File No. 33-65822
File No. 811-7870
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Check the appropriate box:
[X] Preliminary proxy statements [ ] Confidential, for Use
of the Commission
Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Pioneer Real Estate Shares
(Name of Registrant as Specified in Its Charter)
Pioneer Real Estate Shares
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2).
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 5, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of Pioneer Real Estate Shares, a Delaware business trust (the
"Fund"), will be held at the offices of Hale and Dorr, counsel to the Fund, at
60 State Street, 26th Floor, Boston, Massachusetts 02109, at 2:00 p.m. (Boston
time) on Tuesday, March 5, 1996. The purpose of the Meeting is to consider and
act upon the following proposals:
1. To approve the terms of a new Subadvisory Agreement with Boston
Financial Securities, Inc.;
2. To ratify the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending December 31,
1996; and
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
YOUR BOARD OF TRUSTEES RECOMMENDS THAT YOU VOTE IN FAVOR OF ALL PROPOSALS
Shareholders of record as of the close of business on January 22, 1996 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Trustees,
Joseph P. Barri, Secretary
January 29, 1996
Boston, Massachusetts
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
RETURN THE ENCLOSED FORM OF PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING.
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 5, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Pioneer Real Estate Shares, a Delaware
business trust (the "Fund"). The proxies will be used at the Special Meeting of
Shareholders (the "Meeting") of the Fund to be held on Tuesday, March 5, 1996 at
2:30 p.m. (Boston time). The Meeting will be held at the offices of Hale and
Dorr, counsel to the Fund, at 60 State Street, 26th Floor, Boston, Massachusetts
02109.
The Board of Trustees has fixed the close of business on January 22, 1996
as the record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting. On the record date, [ ] shares of
beneficial interest of the Fund were outstanding. No person within the knowledge
of management of the Fund beneficially owned more than 5% of the Fund's shares
of beneficial interest outstanding as of January __, 1996, except [insert names
and addresses of any brokers holding more than 5% in street name.]
This Proxy Statement, the attached Notice and the enclosed proxy card are
being mailed to shareholders of the Fund on or about January 29, 1996. THE
FUND'S ANNUAL REPORT FOR ITS FISCAL PERIOD ENDED DECEMBER 31, 1994 AND
SUBSEQUENT SEMIANNUAL REPORT MAY BE OBTAINED FREE OF CHARGE BY WRITING TO THE
FUND AT ITS EXECUTIVE OFFICES, 60 STATE STREET, BOSTON, MASSACHUSETTS 02109 OR
BY CALLING 1-800-225-6292.
<PAGE>
PROPOSAL 1
APPROVAL OF THE TERMS OF A NEW
SUBADVISORY AGREEMENT WITH
BOSTON FINANCIAL SECURITIES, INC.
The Fund's Current Advisory Arrangements
Pioneering Management Corporation ("PMC") currently serves as the Fund's
investment adviser pursuant to a management contract, dated September 26, 1995,
between the Fund and PMC (the "Current Management Contract"). Under the Current
Management Contract, the Fund pays PMC a management fee at a rate equal to 1.00%
of the Fund's average daily net assets.
On January 12, 1996, a majority of the Trustees, including a majority of
the Trustees who are not "interested persons" of the Trust or of PMC within the
meaning of the Investment Company Act of 1940, as amended (the "Investment
Company Act")(the "Independent Trustees"), voted to recommend to shareholders of
the Fund that they approve a subadvisory agreement among the Fund, PMC and
Boston Financial Securities, Inc. ("BFS"), pursuant to which BFS would provide
investment subadvisory services relating to the management of the Fund's
portfolio (the "Proposed Subadvisory Agreement").
During 1995, the Fund experienced several changes in investment
management and subadvisory arrangements as a result of changes in the corporate
structures of the Fund's investment advisers and subadvisers and affiliated
entities. The Fund does not currently have an investment subadviser. Under an
Investment Subadvisory Agreement previously in effect among the Fund, PMC and
Winthrop Advisers Limited Partnership ("WALP")(the "WALP Subadvisory
Agreement"), WALP provided subadvisory services similar to those proposed to be
provided by BFS under the Proposed Subadvisory Agreement. The WALP Subadvisory
Agreement terminated in July, 1995. At present, PMC, at its own expense, has
contracted with BFS for consulting advice regarding real estate projects in
which issues of the Portfolio's portfolio securities have an interest. This
consulting arrangement will terminate upon effectiveness of the Proposed
Subadvisory Agreement. The changes in the Fund's management and subadvisory
arrangements over the past year are described in Appendix A to this Proxy
Statement.
Information regarding Boston Financial Securities, Inc.
