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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 Shares
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Dorothy E. Bourassa, Pioneer Investment Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31
Date of reporting period: January 1, 2006 through June 30, 2006
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO SHAREOWNERS.
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PIONEER
----------
REAL
ESTATE
SHARES
Semiannual
Report
6/30/06
[Logo]PIONEER
Investments(R)
Table of Contents
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Letter to Shareowners 2
Portfolio Management Discussion 4
Portfolio Summary 8
Prices and Distributions 9
Performance Update 10
Comparing Ongoing Fund Expenses 14
Schedule of Investments 16
Financial Statements 19
Notes to Financial Statements 27
Trustees, Officers and Service Providers 34
President's
Dear Shareowner,
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We know from the history of the capital markets that sudden shifts in investor
sentiment can occur with little warning, based on an assortment of events. We
believe such a shift in sentiment is occurring in reaction to the possibility
that U.S. economic growth may slow in the second half of 2006.
While U.S. markets fell in late May and early June, the economic events of the
six- and 12-month periods ending June 30, 2006, have actually been characterized
by continued low inflation at home and strong growth prospects abroad with
rising commodity and stock prices.
According to the International Monetary Fund, international economic growth in
2004-5 was the fastest of any two-year period in more than 30 years, and 2006
growth is projected to match the healthy growth of 2005. The growth has been
broad-based, with Europe, Japan, and emerging market economies all showing
strength. The result has been rising prices across a broad range of commodities,
increasing corporate profits, and higher interest rates.
The U.S. bond markets' concern has been that strong economic growth would spark
inflation - we have already seen commodity prices rise, and U.S. labor costs are
threatening to increase, since we are close to full employment. That may also be
a reason why public sentiment is becoming uneasy.
Despite strong first quarter economic growth, the U.S. economy for the second
half of the year may slow in reaction to past increases in interest rates and
energy costs. Thus far the only sign of such a slowdown has been a cooling
housing market. Yet many observers believe a slower growing economy could be
welcomed by the markets.
The U.S. Federal Reserve has continued its program of measured short-term
interest rate increases. However, the Fed Chairman, Ben Bernanke, indicated that
inflation may moderate, which would permit the Fed to stop raising interest
rates. Such action could have positive effects for both consumers and investors
over the intermediate to longer term. By restraining inflation, the Fed may also
limit upward
2
Letter
pressure on longer-maturity bond yields and downward pressure on stocks'
price/earnings ratios.
In summary, we think security market valuations remain reasonable, and yet there
are no guarantees in investing. The unpredictability reinforces the importance
of Pioneer's message that investors should remain diversified, take a long-term
view, and base investment decisions on economic and market fundamentals, rather
than on emotion. Our investment philosophy and approach continue to be based on
the use of fundamental research to identify a range of opportunities that offer
an attractive balance of risk and reward to help shareowners work toward their
long-term goals.
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.
3
Pioneer Real Estate Shares
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
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Real estate investments enjoyed strong performance during the six months ended
June 30, 2006 - the first half of Pioneer Real Estate Shares' fiscal year.
While performance gains were generally positive across the various sectors of
the real estate market, the Fund's investments in the apartment and office
sectors proved very rewarding, as Portfolio Manager Matthew Troxell of AEW
Capital management, L.P., the Fund's Sub-Advisor, explains in the following
interview.
Q: How well did the Fund perform during the six months ended June 30, 2006?
A: The Fund posted strong performance, both on an absolute basis and relative
to its benchmark and competitive universe. For the first half of fiscal
2006, the Fund's Class A shares returned 14.45% at net asset value. In
comparison, the Fund's benchmark, the Wilshire Real Estate Securities
Index, posted 14.08% for the same six-month period. The average return for
the 251 funds in the Fund's Lipper category of real estate funds was
12.70%. We think effective stock selection and the portfolio's
greater-than-benchmark weighting in the apartment sector contributed to
these results.
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Q: Could you highlight the sectors of the real estate market - and some stocks
within those industries - that contributed to performance?
A: Our decision to emphasize investments in the apartment sector during the
reporting period proved to be very rewarding. The sector's outlook has
improved, as many of the negative factors that had overshadowed this group
of stocks and depressed investor demand have dissipated.
Several factors contributed to increased demand for apartments. With the
return of higher interest rates, renting has
4
Pioneer Real Estate Shares
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become a more attractive option relative to buying a home. In addition,
property values appear to have leveled off or even declined in some markets
- thereby discouraging potential homebuyers that might have been drawn to
the rising equity values offered by owning a home.
At the same time, the growth in the supply of apartments has remained in
check, in part due to the escalating cost of new construction. Moreover,
during the last few years, many apartments were converted into condominiums
to meet the high demand for home ownership. This development has resulted
in a reduced supply of apartments in the face of today's rising demand in
some markets. This is benefiting the bottom line of the apartment real
estate investment trust (REIT) operators, since landlords are better able
to maintain full occupancy. With stronger demand, landlords have greater
pricing power and are able to push through rent increases.
One of the Fund's holdings, Camden Properties, dramatically outperformed
for the six months ended June 30, 2006. We have a high level of confidence
in the management team of this REIT, which is embracing technological
innovations to improve efficiency and maximize revenue. The company owns
high-quality properties, which they manage very effectively in our opinion.
Q: Did office REITs also experience a resurgence?
A: Yes, and for similar reasons, albeit with somewhat of a lag versus the
multifamily sector. After a protracted period of underperformance as a
result of declining occupancies, the office sector has begun to see
fundamentals improve. In fact, in some markets, such as New York City,
rents have returned to the previous peak levels experienced during the
technology boom of the late 1990s and early 2000. With the U.S. economy
prospering and job growth expanding, demand for office space is increasing
occupancy as existing tenants expand their businesses or new tenants
arrive. As with the apartment sector, the increased demand has allowed
landlords to raise rents.
Announcements of two large all-cash privatizations in the office sector in
the first half of the year (CarrAmerica Realty and Trizec Properties) on
the heels of the acquisition of Arden Realty underscored tremendous
investor interest in office properties.
