan, the Fund receives collateral,
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Fund also continues to receive interest or
payments in lieu of dividends on the securities loaned. Gain or loss on
the fair value of the loaned securities that may occur during the term of
the loan will be for the account of the Fund. The loans are secured by
collateral of at least 102%, at all times, of the fair value of the
securities loaned. The amount of the collateral will be adjusted daily to
reflect any price fluctuation in the value of the loaned securities. The
Fund has the right under the
27
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
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.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The
Fund's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. Management fees are calculated daily at the annual rate of
0.80% of the Fund's average daily net assets. Effective May 3, 2004, AEW
Management and Advisors LP (AEW) became subadvisor to the Fund.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At June 30, 2005, $4,583 was payable to PIM
related to management fees, administrative costs and certain other services and
is included in due to affiliates.
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Fund at
negotiated rates. Included in due to affiliates is $56,134 in transfer agent
fees payable to PIMSS at June 30, 2005.
4. Distribution Plans
The Fund adopted a Plan of Distribution with respect to Class A, Class B and
Class C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with
Rule 12b-1 of the Investment Company Act of 1940.
28
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pursuant to the Class A Plan, the Fund pays PFD a service fee of up to 0.25% of
the Fund's average daily net assets attributable to Class A shares in
reimbursement of its actual expenditures to finance activities primarily
intended to result in the sale of Class A shares. Pursuant to the Class B Plan
and the Class C Plan, the Fund pays PFD 1.00% of the average daily net assets
attributable to each class of shares. The fee consists of a 0.25% service fee
and a 0.75% distribution fee paid as compensation for personal services and/or
account maintenance services or distribution services with regard to Class B
and Class C shares. Included in due to affiliates is $2,335 in distribution
fees payable to PFD at June 30, 2005.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). Effective February 1,
2004, a CDSC of 1.00% may be imposed on redemptions of certain net asset value
purchases of Class A shares within 18 months of purchase (12 months for shares
purchased prior to February 1, 2004). Class B shares subscribed on or after
December 1, 2004 that are redeemed within five years of purchase are subject to
a CDSC at declining rates beginning at 4.0%, based on the lower of cost or
market value of shares being redeemed. Shares purchased prior to December 1,
2004 remain subject to the CDSC in effect at the time those shares were
purchased. 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 six
months ended June 30 2005, CDSCs in the amount of $21,338 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 six months ended June 30, 2005, the Fund's expenses
were reduced by $4,030 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.
29
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/05 (unaudited) (continued)
- --------------------------------------------------------------------------------
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 six months ended June 30, 2005, the Fund
had no borrowings under this agreement.
30
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT
- --------------------------------------------------------------------------------
The Investment Company Act of 1940 requires that both the Board of Trustees and
a majority of the Independent Trustees (collectively "the Trustees") vote
separately annually to approve the Fund's management contract (the "Management
Contract"). The Trustees have determined that the terms of the Management
Contract are fair and reasonable and that renewal of the contract will enable
the Fund to receive quality investment advisory services at a cost deemed
reasonable and in the best interests of the Fund and its shareholders. In
making such determinations, the Independent Trustees relied upon the assistance
of counsel to the Independent Trustees and counsel to the Fund.
Throughout the year, the Independent Trustees regularly met in executive
session separately from the Interested Trustees of the Fund and any officer of
Pioneer Investment Management, Inc., the Fund's adviser (the "Investment
Adviser"), or its affiliates. While the Trustees, including the Independent
Trustees, act on all major matters relating to the Fund, a significant portion
of the activities of the Board of Trustees (including certain of those
described herein) is conducted through committees, the members of which are
comprised exclusively of Independent Trustees. Such committee meetings are
attended by officers of the Fund or the Investment Adviser to the extent
requested by the members of the committee.