BFS, 101 Arch Street, Boston, MA 02110, a registered investment adviser
organized as a Massachusetts corporation, has extensive experience and expertise
in placing, evaluating and providing advice with respect to real estate related
investments. BFS is an affiliate of the Boston Financial Group Limited
<PAGE>
Partnership, a Massachusetts limited partnership ("BFGLP"), which together with
a predecessor business have been engaged since 1970 in structuring a variety of
real estate investment programs. Several other affiliates of BFS also provide a
variety of financial, consulting and management services to real estate
investors and developers.
Mr. Fred N. Pratt, Jr. will have ultimate responsibility for overseeing
the provision of subadvisory services to the Fund under the Proposed Subadvisory
Agreement. Mr. Pratt was one of the founders of the original BFGLP affiliate in
1969 and currently serves as the President and Chief Executive Officer of BFGLP
and as a Director of BFS. Mr. Pratt is also a principal of BFS, BFGLP and other
BFS affiliates. Mr. Pratt was elected as a Trustee of the Fund by the other
members of the Board of Trustees on January 12, 1996. Mr. David Carter of BFS
will have primary responsibility for the day-to-day provision of subadvisory
services to the Fund. Mr. Carter joined BFS in January, 1995, having previously
been employed as a real estate securities analyst by PMC and WALP and its
affiliates. It is expected that Mr. Carter will be appointed as a Vice President
of BFS in February, 1996.
Additional information pertaining to BFS is provided in Appendix B to
this Proxy Statement.
Terms of the Proposed Subadvisory Agreement
The material terms of the Proposed Subadvisory Agreement are described
below, which description is qualified in its entirety by reference to the copy
of the Proposed Subadvisory Agreement attached to this Proxy Statement as
Exhibit A.
Subadvisory Services. Pursuant to the terms of the Proposed Subadvisory
Agreement, BFS, as subadviser to the Fund, would (i) identify and analyze real
estate industry companies, including the real estate properties and other
permissible investments for the Fund, (ii) analyze market conditions affecting
the real estate industry generally and specific geographical and securities
markets in which the Fund may invest or is invested, (iii) continuously review
and analyze the investments in the Fund's portfolio and (iv) furnish advisory
reports based on such analysis to PMC. Pursuant to the terms of the WALP
Subadvisory Agreement previously in effect, WALP provided the Fund with
substantially similar investment subadvisory services.
Subadvisory Fees and Expense Limitation. As compensation for its
subadvisory services, PMC will pay BFS a subadvisory fee under the Proposed
Subadvisory Agreement equal to 0.25% per annum of the Fund's average daily net
assets up to $27 million and 0.50% of average daily net assets in excess of $27
million. This fee is computed daily and paid monthly. Under the terms of the
WALP
<PAGE>
Subadvisory Agreement previously in effect, WALP was paid a Subadvisory fee at
the rate of 0.25% per annum of the Fund's average daily net assets. BFS's
subadvisory fee would be payable solely by PMC and the Fund would not be
responsible for its payment. Accordingly, the subadvisory fee will not result in
a higher overall management fee for the Fund or increase the Fund's total
operating expenses.
PMC has voluntarily and temporarily agreed not to impose a portion of
its management fee and, if necessary, to limit or otherwise reduce operating
expenses so that the Fund's expenses will not exceed 1.75% of its average daily
net assets. PMC may revise or terminate this agreement at any time. The
subadvisory fee payable by PMC to BFS would be reduced proportionally to the
extent that the management fee is reduced under this expense limitation or to
the extent that PMC after written notice to BFS elects to utilize a portion of
the management fees paid to it by the Fund to make payments to third parties.
Expenses. Under the Proposed Subadvisory Agreement, BFS pays all
expenses related to its services for the Fund with the exception of bookkeeping,
custodial, transfer agency, auditing, legal and certain other specified
expenses, which are paid by the Fund. The Fund also pays all brokerage
commissions and any taxes or other charges in connection with its portfolio
transactions.
Approval and Termination Provisions. The Proposed Subadvisory Agreement
was approved by the Board of Trustees, including a majority of the Independent
Trustees, on January 12, 1996. If initially approved by Shareholders, the
Proposed Subadvisory Agreement will remain in effect until May 31, 1997 and from
year to year thereafter, provided that its continuance is approved at least
annually by the vote of a majority of the Independent Trustees cast in person at
a meeting called for the purpose of voting on such approval, and either by vote
of a majority of the Fund's Trustees or a "majority of the outstanding voting
securities" (as defined below) of the Fund. The Proposed Subadvisory Agreement
may be terminated without penalty on 60 days' written notice by the Fund's Board
of Trustees, by vote of holders of a majority of the Fund's shares or by PMC or
BFS, upon not less than 30 days' written notice and not more than 60 days'
written notice.