5
Pioneer Real Estate Shares
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PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued)
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Highwoods Properties, an overweight holding of the Fund, rose dramatically
in the final weeks of the reporting period in response to an unsolicited
offer for the company at a value substantially higher than the trading
price. While the offer was quickly rejected by the board, we think it
corroborated the inherent value that we'd seen in the stock for some time.
One of the Fund's holdings, Equity Office Properties, also was a strong
performer for the semiannual period. However, we'd limited the Fund's
exposure to this REIT, because we had concerns about the ability of the
company to participate fully in the nascent office recovery.
Q: Is the mall sector still benefiting from the economic recovery?
A: Yes, but to a lesser degree than apartment or office REITs because regional
malls and shopping centers had already enjoyed strong outperformance
relative to other property types for some time. Over the past few years,
healthy consumer spending has supported strong operating results at the
property level.
Two of the Fund's holdings produced contrasting results and contributed to
weaker albeit positive results during the reporting period. The Fund
benefited from its overweight position in Taubman Centers, which
outperformed both the mall group and the Index. The Fund's position in
Mills hurt absolute performance as it posted a negative total return, but
not relative performance as the Fund's holding was significantly less than
the Index weighting.
The Fund's investment in Mills Corp. turned in disappointing performance,
because of questions surrounding the company's financial reporting and a
proposed large-scale project in New Jersey. In contrast, Taubman Centers
delivered strong performance consistent with its high-quality portfolio,
and its considerable weighting in the portfolio magnified this result.
Q: What is your outlook for balance of the fiscal year?
A: We think that the fundamentals across most property types should continue
to improve for the foreseeable future - although to varying degrees since
their respective lease terms make them respond differently to the economic
recovery. For instance, hotels, with their one-night lease terms can
effectively adjust daily to the strength in their market. On the other
hand, offices respond more
6
Pioneer Real Estate Shares
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slowly to economic growth because they typically have leases that run three
to five years. Our investment approach will continue to monitor fundamental
trends and seek out investments offering the most attractive value.
As we have mentioned to you in past reports, the multi-year rally in real
estate stocks has produced tremendous appreciation. Our valuation analyses
suggest that shares are fully valued based on valuation metrics that are
well above historical averages. On the other hand, there are a number of
sound arguments that lend support to these higher metrics, and demand for
commercial real estate continues to be strong on both a public and private
basis. We will continue to assess every holding - paring back positions in
companies that have become overpriced in our estimation while adding to
positions in relatively undervalued companies - to help build long-term
value and appreciation for our shareowners.
The Fund invests in REIT and REOC securities, the value of which can fall
for a variety of reasons, such as declines in rental income, fluctuating
interest rates, poor property management, environmental liabilities,
uninsured damage, increased competition, or changes in real estate tax
laws. At times, the Fund's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries or sectors.
Any information in this shareholder report regarding market or economic
trends or the factors influencing the Fund's historical or future
performance are statements of the opinion of Fund management as of the date
of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is
no guarantee that market forecasts discussed will be realized.
7
Pioneer Real Estate Shares
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PORTFOLIO SUMMARY 6/30/06
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Portfolio Diversification
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(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 84.8%
Temporary Cash Investment 15.2%
Sector Diversification
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(As a percentage of equity holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Office 20.5%
Apartment 19.3%
Industrial 13.2%
Regional Mall 13.2%
Shopping Center 12.7%
Hotel 9.0%
Storage 4.9%
Diversified 4.3%
Triple Net Lease 1.5%
Health Care 1.1%
Manufactured Home 0.3%
10 Largest Holdings
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(As a percentage of equity holdings)
1. Simon DeBartolo Group, Inc. 7.10%
2. Boston Properties, Inc. 5.43
3. ProLogis Trust 5.31
4. AvalonBay Communities, Inc. 4.95
5. Equity Residential Property Trust 4.71
6. Host Hotels & Resorts, Inc. 4.05
7. Archstone Communities Trust 3.74
8. Vornado Realty Trust 3.52
9. Developers Diversifies Realty Corp. 3.51
10. Liberty Property Trust 3.49
This list excludes temporary cash investments and derivative instruments.
Portfolio holdings will vary for other periods.
8
Pioneer Real Estate Shares
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PRICES AND DISTRIBUTIONS
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Net Asset Value Per Share
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Class 6/30/06 12/31/05
- ------- --------- ---------
A $29.29 $25.87
B $29.02 $25.64
C $29.07 $25.68
Y $29.26 $25.84
Distributions Per Share
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1/1/06 - 6/30/06
-----------------------------------------------------------
Net
Investment Short-Term Long-Term Non-taxable
Class Income Capital Gains Capital Gains Distributions
- ------- ------------ --------------- --------------- --------------
A $0.31 $ - $ - $ -
B $0.18 $ - $ - $ -
C $0.19 $ - $ - $ -
Y $0.37 $ - $ - $ -
9
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/06 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, 2006)
Public
Net Asset Offering
Period Value (NAV) Price (POP)
10 Years 15.01% 14.34%
5 Years 19.97 18.56
1 Year 23.31 16.24
Value of $10,000 Investment
[THE FOLLOWING DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED
MATERIAL]
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
Jun-96 9,425 10,000
12,892 13,355
Jun-98 13,712 14,223
12,329 13,244
Jun-00 12,837 13,834
15,368 17,231
Jun-02 17,529 19,603
17,973 20,182
Jun-04 23,024 26,073
30,969 35,100
Jun-06 38,188 42,769
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Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
NAV results represent the percent change in net asset value per share.
Returns would have been lower had sales charges been reflected. POP returns
reflect deduction of maximum 5.75% sales charge. All results are historical
and assume the reinvestment of dividends and capital gains. Other share
classes are available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
The 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.
