[PIONEER LOGO]
Pioneer
Real Estate
Shares
ANNUAL REPORT 12/31/96
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 6
Schedule of Investments 9
Financial Statements 11
Notes to Financial Statements 18
Report of Independent Public Accountants 23
Trustees' Fees and Share Ownership 24
Trustees, Officers and Service Providers 25
Programs and Services for Pioneer Shareowners 26
The Pioneer Family of Mutual Funds 28
</TABLE>
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Pioneer Real Estate Shares
LETTER FROM THE CHAIRMAN 12/31/96
Dear Shareowner,
I am pleased to introduce this report for Pioneer Real Estate Shares,
covering the fast-paced and profitable year ended December 31, 1996. We
extend a special welcome to new shareowners, particularly those who joined
the Fund through Class B and C Shares introduced on February 1, 1996.
In February, following shareowner approval, we added the experience and
resources of Boston Financial as the Fund's subadviser. Their expertise in
the real estate industry has provided a solid backdrop for your portfolio
management team's stock-selection process. As the year progressed, real
estate investment trusts (REITs) moved into the spotlight as an effective
choice for portfolio diversification. These stocks "emerged" as an attractive
vehicle offering growth potential and tax- advantaged income. This atmosphere
set the stage for your Fund to post a 36% total return for the year -
outperforming both the Dow Jones Industrial Average and the Standard & Poor's
500 Index. While this was an extraordinary year, we think the future still is
bright for REIT stocks and real estate-related investments.
A final note. As you see, we've given your Fund's annual report a facelift.
The new style reflects what shareowners told us they want to see. Now you'll
find a Table of Contents and consistent, easy-to-read summaries of portfolio
information and performance. There's also a Portfolio Management Discussion
of the management team's insights into market conditions, portfolio strategy
and results. I encourage you to read on to learn more about your Fund.
Please contact your investment representative, or us at 1-800-225-6292, if
you have questions about Pioneer Real Estate Shares. Thank you for investing
with Pioneer.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO SUMMARY 12/31/96
Portfolio Diversification
(As a percentage of total investment portfolio)
U.S. Common Stocks 99%
Short-Term Cash Equivalents 1%
Geographical Distribution
(As a percentage of equity holdings)
Southeast 32%
Midwest 19%
West 18%
Southwest 17%
Mid-Atlantic 12%
Northeast 2%
10 Largest Holdings
(As a percentage of equity holdings)
1. Equity Residential 4.82% 6. Trizec Hahn Corp. 3.96%
Properties Trust
2. Patriot American 4.62 7. Catellus Development Corp. 3.93
Hospitality, Inc.
3. Host Marriott Services 4.13 8. Felcor Suite Hotels Inc. 3.79
Corp.
4. Liberty Property Trust 4.01 9. Cali Realty Corp. 3.61
5. Amli Residential 3.98 10. Beacon Properties Corp. 3.57
Properties Trust
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/96 CLASS A SHARES
Share Prices and Distributions
Net Asset Value
per Share 12/31/96 12/31/95
$15.52 $12.02
Distributions per Share Income Short-Term Long-Term
(12/31/95-12/31/96) Dividends Capital Gains Capital Gains
$0.3982 - $0.3411
Investment Returns
The mountain chart on the right shows the growth of a $10,000 investment
made in Pioneer Real Estate Shares, compared to the growth of the Standard &
Poor's 500 Index and the Wilshire Real Estate Securities Index.
Average Annual Total Returns
(As of December 31, 1996)
Period Net Asset Public Offering
Value Price*
Life-of-Fund 12.95% 10.88%
(10/25/93)
1 Year 36.45 28.64
Growth of $10,000+
PLOT POINTS
Pioneer Wilshire
Real Standard & Real Estate
Estate Poor's 500 Securities
Shares* Index Index
10/93 9425 10000 10000
12/93 9067 10015 9553
6/94 9288 9676 9884
12/94 9088 10147 9709
6/95 9435 12196 10170
12/95 10188 13956 11034
6/96 10719 15365 12046
12/96 13902 17159 15103
* Reflects deduction of the maximum 5.75% sales charge at the beginning of
the period and assumes reinvestment of distributions at net asset value.