Standard of Care. The Proposed Subadvisory Agreement provides that, in
the absence of willful misfeasance, bad faith or gross negligence on the part of
BFS, or of the reckless disregard of its obligations and duties, BFS will not be
liable for any act or omission in the course of, or connected with, rendering
services under such Agreement. This "standard of care" is identical to that
under the WALP Subadvisory Agreement previously in effect and is consistent with
the Investment Company Act and common practice in the mutual fund industry.
<PAGE>
Board of Trustees' Evaluation and Recommendation
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
APPROVE THE TERMS OF THE PROPOSED SUBADVISORY AGREEMENT
The Board of Trustees, including a majority of the Independent Trustees,
determined that the terms of the Proposed Subadvisory Agreement are fair and
reasonable and that approval of the terms of the Proposed Subadvisory Agreement
on behalf of the Fund is in the best interests of the Fund and its shareholders.
In making these determinations, the Trustees considered the following: (a) the
nature and quality of services to be provided by BFS under the Proposed
Subadvisory Agreement; (b) the similar material terms, other than the difference
in fee rates, under both the Proposed Subadvisory Agreement and the WALP
Subadvisory Agreement; and (c) the reasonableness of BFS's compensation and
profits and the financial and managerial stability of BFS.
In the event that this Proposal is not approved by the shareholders of
the Fund, the Proposed Subadvisory Agreement will not become effective and no
person will serve as a subadviser to the Fund. In such event, the Trustees will
consider what further action, if any, should be taken.
Vote Required
Approval of this Proposal requires the affirmative vote of a "majority
of the outstanding voting securities" of the Fund, which for this purpose means
the affirmative vote of the lesser of (i) 67% or more of the outstanding shares
of the Fund present at the Meeting and entitled to vote, if the holders of more
than 50% of the outstanding shares of the Fund are present or represented by
proxy or (ii) more than 50% of the outstanding shares of the Fund. Each Fund
share is entitled to one vote.
PROPOSAL 2
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as the Fund's independent
public accountants since the Fund's commencement of operations on October 25,
1993. The Board of Trustees, including a majority of the Independent Trustees,
has selected Arthur Andersen LLP as the Fund's independent public accountants
for the fiscal year ending December 31, 1996. Audit services during the fiscal
year ending December 31, 1996 will consist of examinations of the Fund's
financial statements and reviews of the Fund's filings with the Securities and
Exchange Commission.
<PAGE>
A representative of Arthur Andersen LLP is expected to be available at
the Meeting to make a statement if he or she desires to do so and to respond to
appropriate questions. Arthur Andersen LLP also serves as the independent public
accountants for PGI and PMC.
Board of Trustees' Evaluation and Recommendation
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE
FUND VOTE IN FAVOR OF THE RATIFICATION OF ARTHUR ANDERSEN LLP AS THE FUND'S
INDEPENDENT PUBLIC ACCOUNTANTS.
REQUIRED VOTE
Approval of this Proposal requires the affirmative vote of a majority of
the votes present and entitled to vote at the Meeting.
OTHER MATTERS
The Fund's management knows of no business to be brought before the
Meeting except as described above. However, if any other matters properly come
before the Meeting, the persons named in the enclosed form of proxy intend to
vote on such matters in accordance with their best judgment. If shareholders
desire additional information about the matters proposed for action, the Fund's
management will be pleased to hear from them and to provide further information.
Proxies, Quorum and Voting at the Meeting
Any person giving a proxy has the power to revoke it any time prior to
its exercise by executing a superseding proxy or by submitting a written notice
of revocation to the Secretary of the Fund. In addition, although mere
attendance at the Meeting will not revoke a proxy, a shareholder present at the
Meeting may withdraw his or her proxy and vote in person. All properly executed
and unrevoked proxies received in time for the Meeting will be voted in
accordance with the instructions contained in the proxies. If no instruction is
given, the persons named as proxies will vote the shares represented thereby in
favor of the matters set forth in the attached Notice and will use their best
judgment in connection with the transaction of such other business as may
properly come before the Meeting or any adjournment thereof.
In the event that, at the time any session of the Meeting is called to
order, a quorum is not present in person or by proxy, the persons named as
proxies may vote those proxies which have been received to adjourn the Meeting
to a later date. In the event that a quorum is present but sufficient votes in
favor of either of the Proposals have not been received, the persons named as
proxies will vote those proxies which they are entitled to vote in favor of the
relevant Proposal for such an adjournment and will
<PAGE>
vote those proxies required to be voted against the Proposal against any such
adjournment. A shareholder vote may be taken on either of the Proposals in the
Proxy Statement prior to such adjournment if sufficient votes for its approval
have been received and it is otherwise appropriate.