10
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/06 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, 2006)
If If
Period Held Redeemed
10 Years 14.11% 14.11%
5 Years 18.97 18.97
1 Year 22.17 18.17
Value of $10,000 Investment
[THE FOLLOWING DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED
MATERIAL]
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
Jun-96 10,000 10,000
13,576 13,355
Jun-98 14,334 14,223
12,783 13,244
Jun-00 13,222 13,834
15,701 17,231
Jun-02 17,764 19,603
18,074 20,182
Jun-04 22,967 26,073
30,631 35,100
Jun-06 37,421 42,769
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Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
"If Held" results represent the percent change in net asset value per
share. Returns would have been lower had sales charges been reflected. "If
redeemed" returns reflect the deduction of applicable contingent deferred
sales charge (CDSC). Effective December 1, 2004, the period during which a
CDSC is applied to withdrawals was shortened to 5 years. The maximum CDSC
for class B shares continues to be 4%. For more complete information,
please see the prospectus for details. Note: Shares purchased prior to
December 1, 2004 remain subject to the CDSC in effect at the time you
purchased those shares. For performance information for shares purchased
prior to December 1, 2004, please visit www.pioneerinvestments.com/bshares.
All results are historical and assume the reinvestment of dividends and
capital gains. Other share classes are available for which performance and
expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
The 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.
11
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/06 CLASS C SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Wilshire
Real Estate Securities Index.
Average Annual Total Returns
(As of June 30, 2006)
If If
Period Held Redeemed
10 Years 14.16% 14.16%
5 Years 19.05 19.05
1 Year 22.29 22.29
Value of $10,000 Investment
[THE FOLLOWING DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED
MATERIAL]
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
Jun-96 10,000 10,000
13,582 13,355
Jun-98 14,342 14,223
12,778 13,244
Jun-00 13,240 13,834
15,713 17,231
Jun-02 17,786 19,603
18,110 20,182
Jun-04 23,023 26,073
30,732 35,100
Jun-06 37,582 42,769
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Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
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.
12
Pioneer Real Estate Shares
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PERFORMANCE UPDATE 6/30/06 CLASS Y SHARES
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Investment Returns
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The mountain chart on the right shows the change in value of a $10,000
investment made in Pioneer Real Estate Shares, compared to that of the Wilshire
Real Estate Securities Index.
Average Annual Total Returns
(As of June 30, 2006)
If If
Period Held Redeemed
10 Years 15.57% 15.57%
5 Years 20.62 20.62
1 Year 23.94 23.94
Value of $10,000 Investment
[THE FOLLOWING DATA IS A REPRESENTATION OF A MOUNTAIN CHART IN THE PRINTED
MATERIAL]
Pioneer Wilshire
Real Estate Real Estate
Shares Securities Index
Jun-96 10,000 10,000
13,666 13,355
Jun-98 14,544 14,223
13,201 13,244
Jun-00 13,846 13,834
16,656 17,231
Jun-02 19,089 19,603
19,700 20,182
Jun-04 25,381 26,073
34,308 35,100
Jun-06 42,521 42,769
- --------------------------------
Call 1-800-225-6292 or visit www.pioneerinvestments.com for the most recent
month-end performance results. Current performance may be lower or higher
than the performance data quoted.
The performance data quoted represents past performance, which is no
guarantee of future results. Investment return and principal value will
fluctuate, and shares, when redeemed, may be worth more or less than their
original cost.
Performance for periods prior to the inception 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 its
inception would have been higher. Class A shares are used as a proxy
through April 9, 1998. Class Y shares are not subject to sales charges and
are available for limited groups of eligible investors, including
institutional investors. All results are historical and assume the
reinvestment of dividends, and capital gains. Other share classes are
available for which performance and expenses will differ.
Performance results reflect any applicable expense waivers in effect during
the periods shown. Without such waivers Fund performance would be lower.
Waivers may not be in effect for all funds. Certain fee waivers are
contractual through a specified period. Otherwise, fee waivers can be
rescinded at any time. See the prospectus and financial statements for more
information.
The performance table and graph do not reflect the deduction of fees and
taxes that a shareowner would pay on Fund distributions or the redemption
of Fund shares.
The 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.
13
Pioneer Real Estate Shares
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COMPARING ONGOING FUND EXPENSES
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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, 2006 through June 30, 2006
Share Class A B C Y
- --------------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/06
Ending Account Value $1,144.50 $1,139.00 $1,139.60 $1,147.00
On 6/30/06
Expenses Paid During Period* $ 7.13 $ 12.20 $ 11.51 $ 4.58
* Expenses are equal to the Fund's annualized expense ratio of 1.34%, 2.30%,
2.17% and 0.86% 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).
14
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, 2006 through June 30, 2006
Share Class A B C R
- --------------------------------------------------------------------------------------------
Beginning Account Value $1,000.00 $1,000.00 $1,000.00 $1,000.00
On 1/1/06
Ending Account Value $1,018.15 $1,013.59 $1,014.03 $1,020.53
On 6/30/06
Expenses Paid During Period* $ 6.71 $ 11.48 $ 10.84 $ 4.31
* Expenses are equal to the Fund's annualized expense ratio of 1.34%, 2.30%,
2.17% and 0.86% 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).