+ Index comparison begins 10/31/93. The Standard & Poor's (S&P) 500 Index is
an unmanaged measure of 500 widely held common stocks listed on the New
York Stock Exchange, American Stock Exchange and the Over-the-Counter
market. The Wilshire Real Estate Securities Index is a
market-capitalization weighted measure of the performance of more than 85
real estate securities. The Index is 79% REITs (equity and hybrid) and 21%
real estate operation companies.
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.
3
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Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/96 CLASS B SHARES
Share Prices and Distributions
Net Asset Value
per Share 12/31/96 1/31/96
$15.45 $12.09
Distributions per Share Income Short-Term Long-Term
(1/31/96-12/31/96) Dividends Capital Gains Capital Gains
$0.3750 - $0.3411
Investment Returns
The mountain chart on the right shows the growth of a $10,000 investment
made in Pioneer Real Estate Shares, compared to the growth of the Standard &
Poor's 500 Index and the Wilshire Real Estate Securities Index.
Cumulative Total Returns
(As of December 31, 1996)
Period If Held If Redeemed*
Life-of-Fund 34.81% 30.81%
(1/31/96)
Growth of $10,000
PLOT POINTS
Pioneer Wilshire
Real Standard & Real Estate
Estate Poor's 500 Securities
Shares* Index Index
1/96 10000 10000 10000
2/96 10083 10087 10198
3/96 10108 10185 10281
4/96 10150 10342 10327
5/96 10452 10598 10557
6/96 10427 10642 10768
7/96 10647 10176 10672
8/96 11231 10388 11126
9/96 11555 10972 11404
10/96 11768 11278 11713
11/96 12187 12126 12199
12/96 13082 11885 13501
* Reflects deduction of the maximum applicable contingent deferred sales
charge (CDSC) at the end of the period and assumes reinvestment of
distributions. The maximum CDSC of 4% declines over six years.
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange and the Over-the-Counter market. The Wilshire Real Estate Securities
Index is a market-capitalization weighted measure of the performance of more
than 85 real estate securities. The Index is 79% REITs (equity and hybrid)
and 21% real estate operation companies.
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.
4
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Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/96 CLASS C SHARES
Share Prices and Distributions
Net Asset Value
per Share 12/31/96 1/31/96
$15.46 $12.09
Distributions per Share Income Short-Term Long-Term
(1/31/96-12/31/96) Dividends Capital Gains Capital Gains
$0.3620 - $0.3411
Investment Returns
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Real Estate Shares, compared to the growth of the Standard &
Poor's 500 Index and the Wilshire Real Estate Securities Index.
Cumulative Total Returns
(As of December 31, 1996)
Period If Held If Redeemed*
Life-of-Fund 34.76% 33.76%
(1/31/96)
Growth of $10,000
Pioneer Wilshire
Real Standard & Real Estate
Estate Poor's 500 Securities
Shares* Index Index
1/96 10000 10000 10000
2/96 10083 10087 10198
3/96 10108 10185 10281
4/96 10142 10342 10327
5/96 10443 10598 10557
6/96 10418 10642 10768
7/96 10638 10176 10672
8/96 11230 10388 11126
9/96 11545 10972 11404
10/96 11759 11278 11713
11/96 12186 12126 12199
12/96 13376 11885 13501
* Reflects deduction of the 1% contingent deferred sales charge (CDSC) at the
end of the period and assumes reinvestment of distributions.
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely
held common stocks listed on the New York Stock Exchange, American Stock
Exchange and the Over-the-Counter market. The Wilshire Real Estate Securities
Index is a market-capitalization weighted measure of the performance of more
than 85 real estate securities. The Index is 79% REITs (equity and hybrid)
and 21% real estate operation companies.
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.
5
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO MANAGEMENT DISCUSSION 12/31/96
Dear Shareowners,
On December 31, 1996, Pioneer Real Estate Shares completed its third fiscal
year. Your Fund had an impressive year overall, thanks to some exceptional
performance in the real estate investment trust (REIT) market. In fact, the
Fund's one-year total return of 36.45% (Class A Shares) outpaced the 30.80%
average return posted by its peers, according to independent research firm
Lipper Analytical Services.
Domestic equity markets overall remained strong for the year, although many
areas - particularly technology - became increasingly volatile and expensive
as the period progressed. Investors who were looking for good values, or
looking to diversify their portfolios, turned to REITs, which pushed demand-
and prices-higher.
