[Pioneer Logo]
Pioneer
Real Estate
Shares
Semiannual Report
June 30, 1996
<PAGE>
Pioneer Real Estate Shares
Dear Shareowner,
Pioneer Real Estate Shares completed the first half of its fiscal year on June
30. Domestic equity markets remained strong, thanks to a huge demand for -- and
generally strong performance by -- technology issues. As a result, other
industries, including real estate, were overlooked by investors and lagged the
general market. As the period progressed, however, technology stocks became
increasingly volatile and investors grew concerned with the market's ability to
sustain their lofty prices.
This mood may help set the stage for investors to begin looking elsewhere for
better values, which could be good news for real estate investment trusts
(REITs). While risks relating to economic conditions and interest rate changes
are an inevitable part of real estate investing, REITs also have the potential
to move independently from the overall stock market, which may attract investors
looking to diversify their portfolios.
Shifting focus to the Fund itself, shareowners approved Boston Financial
Securities as the Fund's subadviser. We appreciate your support and are
confident Boston Financial will be an important link in the chain of the Fund's
success. For detailed voting results, please turn to page 14.
HOW YOUR FUND PERFORMED
For the six months ended June 30, 1996, we report the following:
* CLASS A SHARES -- Shareowners received income dividends totaling $0.31 per
share. Net asset value stood at $12.32 per share on June 30, versus $12.02 six
months earlier, even after the payment of distributions. The Fund's six-month
total return was 5.12% based on net asset value and -0.90% based on maximum
public offering price. Total return assumes the reinvestment of all
distributions at net asset value.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(As of June 30, 1996)
Class A Shares Net Asset Value Public Offering Price*
-------------- --------------- ---------------------
Life-of-Fund
(10/25/93) 4.88% 2.59%
1 Year 13.51 6.98
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares introduced Class B shares and Class C shares to
investors on January 31, 1996. Through June 30, they achieved the following
results:
* CLASS B SHARES -- Shareowners received income dividends totaling $0.29 per
share. Net asset value stood at $12.30 per share on June 30, versus the
opening net asset value of $12.09. Your Fund produced a total return of 4.18%
if shares were held throughout the abbreviated period, 0.18% if shares were
redeemed and the maximum 4% contingent deferred sales charge deducted on
June 30.
* CLASS C SHARES -- Shareowners received income dividends totaling $0.28 per
share. Net asset value stood at $12.31 per share on June 30, versus the
opening net asset value of $12.09. Your Fund produced a total return of 4.18%
if shares were held throughout the abbreviated period, 3.18% if shares were
redeemed and the 1% contingent deferred sales charge deducted on June 30.
A FAST-MOVING, VOLATILE STOCK MARKET
At the beginning of the semiannual period, the environment for stock investing
was favorable. The low inflation and falling interest rates that existed
throughout 1995 continued into 1996. Later in the period, however,
better-than-expected employment reports sparked worries that the economy could
be approaching a peak and that interest rates could rise further, triggering
stock market volatility. Despite big price swings, the Dow Jones Industrial
Average gained 11.75% for the semiannual period, and the broader-based Standard
& Poor's 500 (S&P 500) Index gained 10.08%. While these figures are solid, they
were far below last year's huge run-up when the Dow jumped 20.37% in the first
six months of 1995, and the S&P 500 returned 20.14%.
In the midst of all this, investors seeking some degree of comfort turned to
large, familiar investments. More aggressive investors moved in and out of
technology stocks, leaving many other companies out of the spotlight,
including REITs. With the continued potential for heightened volatility,
however, we think investors looking for value will turn to REITs. REITs
remain attractively priced and continue to meet -- and in many cases, exceed --
their projected earnings. In addition, investors often
- ----------
* Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of all distributions at net asset value.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
want the high yields REITs can offer, as they wait for longer-term growth.
HOW PIONEER MANAGED YOUR INVESTMENT
Pioneer Real Estate Shares invests for long-term capital growth, with quarterly
income as a secondary objective. To select REITs and other real estate
securities with the best prospects, your management focuses first on company
basics such as balance sheets and income statements, quality management and
favorable earnings potential. We review broader conditions, including the growth
and income potential of different property types such as apartment complexes,
warehouses and outlet malls. We also look at demographics such as population
trends and job growth that could affect geographic preferences. To that end, we
look to Boston Financial. Boston Financial brings the Fund in-depth expertise in
a number of aspects of real estate, including property acquisitions and asset
and property management.