Shares of the Fund entitled to vote at the meeting (including shares
which abstain or do not vote with respect to either of the Proposals presented
for shareholder approval) will be counted for purposes of determining whether a
quorum is present at the Meeting. Abstentions from voting will be treated as
shares that are present and entitled to vote for purposes of determining the
number of shares that are present and entitled to vote with respect to a
Proposal, but will not be counted as a vote in favor of that Proposal.
Accordingly, an abstention from voting has the same effect as a vote against a
Proposal.
Adoption by the shareholders of the Fund of Proposal 1 requires the
affirmative vote of the lesser of (i) 67% or more of outstanding shares of the
Fund present at the Meeting and entitled to vote, if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy or
(ii) more than 50% of the Fund's outstanding shares. If a broker or nominee
holding shares in "street name" indicates on the proxy that it does not have
discretionary authority to vote as to any Proposal, those shares will not be
considered as present and entitled to vote as to that Proposal. Accordingly, a
"broker non-vote" has no effect on the voting in determining whether Proposal 1
has been adopted pursuant to item (i) above, provided that the holders of more
than 50% of the outstanding shares (excluding the "broker non-votes") of the
Fund are present or represented by proxy. However, with respect to determining
whether Proposal 1 has been adopted pursuant to item (ii) above, because shares
represented by a "broker non-vote" are considered outstanding shares, a "broker
non-vote" has the same effect as a vote against such Proposal.
Shareholder Proposals
The Fund is not required to hold annual meetings of shareholders and
does not currently intend to hold such a meeting in 1997. Instead, meetings will
be held only when and if required. Any shareholders desiring to present a
proposal for consideration at the next meeting for shareholders of the Fund must
submit such proposal in writing so that it is received by the Fund at 60 State
Street, Boston, Massachusetts 02109 within a reasonable time before any such
meeting.
Expenses and Methods of Solicitation
The costs of the Meeting, including the solicitation of proxies will be
paid by PMC. PMC may, at its expense, have one or more of its officers,
representatives or compensated third-party
<PAGE>
agents aid in the solicitation of proxies by personal interview or telephone and
telegraph and may request brokerage houses and other custodians, nominees and
fiduciaries to forward proxy soliciting material to beneficial owners of the
shares held of record by such persons. Persons holding shares as nominees will
be reimbursed by PMC, upon request, for the reasonable expenses of mailing
soliciting material to the principals of the accounts.
PIONEER REAL ESTATE SHARES
January 29, 1996
<PAGE>
APPENDIX A
Additional Information Concerning Prior Advisory Arrangements
Prior to July 17, 1995, Pioneer Winthrop Advisers ("PWA") served as the
Fund's investment manager pursuant to a management contract dated April 28, 1995
(the "PWA Management Contract"), and WALP and PMC served as the Fund's
co-investment subadvisers pursuant to separate investment subadvisory contracts
dated April 28, 1995 (the WALP Subadvisory Agreement, described above, and the
"PMC Subadvisory Agreement," respectively). The PWA Management Contract and the
WALP and the PMC Subadvisory Agreements are referred to in this Proxy Statement
as the "Prior Advisory Agreements."
On July 17, 1995, the PWA Management Agreement and the WALP Subadvisory
Agreement terminated by operation of law as a result of the acquisition (the
"Acquisition") by Apollo Real Estate Advisors, L.P. ("Apollo") of W.L. Realty,
L.P. ("Realty LP"). Because Realty LP had an indirect controlling interest in
WALP and PWA, the Acquisition resulted in an ownership change in PWA and WALP.
Under the relevant provisions of the Investment Company Act, the ownership
change in PWA and WALP caused an "assignment" of the PWA Management Contract and
the WALP Subadvisory Agreement resulting in their automatic termination.
Although the Acquisition did not affect the ownership or control of PMC in any
manner, the PMC Subadvisory Agreement provided that it terminate automatically
in the event that the PWA Management Contract terminated. As such, the PMC
Subadvisory Agreement also terminated on July 17, 1995.
In anticipation of the Acquisition and the resulting termination of the
Prior Advisory Agreements, the Board of Trustees of the Fund, including a
majority of the Independent Trustees, approved an interim management contract
(the "Interim Management Contract") between the Fund and PMC. The Interim
Management Contract became effective on July 17, 1995 (the closing date of the
Acquisition) and PMC provided investment advisory and management services to the
Fund under the Interim Management Contract until the adoption of the Current
Management Contract.