15
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (unaudited)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.5%
Consumer Services - 3.9%
Hotels, Resorts & Cruise Lines - 3.9%
160,000 Hilton Hotels Corp. $ 4,524,800
64,000 Starwood Hotels & Resorts* 3,861,760
------------
$ 8,386,560
------------
Total Consumer Services $ 8,386,560
------------
Real Estate - 93.6%
Real Estate Management & Development- 3.2%
215,000 Brookfield Properties Corp. (b) $ 6,916,550
------------
Real Estate Investment Trusts - 90.4%
73,000 AMB Property Corp. $ 3,690,150
46,300 Apartment Investment & Management Co. 2,011,735
153,000 Archstone Communities Trust 7,783,110
93,000 AvalonBay Communities, Inc. 10,287,660
54,700 BioMed Property Trust, Inc. 1,637,718
125,000 Boston Properties, Inc. 11,300,000
140,000 Brandywine Realty Trust 4,503,800
81,000 Camden Property Trust 5,957,550
14,500 Carramerica Realty Corp. 645,975
50,800 Corporate Office Properties (b) 2,137,664
140,000 Developers Diversifies Realty Corp. 7,305,200
58,000 Duke Realty Investments, Inc. 2,038,700
14,000 Equity Lifestyle Properties, Inc. 613,620
97,000 Equity Office Properties Trust (b) 3,541,470
219,000 Equity Residential Property Trust (b) 9,795,870
82,000 Extra Space Storage, Inc.* 1,331,680
70,000 Federal Realty Investment Trust 4,900,000
33,500 First Potomac Realty Trust 997,965
128,000 General Growth Properties, Inc. 5,767,680
22,500 Healthcare Realty Trust, Inc. 716,625
112,500 Highwoods Properties, Inc. 4,070,250
26,800 Home Properties, Inc.*(b) 1,487,668
23,000 Hospitality Properties Trust 1,010,160
385,000 Host Hotels & Resorts, Inc.*(b) 8,419,950
50,000 iStar Financial, Inc. 1,887,500
16 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Real Estate Investment Trusts - (continued)
52,500 Kilroy Realty Corp. $ 3,793,125
105,100 Kimco Realty Corp. 3,835,099
66,600 Kite Realty Group Trust 1,038,294
164,000 Liberty Property Trust (b) 7,248,800
24,500 Mack-Cali Realty Corp. 1,125,040
69,000 Nationwide Health Properties, Inc.* 1,553,190
68,000 Pan Pacific Retail Properties, Inc. 4,717,160
212,000 ProLogis Trust 11,049,440
40,600 PS Business Parks, Inc. 2,395,400
86,100 Public Storage, Inc. 6,534,990
74,000 Regency Centers Corp. 4,599,100
29,000 Shurgard Storage Centers, Inc. 1,812,500
178,000 Simon DeBartolo Group, Inc. 14,763,320
109,000 Spirit Finance Corp. 1,227,340
41,000 Strategic Hotels & Resorts, Inc.* 850,340
95,500 Taubman Centers, Inc. 3,905,950
43,700 The Macerich Co. 3,067,740
159,000 Trizec Properties, Inc. 4,553,760
100,000 United Dominion Realty Trust 2,801,000
32,000 U-Store-It Trust* 603,520
75,000 Vornado Realty Trust 7,316,250
------------
$192,631,058
------------
Total Real Estate $199,547,608
------------
TOTAL COMMON STOCKS
(Cost $125,944,172) $207,934,168
------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 17.5%
Repurchase Agreement - 2.0%
$ 4,200,000 UBS Warburg, Inc. 4.40%, dated 7/3/06,
with a repurchase price of $4,200,000 plus
accrued interest on 7/3/06 collateralized
by $4,289,000 U.S. Treasury Note,
5.125%, 6/30/08 $ 4,200,000
------------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
Security Lending Collateral - 15.5%
$33,023,717 Securities Lending Investment Fund, 5.16% $ 33,023,717
-------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $37,223,717) $ 37,223,717
-------------
TOTAL INVESTMENTS IN SECURITIES - 115.0%
(Cost $163,167,889) (a) $ 245,157,885
-------------
OTHER ASSETS AND LIABILITIES - (15.0)% $ (32,000,675)
-------------
TOTAL NET ASSETS - 100.0% $ 213,157,210
=============
* Non-income producing security.
(a) At June 30, 2006, the net unrealized gain on investments based on cost for
federal income tax purposes of $164,042,878 was as follows:
Aggregate gross unrealized gain for all investments in which there is an
excess of value over tax cost. $ 81,217,835
Aggregate gross unrealized loss for all investments in which there
is an excess of tax cost over value. (102,828)
------------
Net unrealized gain $ 81,115,007
============
(b) At June 30, 2006, the following securities were out on loan:
Shares Security Value
215,000 Brookfield Properties Corp.** $ 1,637,453
50,800 Corporate Office Properties 2,116,287
97,000 Equity Office Properties Trust 3,506,055
219,000 Equity Residential Property Trust 9,318,959
26,800 Home Properties, Inc.* 1,472,792
385,000 Host Hotels & Resorts, Inc.* 7,173,360
164,000 Liberty Property Trust 7,176,312
------------
Total $ 32,401,218
============
** Pending sale at June 30, 2006
Purchases and sales of securities (excluding temporary cash investments) for the
period ended June 30, 2006 aggregated 24,598,968 and 23,236,558 respectively.