A Strong Equity Market
At the start of the fiscal year, U.S. financial markets enjoyed the same
favorable investing climate that existed throughout 1995; namely, low
inflation, a slow-moving economy and lower-trending interest rates. The
Federal Reserve (the Fed) contributed to investor optimism when it cut
short-term interest rates in January, reflecting its belief that accelerated
economic growth and inflation were not concerns.
Investor enthusiasm waned temporarily, however, when February's employment
report showed the biggest job increase in 12 years. Worries about a
fast-growing economy prompted concerns the Fed would raise short-term rates.
These fears lingered throughout the year, contributing to interim declines
and volatility, as did perceptions that prices of various stock sectors were
too high. However, dramatic price increases of select, typically large-sized
companies helped pushed the stock market higher, keeping its overall return
strong for the fiscal year. The unmanaged Standard & Poor's 500 Index
returned 22.90% over the 12 months, assuming reinvestment of all distributions.
6
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Pioneer Real Estate Shares
REITs Delivered Performance, Diversification
Your Fund's one-year total return outpaced the S&P's, mostly due to the
strong performance REITs turned in as the fiscal year progressed. While both
the REIT sector and the overall market posted stellar returns, daily results
often varied significantly, reflecting the tendency of REITs to move
independently from other stocks. While REIT investing involves risks relating
to economic conditions and interest rate changes, it also lets investors
diversify their portfolios into real estate, while still enjoying the
flexibility and liquidity of stocks. In addition, REIT stocks continue to
offer competitive yields, giving investors a consistent income stream.
Identifying Value in a Fast-Moving Stock Market
Pioneer Real Estate Shares invests for long-term capital growth, with
current income as a secondary objective. To that end, we look for REITs and
real estate-related companies that exhibit good growth potential, as well as
attractive dividend yields. We examine company fundamentals such as earnings
growth, cash flow and the quality of management. With the added support of
Boston Financial Securities (the Fund's subadviser), we also take into
consideration broader factors related to real estate, such as employment
growth and population trends.
During the past year, we saw impressive growth in the office/industrial
sector. With employment on the rise, companies are looking for additional
office space, especially in states such as California that are experiencing
an economic recovery. Little building activity in the face of growing demand
has led to higher rents. REITs that have benefited from this favorable
supply/demand climate include Fund holdings Beacon Properties. With inflation
low, we think these companies will continue to perform well, particularly
since they can raise capital to expand their business endeavors by issuing
additional stock.
One area that did not prove rewarding over the past year was the retail
sector. After demonstrating good growth prospects in 1993 and 1994, many
retail outlets fizzled. Your Fund had minimal exposure to this area as of
December 31; the sole stock in the portfolio was Horizon Group. While we did
reallocate money from Horizon to take advantage of other, better-
7
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO MANAGEMENT DISCUSSION 12/31/96 (continued)
performing securities, we still hold out hope that this area, and Horizon,
will see a recovery of sorts.
Some of the Fund's strongest performers over the 12 months were not REITs.
Instead, they are involved in real estate-related businesses that benefited
from the strong REIT market. Over the course of the year, we added shares of
Catellus Development, a company involved in land and industrial development
in California. We also invested in Trizec Hahn, a Toronto-based company
involved in property development in California and elsewhere along the West
Coast. On the other side of the coin, we sold Amresco after it appreciated to
our target price, locking in sizable gains.
Looking Ahead
Whether 1997 will be another stellar year for financial markets is anyone's
guess. At some point, however, logic tells us the market will have to slow or
reverse the course of the past two years. The same holds true for the REIT
market. While 1996 proved to be a phenomenal year, it also is not likely to
be repeated over an extended period of time, given that the average annual
return for this stock group over the past 20 years is 16.13%.
Diversifying into a sector that can move independently from the general
market makes real estate-related investments an important part of almost any
asset allocation strategy. We believe Pioneer Real Estate Shares can have a
role in most portfolios and, by focusing on the individual merits of
companies, we expect to uncover many good values. We are confident our
in-depth analysis, along with the research capabilities of your Fund's
subadviser Boston Financial Securities, will reward long-term investors.