In evaluating the Management Contract, the Trustees conducted a review that was
specifically focused upon the renewal of the Management Contract, and relied
upon their knowledge, resulting from their meetings throughout the year, of the
Investment Adviser, its services and the Fund. Both in meetings specifically
dedicated to renewal of the Management Contract and at other meetings during
the course of the year, the Trustees, including the Independent Trustees,
received materials relating to the Investment Adviser's investment and
management services under the Management Contract. These materials included (i)
information on the investment performance of the Fund, a peer group of funds
and an index, in each case selected by the Independent Trustees for this
purpose, (ii) sales and redemption data in respect to the Fund, (iii) the
general investment outlook in the markets in which the Fund invests, (iv)
arrangements in respect of the distribution of the Fund's shares, (v) the
procedures employed to determine the value of each of the Fund's assets, (vi)
the Investment Adviser's management of the relationships with the Fund's
unaffiliated service providers, (vii) the record of compliance with the
31
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
Fund's investment policies and restrictions and with the Fund's Code of Ethics
and the structure and responsibilities of the Investment Adviser's compliance
department, (viii) the nature, cost and character of non-investment management
services provided by the Investment Adviser and its affiliates and (ix) the
disclosures included in the Fund's prospectuses and reports to shareholders.
Specifically in connection with the Independent Trustees' review of the
Management Contract, the Independent Trustees requested and the Investment
Adviser provided additional information in order to evaluate the quality of the
Investment Adviser's services and the reasonableness of the fee under the
Management Contract. Among other items, this information included data or
analyses of (1) investment performance for one, three, and five year periods
for the Fund and a peer group selected by the Independent Trustees for this
purpose, (2) management fees incurred by a peer group of funds selected by the
Independent Trustees for this purpose, (3) the advisory fees of comparable
portfolios of other clients of the Investment Adviser, (4) expense ratios for
the Fund and a peer group of funds selected by the Independent Trustees for
this purpose, (5) the overall organization of the Investment Adviser, (6) the
Investment Adviser's financial results and condition, including its and certain
of its affiliates profitability from services performed for the Fund, (7)
transfer agency fees and administrative reimbursements paid to the Investment
Adviser or affiliates, (8) investment management staffing, and (9) operating
expenses paid to third parties. The Trustees also reviewed information
regarding the potential for the Fund and the Investment Adviser to benefit from
further economies of scale in the management of the Fund in light of reasonable
growth expectations for the Fund and certain of the Fund's expenses that are
not incurred as fees based on a percentage of net assets.
The following summarizes matters considered by the Trustees in connection with
their renewal of the Fund's Management Contract. The Trustees did not identify
any single factor as all-important or controlling, and the summary does not
detail all the matters that were considered.
A. Ancillary Benefits to Shareholders. The Trustees considered the benefits to
shareholders of investing in a Fund that is part of a large number of
investment companies offering a variety of investment disciplines and
providing for a large variety of Fund and shareholder services.
32
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
B. Compliance and Investment Performance. The Trustees determined that the
Investment Adviser had policies and systems reasonably designed to achieve
compliance with the Fund's investment objectives and regulatory
requirements. The Trustees also reviewed the Fund's investment performance
based upon total return, as well as the Fund's performance compared to both
the performance of a peer group and an index, in each case selected by the
Independent Trustees for this purpose. The Fund's performance based upon
total return was in the second quintile of the peer group for the 12 months
ended June 30, 2004, the third quintile of the peer group for the three
years ended June 30, 2004 and the fourth quintile of the peer group for the
five years ended June 30, 2004. (In all quintile rankings referred to
throughout this discussion first quintile is most favorable to the Fund's
shareholders. Thus, highest relative performance would be first quintile
and lowest relative expenses also would be first quintile.) The Trustees
concluded that, given the improving trend in performance, the performance
of the Fund supported the continuation of the Management Contract.
C. The Investment Adviser's Personnel and Methods. The Trustees reviewed the
background of members of the team responsible for the daily management of
the Fund and the Fund's investment objective and discipline, including
members of the sub-adviser's team. The Independent Trustees also have had
discussions with senior management of the Investment Adviser responsible
for investment operations and the senior management of the Investment
Adviser's equities group, as well as senior management of the sub-adviser.