18 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (unaudited)
- -----------------------------------------------------------------------------
ASSETS:
Investment in securities (including securities loaned of
$32,401,218) (cost $163,167,889) $245,157,885
Receivables -
Investment securities sold 551,381
Fund shares sold 189,800
Dividends, interest and foreign taxes withheld 761,015
Other 8,398
------------
Total assets $246,668,479
------------
LIABILITIES:
Payables -
Investment securities purchased $ 49,081
Fund shares repurchased 125,381
Upon return of securities loaned 33,023,717
Due to bank 174,793
Due to affiliates 48,585
Accrued expenses 89,712
------------
Total liabilities $ 33,511,269
------------
NET ASSETS:
Paid-in capital $125,447,669
Undistributed net investment income 395,300
Accumulated net realized gain on investments 5,324,245
Net unrealized gain on investments 81,989,996
------------
Total net assets $213,157,210
============
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Class A (based on $128,233,129/4,378,333 shares) $ 29.29
============
Class B (based on $29,463,516/1,015,290 shares) $ 29.02
============
Class C (based on $20,766,335/714,356 shares) $ 29.07
============
Class Y (based on $34,694,230/1,185,586 shares) $ 29.26
============
MAXIMUM OFFERING PRICE:
Class A ($29.29 [divided by] 94.25%) $ 31.08
============
The accompanying notes are an integral part of these financial statements. 19
Pioneer Real Estate Shares
- -----------------------------------------------------------------------------
STATEMENT OF OPERATIONS (unaudited)
- -----------------------------------------------------------------------------
For the Six Months Ended 6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $12,203) $3,499,544
Interest 101,424
Income from securities loaned, net 14,782
----------
Total investment income $ 3,615,750
-----------
EXPENSES:
Management fees $ 811,011
Transfer agent fees and expenses
Class A 141,929
Class B 66,488
Class C 32,122
Class Y 356
Distribution fees
Class A 151,761
Class B 149,269
Class C 103,343
Administrative reimbursements 18,353
Custodian fees 8,536
Professional fees 15,537
Printing expense 5,993
Fees and expenses of nonaffiliated trustees 4,189
Miscellaneous 3,998
----------
Total expenses $ 1,512,885
-----------
Net expenses $ 1,512,885
-----------
Net investment income $ 2,102,865
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 6,199,547
Change in net unrealized gain on investments 18,396,687
-----------
Net gain investments $24,596,234
-----------
Net increase in net assets resulting from operations $26,699,099
===========
20 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/06 and the Year Ended 12/31/05, respectively
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 2,102,865 $ 1,537,954
Net realized gain on investments 6,199,547 12,370,248
Change in net unrealized gain on investments 18,396,687 10,168,193
------------- -------------
Net increase in net assets resulting from
operations $ 26,699,099 $ 24,076,395
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class A ($0.31 and $.24 per share, respectively) $ (1,359,927) $ (975,314)
Class B ($0.18 and $.05 per share, respectively) (189,586) (63,873)
Class C ($0.19 and $.07 per share, respectively) (137,573) (55,449)
Class Y ($0.37 and $.34 per share, respectively) (412,229) (221,077)
Net realized gain:
Class A ($0.00 and $1.84 per share, respectively) - (7,449,006)
Class B ($0.00 and $1.84 per share, respectively) - (2,041,497)
Class C ($0.00 and $1.84 per share, respectively) - (1,370,463)
Class Y ($0.00 and $1.84 per share, respectively) - (1,643,093)
Tax return of capital:
Class A ($0.00 and $0.14 per share, respectively) - (563,975)
Class B ($0.00 and $0.09 per share, respectively) - (112,846)
Class C ($0.00 and $0.10 per share, respectively) - (75,822)
Class Y ($0.00 and $0.16 per share, respectively) - (106,067)
------------- -------------
Total distributions to shareowners $ (2,099,315) $ (14,678,482)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 33,603,224 $ 83,328,211
Reinvestment of distributions 1,878,234 13,169,180
Cost of shares repurchased (33,447,791) (88,250,156)
------------- -------------
Net increase in net assets resulting from
Fund share transactions $ 2,033,667 $ 13,247,235
------------- -------------
Net increase in net assets $ 26,633,451 $ 22,645,148
NET ASSETS:
Beginning of period 186,523,759 163,878,611
------------- -------------
End of period (including undistributed net investment
income of $395,300 and $391,750, respectively) $ 213,157,210 $ 186,523,759
============= =============
The accompanying notes are an integral part of these financial statements. 21
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
CLASS A
Shares sold 748,896 $ 21,164,104 1,869,739 $ 46,078,540
Reinvestment of distributions 42,324 1,215,287 315,973 8,167,334
Less shares repurchased (673,449) (19,010,452) (1,766,214) (44,031,328)
-------- ------------- ---------- -------------
Net increase 117,771 $ 3,368,939 419,498 $ 10,214,546
======== ============= ========== =============
CLASS B
Shares sold 141,209 $ 3,947,858 643,409 $ 15,526,329
Reinvestment of distributions 5,987 170,456 76,949 1,972,638
Less shares repurchased (301,601) (8,364,326) (1,188,498) (28,932,188)
-------- ------------- ---------- -------------
Net decrease (154,405) $ (4,246,012) (468,140) $ (11,433,221)
======== ============= ========== =============
CLASS C
Shares sold 106,444 $ 2,991,105 391,180 $ 9,450,159
Reinvestment of distributions 3,968 112,942 48,255 1,240,675
Less shares repurchased (168,131) (4,728,092) (516,443) (12,730,754)
-------- ------------- ---------- -------------
Net decrease (57,719) $ (1,624,045) (77,008) $ (2,039,920)
======== ============= ========== =============
CLASS Y
Shares sold 195,285 $ 5,500,157 682,351 $ 17,273,183
Reinvestment of distributions 13,247 379,549 68,990 1,788,533
Less shares repurchased (48,119) (1,344,921) (100,628) (2,555,886)
-------- ------------- ---------- -------------
Net increase 160,413 $ 4,534,785 650,713 $ 16,505,830
======== ============= ========== =============
22 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
CLASS A
Net asset value, beginning of period $ 25.87 $ 24.52
-------- --------
Increase from investment operations:
Net investment income $ 0.31 $ 0.28
Net realized and unrealized gain on investments 3.42 3.29
-------- --------
Net increase from investment operations $ 3.73 $ 3.57
Distributions to shareowners:
Net investment income (0.31) (0.24)
Net realized gain - (1.84)
Tax return of capital - (0.14)
-------- --------
Net increase (decrease) in net asset value $ 3.42 $ 1.35
-------- --------
Net asset value, end of period $ 29.29 $ 25.87
======== ========
Total return* 14.45% 14.79%
Ratio of net expenses to average net assets+ 1.34%** 1.50%