Over the six months, your management saw signs of strong performance from
hotels, particularly mid-to-upper tier, full-service hotels. We added Felcor
Suite Hotels, a well-managed company with owner interests in 31 Embassy Suites
and Doubletree Hotels located primarily in the South and Southwest. Felcor has
entered into management contracts with Embassy to manage day-to-day operations,
allowing it to focus on its acquisition and redevelopment strategy.
We continued to favor the increasingly popular office sector, an industry driven
primarily by employment. With employment currently strong, so too is demand for
office space, creating the potential for rents to increase. Generally, we think
suburban markets currently offer greater potential than central business
districts. We added Liberty Property Trust, a company involved with office and
industrial properties along the Eastern seaboard. We continue to see good value
in Spieker Properties, which owns interests in a diversified portfolio of
industrial, office and retail properties in California and the Pacific
Northwest.
Our research also shows us where not to buy. For example, we minimized holdings
in healthcare. Although the industry is projected to grow with the aging of
America's "baby boomers," we have concerns that many healthcare companies
financed by REITs are growing too quickly and may eventually experience a
default. In addition, most healthcare REITs lend money to build healthcare
facilities. If the facility does not repay as scheduled, the REIT must foreclose
on the property, which can become a lengthy and involved process. One exception
is Nationwide Health Properties, a new addition to the portfolio that directly
leases its properties to healthcare operators and therefore can simply replace
the company if payments lag, rather than having to go through foreclosure
proceedings.
LOOKING AHEAD
Debates will undoubtedly persist -- particularly in this election year -- as to
whether financial markets will move higher, or whether they will reverse course.
We believe no one can predict stock market movements into the future; however,
we think it is likely the overall market will remain somewhat volatile
near-term, especially given the uncertain outlook for interest rates, the
strength of the economy and corporate earnings. Your management, however, does
not get bogged down in market forecasting. Instead, we remain focused on what we
think is the most effective way to invest for the long-term -- working with
Boston Financial to identify individual REITs we think offer exceptional
prospects. By doing so, we expect to give you an easy and convenient way to
participate in the long-term potential of an enduring market sector.
One final note. We are pleased to announce that we are giving semiannual and
annual reports a facelift, including easy-to-find and use graphic summaries.
Your annual report dated December 31, 1996, will reflect these improvements. We
also will begin sending you quarterly information, starting September 30, 1996,
so you can have more up-to-date reports about your Fund. We wish to thank all of
you who took the time to respond to our questions about what you want to see in
fund reports. Please read on through the following pages, which provide the
Fund's audited Schedule of Investments and financial statements as of June 30,
1996. If you have any questions about your investment in Pioneer Real Estate
Shares, please contact your investment representative or call Pioneer at
1-800-225-6292.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman,
Pioneer Real Estate Shares
2
<PAGE>
Pioneer Real Estate Shares
Schedule of Investments
June 30, 1996
Shares Value
- --------------------------------------------------------------------------------
INVESTMENT IN SECURITIES -- 99.4%
REAL ESTATE INVESTMENT TRUSTS -- 91.2%
61,300 Bedford Property Investors, Inc. ....................... $ 827,550
5,000 Belmont Homes, Inc.* ................................... 108,125
40,000 Bradley Real Estate Trust .............................. 580,000
70,000 CenterPoint Properties Corp. ........................... 1,697,500
20,000 Cousins Properties, Inc. ............................... 392,500
37,000 Developers Diversified Realty Corp. .................... 1,179,375
50,000 Duke Realty Investments, Inc. .......................... 1,512,500
125,300 Equity Inns, Inc. ...................................... 1,440,950
10,000 Equity Residential Property ............................ 328,750
43,000 Felcor Suite Hotels Inc. ............................... 1,311,500
58,000 Gables Residential Trust ............................... 1,363,000
45,000 Highwoods Properties, Inc. ............................. 1,243,125
85,000 HGI Realty, Inc. ....................................... 1,742,500
54,100 JP Realty, Inc. ........................................ 1,156,387
52,500 Liberty Property Trust ................................. 1,043,438
60,500 Merry Land & Investment Co., Inc. ...................... 1,270,500
60,000 National Golf Properties, Inc. ......................... 1,455,000
51,900 Nationwide Health Properties, Inc. ..................... 1,096,388
9,400 Post Properties, Inc. .................................. 332,525
63,800 Public Storage, Inc. ................................... 1,315,875
53,400 Spieker Properties, Inc. ............................... 1,455,150
25,000 Storage Trust Realty ................................... 512,500
60,000 Sun Communities, Inc. .................................. 1,612,500
67,500 Wellsford Residential Properties Trust ................. 1,518,750
-----------
$26,496,388
-----------
REAL ESTATE SERVICES -- 8.2%
140,000 Amresco, Inc. .......................................... $ 2,397,500
-----------
TOTAL INVESTMENT IN SECURITIES -- (Cost $26,267,352) ... $28,893,888
-----------
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Pioneer Real Estate Shares
Schedule of Investments
June 30, 1996 (continued)
Principal
Amount Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENT -- 0.6%
COMMERCIALPAPER -- 0.6%
$171,000 Ford Motor Credit Co., 5.50%, 7/1/96 ................... $ 171,000
-----------
TOTAL TEMPORARY CASH INVESTMENT (Cost $171,000) ........ $ 171,000
-----------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT -- 100%
(Cost $26,438,352) (a)(b) .............................. $29,064,888
===========
* Non-income producing security.