Among other things, the Trustees considered the number, education and
experience of the Investment Adviser's and sub-adviser's investment staffs,
their use of technology and emphasis on analytics in view of the risk
profile of securities in which the Fund invests. The Trustees concluded
that the Investment Adviser as well as the sub-adviser have the quality and
depth of personnel and the well-developed methods essential to performing
their duties under the Management Contract and the Sub-Advisory Agreement.
D. Nature and Quality of Other Services. The Trustees considered the nature,
quality, cost and extent of other services provided to shareholders of the
Fund, including administrative and shareholder services performed by the
Investment Adviser under the Management Contract. The Trustees also
considered the reasonableness
33
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FACTORS CONSIDERED BY THE INDEPENDENT TRUSTEES IN
APPROVING THE MANAGEMENT CONTRACT (continued)
- --------------------------------------------------------------------------------
of the arrangements for reimbursement of the Investment Adviser's
out-of-pocket costs and expenses, including overhead, for certain
administrative services that the Investment Adviser is not required to
provide under the Management Contract. The Trustees also considered the
nature and extent of the other services provided by the Investment
Adviser's affiliates under other contracts and its supervision of third
party service providers. Based on these considerations, the Trustees
concluded that the nature, quality, cost and extent of such services are
satisfactory and reliable and serve the shareholders of the Fund well.
E. Management Fee and Expenses. The Trustees considered the Investment
Adviser's fee under the Management Contract relative to the management fees
charged by a peer group of funds selected by the Independent Trustees for
this purpose using data provided by an independent third party. The Fund's
management fee for the 12 months ended June 30, 2004 was in the second
quintile relative to the management fees paid by the other funds in that
peer group for the comparable period. The Trustees determined that the fee
under the Management Contract was reasonable and fair in light of both the
overall nature and quality of services provided by the Investment Adviser
and the fees charged by the funds in the peer group. The Trustees also
considered the Fund's expense ratio and expense ratios of a peer group of
funds selected by the Independent Trustees for this purpose. The Fund's
expense ratio for the 12 months ended June 30, 2004 was in the fourth
quintile of the applicable peer group for the most recent fiscal year of
the peer group for the comparable period. The Trustees concluded that the
Fund's overall expense ratio was acceptable compared to that of comparably
sized funds.
F. Profitability. The Trustees considered the level of the Investment
Adviser's profits with respect to the management of the Pioneer Funds,
including details with respect to the Fund. This consideration included a
review of the Investment Adviser's methodology in allocating certain of its
costs to the management of each Fund. The Trustees also considered the
financial results realized by the Investment Adviser in connection with the
operation of the Fund. They further considered the profits realized by the
Investment Adviser and its affiliates from non-fund businesses that may
benefit from or be related to the Fund's business. The Trustees considered
the Investment Adviser's profit margins in comparison
34
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
with the limited available industry data. The Trustees concluded that the
Investment Adviser's profits from management of the Pioneer Funds,
including the financial results derived from the Fund, bear a reasonable
relationship to the services rendered and are fair for the management of
the Fund.
G. Economies of Scale. The Trustees considered the economies of scale with
respect to the management of the Fund, whether the Fund had appropriately
benefited from any economies of scale, and whether there was potential for
realization of any further economies of scale. The Trustees concluded that,
given current and anticipated asset levels, break points in the management
fee were not necessary at this time. The Trustees will continue to evaluate
annually the appropriateness of break points.
H. Other Benefits to the Investment Adviser. The Trustees also considered the
character and amount of fees paid by the Fund, other than under the
Management Contract, for services provided by the Investment Adviser and
affiliates, including fees for services such as shareholder services. The
Trustees also considered the receipt of sales loads and payments under Rule
12b-1 plans in respect to the Pioneer Funds (including the Fund), and
benefits to the Investment Adviser from the use of "soft" commission
dollars to pay for research and brokerage services. The Trustees further
considered the revenues and profitability of the Investment Adviser's
businesses other than the fund business, including the Investment Adviser's
institutional investment advisory business. The Trustees considered the
intangible benefits that accrue to the Investment Adviser and its
affiliates by virtue of its relationship with the Fund and the Pioneer
Funds as a group. The Trustees concluded that all these types of benefits
accruing to the Investment Adviser were reasonable in the context of the
overall relationship between the Investment Adviser and the Fund.