Ratio of net investment income to average net assets+ 2.23%** 1.14%
Portfolio turnover rate 23%** 24%
Net assets, end of period (in thousands) $128,233 $110,217
Ratios with reductions for fees paid indirectly:
Net expenses 1.34%** 1.50%
Net investment income 2.23%** 1.14%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 1.34%** 1.50%
Net investment income 2.23%** 1.14%
Year Ended Year Ended Year Ended Year Ended
12/31/04 (a) 12/31/03 12/31/02 12/31/01
CLASS A
Net asset value, beginning of period $ 19.55 $ 15.30 $ 15.38 $ 15.04
------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.39 $ 0.65 $ 0.57 $ 0.38
Net realized and unrealized gain on investments 6.31 4.33 0.00(b) 0.70
------- ------- ------- -------
Net increase from investment operations $ 6.70 $ 4.98 $ 0.57 $ 1.08
Distributions to shareowners:
Net investment income (0.40) (0.73) (0.65) (0.74)
Net realized gain (1.33) - - -
Tax return of capital - - - -
------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.97 $ 4.25 $ (0.08) $ 0.34
------- ------- ------- -------
Net asset value, end of period $ 24.52 $ 19.55 $ 15.30 $ 15.38
======= ======= ======= =======
Total return* 35.26% 33.27% 3.58% 7.47%
Ratio of net expenses to average net assets+ 1.56% 1.68% 1.67% 1.58%
Ratio of net investment income to average net assets+ 1.85% 3.81% 3.70% 4.31%
Portfolio turnover rate 34% 36% 39% 37%
Net assets, end of period (in thousands) $94,198 $61,455 $44,904 $39,263
Ratios with reductions for fees paid indirectly:
Net expenses 1.56% 1.68% 1.67% 1.58%
Net investment income 1.85% 3.81% 3.70% 4.31%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 1.56% 1.68% 1.67% 1.57%
Net investment income 1.85% 3.81% 3.70% 4.32%
(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. 23
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
CLASS B
Net asset value, beginning of period $ 25.64 $ 24.32
------- -------
Increase from investment operations:
Net investment income $ 0.18 $ 0.06
Net realized and unrealized gain on investments 3.38 3.24
------- -------
Net increase from investment operations $ 3.56 $ 3.30
Distributions to shareowners:
Net investment income (0.18) (0.05)
Net realized gain - (1.84)
Tax return of capital - (0.09)
------- -------
Net increase (decrease) in net asset value $ 3.38 $ 1.32
------- -------
Net asset value, end of period $ 29.02 $ 25.64
======= =======
Total return* 13.90% 13.72%
Ratio of net expenses to average net assets+ 2.30%** 2.42%
Ratio of net investment income to average net assets+ 1.23%** 0.14%
Portfolio turnover rate 23%** 24%
Net assets, end of period (in thousands) $29,464 $29,992
Ratios with reduction for fees paid indirectly:
Net expenses 2.30%** 2.42%
Net investment income 1.23%** 0.14%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.30%** 2.42%
Net investment income 1.23%** 0.14%
Year Ended Year Ended Year Ended Year Ended
12/31/04 (a) 12/31/03 12/31/02 12/31/01
CLASS B
Net asset value, beginning of period $ 19.40 $ 15.17 $ 15.25 $ 14.94
------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.19 $ 0.51 $ 0.43 $ 0.54
Net realized and unrealized gain on investments 6.28 4.30 0.02 0.39
------- ------- ------- -------
Net increase from investment operations $ 6.47 $ 4.81 $ 0.45 $ 0.93
Distributions to shareowners:
Net investment income (0.22) (0.58) (0.53) (0.62)
Net realized gain (1.33) - - -
Tax return of capital - - - -
------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.92 $ 4.23 $ (0.08) $ 0.31
------- ------- ------- -------
Net asset value, end of period $ 24.32 $ 19.40 $ 15.17 $ 15.25
======= ======= ======= =======
Total return* 34.20% 32.30% 2.84% 6.42%
Ratio of net expenses to average net assets+ 2.37% 2.50% 2.40% 2.36%
Ratio of net investment income to average net assets+ 0.96% 2.98% 2.90% 3.50%
Portfolio turnover rate 34% 36% 39% 37%
Net assets, end of period (in thousands) $39,833 $37,325 $28,121 $30,699
Ratios with reduction for fees paid indirectly:
Net expenses 2.37% 2.50% 2.40% 2.36%
Net investment income 0.96% 2.98% 2.90% 3.50%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.37% 2.50% 2.40% 2.36%
Net investment income 0.96% 2.98% 2.90% 3.50%
(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. 24
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
CLASS C
Net asset value, beginning of period $ 25.68 $ 24.35
------- -------
Increase from investment operations:
Net investment income $ 0.20 $ 0.08
Net realized and unrealized gain on investments 3.38 3.26
------- -------
Net increase from investment operations $ 3.58 $ 3.34
Distributions to shareowners:
Net investment income (0.19) (0.07)
Net realized gain - (1.84)
Tax return of capital - (0.10)
------- -------
Net increase (decrease) in net asset value $ 3.39 $ 1.33
------- -------
Net asset value, end of period $ 29.07 $ 25.68
======= =======
Total return* 13.96% 13.85%
Ratio of net expenses to average net assets+ 2.17%** 2.32%
Ratio of net investment income to average net assets+ 1.37%** 0.27%
Portfolio turnover rate 23%** 24%
Net assets, end of period (in thousands) $20,766 $19,824
Ratios with reduction for fees paid indirectly:
Net expenses 2.17%** 2.32%
Net investment income 1.37%** 0.27%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.17%** 2.32%
Net investment income 1.37%** 0.27%
Year Ended Year Ended Year Ended Year Ended
12/31/04 (a) 12/31/03 12/31/02 12/31/01
CLASS C
Net asset value, beginning of period $ 19.42 $ 15.20 $ 15.28 $ 14.96
------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.20 $ 0.52 $ 0.44 $ 0.55
Net realized and unrealized gain on investments 6.29 4.31 0.00(b) 0.41
------- ------- ------- -------
Net increase from investment operations $ 6.49 $ 4.83 $ 0.44 $ 0.96
Distributions to shareowners:
Net investment income (0.23) (0.61) (0.52) (0.64)
Net realized gain (1.33) - - -
Tax return of capital - - - -
------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.93 $ 4.22 $ (0.08) $ 0.32
------- ------- ------- -------
Net asset value, end of period $ 24.35 $ 19.42 $ 15.20 $ 15.28
======= ======= ======= =======
Total return* 34.27% 32.35% 2.79% 6.63%
Ratio of net expenses to average net assets+ 2.34% 2.39% 2.46% 2.28%
Ratio of net investment income to average net assets+ 1.02% 3.20% 2.95% 3.57%
Portfolio turnover rate 34% 36% 39% 37%
Net assets, end of period (in thousands) $20,675 $14,686 $ 7,429 $ 6,136
Ratios with reduction for fees paid indirectly:
Net expenses 2.34% 2.39% 2.46% 2.28%
Net investment income 1.02% 3.20% 2.95% 3.57%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 2.34% 2.39% 2.46% 2.27%
Net investment income 1.02% 3.20% 2.95% 3.58%
(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 25
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
CLASS Y
Net asset value, beginning of period $ 25.84 $ 24.49
------- -------
Increase from investment operations:
Net investment income $ 0.36 $ 0.35
Net realized and unrealized gain on investments 3.43 3.34