(a) At June 30, 1996, the net unrealized gain on investments
based on cost for federal income tax purposes of $26,438,352
was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost ..................... $ 3,513,330
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value ..................... (886,794)
-----------
Net unrealized gain ......................................... $ 2,626,536
===========
(b) At December 31, 1995, the Fund had a net capital loss
carryforward of $584,636 which will expire in 2003
if not utilized.
Purchases and sales of securities (excluding temporary cash investments) for
the six months ended June 30, 1996 aggregated $8,600,709 and $7,655,750,
respectively.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Pioneer Real Estate Shares
Balance Sheet
June 30, 1996
ASSETS:
Investment in securities, at value (including temporary cash
investment of $171,000) (cost $26,438,352; see Schedule of
Investments and Note 1) ..................................... $ 29,064,888
Cash .......................................................... 442
Receivables --
Investment securities sold .................................. 1,245,940
Dividends and interest ...................................... 303,852
Fund shares sold ............................................ 434,354
Organizational cost -- net (Note 1) ........................... 46,598
Other ......................................................... 11,967
------------
Total assets .............................................. $ 31,108,041
------------
LIABILITIES:
Payables --
Investment securities purchased ............................. $ 1,107,500
Fund shares repurchased ..................................... 3,490
Due to affiliates (Notes 2, 3 and 4) .......................... 40,781
Accrued expenses .............................................. 42,908
------------
Total liabilities ......................................... $ 1,194,679
------------
NET ASSETS:
Paid-in capital (Note 1) ...................................... $ 28,654,251
Distributions in excess of net investment income (Note 1) ..... (1,291)
Accumulated net realized loss on investments (Note 1) ......... (1,366,134)
Net unrealized gain on investments (Note 1) ................... 2,626,536
------------
Total net assets .......................................... $ 29,913,362
============
NET ASSET VALUE PER SHARE:
Class A -- (based on $28,700,860 / 2,328,941 shares of
beneficial interest outstanding -- unlimited number
of shares authorized) ....................................... $12.32
======
Class B -- (based on $798,352 / 64,895 shares of
beneficial interest outstanding -- unlimited number
of shares authorized) ....................................... $12.30
======
Class C -- (based on $414,150 / 33,650 shares of
beneficial interest outstanding -- unlimited number
of shares authorized) ....................................... $12.31
======
MAXIMUM OFFERING PRICE:
Class A ....................................................... $13.07
======
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
Pioneer Real Estate Shares
Statement of Operations
For the Six Months Ended June 30, 1996
INVESTMENT INCOME (NOTE 1):
Dividends ..................................................... $ 962,177
Interest ...................................................... 4,104
------------
Total investment income ..................................... $ 966,281
------------
EXPENSES:
Management fees (Note 2) ...................................... $ 140,044
Distribution fees (Note 4)
Class A ..................................................... 24,570
Class B ..................................................... 1,463
Class C ..................................................... 993
Transfer agent fees (Note 3)
Class A ..................................................... 33,895
Class B ..................................................... 444
Class C ..................................................... 359
Registration fees ............................................. 22,898
Professional fees ............................................. 48,535
Accounting (Note 2) ........................................... 27,966
Custodian fees ................................................ 9,105
Printing ...................................................... 11,585
Organizational costs (Note 1) ................................. 8,994
Fees and expenses of nonaffiliated trustees ................... 5,625
Miscellaneous ................................................. 8,098
------------
Total expenses .............................................. $ 344,574
------------
Less fees paid indirectly (Note 5) .......................... (3,386)
Less management fees waived by
Pioneering Management Corporation (Note 2) ................ (94,260)
------------
Net expenses ................................................ $ 246,928
------------
