File No. 33-65822
811-07379
(formerly 811-7870)
As Filed with the Securities and Exchange Commission on January 27, 1998.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. 11 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. 12 [x]
(Check appropriate box or boxes)
PIONEER REAL ESTATE SHARES
(Formerly, Pioneer Winthrop Real Estate Investment Fund)
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(Exact name of registrant as specified in charter)
60 State Street, Boston, Massachusetts 02109
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(Address of principal executive office) Zip Code
(617) 742-7825
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(Registrant's Telephone Number, including Area Code)
Joseph P. Barri, Hale and Dorr, 60 State Street, Boston, MA 02109
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(Name and address of agent for service)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on [date] pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(1)
[ ] on [date] pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on [date] pursuant to paragraph (a)(2)
of Rule 485
Title of Securities: Shares of beneficial interest, no par value
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PIONEER REAL ESTATE SHARES
Cross-Reference Sheet Showing Location in Prospectus and
Statement of Additional Information of
Information Required by Items of the Registration Form
Form N-1A Item Number and Caption Location
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Part A
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1. Cover Page............................. Cover Page
2. Synopsis............................... Expense Information
3. Condensed Financial Information........ Financial Highlights
4. General Description of Registrant...... Investment Objectives and
Policies and Associated
Risks; Management of the
Fund; Fund Shares; The Fund
5. Management of the Fund................. Management of the Fund
5.a. Management's Discussion of Fund
Performance........................ Not Applicable
6. Capital Stock and Other Securities..... The Fund; Dividends;
Distributions and Taxation;
Distribution of Class Y Shares
7. Purchase of Securities Being Offered... Purchasing Class Y Shares;
Share Price
8. Redemption or Repurchase............... Redeeming Class Y Shares;
Exchanging Class Y Shares;
9. Pending Legal Proceedings.............. Not Applicable
<PAGE>
Form N-1A Item Number and Caption Location
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Part B
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10. Cover Page............................. Cover Page
11. Table of Contents...................... Cover Page
12. General Information and History........ Cover Page; General
Information and History;
Certain Liabilities
13. Investment Objectives and Policies..... Investment Policies and
Restrictions
14. Management of the Fund................. Management of the Fund
15. Control Persons and Principle Holders
of Securities........................ Management of the Fund
16. Investment Advisory and Other
Services............................. Management of the Fund;
Advisory Services;
Shareholder
Servicing/Transfer Agent;
Custodian; Independent Public
Accountant
17. Brokerage Allocation and Other
Practices............................ Portfolio Transactions
18. Capital Stock and Other Securities..... Description of Shares;
Certain Liabilities
19. Purchase Redemption and Pricing of
Securities Being Offered............. Determination of Net Asset
Value; Letter of Intent;
Systematic Withdrawal Plan
20. Tax Status............................. Tax Status
21. Underwriters........................... Principal Underwriter;
Underwriting Agreement and
Distribution Plans
22. Calculation of Performance Data........ Investment Results
23. Financial Statements................... Financial Statements
<PAGE>
PIONEER REAL ESTATE SHARES
STATEMENT OF INCORPORATION BY REFERENCE
The prospectus describing Class A, Class B and Class C shares filed with the
Commission as part of Post-Effective Amendment No. 10 filed April 28, 1997,
Accession No.0000950146-97-000651 to the Registrant's Registration Statement on
Form N-1A, is incorporated herein by reference.
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PART A
PROSPECTUS
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[PIONEER LOGO]
PIONEER
REAL ESTATE SHARES
CLASS Y SHARES PROSPECTUS
March 26, 1998
PIONEER REAL ESTATE SHARES (the "Fund") is a non-diversified open-end
investment company seeking primarily long-term growth of capital. Current income
is a secondary objective. The Fund will seek to achieve its investment
objectives by investing at least 75% of its total assets in a portfolio
consisting primarily of equity securities of real estate investment trusts and
other real estate industry companies.
The Fund may also invest up to 25% of its total assets in debt securities
of real estate industry companies, mortgage-backed securities and short-term
investments. In pursuit of its objectives, the Fund may employ active management
techniques (including futures and options) in an attempt to hedge risks
associated with the Fund's investments in real estate equity securities. There
is, of course, no assurance that the Fund will achieve its investment
objectives.
FUND RETURNS AND SHARE PRICES FLUCTUATE AND THE VALUE OF YOUR ACCOUNT
UPON REDEMPTION MAY BE MORE OR LESS THAN YOUR PURCHASE PRICE. SHARES IN THE FUND
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR
OTHER DEPOSITORY INSTITUTION, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENTS IN SECURITIES OF REAL ESTATE INDUSTRY COMPANIES
ENTAIL RISKS IN ADDITION TO THOSE CUSTOMARILY ASSOCIATED WITH INVESTING IN
SECURITIES IN GENERAL. THE FUND IS INTENDED FOR INVESTORS WHO CAN ACCEPT SUCH
RISKS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE "INVESTMENT OBJECTIVE AND
POLICIES AND ASSOCIATED RISKS" FOR A DISCUSSION OF THESE RISKS.
This Prospectus provides information about the Fund and its Class Y
shares that you should know before investing in the Fund. Please read and retain
it for your future reference. More information about the Fund is included in the
Statement of Additional Information, also dated March __, 1998, as supplemented
or revised from time to time, which is incorporated into this Prospectus by
reference. A copy of the Statement of Additional Information may be obtained
free of charge by calling Shareholder Services at 1-888-294-4480 or by written
request to the Fund at 60 State Street, Boston, Massachusetts 02109. Other
information about the Fund has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge through
the SEC's Internet web site (http://www.sec.gov).
TABLE OF CONTENTS PAGE
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I. EXPENSE INFORMATION ...................................
II. FINANCIAL HIGHLIGHTS ..................................
III. INVESTMENT OBJECTIVES AND POLICIES AND
ASSOCIATED RISKS .............................
IV. MANAGEMENT OF THE FUND ................................
V. FUND SHARES ...........................................
VI. SHARE PRICE ...........................................
VII. PURCHASING CLASS Y SHARES .............................
VIII. REDEEMING CLASS Y SHARES ..............................
IX. EXCHANGING CLASS Y SHARES .............................
X. DISTRIBUTION OF CLASS Y SHARES ........................
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION .................
XII. SHAREHOLDER SERVICES ..................................
Account and Confirmation Statements ..........
Financial Reports and Tax Information ........
Distribution Options .........................
Telephone Transactions .......................
FactFoneSM ...................................
XIII. THE FUND ..............................................
XIV. INVESTMENT RESULTS ....................................
APPENDIX A: Certain Investment Practices ..............
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
I. EXPENSE INFORMATION
This table is designed to help investors understand the charges and
expenses that an investor will bear directly or indirectly when investing in the
Fund. Operating expenses for Class Y shares are based on expenses that would
have been incurred for the fiscal year ended December 31, 1996 had such shares
been outstanding for the entire fiscal year. +
Shareholder Transaction Expenses:........................... Class Y
Maximum Initial Sales Charge on Purchases
(as a percentage of offering price) ..................... None
Maximum Sales Charge on
Reinvestment of Dividends ............................... None
Maximum Deferred Sales Charge
(as a percentage of original purchase price
or redemption proceeds, as applicable).................. None
Redemption fee ........................................... None
Exchange fee ............................................. None
Annual Operating Expenses
(As a Percentage of Average Net Assets):
Management fee ........................................... 1.00%
Other Expenses (estimated) (including
accounting and transfer agent fees, custodian fees and
printing expenses)....................................... 0.44%
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Total Operating Expenses .................................. 1.44%
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+ Class Y shares were first offered March 26, 1998.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming a
5% annual return, reinvestment of all dividends and distributions and that the
percentage amounts listed under "Annual Operating Expenses" remain the same each
year.
1 Year 3 Years 5 Years 10 Years
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Class Y Shares $15 $46 $79 $172
THE EXAMPLE IS DESIGNED FOR INFORMATION PURPOSES ONLY, AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR RETURN. ACTUAL FUND
EXPENSES AND RETURN VARY FROM YEAR TO YEAR AND MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
For further information regarding management fees and other expenses of
the Fund, see "Management of the Fund" and "Distribution of Class Y Shares" in
this Prospectus and "Management of the Fund" and "Underwriting Agreement and
Distribution Plan" in the Statement of Additional Information.
II. FINANCIAL HIGHLIGHTS
Class Y shares are a new class of shares; financial highlights are not
currently available for Class Y shares. Arthur Andersen LLP's report on the
Fund's audited financial statements as of December 31, 1996 for Class A, Class B
and Class C shares appears in the Fund's Annual Report which is incorporated by
reference into the Statement of Additional Information. The Annual Report
includes more information about the Fund's performance and is available free of
charge by calling Shareholder Services at 1-888-294-4480.
III. INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS
The Fund's primary investment objective is to seek long-term growth of
capital. Current income is a secondary investment objective. The Fund seeks
these objectives by investing in a non-diversified portfolio consisting
primarily of equity securities of real estate investment trusts and other real
estate industry companies and, to a lesser extent, in debt securities of such
companies and in mortgage-backed securities.
Under normal circumstances, at least 75% of the Fund's total assets are
invested in equity securities of real estate investment trusts ("REITs") and
other real estate industry companies. For purposes of the Fund's investments, a
"real estate industry company" is a company that derives at least 50% of its
gross revenues or net profits from either (a) the ownership, development,
construction, financing, management or sale of commercial, industrial or
residential real estate or (b) products or services related to the real estate
industry like building supplies or mortgage servicing. The equity securities of
real estate industry companies in which the Fund will invest consist of common
stock, shares of beneficial interest of REITs and securities with common stock
characteristics, such as preferred stock and debt securities convertible into
common stock ("Real Estate Equity Securities").
The Fund may also invest up to 25% of its total assets in (a) debt
securities of real estate industry companies, (b) mortgage-backed securities,
such as mortgage pass-through certificates, real estate mortgage investment
conduit ("REMIC") certificates and collateralized mortgage obligations ("CMOs")
and (c) short-term investments (as listed below). See "Other Eligible
Investments."
In pursuit of its objectives, the Fund may employ certain active
management techniques including options on securities indices and futures
contracts on securities and indices and options on such futures contracts. These
techniques may be employed in an attempt to hedge interest rate or other risks
associated with the Fund's portfolio securities. See Appendix A for a
description of these investment practices and securities and associated risks.
For temporary defensive purposes, the Fund may invest up to 100% of its
total assets in short-term investments (as listed below). The Fund will assume a
temporary defensive posture only when economic and other factors affect the real
estate industry market to such an extent that Pioneering Management Corporation
("PMC") believes there to be extraordinary risks in being substantially invested
in Real Estate Equity Securities.
As to any specific investment in Real Estate Equity Securities, PMC's
analysis will focus on evaluating the fundamental value of an enterprise. The
Fund will purchase securities for its portfolio when, in the judgment of PMC,
their market price appears to be less than their fundamental value and/or which
offer a high level of current income consistent with reasonable investment risk.
In selecting specific investments, PMC will attempt to identify securities with
significant potential for appreciation relative to their downside exposure
and/or which have a timely record and high level of interest or dividend
payments. In making these determinations, PMC will take into account
price-earnings ratios, cash flow, the relationship of asset value to market
price of the securities, interest or dividend payment history and other factors
which it may determine from time to time to be relevant. PMC will attempt to
allocate the Fund's portfolio investments across regional economies and property
types.
RISK FACTORS ASSOCIATED WITH THE REAL ESTATE INDUSTRY
Although the Fund does not invest directly in real estate, it does invest
primarily in Real Estate Equity Securities and does concentrate its investments
in the real estate industry, and, therefore, an investment in the Fund may be
subject to certain risks associated with the direct ownership of real estate and
with the real estate industry in general. These risks include, among others:
possible declines in the value of real estate; risks related to general and
local economic conditions; possible lack of availability of mortgage funds;
overbuilding; extended vacancies of properties; increases in competition,
property taxes and operating expenses; changes in zoning laws; costs resulting
from the clean-up of, and liability to third parties for damages resulting from,
environmental problems; casualty or condemnation losses; uninsured damages from
floods, earthquakes or other natural disasters; limitations on and variations in
rents; and changes in interest rates.
In addition, if the Fund has rental income or income from the disposition
of real property acquired as a result of a default on securities the Fund owns,
the receipt of such income may adversely affect its ability to retain its tax
status as a regulated investment company. See "Tax Status" in the Statement of
Additional Information. Investments by the Fund in securities of companies
providing mortgage servicing will be subject to the risks associated with
refinancings and their impact on servicing rights.
REAL ESTATE INVESTMENT TRUSTS AND ASSOCIATED RISK FACTORS
The Fund may invest without limitation in shares of REITs. REITs are
pooled investment vehicles which invest primarily in income producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or a combination of equity and mortgage REITs.
Equity REITs invest the majority of their assets directly in real property and
derive income primarily from the collection of rents. Equity REITs can also
realize capital gains by selling properties that have appreciated in value.
Mortgage REITs invest the majority of their assets in real estate mortgages and
derive income from the collection of interest payments. Like investment
companies such as the Fund, REITs are not taxed on income distributed to
shareholders provided they comply with several requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund will indirectly bear its
proportionate share of any expenses paid by REITs in which it invests in
addition to the expenses paid by the Fund.
Investing in REITs involves certain unique risks in addition to those
risks associated with investing in the real estate industry in general. Equity
REITs may be affected by changes in the value of the underlying property owned
by the REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to the risks of financing projects. REITs are subject to heavy cash
flow dependency, default by borrowers, self-liquidation, and the possibilities
of failing to qualify for the exemption from tax for distributed income under
the Code and failing to maintain their exemptions from the Investment Company
Act of 1940, as amended (the "1940 Act"). REITs whose underlying assets include
long-term health care properties, such as nursing, retirement and assisted
living homes, may be impacted by federal regulations concerning the health care
industry.
REITs (especially mortgage REITs) are also subject to interest rate
risks. When interest rates decline, the value of a REIT's investment in fixed
rate obligations can be expected to rise. Conversely, when interest rates rise,
the value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will gradually
align themselves to reflect changes in market interest rates, causing the value
of such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Investing in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have been more
volatile in price than the larger capitalization stocks included in the Standard
& Poor's Index of 500 Common Stocks.
OTHER ELIGIBLE INVESTMENTS
The Fund may invest up to 25% of its total assets in any of the
investments described in this section.
DEBT SECURITIES OF REAL ESTATE INDUSTRY COMPANIES AND MORTGAGE-BACKED
SECURITIES. The Fund may invest in debt securities (including convertible debt
securities) of real estate industry companies. PMC intends to invest no more
than 5% of the Fund's net assets in debt securities rated, at the time of
investment, below Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Ratings Group ("Standard & Poor's"), commonly referred to as
junk bonds, or, if unrated, judged by PMC to be of at least comparable quality.
Securities rated Baa by Moody's or BBB by Standard & Poor's and securities of
comparable quality, referred to as "medium grade" obligations, have speculative
characteristics, and changes in economic conditions and other factors are more
likely to lead to weakened capacity to pay principal and interest than is the
case for higher rated investment grade securities. In the event a debt security
purchased by the Fund is subsequently down graded below investment grade, PMC
will consider whether the Fund should continue to hold the security. See the
Statement of Additional Information for a description of the corporate debt
ratings assigned by Moody's and Standard & Poor's and the risks associated with
lower-rated debt securities.
The Fund may also invest in securities that directly or indirectly
represent participations in, or are collateralized by and payable from, mortgage
loans secured by real property ("Mortgage-Backed Securities"). Investing in
Mortgage-Backed Securities involves certain unique risks in addition to those
associated with investing in the real estate industry in general. These risks
include the failure of a counter-party to meet its commitments, adverse interest
rate changes and the effects of prepayments on mortgage cash flows. See Appendix
A for a more complete description of the characteristics of Mortgage-Backed
Securities and associated risks.
SHORT-TERM INVESTMENTS. The Fund may invest in short-term investments
consisting of: corporate commercial paper and other short-term commercial
obligations, in each case rated or issued by companies with similar securities
outstanding that are rated Prime-1, Aa or better by Moody's or A-1, AA or better
by Standard & Poor's; obligations (including certificates of deposit, time
deposits, demand deposits and bankers' acceptances) of banks with securities
outstanding that are rated Prime-1, Aa or better by Moody's, or A-1, AA or
better by Standard & Poor's; obligations issued or guaranteed by the U.S.
government or its agencies or instrumentalities with remaining maturities not
exceeding 18 months; and repurchase agreements.
FOREIGN INVESTMENTS
The Fund may invest up to 5% of its net assets in equity and debt
securities of foreign real estate companies. See "Foreign Real Estate Companies
and Associated Risks" in the Statement of Additional Information for a
description of the risks associated with foreign investments.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest up to 5% of its net assets in securities exempt from
registration and up to 15% of its net assets in illiquid investments. See
Appendix A for a description of the risks associated with these securities.
NON-DIVERSIFIED STATUS
The Fund is "non-diversified" for purposes of the 1940 Act. As a
non-diversified mutual fund, the Fund may be more susceptible to risks
associated with a single economic, political or regulatory occurrence than a
diversified fund might be. Like most other registered investment companies,
however, the Fund has qualified, and intends to continue to qualify, as a
"regulated investment company" under the Code and therefore will be subject to
diversification limits, which generally require that, as of the close of each
quarter of its taxable year, (i) no more than 25% of its assets may be invested
in the securities of a single issuer (except for U.S. Government securities) and
(ii) with respect to 50% of its total assets, no more than 5% of its total
assets may be invested in the securities of a single issuer (except for U.S.
Government securities) or invested in more than 10% of the outstanding voting
securities of a single issuer.
PORTFOLIO TURNOVER
PMC generally avoids market-timing or speculating on broad market
fluctuations. Therefore, except as described above, the Fund will be
substantially fully invested at all times. Changes in the portfolio may be made
promptly when determined to be advisable by reason of developments not foreseen
at the time of the initial investment decision, and usually without reference to
the length of time a security has been held. Accordingly, portfolio turnover
rates are not considered a limiting factor in the execution of investment
decisions. See "Financial Highlights" for the Fund's actual turnover rates.
The Fund's investment objectives and certain investment restrictions
designated as fundamental in the Statement of Additional Information may be
changed by the Board of Trustees only with shareholder approval.
IV. MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for the
management and supervision of the Fund. The Board meets at least quarterly. By
virtue of the functions performed by PMC as investment adviser, the Fund
requires no employees other than its executive officers, all of whom receive
their compensation from PMC or other sources. The Statement of Additional
Information contains the names and general business and professional background
of each Trustee and executive officer of the Fund.
THE MANAGER
The Fund is managed under a management contract with PMC. PMC serves as
investment adviser to the Fund and is responsible for the overall management of
the Fund's business affairs, subject only to the authority of the Board of
Trustees. PMC is a wholly owned subsidiary of The Pioneer Group, Inc. ("PGI"), a
Delaware corporation. Pioneer Funds Distributor, Inc. ("PFD"), an indirect
wholly owned subsidiary of PGI, is the principal underwriter of shares of the
Fund. John F. Cogan, Jr., Chairman and Chief Executive Officer of the Fund,
Chairman and a Director of PMC and PFD, and President and a Director of PGI,
beneficially owned approximately 14% of the outstanding capital stock of PGI as
of the date of this Prospectus.
Mr. David Tripple, President and Chief Investment Officer of PMC and
Executive Vice President of each Pioneer mutual fund, has general responsibility
for PMC's investment operations and chairs a committee of PMC's equity managers
which reviews PMC's research and portfolio operations, including those of the
Fund. Mr. Tripple joined PMC in 1974.
Research and management of the Fund is the responsibility of a team
consisting of a PMC portfolio manager and analysts from Boston Financial
Securities, Inc. ("BFS"), the Fund's subadviser. Members of the team meet
regularly to discuss holdings, prospective investments and portfolio
composition. Mr. Robert Bensen, a Vice President of PMC and the Fund, is the
senior member of the team. Mr. Bensen joined PMC in 1974 and has 23 years of
investment experience. Mr. Bensen is responsible for the day-to-day management
of the Fund.
In addition to the Fund, PMC also manages and serves as the investment
adviser for other mutual funds and is an investment adviser to certain other
institutional accounts. The executive offices of PMC, PGI and PFD are located at
60 State Street, Boston, Massachusetts 02109. In an effort to avoid conflicts of
interest with the Fund, the Fund, PMC and BFS, the subadviser to the Fund, have
adopted a Code of Ethics that is designed to maintain a high standard of
personal conduct by directing that all personnel defer to the interests of the
Fund and its shareholders in making personal securities transactions.
Under the terms of its contract with the Fund, PMC assists in the
management of the Fund and is authorized in its discretion to buy and sell
securities for the account of the Fund. PMC pays all the ordinary operating
expenses, including executive salaries and the rental of office space relating
to its services for the Fund with the exception of the following which are to be
paid by the Fund: (a) charges and expenses for fund accounting, pricing and
appraisal services and related overhead, including, to the extent such services
are performed by personnel of PMC or its affiliates, office space and facilities
and personnel compensation, training and benefits; (b) the charges and expenses
of auditors; (c) the charges and expenses of any custodian, transfer agent, plan
agent, dividend disbursing agent and registrar appointed by the Fund with
respect to the Fund; (d) issue and transfer taxes, chargeable to the Fund in
connection with securities transactions to which the Fund is a party; (e)
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; (f) fees and expenses involved in
registering and maintaining registrations of the Fund and/or its shares with the
SEC, state or blue sky securities agencies and foreign countries, including the
preparation of Prospectuses and Statements of Additional Information for filing
with the SEC; (g) 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; (h) charges and
expenses of legal counsel to the Fund and the Trustees; (i) distribution fees
paid by the Fund pursuant to the 1940 Act; (j) compensation of those Trustees of
the Fund who are not affiliated with or interested persons of PMC, the Fund
(other than as Trustees), PGI or PFD; (j) the cost of preparing and printing
share certificates; (k) interest on borrowed money, if any; and (l)
organizational expenses of the Fund. The Fund also pays all brokerage
commissions and any taxes or other charges in connection with its portfolio
transactions. In addition, the expense of organizing the Fund and initially
registering and qualifying its shares under federal and state securities laws
are being charged to the Fund's operations, as an expense, over a period not to
exceed 60 months from the Fund's inception date.