------- -------
Net increase from investment operations $ 3.79 $ 3.69
Distributions to shareowners:
Net investment income (0.37) (0.34)
Net realized gain - (1.84)
Tax return of capital - (0.16)
------- -------
Net increase (decrease) in net asset value $ 3.42 $ 1.35
------- -------
Net asset value, end of period $ 29.26 $ 25.84
======= =======
Total return* 14.70% 15.36%
Ratio of net expenses to average net assets+ 0.86%** 1.00%
Ratio of net investment income to average net assets+ 2.74%** 1.84%
Portfolio turnover rate 23%** 24%
Net assets, end of period (in thousands) $34,694 $26,490
Ratios with reduction for fees paid indirectly:
Net expenses 0.86%** 1.00%
Net investment income 2.74%** 1.84%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 0.86%** 1.00%
Net investment income 2.74%** 1.84%
Year Ended Year Ended Year Ended Year Ended
12/31/04 (a) 12/31/03 12/31/02 12/31/01
CLASS Y
Net asset value, beginning of period $ 19.53 $ 15.27 $ 15.35 $ 15.01
------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.50 $ 0.76 $ 0.66 $ 0.63
Net realized and unrealized gain on investments 6.31 4.33 0.00(b) 0.52
------- ------- ------- -------
Net increase from investment operations $ 6.81 $ 5.09 $ 0.66 $ 1.15
Distributions to shareowners:
Net investment income (0.52) (0.83) (0.74) (0.81)
Net realized gain (1.33) - - -
Tax return of capital - - - -
------- ------- ------- -------
Net increase (decrease) in net asset value $ 4.96 $ 4.26 $ (0.08) $ 0.34
------- ------- ------- -------
Net asset value, end of period $ 24.49 $ 19.53 $ 15.27 $ 15.35
======= ======= ======= =======
Total return* 35.97% 34.16% 4.21% 8.00%
Ratio of net expenses to average net assets+ 1.01% 1.05% 1.10% 1.12%
Ratio of net investment income to average net assets+ 2.47% 4.47% 4.39% 4.36%
Portfolio turnover rate 34% 36% 39% 37%
Net assets, end of period (in thousands) $ 9,172 $ 4,984 $ 3,671 $ 2,349
Ratios with reduction for fees paid indirectly:
Net expenses 1.01% 1.05% 1.10% 1.12%
Net investment income 2.47% 4.47% 4.39% 4.36%
Ratios with waiver of management fees and reduction for fees
paid indirectly:
Net expenses 1.01% 1.05% 1.10% 1.11%
Net investment income 2.47% 4.47% 4.39% 4.37%
(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.
26 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (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 diversified, open-end management
investment company. The investment objective of the Fund is to seek long-term
growth of capital. Current income is a secondary objective.
The Fund offers four classes of shares - Class A, Class B, Class C, and Class Y
shares. Each class of shares represents an interest in the same portfolio of
investments of the Fund and has equal rights to voting, redemptions, dividends
and liquidation, except that each class of shares can bear different transfer
agent and distribution fees and have exclusive voting rights with respect to
the distribution plans that have been adopted by Class A, Class B and Class C
shareowners, respectively. There is no distribution plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of income, expenses and gains and losses on investments during the
reporting year. Actual results could differ from those estimates.
Information regarding the Fund's principal risks is contained in the Fund's
prospectus. Please refer to those documents when considering the Fund's risks.
Because the Fund may invest a substantial portion of its assets in Real Estate
Investment Trusts (REITs), the Fund may be subject to certain risks associated
with direct investments in REITs. REITs may be affected by changes in the value
of their underlying properties and by defaults of their borrowers or tenants.
REITs depend generally on their ability to generate cash flow to make
distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a REIT
may be affected by its failure to qualify for tax-free pass-through of income
under the Internal Revenue Code or its failure to maintain exemption from
registration under the Investment Company Act of 1940.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements, which are
27
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
consistent with those policies generally accepted in the investment company
industry.
A. Security Valuation
Security transactions are recorded on trade date. The net asset value of
the Fund is computed once daily, on each day the New York Stock Exchange
(NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset value, securities are valued at the last sale
price on the principal exchange where they are traded. Securities that
have not traded on the date of valuation, or securities for which sale
prices are not generally reported, are valued at the mean between the last
bid and asked prices. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or
under the direction of, the Board of Trustees. Trading in foreign
securities is substantially completed each day at various times prior to
the close of the NYSE. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. The
Fund also may use the fair value of a security, including a non-U.S.
security, when the closing market price on the principal exchange where
the security is traded no longer reflects the value of the security. At
June 30, 2006 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.
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
28
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
federal income tax rules. Therefore, the sources of the Fund's
distributions may be shown in the accompanying financial statements as
either from or in excess of net investment income or net realized gain on
investment transactions, or from paid-in capital, depending on the type of
book/tax differences that may exist. A portion of the dividend income
recorded by the Fund is from distributions by publicly traded REITs, and
such distributions for tax purposes may also consist of capital gains and
return of capital. The actual return of capital and capital gains portions
of such distributions will be determined by formal notifications from the
REITs subsequent to the calendar year-end. Distributions received from the
REITs that are determined to be a return of capital, are recorded by the
Fund as a reduction of the cost basis of the securities held.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The tax character of distributions
paid during the year ended December 31, 2005 was as follows:
- -----------------------------------------------
2005
- -----------------------------------------------
Distributions paid from:
Ordinary income* $ 1,758,621
Long-term capital gain 12,061,151
-----------
13,819,772
Return of capital 858,710
-----------
Total $14,678,482
===========
- -----------------------------------------------
The following shows the components of distributable earnings on a
federal income tax basis at December 31, 2005.