Conclusion. The Trustees, in light of the Investment Adviser's overall
performance, considered it appropriate to continue to retain the management
services of the Investment Adviser. Based on their evaluation of all material
factors deemed relevant and the advice of independent counsel, the Trustees
concluded that the Management Contract with the Fund is fair and reasonable and
voted to approve the continuation of the Management Contract for another year.
35
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive
Mary K. Bush Vice President
Margaret B.W. Graham Vincent Nave, Treasurer
Osbert M. Hood Dorothy E. Bourassa, Secretary
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the Fund are available without charge,
upon request, by calling our toll free number (1-800-225-6292). Information
regarding how the Fund voted proxies relating to portfolio securities during
the most recent 12 month period ended June 30 is publicly available to
shareowners at www.pioneerfunds.com. This information is also available on our
web site at www.pioneerfunds.com and on the Securities and Exchange
Commission's web site at http://www.sec.gov.
36
- --------------------------------------------------------------------------------
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
Please consider the Fund's investment objectives, risks, charges and expenses
carefully before investing. The prospectus contains this and other information
about the Fund and should be read carefully before you invest. To obtain a
prospectus and for other information on any Pioneer fund, call 1-800-225-6292 or
visit our web site www.pioneerfunds.com.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, DC. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party. If
the registrant has not adopted such a code of ethics, explain why it has not
done so.
The registrant has adopted, as of the end of the period covered by this report,
a code of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term "code of ethics" means written standards
that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in
reports and documents that a registrant files with, or submits to, the
Commission and in other public communications made by the registrant;
(3) Compliance with applicable governmental laws, rules, and
regulations;
(4) The prompt internal reporting of violations of the code to an
appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the
period covered by the report, to a provision of its code of ethics that applies
to the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of
ethics definition enumerated in paragraph (b) of this Item. The registrant must
file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless
the registrant has elected to satisfy paragraph (f) of this Item by posting its
code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by
undertaking to provide its code of ethics to any person without charge, upon
request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period
covered by this report.
(d) If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of ethics to
the registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party, that relates to one or more of the items set forth
in paragraph (b) of this Item, the registrant must briefly describe the nature
of the waiver, the name of the person to whom the waiver was granted, and the
date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under
paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from,
a provision of its code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of this
Item by posting such information on its Internet website, disclose the
registrant's Internet address and such intention.
Not applicable.
(f) The registrant must:
(1) File with the Commission, pursuant to Item 10(a), a copy of its code
of ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, as an exhibit to its annual
report on this Form N-CSR;
(2) Post the text of such code of ethics on its Internet website and
disclose, in its most recent report on this Form N-CSR, its Internet
address and the fact that it has posted such code of ethics on its
Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to
any person without charge, upon request, a copy of such code of ethics
and explain the manner in which such request may be made.
See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of trustees has determined that
the registrant either:
(i) Has at least one audit committee financial expert serving on its audit
committee; or
(ii) Does not have an audit committee financial expert serving on its audit
committee.
The registrant's Board of Trustees has determined that the registrant has at
least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph
(a)(1)(i) of this Item, it must disclose the name of the audit committee
financial expert and whether that person is "independent." In order to be
considered "independent" for purposes of this Item, a member of an audit
committee may not, other than in his or her capacity as a member of the audit
committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as defined in
Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Ms. Marguerite A. Piret, an independent trustee, is such an audit committee
financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1)
(ii) of this Item, it must explain why it does not have an audit committee
financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
The Pioneer Funds recognize the importance of maintaining the independence of
their outside auditors. Maintaining independence is a shared responsibility
involving Pioneer Investment Management, Inc ("PIM"), the audit committee and
the independent auditors.