Respectfully,
/s/ Robert W. Benson,
Robert W. Benson,
Portfolio Manager
8
<PAGE>
Pioneer Real Estate Shares
SCHEDULE OF INVESTMENTS 12/31/96
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
INVESTMENT IN SECURITIES - 98.5%
Capital Goods - 1.3%
Construction & Engineering - 1.3%
140,000 Belmont Homes, Inc.* $ 1,347,500
-----------
Total Capital Goods $ 1,347,500
-----------
Real Estate Investment Trusts - 80.5%
175,000 Amli Residential Properties Trust $ 4,090,625
105,000 Arden Realty Group, Inc. 2,913,750
100,000 Beacon Properties Corp. 3,662,500
180,500 Bedford Property Investors, Inc. 3,158,750
100,000 Berkshire Realty Co., Inc. 987,500
120,000 Cali Realty Corp. 3,705,000
95,500 Cousins Properties, Inc. 2,685,937
70,000 Developers Diversified Realty Corp. 2,598,750
60,000 Duke Realty Investments, Inc. 2,310,000
120,000 Equity Residential Property Trust 4,950,000
115,000 Gables Residential Trust 3,335,000
161,600 Glimcher Realty Trust 3,555,200
105,000 Highwoods Properties, Inc. 3,543,750
87,400 Horizon Group, Inc. 1,737,075
87,500 JP Realty, Inc. 2,264,063
160,000 Liberty Property Trust 4,120,000
137,000 The Macerich Co. 3,579,125
140,000 Merry Land & Investments, Inc. 3,010,000
111,100 National Golf Properties, Inc. 3,513,537
90,000 Nationwide Health Properties, Inc. 2,182,500
110,000 Patriot American Hospitality, Inc. 4,743,750
135,000 Prentiss Properties Trust 3,375,000
100,000 Public Storage, Inc. 3,100,000
110,000 Simon DeBartolo Group, Inc. 3,410,000
130,000 Storage Trust Realty 3,510,000
85,000 Sun Communities, Inc. 2,932,500
65,000 Town & Country Trust 950,625
-----------
$83,924,937
-----------
Real Estate Services - 8.9%
45,000 Amresco, Inc.* $ 1,203,750
355,000 Catellus Development Corp.* 4,038,125
The accompanying notes are an integral part of these financial statements
9
<PAGE>
Pioneer Real Estate Shares
SCHEDULE OF INVESTMENTS 12/31/96 (Continued)
Shares Value
Real Estate - continued
185,000 Trizec Hahn Corp. $ 4,070,000
------------
$ 9,311,875
------------
SCHEDULE OF INVESTMENTS (continued) Services - 7.8%
Hotels & Restaurants - 7.8%
110,000 Felcor Suite Hotels, Inc. $ 3,891,250
265,000 Host Marriott Services Corp.* 4,240,000
------------
Total Services $ 8,131,250
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $86,345,324) $102,715,562
------------
Principal
Amount
TEMPORARY CASH INVESTMENT - 1.5%
Commercial Paper - 1.5%
$1,509,000 American Express Co., 6.55%, 1/02/97 $ 1,509,000
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,509,000) $ 1,509,000
------------
TOTAL INVESTMENT IN SECURITIES AND
TEMPORARY CASH INVESTMENT - 100%
(Cost $87,854,324) (a) $104,224,562
============
</TABLE>
* Non-income producing security.
(a) At December 31, 1996, the net unrealized gain on investments based on
cost for federal income tax purposes of $87,854,324 was as follows:
<TABLE>
<CAPTION>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $17,192,977
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (822,739)
-----------
Net unrealized gain $16,370,238
===========
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 1996 aggregated $79,516,648 and $20,781,364,
respectively.