Orders for the Fund's portfolio securities transactions are placed by
PMC, which strives to obtain the best price and execution for each transaction.
In circumstances where two or more broker-dealers are in a position to offer
comparable prices and execution, consideration may be given to whether the
broker-dealer provides investment research or brokerage services or sells shares
of any Pioneer mutual fund or other funds for which PMC or any other affiliate
or subsidiary serves as investment adviser or manager. See the Statement of
Additional Information for a further description of PMC's brokerage allocation
practices.
As compensation for its management and investment advisory services and
certain expenses which PMC incurs, PMC is entitled to a management fee equal to
1% per annum of the Fund's average daily net assets. The fee is normally
computed daily and paid monthly. See "Expense Information" in the Prospectus and
"Investment Adviser" in the Statement of Additional Information.
THE REAL ESTATE SUBADVISER. BFS is an affiliate of The Boston Financial
Group Limited Partnership, a Massachusetts limited partnership ("Boston
Financial"), which together with a predecessor business has extensive experience
and expertise in placing, evaluating and providing advice on a variety of real
estate related investments since 1969 for individuals, institutions and real
estate professionals. Several other affiliates of BFS also provide a variety of
financial, consulting and management services to real estate investors and
developers. As one of the largest real estate asset managers in the U.S., Boston
Financial oversees investment in over $6 billion of properties in 49 states. The
company serves over 37,000 investors with equity contributions in excess of $2
billion in real estate investments. In its capacity as subadviser to the Fund,
BFS (i) identifies and analyzes real estate industry companies, including real
estate properties and other permissible investments for the Fund, (ii) analyzes
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 reviews and analyzes the investments in the Fund's portfolio
and (iv) furnishes advisory reports based on such analysis to PMC.
Mr. Fred N. Pratt, Jr. has the ultimate responsibility for overseeing the
provisions of subadvisory services to the Fund. Mr. Pratt is President and Chief
Executive Officer of Boston Financial, a Director of BFS and a Trustee of the
Fund. Mr. Pratt has worked in the real estate industry since 1969. Mr. Mark
Howard-Johnson, a Vice President of BFS, is primarily responsible for the
day-to-day provision of subadvisory services to the Fund since September 30,
1996. Mr. Howard-Johnson has worked as a real estate analyst since 1994.
As compensation for its subadvisory services, PMC (and not the Fund) pays
BFS a subadvisory fee 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. After written notice to BFS, the subadvisory fee payable by PMC to BFS
would be reduced proportionally to the extent that PMC elects to utilize a
portion of the management fees paid to PMC by the Fund to make payments to third
parties.
The executive offices of BFS are located at 101 Arch Street, Boston,
Massachusetts 02110. BFS is a registered broker-dealer and may act as a broker
in connection with the sale of shares of the Fund under a sales agreement with
PFD.
V. FUND SHARES
The Fund continuously offers four Classes of shares designated as Class
A, Class B, Class C and Class Y shares. Class A, Class B and Class C shares are
offered in a separate prospectus which may be obtained by contacting your sales
representative or by calling PSC at 1-888-294-4480.
Class Y shares are sold at net asset value, without either an initial
sales charge or a contingent deferred sales charge. Class Y shares are not
subject to any ongoing service fee or distribution fee and do not convert to any
other class of shares. Class Y shares are described more fully in "Purchasing
Class Y Shares" in this Prospectus.
Investment dealers or their representatives may receive different
compensation depending on which Class of shares they sell. Shares may be
exchanged only for shares of the same Class of another Pioneer mutual fund.
Shares sold outside the U.S. to persons who are not U.S. citizens may be subject
to different sales charges, contingent deferred sales charges and dealer
compensation arrangements in accordance with local laws and business practices.
VI. SHARE PRICE
Class Y shares of the Fund are sold at the net asset value per share. The
net asset value per share of each Class of the Fund is determined by dividing
the value of its assets, less liabilities attributable to that Class, by the
number of shares of that Class outstanding. The net asset value is computed once
daily, on each day the New York Stock Exchange (the "Exchange") is open, as of
the close of regular trading on the Exchange. The net asset value per share of
Class Y shares will generally be higher than the net asset value per share of
the Fund's other three classes of shares because Class Y shares are not subject
to any ongoing distribution fee, and certain other expenses are expected to be
lower.
Securities are valued at the last sale price on the principal exchange or
market where they are traded. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the current bid and asked prices. Securities quoted
in foreign currencies are converted to U.S. dollars utilizing foreign exchange
rates employed by the Fund's independent pricing services. Generally, trading in
foreign securities is substantially completed each day at various times prior to
the close of the Exchange. The values of such securities used in computing the
net asset value of the Fund's shares are determined as of such times. Foreign
currency exchange rates are also generally determined prior to the close of the
Exchange. Occasionally, events which affect the values of such securities and
such exchange rates may occur between the times at which they are determined and
the close of the Exchange and will therefore not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities may be valued at
their fair value as determined in good faith by the Trustees. All assets of the
Fund for which there is no other readily available valuation method are valued
at their fair value as determined in good faith by the Trustees.
VII. PURCHASING CLASS Y SHARES
To open an account for an individual or other non-institutional investor,
a completed Account Application must be received by Pioneering Service
Corporation ("PSC") by mail or by fax prior to the purchase of Class Y shares.
All other investors should call PSC at 1-888-294-4480 to obtain an account
set-up kit and to obtain an account number. A bank wire address of record (your
predesignated bank account") must be provided to PSC at the time an account is
established.
The minimum initial investment for Class Y shares is $5 million which may
be invested in one or more of the Pioneer mutual funds that currently offer
Class Y shares. There is no minimum additional investment amount. Class Y shares
will be purchased at the net asset value per share next computed after receipt
of a purchase order without the imposition of an initial sales charge and are
not subject to a contingent deferred sales charge. All purchases must be made in
U.S. dollars.
The $5 million minimum investment requirement will be waived if:
(i) a trust company or bank trust department is initially investing at least
$1 million in any of the Pioneer mutual funds and, at the time of the
purchase, such assets are held in a fiduciary, advisory, custodial or
similar capacity over which the trust company or bank trust department
has full or shared investment discretion; or
(ii) the investment is made by an employer sponsored retirement plan that
meets the requirements of Section 401, 403 or 457 of the Code, provided
that the number of employees covered by the plan is 5,000 or more or the
plan has assets of $25 million or more; or
(iii) the investment is at least $1 million and the purchaser is an insurance
company separate account; or
(iv) the investment is made by an employer sponsored retirement plan
established for the benefit of (1) employees of PGI or employees of PGI's
affiliates or (2) employees of broker-dealers who have a Class Y shares
sales agreement with PFD.
PAYMENT BY WIRE. Funds may be wired in payment of a request to purchase Class Y
shares provided that such funds are wired to a Class Y shares account. See above
for information on establishing an account. To wire funds in payment of a
request to purchase Class Y shares instruct your bank to wire funds to:
Receiving Bank State Street Bank and Trust Company
Address 225 Franklin Street
Boston, MA 02101
ABA Routing No. 011000028
For further credit to: Shareholder Name
Existing Pioneer Account No.
Pioneer Real Estate Shares
A request to purchase shares must be received by PSC or by your
broker-dealer by the close of regular trading of the Exchange (currently 4:00
p.m. Eastern time) in order to purchase shares at the price determined on that
day. Funds wired in payment of such requests must be received by State Street
Bank and Trust Company by 11:00 a.m. Eastern time on the next business day
following receipt of the request to purchase shares. IF WIRED FUNDS ARE NOT
RECEIVED BY PSC BY 11:00 A.M. OF THE NEXT BUSINESS DAY FOLLOWING RECEIPT OF THE
REQUEST TO PURCHASE SHARES, THE TRANSACTION WILL BE CANCELED AT THE EXPENSE AND
RISK OF THE PURCHASER. Wire transfers normally take two or more hours to
complete and a fee may be charged by the sending bank. Wire transfers may be
restricted on holidays and at certain other times. Questions on wire transfers
should be directed to PSC or your broker-dealer.
BY MAIL. Purchases of Class Y shares may always be made by mail. For
accounts registered to individuals or non-institutional investors, make your
check payable to Pioneer Real Estate Shares and mail a completed Account
Application to PSC at: P.O. Box 9150, Boston, Massachusetts 02205-8573. For
accounts registered to institutions, completed account set-up kit materials must
be sent to PSC with payment. Checks written on non-U.S. banks will delay
purchases until U.S. funds are received and a collection charge may be imposed.
BROKER-DEALERS. An order for Class Y shares received by a broker-dealer
prior to the close of regular trading on the Exchange is confirmed at the price
for Class Y shares as determined at the close of regular trading on the Exchange
on the day the order is received, provided the order is received by PFD from the
broker-dealer prior to PFD's close of business (usually, 5:30 p.m. Eastern
time), except as described above for wire transfers. It is the responsibility of
broker-dealers to transmit orders so that they will be received by PFD prior to
its close of business.
GENERAL. The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering of shares when, in the judgment of the Fund's
management, such withdrawal is in the best interest of the Fund. An order to
purchase shares is not binding on, and may be rejected by, PFD until it has been
confirmed in writing by PFD and payment has been received.
VIII. REDEEMING CLASS Y SHARES Class Y shares will be redeemed at the share
price next calculated after a redemption request is received in good order as
described below. Redemption proceeds generally will be sent to the registered
owner by check or by wire transfer, normally within seven days after the request
is received in good order. The Fund reserves the right to withhold payment of
the redemption proceeds until checks or wire transfers received by the Fund in
payment for the shares being sold have cleared, which may take up to 15 calendar
days from the purchase date.
IN WRITING. Class Y shares may be redeemed by delivering a written
request, signed by all registered owners, in good order to PSC. A written
request, including a signature guarantee, must be used to redeem Class Y shares
if any of the following applies:
o the requested redemption is for over $100,000 and there is no record of a
predesignated bank account,
o the requested redemption is for over $100,000 and the account registration
or address of record has changed within the last 30 days,
o the requested redemption is for over $5 million,
o the check for the amount of the redemption proceeds is not being mailed to
o the address of record, the check for the amount of the redemption proceeds
is not being made payable to the account's record owners, or
o the redemption proceeds are being transferred to a Pioneer mutual fund
account with a different registration.
Include in the request the account's registration name, the Fund's name,
the Fund account number, the Class of shares to be redeemed, the dollar amount
or number of shares to be redeemed, and any other applicable requirements as
described below. Redemption requests for accounts registered in the name of a
corporation or other fiduciary must name an authorized person and must be
accompanied by a certified copy of a current corporate resolution, certificate
of incumbency or similar legal document showing that the named individual is
authorized to act on behalf of the record owner. Unless instructed otherwise,
PSC will send the proceeds of the redemption by check to the address of record.
For more information, contact PSC at 1-800-888-294-4480.
Written requests will not be processed until they are received in good
order by PSC. Good order means that there are no outstanding claims or requests
to hold redemptions on the account, any share certificates are endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) on the
share certificate are guaranteed by an eligible guarantor. A bank, broker,
dealer, credit union (if authorized under state law), securities exchange or
association, clearing agency or savings association will generally be able to
provide a signature guarantee. A notary public cannot provide a signature
guarantee. Signature guarantees are not accepted by facsimile ("fax"). For
additional information about the necessary documentation for redemption by mail,
please contact PSC at 1-888-294-4480.
A signature guarantee must also accompany any request to change your
predesignated bank account information.
BY TELEPHONE OR FAX. Class Y share accounts are automatically authorized
to have the telephone redemption privilege unless indicated otherwise on the
Account Application or by writing to PSC. Proper account identification will be
required for each telephone redemption. A maximum of $5 million per account per
day may be redeemed by telephone or fax if PSC has a predesignated bank account
number on record. If there is no predesignated bank account number on file, a
maximum of $100,000 may be redeemed by telephone or fax. The proceeds of a
telephone or fax redemption may be received by bank wire, electronic funds
transfer or by check. Proceeds of a telephone or fax request will normally be
mailed or transmitted the next business day.
To redeem by telephone, see "Shareholder Services - Telephone
Transactions" for more information.
To redeem by fax, send your redemption request to 1-888-294-4485.
To receive the proceeds by bank wire: the proceeds must be sent to the
bank wire address of record which must have been properly predesignated either
on your Account Application or on an Account Options Form and which must not
have changed in the last 30 days.
To receive the proceeds by check: the check must be made payable exactly
as the account is registered and the check must be sent to the address of record
which must not have changed in the last 30 days.
You may always elect to deliver redemption instructions to PSC by mail.
REDEEMING SHARES THROUGH A BROKER-DEALER. The Fund has authorized PFD to
act as its agent in the repurchase of shares of the Fund from qualified
broker-dealers and reserves the right to terminate this procedure at any time.
Broker-dealers must receive redemption requests prior to the close of business
of the Exchange and must transmit each redemption request to PFD before PFD's
close of business to receive that day's redemption price. Broker-dealers are
responsible for providing all necessary documentation to PFD and may charge for
their services.
GENERAL. Redemptions may be suspended or payment postponed during any
period in which any of the following conditions exist: the Exchange is closed or
trading on the Exchange is restricted; an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Fund to fairly determine the value of
the net assets of its portfolio; or the SEC, by order, so permits.
Redemptions and repurchases are taxable transactions to shareholders
unless the account qualifies as tax-exempt. The net asset value per share
received upon redemption or repurchase may be more or less than the cost of
shares to an investor, depending on the market value of the portfolio at the
time of redemption or repurchase.
BY MAIL. Purchases of Class Y shares may always be made by mail. Make
your check payable to Pioneer Real Estate Shares and mail a completed Account
Application to PSC at: P.O. Box 9150, Boston, Massachusetts 02205-8573. Checks
written on non-U.S. banks will delay purchases until U.S. funds are received and
a collection charge may be imposed.
IX. EXCHANGING CLASS Y SHARES
Exchanges of Class Y shares must be at least $1,000. You may exchange
your investment from one Class of Fund shares at net asset value, without a
sales charge, for shares of the same Class of any other Pioneer mutual fund. Not
all Pioneer mutual funds offer Class Y shares. A new Pioneer mutual fund account
opened through an exchange must have a registration identical to that on the
original account.
PSC will process exchanges only after receiving an exchange request in
good order. Exchange requests received by PSC before the close of the Exchange,
generally 4:00 p.m. Eastern time, will be effective on that day if the
requirements above have been met, otherwise, they will be effective on the next
business day. There are currently no fees or sales charges imposed at the time
of an exchange. An exchange of shares may be made only in states where legally
permitted. For federal and (generally) state income tax purposes, an exchange is
considered to be a sale of the shares of the Fund exchanged and a purchase of
shares in another Pioneer mutual fund. Therefore, an exchange could result in a
gain or loss on the shares sold, depending on the tax basis of these shares and
the timing of the transaction, and special tax rules may apply.
You should consider the differences in objectives and policies of the
Pioneer mutual funds, as described in each fund's current prospectus, before
making any exchange. For the protection of the Fund's performance and
shareholders, the Fund and PFD reserve the right to refuse any exchange request
or restrict, at any time without notice, the number and/or frequency of
exchanges to prevent abuses of the exchange privilege. Such abuses may arise
from frequent trading in response to short-term market fluctuations, a pattern
of trading by an individual or group that appears to be an attempt to "time the
market," or any other exchange request which, in the view of management, will
have a detrimental effect on the Fund's portfolio management strategy or its
operations. In addition, the Fund and PFD reserve the right to charge a fee for
exchanges or to modify, limit, suspend or discontinue the exchange privilege
with notice to shareholders as required by law.
TELEPHONE AND FAX EXCHANGES. Class Y share accounts are automatically
authorized to have the telephone exchange privilege unless indicated otherwise
on the Account Application or by writing to PSC. Proper account identification
will be required for each telephone exchange. Telephone exchanges or fax
exchanges of Class Y shares may not exceed $5 million per account per day. Each
telephone exchange request will be recorded. See "Telephone Transactions" below.
WRITTEN EXCHANGES. Class Y shares may be exchanged by sending a letter of
instruction to PSC. Include in your letter the record name on the account, the
name of the Pioneer mutual fund out of which to exchange and the name of the
Pioneer mutual fund into which to exchange, the fund account number(s), the
Class of shares to be exchanged and the dollar amount or number of shares to be
exchanged. Written exchange requests must be signed by all record owner(s)
exactly as the shares are registered. Written documentation may be required for
accounts registered in the name of a corporation or fiduciary.
X. DISTRIBUTION OF FUND SHARES
PFD incurs the expenses of distributing the Fund's Class Y shares, none
of which is reimbursed or paid for by the Fund. These expenses include fees paid
to, or on account of, broker-dealers and other qualifying institutions which
have sales agreements with PFD, advertising expenses, the cost of printing and
mailing prospectuses to potential investors and other direct and indirect
expenses associated with the sale of Fund's Class Y shares.
PFD or its affiliates may make payments out of its own resources to
dealers and other persons who distribute shares of the Fund, including Class Y
shares. Such payments may be calculated by reference to the net asset value of
shares sold by such person or otherwise. Dealers and other persons may from time
to time be required to meet certain criteria in order to receive such payments.
Banks are currently prohibited under the Glass-Steagall Act from providing
certain underwriting or distribution services. If a bank was prohibited from
acting in any capacity or providing any of the described services, management
would consider what action, if any, would be appropriate.
The Fund has adopted a Plan of Distribution for each Class of shares,
other than Class Y shares, in accordance with Rule 12b-1 under the 1940 Act
pursuant to which certain distribution fees are paid to PFD. For more
information, see "Distribution Plans" in the Statement of Additional
Information.
XI. DIVIDENDS, DISTRIBUTIONS AND TAXATION
The Fund has elected to be treated, has qualified and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Code, so
that it will not pay federal income tax on income and capital gains distributed
to shareholders as required under the Code.
Under the Code, the Fund will be subject to a nondeductible 4% excise tax
on a portion of its undistributed ordinary income and capital gains if it fails
to meet certain distribution requirements with respect to each calendar year.
The Fund intends to make distributions in a timely manner and accordingly does
not expect to be subject to the excise tax.
The Fund's policy is to pay to shareholders dividends from net investment
income, if any, quarterly during the months of March, June, September and
December and to make distributions from net long-term capital gains, if any,
usually in December. Distributions from net short-term capital gains, if any,
may be paid with such dividends; dividends from income and/or capital gains may
also be paid at such other times as may be necessary for the Fund to avoid
federal income or excise tax. Generally, dividends from the Fund's net
investment income, market discount income, net short-term capital gains, and
certain net foreign exchange gains are taxable under the Code as ordinary
income, and dividends from the Fund's net long-term capital gains are taxable as
long-term capital gains.
Unless shareholders specify otherwise, all distributions will be
automatically reinvested in additional full and fractional shares of the Fund.
For federal income tax purposes, all dividends are taxable as described above
whether a shareholder takes them in cash or reinvests them in additional shares
of the Fund. Information as to the federal tax status of dividends and
distributions will be provided to shareholders annually. For further information
on the distribution options available to shareholders, see "Distribution
Options" below.
Distributions by the Fund of the dividend income it receives from U.S.
domestic corporations may qualify for the dividends-received deduction for
corporate shareholders, subject to holding-period requirements and
debt-financing restrictions under the Code.
The Fund may be subject to foreign withholding taxes or other foreign
taxes on income (possibly including, in some cases, capital gains) on certain of
its foreign investments which will reduce the yield on or return from those
investments.
Dividends and other distributions and the proceeds of redemptions,
exchanges or repurchases of Fund shares paid to individuals and other non-exempt
payees will be subject to a 31% backup withholding of federal income tax if the
Fund is not provided with the shareholder's correct taxpayer identification
number and certification that the number is correct and that the shareholder is
not subject to backup withholding or if the Fund receives notice from the IRS or
a broker that such withholding applies.
The description above relates only to U.S. federal income tax
consequences for shareholders who are U.S. persons, i.e., U.S. citizens or
residents or U.S. corporations, partnerships, trusts or estates and who are
subject to U.S. federal income tax. Non-U.S. shareholders and tax-exempt
shareholders are subject to different tax treatment that is not described above.
Shareholders should consult their own tax advisors regarding state, local and
other applicable tax laws.
XII. SHAREHOLDER SERVICES
PSC is the shareholder services and transfer agent for shares of the
Fund. PSC, a Massachusetts corporation, is a wholly owned subsidiary of PGI.
PSC's offices are located at 60 State Street, Boston, Massachusetts 02109, and
inquiries to PSC should be mailed to Pioneering Services Corporation, P.O. Box
9150, Boston, Massachusetts 02205-8573. Brown Brothers Harriman & Co. (the
"Custodian") serves as the custodian of the Fund's portfolio securities and
other assets. The principal business address of the Mutual Fund Division of the
Custodian is 40 Water Street, Boston, Massachusetts 02109.