The Fund and PMC had received an order from the Securities and Exchange
Commission (the "Commission") permitting PMC to serve, without shareholder
approval, as the Fund's investment manager pursuant to the Interim Management
Contract until October 30, 1995. Pursuant to the terms of such order, the fees
earned by PMC under the Interim Management Contract were maintained in an
interest-bearing escrow account and the amounts in such account were paid to PMC
only upon approval of the shareholders of the Fund at a meeting held on
September 26, 1995. At the same meeting, the shareholders also voted to approve
the Current
<PAGE>
Management Contract, pursuant to which, as indicated above, PMC currently serves
as the Fund's investment adviser.
<PAGE>
APPENDIX B
Additional Information Pertaining to BFS
Directors. The following table provides information with respect to the
Directors of BFS:
Name and Address Principal Occupation(s)
George J. Carter, Jr., President of BFS
101 Arch Street
Boston, MA 02110
Randolph G. Hawthorne Vice President, Treasurer and a Director
101 Arch Street of BFS; Senior Vice President of BFGLP;
Boston, MA 02110
Georgia Murray, Vice President and Director of BFS;
101 Arch Street Senior Vice President of BFGLP;
Boston, MA 02110 Director of Atlantic Bank and Trust
Company
Fred N. Pratt, Jr., Director of BFS; President and
101 Arch Street Chief Executive Officer of BFGLP;
Boston, MA 02110 Trustee of the Fund
Ownership of BFS. As of December 31, 1995, the following individuals
each beneficially owned more than 5% of the outstanding Common Stock of BFS:
Number of Shares
Name and Address (% of Shares Outstanding)
Mr. Hawthorne 1,270 (10.53%)
Ms. Murray 763 ( 6.33%)
Mr. Pratt 1,468 (12.17%)
Peter G. Fallon, Jr. 1,105 ( 9.16%)
101 Arch Street
Boston, MA 02110
William B. Haynsworth 1,289 (10.96%)
101 Arch Street
Boston, MA 02110
<PAGE>
Alvin H. Howell 1,361 (11.29%)
101 Arch Street
Boston, MA 02110
Donna C. Gibson 634 ( 5.26%)
101 Arch Street
Boston, MA 02110
At such date, Mr. Carter, BFS's principal executive officer, owned
beneficially less than 2% of the outstanding Common Stock of BFS. Each of the
above principals also owns BFGLP in substantially the same percentage amounts as
BFS. BFG-GP, Inc. ("BFGGP"), a Massachusetts corporation, is the general partner
of BFGLP. Mr. Pratt is the sole shareholder of BFGGP.
Similar Fund Advised By BFS. BFS has not previously served as an
investment adviser or subadviser to a registered investment company. It is
currently being proposed that BFS also serve as the investment subadviser to the
Real Estate Growth Portfolio of Pioneer Variable Contracts Trust (the "Real
Estate Series") which has an investment objective similar to that of the Fund.
As of December 31, 1995, the Real Estate Series had approximately $512,500 in
net assets. The proposed subadvisory fee payable by PMC to BFS with respect to
the Real Estate Series would be payable quarterly at an annual rate equal to
0.30% of the Real Estate Series' average daily net assets. PMC has voluntarily
agreed not impose a portion of its management fee and to make other
arrangements, if necessary, to limit the operating expenses of the Real Estate
Series to 1.25% of its average daily net assets. This agreement may be revised
or discontinued by PMC at its discretion at any time. The subadvisory fee
payable by PMC to BFS would be reduced proportionally to the extent that the
management fee is reduced under this expense limitation or to the extent that
PMC after written notice to BFS determines to utilize a portion of the
management fees paid to it by the Real Estate Series to make payments to third
parties.
Possible Sale of Shares By BFS. BFS is a registered broker-dealer and
may in the future act as a broker in connection with the sale of shares of the
Fund. BFS would earn commissions at the same rates as other brokers selling
shares of the Fund. In the event that BFS acts as a broker of Fund shares, the
Fund's prospectus would be revised accordingly.
APPENDIX A
SUBADVISORY AGREEMENT
SUBADVISORY AGREEMENT made as of the ____ day of March, 1996, by and
among PIONEER REAL ESTATE SHARES, a Delaware business trust (the "Fund"),
PIONEERING MANAGEMENT CORPORATION, a Delaware corporation (the "Manager") and
BOSTON FINANCIAL SECURITIES, INC., a Massachusetts corporation (the
"Subadviser").