The accompanying notes are an integral part of these financial statements
10
<PAGE>
Pioneer Real Estate Shares
BALANCE SHEET 12/31/96
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investment of $1,509,000) (cost $87,854,324) $104,224,562
Cash 978
Receivables -
Fund shares sold 3,019,561
Dividends and interest 583,105
Organizational costs - net 37,504
Other 3,729
------------
Total assets $107,869,439
------------
LIABILITIES:
Payables -
Investment securities purchased $ 2,005,538
Fund shares repurchased 19,952
Dividends 2,804
Due to affiliates 154,685
Accrued expenses 35,850
------------
Total liabilities $ 2,218,829
------------
NET ASSETS:
Paid-in capital $ 89,259,517
Accumulated undistributed net realized gain on investments 20,855
Net unrealized gain on investments 16,370,238
------------
Total net assets $105,650,610
============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A - (based on $72,572,295/4,674,628 shares) $ 15.52
============
Class B - (based on $26,379,204/1,706,947 shares) $ 15.45
============
Class C - (based on $6,699,111/433,297 shares) $ 15.46
============
MAXIMUM OFFERING PRICE:
Class A $ 16.47
============
</TABLE>
The accompanying notes are an integral part of these financial statements
11
<PAGE>
Pioneer Real Estate Shares
STATEMENT OF OPERATIONS
For the Year Ended 12/31/96
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends $2,257,844
Interest 41,981
----------
Total investment income $ 2,299,825
-----------
EXPENSES:
Management fees $ 428,114
Transfer agent fees
Class A 84,566
Class B 7,909
Class C 2,229
Distribution fees
Class A 79,357
Class B 50,464
Class C 13,398
Accounting 55,521
Custodian fees 21,405
Registration fees 51,620
Professional fees 62,890
Printing 18,870
Fees and expenses of nonaffiliated trustees 9,866
Organization costs 18,088
Miscellaneous 16,266
----------
Total expenses $ 920,563
Less management fees waived by Pioneering
Management Corporation (145,879)
Less fees paid indirectly (9,187)
-----------
Net expenses $ 765,497
-----------
Net investment income $ 1,534,328
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 2,084,816
Change in net unrealized gain on investments 15,224,378
-----------
Net gain on investments $17,309,194
-----------
Net increase in net assets resulting from operations $18,843,522
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
12
<PAGE>
Pioneer Real Estate Shares
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended 12/31/96 and 12/31/95
<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/96 12/31/95
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 1,534,328 $ 725,611
Net realized gain (loss) on investments 2,084,816 (590,962)
Change in net unrealized gain on investments 15,224,378 2,858,800
------------ -----------
Net increase in net assets resulting from operations $ 18,843,522 $ 2,993,449
============ ===========
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income:
Class A ($0.40 and $0.33 per share, respectively) $ (1,212,422) $ (725,611)
Class B ($0.35 per share) (192,285) -
Class C ($0.34 per share) (50,053) -
In excess of net investment income:
Class A ($0.00 and $0.02 per share, respectively) - (56,360)
Class B ($0.03 per share) (35,573) -
Class C ($0.02 per share) (8,508) -
From net realized gain:
Class A ($0.34 and $0.00 per share, respectively) (1,154,046) (3,966)
Class B ($0.34 per share) (301,689) -
Class C ($0.34 per share) (77,166) -
From tax return of capital:
Class A ($0.00 and $0.34 per share, respectively) - (781,598)
Total distributions to shareholders $ (3,031,742) $(1,567,535)
------------ -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 69,395,986 $ 6,726,489
Reinvestment of distributions 2,390,834 1,210,135
Cost of shares repurchased (9,439,138) (9,939,492)
------------ -----------
Net increase (decrease) in net assets resulting
from fund share transactions $ 62,347,682 $(2,002,868)
------------ -----------
Net increase (decrease) in net assets $ 78,159,462 $ (576,954)
------------ -----------
NET ASSETS:
Beginning of year 27,491,148 28,068,102
------------ -----------
End of year (including accumulated undistributed net
investment income of $0 and $0, respectively) $105,650,610 $27,491,148
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
13
<PAGE>
Pioneer Real Estate Shares
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
'96 Shares '96 Amount '95 Shares '95 Amount
<S> <C> <C> <C> <C>
CLASS A
Shares sold 2,947,203 $39,983,424 594,169 $ 6,726,489
Reinvestment of distributions 145,524 1,986,193 105,171 1,210,135
Less shares repurchased (705,235) (9,077,100) (879,454) (9,939,492)
--------- ----------- -------- -----------
Net increase (decrease) 2,387,492 $32,892,517 (180,114) $(2,002,868)
========= =========== ======== ===========
CLASS B*
Shares sold 1,706,613 $23,478,577
Reinvestment of distributions 22,391 322,174
Less shares repurchased (22,057) (303,267)
--------- -----------
Net increase 1,706,947 $23,497,484
========= ===========
CLASS C*
Shares sold 431,665 $ 5,933,985
Reinvestment of distributions 5,752 82,467
Less shares repurchased (4,120) (58,771)
--------- -----------
Net increase 433,297 $ 5,957,681
========= ===========
</TABLE>
*Class B and C shares were first publicly offered on January 31, 1996.