ACCOUNT AND CONFIRMATION STATEMENTS
PSC maintains an account for each shareholder and all transactions of the
shareholder are recorded in this account. Confirmation statements showing the
details of transactions are sent to shareholders as transactions occur..
FINANCIAL REPORTS AND TAX INFORMATION
As a shareholder, you will receive financial reports at least
semiannually. In January of each year the Fund will mail to you information
about the tax status of dividends and distributions.
DISTRIBUTION OPTIONS
Dividends and capital gains distributions, if any, will automatically be
invested in additional shares of the Fund, at the applicable net asset value per
share, unless you indicate another option on the Account Application.
Two other options available are (a) dividends in cash and capital gains
distributions in additional shares; and (b) all dividends and capital gains
distributions in cash. These two options are not available, however, for
retirement plans or an account with a net asset value of less than $500. Changes
in the distribution option may be made by written request to PSC.
If you elect to receive either dividends or capital gains or both in cash
and a distribution check issued to you is returned by the U. S. Postal Service
as not deliverable or a distribution check remains uncashed for six months or
more, the amount of the check may be reinvested in your account. Such additional
shares will be purchased at the then current net asset value. Furthermore, the
distribution option on the account will automatically be changed to the
reinvestment option until such time as you request a different option by writing
to PSC.
TELEPHONE TRANSACTIONS
Class Y accounts are automatically authorized to have telephone
transaction privileges as described above. To redeem or exchange Class Y shares
by telephone, call 1-888-294-4480 between the hours of 9:00 a.m. and 6:00 p.m.
Eastern time on weekdays. See "Selling Class Y Shares" and "Exchanging Class Y
Shares" for more information.
To confirm that each transaction instruction received by telephone is
genuine, the Fund will record each telephone transaction, require the caller to
provide the personal identification number ("PIN") for the account and send you
a written confirmation of each telephone transaction. Different procedures may
apply to accounts that are registered to non-U.S. citizens or that are held in
the name of an institution or in the name of an investment broker-dealer or
other third-party. If reasonable procedures, such as those described above, are
not followed, the Fund may be liable for any loss due to unauthorized or
fraudulent instructions. In all other cases, neither the Fund, PSC nor PFD will
be responsible for the authenticity of instructions received by telephone,
therefore, you bear the risk of loss for unauthorized or fraudulent telephone
transactions. The Fund may implement other procedures from time to time.
During times of economic turmoil or market volatility or as a result of
severe weather or a natural disaster, it may be difficult to contact the Fund by
telephone to institute a redemption or exchange. You should communicate with the
Fund in writing if you are unable to reach the Fund by telephone.
FACTFONESM
FactFoneSM is an automated inquiry and telephone transaction system
available to Pioneer shareholders by dialing 1-800-225-4321. FactFoneSM allows
shareholder access to current information on Pioneer mutual fund accounts and to
the prices and yields of all publicly available Pioneer mutual funds. Computer
assisted telephone purchases, exchanges and redemptions of Class Y shares are
not currently available through FactFoneSM.
---------------------
The options and services available to shareholders may be revised, suspended, or
terminated at any time by PFD or by the Fund. You may establish the services
described in this section when you open your account. You may also establish or
revise many of them on an existing account by completing an Account Options
Form, which you may obtain by calling 1-888-294-4480.
XIII. THE FUND
The Fund, a non-diversified open-end management investment company
(commonly referred to as a mutual fund), was established as a Massachusetts
business trust on July 1, 1993 and was reorganized as a Delaware business trust
on April 28, 1995 under an Agreement and Declaration of Trust (the "Declaration
of Trust"). Prior to September 1, 1995, the Fund was named "Pioneer Winthrop
Real Estate Investment Fund." The Fund has authorized an unlimited number of
shares of beneficial interest. As an open-end investment company, the Fund
continuously offers its shares to the public and under normal conditions must
redeem its shares upon the demand of any shareholder at the then current net
asset value per share (less any applicable contingent deferred sales charge for
Class A, Class B and Class C share transactions). The Fund is not required, and
does not intend, to hold annual shareholder meetings although special meetings
may be called for the purpose of electing or removing Trustees, changing
fundamental investment restrictions or approving a management contract.
The Fund reserves the right to create and issue additional series of
shares. The Trustees have the authority, without further shareholder approval,
to classify and reclassify the shares of the Fund, or any additional series of
the Fund, into one or more classes. As of the date of this Prospectus, the
Trustees have authorized the issuance of four classes of shares, designated
Class A, Class B, Class C and Class Y. The shares of each class represent an
interest in the same portfolio of investments of the Fund. Each class has equal
rights as to voting, redemption, dividends and liquidation, except that each
class bears different distribution and transfer agent fees and may bear other
expenses properly attributable to the particular class. Class A, Class B and
Class C shareholders have exclusive voting rights with respect to the Rule 12b-1
distribution plans adopted by holders of those shares in connection with the
distribution of shares. A Rule 12b-1 distribution plan has not been adopted with
respect to the Class Y shares of the Fund (see "Distribution of Class Y Shares"
for more information).
In addition to the requirements under Delaware law, the Declaration of
Trust provides that a shareholder of the Fund may bring a derivative action on
behalf of the Fund only if the following conditions are met: (a) shareholders
eligible to bring such derivative action under Delaware law who hold at least
10% of the outstanding shares of the Fund, or 10% of the outstanding shares of
the series or class to which such action relates, shall join in the request for
the Trustees to commence such action; and (b) the Trustees must be afforded a
reasonable amount of time to consider such shareholder request and investigate
the basis of such claim. The Trustees shall be entitled to retain counsel or
other advisers in considering the merits of the request and shall require an
undertaking by the shareholders making such request to reimburse the Fund for
the expense of any such advisers in the event that the Trustees determine not to
bring such action.
When issued and paid for in accordance with the terms of the Prospectus
and Statement of Additional Information, shares of the Fund are fully-paid and
non-assessable. Shares will remain on deposit with the Fund's transfer agent and
certificates; certificates will not normally be issued. The Fund reserves the
right to charge a fee for the issuance of Class A shares certificates;
certificates will not be issued for Class B, Class C or Class Y shares.
XIV. INVESTMENT RESULTS
The average annual total return (for a designated period of time) on an
investment in the Fund may be included in advertisements, and furnished to
existing or prospective shareholders. The average annual total return for each
Class is computed in accordance with the SEC's standardized formula. The
calculation for all Classes assumes the reinvestment of all dividends and
distributions at net asset value and does not reflect the impact of federal or
state income taxes. The periods illustrated would normally include one, five and
ten years (or since the commencement of the public offering of the shares of a
Class, if shorter) through the most recent calendar quarter.
One or more additional measures and assumptions, including but not
limited to historical total returns; distribution returns; results of actual or
hypothetical investments; changes in dividends, distributions or share values;
or any graphic illustration of such data may also be used. These data may cover
any period of the Fund's existence and may or may not include the impact of
sales charges, taxes or other factors.
Other investments or savings vehicles and/or unmanaged market indices,
indicators of economic activity or averages of mutual fund results may be cited
or compared with the investment results of the Fund. Rankings or listings by
magazines, newspapers or independent statistical or rating services, such as
Lipper Analytical Services, Inc., may also be referenced. The Fund may also
include securities industry, real estate industry or comparative performance
information in advertising or materials marketing the Fund's shares. Such
performance information may include rankings or listings by magazines,
newspapers, or independent statistical or ratings services, such as Lipper
Analytical Services, Inc. or Ibbotson Associates.
The Fund's investment results will vary from time to time depending on
market conditions, the composition of the Fund's portfolio and operating
expenses of the Fund. All quoted investment results are historical and should
not be considered representative of what an investment in the Fund may earn in
any future period. For further information about the calculation methods and
uses of the Fund's investment results, see the Statement of Additional
Information.
From time to time, the Fund may include in advertisements or other
communications to existing or proposed shareholders its respective "yield" and
"effective yield." Whenever yield information is provided, it includes a
standardized yield calculation computed by dividing the Fund's net investment
income per share for a Class of Fund shares during a base period of 30 days, or
one month, by the maximum offering price per share for that Class of shares on
the last day of such base period. The resulting "30-day yield" is then
annualized as described below. The Fund's net investment income per share for
each Class is determined by dividing the Fund's net investment income for that
Class during the base period by the average number of shares of that Class
entitled to receive dividends during the base period. The Class's 30-day yield
is then "annualized" by a computation that assumes that the Class's net
investment income is earned and reinvested for a six-month period at the same
rate as during the 30-day base period and that the resulting six-month income
will be generated over an additional six months.
For more information about the calculation methods used to compute the
Fund's investment results, see the Statement of Additional Information.
APPENDIX A: CERTAIN INVESTMENT PRACTICES
This Appendix provides a brief description of certain securities in which
the Fund may invest and certain transactions it may make. For a more complete
discussion of these and other securities and practices, see "Investment
Objectives and Policies" in this Prospectus and "Investment Policies and
Restrictions" in the Statement of Additional Information.
MORTGAGE-BACKED SECURITIES AND ASSOCIATED RISKS
The Fund may invest up to 25% of its total assets in mortgage
pass-through certificates and multiple-class pass-through securities, such as
real estate mortgage investment conduits ("REMIC") pass-through certificates,
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities ("SMBS"), and other types of Mortgage-Backed Securities that may be
available in the future.
GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. The Fund may invest in
guaranteed mortgage pass-through securities which represent participation
interests in pools of residential mortgage loans and are issued by U.S.
Governmental or private lenders and guaranteed by the U.S. Government or one of
its agencies or instrumentalities, including but not limited to the Government
National Mortgage Association ("Ginnie Mae"), the Federal National Mortgage
Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation
("Freddie Mac"). Ginnie Mae certificates are guaranteed by the full faith and
credit of the U.S. government for timely payment of principal and interest on
the certificates. Fannie Mae certificates are guaranteed by Fannie Mae, a
federally chartered and privately-owned corporation for full and timely payment
of principal and interest on the certificates. Freddie Mac certificates are
guaranteed by Freddie Mac, a corporate instrumentality of the U.S. government,
for timely payment of interest and the ultimate collection of all principal of
the related mortgage loans.
MULTIPLE-CLASS PASS-THROUGH SECURITIES AND COLLATERALIZED MORTGAGE
OBLIGATIONS. The Fund may also invest in CMOs and REMIC pass-through or
participation certificates, which may be issued by, among others, U.S.
Government agencies and instrumentalities as well as private lenders. CMOs and
REMIC certificates are issued in multiple classes and the principal of and
interest on the mortgage assets may be allocated among the several classes of
CMOs or REMIC certificates in various ways. Each class of CMOs or REMIC
certificates, often referred to as a "tranche," is issued at a specific
adjustable or fixed interest rate and must be fully retired no later than its
final distribution date. Generally, interest is paid or accrues on all classes
of CMOs or REMIC certificates on a monthly basis.
Typically, CMOs are collateralized by Ginnie Mae, Fannie Mae or Freddie
Mac certificates but also may be collateralized by other mortgage assets such as
whole loans or private mortgage pass-through securities. Debt service on CMOs is
provided from payments of principal and interest on collateral of mortgaged
assets and any reinvestment income thereon.
A REMIC is a CMO that qualifies for special tax treatment under the Code
and invests in certain mortgages primarily secured by interests in real property
and other permitted investments. Investors may purchase "regular" and "residual"
interest shares of beneficial interest in REMIC trusts although the Fund does
not intend to invest in residual interests.
RISK FACTORS ASSOCIATED WITH MORTGAGE-BACKED SECURITIES. As discussed
above, investing in Mortgage-Backed Securities involves certain unique risks in
addition to those risks associated with investing in the real estate industry in
general. These risks include the failure of a counter-party to meet its
commitments, adverse interest rate changes and the effects of prepayments on
mortgage cash flows. The Fund will not invest in the lowest tranche of CMOs and
REMIC certificates. When interest rates decline, the value of an investment in
fixed rate obligations can be expected to rise. Conversely, when interest rates
rise, the value of an investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on investments in such loans will gradually align
themselves to reflect changes in market interest rates, causing the value of
such investments to fluctuate less dramatically in response to interest rate
fluctuations than would investments in fixed rate obligations.
Further, the yield characteristics of Mortgage-Backed Securities, such as
those in which the Fund may invest, differ from those of traditional fixed
income securities. The major differences typically include more frequent
interest and principal payments (usually monthly), the adjustability of interest
rates, and the possibility that prepayments of principal may be made
substantially earlier than their final distribution dates.
Prepayment rates are influenced by changes in current interest rates and
a variety of economic, geographic, social and other factors and cannot be
predicted with certainty. Both adjustable rate mortgage loans and fixed rate
mortgage loans may be subject to a greater rate of principal prepayments in a
declining interest rate environment and to a lesser rate of principal
prepayments in an increasing interest rate environment. Under certain interest
rate and prepayment rate scenarios, the Fund may fail to recoup fully its
investment in Mortgage-Backed Securities notwithstanding any direct or indirect
governmental or agency guarantee. When the Fund reinvests amounts representing
payments and unscheduled prepayments of principal, it may receive a rate of
interest that is lower than the rate on existing adjustable rate mortgage
pass-through securities. Thus, Mortgage-Backed Securities, and adjustable rate
mortgage pass-through securities in particular, may be less effective than other
types of U.S. Government securities as a means of "locking in" interest rates.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements, generally not exceeding
seven days. In a repurchase agreement, an investor (e.g., the Fund) purchases a
debt security from a seller which undertakes to repurchase the security at a
specified resale price on an agreed future date (ordinarily a week or less). The
resale price generally exceeds the purchase price by an amount which reflects an
agreed-upon market interest rate for the term of the repurchase agreement.
Repurchase agreements entered into by the Fund will be fully collateralized with
U.S. Treasury and/or U.S. Government agency obligations with a market value of
not less than 100% of the obligation, valued daily. Collateral will be held in a
segregated, safekeeping account for the benefit of the Fund. In the event that a
repurchase agreement is not fulfilled, the Fund could suffer a loss to the
extent that the value of the collateral falls below the repurchase price or if
the Fund is prevented from realizing the value of the collateral by reason of an
order of a court with jurisdiction over an insolvency proceeding with respect to
the other party to the repurchase agreement.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest up to 5% of its net assets in "restricted securities"
(i.e., securities that would be required to be registered prior to distribution
to the public), excluding restricted securities eligible for resale to certain
institutional investors pursuant to Rule 144A of the Securities Act of 1933 or
foreign securities which are offered or sold outside the United States;
provided, however, that no more than 15% of the Fund's net assets may be
invested in restricted securities including securities eligible for resale under
Rule 144A. The Fund may also invest up to 15% of its net assets in illiquid
investments, which includes securities that are not readily marketable and
repurchase agreements maturing in more than seven days. The Board of Trustees
has adopted guidelines and delegated to PMC the daily function of determining
and monitoring the liquidity of portfolio securities. The Board, however,
retains sufficient oversight and is ultimately responsible for the
determinations.
Since it is not possible to predict with assurance exactly how this
market for restricted securities sold and offered under Rule 144A will develop,
the Board monitors the Fund's investments in these securities, focusing on such
important factors, among others, as valuation, liquidity and availability of
information. This investment practice could have the effect of increasing the
level of illiquidity in the Fund to the extent that qualified institutional
buyers become for a time uninterested in purchasing these restricted securities.
LIMITATIONS AND RISKS ASSOCIATED WITH TRANSACTIONS
IN OPTIONS AND FUTURES CONTRACTS
The Fund may employ certain active management techniques including
options on securities indices, futures contracts and options on futures
contacts. Each of these active management techniques involves transaction costs
as well as (1) liquidity risk that contractual positions cannot be easily closed
out in the event of market changes or generally in the absence of a liquid
secondary market, (2) correlation risk that changes in the value of hedging
positions may not match the securities market fluctuations intended to be
hedged, and (3) market risk that an incorrect prediction of securities prices by
PMC may cause the Fund to perform less well than if such positions had not been
entered. The ability to terminate over-the-counter options is more limited than
with exchange traded options and may involve the risk that the counter-party to
the option will not fulfill its obligations. The Fund will treat
over-the-counter options (both purchased and written) as illiquid securities.
The use of options and futures contracts are highly specialized activities which
involve investment techniques and risks that are different from those associated
with ordinary portfolio transactions. The loss that may be incurred by the Fund
in entering into futures contracts and written options thereon is potentially
unlimited. There is no limit on the percentage of the Fund's assets that may be
invested in futures contracts and related options. The Fund may not invest more
than 5% of its total assets in purchased options other than protective put
options.
The Fund's transactions in options, futures contracts and options on
futures contracts may be limited by the requirements for qualification of the
Fund as a regulated investment company for tax purposes. See "Tax Status" in the
Statement of Additional Information. The Fund may purchase put and call options
on securities indices that are based on securities in which it may invest in an
attempt to hedge against risks of market-wide price fluctuations.
The Fund may purchase put options in an attempt to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's portfolio
securities.
The Fund may purchase call options on securities indices in an attempt to
lock in a favorable price on securities that it intends to buy in the future. If
the Fund purchases a call option on a securities index, the amount of the
payment it receives upon exercising the option depends on the extent of an
increase in the level of other securities indices above the exercise price. Such
payments would in effect allow the Fund to benefit from securities market
appreciation even though it may not have had sufficient cash to purchase the
underlying securities. Such payments may also offset increases in the price of
securities that the Fund intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the call
option is outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Fund pays to buy
additional securities for its portfolio.
The Fund may sell an option it has purchased or a similar option prior to
the expiration of the purchased option in order to close out its position in an
option which it has purchased. The Fund may also allow options to expire
unexercised, which would result in the loss of the premium paid.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices or interest rates, the Fund
may purchase and sell various kinds of futures contracts, and purchase and write
call and put options on any of such futures contracts. The Fund may also enter
into closing purchase and sale transactions with respect to any of such
contracts and options. The futures contracts may be based on various securities
and other financial instruments and indices. The Fund will engage in futures and
related options transactions for bona fide hedging purposes as are permitted by
regulations of the Commodity Futures Trading Commission.
The Fund may not purchase or sell non-hedging futures contracts or
purchase or sell related non-hedging options, except for closing purchase or
sale transactions. These transactions involve brokerage costs, require margin
deposits and, in the case of contracts and options obligating the Fund to
purchase securities, require the Fund to segregate assets to cover such
contracts and options. Perfect correlation between the Fund's futures positions
and portfolio positions will be difficult to achieve because no futures
contracts based on corporate fixed-income securities are currently available.
<PAGE>
[PIONEER LOGO]
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
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
LEGAL COUNSEL
HALE AND DORR LLP
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
SHAREHOLDER SERVICES AND TRANSFER AGENT
PIONEERING SERVICES CORPORATION
60 State Street Boston,
Massachusetts 02109
Telephone: 1-800-294-4480
SERVICE INFORMATION
If you would like information on the following, please call:
Existing and new accounts, prospectuses,
applications, service forms
and telephone transactions ..............................1-888-294-4480
FactFoneSM
Automated fund yields, automated prices and
account information ......................................1-800-225-4321
Toll-free fax ..............................................1-888-294-4485
Visit our website: www.pioneerfunds.com
0398xxxx
(C) Pioneer Funds Distributor, Inc.
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
<PAGE>
PIONEER REAL ESTATE SHARES
60 State Street
Boston, Massachusetts 02109
STATEMENT OF ADDITIONAL INFORMATION
Class A, Class B, Class C and Class Y Shares
APRIL 30, 1997
AS SUPPLEMENTED MARCH 26, 1998
This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Class A, Class B and Class C Shares
Prospectus dated April 30, 1997 and the Class Y Shares Prospectus dated March
26, 1998, (each, a "Prospectus", and together, the "Prospectuses") as amended
and/or supplemented from time to time, of Pioneer Real Estate Shares (the
"Fund"). A copy of each Prospectus can be obtained free of charge by calling
1-800-225-6292 or by written request to the Fund at 60 State Street, Boston,
Massachusetts 02109. The Fund's Annual Report to Shareholders is attached to,
and is hereby incorporated into, this Statement of Additional Information.
TABLE OF CONTENTS
Page
1. General Fund Information and History....................... 2
2. Investment Policies and Restrictions....................... 2
3. Management of the Fund..................................... 9
4. Advisory Services.......................................... 13
5. Underwriting Agreement and Distribution Plans.............. 14
6. Shareholder Servicing/Transfer Agent....................... 17
7. Custodian.................................................. 17
8. Principal Underwriter...................................... 17
9. Independent Public Accountant.............................. 18
10. Portfolio Transactions..................................... 18
11. Tax Status................................................. 19
12. Description of Shares...................................... 22
13. Certain Liabilities........................................ 23
14. Determination of Net Asset Value........................... 23
15. Systematic Withdrawal Plan................................. 24
16. Letter of Intent........................................... 24
17. Investment Results......................................... 25
18. Financial Statements....................................... 27
APPENDIX A - Description of Bond Ratings............... 31
APPENDIX B - Other Pioneer Information................. 46
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
<PAGE>
1. GENERAL FUND INFORMATION AND HISTORY
Effective September 1, 1995, the Fund changed its name from Pioneer
Winthrop Real Estate Investment Fund to Pioneer Real Estate Shares. On April 28,
1995, the Fund, a Delaware business trust, acquired all the assets and
liabilities of Pioneer Winthrop Real Estate Investment Fund, a Massachusetts
business trust (the "Massachusetts Trust"), in a tax-free reorganization
effected for the sole purpose of changing the Fund's domicile from a
Massachusetts business trust to a Delaware business trust. In connection with
the reorganization, the Fund adopted the Massachusetts Trust's Registration
Statement on Form N-1A.