Net investment income ..................................... $ 719,353
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments .............................. $ (781,498)
Change in unrealized gain on investments ...................... 1,480,676
------------
Net gain on investments ..................................... $ 699,178
------------
Net increase in net assets resulting from operations ...... $ 1,418,531
============
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
Pioneer Real Estate Shares
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Six Months Year
Ended Ended
June 30, December 31,
1996 1995
------------ -------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income ................................................... $ 719,353 $ 725,611
Net realized loss on investments ........................................ (781,498) (590,962)
Change in net unrealized gain on investments ............................ 1,480,676 2,858,800
------------ ------------
Net increase in net assets resulting from operations .................. 1,418,531 $ 2,993,449
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A ($0.31 and $0.33 per share, respectively) ..................... (703,646) $ (725,611)
Class B ($0.28 and $0.00 per share, respectively) ..................... (10,031) --
Class C ($0.26 and $0.00 per share, respectively) ..................... (5,676) --
In excess of net investment income
Class A ($0.00 and $0.02 per share, respectively) ..................... (71) (56,360)
Class B ($0.01 and $0.00 per share, respectively) ..................... (420) --
Class C ($0.02 and $0.00 per share, respectively) ..................... (800) --
From tax return of capital
Class A ($0.00 and $0.34 per share, respectively) ..................... -- (781,598)
From net realized gain
Class A ($0.00 and $0.00 per share, respectively) ..................... -- (3,966)
------------ ------------
Decrease in net assets resulting from
distributions to shareholders ......................................... $ (720,644) $ (1,567,535)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares ........................................ $ 6,005,289 $ 6,726,489
Net asset value of shares issued to shareholders
in reinvestment of distributions ...................................... 575,010 1,210,135
Cost of shares repurchased .............................................. (4,855,972) (9,939,492)
------------ ------------
Net increase (decrease) in net assets resulting
from fund share transactions ........................................ $ 1,724,327 $ (2,002,868)
------------ ------------
Net increase (decrease) in net assets ................................. 2,422,214 $ (576,954)
NET ASSETS:
Beginning of period ..................................................... 27,491,148 28,068,102
------------ ------------
End of period (including distributions in excess of net investment
income of $1,291 and $0, respectively) ................................ $ 29,913,362 $ 27,491,148
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
Pioneer Real Estate Shares
Statements of Changes in Net Assets
For the Six Months Ended June 30, 1996 and the Year Ended December 31, 1995
(Continued)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 1996 December 31,1995
--------------------------------------------------
Shares Amount Shares Amount
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold ................................... 393,436 $ 4,786,986 594,169 $ 6,726,489
Shares issued to shareholders in reinvestment
of distributions .......................... 46,210 562,319 105,171 1,210,135
Less shares repurchased ..................... (397,841) (4,823,296) (879,454) (9,939,492)
-------- ----------- -------- -----------
Net increase (decrease) ................... 41,805 $ 526,009 (180,114) $(2,002,868)
======== =========== ======== ===========
CLASS B*
Shares sold ................................. 66,863 $ 815,907
Shares issued to shareholders in reinvestment
of distributions .......................... 686 8,370
Less shares repurchased ..................... (2,654) (32,337)
-------- -----------
Net increase .............................. 64,895 $ 791,940
======== ===========
CLASS C*
Shares sold ................................. 33,323 $ 402,396
Shares issued to shareholders in reinvestment
of distributions .......................... 355 4,321
Less shares repurchased ..................... (28) (339)
-------- -----------
Net increase .............................. 33,650 $ 406,378
======== ===========
<FN>
* Class B and Class C shares were first publicly offered on January 31, 1996.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
Pioneer Real Estate Shares
Financial Highlights -- Selected Data For a Share Outstanding
For the Periods Presented
<TABLE>
<CAPTION>
Six Months Year Six Months Ocotober 25,
Ended Ended Ended 1993 to
June 30, December 31, December 31, June 30,
1996 1995 1994 1994