W I T N E S S E T H
WHEREAS, the Fund is an open-end, management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), and the Manager and the Subadviser are investment advisers registered
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, pursuant to authority granted to the Manager by the Fund's
Board of Trustees and pursuant to the provisions of the Management Contract
dated as of September 26, 1995 between the Manager and the Fund (the "Management
Contract"), the Manager has selected the Subadviser to act as a sub-investment
adviser of the Fund and to provide certain other services, as more fully set
forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, it is agreed as follow:
1. The Subadviser's Services.
(a) The Subadviser shall, to the extent reasonably required in the
conduct of the business of the Fund and upon request by the Fund or the Manager,
(i) identify, analyze and make investment recommendations regarding real estate
industry companies, including the real estate properties and other permissible
investments of the Fund, (ii) analyze market conditions affecting the real
estate industry generally and specific geographical and securities markets in
which the Fund may invest or is invested, (iii) continuously review and analyze
the investments in the Fund's portfolio, and (iv) furnish to the Manager and the
Fund advisory reports based on such analysis. The Subadviser shall use its best
efforts in the preparation of such reports and will endeavor to consult the
persons and sources believed by it to have information available with respect to
the contents of such reports.
The Subadviser shall use its best efforts to ensure that any
recommendations it makes to the Manager regarding the purchase and sale of
portfolio securities are in compliance with the provisions of the Fund's
Declaration of Trust and By-laws and the 1940 Act, and with the investment
objectives, policies and restrictions (including, without limitation, the
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended,
for qualification as a regulated investment company) of the Fund, as each of the
same shall be from time to time in effect as set forth in the Fund's Prospectus
and Statement of Additional Information, or any investment guidelines or other
instructions received in writing from the Manager, and subject, further, to such
policies and instructions as the Manager may from time to time establish and
deliver to the Subadviser. Notwithstanding the foregoing, pursuant to the terms
of the Management Contract, the Manager is solely responsible for the day-to-day
management of the Fund's investment portfolio and for ensuring that the Fund's
investments comply with the Fund's Declaration of Trust and By-laws and the 1940
Act, and with the investment objectives, policies and restrictions of the Fund.
<PAGE>
(b) The Subadviser shall not be responsible for the provision of
administrative, bookkeeping or accounting services to the Fund, except as
otherwise provided herein or as may be necessary for the Subadviser to supply to
the Manager, the Fund or its Trustees the information required to be supplied
under this Agreement.
(c) The Subadviser shall maintain separate books and detailed records
of all matters pertaining to the Fund (the "Fund's Books and Records"). The
Fund's Books and Records shall be available to the Manager at any time upon
request and shall be available for telecopying without delay to the Manager
during any day that the Fund is open for business.
(d) The Subadviser shall also ensure that its Access Persons (as
defined in the Fund's Code of Ethics) comply in all respects with the Fund's
Code of Ethics, as in effect from time to time.
(e) The Subadviser shall inform the Manager and the Fund's Trustees on
a current basis of changes in investment strategy or tactics or in key
personnel. The Subadviser will make its officers and employees available to meet
with the Fund's Trustees at least annually on due notice to review the
investments of the Fund in light of current and prospective economic and market
conditions.
(f) From time to time as the Manager or the Trustees of the Fund may
reasonably request, the Subadviser shall furnish to the Manager and to each of
the Fund's Trustees reports on securities held by the Fund, all in such detail
as the Manager or the Trustees may reasonably request.
(g) It shall be the duty of the Subadviser to furnish to the Trustees
of the Fund such information as may reasonably be necessary in order for the
Trustees to evaluate this Agreement or any proposed amendments thereto for the
purposes of casting a vote pursuant to Section 8 hereof.
2. Allocation of Charges and Expenses. The Subadviser will bear its own
costs of providing services hereunder. Other than as herein specifically
indicated, the Subadviser shall not be responsible for the Fund's or the
Manager's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities. Specifically, the Subadviser
will not be responsible for expenses of the Fund or the Manager, as the case may
be, including, but not limited to, the following: (i) charges and expenses for
determining from time to time the value of the Fund's net assets and the keeping
of its books and records and related overhead; (ii) the charges and expenses of
auditors; (iii) the charges and expenses of any custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the Fund; (iv)
brokers' commissions, and issue and transfer taxes, chargeable to the Fund in
connection with securities transactions to which the Fund is a party; (v)
insurance premiums, interest charges, dues and fees for membership in trade
associations and all taxes and corporate fees payable by the Fund to federal,
state or other governmental agencies; (vi) fees and expenses involved in
registering and maintaining registrations of the Fund and/or its shares with the
Securities and Exchange Commission (the "Commission"), state or blue sky
securities agencies and foreign countries, including the preparation of
Prospectuses and Statements of Additional Information for filing with the
Commission; (vii) all expenses of shareholders' and Trustees' meetings and of
preparing, printing and distributing prospectuses, notices, proxy statements and
all reports to shareholders and to governmental agencies; (viii) charges and
expenses of legal counsel to the Fund and the Trustees; (ix) distribution fees
paid by the Fund in accordance with Rule 12b-1 promulgated by the Commission
pursuant to the 1940 Act; (x) compensation and expenses of Trustees of the Fund.