2. INVESTMENT POLICIES AND RESTRICTIONS
The Prospectuses of the Fund identify the investment objectives and the
principal investment policies of the Fund. Other investment policies of the Fund
are set forth below. Capitalized terms not otherwise defined herein have the
meaning given to them in the Prospectuses.
LOWER-RATED DEBT SECURITIES AND ASSOCIATED RISKS
As described in the Prospectuses, the Fund may make a variety of
investments, including corporate debt obligations of real estate industry
companies which may be unrated or rated in the lowest rating categories by
Standard & Poor's Ratings Group ("Standard & Poor's") or by Moody's Investor
Services, Inc. ("Moody's") (i.e., ratings of BB or lower by Standard & Poor's or
Ba or lower by Moody's). Bonds rated BB or Ba or below (or comparable unrated
securities) are commonly referred to as "junk bonds" and are considered
speculative and may be questionable as to principal and interest payments. In
some cases, such bonds may be highly speculative, have poor prospects for
reaching investment standing and be in default. As a result, investment in such
bonds will entail greater speculative risks than those associated with
investment in investment-grade bonds (i.e., bonds rated BBB or better by
Standard & Poor's or Baa or better by Moody's). The Fund will limit its
investment in non-investment grade corporate debt obligations, and comparable
unrated debt obligations, to less than 5% of its net assets. See Appendix A for
a description of the ratings issued by investment rating services.
The amount of junk bond securities outstanding has proliferated in
conjunction with the increase in merger and acquisition and leveraged buyout
activity. An economic downturn could severely affect the ability of highly
leveraged issuers to service their debt obligations or to repay their
obligations upon maturity. Factors having an adverse impact on the market value
of lower rated securities will have an adverse effect on the Fund's net asset
value to the extent it invests in such securities. In addition, the Fund may
incur additional expenses to the extent it is required to seek recovery upon a
default in payment of principal or interest on its portfolio holdings.
The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on the
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
Pioneering Management Corporation ("PMC"), the Fund's investment adviser, could
find it more difficult to sell these securities or may be able to sell the
securities only at prices lower than if such securities were widely traded.
Prices realized upon the sale of such lower rated or unrated securities, under
these circumstances, may be less than the prices used in calculating the Fund's
net asset value.
Proposed federal laws designed to limit the use, or tax and other
advantages, of junk bond securities could adversely affect the Fund's net asset
value to the extent that the Fund invests in lower-rated debt securities. Such
proposals could also adversely affect the secondary market for junk bond
securities, the financial condition of issuers of these securities and the value
of outstanding junk bond securities.
Since investors generally perceive that there are greater risks
associated with the medium to lower rated securities of the type in which the
Fund may invest, the yields and prices of such securities may tend to fluctuate
more than those for higher rated securities. In the lower quality segments of
the fixed-income securities market, changes in perceptions of issuers'
creditworthiness tend to occur more frequently and in a more pronounced manner
than do changes in higher quality segments of the fixed-income securities market
resulting in greater yield and price volatility.
Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in the Fund's net asset value.
Medium to lower rated and comparable unrated securities tend to offer
higher yields than higher rated securities with the same maturities because the
historical financial condition of the issuers of such securities may not have
been as strong as that of other issuers. Since medium to lower rated securities
generally involve greater risks of loss of income and principal than higher
rated securities, investors should consider carefully the relative risks
associated with investment in securities which carry medium to lower ratings and
in comparable unrated securities. In addition to the risk of default, there are
the related costs of recovery on defaulted issues. PMC will attempt to reduce
these risks through diversification of the Fund's portfolio and by analysis of
each issuer and its ability to make timely payments of income and principal, as
well as broad economic trends in corporate developments.
FOREIGN REAL ESTATE COMPANIES AND ASSOCIATED RISKS
The Fund may invest up to 5% of its net assets in securities of foreign
real estate companies. Such investments involve certain risks which are not
typically associated with investing in securities of domestic real estate
companies. Foreign companies are not subject to uniform accounting, auditing and
financial standards and requirements comparable to those applicable to United
States ("U.S.") companies. There may also be less government supervision and
regulation of foreign securities exchanges, brokers and listed companies than
exists in the United States. Interest and dividends paid by foreign issuers may
be subject to withholding and other foreign taxes which will decrease the net
return on such investments as compared to interest and dividends paid to the
Fund by the U.S. government or by domestic companies. In addition, there may be
the possibility of expropriation, confiscatory taxation, political, economic or
social instability, or diplomatic developments which could affect assets of the
Fund invested in foreign securities.
In addition, the value of foreign securities may also be adversely
affected by fluctuations in the relative rates of exchange between the
currencies of different nations and exchange control regulations. There may be
less publicly available information about foreign companies compared to reports
and ratings published about U.S. companies. Foreign securities markets have
substantially less trading volume than domestic markets and securities of some
foreign companies are less liquid and more volatile than securities of
comparable U.S. companies. Transaction costs on foreign securities exchanges are
generally higher than in the United States.
The Fund's investments in securities denominated in foreign currencies
are also subject to currency risk, as the U.S. dollar value of these securities
may be favorably or unfavorably affected by changes in foreign currency exchange
rates and exchange control regulations. Currency exchange rates may fluctuate
significantly over short periods of time causing, among other factors, the
Fund's net asset value to fluctuate as well. Currency exchange rates are
generally determined by forces of supply and demand and the perceived relative
merits of investments in various countries, but can be affected unpredictable by
intervention from U.S. and foreign governments or central banks, political
events and currency control measures. PMC will take these and other factors into
consideration in managing the Fund's investments.
SECURITIES INDEX OPTIONS
The Fund may purchase call and put options on securities indices for
the purpose of hedging against the risk of unfavorable price movements adversely
affecting the value of the Fund's securities or securities the Fund intends to
buy. Securities index options will not be used for speculative purposes.
Options on stock indices are traded on national securities exchanges
and over-the-counter, both in the U.S. and in foreign countries. A securities
index fluctuates with changes in the market values of the securities included in
the index. For example, some stock index options are based on a broad market
index such as the S&P 500 or the Value Line Composite Index. Index options may
also be based on a narrower market index such as the S&P 100 or on an industry
or market segment such as the AMEX Oil and Gas Index or the Computer and
Business Equipment Index.
The Fund may purchase put options in order to hedge against an
anticipated decline in securities prices that might adversely affect the value
of the Fund's portfolio securities. If the Fund purchases a put option on a
securities index, the amount of the payment it would receive upon exercising the
option would depend on the extent of any decline in the level of the securities
index below the exercise price. Such payments would tend to offset a decline in
the value of the Fund's portfolio securities. However, if the level of the
securities index increases and remains above the exercise price while the put
option is outstanding, the Fund will not be able to profitably exercise the
option and will lose the amount of the premium and any transaction costs. Such
loss may be partially offset by an increase in the value of the Fund's portfolio
securities.
The Fund may purchase call options on securities indices in an attempt
to lock in a favorable price on securities that it intends to buy in the future.
If the Fund purchases a call option on a securities index, the amount of the
payment it receives upon exercising the option depends on the extent of an
increase in the level of other securities indices above the exercise price. Such
payments would in effect allow the Fund to benefit from securities market
appreciation even though it may not have had sufficient cash to purchase the
underlying securities. Such payments may also offset increases in the price of
securities that the Fund intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the call
option is outstanding, the Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially offset by a reduction in the price the Fund pays to buy
additional securities for its portfolio.
The Fund may sell the securities index option it has purchased or write
a similar offsetting securities index option in order to close out a position in
a securities index option which it has purchased. These closing sale
transactions enable the Fund to immediately realize gains or minimize losses on
its options positions. However, there is no assurance that a liquid secondary
market on an options exchange will exist for any particular option, or at any
particular time, and for some options no secondary market may exist. In
addition, securities index prices may be distorted by interruptions in the
trading of securities of certain companies or of issuers in certain industries,
or by restrictions that may be imposed by an exchange on opening or closing
transactions, or both, which would disrupt trading in options on such indices
and preclude the Fund from closing out its options positions. If the Fund is
unable to effect a closing sale transaction with respect to options that it has
purchased, it would have to exercise the options in order to realize any profit.
The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the options
markets close before the markets for the underlying securities, significant
price and rate movements can take place in the underlying markets that can not
be reflected in the options markets. The purchase of options is a highly
specialized activity which involves investment techniques and risks different
from those associated with ordinary portfolio securities transactions.
In addition to the risks of imperfect correlation between the Fund's
portfolio and the index underlying the option, the purchase of securities index
options involves the risk that the premium and transaction costs paid by the
Fund in purchasing an option will be lost. This could occur as a result of
unanticipated movements in prices of the securities comprising the securities
index on which the option is based.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
To hedge against changes in securities prices, the Fund may purchase
and sell various kinds of futures contracts, and purchase and write (sell) call
and put options on any of such futures contracts. The Fund may also enter into
closing purchase and sale transactions with respect to any of such contracts and
options. The futures contracts may be based on various securities (such as U.S.
government securities), securities indices and other financial instruments and
indices. The Fund will engage in futures and related options transactions for
bona fide hedging and, although the Fund has no current intention of doing so,
for non-hedging purposes as described below. All futures contracts entered into
by the Fund are traded on U.S. exchanges or boards of trade that are licensed
and regulated by the Commodity Futures Trading Commission (the "CFTC") or on
foreign exchanges.
FUTURES CONTRACTS. A futures contract may generally be described as an
agreement between two parties to buy and sell particular financial instruments
for an agreed price during a designated month (or to deliver the final cash
settlement price, in the case of a contract relating to an index or otherwise
not calling for physical delivery at the end of trading in the contract).
When interest rates are rising or securities prices are falling, the
Fund can seek to offset a decline in the value of its current portfolio
securities through the sale of futures contracts. When interest rates are
falling or securities prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when it effects anticipated purchases.
Positions taken in the futures markets are not normally held to
maturity but are instead liquidated through offsetting transactions which may
result in a profit or a loss. A clearing corporation associated with the
exchange on which futures on securities are traded guarantees that, if still
open, the sale or purchase will be performed on the settlement date.
HEDGING STRATEGIES. Hedging, by use of futures contracts, seeks to
establish with more certainty the effective price and rate of return on
portfolio securities and securities that the Fund owns or proposes to acquire.
The Fund may, for example, take a "short" position in the futures market by
selling futures contracts in order to hedge against an anticipated rise in
interest rates that would adversely affect the value of the Fund's portfolio
securities. Such futures contracts may include contracts for the future delivery
of securities held by the Fund or securities with characteristics similar to
those of the Fund's portfolio securities. If, in the opinion of PMC, there is a
sufficient degree of correlation between price trends for the Fund's portfolio
securities and futures contracts based on other financial instruments,
securities indices or other indices, the Fund may also enter into such futures
contracts as part of its hedging strategy. Although under some circumstances
prices of securities in the Fund's portfolio may be more or less volatile than
prices of such futures contracts, PMC will attempt to estimate the extent of
this volatility difference based on historical patterns and compensate for any
such differential by having the Fund enter into a greater or lesser number of
futures contracts or by attempting to achieve only a partial hedge against price
changes affecting the Fund's securities portfolio. When hedging of this
character is successful, any depreciation in the value of portfolio securities
will be substantially offset by appreciation in the value of the futures
position. On the other hand, any unanticipated appreciation in the value of the
Fund's portfolio securities would be substantially offset by a decline in the
value of the futures position.
On other occasions, the Fund may take a "long" position by purchasing
futures contracts. This would be done, for example, when the Fund anticipates
the subsequent purchase of particular securities when it has the necessary cash,
but expects the prices or currency exchange rates then available in the
applicable market to be less favorable than prices or rates that are currently
available.
OPTIONS ON FUTURES CONTRACTS. The acquisition of put and call options
on futures contracts will give the Fund the right (but not the obligation) for a
specified price to sell or to purchase, respectively, the underlying futures
contract at any time during the option period. As the purchaser of an option on
a futures contract, the Fund obtains the benefit of the futures position if
prices move in a favorable direction but limits its risk of loss in the event of
an unfavorable price movement to the loss of the premium and transaction costs.
The writing of a call option on a futures contract generates a premium
which may partially offset a decline in the value of the Fund's assets. By
writing a call option, the Fund becomes obligated, in exchange for the premium,
to sell a futures contract, which may have a value higher than the exercise
price. Conversely, the writing of a put option on a futures contract generates a
premium which may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract which may have a value lower than the exercise price. Thus, the
loss incurred by the Fund in writing options on futures is potentially unlimited
and may exceed the amount of the premium received. The Fund will incur
transaction costs in connection with the writing of options on futures.
The holder or writer of an option on a futures contract may terminate
its position by selling or purchasing an offsetting option on the same
securities. There is no guarantee that such closing transactions can be
effected. The Fund's ability to establish and close out positions on such
options will be subject to the development and maintenance of a liquid market.
OTHER CONSIDERATIONS. The Fund may engage in futures and related
options transactions only for bona fide hedging and, although the Fund has no
current intention of doing so, for non-hedging purposes in accordance with CFTC
regulations which permit principals of an investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), to engage in
such transactions without registering as commodity pool operators. The Fund is
not permitted to engage in speculative futures trading. The Fund will determine
that the price fluctuations in the futures contracts and options on futures used
for hedging purposes are substantially related to price fluctuations in
securities held by the Fund or which it expects to purchase. The Fund's futures
transactions will be entered into for traditional hedging purposes -- i.e.,
futures contracts will be sold to protect against a decline in the price of
securities that the Fund owns, or futures contracts will be purchased to protect
the Fund against an increase in the price of securities it intends to purchase.
As evidence of this hedging intent, the Fund expects that on 75% or more of the
occasions on which it takes a long futures or option position (involving the
purchase of futures contracts), the Fund will have purchased, or will be in the
process of purchasing, equivalent amounts of related securities or assets in the
cash market at the time when the futures or option position is closed out.
However, in particular cases, when it is economically advantageous for the Fund
to do so, a long futures position may be terminated or an option may expire
without the corresponding purchase of securities or other assets.
As an alternative to literal compliance with the bona fide hedging
definition, a CFTC regulation permits the Fund to elect to comply with a
different test, under which the sum of the amounts of initial margin deposits on
the Fund's existing non-hedging futures contracts and premiums paid for
non-hedging options on futures (net of the amount the positions are "in the
money") would not exceed 5% of the market value of the Fund's net assets. As
noted above, the Fund has no current intention of entering into non-hedging
futures contracts and non-hedging options on futures. The Fund will engage in
transactions in futures contracts and related options only to the extent such
transactions are consistent with the requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), for maintaining its qualification as a
regulated investment company for federal income tax purposes.
Transaction costs associated with futures contracts and related options
involve brokerage costs, require margin deposits and, in the case of contracts
and options obligating the Fund to purchase securities, require the Fund to
segregate assets to cover such contracts and options.
While transactions in futures contracts and options on futures may
reduce certain risks, such transactions themselves entail certain other risks.
Thus, while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for the Fund than if it had not entered into any
futures contracts or options transactions. In the event of an imperfect
correlation between a futures position and a portfolio position which is
intended to be protected, the desired protection may not be obtained and the
Fund may be exposed to risk of loss. The only futures contracts available to
hedge the Fund's portfolio are various futures on U.S. government securities,
futures on a municipal securities index and stock index futures.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with "primary dealers" in
U.S. government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. The Fund may also enter into repurchase agreements
involving certain foreign government securities. The primary risk is that, if
the seller defaults, the Fund might suffer a loss to the extent that the
proceeds from the sale of the underlying securities and other collateral held by
the Fund in connection with the related repurchase agreement are less than the
agreed-upon repurchase price. Another risk is that, in the event of bankruptcy
of the seller, the Fund could be delayed in or prohibited from disposing of the
underlying securities and other collateral held by the Fund in connection with
the related repurchase agreement pending court proceedings. In evaluating
whether to enter a repurchase agreement, PMC will carefully consider the
creditworthiness of the seller pursuant to procedures reviewed and approved by
the Trustees.
INVESTMENT RESTRICTIONS
The Fund has adopted certain additional investment restrictions which
may not be changed without the affirmative vote of the holders of a majority of
the Fund's outstanding voting securities. The Fund may not:
(1)......Issue senior securities, except as permitted by paragraphs
(2), (6) and (7) below. For purposes of this restriction, the issuance of shares
of beneficial interest in multiple classes or series, the purchase or sale of
options, futures contracts and options on futures contracts, forward
commitments, forward foreign exchange contracts, repurchase agreements and
reverse repurchase agreements entered into in accordance with the Fund's
investment policy, and the pledge, mortgage or hypothecation of the Fund's
assets within the meaning of paragraph (3) below are not deemed to be senior
securities.
(2)......Borrow money, except from banks as a temporary measure for
extraordinary emergency purposes and except pursuant to reverse repurchase
agreements and then only in amounts not to exceed 33 1/3% of the Fund's total
assets (including the amount borrowed) taken at market value. The Fund will not
use leverage to attempt to increase income. The Fund will not purchase
securities while outstanding borrowings (including reverse repurchase
agreements) exceed 5% of the Fund's total assets.
(3)......Pledge, mortgage, or hypothecate its assets, except to secure
indebtedness permitted by paragraph (2) above and then only if such pledging,
mortgaging or hypothecating does not exceed 33 1/3% of the Fund's total assets
taken at market value.
(4)......Act as an underwriter, except to the extent that, in
connection with the disposition of portfolio securities, the Fund may be deemed
to be an underwriter for purposes of the Securities Act of 1933.
(5)......Purchase or sell real estate, including limited partnership
interests, except that the Fund may invest in securities that are secured by
real estate or interests therein and may purchase and sell mortgage-related
securities and may hold and sell real estate acquired by the Fund as a result of
the ownership of securities.
(6)......Make loans, except that the Fund may lend portfolio securities
in accordance with the Fund's investment policies and may purchase or invest in
repurchase agreements, bank certificates of deposit, all or a portion of an
issue of publicly distributed bonds, bank loan participation agreements,
bankers' acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities.
(7)......Invest in commodities or commodity contracts or in puts,
calls, or combinations of both, except interest rate futures contracts, options
on securities, securities indices, currency and other financial instruments,
futures contracts on securities, securities indices, currency and other
financial instruments and options on such futures contracts, forward foreign
currency exchange contracts, forward commitments, securities index put or call
warrants and repurchase agreements entered into in accordance with the Fund's
investment policies.
The Fund will invest 25% or more of its total assets in securities
issued by companies in the real estate industry. Except as noted in the previous
sentence, it is a fundamental policy of the Fund not to concentrate its
investments in securities of companies in any particular industry. Following the
current opinion of the staff of the Securities and Exchange Commission ("SEC"),
investments are concentrated in a particular industry if such investments (but
not investments in U.S. government securities) aggregate 25% or more of the
Fund's total assets.
The Fund does not intend to invest in or to enter into any forward
commitments, forward foreign currency exchange contracts, reverse repurchase
agreements, options on securities or currency or securities index put and call
warrants or to lend portfolio securities as described in fundamental investment
restrictions (1), (2), (6) and (7) above, during the current fiscal year.
In addition, as a matter of nonfundamental investment policy and in
connection with the offering of its shares in various states and foreign
countries, the Fund has agreed not to:
(a)......Participate on a joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of marketable
portfolio securities with other accounts under the management of PMC to save
commissions or to average prices among them is not deemed to result in a
securities trading account.
(b)......Purchase securities on margin or make short sales unless by
virtue of its ownership of other securities, the Fund has the right to obtain,
without payment of additional consideration, securities equivalent in kind and
amount to the securities sold and, if the right is conditional, the sale is made
upon the same conditions, except that a Fund may obtain such short-term credits
as may be necessary for the clearance of purchases and sales of securities and
in connection with transactions involving forward foreign currency exchange
transactions.
(c)......Purchase a security if, as a result, (i) more than 10% of the
Fund's assets would be invested in securities of closed-end investment
companies, (ii) such purchase would result in more than 3% of the total
outstanding voting securities of any one such closed-end investment company
being held by the Fund, or (iii) more than 5% of the Fund's assets would be
invested in any one such closed-end investment company; provided, however, the
Fund can exceed such limitations in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
closed-end investment company. The Fund will not invest in the securities of any
open-end investment company, except in connection with a plan of merger or
consolidation with or acquisition of substantially all the assets of such other
open-end investment company.
(d)......Purchase securities of any issuer which, together with any
predecessor, has a record of less than three years' continuous operations prior
to the purchase if such purchase would cause investments of the Fund in all such
issuers to exceed 5% of the value of the total assets of the Fund.
(e)......Invest for the purpose of exercising control over or
management of any company.
(f)......Purchase warrants of any issuer, if, as a result of such
purchases, more than 2% of the value of the Fund's total assets would be
invested in warrants which are not listed on the New York Stock Exchange or the
American Stock Exchange or more than 5% of the value of the total assets of the
Fund would be invested in warrants generally, whether or not so listed. For
these purposes, warrants are to be valued at the lesser of cost or market, but
warrants acquired by the Fund in units with or attached to debt securities shall
be deemed to be without value.