The accompanying notes are an integral part of these financial statements
14
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/96
<TABLE>
<CAPTION>
Six Months
Year Ended Year Ended Ended 10/25/93 to
12/31/96 12/31/95 12/31/94+ 6/30/94
<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 $ 0.42 $ 0.32 $ 0.21 $ 0.27
Net realized and unrealized gain (loss) on investments 3.82 1.01 (0.48) (0.45)
------- ------- ------- -------
Net increase (decrease) from investment operations $ 4.24 $ 1.33 $ (0.27) $ (0.18)
Distributions to shareholders:
From net investment income (0.40) (0.33) (0.20) (0.27)
In excess of net investment income - (0.02) - -
From net realized gain (0.34) - (0.02) -
From tax return of capital - (0.34) (0.15) (0.03)
------- ------- ------- -------
Net increase (decrease) in net asset value $ 3.50 $ 0.64 $ (0.64) $ (0.48)
------- ------- ------- -------
Net asset value, end of period $ 15.52 $ 12.02 $ 11.38 $ 12.02
======= ======= ======= =======
Total return* 36.45% 12.11% (2.16)% (1.47)%
Ratio of net expenses to average net assets 1.71%+++ 1.77%+++ 1.75%** 1.71%**
Ratio of net investment income to average net assets 3.52%+++ 2.73%+++ 3.72%** 3.73%**
Portfolio turnover rate 47% 10% 17%** 24%**
Average commission rate paid(1) $0.0556 - - -
Net assets, end of period (in thousands) $72,572 $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 2.09% 2.59% 2.27% ** 2.15% **
Net investment income 3.14% 1.91% 3.20% ** 3.28% **
Ratios assuming waiver of management fees and reduction
for fees paid indirectly:
Net expenses 1.69% 1.75% - -
Net investment income 3.54% 2.75% - -
</TABLE>
+ 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 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 assuming no reduction for fees paid indirectly.
(1) Amount represents the rate of commission paid per share on the Fund's
exchanged listed security transactions.
The accompanying notes are an integral part of these financial statements
15
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/96
<TABLE>
<CAPTION>
1/31/96 to
12/31/96
<S> <C>
CLASS B(a)
Net asset value, beginning of period $ 12.09
-------
Increase from investment operations:
Net investment income $ 0.35
Net realized and unrealized gain on investments 3.73
-------
Net increase from investment operations $ 4.08
Distributions to shareholders:
From net investment income (0.35)
In excess of net investment income (0.03)
From net realized gain (0.34)
-------
Net increase in net asset value $ 3.36
-------
Net asset value, end of period $ 15.45
=======
Total return* 34.81%
Ratio of net expenses to average net assets 2.33%**+
Ratio of net investment income to average net assets 3.73%**+
Portfolio turnover rate 47%
Average commission rate paid(1) $0.0556
Net assets, end of period (in thousands) $26,379
Ratios assuming no waiver of management fees and no
reduction for fees paid indirectly:
Net expenses 2.45%**
Net investment income 3.61%**
Ratios assuming waiver of management fees and reduction for
fees paid indirectly:
Net expenses 2.30%**
Net investment income 3.76%**
</TABLE>
(a) Class B shares were first publicly offered on January 31, 1996.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of 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 assuming no reduction for fees paid indirectly.
(1) Amount represents the rate of commission paid per share on the Fund's
exchanged listed security transactions.
The accompanying notes are an integral part of these financial statements
16
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/96
<TABLE>
<CAPTION>
1/31/96 to
12/31/96
<S> <C>
CLASS C(a)
Net asset value, beginning of period $ 12.09
-------
Increase from investment operations:
Net investment income $ 0.34
Net realized and unrealized gain on investments 3.73
-------
Net increase from investment operations $ 4.07
Distributions to shareholders:
From net investment income (0.34)
In excess of net investment income (0.02)
From net realized gain (0.34)
-------
Net increase in net asset value $ 3.37
-------
Net asset value, end of period $ 15.46
=======
Total return* 34.76%
Ratio of net expenses to average net assets 2.35%**+
Ratio of net investment income to average net assets 3.66%**+
Portfolio turnover rate 47%
Average commission rate paid(1) $0.0556
Net assets, end of period (in thousands) $ 6,699
Ratios assuming no waiver of management fees and no
reduction for fees paid indirectly:
Net expenses 2.48%**
Net investment income 3.53%**
Ratios assuming waiver of management fees and reduction for
fees paid indirectly:
Net expenses 2.32%**
Net investment income 3.69%**
</TABLE>
(a) Class C shares were first publicly offered on January 31, 1996.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of 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 assuming no reduction for fees paid indirectly.