The
2
<PAGE>
Fund or the Manager, as the case may be, shall reimburse the Subadviser for any
such expenses or other expenses of the Fund or the Manager, as may be reasonably
incurred by such Subadviser on behalf of the Fund or the Manager. The Subadviser
shall keep and supply to the Fund and the Manager adequate records of all such
expenses.
3. Information supplied by the Manager. The Manager shall provide the
Subadviser with the Fund's Declaration of Trust, By-laws, Prospectus and
Statement of Additional Information, and instructions, as in effect from time to
time; and the Subadviser shall have no responsibility for actions taken in
reliance on any such documents.
4. Representations, Warranties and Covenants. The Subadviser represents
and warrants to each of the Fund and the Manager that it is registered as an
"investment adviser" under the Subadvisers Act and covenants that it will remain
so registered for the duration of this Agreement.
The Subadviser has reviewed the Registration Statement of the Fund as
filed with the Commission and represents and warrants that with respect to
disclosure about the Subadviser or information relating directly or indirectly
to the Subadviser, such Registration Statement contains, as of the date hereof,
no untrue statement of any material fact and does not omit any statement of
material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading.
Except as otherwise provided in Section 1(a) hereof, the Subadviser
agrees to comply with the requirements of the 1940 Act and the Advisers Act and
the respective rules and regulations thereunder, as applicable, as well as with
all other applicable Federal and state laws, rules, regulations and case law
that relate to the services and relationships described hereunder, and with the
provisions of the Registration Statement, as amended or supplemented, of the
Fund.
5. Subadviser's Compensation. The Manager shall pay to the Subadviser,
as compensation for the Subadviser's services hereunder, a fee equal to 0.25%
per annum of the Fund's average daily net assets up to $27 million of such
assets and 0.50% per annum of average daily net assets in excess of $27 million.
Such fee shall be computed daily and paid monthly. The Fund shall have no
responsibility for any fee payable to the Subadviser.
The method of determining net assets of the Fund for purposes hereof
shall be the same as the method of determining net assets for purposes of
establishing the offering and redemption price of Fund shares as described in
the Fund's Prospectus. If this Agreement shall be effective for only a portion
of a month, the aforesaid fee shall be prorated for that portion of such month
during which this Agreement is in effect.
In the event that the advisory fee payable by the Fund to the Manager
shall be reduced or the Manager agrees, after written notice to the Subadviser,
to utilize a portion of the advisory fee to make payments to a third party, the
amount payable to the Subadviser shall be likewise reduced by a proportionate
amount. The Subadviser may from time to time agree not to impose all or a
portion of its fee otherwise payable hereunder (in advance of the time such fee
or portion thereof would otherwise accrue). Any such fee reduction may be
discontinued or modified by the Subadviser at any time.
3
<PAGE>
6. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund in any way or otherwise be deemed to
be an agent of the Fund or of the Manager.
7. Assignment and Amendments. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of (i) its
assignment, including any change of control of the Manager or the Subadviser, or
(ii) in the event of the termination of the Management Contract; provided that
such termination shall not relieve the Manager or the Subadviser of any
liability incurred hereunder.
The terms of this Agreement shall not be changed unless such change is
approved at a meeting by the affirmative vote of a majority of the outstanding
voting securities of the Fund and unless also approved by the affirmative vote
of a majority of Trustees of the Fund voting in person, including a majority of
the Trustees who are not interested persons of the Fund, the Manager or the
Subadviser, at a meeting called for the purpose of voting on such change.
8. Duration and Termination. This Agreement shall become effective as
of the date first above written and shall remain in full force and effect
continually thereafter unless terminated automatically as set forth in Section 7
hereof or until terminated as follows:
(a) The Fund or the Manager may at any time terminate this Agreement by
not more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Subadviser.
Action of the Fund under this Subsection may be taken either (i) by vote of its
Trustees or (ii) by the affirmative vote of a majority of the outstanding voting
securities of the Fund;
(b) The Subadviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Manager; or
(c) This Agreement shall automatically terminate on May 31 of any year
beginning on May 31, 1997, in which its terms and renewal shall not have been
approved by (i) a majority vote of the Trustees of the Fund voting in person,
including a majority of the Trustees who are not interested persons of the Fund,
the Manager or the Subadviser, at a meeting called for the purpose of voting on
such approval or (ii) the affirmative vote of a majority of the outstanding
voting securities of the Fund; provided, however, that if the continuance of
this Agreement is submitted to the shareholders of the Fund for their approval
and such shareholders fail to approve such continuance of this Agreement as
provided herein, the Subadviser may continue to serve hereunder as to the Fund
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
Termination of this Agreement pursuant to this Section shall be without
payment of any penalty.