The Funds recognize that a Fund's independent auditors: 1) possess knowledge of
the Funds, 2) are able to incorporate certain services into the scope of the
audit, thereby avoiding redundant work, cost and disruption of Fund personnel
and processes, and 3) have expertise that has value to the Funds. As a result,
there are situations where it is desirable to use the Fund's independent
auditors for services in addition to the annual audit and where the potential
for conflicts of interests are minimal. Consequently, this policy, which is
intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and
procedures to be followed by the Funds when retaining the independent audit firm
to perform audit, audit-related tax and other services under those
circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also
constitute approval for any other Fund whose pre-approval is required pursuant
to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services
that may be provided consistently with Rule 210.2-01 may be approved by the
Audit Committee itself and any pre-approval that may be waived in accordance
with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund's independent auditors and their compensation shall be
determined by the Audit Committee and shall not be subject to this policy.
SECTION II - POLICY
- ---------------- -------------------------------- -------------------------------------------------
SERVICE SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES related to performing the o SEC consultation, registration
independent audit of the Funds statements, and reporting
o Tax accrual related matters
o Implementation of new accounting
standards
o Compliance letters (e.g. rating agency
letters)
o Regulatory reviews and assistance
regarding financial matters
o Semi-annual reviews (if requested)
o Comfort letters for closed end
offerings
- ---------------- -------------------------------- -------------------------------------------------
II. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 210.2-01(C)(4) (the "Rule") o Financial reporting control assessments
and are related extensions of o Enterprise security architecture
the audit services support the assessment
audit, or use the
knowledge/expertise gained
from the audit procedures as a
foundation to complete the
project. In most cases, if
the Audit-Related Services are
not performed by the Audit
firm, the scope of the Audit
Services would likely
increase. The Services are
typically well-defined and
governed by accounting
professional standards (AICPA,
SEC, etc.)
- ---------------- -------------------------------- -------------------------------------------------
------------------------------------- ------------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the audit period for all services and related fees
pre-approved specific service reported at each regularly
subcategories. Approval of the scheduled Audit Committee
independent auditors as meeting.
auditors for a Fund shall
constitute pre approval for
these services.
------------------------------------- ------------------------------------
o "One-time" pre-approval o A summary of all such
for the fund fiscal year within services and related fees
a specified dollar limit (including comparison to
for all pre-approved specified dollar limits)
specific service subcategories reported quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limit for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for Audit-Related
Services not denoted as
"pre-approved", or
to add a specific service
subcategory as "pre-approved"
------------------------------------- ------------------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
III. TAX SERVICES Services which are not o Tax planning and support
prohibited by the Rule, o Tax controversy assistance
if an officer of the Fund o Tax compliance, tax returns, excise
determines that using the tax returns and support
Fund's auditor to provide o Tax opinions
these services creates
significant synergy in
the form of efficiency,
minimized disruption, or
the ability to maintain a
desired level of
confidentiality.
- ----------------------- --------------------------- -----------------------------------------------
- ------------------------------------- -------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- -------------------------
- ------------------------------------- -------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year all such services and
within a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for tax services not
denoted as pre-approved, or to add a specific
service subcategory as
"pre-approved"
- ------------------------------------- -------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- --------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
IV. OTHER SERVICES Services which are not o Business Risk Management support
prohibited by the Rule, o Other control and regulatory
A. SYNERGISTIC, if an officer of the Fund compliance projects
UNIQUE QUALIFICATIONS determines that using the
Fund's auditor to provide
these services creates
significant synergy in
the form of efficiency,
minimized disruption,
the ability to maintain a
desired level of
confidentiality, or where
the Fund's auditors
posses unique or superior
qualifications to provide
these services, resulting
in superior value and
results for the Fund.