(1) Amount represents the rate of commission paid per share on the Fund's
exchanged listed security transactions.
The accompanying notes are an integral part of these financial statements
17
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/96
1.Organization and Significant Accounting Policies
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 Fund offers three classes of shares - Class A, Class B and Class C
shares. Class B and Class C shares were first publicly offered on January 31,
1996. Shares issued and outstanding prior to January 31, 1996 were designated
as Class A shares. Shares of Class A, Class B and Class C each 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 Board of Trustees. Dividend
income is recorded on the ex-dividend date and interest income is recorded
on the accrual basis. Temporary cash investments are valued at amortized
cost.
18
<PAGE>
Pioneer Real Estate Shares
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 on 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 to first 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 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
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax
rules. Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by the Fund is from distributions
by publicly traded REITs, and such distributions for tax 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.
19
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/96 (continued)
At December 31, 1996, the Fund reclassified $35,487 and $18,089 from
accumulated undistributed net investment income and paid-in capital,
respectively, to accumulated net realized loss on investments. The
reclassification has no impact on the net asset value of the Fund and is
designed to present the Fund's capital accounts on a tax basis.
The Fund has designated $1,553,755 as a capital gain dividend for the
purposes of the dividend paid deduction.
C. Fund Shares
The Fund records sales and repurchases of its shares on 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 subsidiary of The Pioneer Group, Inc. (PGI). PFD earned
$61,469 in underwriting, commissions on the sale of fund shares during
the year ended December 31, 1996.
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 the 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.
Distributions to shareholders 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 and Class C shares can bear different
transfer agent and distribution fees.
E. Deferred 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. If Pioneering Management Corporation (PMC) redeems any of its
initial investment prior to the end of the amortization period, the
redemption proceeds will be decreased by the pro rata share of the
unamortized expenses as of the date of redemption. The pro rata
20
<PAGE>
Pioneer Real Estate Shares
shares is derived by dividing the number of original shares redeemed by the
total number of original shares outstanding at the time of redemption.
2. Management Agreement
PMC 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.
Until October 22, 1996, PMC had agreed not to impose a portion of its
management fee and to assume other operating expenses of the Fund to the
extent that such expenses exceeded 1.75% of the Class A expenses; 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. At December 31, 1996, $85,384 was payable to PMC related to
management fees and certain other services.
Effective March 5, 1996, the shareholders approved a subadvisory agreement
with Boston Financial Securities, Inc. (BFS). As compensation for its
subadvisory services, PMC pays BFS a management fee at the annual rate of
0.25% of the Fund's average daily net assets up to $27 million and 0.50% of
excess over $27 million.
3. Transfer Agent
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 $13,607 in transfer agent fees payable to PSC at
December 31, 1996.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A
Plan, Class B Plan and Class C Plan) in accordance with Rule 12b-1 of the
Investment Company Act of 1940. Pursuant to the Class A Plan, the Fund pays
PFD a service fee of up to 0.25% of the Fund's average daily net assets 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
21
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/96 (continued)
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 $55,694 in distribution fees payable to PFD at December 31,
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
redemptions of certain net asset value purchases of Class A shares within one
year of purchase. Class B shares that are redeemed within 6 years of purchase
are subject to a CDSC at declining rates beginning at 4.0%, based on the
lower of cost or market value of shares being redeemed. Redemptions of Class
C shares within one year of purchase are subject to a CDSC of 1.00%. Proceeds
from the CDSC are paid to PFD. For the year ended December 31, 1996, CDSCs in
the amount of $677 were paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended December 31, 1996,
the Fund's expenses were reduced by $9,187 under such arrangements.