---------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
CLASS A
Net asset value, beginning of period ......................................... $ 12.02 $ 11.38 $ 12.02 $ 12.50
------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income ...................................................... $ 0.31 $ 0.32 $ 0.21 $ 0.27
Net realized and unrealized gain (loss) on investments ..................... 0.30 1.01 (0.48) (0.45)
------- ------- ------- -------
Net increase (decrease) from investment operations ....................... $ 0.61 $ 1.33 $ (0.27 $ (0.18)
Distributions to shareholders:
From net investment income ................................................. (0.31) (0.33) (0.20) (0.27)
In excess of net investment income ......................................... -- (0.02) -- --
From tax return of capital ................................................. -- (0.34) (0.15) (0.03)
From net realized gain ..................................................... -- -- (0.02) --
------- ------- ------- -------
Net increase (decrease) in net asset value ................................... $ 0.30 $ 0.64 $ (0.64) $ (0.48)
------- ------- ------- -------
Net asset value, end of period ............................................... $ 12.32 $ 12.02 $ 11.38 $ 12.02
======= ======= ======= =======
Total return * ............................................................... 5.12% 12.11% (2.16)% (1.47)%
Ratio of net expenses to average net assets .................................. 1.77%**+ 1.77%+ 1.75%** 1.71%**
Ratio of net investment income to average net assets ......................... 5.10%**+ 2.73%+ 3.72%** 3.73%**
Porfolio turnover rate ....................................................... 54.97%** 9.63% 17.40%** 23.98%**
Average commission rate paid per exchange listed transaction ................. $0.0574 -- -- --
Net assets, end of period (in thousands) ..................................... $28,701 $27,491 $28,068 $ 29,584
Ratios assuming no waiver of management fees and assumption
of expenses by PMC and no reduction for fees paid indirectly:
Net expenses ............................................................... 2.45%** 2.59% 2.27%** 2.15%**
Net investment income ...................................................... 4.42%** 1.91% 3.20%** 3.28%**
Ratios assuming waiver of management fees and assumption
of expenses by PMC and reduction for fees paid indirectly:
Net expenses ............................................................... 1.75%** 1.75% -- --
Net investment income ...................................................... 5.12%** 2.75% -- --
<FN>
+ Ratios assuming no reduction for fees paid indirectly.
++ Subsequent to December 31, 1994, the Fund's year end was changed to December 31.
* 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.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
Pioneer Real Estate Shares
Financial Highlights -- Selected Data For a Share Outstanding
For the Periods Presented (Continued)
<TABLE>
<CAPTION>
January 31, 1996 January 31, 1996
to to
June 30, 1996 June 30, 1996
----------------- ----------------
CLASS B*** CLASS C***
---------- ----------
<S> <C> <C>
Net asset value, beginning of period ....................... $ 12.09 $ 12.09
------- -------
Increase from investment operations:
Net investment income .................................... $ 0.28 $ 0.26
Net realized and unrealized gain on investments .......... 0.22 0.24
------- -------
Net increase from investment operations ................ $ 0.50 $ 0.50
Distributions to shareholders:
From net investment income ............................... $ (0.28) $ (0.26)
In excess of net investment income ....................... (0.01) (0.02)
------- -------
Net increase in net asset value ............................ $ 0.21 $ 0.22
------- -------
Net asset value, end of period ............................. $ 12.30 $ 12.31
======= =======
Total return * ............................................. 4.18% 4.18%
Ratio of net expenses to average net assets ................ 2.65%**+ 2.71%**+
Ratio of net investment income to average net assets ....... 6.75%**+ 5.64%**+
Porfolio turnover rate ..................................... 54.97%** 54.97%**
Average commission rate paid per exchange
listed transaction ....................................... $0.0574 $0.0574
Net assets, end of period (in thousands) ................... $ 798 $ 414
Ratios assuming no waiver of management fees by PMC and
no reduction for fees paid indirectly:
Net expenses ............................................. 3.23%** 3.31%**
Net investment income .................................... 6.17%** 5.04%**
Ratios assuming waiver of management fees by PMC and
no reduction for fees paid indirectly:
Net expenses ............................................. 2.62%** 2.66%**
Net investment income .................................... 6.78%** 5.69%**
<FN>
+ Ratios assuming no reduction for fees paid indirectly.