(g)......Knowingly purchase or retain securities of an issuer if one or
more of the Trustees or officers of the Fund or directors or officers of PMC or
any investment management subsidiary of PMC individually owns beneficially more
than 0.5% and together own beneficially more than 5% of the securities of such
issuer.
(h)......Purchase interests in oil, gas or other mineral leases or
exploration programs; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas or
other minerals.
(i)......Purchase any security, including stripped mortgage-backed
securities and any repurchase agreement maturing in more than seven days, which
is illiquid, if more than 15% of the net assets of the Fund, taken at market
value, would be invested in such securities; provided, however, that the Fund
may invest up to 10% of its total assets in shares of real estate investment
trusts that are illiquid.
(j)......Invest more than 10% of its total assets in restricted
securities, excluding restricted securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933; provided, however, that no more than 15%
of the Fund's total assets may be invested in restricted securities including
restricted securities eligible for resale under Rule 144A.
(k)......Write covered calls or put options with respect to more than
25% of the value of its total assets or invest more than 5% of its total assets
in puts, calls, spreads, or straddles, other than protective put options.
These restrictions may not be changed without the approval of the
regulatory agencies in such states or foreign countries.
3. MANAGEMENT OF THE FUND
The Fund's Board of Trustees provides broad supervision over the
affairs of the Fund. The officers of the Fund are responsible for the Fund's
operations. The Trustees and executive officers of the Fund are listed below,
together with their principal occupations during the past five years. An
asterisk indicates those Trustees who are interested persons of the Fund within
the meaning of the 1940 Act.
JOHN F.COGAN, JR.*, CHAIRMAN OF THE BOARD, PRESIDENT AND TRUSTEE, DOB: JUNE 1926
President, Chief Executive Officer and a Director of The Pioneer Group,
Inc. ("PGI"); Chairman and a Director of Pioneering Management Corporation
("PMC") and Pioneer Funds Distributor, Inc. ("PFD"); Director of Pioneering
Services Corporation ("PSC"), Pioneer Capital Corporation ("PCC"); Pioneer Real
Estate Advisors, Inc., Pioneer Forest, Inc., Pioneer Explorer, Inc., Pioneer
Management (Ireland) Ltd. ("PMIL") and Closed Joint Stock Company
"Forest-Starma"; President and Director of Pioneer Metals and Technology, Inc.
("PMT"), Pioneer International Corp. ("PIntl"), Pioneer First Russia, Inc.
("First Russia") and Pioneer Omega, Inc. ("Omega"); Chairman of the Board and
Director of Pioneer Goldfields Limited ("PGL") and Teberebie Goldfields Limited;
Chairman of the Supervisory Board of Pioneer Fonds Marketing, GmbH, Pioneer
First Polish Trust Fund Joint Stock Company, S.A. and Pioneer Czech Investment
Company, A.S.; Chairman, President and Trustee of all of the Pioneer mutual
funds; Director of Pioneer Global Equity Fund Plc, Pioneer Global Bond Fund Plc,
Pioneer DM Cashfonds Plc, Pioneer European Equity Fund Plc, Pioneer Central and
Eastern Europe Fund Plc and Pioneer U.S. Real Estate Fund Plc; and Partner, Hale
and Dorr LLP (counsel to PGI and the Fund).
MARY K. BUSH, TRUSTEE, DOB: APRIL 1948
4201 Cathedral Avenue, NW, Washington, DC 20016
President, Bush & Co., an international financial advisory firm;
Director and Trustee of Mortgage Guaranty Insurance Corporation, Novecon
Management Company, Hoover Institution, Folger Shakespeare Library, March of
Dimes, Project 2000, Inc., Small Enterprise Assistance Fund and Wilberforce
University; Advisory Board Member, Washington Mutual Investors Fund, a
registered investment company; and Trustee of all the Pioneer mutual funds,
except Pioneer Variable Contracts Trust.
RICHARD H. EGDAHL, M.D., TRUSTEE, DOB: DECEMBER 1926
Boston University Health Policy Institute, 53 Bay State Road, Boston, MA 02115
Professor of Management, Boston University School of Management;
Professor of Public Health, Boston University School of Public Health; Professor
of Surgery, Boston University School of Medicine; Director, Boston University
Health Policy Institute and Boston University Medical Center; Executive Vice
President and Vice Chairman of the Board, University Hospital; Academic Vice
President for Health Affairs, Boston University; Director, Essex Investment
Management Company, Inc. (investment adviser), Health Payment Review, Inc.
(health care containment software firm), Mediplex Group, Inc. (nursing care
facilities firm), Peer Review Analysis, Inc. (health care facilities firm) and
Springer-Verlag New York, Inc. (publisher); Honorary Trustee, Franciscan
Children's Hospital; and Trustee of all of the Pioneer mutual funds.
MARGARET B.W. GRAHAM, TRUSTEE, DOB: MAY 1947
The Keep, P.O. Box 110, Little Deer Isle, ME 04650
Founding Director, The Winthrop Group, Inc. (consulting firm); Manager
of Research Operations, Xerox Palo Alto Research Center, from 1991 to 1994;
Professor of Operations Management and Management of Technology and Associate
Dean, Boston University School of Management from 1989 to 1993; and Trustee of
all the Pioneer mutual funds, except Pioneer Variable Contracts Trust.
JOHN W. KENDRICK, TRUSTEE, DOB: JULY 1917
6363 Waterway Drive, Falls Church, VA 22044
Professor Emeritus, George Washington University; Director, American
Productivity and Quality Center; Adjunct Scholar, American Enterprise Institute;
and Trustee of all of the Pioneer mutual funds, except Pioneer Variable
Contracts Trust.
MARGUERITE A. PIRET, TRUSTEE, DOB: MAY 1948
One Boston Place, Suite 2635, Boston, MA 02108
President, Newbury, Piret & Company, Inc. (merchant banking firm);
Trustee of Boston Medical Center; Member of the Board of Governors of the
Investment Company Institute; and Trustee of all of the Pioneer mutual funds.
DAVID D. TRIPPLE*, TRUSTEE AND EXECUTIVE VICE PRESIDENT, DOB: FEBRUARY 1944
Executive Vice President and a Director of PGI; President, Chief
Investment Officer and a Director of PMC; Director of PFD, PCC, PIntl, First
Russia, Omega, Pioneer SBIC Corporation ("Pioneer SBIC"), PMIL, Pioneer Global
Equity Fund Plc, Pioneer Global Bond Fund Plc, Pioneer DM Cashfonds Plc, Pioneer
European Equity Fund Plc, Pioneer Central and Eastern Europe Fund Plc and
Pioneer U.S. Real Estate Fund Plc; and Executive Vice President and Trustee of
all of the Pioneer mutual funds.
STEPHEN K. WEST, TRUSTEE, DOB: SEPTEMBER 1928
125 Broad Street, New York, NY 10004
Partner, Sullivan & Cromwell (law firm); Trustee, The Winthrop Focus
Funds (mutual funds); and Trustee of all of the Pioneer mutual funds.
JOHN WINTHROP, TRUSTEE, DOB: JUNE 1936
One North Adgers Wharf, Charleston, SC 29401
President, John Winthrop & Co., Inc. (private investment firm);
Director of NUI Corp. (energy sales, services and distribution); Trustee of
Alliance Capital Reserves, Alliance Government Reserves and Alliance Tax Exempt
Reserves; and Trustee of all of the Pioneer mutual funds, except Pioneer
Variable Contracts Trust.
STEPHEN G. KASNET*, TRUSTEE AND VICE PRESIDENT, DOB: MAY 1945
Vice President of PGI and President of Pioneer Real Estate Advisors,
Inc. since 1995; Vice President of Pioneer Variable Contracts Trust; Managing
Director, Winthrop Financial Associates and First Winthrop Corp. from 1991 to
1995; Executive Vice President, Cabot, Cabot & Forbes from 1989 to 1991.
FRED N. PRATT, JR.*, TRUSTEE, DOB: DECEMBER 1944
Boston Financial, 101 Arch Street, Boston, MA 02110
Chief Executive Officer, Chairman of the Board, Boston Financial; Vice
Chairman and Member of the Executive committee, National Realty Committee;
Member, World Affairs Council of Boston; Trustee, The Chestnut Hill School;
Member, Advisory Committee, Massachusetts Institute of Technology, Center for
Real Estate.
BLAKE EAGLE, TRUSTEE, DOB: JUNE 1933
Massachusetts Institute of Technology, Building W31 310, Cambridge, MA 02139
Chairman of the Center for Real Estate, Massachusetts Institute of
Technology since 1994; Member of the Capital Markets Task Force for the Urban
Land Institute; Associated with Frank Russell Company from June, 1971 to
December, 1993, serving as President of Real Estate Consulting from 1985 to
1991; Director of Bentall Corporation (Canadian real estate firm), Cornerstone
Properties, Inc. (real estate firm listed on the Frankfurt Stock Exchange) and
Storage Trust Realty (real estate firm listed on the New York Stock Exchange);
Chairman of the Institutional Real Estate Clearinghouse (a non-profit
organization); Member of the Real Estate Advisory Committee of the New York
State Teachers' Retirement Plan; Member of the Shared Investment Committee of
Copley Investors Limited Partnership.
ROBERT W. BENSON, VICE PRESIDENT, DOB: APRIL 1947
Senior Vice President of PMC; Vice President of Pioneer Mid-Cap Fund.
WILLIAM H. KEOUGH, TREASURER, DOB: APRIL 1937
Senior Vice President, Chief Financial Officer and Treasurer of PGI;
Treasurer of PFD, PMC, PSC, PCC, PIntl, PMT, PGL, First Russia, Omega and
Pioneer SBIC; and Treasurer of all of the Pioneer mutual funds.
JOSEPH P. BARRI, SECRETARY, DOB: AUGUST 1946
Corporate Secretary of PGI and most of its subsidiaries; Secretary of all
of the Pioneer mutual funds; and Partner, Hale and Dorr LLP.
ERIC W. RECKARD, ASSISTANT TREASURER, DOB: JUNE 1956
Manager of Fund Accounting of PMC since May 1994, Manager of Auditing,
Compliance and Business Analysis for PGI prior to May 1994 and Assistant
Treasurer of all of the Pioneer mutual funds.
ROBERT P. NAULT, ASSISTANT SECRETARY, DOB: MARCH 1964
General Counsel and Assistant Secretary of PGI since 1995; Assistant
Secretary of PMC, PIntl, PGL, First Russia, Omega and all of the Pioneer mutual
funds; Assistant Clerk of PFD and PSC: and junior partner of Hale and Dorr LLP
prior to 1995.
The Fund's Agreement and Declaration of Trust, dated March 10, 1995, as
amended, (the "Declaration") provides that the holders of two-thirds of its
outstanding shares may vote to remove a Trustee of the Fund at any meeting of
shareholders. See "Description of Shares" below. The business address of all
officers is 60 State Street, Boston, Massachusetts 02109.
All of the outstanding capital stock of PFD, PMC and PSC is owned,
directly or indirectly, by PGI, a publicly-owned Delaware corporation. PMC, the
Fund's investment adviser, serves as the investment adviser for the Pioneer
mutual funds listed below and manages the investments of certain institutional
accounts.
The table below lists all the Pioneer mutual funds currently offered to
the public and the investment adviser and principal underwriter for each fund.
Investment Principal
Fund Name Adviser Underwriter
Pioneer World Equity Fund PMC PFD
Pioneer International Growth Fund PMC PFD
Pioneer Europe Fund PMC PFD
Pioneer Emerging Markets Fund PMC PFD
Pioneer India Fund PMC PFD
Pioneer Capital Growth Fund PMC PFD
Pioneer Mid-Cap Fund PMC PFD
Pioneer Growth Shares PMC PFD
Pioneer Micro-Cap Fund PMC PFD
Pioneer Small Company Fund PMC PFD
Pioneer Gold Shares PMC PFD
Pioneer Equity-Income Fund PMC PFD
Pioneer Fund PMC PFD
Pioneer II PMC PFD
Pioneer Real Estate Shares PMC PFD
Pioneer Balanced Fund PMC PFD
Pioneer Short-Term Income Trust PMC PFD
Pioneer America Income Trust PMC PFD
Pioneer Bond Fund PMC PFD
Pioneer Intermediate Tax-Free Fund PMC PFD
Pioneer Tax-Free Income Fund PMC PFD
Pioneer Cash Reserves Fund PMC PFD
Pioneer Interest Shares, Inc. PMC Note 1
Pioneer Variable Contracts Trust PMC Note 2
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Note 1 This fund is a closed-end fund.
Note 2 This is a series of ten separate portfolios designed to provide
investment vehicles for the variable annuity and variable life
insurance contracts of various insurance companies or for certain
qualified pension plans.
PMC also manages the investments of certain institutional private
accounts. As of December 31, 1997, to the knowledge of the Fund, no officer or
Trustee of the Fund owned 5% or more of the issued and outstanding shares of
PGI, except Mr. Cogan who then owned approximately 14% of such shares. As of a
date no earlier than 30 days prior to the date of this Statement of Additional
Information ("SAI"), the Trustees and officers of the Fund owned in the
aggregate less than 2% of the outstanding shares of the Fund and there were no
shareholders of record who owned 5% or more of the Fund's outstanding voting
securities, except MLPF&S For the Sole Benefit of its Customers, Mutual Fund
Administration, 4800 Deer Lake Drive East, Third Floor, Jacksonville, Florida
32246-6484, owned approximately 847,895 (26.48%) of the Class B shares of the
Fund and 319,816 (33.06%) of the Class C shares of the Fund.
REMUNERATION OF TRUSTEES
The Fund pays no salaries or compensation to any of its officers,
however, the Fund pays an annual trustee's fee to each Trustee who is not
affiliated with PMC, PGI, PFD or PSC consisting of two components: (a) a base
fee of $500 and (b) a variable fee, calculated on the basis of the average net
assets of the Fund. In addition, the Fund pays a per meeting fee of $100 to each
Trustee who is not affiliated with PMC, PGI, PFD or PSC. The Fund also pays an
annual committee participation fee to trustees who serve as members of
committees established to act on behalf of one or more of the Pioneer mutual
funds. Committee fees are allocated to the Fund on the basis of the Fund's
average net assets. Each Trustee who is a member of the Audit Committee for the
Pioneer mutual funds receives an annual fee equal to 10% of the aggregate annual
trustee's fee, except the Committee Chair who receive an annual trustee's fee
equal to 20% of the aggregate annual trustee's fee. Members of the Pricing
Committee for the Pioneer mutual funds, as well as any other committee which
renders material functional services to the Board of Trustees for the Pioneer
mutual funds, receive an annual fee equal to 5% of the annual trustee's fee,
except the Committee Chair who receives an annual trustee's fee equal to 10% of
the annual trustee's fee. Any such fees paid to affiliates or interested persons
of PGI, PMC, PFD or PSC are reimbursed to the Fund under its Management
Contract.
The following table sets forth certain information with respect to the
compensation of each Trustee of the FUND:
Total Compensa-
tion from the
Pension or Fund and other
Aggregate Retirement funds in the
Compensation Benefits Pioneer Family
TrusteeFrom the Fund* Accrued of Mutual Funds**
John F. Cogan, Jr. $500 0 $11,083
Mary K. Bush+ 0 0 0
David D. Tripple 500 0 11,083
Stephen G. Kasnet*** 500 0 500
Blake Eagle*** 303 0 303
Richard H. Egdahl, M.D. 1,015 0 59,858
Margaret B.W. Graham 1,015 0 59,858
John W. Kendrick 1,015 0 59,858
Marguerite A. Piret 1,254 0 79,842
Fred N. Pratt, Jr*** 375 0 375
Stephen K. West 1,126 0 67,850
John Winthrop 1,228 0 66,442
Totals $8,831 $417,052
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+ Mary K. Bush became a Trustee on June 23, 1997.
* As of December 31, 1996.
** For the calendar year ended December 31, 1996.
*** Mr. Pratt became a Trustee in April, 1996; Mr. Eagle in September, 1996.
4. ADVISORY SERVICES
THE ADVISER.
As stated in the Prospectus, PMC, 60 State Street, Boston,
Massachusetts 02109, serves as the Fund's investment adviser. The Management
Contract is renewable annually by the vote of a majority of the Board of
Trustees of the Fund (including a majority of the Board of Trustees who are not
parties to the contract or interested persons of any such parties) cast in
person at a meeting called for the purpose of voting on such renewal. This
contract terminates if assigned and may be terminated without penalty by either
party by vote of its Board of Directors or Trustees, as the case may be, or a
majority of the Fund's outstanding voting securities and the giving of sixty
days' written notice.
As compensation for its investment advisory and management services and
expenses incurred, PMC is entitled to a management fee at the rate of 1.00% per
annum of the Fund's average daily net assets. The fee is computed daily and paid
monthly. Prior to October 22, 1996, PMC voluntarily agreed not to impose a
portion of its management fee and to make other arrangements to the extent
necessary to limit operating expenses of the Class A shares of the Fund to 1.75%
of the Fund's average daily net assets; the portion of the Fund-wide expenses
attributable to Class B and Class C shares were reduced only to the extent they
were reduced for Class A shares. From the Fund's inception through July 17,
1995, Pioneer Winthrop Advisers ("PWA") served as investment adviser to the Fund
and PMC and Winthrop Advisers Limited Partnership ("WALP") served as subadvisers
to the Fund. During the period that PWA served as adviser, PWA voluntarily
agreed not to impose a portion of its management fee and to make other
arrangements to the extent necessary to limit the Fund's total expenses to 1.75%
of the Fund's average daily net assets.
For the periods from October 25, 1993 through June 30, 1994, July 1,
1994 through December 31, 1994 and January 1, 1995 through July 17, 1995, the
Fund would have paid or accrued total management fees to PWA of $103,371,
$141,284 and $142,839, respectively, but $45,812, $73,158, and $117,002,
respectively, of such fees were not imposed pursuant to PWA's voluntary
agreement described above. For the period from July 18, 1995 through December
31, 1995 and for the fiscal year ended December 31, 1996, the Fund would have
paid or accrued total management fees to PMC of $122,260 and $428,114,
respectively, but $99,216 and $145,879, respectively, of such fees were not
imposed pursuant to PMC's voluntary agreement described above.
For the periods from October 25, 1993 through June 30, 1994, July 1,
1994 through December 31, 1994 and January 1, 1995 through July 17, 1995, PWA
paid or accrued total subadvisory fees to PMC and WALP approximately $34,535,
$26,010 and $15,502, respectively.
In an attempt to avoid any potential conflict with portfolio
transactions for the Fund, PMC and the Fund have adopted extensive restrictions
on personal securities trading by personnel of PMC and its affiliates. These
restrictions include: pre-clearance of all personal securities transactions and
a prohibition of purchasing initial public offerings of securities. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders come before those of PMC and its employees.
THE SUBADVISER.
Boston Financial Securities, Inc. ("BFS"), 101 Arch Street, Boston,
Massachusetts 02110, serves as the Fund's subadviser. The subadvisory agreement
among the Fund, PMC and BFS is renewable annually by the vote of a majority of
the Board of Trustees of the Fund (including a majority of the Board of Trustees
who are not parties to the contract of interested persons of any such parties)
cast in person at a meeting called for the purpose of voting on such renewal.
This contract terminates if assigned and may be terminated without penalty by
either party by vote of its Board of Directors or Trustees, as the case may be,
or a majority of the Fund's outstanding voting securities and the giving of 60
days' written notice.
As compensation for its subadvisory services, PMC pays BFS a
subadvisory fee 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. The fee is computed daily and paid monthly. The subadvisory fee payable
by PMC to BFS will be reduced proportionally to the extent that PMC, after
written notice to BFS, elects to utilize a portion of the management fees paid
to PMC by the Fund to make payments to third parties. 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 under a selling agreement with PFD.
As of December 31, 1996, the following individuals owned beneficially
more than 10% of the outstanding common stock of BFS: Randolph G Hawthorne
(11.17%), Fred N. Pratt, Jr. (12.98%), William B Haynsworth (11.24%). The
address for each of these individuals is BFS, 101 Arch Street, Boston,
Massachusetts 02110.
5. UNDERWRITING AGREEMENT AND DISTRIBUTION PLANS
The Fund and Pioneer Funds Distributor, Inc. are parties to an
Underwriting Agreement. See "Principal Underwriter" below. The Trustees who were
not at the time they voted interested persons of the Fund, as defined in the
1940 Act, approved the Underwriting Agreement. The Underwriting Agreement will
continue from year to year if annually approved by the Trustees. The
Underwriting Agreement provides that PFD will bear certain distribution expenses
not borne by the Fund.
PFD bears all expenses it incurs in providing services under the
Underwriting Agreement. Such expenses include compensation to its employees and
representatives and to securities dealers for distribution related services
performed for the Fund. PFD also pays certain expenses in connection with the
distribution of the Fund's shares, including the cost of preparing, printing and
distributing advertising or promotional materials, and the cost of printing and
distributing prospectuses and supplements to prospective shareholders. The Fund
bears the cost of registering its shares under federal and state securities law.
The Fund and PFD have agreed to indemnify each other against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Under the Underwriting Agreement, PFD will use its best efforts in rendering
services to the Fund.
The Fund has adopted a Plan of Distribution for each Class of shares (except
Class Y shares) in accordance with Rule 12b-1 under the 1940 Act pursuant to
which certain distribution fees are paid to PFD.