In the event of termination of this Agreement for any reason, the
Subadviser shall, immediately upon notice of termination or on such later date
as may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets, except as expressly directed by the Manager.
In addition, the Subadviser shall deliver the Fund's Books and Records to the
Manager by such means and in accordance with such schedule as the Manager shall
direct and shall otherwise cooperate, as reasonably directed by the Manager, in
the transition of portfolio asset management to any successor of the Subadviser,
including the Manager.
4
<PAGE>
9. Certain Definitions. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" means the affirmative vote, at an annual or special
meeting of shareholders of the Fund, duly called and held, (a) of 67% or more of
the shares of the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Fund entitled to vote at such meeting are present (in person or by proxy), or
(b) of more than 50% of the outstanding shares of the Fund entitled to vote at
such meeting, whichever is less.
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under said Act.
10. Liability and Indemnification. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Subadviser, or of
reckless disregard of its obligations and duties hereunder (collectively,
"Malfeasance"), the Subadviser shall not be subject to any liability to the
Manager or the Fund, to any shareholder of the Fund, or to any person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder. Nothing herein, however, shall derogate from the
Subadviser's obligations under federal and state securities laws (collectively,
the "Securities Laws").
The Manager shall indemnify the Subadviser for all liabilities and
related costs, including reasonable attorney's fees, which the Subadviser may
sustain in connection with the discharge without Malfeasance or negligence of
its obligations hereunder and in accordance with the Securities Laws. The
Subadviser shall indemnify the Manager and the Fund for all liabilities and
related costs, including reasonable attorneys fees, which either of them may
sustain as a result of the Subadviser's Malfeasance or violation of the
Securities Laws.
11. Enforceability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or uneforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12. Limitation of Liability. The parties to this Agreement acknowledge
and agree that all litigation arising hereunder, whether direct or indirect, and
of any and every nature whatsoever shall be satisfied solely out of the assets
of the portfolio affected thereby and that no Trustee, officer or holder of
shares of beneficial interest of the Fund shall be personally liable for any of
the foregoing liabilities. The Fund's Certificate of Trust, as amended from time
to time, is on file in the Office of the Secretary of State of the State of
Delaware. Such Certificate of Trust and the Fund's Declaration of Trust describe
in detail the respective responsibilities and limitations on liability of the
Trustees, officers, and holders of shares of beneficial interest.
13. Jurisdiction. This Agreement shall be governed by and construed in
accordance with the substantive laws of The Commonwealth of Massachusetts and
the Subadviser consents to the jurisdiction of courts, both state or federal, in
Boston, Massachusetts, with respect to any dispute under this Agreement.
5
<PAGE>
14. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be signed on their behalf by their duly authorized officers as of the date first
above written.
ATTEST: PIONEER REAL ESTATE SHARES
Name: Joseph P. Barri Name: John F. Cogan, Jr.
Title: Secretary Title: President
ATTEST: PIONEERING MANAGEMENT
CORPORATION
Name: Joseph P. Barri Name: David D. Tripple
Title: Secretary Title: President
ATTEST: BOSTON FINANCIAL SECURITIES, INC.
Name: Name:
Title: Title
6
PRELIMINARY COPY
PROXY PROXY
PIONEER REAL ESTATE SHARES
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
To be held March 5, 1996
The undersigned, having received notice of the meeting and management's
proxy statement therefor, and revoking all prior proxies, hereby appoint(s) John
F. Cogan, Jr., David D. Tripple, Robert P. Nault and Joseph P. Barri, and each
of them, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the undersigned
to attend the Special Meeting of Shareholders of Pioneer Real Estate Shares (the
"Fund") to be held on Tuesday, March 5, 1996 at 2:30 p.m. (Boston time) at the
offices of Hale and Dorr, counsel to the Fund, 60 State Street, 26th Floor,
Boston, Massachusetts 02109 (the "Meeting"), and any adjourned session or
sessions thereof, and there to vote and act upon the following matters (as more
fully described in the accompanying Proxy Statement) in respect of all shares of
the Fund which the undersigned will be entitled to vote or act upon, with all
the powers the undersigned would possess if personally present:
(1) To approve a new Investment Subadvisory Agreement with Boston
Financial Securities, Inc.:
- - -
FOR |_| AGAINST |_| ABSTAIN |_|
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
DATED: ......................, 1996
....................................
....................................
Signature(s)
In signing, please write name(s)
exactly as appearing hereon. When
signing as attorney, executor,
administrator or other fiduciary,
please give your full title as such.
Joint owners should each sign
personally.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE FUND SHOULD BE
RETURNED AS SOON AS POSSIBLE IN THE ENVELOPE PROVIDED