* 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.
*** Class B and Class C shares were first publicly offered on January 31, 1996.
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
Pioneer Real Estate Shares
Notes to Financial Statements
June 30, 1996
1. Pioneer Real Estate Shares (the Fund) is a Delaware business trust registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The investment objective of the Fund is to seek
long-term growth of capital. Current income is a secondary objective.
The Board of Trustees (the Trustees) has authorized the issuance of three
share classes of the Fund, designated as Class A, Class B and Class C shares.
Class B and C shares were first publicly offered on January 31, 1996. The shares
of Class A, Class B and Class C represent an interest in the same portfolio of
investments of the Fund and have 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
shareholders, respectively.
The Fund's financial statements have been prepared in conformity with
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
revenues and expenses during the reporting periods. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies consistently followed by the Fund, which are in conformity with those
generally accepted in the investment company industry:
A. Security Valuation -- Security transactions are recorded on trade date.
Each day, 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 Trustees. Temporary cash
investments are valued at amortized cost. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis
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 by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to make
distributions to shareholders, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a REIT
may be affected by its failure to qualify for tax-free pass-through of income
under the Internal Revenue Code or its failure to maintain exemption from
registration under the Investment Company Act of 1940.
Gains and losses from sales of investments are calculated on the
"identified cost" method for both financial reporting and federal income tax
purposes. It is the Fund's practice first to select for sale those securities
that have the highest cost and also qualify for long-term capital gain or
loss treatment for tax purposes.
B. Federal Income Taxes -- It is the policy of the Fund 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 shareholders. Therefore, no federal income tax provision
is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with income tax rules. Therefore,
the source of the Fund's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or net
realized gain on investment transactions, or from paid-in-capital, depending on
the type of book/tax differences that may exist.
A portion of the dividend income recorded by the Fund is from distributions
by publicly traded REITs and such distributions for tax purposes may 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 character of
such distributions, for tax purposes, is determined by the Fund based on
estimates and information received by the Fund from the REITs.
11
<PAGE>
Pioneer Real Estate Shares
Notes To Financial Statements
June 30, 1996 (Continued)
C. Fund Shares -- The Fund records sales and repurchases of its shares on
the trade date. Net losses, if any, as a result of cancellations are absorbed by
Pioneer Funds Distributor, Inc. (PFD), the principal underwriter for the Fund
and an indirect wholly owned subsidiary of The Pioneer Group, Inc. (PGI). PFD
earned $17,705 in underwriting commissions on the sale of fund shares during the
six months ended June 30, 1996. Distributions to shareholders are recorded as of
the ex-dividend date. Distributions paid by the Fund, if any, with respect to
each class of shares are calculated in the same manner, at the same time, on the
same day and in the same amount, except that Class A, Class B and Class C shares
bear different transfer agent and distribution fees.
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. Shareholders of each class share all expenses
and fees paid to the transfer agent, Pioneering Services Corporation (PSC), for
their services, which are allocated based on number of accounts in each class
and the ratable allocation of related out-of-pocket expense (see Note 3).
Income, common expenses and realized and unrealized gains and losses are
calculated at the Fund level and allocated daily to each class of shares based
on the respective percentage of adjusted net assets at the beginning of the day.
E. Organization Costs -- The costs incurred by the Fund in connection with
its organization have been deferred and are amortized on a straight-line basis
over a period of five years.
2. Pioneering Management Corporation (PMC), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI. Management
fees are calculated daily at the annual rate of 1.00% of the Fund's average
daily net assets.
PMC has agreed not to impose a portion of its management fees and to assume
other operating expenses for the Fund to the extent necessary to limit the
Fund's expenses to 1.75% of average daily net assets attributable to Class A
shares; the portion of the Fund-wide expenses attributable to Class B and Class
C shares were reduced only to the extent that such expenses were reduced for
Class A shares.
In addition, under the management agreement, certain other services and
costs, including accounting, regulatory reporting and insurance premiums, are
paid by the Fund. Included in due to affiliates are $13,200 and $5,727 in
management fees and accounting fees, respectively, payable to PMC at June 30,
1996.