CLASS A PLAN
Pursuant to the Class A Plan the Fund reimburses PFD for its
expenditures in financing certain activities primarily intended to result in the
sale of Class A shares. Certain categories of such expenditures have been
approved by the Board of Trustees and are set forth in the Prospectus. See
"Distribution Plans" in the Prospectus. The expenses of the Fund pursuant to the
Class A Plan are accrued on a fiscal year basis and may not exceed, the annual
rate of 0.25% of the Fund's average daily net assets attributable to Class A
shares.
CLASS B PLAN
The Class B Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class B shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class B shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class B shares
(which PFD will in turn pay to securities dealers which enter into a selling
agreement with PFD at a rate of up to 0.25% of the Fund's average daily net
assets attributable to Class B shares owned by investors for whom that
securities dealer is the holder or dealer of record). This service fee is
intended to be in consideration of personal services and/or account maintenance
services rendered by the dealer with respect to Class B shares. PFD will advance
to dealers the first year's service fee at a rate equal to 0.25% of the amount
invested. As compensation therefor, PFD may retain the service fee paid by the
Fund with respect to such shares for the first year after purchase. Commencing
in the thirteenth month following a purchase of Class B shares, dealers will
become eligible for additional service fees or other compensation with respect
to such shares. Dealers may from time to time be required to meet certain other
criteria in order to receive service fees. PFD or its affiliates are entitled to
retain all service fees payable under the Class B Plan for which there is no
dealer of record or for which qualification standards have not been met as
partial consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class B Plan is
to compensate PFD for its distribution services with respect to the Class B
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class B Plan also provides that PFD will receive all CDSCs
attributable to Class B shares. (See "Distribution Plans" in the Prospectus).
When a broker-dealer sells Class B shares and elects, with PFD's approval, to
waive its right to receive the commissions normally paid on the sale, PFD may
cause all or a portion of the distribution fees described above to be paid to
that broker-dealer.
CLASS C PLAN
The Class C Plan provides that the Fund will pay PFD, as the Fund's
distributor for its Class C shares, a distribution fee accrued daily and paid
quarterly, equal on an annual basis to 0.75% of the Fund's average daily net
assets attributable to Class C shares and will pay PFD a service fee equal to
0.25% of the Fund's average daily net assets attributable to Class C shares. PFD
will in turn pay to securities dealers which enter into a selling agreement with
PFD a distribution fee and a service fee at rates of up to 0.75% and 0.25%,
respectively, of the Fund's average daily net assets attributable to Class C
shares owned by investors for whom that securities dealer is the holder or
dealer of record. The service fee is intended to be in consideration of personal
services and/or account maintenance services rendered by the dealer with respect
to Class C shares. PFD will advance to dealers the first year's service fee at a
rate equal to 0.25% of the amount invested. As compensation therefor, PFD may
retain the service fee paid by the Fund with respect to such shares for the
first year after purchase. Commencing in the thirteenth month following a
purchase of Class C shares, dealers will become eligible for additional service
fees at a rate of up to 0.25% of the net asset value of such shares and
additional compensation at a rate of up to 0.75% of the net asset value of such
shares. Dealers may from time to time be required to meet certain other criteria
in order to receive service fees. PFD or its affiliates are entitled to retain
all service fees payable under the Class C Plan for which there is no dealer of
record or for which qualification standards have not been met as partial
consideration for personal services and/or account maintenance services
performed by PFD or its affiliates for shareholder accounts.
The purpose of distribution payments to PFD under the Class C Plan is
to compensate PFD for its distribution services with respect to the Class C
shares of the Fund. PFD pays commissions to dealers as well as expenses of
printing prospectuses and reports used for sales purposes, expenses with respect
to the preparation and printing of sales literature and other
distribution-related expenses, including, without limitation, the cost necessary
to provide distribution-related services, or personnel, travel office expenses
and equipment. The Class C Plan also provides that PFD will receive all CDSCs
attributable to Class C shares. (See "Distribution Plans" in the Prospectus). ).
When a broker-dealer sells Class C shares and elects, with PFD's approval, to
waive its right to receive the commissions normally paid on the sale, PFD may
cause all or a portion of the distribution fees described above to be paid to
that broker-dealer.
Class Y Shares
PFD incurs the expenses of distributing the Fund's Class Y shares, none of
which are reimbursed or paid for by the Fund. These expenses include any
commissions or account servicing fees paid to, or on account of, broker-dealers
which have selling agreements with PFD and certain qualifying registered
investment advisers and other financial institutions.
GENERAL
In accordance with the terms of the Plans, PFD provides to the Fund for
review by the Trustees a quarterly written report of the amounts expended under
the respective Plan and the purpose for which such expenditures were made. In
the Trustees' quarterly review of the Plans, they will consider the continued
appropriateness and the level of reimbursement or compensation the Plans
provide.
No interested person of the Fund, nor any Trustee of the Fund who is
not an interested person of the Fund, has any direct or indirect financial
interest in the operation of the Plans except to the extent that PFD and certain
of its employees may be deemed to have such an interest as a result of receiving
a portion of the amounts expended under the Plans by the Fund and except to the
extent certain officers may have an interest in PFD's ultimate parent, PGI.
The Plans were adopted by a majority vote of the Board of Trustees,
including all of the Trustees who are not, and were not at the time they voted,
interested persons of the Fund, as defined in the 1940 Act (none of whom had or
have any direct or indirect financial interest in the operation of the Plans),
cast in person at a meeting called for the purpose of voting on the Plans. In
approving the Plans, the Trustees identified and considered a number of
potential benefits which the Plans may provide. The Board of Trustees believes
that there is a reasonable likelihood that the Plans will benefit the Fund and
their current and future shareholders. Under their terms, the Plans remain in
effect from year to year provided such continuance is approved annually by vote
of the Trustees in the manner described above. The Plans may not be amended to
increase materially the annual percentage limitation of average net assets which
may be spent for the services described therein without approval of the
shareholders of the Class or Classes affected thereby, and material amendments
of the Plans must also be approved by the Trustees in the manner described
above. A Plan may be terminated at any time, without payment of any penalty, by
vote of the majority of the Trustees who are not interested persons of the Fund
and have no direct or indirect financial interest in the operations of the Plan,
or by a vote of "a majority of the outstanding voting securities" of the
respective Class of the Fund (as defined in the 1940 Act). A Plan will
automatically terminate in the event of its "assignment" (as defined in the 1940
Act).
During the period October 25, 1993 through June 30, 1994, the Fund did
not incur any distribution fees pursuant to the Class A Plan. The Fund commenced
accruing distribution and service fees under the Class A Plan on July 1, 1994.
For the periods July 1, 1994 through December 31, 1994 and January 1, 1995
through December 31, 1995, the Fund incurred total Class A distribution fees of
$35,321 and $61,755, respectively. During the fiscal year ended December
31,1996, the Fund incurred total distribution fees pursuant to the Fund's Class
A Plan, Class B Plan, and Class C Plan, respectively, as follows: $79,357,
$50,464 and $13,398. The distribution fees were paid by the Fund to PFD in
reimbursement of expenses related to servicing of shareholder accounts and to
compensating dealers and sales personnel.
Redemptions of each class of shares (except Class Y shares) may be
subject to a 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% based on the lower of the cost or market value
of the shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. During the fiscal year ended December
31, 1996, CDSCs, in the amount of approximately $677 were paid to PFD.
6. SHAREHOLDER SERVICING/TRANSFER AGENT
The Fund has contracted with PSC, 60 State Street, Boston,
Massachusetts 02109, to act as shareholder servicing agent and transfer agent
for the Fund. This contract terminates if assigned and may be terminated without
penalty by either party by vote of its Board of Directors or Trustees, as the
case may be, or a majority of the Fund's outstanding voting securities and the
giving of ninety days' written notice.
Under the terms of its contract with the Fund, PSC will service
shareholder accounts, and its duties will include: (i) processing sales,
redemptions and exchanges of shares of the Fund; (ii) distributing dividends and
capital gains associated with Fund portfolio accounts; and (iii) maintaining
account records and responding to routine shareholder inquiries.
PSC receives from the Fund an annual fee of $22.75 for each Class A,
Class B, Class C and Class Y shareholder account as compensation for the
services described above. This fee is set at an amount determined by vote of a
majority of the Trustees (including a majority of the Trustees who are not
parties to the contract with PSC or interested persons of any such parties) to
be comparable to fees for such services being paid by other investment
companies. The Fund may compensate entities which have agreed to provide certain
sub-accounting services such as specific transaction processing and
recordkeeping services. Any such payments by the Fund would be in lieu of the
per account fee which would otherwise be paid by the Fund to PSC.
7. CUSTODIAN
Brown Brothers Harriman & Co. (the "Custodian"), 40 Water Street,
Boston, Massachusetts 02109, is the custodian of the Fund's assets. The
Custodian's responsibilities include safekeeping and controlling the Fund's cash
and securities in the U.S. as well as in foreign countries, handling the receipt
and delivery of securities, and collecting interest and dividends on the Fund's
investments. The Custodian fulfills its function in foreign countries through a
network of subcustodian banks located in the foreign countries.
The Custodian does not determine the investment policies of the Fund or
decide which securities it will buy or sell. The Fund may invest in securities
issued by the Custodian, deposit cash in the Custodian and deal with the
Custodian as a principal in securities transactions. Portfolio securities may be
deposited into the Federal Reserve-Treasury Department Book Entry System or the
Depository Trust Company in the U.S. or in recognized central depositories in
foreign countries.
8. PRINCIPAL UNDERWRITER
Pioneer Funds Distributor, Inc., 60 State Street, Boston, Massachusetts
02109, serves as the principal underwriter for the Fund in connection with the
continuous offering of its shares. The Fund will not generally issue Fund shares
for consideration other than cash. At the Fund's sole discretion, however, it
may issue Fund shares for consideration other than cash in connection with an
acquisition of portfolio securities pursuant to a purchase of assets, merger or
reorganization.
The redemption price of shares of beneficial interest of the Fund
may, at PMC's discretion, be paid in cash or portfolio securities. The Fund has,
however, elected to be governed by Rule 18f-1 under the 1940 Act pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the Fund's net asset value during any 90-day period for any
one shareholder. Should the amount of redemptions by any shareholder exceed such
limitation, the Fund will have the option of redeeming the excess in cash or
portfolio securities. In the latter case, the securities are taken at their
value employed in determining the Fund's net asset value. A shareholder whose
shares are redeemed in-kind may incur brokerage charges in selling the
securities received in-kind. The selection of such securities will be made in
such manner as the Board deems fair and reasonable.
During the periods from October 25, 1993 through June 30, 1994, July 1,
1994 through December 31, 1994 and January 1, 1995 through December 31, 1995,
net underwriting commissions earned by PFD in connection with its offering of
Fund shares were approximately $66,304, $27,497 and $29,767. For the same
periods, commissions reallowed to dealers by PFD were approximately $1,124,000,
$186,213 and $187,036, respectively. During the fiscal year ended December 31,
1996, net underwriting commissions retained by PFD in connection with its
offering of Fund shares were approximately $61,469. Commissions reallowed to
dealers by PFD were approximately $1,142,385. See "Underwriting Agreement and
Distribution Plan" above for a description of the terms of the Underwriting
Agreement with PFD.
9. INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, 225 Franklin Street, Boston, Massachusetts
02110, is the Fund's independent public accountant, providing audit services,
tax return review, and assistance and consultation with respect to the
preparation of filings with the Commission.
10. PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are
placed on behalf of the Fund by PMC pursuant to authority contained in the
Management Contract with PMC. In selecting brokers or dealers, PMC considers
other factors relating to best execution, including, but not limited to, the
size and type of the transaction; the nature and character of the markets of the
security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the dealer; the dealer's execution
services rendered on a continuing basis; and the reasonableness of any dealer
spreads. Most transactions in foreign equity securities are executed by
broker-dealers in foreign countries in which commission rates are fixed and,
therefore, are not negotiable (as such rates are in the U.S.)
and are generally higher than in the U.S..
PMC may select dealers which provide brokerage and/or research services
to the Fund and/or other investment companies or accounts managed by PMC. Such
services may include advice concerning the value of securities; the advisability
of investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers, industries, securities, economic factors and trends,
portfolio strategy and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). PMC maintains a listing of dealers who provide such services on a
regular basis. However, because many transactions on behalf of the Fund and
other investment companies or accounts managed by PMC are placed with dealers
(including dealers on the listing) without regard to the furnishing of such
services, it is not possible to estimate the proportion of such transactions
directed to such dealers solely because such services were provided. Management
believes that no exact dollar value can be calculated for such services.
The research received from dealers may be useful to PMC in rendering
investment management services to the Fund as well as to other investment
companies or accounts managed by PMC, although not all of such research may be
useful to the Fund. Conversely, such information provided by brokers or dealers
who have executed transaction orders on behalf of such other accounts may be
useful to PMC in carrying out their obligations to the Fund. The receipt of such
research has not reduced PMC's normal independent research activities; however,
it enables PMC to avoid the additional expenses which might otherwise be
incurred if they were to attempt to develop comparable information through its
own staffs.
In circumstances where two or more broker-dealers offer comparable
prices and executions, preference may be given to a broker-dealer which has sold
shares of the Fund as well as shares of other investment companies or accounts
managed by PMC. This policy does not imply a commitment to execute all portfolio
transactions through all broker-dealers that sell shares of the Fund. In
addition, if PMC determines in good faith that the amount of commissions charged
by a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker, the Fund may pay commissions to such broker in
an amount greater than the amount another firm may charge.
The Trustees periodically review PMC's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund.
In addition to serving as investment subadviser to the Fund, PMC acts
as investment adviser to other mutual funds in the Pioneer group and private
accounts with investment objectives similar to those of the Fund. As such,
securities may meet investment objectives of the Fund, such other funds and such
private accounts. In such cases, the decision to recommend to purchase for one
fund or account rather than another is based on a number of factors. The
determining factors in most cases are the amount of securities of the issuer
then outstanding, the value of those securities and the market for them. Other
factors considered in the investment recommendations include other investments
which each fund or account presently has in a particular industry or country and
the availability of investment funds in each fund or account.
It is possible that, at times, identical securities will be held by
more than one fund and/or account. However, the position of any fund or account
in the same issue may vary and the length of time that any fund or account may
choose to hold its investment in the same issue may likewise vary. To the extent
that the Fund, another Pioneer mutual fund or a private account managed by PMC
seeks to acquire the same security at about the same time, the Fund may not be
able to acquire as large a position in such security as it desires or it may
have to pay a higher price for the security. Similarly, the Fund may not be able
to obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if PMC decides to sell on behalf of another
account the same portfolio security at the same time. On the other hand, if the
same securities are bought or sold at the same time by more than one account,
the resulting participation in volume transactions could produce better
executions for the Fund or other account. In the event that more than one
account purchases or sells the same security on a given date, the purchases and
sales will normally be made as nearly as practicable on a pro rata basis in
proportion to the amounts desired to be purchased or sold by each.
During the periods from October 25, 1993 through June 30, 1994, July 1,
1994 through December 31, 1994 and January 1, 1995 through December 31, 1995,
the Fund paid or accrued aggregate brokerage and underwriting commissions of
approximately $170,534, $213,710 and $18,000, respectively. During the fiscal
period ended December 31, 1996, the Fund paid or accrued aggregate brokerage and
underwriting commissions of approximately $224,000.
11. TAX STATUS
It is the Fund's policy to meet the requirements of Subchapter M of the
Code, for qualification as a regulated investment company. These requirements
relate to the sources of the Fund's income, the diversification of its assets
and the distribution of its income to shareholders. If the Fund meets all such
requirements and distributes to its shareholders, in accordance with the Code's
timing requirements, all investment company taxable income and net capital gain,
if any, which it earns, the Fund will be relieved of the necessity of paying
federal income tax.
In order to qualify as a regulated investment company under Subchapter
M, the Fund must, among other things, derive at least 90% of its annual gross
income from dividends, interest, gains from the sale or other disposition of
stock, securities or foreign currencies, or other income (including gains from
options and futures contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "90% income test"), limit its gains
from the sale of stock, securities and certain other positions held for less
than three months to less than 30% of its annual gross income (the "30% test")
and satisfy certain annual distribution and quarterly diversification
requirements. For purposes of the 90% income test, income the Fund earns from
equity interests in certain entities that are not treated as corporations (e.g.,
are treated as partnerships or trusts) for U.S. tax purposes will generally have
the same character for the Fund as in the hands of such entities; consequently,
the Fund may be required to limit its equity investments in such entities that
earn fee income, rental income, or other nonqualifying income. Similarly, the
Fund may need to limit its holdings of and income from any direct ownership
interests that it may acquire in real estate in order to seek to ensure
satisfaction of the 90% income test.
Dividends from investment company taxable income, which includes net
investment income, net short-term capital gain in excess of net long-term
capital loss, and certain net foreign exchange gains, are taxable as ordinary
income, whether received in cash or reinvested in additional shares. Dividends
from net long-term capital gain in excess of net short-term capital loss, if
any, whether received in cash or reinvested in additional shares, are taxable to
the Fund's shareholders as long-term capital gains for federal income tax
purposes without regard to the length of time shares of the Fund have been held.
The federal income tax status of all distributions will be reported to
shareholders annually.
Any dividend declared by the Fund in October, November or December as
of a record date in such a month and paid during the following January will be
treated for federal income tax purposes as received by shareholders on December
31 of the calendar year in which it is declared.
Foreign exchange gains and losses realized by the Fund in connection
with certain transactions involving foreign currency-denominated debt
securities, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and may affect
the amount, timing and character of distributions to shareholders. Any
transactions in foreign currency that are not directly related to the Fund's
investments in stock or securities (or its options or futures contracts with
respect to stock or securities) may need to be limited in order to enable the
Fund to satisfy the limitations described in the second paragraph above that are
applicable to the income or gains recognized by a regulated investment company.
If the net foreign exchange loss for a year were to exceed the Fund's investment
company taxable income (computed without regard to such loss), the resulting
ordinary loss for such year would not be deductible by the Fund or its
shareholders in future years.
If the Fund acquires any equity interest (under proposed regulations,
generally including not only stock but also an option to acquire stock) in
certain foreign corporations that receive at least 75% of their annual gross
income from passive sources (such as interest, dividends, rents, royalties or
capital gain) or hold at least 50% of their assets in investments producing such
passive income ("passive foreign investment companies"), the Fund could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock in
such companies, even if all income or gain actually received by the Fund is
timely distributed to its shareholders. The Fund would not be able to pass
through to its shareholders any credit or deduction for such a tax. Certain
elections may, if available, ameliorate these adverse tax consequences, but any
such election would require the Fund to recognize taxable income or gain without
the concurrent receipt of cash. The Fund may limit and/or manage its holdings in
passive foreign investment companies to minimize its tax liability or maximize
its return from these investments.
The Fund may invest in debt obligations that are in the lowest rating
categories or are unrated, including debt obligations of issuers not currently
paying interest or who are in default. Investments in debt obligations that are
at risk of or in default present special tax issues for the Fund. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by the Fund, in the event it
invests in such securities, in order to seek to ensure that it distributes
sufficient income to preserve its status as a regulated investment company and
does not become subject to federal income or excise tax.
If the Fund invests in certain pay-in-kind securities ("PIKs"), zero
coupon securities, deferred interest securities or, in general, any other
securities with original issue discount (or with market discount if the Fund
elects to include market discount in income currently), the Fund must accrue
income on such investments for each taxable year, which generally will be prior
to the receipt of the corresponding cash payments. However, the Fund must
distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid Federal income and excise taxes.
Therefore, the Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
For federal income tax purposes, the Fund is permitted to carry forward
a net capital loss for any year to offset its capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the Fund and therefore are not expected to be distributed as such
to shareholders. As of the end of its most recent taxable year, the Fund had no
capital loss carryforwards.
At the time of an investor's purchase of Fund shares, a portion of the
purchase price may be attributable to realized or unrealized appreciation in the
Fund's portfolio or undistributed taxable income of the Fund. Consequently,
subsequent distributions on these shares from such appreciation or income may be
taxable to such investor even if the net asset value of the investor's shares
is, as a result of the distributions, reduced below the investor's cost for such
shares and the distributions economically represent a return of a portion of the
investment.
Redemptions and exchanges are taxable events. Any loss realized by a
shareholder upon the redemption, exchange or other disposition of shares with a
tax holding period of six months or less will be treated as a long-term capital
loss to the extent of any amounts treated as distributions of long-term capital
gain with respect to such shares.
In addition, if Class A shares redeemed or exchanged have been held for
less than 91 days, (1) in the case of a reinvestment at net asset value pursuant
to the reinvestment privilege, the sales charge paid on such shares is not
included in their tax basis under the Code, and (2) in the case of an exchange,
all or a portion of the sales charge paid on such shares is not included in
their tax basis under the Code, to the extent a sales charge that would
otherwise apply to the shares received is reduced pursuant to the exchange
privilege. In either case, the portion of the sales charge not included in the
tax basis of the shares redeemed or surrendered in an exchange is included in
the tax basis of the shares acquired in the reinvestment or exchange. Losses on
redemptions or other dispositions of shares may be disallowed under "wash sale"
rules in the event of other investments in the Fund (including those made
pursuant to reinvestment of dividends and/or capital gain distributions) within
a period of 61 days beginning 30 days before and ending 30 days after a
redemption or other disposition of shares. In such a case, the disallowed
portion of any loss would be included in the federal tax basis of the shares
acquired in the other investments.