- ------------------------------------------------
2005
- ------------------------------------------------
Undistributed Ordinary Income $ 391,750
Unrealized appreciation 62,604,982
-----------
Total $62,996,732
===========
- -----------------------------------------------
The difference between book basis and tax-basis unrealized appre
ciation is attributable to the tax deferral of losses on wash sales.
29
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
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 $26,097 in underwriting commissions on
the sale of Class A shares during the six months ended June 30, 2006.
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
30
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the lending agreements to recover the securities from the borrower on
demand. The Fund invests cash collateral in the Securities Lending
Investment Fund, which is sponsored by Brown Brothers Harriman & Co., the
Fund's custodian.
F. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value
of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase.
The collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, or subcustodians. The
Fund's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at
least equal to the repurchase price.
2. Management Agreement
PIM, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Fund's portfolio. Management fees are calculated daily at the annual rate of
0.80% of the Fund's average daily net assets. Effective May 31, 2004, AEW
Management and Advisors LP (AEW) became subadvisor to the Fund. PIM pays a
portion of the fee it receives from the Fund to AEW as compensation for
sub-advisory services to the Fund.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At June 30, 2006, $4,389 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 $41,968 in transfer agent
fees payable to PIMSS at June 30, 2006.
31
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
4. Distribution Plans
The Fund adopted a Plan of Distribution with respect to Class A, Class B and
Class C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with
Rule 12b-1 of the Investment Company Act of 1940. Pursuant to the Class A Plan,
the Fund pays PFD a service fee of up to 0.25% of the Fund's average daily net
assets attributable to Class A shares in reimbursement of its actual
expenditures to finance activities primarily intended to result in the sale of
Class A shares. Pursuant to the Class B Plan and the Class C Plan, the Fund
pays PFD 1.00% of the average daily net assets attributable to each class of
shares. The fee consists of a 0.25% service fee and a 0.75% distribution fee
paid as compensation for personal services and/or account maintenance services
or distribution services with regard to Class B and Class C shares. Included in
due to affiliates is $2,228 in distribution fees payable to PFD at June 30,
2006.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be
imposed on redemptions of certain net asset value purchases of Class A shares
within 18 months of purchase. Class B shares 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, 2006, CDSCs in the amount of $27,636 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, 2006, the Fund's expenses
were not reduced 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
32
Pioneer Real Estate Shares
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
for temporary or emergency purposes. The Fund may borrow up to the lesser of
$50 million or the limits set by its prospectus for borrowings. Interest on
collective borrowings is payable at the Federal Funds Rate plus 1/2% on an
annualized basis. The Funds pay an annual commitment fee for this facility. The
commitment fee is allocated among such Funds based on their respective
borrowing limits. For the six months ended June 30, 2006, the Fund had no
borrowings under this agreement.
33
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
Thomas J. Perna
Marguerite A. Piret
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Subadviser
AEW Capital Management, L.P.
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 pioneerinvestments.com. This information is also available on
the Securities and Exchange Commission's web site at http://www.sec.gov.
34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
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
FactFoneSM for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
PIMSS, Inc.
P.O. Box 55014
Boston, Massachusetts 02205-5014
Our toll-free fax 1-800-225-4240
Our internet e-mail address ask.pioneer@pioneerinvestments.com
(for general questions about Pioneer only)
Visit our web site: www.pioneerinvestments.com
Before investing consider the Fund's investment objectives, risks, charges and
expenses. Contact your advisor or Pioneer Investments for a prospectus
containing this information. Read it carefully.
The Fund files a complete 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.
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.
The Fund's independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Fund's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Funds investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Fund in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Fund has been
impaired or that it is disqualified from acting as
independent auditors to the Fund.
N/A
Item 5. Audit Committee of Listed Registrants
(a) If the registrant is a listed issuer as defined in Rule 10A-3
under the Exchange Act (17 CFR 240.10A-3), state whether
or not the registrant has a separately-designated standing
audit committee established in accordance with Section
3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)).
If the registrant has such a committee, however designated,
identify each committee member. If the entire board of directors
is acting as the registrants audit committee as specified in
Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)),
so state.
N/A
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption
from the listing standards for audit committees.
N/A
Item 6. Schedule of Investments.
File Schedule I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 of Regulation S-X [17 CFR 210.12-12], unless the schedule is
included as part of the report to shareholders filed under Item
1 of this Form.
Included in Item 1
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on
this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
Not applicable to open-end management investment companies.
Item 8. Portfolio Managers of Closed-End Management Investment
Companies.
(a) If the registrant is a closed-end management investment company that
is filing an annual report on this Form N-CSR,provide the following
information:
(1) State the name, title, and length of service of the person or persons
employed by or associated with the registrant or an investment adviser
of the registrant who are primarily responsible for the day-to-day management
of the registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
Item 9. Purchases of Equity Securities by Closed-End Management
Investment Company and Affiliated Purchasers.
(a) If the registrant is a closed-end management investment company,
in the following tabular format, provide the information specified in
paragraph (b) of this Item with respect to any purchase made by or on
behalf of the registrant or any affiliated purchaser, as defined in
Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of
shares or other units of any class of the registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders
may recommend nominees to the registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the
shareholders may recommend nominees to the registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14(A) in
its definitive proxy statement, or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
There were no significant changes in the registrant's internal 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 12. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
SIGNATURES
[See General Instruction F]
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Pioneer Real Estate Shares
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 31, 2006
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 31, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 31, 2006
* Print the name and title of each signing officer under his or her signature.