3. PSC, a wholly owned subsidiary of PGI, provides substantially all transfer
agent and shareholder services to the Fund, at negotiated rates. Included in due
to affiliates is $8,298 in transfer agent fees payable to PSC at June 30, 1996.
4. The Fund adopted a Plan of Distribution for each class of shares (Class A
Plan, Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD
a service fee of up to 0.25% of the Fund's average daily net assets 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 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 $13,556 in distribution fees
payable to PFD at June 30, 1996.
In addition, redemptions of each class of shares may be subject to a
contingent deferred sales charge (CDSC). A CDSC of 1.00% may be imposed on
certain net asset value purchases of Class A shares that are redeemed within one
year of purchase. Class B shares that are redeemed within six years of purchase
are subject to a CDSC at declining rates beginning at 4.0%, based on the lower
of cost or market value of shares being redeemed. Redemptions of Class C shares
within one year of purchase are subject to a CDSC of 1.00%. Proceeds from the
CDSC are paid to PFD. For the period ended June 30, 1996, no CDSCs were paid to
PFD.
5. The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the six months ended June 30, 1996,
the Fund's expenses were reduced by $3,386 under such arrangements.
12
<PAGE>
Pioneer Real Estate Shares
Report of Independent Public Accountants
To the Shareholders and the Board of Trustees of Pioneer Real Estate Shares:
We have audited the accompanying balance sheet of Pioneer Real Estate
Shares, including the schedule of investments, as of June 30, 1996, and the
related statements of operations, the changes in net assets and financial
highlights for the periods presented. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996 by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Pioneer Real Estate Shares as of June 30, 1996, the results of its operations,
the changes in its net assets and financial highlights for the periods
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
August 1, 1996
13
<PAGE>
Pioneer Real Estate Shares
Results of March 5, 1996 Shareowner Meeting (Unaudited)
On March 5, 1996, Pioneer Real Estate Shares held a special meeting of
shareowners. All Proposals were approved by shareowner vote. Following are
the detailed results of the vote for each Proposal presented.
PROPOSAL 1 -- APPROVE A NEW SUBADVISORY AGREEMENT WITH BOSTON FINANCIAL
SECURITIES, INC.
Affirmative 1,433,575.011
Against 23,468.640
Abstain 43,349.738
PROPOSAL 2 -- RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS THE FUND'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996.
Affirmative 1,442,820.984
Against 16,849.979
Abstain 40,722.426
14
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
OFFICERS
JOHN F. COGAN, JR., Chairman and Chief Executive Officer
DAVID D. TRIPPLE, Executive Vice President
ROBERT W. BENSON, Vice President
STEPHEN G. KASNET, Vice President
WILLIAM H. KEOUGH, Treasurer
JOSEPH P. BARRI, Secretary
TRUSTEES SHAREHOLDER
JOHN F. COGAN, JR. SERVICES AND
RICHARD H. EGDAHL, M.D. TRANSFER AGENT
MARGARET B. W. GRAHAM Pioneering Services Corporation
STEPHEN G. KASNEt 60 State Street
JOHN W. KENDRICK Boston, Massachusetts
MARGUERITE A. PIRET 02109
FRED N. PRATT, JR.
DAVID D. TRIPPLE PRINCIPAL UNDERWRITER
STEPHEN K. WEST PIONEER FUNDS
JOHN WINTHROP DISTRIBUTOR, INC.
INVESTMENT ADVISER LEGAL COUNSEL
PIONEERING MANAGEMENT Hale and Dorr
CORPORATION
INDEPENDENT PUBLIC ACCOUNTANTS CUSTODIAN
ARTHUR ANDERSEN LLP BROWN BROTHERS
HARRIMAN & CO.
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Please call Pioneer for information on:
Existing accounts, new accounts,
prospectuses, applications,
and service forms.............................................. 1-800-225-6292
Fund yields and prices......................................... 1-800-225-4321
Toll-free fax.................................................. 1-800-225-4240
Retirement plans............................................... 1-800-622-0176
Telecommunications Device for the Deaf (TDD)................... 1-800-225-1997
- --------------------------------------------------------------------------------
When distributed to persons who are not shareowners of the Fund, this report
must be accompanied by a current prospectus, which discusses the objectives,
policies, sales charges and other information about the Fund.
0896-3594
[Copyright] Pioneer Funds Distributor, Inc.