Options written or purchased and futures contracts entered into by the
Fund on certain securities or indices may cause the Fund to recognize gains or
losses from marking-to-market at the end of its taxable year even though such
options may not have lapsed, been closed out, or exercised or such futures
contracts may not have been performed or closed out. The tax rules applicable to
these contracts may affect the characterization as long-term or short-term of
some capital gains and losses realized by the Fund. Losses on certain options or
futures contracts and/or offsetting positions (portfolio securities or other
positions with respect to which the Fund's risk of loss is substantially
diminished by one or more options or futures contracts) may also be deferred
under the tax straddle rules of the Code, which may also affect the
characterization of capital gains or losses from straddle positions and certain
successor positions as long-term or short-term. Certain tax elections may be
available that would enable the Fund to ameliorate some adverse effects of the
tax rules described in this paragraph. The tax rules applicable to options,
futures contracts and straddles may affect the amount, timing and character of
the Fund's income and losses and hence of its distributions to shareholders.
For purposes of the 70% dividends-received deduction generally
available to corporations under the Code, dividends received by the Fund from
U.S. domestic corporations in respect of any share of stock with a tax holding
period of at least 46 days (91 days in the case of certain preferred stock) held
in an unleveraged position and distributed and designated by the Fund may be
treated as qualifying dividends. Any corporate shareholder should consult its
tax advisor regarding the possibility that its tax basis in its shares may be
reduced, for federal income tax purposes, by reason of "extraordinary dividends"
received with respect to the shares. In order to qualify for the deduction,
corporate shareholders must meet the minimum holding period requirement stated
above with respect to their Fund shares, taking into account any holding period
reductions from certain hedging or other transactions or positions that diminish
their risk of loss with respect to their Fund shares, and, if they borrow to
acquire Fund shares, they may be denied a portion of the dividends-received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporation's
adjusted current earnings over its alternative minimum taxable income, which may
increase a corporation's alternative minimum tax liability.
The Fund may be subject to withholding and other taxes imposed by
foreign countries, including taxes on interest, dividends and capital gains,
with respect to its investments in those countries. Tax conventions between
certain countries and the U.S. may reduce or eliminate such taxes in some cases.
The Fund does not expect to satisfy the requirements for passing through to its
shareholders their pro rata shares of qualified foreign taxes paid by the Fund,
with the result that shareholders will not include such taxes in their gross
incomes and will not be entitled to a tax deduction or credit for such taxes on
their own tax returns.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions, and certain prohibited transactions, is accorded to accounts
maintained as qualified retirement plans.
Shareholders should consult their tax advisers for more information.
A state income (and possibly local income and/or intangible property)
tax exemption is generally available to the extent (if any) the Fund's
distributions are derived from interest on (or, in the case of intangible
property taxes, the value of its assets is attributable to) certain U.S.
Government obligations, provided in some states that certain thresholds for
holdings of such obligations and/or reporting requirements are satisfied. The
Fund will not seek to satisfy any threshold or reporting requirements that may
apply in particular taxing jurisdictions, although the Fund may in its sole
discretion provide relevant information to shareholders.
Federal law requires that the Fund withhold (as "backup withholding")
31% of reportable payments, including dividends, capital gain dividends and the
proceeds of redemptions (including exchanges) and repurchases to shareholders
who have not complied with Internal Revenue Service ("IRS") regulations. In
order to avoid this withholding requirement, shareholders must certify on their
Account Applications, or on separate IRS Forms W-9, that the Social Security
Number or other Taxpayer Identification Number they provide is their correct
number and that they are not currently subject to backup withholding, or that
they are exempt from backup withholding. The Fund may nevertheless be required
to withhold if it receives notice from the IRS or a broker that the number
provided is incorrect or backup withholding is applicable as a result of
previous underreporting of interest or dividend income.
If, as anticipated, the Fund qualifies as a regulated investment
company under the Code, it will not be required to pay any Massachusetts income,
corporate excise or franchise taxes or any Delaware corporation income tax.
The description of certain federal tax provisions above relates only to
U.S. federal income tax consequences for shareholders who are U.S. persons, i.e.
U.S. citizens or residents or U.S. corporations, partnerships, trusts or
estates, and who are subject to U.S. federal income tax. This description does
not address the special tax rules that may be applicable to particular types of
investors, such as financial institutions, insurance companies, securities
dealers, or tax-exempt or tax-deferred plans, accounts or entities. Investors
other than U.S. persons may be subject to different U.S. tax treatment,
including a possible 30% non-resident alien U.S. withholding tax (or
non-resident alien withholding tax at a lower treaty rate) on amounts treated as
ordinary dividends from the Fund and, unless an effective IRS Form W-8 or
authorized substitute for Form W-8 is on file, to 31% backup withholding on
certain other payments from the Fund. Shareholders should consult their own tax
advisers on these matters and on state, local and other applicable tax laws.
12. DESCRIPTION OF SHARES
The Fund's Declaration of Trust permits the Board of Trustees to
authorize the issuance of an unlimited number of full and fractional shares of
beneficial interest which may be divided into such separate series as the
Trustees may establish. Currently, the Fund consists of only one series. The
Trustees may, however, establish additional series of shares in the future, and
may divide or combine the shares into a greater or lesser number of shares
without thereby changing the proportionate beneficial interests in the Fund. The
Declaration of Trust further authorizes the Trustees to classify or reclassify
any series of the shares into one or more classes. Pursuant thereto, the
Trustees have authorized the issuance of four classes of shares of the Fund,
designated as Class A, Class B, Class C and Class Y shares. Each share of a
class of the Fund represents an equal proportionate interest in the assets of
the Fund allocable to that class. Upon liquidation of the Fund, shareholders of
each class of the Fund are entitled to share pro rata in the Fund's net assets
allocable to such class available for distribution to shareholders. The Fund
reserves the right to create and issue additional series or classes of shares,
in which case the shares of each class of a series would participate equally in
the earnings, dividends and assets allocable to that class of the particular
series.
Shareholders are entitled to one vote for each share held and may vote
in the election of Trustees and on other matters submitted to a meeting of
shareholders. Although Trustees are not elected annually by the shareholders,
shareholders have, under certain circumstances, the right to remove one or more
Trustees.
The series of the Fund are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Trustees and accountants. Shares of all series or classes of the Fund vote
together as a class on matters that affect all series or classes of the Fund in
substantially the same manner. As to matters affecting a single series or class,
shares of such series or class will vote separately. No amendment adversely
affecting the rights of shareholders may be made to the Fund's Declaration of
Trust without the affirmative vote of a majority of its shares. Shares have no
preemptive or conversion rights. Shares are fully paid and non-assessable by the
Fund, except as stated below.
13. CERTAIN LIABILITIES
As a Delaware business trust, the Fund's operations are governed by its
Declaration , a copy of which has been filed with the Fund's registration
statement.
Generally, Delaware business trust shareholders are not personally
liable for obligations of the Delaware business trust under Delaware law. The
Delaware Business Trust Act (the "Delaware Act") provides that a shareholder of
a Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Fund's
Declaration expressly provides that the Fund has been organized under the
Delaware Act and that the Agreement and Declaration of Trust is to be governed
by Delaware law. It is nevertheless possible that a Delaware business trust,
such as the Fund, might become a party to an action in another state whose
courts refused to apply Delaware law, in which case the trust's shareholders
could be subject to personal liability.
To guard against this risk, the Declaration (i) contains an express
disclaimer of shareholder liability for acts or obligations of the Fund and
provides that notice of such disclaimer may be given in each agreement,
obligation and instrument entered into or executed by the Fund or its Trustees,
(ii) provides for the indemnification out of Fund property of any shareholders
held personally liable for any obligations of the Fund or any series of the Fund
and (iii) provides that the Fund shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of the Fund and
satisfy any judgment thereon. Thus, the risk of a Fund shareholder incurring
financial loss beyond his or her investment because of shareholder liability is
limited to circumstances in which all of the following factors are present: (1)
a court refused to apply Delaware law; (2) the liability arose under tort law
or, if not, no contractual limitation of liability was in effect; and (3) the
Fund itself would be unable to meet its obligations. In light of Delaware law,
the nature of the Fund's business and the nature of its assets, the risk of
personal liability to a Fund shareholder is remote.
The Declaration further provides that the Fund shall indemnify each of
its Trustees and officers against liabilities and expenses reasonably incurred
by them, in connection with, or arising out of, any action, suit or proceeding,
threatened against or otherwise involving such Trustee or officer, directly or
indirectly, by reason of being or having been a Trustee or officer of the Fund.
The Declaration does not authorize the Fund to indemnify any Trustee or officer
against any liability to which he or she would otherwise be subject by reason of
or for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties.
14. DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of the Fund is determined
as of the close of regular trading (normally 4:00 p.m., Eastern time) on each
day on which the New York Stock Exchange (the "Exchange") is open for regular
trading. As of the date of this Statement of Additional Information, the
Exchange is open for trading every weekday except for the following holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of each class of the Fund is also determined on
any other day in which the level of trading in its portfolio securities is
sufficiently high so that the current net asset value per share might be
materially affected by changes in the value of its portfolio securities. The
Fund is not required to determine its net asset value per share on any day in
which no purchase orders for the shares of the Fund are received and no shares
are tendered for redemption.
The net asset value per share of each class of the Fund is computed by
taking the value of all of the class's assets, less its liabilities, and
dividing it by the number of outstanding shares for that class. Expenses of the
Fund are accrued daily. Securities which have not traded on the date of
valuation or securities for which sales prices are not generally reported are
valued at the mean between the last bid and asked prices. Securities for which
no market quotations are readily available (including those the trading of which
has been suspended) will be valued at fair value as determined in good faith by
the Board of Trustees, although the actual computations may be made by persons
acting pursuant to the direction of the Board. The maximum offering price per
Class A share is the net asset value per Class A share, plus the maximum sales
charge. Class B and Class C shares are offered at net asset value without the
imposition of an initial sales charge, but are subject to a CDSC. Class Y shares
are offered without an initial sales charge and are not subject to a CDSC. See
"Fund Share Alternatives" in the Prospectus.
15. SYSTEMATIC WITHDRAWAL PLAN (CLASS A, CLASS B AND CLASS C SHARES ONLY)
The Systematic Withdrawal Plan ("SWP") is designed to provide a
convenient method of receiving fixed payments at regular intervals from shares
of the Fund deposited by the applicant under this SWP. The applicant must
deposit or purchase for deposit with PSC shares of the Fund having a total value
of not less than $10,000. Periodic checks of $50 or more will be deposited,
monthly or quarterly, directly into a bank account designated by the applicant,
or will be sent to the applicant, or any person designated by him. Withdrawals
from Class B and Class C share accounts are limited as described in "Systematic
Withdrawal Plan" in the Prospectus. A designation of a third party to receive
checks requires an acceptable signature guarantee. See "Waiver or Reduction of
Contingent Deferred Sales Charge" in the Prospectus. Designation of another
person to receive the checks subsequent to opening an account must be
accompanied by a signature guarantee.
Any income dividends or capital gains distributions on shares under the
Systematic Withdrawal Plan will be credited to the Plan account on the payment
date in full and fractional shares at the net asset value per share in effect on
the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited under the Plan in a Plan account. To the extent that such redemptions
for periodic withdrawals exceed dividend income reinvested in the Plan account,
such redemptions will reduce and may ultimately exhaust the number of shares
deposited in the Plan account. Redemptions are taxable transactions to
shareholders. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her investment.
The SWP Plan may be terminated at any time (1) by written notice to PSC
or from PSC to the shareholder; (2) upon receipt by PSC of appropriate evidence
of the shareholder's death; or (3) when all shares under the Plan have been
redeemed.
16. LETTER OF INTENT (CLASS A SHARES ONLY)
A Letter of Intent (an "LOI") may be established by completing the LOI
section of the Account Application. When you sign the Account Application, you
agree to irrevocably appoint PSC your attorney-in-fact to surrender for
redemption any or all shares held in escrow with full power of substitution. An
LOI is not a binding obligation upon the investor to purchase, or the Fund to
sell, the full amount indicated.
If the total purchases, less redemptions, exceed the amount specified
under the LOIand are in an amount which would qualify for a further quantity
discount, all transactions will be recomputed on the expiration date of the LOI
to effect the lower sales charge. Any difference in the sales charge resulting
from such recomputation will be either delivered to you in cash or invested in
additional shares at the lower sales charge. The dealer, by signing the Account
Application, agrees to return to PFD, as part of such retroactive adjustment,
the excess of the commission previously reallowed or paid to the dealer over
that which is applicable to the actual amount of the total purchases under the
Letter .
If the total purchases, less redemptions, are less than the amount
specified under the Letter , you must remit to PFD any difference between the
sales charge on the amount actually purchased and the amount originally
specified in the Letter section of the Account Application. When the difference
is paid, the shares held in escrow will be deposited to your account. If you do
not pay the difference in sales charge within 20 days after written request from
PFD or your dealer, PSC, after receiving instructions from PFD, will redeem the
appropriate number of shares held in escrow to realize the difference and
release any excess. See "How to Purchase Fund Shares - Letter of Intent" in the
Prospectus for more information.
17. INVESTMENT RESULTS
One of the primary methods used to measure the Fund's performance is
"total return." "Total return" will normally represent the percentage change in
value of an account, or of a hypothetical investment in the Fund, over any
period up to the lifetime of the Fund. Total return calculations will usually
assume the reinvestment of all dividends and capital gains distributions and
will be expressed as a percentage increase or decrease from an initial value,
for the entire period or for one or more specified periods within the entire
period. Total return percentages for periods of less than one year will usually
be annualized; total return percentages for periods longer than one year will
usually be accompanied by total return percentages for each year within the
period and/or by the average annual compounded total return for the period. The
income and capital components of a given return may be separated and portrayed
in a variety of ways in order to illustrate their relative significance.
Performance may also be portrayed in terms of cash or investment values, without
percentages. Past performance cannot guarantee any particular future result.
The Fund's yield quotations and average annual total return quotations
as they may appear in the Prospectus, this Statement of Additional Information
or in advertising are calculated by standard methods prescribed by the SEC.
With respect to the treatment of discount and premium on mortgage or
other receivables-backed obligations which are expected to be subject to monthly
payments of principal and interest ("pay downs"), the Fund accounts for gain or
loss attributable to actual monthly pay downs as an increase or decrease to
interest income during the period. In addition, the Fund may elect (i) to
amortize the discount or premium remaining on a security, based on the cost of
the security, to the weighted average maturity date, if such information is
available, or to the remaining term of the security, if the weighted average
maturity date is not available, or (ii) not to amortize the remaining discount
or premium on a security.
Standardized Average Annual Total Return Quotations. Average annual
total return quotations for each class of Fund shares are computed by finding
the average annual compounded rates of return that would cause a hypothetical
investment made on the first day of a designated period (assuming all dividends
and distributions are reinvested) to equal the ending redeemable value of such
hypothetical investment on the last day of the designated period in accordance
with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1000, less the maximum
sales load of 5.75% for Class A shares or the deduction of
any CDSC applicable to Class B or C shares as of the end of
the period. For Class Y shares, no sales load or deduction of
a CDSC is applicable.
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
For purposes of the above computation, all dividends and distributions
made by the Fund are reinvested at net asset value during the designated period.
The average annual total return quotation is determined to the nearest 1/100 of
1%.
In determining the average annual total return (calculated as provided
above), recurring fees, if any, that are charged to all shareholder accounts of
a particular class of shares are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of the
above computation is assumed to be the fee that would be charged to the Fund's
mean account size.
The average annual total return* for shares of the Fund
for the fiscal year ended December 31, 1996
were:
Since Inception ** 1 Year 5 Years 10 Years
------ ------- --------
Class A Shares 28.64% N/A N/A 10.88%
Class B Shares N/A N/A N/A 30.81
Class C Shares N/A N/A N/A 33.76
Class Y Shares N/A N/A N/A N/A
- -----------
* Total return would have been reduced if no effect were given to the expense
limitation previously in place. ** For Class A shares, inception was October 25,
1993. For Class B and Class C shares inception was January 31, 1996.
For Class Y shares, inception was March __, 1998.
Other Quotations, Comparisons, and General Information. From time to
time, in advertisements, in sales literature, or in reports to shareholders, the
past performance of the Fund may be illustrated and/or compared with that of
other mutual funds with similar investment objectives, and to stock or other
relevant indices. For example, the Fund's total return may be compared to
averages or rankings prepared by Lipper Analytical Services, Inc., a widely
recognized independent service which monitors mutual fund performance; the
Standard & Poor's 500 Stock Index ("S&P 500"), an unmanaged index of common
stocks; or the Dow Jones Industrial Average, a recognized unmanaged index of
common stocks of 30 industrial companies listed on the Exchange.
In addition, the performance of the Fund may be compared to alternative
investment or savings vehicles and/or to indices or indicators of economic
activity, e.g., inflation or interest rates. Performance rankings and listings
reported in newspapers or national business and financial publications, such as
Barron's, Business Week, Consumer's Digest, Consumer's Report, Financial World,
Forbes, Fortune, Investors Business Daily, Kiplinger's Personal Finance
Magazine, Lipper Real Estate Funds Average, Money Magazine, NAREIT All REIT
Index, NAREIT Equity REIT Index, the New York Times, RUSSELL-NACRIEF Index,
Smart Money, USA Today, U.S. News and World Report, The Wall Street Journal,
Wilshire Real Estate Securities Trust and Worth may also be cited (if the Fund
is listed in any such publication) or used for comparison, as well as
performance listings and rankings from various other sources including Bloomberg
Financial Systems, CDA/Wiesenberger Investment Companies Service, Donoghue's
Mutual Fund Almanac, Investment Company Data, Inc., Johnson's Charts, Kanon
Bloch Carre & Co., Micropal, Inc., Morningstar, Inc., Schabacker Investment
Management, Towers Data Systems and Weisenberger Investment Companies Service.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Fund.
AUTOMATED INFORMATION LINE
FactFoneSM, Pioneer's 24-hour automated information line, allows
shareholders to dial toll-free 1-800-225-4321 and hear recorded fund
information, including:
o net asset value prices for all Pioneer mutual funds;
o annualized 30-day yields on Pioneer's bond funds;
o annualized 7-day yields and 7-day effective
(compound) yields for Pioneer's money market funds;
and
o dividends and capital gains distributions on all
Pioneer mutual funds.
Yields are calculated in accordance with standard formulas mandated by the SEC.
In addition, by using a personal identification number ("PIN"),
shareholders may enter purchases, exchanges and redemptions, access their
account balance and last three transactions and may order a duplicate statement.
See "FactFoneSM" in the Prospectus for more information.
All performance numbers communicated through FactFoneSM represent past
performance; figures for all quoted bond funds include the maximum applicable
sales charge. A shareholder's actual yield and total return will vary with
changing market conditions. The value of Class A, Class B and Class C shares
(except for Pioneer Cash Reserves Fund, which seeks to maintain a stable $1.00
share price) will also vary, and shares may be worth more or less at redemption
than their original cost. Certain FactFoneSM features are not available to Class
Y shareholders.
18. FINANCIAL STATEMENTS
The Fund's audited financial statements for its Class A, Class B and
Class C shares for the fiscal year ended December 31, 1996 are included in the
Fund's 1996 Annual Report to Shareholders which is hereby incorporated by
reference into this Statement of Additional Information and attached hereto in
reliance upon the report of Arthur Andersen LLP, independent public accountants,
as experts in accounting and auditing.
<PAGE>
PIONEER REAL ESTATE SHARES
CLASS A SHARES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Asset
Initial Offering Sales Charge Shares Value Per Initial Net
Date Investment Price Included Purchased Share Asset Value
10/25/93 $10,000 $13.2600 5.75% 754.148 $12.5000 $9,425
</TABLE>
Dividends and Capital Gains Reinvested
VALUE OF SHARES
From Dividends
From Cap. Gains Reinvested
Date From Investment Reinvested Total Value
12/31/93 $9,012 $0 $55 $9,067
12/31/94 $8,583 $20 $485 $9,088
12/31/95 $9,065 $23 $1,100 $10,188
12/31/96 $11,704 $369 $1,829 $13,902
<PAGE>
PIONEER REAL ESTATE SHARES
CLASS B SHARES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net Asset
Initial Offering Price Sales Charge Shares Value Per Initial Net
Date Investment Included Purchased Share Asset Value
01/31/96 $10,000 $12.0900 0.00% 827.130 $12.9000 $10,000
</TABLE>
Dividends and Capital Gains Reinvested
VALUE OF SHARES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
From Cap. Gains From Dividends CDSC If Total Value CDSC
Date From Reinvested Reinvested Redeemed If Redeemed %
Investment
12/31/96 $12,780 $330 $372 $400 $13,082 4.00%
</TABLE>
<PAGE>
PIONEER REAL ESTATE SHARES
CLASS C SHARES
Net Asset
Initial Offering Sales Charge Shares Value Per Initial Net
Date Investment Price Included Purchased Share Asset Value
01/31/96 $10,000 $12.0900 0.00% 827.130 $12.9000 $10,000
Dividends and Capital Gains Reinvested
VALUE OF SHARES
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
From Cap. Gains From Dividends CDSC If Total Value CDSC
Date From Reinvested Reinvested Redeemed If Redeemed %
Investment
12/31/96 $12,787 $330 $359 $100 $13,376 1.00%
</TABLE>
<PAGE>
APPENDIX A
MOODY'S CORPORATE BOND RATINGS
AAA
Bonds which are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be greater amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A posses many favorable investment attributes are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
BAA
Bonds which are rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA
Bonds which are rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
other good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
<PAGE>
CAA
Bonds which are rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
CA
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicated that the security ranks in the higher end of its generic
rating category; the modifier 2 indicated a mid-range ranking and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
<PAGE>
STANDARD AND POOR'S RATINGS GROUP CORPORATE BOND RATINGS
AAA
Debt rated AAA has the highest rating assigned by Standard and Poor's. Capacity
to pay interest and repay principal is extremely strong.