- ----------------------- --------------------------- -----------------------------------------------
- --------------------------------------- ------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------- --------------------------
o "One-time" pre-approval o A summary of
for the fund fiscal year within all such services and
a specified dollar limit related fees
(including comparison
to specified dollar
limits) reported
quarterly.
o Specific approval is
needed to exceed the
pre-approved dollar limits for
these services (see general
Audit Committee approval policy
below for details on obtaining
specific approvals)
o Specific approval is
needed to use the Fund's
auditors for "Synergistic" or
"Unique Qualifications" Other
Services not denoted as
pre-approved to the left, or to
add a specific service
subcategory as "pre-approved"
- ------------------------------------- --------------------------
SECTION III - POLICY DETAIL, CONTINUED
- ----------------------- ------------------------- -----------------------------------------------
SERVICE CATEGORY SERVICE CATEGORY SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
PROHIBITED SERVICES Services which result 1. Bookkeeping or other services
in the auditors losing related to the accounting records or
independence status financial statements of the audit
under the Rule. client*
2. Financial information systems design
and implementation*
3. Appraisal or valuation services,
fairness* opinions, or
contribution-in-kind reports
4. Actuarial services (i.e., setting
actuarial reserves versus actuarial
audit work)*
5. Internal audit outsourcing services*
6. Management functions or human
resources
7. Broker or dealer, investment
advisor, or investment banking services
8. Legal services and expert services
unrelated to the audit
9. Any other service that the Public
Company Accounting Oversight Board
determines, by regulation, is
impermissible
- ----------------------- ------------------------- -----------------------------------------------
- ------------------------------------------- ------------------------------
AUDIT COMMITTEE APPROVAL POLICY AUDIT COMMITTEE
REPORTING POLICY
- ------------------------------------------- ------------------------------
o These services are not to be o A summary of all
performed with the exception of the(*) services and related
services that may be permitted fees reported at each
if they would not be subject to audit regularly scheduled
procedures at the audit client (as Audit Committee meeting
defined in rule 2-01(f)(4)) level will serve as continual
the firm providing the service. confirmation that has
not provided any
restricted services.
- ------------------------------------------- ------------------------------
- --------------------------------------------------------------------------------
GENERAL AUDIT COMMITTEE APPROVAL POLICY:
o For all projects, the officers of the Funds and the Fund's auditors will each
make an assessment to determine that any proposed projects will not impair
independence.
o Potential services will be classified into the four non-restricted service
categories and the "Approval of Audit, Audit-Related, Tax and Other
Services" Policy above will be applied. Any services outside the specific
pre-approved service subcategories set forth above must be specifically
approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the
services by service category, including fees, provided by the Audit firm as
set forth in the above policy.
- --------------------------------------------------------------------------------
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
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.
The Fund's independent auditor, Ernst & Young
LLP ("E&Y"), has advised the Securities
and Exchange Commission, the Public Company
Accounting Oversight Board, and the Audit
Committee of the Fund's Board of Trustees that
certain non-audit work performed by E&Y's China
affiliate raised questions regarding E&Y's
independence with respect to its performance of
audit services for the Fund. In July 2004, E&Y
became aware that member firms in China ("E&Y
China") provided certain tax services to offices of
UniCredito Italiano, S.p.A. ("UCI"), a member of
the Fund's Investment Company Complex. The
services included receipt and disbursement of
monies transferred to E&Y China by UCI in
payment of individual expatriate income taxes due
on returns prepared by E&Y China for certain UCI
employees located in China from October 1998 to
May 2003. E&Y became auditors of the Fund in
May 2002. These expatriate tax services were
discontinued in May 2003. The fees received by
E&Y China for all such services totaled $3,685.
The Fund's Audit Committee and E&Y have
discussed the matter, including the nature of the
services provided, the personnel involved in
providing the services and the fees received by
E&Y for performing the services. E&Y has informed
the Audit Committee that based on its internal reviews
and the de minimis nature of the services provided and
fees received, it does not believe its independence
with respect to the Fund has been impaired.
N/A
(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.
N/A
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 principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal 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.
(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 Fund
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 29, 2005
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 August 29, 2005
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 29, 2005
* Print the name and title of each signing officer under his or her signature.