22
<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, including the schedule of
investments, of Pioneer Real Estate Shares as of December 31, 1996, and the
related statement of operations, the statements of changes in net assets, and
the financial highlights for the periods presented. These financial
statements and the 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 December 31, 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 December 31, 1996, the results of its
operations, the changes in its net assets, and the financial highlights for
the periods presented, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 3, 1997
23
<PAGE>
Pioneer Real Estate Shares
TRUSTEES' FEES AND SHARE OWNERSHIP 12/31/96
Trustees' Fees, Principal Shareholders and Share
Ownership of Trustees and Officers (Unaudited)
The aggregate remuneration paid by the Fund to nonaffiliated trustees and
officers during the year ended December 31, 1996 was $8,906, plus expenses
incurred in attending trustees meetings of $1,100. Fees of trustees who are
affiliated with or "interested persons" of Pioneering Management Corporation
and Pioneer Funds Distributor, Inc., investment adviser and principal
underwriter, respectively, of the Fund ($1,000 in 1996) are reimbursed to the
Fund by Pioneering Management Corporation in accordance with the management
agreement with the Fund. At December 31, 1996, the trustees and officers of
the Fund owned beneficially 101,495 of Class A shares of the Fund (2.2% of
the outstanding Class A shares). The Pioneer Group, Inc., the parent company
of Pioneering Management Corporation and Pioneer Funds Distributor, Inc., is
a publicly held corporation of which Mr. Cogan, Chairman and President of the
Fund, owned approximately 14% of the outstanding shares of capital stock at
December 31, 1996.
24
<PAGE>
Pioneer Real Estate Shares
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees
John F. Cogan, Jr.
Blake Eagle
Richard H. Egdahl, M.D.
Margaret B.W. Graham
Stephen G. Kasnet
John W. Kendrick
Marguerite A. Piret
Fred N. Pratt, Jr.
David D. Tripple
Stephen K. West
John Winthrop
Officers
John F. Cogan, Jr., Chairman and
President
David D. Tripple, Executive Vice President
Robert W. Benson, Vice President
Stephen G. Kasnet, Vice President
William H. Keough, Treasurer
Joseph P. Barri, Secretary
- --
- --
- --
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
25
<PAGE>
PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
Your investment representative can give you additional information on
Pioneer's programs and services. If you want to order literature on any of
the following items directly, simply call Pioneer at 1-800-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund
share prices, yields, dividends and distributions, as well as information
about your own account. Simply call 1-800-225-4321. For specific account
information, have your 13-digit account number and four-digit personal
identification number at hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as
you meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need
to do is authorize a set amount of money to be moved out of your bank account
into the Pioneer fund of your choice. Investomatic also allows you to change
the dollar amount, frequency and investment date right over the phone. By
putting aside affordable amounts of money regularly, you can build a
long-term investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing
Pioneer to deduct from participating employees' paychecks. You specify the
dollar amount you want to invest into the Pioneer fund(s) of your choice.
26
<PAGE>
Automatic Exchange Program
A simple way to move money from a money market or bond fund into a stock fund
over a period of time. Just invest a lump sum in a Pioneer money market fund
or bond fund. Then, select the Pioneer equity fund or funds you wish to
invest in, and choose the amounts and dates for Pioneer to sell shares of
your money market or bond fund and use the proceeds to buy shares of the
Pioneer equity fund you have chosen. Over time, your original investment will
be shifted to your Pioneer equity fund.
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals.
You decide the frequency and the day of the month you want. Pioneer will send
the proceeds by check to the address you designate, or electronically to your
bank account. You also can authorize Pioneer to make the redemptions payable
to someone else. (SWPs are available only for accounts with a value of
$10,000 or more.)
27
<PAGE>
THE PIONEER FAMILY OF MUTUAL FUNDS
Growth Funds
Global/International
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares
Pioneer India Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
Income Funds
Taxable
Pioneer America Income Trust
Pioneer Bond Fund
Pioneer Short-Term Income Trust*
Tax-Exempt
Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
Money Market Fund
Pioneer Cash Reserves Fund
*Offers Class A and B Shares only
28
<PAGE>
This page for your notes.
29
<PAGE>
HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us
for assistance or information.
You can call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Or write to us at:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
This report must be preceded or accompanied by a current
Fund prospectus.
[Pioneer Logo}
Pioneer Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
0297-3940
(c) Pioneer Funds Distributors, Inc.
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