AA
Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the higher rated issues only in small degree.
A
Debt rated A has a strong capacity to pay interest and repay principal although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions of changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
BB
Debt rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied BBB-rating.
B
Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC
Debt rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
<PAGE>
CC
The rating CC is typically applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
C
The C rating is typically applied to debt subordinated to senior debt which is
assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI
The rating CI is reserved for income bonds on which no interest is being paid.
D
Debt rated D is in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-)
The rating from AAA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major categories.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
The following securities indices are well-known, unmanaged measures of market
performance. Advertisements and sales literature for the Fund may refer to these
indices or may present comparisons between the performance of the Fund and one
or more of the indices. Other indices may be used, if appropriate. The indices
are not available for direct investment. The data presented is not meant to be
indicative of the performance of the Fund, reflects past performance and does
not guarantee future results.
S&P 500
This index is a readily available, carefully constructed, market value weighted
benchmark of common stock performance. Currently, the S&P Composite Index
includes 500 of the largest stocks (in terms of stock market value) in the
United States; prior to March 1957 it consisted of 90 of the largest stocks.
DOW JONES INDUSTRIAL AVERAGE
This is a total return index based on the performance of 30 blue chip stocks.
U.S. SMALL STOCK INDEX
This index is a market value weighted index of the ninth and tenth deciles of
the New York Stock Exchange (NYSE), plus stocks listed on the American Stock
Exchange (AMEX) and over-the-counter (OTC) with the same or less capitalization
as the upper bound of the NYSE ninth decile.
U.S. INFLATION
The Consumer Price Index for All Urban Consumers (CPI-U), not seasonally
adjusted, is used to measure inflation, which is the rate of change of consumer
goods prices. Unfortunately, the inflation rate as derived by the CPI is not
measured over the same period as the other asset returns. All of the security
returns are measured from one month-end to the next month-end. CPI commodity
prices are collected during the month. Thus, measured inflation rates lag the
other series by about one-half month. Prior to January 1978, the CPI (as
compared with CPI-U) was used. Both inflation measures are constructed by the
U.S. Department of Labor, Bureau of Labor Statistics, Washington, DC.
S&P/BARRA INDEXES
The S&P/BARRA Growth and Value Indexes are constructed by dividing the stocks in
the S&P 500 Index according to price-to-book ratios. The Growth Index contains
stocks with higher price-to-book ratios, and the Value Index contains stocks
with lower price-to-book ratios. Both indexes are market capitalization
weighted.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
LONG-TERM U.S. GOVERNMENT BONDS
The total returns on long-term government bonds from 1977 to 1991 are
constructed with data from The Wall Street Journal. Over 1926-1976, data are
obtained from the Government bond file at the Center for Research in Security
Prices (CRSP), Graduate School of Business, University of Chicago. Each year, a
one-bond portfolio with a term of approximately 20 years and a reasonably
current coupon was used, and whose returns did not reflect potential tax
benefits, impaired negotiability, or special redemption or call privileges.
Where callable bonds had to be used, the term of the bond was assumed to be a
simple average of the maturity and first call dates minus the current date. The
bond was "held" for the calendar year and returns were computed. Total returns
for 1977-1991 are calculated as the change in the flat price or and-interest
price.
INTERMEDIATE-TERM U.S. GOVERNMENT BONDS
Total returns of the intermediate-term government bonds for 1977-1991 are
calculated from The Wall Street Journal prices, using the change in flat price.
Returns from 1934-1986 are obtained from the CRSP Government Bond File.
Each year, one-bond portfolios are formed, the bond chosen is the shortest
noncallable bond with a maturity not less than 5 years, and this bond is "held"
for the calendar year. Monthly returns are computed. (Bonds with impaired
negotiability or special redemption privileges are omitted, as are partially or
fully tax-exempt bonds starting with 1943.) From 1934-1942, almost all bonds
with maturities near 5 years were partially or full tax-exempt and were selected
using the rules described above. Personal tax rates were generally low in that
period, so that yields on tax-exempt bonds were similar to yields on taxable
bonds. From 1926-1933, there are few bonds suitable for construction of a series
with a 5-year maturity. For this period, five year bond yield estimates are
used.
MSCI
Morgan Stanley Capital International Indices, developed by the Capital
International S.A., are based on share prices of some 1470 companies listed on
the stock exchanges around the world.
Countries in the MSCI EAFE Portfolio are:
Australia; Austria; Belgium; Denmark; Finland; France; Germany; Hong Kong;
Italy; Japan; Netherlands; N. Zealand; Norway; Singapore/Malaysia; Spain;
Sweden; Switzerland; United Kingdom.
Countries in the MSCI EMERGING MARKET FREE INDEX are: Argentina, Brazil, Chile,
China, Czech Republic, Colombia, Greece, Hungary, India, Indonesia, Israel,
Jordan, Korea Free (at 50%), Malaysia, Mexico Free, Pakistan, Peru, Philippines
Free, Poland, Portugal, South Africa, Sri Lanka, Taiwan, Thailand, Turkey,
Venezuela Free
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
6 MONTH CDS
Data sources include the Federal Reserve Bulletin and The Wall Street Journal.
LONG-TERM U.S. CORPORATE BONDS
For 1969-1991, corporate bond total returns are represented by the Salomon
Brothers Long-Term High-Grade Corporate Bond Index. Since most large corporate
bond transactions take place over the counter, a major dealer is the natural
source of these data. The index includes nearly all Aaa- and Aa-rated bonds. If
a bond is downgraded during a particular month, its return for the month is
included in the index before removing the bond from future portfolios.
Over 1926-1968 the total returns were calculated by summing the capital
appreciation returns and the income returns. For the period 1946-1968, Ibbotson
and Sinquefield backdated the Salomon Brothers' index, using Salomon Brothers'
monthly yield data with a methodology similar to that used by Salomon for
1969-1991. Capital appreciation returns were calculated from yields assuming (at
the beginning of each monthly holding period) a 20-year maturity, a bond price
equal to par, and a coupon equal to the beginning-of-period yield. For the
period 1926-1945, the Standard and Poor's monthly High-Grade Corporate Composite
yield data were used, assuming a 4 percent coupon and a 20-year maturity. The
conventional present-value formula for bond price for the beginning and
end-of-month prices was used. (This formula is presented in Ross, Stephen A.,
and Randolph W. Westerfield, Corporate Finance, Times Mirror/Mosby, St. Louis,
1990, p. 97 ["Level-Coupon Bonds"].) The monthly income return was assumed to be
one-twelfth the coupon.
U.S. (30 DAY) TREASURY BILLS
For the U.S. Treasury bill index, data from The Wall Street Journal are used for
1977-1991; the CRSP U.S. Government Bond File is the source until 1976. Each
month a one-bill portfolio containing the shortest-term bill having not less
than one month to maturity is constructed. (The bill's original term to maturity
is not relevant.) To measure holding period returns for the one-bill portfolio,
the bill is priced as of the last trading day of the previous month-end and as
of the last trading day of the current month.
NAREIT-EQUITY INDEX
All of the data is based upon the last closing price of the month for all
tax-qualified REITs listed on the NYSE, AMSE and the NASDAQ. The data is
market-value-weighted. Prior to 1987 REITs were added to the index the January
following their listing. Since 1987 Newly formed or listed REITs are added to
the total shares outstanding figure in the month that the shares are issued.
Only common shares issued by the REIT are included in the index. The total
return calculation is based upon the weighing at the beginning of the period.
Only those REITs listed for the entire period are
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
used in the total return calculation. Dividends are included in the month based
upon their payment date. There is no smoothing of income. Liquidating dividends,
whether full or partial, are treated as income.
RUSSELL 2000 SMALL STOCK INDEX
Index of the 2,000 smallest stocks in the Russell 3000 Index (TM); the smallest
company has a market capitalization of approximately $13 million. The Russell
3000 is comprised of the 3,000 largest US companies as determined by market
capitalization representing approximately 98% of the US equity market. The
largest company in the index has a market capitalization of $67 billion. The
Russell Indexes (TM) are reconstituted annually as of June 1st, based on May 31
market capitalization rankings.
WILSHIRE REAL ESTATE SECURITIES INDEX
The Wilshire Real Estate Securities Index is a market capitalization-weighted
index which measures the performance of more than 85 securities.
The index contains performance data on five major categories of property;
office, retail, industrial, apartment and miscellaneous. Additionally, the Index
has real estate portfolio encumbered by 16% third party mortgages. The companies
in the WRESEC are 79% equity and hybrid REIT's and 21% real estate operating
companies. The capitalization is 47% NYSE, 33% AMEX and 20% OTC."
STANDARD & POOR'S MIDCAP 400 INDEX
The Standard and Poor's MidCap 400 Index is a market-value-weighted index. The
performance data for the MidCap 400 Index were calculated by taking the stocks
presently in the MidCap 400 Index and tracking them backwards in time as long as
there were prices reported. No attempt was made to determine what stocks "might
have been" in the MidCap 400 Index five or ten years ago had it existed.
Dividends are reinvested on a monthly basis prior to June 30, 1991, and are
reinvested daily thereafter.
The S&P MidCap 400 Index and the S&P 500 together represent approximately 85% of
the total market capitalization of stocks traded in the United States.
LIPPER BALANCED FUNDS INDEX
Equally-weighted performance indices, adjusted for capital gains distributions
and income dividends of approximately 30 of the largest funds with a primary
objective of conserving principal by maintaining at all times a balanced
portfolio of stocks and bonds. Typically, the stock/bond ratio ranges around
60%/40%.
<PAGE>
COMPARATIVE PERFORMANCE
INDEX DESCRIPTIONS
BANK SAVINGS ACCOUNT
Data sources include the U.S. League of Savings Institutions Sourcebook; average
annual yield on savings deposits in FSLIC [FDIC] insured savings institutions
for the years 1963-1987 and The Wall Street Journal for the years 1988-1994.
Source: Ibbotson Associates
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
DOW S&P/ BARRA S&P/
S&P JONES INDUSTRIAL U.S. SMALL 500 GROWTH BARRA
500 AVERAGE STOCK INDEX U. S. 500
INDEX INFLATION VALUE
- ---------------------------------------------------------------------------------------------
Dec 1928 43.61 55.38 39.69 -0.97 N/A N/A
Dec 1929 -8.42 -13.64 -51.36 0.20 N/A N/A
Dec 1930 -24.90 -30.22 -38.15 -6.03 N/A N/A
Dec 1931 -43.34 -49.02 -49.75 -9.52 N/A N/A
Dec 1932 -8.19 -16.88 -5.39 -10.30 N/A N/A
Dec 1933 53.99 73.72 142.87 0.51 N/A N/A
Dec 1934 -1.44 8.08 24.22 2.03 N/A N/A
Dec 1935 47.67 43.77 40.19 2.99 N/A N/A
Dec 1936 33.92 30.23 64.80 1.21 N/A N/A
Dec 1937 -35.03 -28.88 -58.01 3.10 N/A N/A
Dec 1938 31.12 33.16 32.80 -2.78 N/A N/A
Dec 1939 -0.41 1.31 0.35 -0.48 N/A N/A
Dec 1940 -9.78 -7.96 -5.16 0.96 N/A N/A
Dec 1941 -11.59 -9.88 -9.00 9.72 N/A N/A
Dec 1942 20.34 14.13 44.51 9.29 N/A N/A
Dec 1943 25.90 19.06 88.37 3.16 N/A N/A
Dec 1944 19.75 17.19 53.72 2.11 N/A N/A
Dec 1945 36.44 31.60 73.61 2.25 N/A N/A
Dec 1946 -8.07 -4.40 -11.63 18.16 N/A N/A
Dec 1947 5.71 7.61 0.92 9.01 N/A N/A
Dec 1948 5.50 4.27 -2.11 2.71 N/A N/A
Dec 1949 18.79 20.92 19.75 -1.80 N/A N/A
Dec 1950 31.71 26.40 38.75 5.79 N/A N/A
Dec 1951 24.02 21.77 7.80 5.87 N/A N/A
Dec 1952 18.37 14.58 3.03 0.88 N/A N/A
Dec 1953 -0.99 2.02 -6.49 0.62 N/A N/A
Dec 1954 52.62 51.25 60.58 -0.50 N/A N/A
Dec 1955 31.56 26.58 20.44 0.37 N/A N/A
Dec 1956 6.56 7.10 4.28 2.86 N/A N/A
Dec 1957 -10.78 -8.63 -14.57 3.02 N/A N/A
Dec 1958 43.36 39.31 64.89 1.76 N/A N/A
Dec 1959 11.96 20.21 16.40 1.50 N/A N/A
Dec 1960 0.47 -6.14 -3.29 1.48 N/A N/A
Dec 1961 26.89 22.60 32.09 0.67 N/A N/A
Dec 1962 -8.73 -7.43 -11.90 1.22 N/A N/A
Dec 1963 22.80 20.83 23.57 1.65 N/A N/A
Dec 1964 16.48 18.85 23.52 1.19 N/A N/A
Dec 1965 12.45 14.39 41.75 1.92 N/A N/A
Dec 1966 -10.06 -15.78 -7.01 3.35 N/A N/A
Dec 1967 23.98 19.16 83.57 3.04 N/A N/A
Dec 1968 11.06 7.93 35.97 4.72 N/A N/A
Dec 1969 -8.50 -11.78 -25.05 6.11 N/A N/A
Dec 1970 4.01 9.21 -17.43 5.49 N/A N/A
Dec 1971 14.31 9.83 16.50 3.36 N/A N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
DOW S&P/ BARRA S&P/
S&P JONES INDUSTRIAL U.S. SMALL 500 GROWTH BARRA
500 AVERAGE STOCK INDEX U. S. 500
INDEX INFLATION VALUE
- ---------------------------------------------------------------------------------------------------
Dec 1972 18.98 18.48 4.43 3.41 N/A N/A
Dec 1973 -14.66 -13.28 -30.90 8.80 N/A N/A
Dec 1974 -26.47 -23.58 -19.95 12.20 N/A N/A
Dec 1975 37.20 44.75 52.82 7.01 31.72 43.38
Dec 1976 23.84 22.82 57.38 4.81 13.84 34.93
Dec 1977 -7.18 -12.84 25.38 6.77 -11.82 -2.57
Dec 1978 6.56 2.79 23.46 9.03 6.78 6.16
Dec 1979 18.44 10.55 43.46 13.31 15.72 21.16
Dec 1980 32.42 22.17 39.88 12.40 39.40 23.59
Dec 1981 -4.91 -3.57 13.88 8.94 -9.81 0.02
Dec 1982 21.41 27.11 28.01 3.87 22.03 21.04
Dec 1983 22.51 25.97 39.67 3.80 16.24 28.89
Dec 1984 6.27 1.31 -6.67 3.95 2.33 10.52
Dec 1985 32.16 33.55 24.66 3.77 33.31 29.68
Dec 1986 18.47 27.10 6.85 1.13 14.50 21.67
Dec 1987 5.23 5.48 -9.30 4.41 6.50 3.68
Dec 1988 16.81 16.14 22.87 4.42 11.95 21.67
Dec 1989 31.49 32.19 10.18 4.65 36.40 26.13
Dec 1990 -3.17 -0.56 -21.56 6.11 0.20 -6.85
Dec 1991 30.55 24.19 44.63 3.06 38.37 22.56
Dec 1992 7.67 7.41 23.35 2.90 5.07 10.53
Dec 1993 9.99 16.94 20.98 2.75 1.68 18.60
Dec 1994 1.31 5.06 3.11 2.67 3.13 -0.64
Dec 1995 37.43 36.84 34.46 2.54 38.13 36.99
Dec 1996 23.07 28.84 17.62 3.58 23.96 21.99
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
LONG- INTERMEDIATE- MSCI LONG-
TERM U.S. TERM U.S. EAFE 6 TERM U.S. U.S.
GOV'T BONDS GOVERNMENT (Net of MONTH CORPORATE BONDS T-BILL
BONDS Taxes) CDS (30 Day)
- ------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A
Dec 1926 7.77 5.38 N/A N/A 7.37 3.27
Dec 1927 8.93 4.52 N/A N/A 7.44 3.12
Dec 1928 0.10 0.92 N/A N/A 2.84 3.56
Dec 1929 3.42 6.01 N/A N/A 3.27 4.75
Dec 1930 4.66 6.72 N/A N/A 7.98 2.41
Dec 1931 -5.31 -2.32 N/A N/A -1.85 1.07
Dec 1932 16.84 8.81 N/A N/A 10.82 0.96
Dec 1933 -0.07 1.83 N/A N/A 10.38 0.30
Dec 1934 10.03 9.00 N/A N/A 13.84 0.16
Dec 1935 4.98 7.01 N/A N/A 9.61 0.17
Dec 1936 7.52 3.06 N/A N/A 6.74 0.18
Dec 1937 0.23 1.56 N/A N/A 2.75 0.31
Dec 1938 5.53 6.23 N/A N/A 6.13 -0.02
Dec 1939 5.94 4.52 N/A N/A 3.97 0.02
Dec 1940 6.09 2.96 N/A N/A 3.39 0.00
Dec 1941 0.93 0.50 N/A N/A 2.73 0.06
Dec 1942 3.22 1.94 N/A N/A 2.60 0.27
Dec 1943 2.08 2.81 N/A N/A 2.83 0.35
Dec 1944 2.81 1.80 N/A N/A 4.73 0.33
Dec 1945 10.73 2.22 N/A N/A 4.08 0.33
Dec 1946 -0.10 1.00 N/A N/A 1.72 0.35
Dec 1947 -2.62 0.91 N/A N/A -2.34 0.50
Dec 1948 3.40 1.85 N/A N/A 4.14 0.81
Dec 1949 6.45 2.32 N/A N/A 3.31 1.10
Dec 1950 0.06 0.70 N/A N/A 2.12 1.20
Dec 1951 -3.93 0.36 N/A N/A -2.69 1.49
Dec 1952 1.16 1.63 N/A N/A 3.52 1.66
Dec 1953 3.64 3.23 N/A N/A 3.41 1.82
Dec 1954 7.19 2.68 N/A N/A 5.39 0.86
Dec 1955 -1.29 -0.65 N/A N/A 0.48 1.57
Dec 1956 -5.59 -0.42 N/A N/A -6.81 2.46
Dec 1957 7.46 7.84 N/A N/A 8.71 3.14
Dec 1958 -6.09 -1.29 N/A N/A -2.22 1.54
Dec 1959 -2.26 -0.39 N/A N/A -0.97 2.95
Dec 1960 13.78 11.76 N/A N/A 9.07 2.66
Dec 1961 0.97 1.85 N/A N/A 4.82 2.13
Dec 1962 6.89 5.56 N/A N/A 7.95 2.73
Dec 1963 1.21 1.64 N/A N/A 2.19 3.12
Dec 1964 3.51 4.04 N/A 4.18 4.77 3.54
Dec 1965 0.71 1.02 N/A 4.68 -0.46 3.93
Dec 1966 3.65 4.69 N/A 5.76 0.20 4.76
Dec 1967 -9.18 1.01 N/A 5.48 -4.95 4.21
Dec 1968 -0.26 4.54 N/A 6.44 2.57 5.21
Dec 1969 -5.07 -0.74 N/A 8.71 -8.09 6.58
Dec 1970 12.11 16.86 -11.66 7.06 18.37 6.52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C>
LONG- INTERMEDIATE- MSCI LONG-
TERM U.S. TERM U.S. EAFE 6 TERM U.S. U.S.
GOV'T BONDS GOVERNMENT (Net of MONTH CORPORATE BONDS T-BILL
BONDS Taxes) CDS (30 Day)
- ------------------------------------------------------------------------------------------------------
Dec 1971 13.23 8.72 29.59 5.36 11.01 4.39
Dec 1972 5.69 5.16 36.35 5.38 7.26 3.84
Dec 1973 -1.11 4.61 -14.92 8.60 1.14 6.93
Dec 1974 4.35 5.69 -23.16 10.20 -3.06 8.00
Dec 1975 9.20 7.83 35.39 6.51 14.64 5.80
Dec 1976 16.75 12.87 2.54 5.22 18.65 5.08
Dec 1977 -0.69 1.41 18.06 6.11 1.71 5.12
Dec 1978 -1.18 3.49 32.62 10.21 -0.07 7.18
Dec 1979 -1.23 4.09 4.75 11.90 -4.18 10.38
Dec 1980 -3.95 3.91 22.58 12.33 -2.76 11.24
Dec 1981 1.86 9.45 -2.28 15.49 -1.24 14.71
Dec 1982 40.36 29.10 -1.86 12.18 42.56 10.54
Dec 1983 0.65 7.41 23.69 9.65 6.26 8.80
Dec 1984 15.48 14.02 7.38 10.65 16.86 9.85
Dec 1985 30.97 20.33 56.16 7.82 30.09 7.72
Dec 1986 24.53 15.14 69.44 6.30 19.85 6.16
Dec 1987 -2.71 2.90 24.63 6.59 -0.27 5.47
Dec 1988 9.67 6.10 28.27 8.15 10.70 6.35
Dec 1989 18.11 13.29 10.54 8.27 16.23 8.37
Dec 1990 6.18 9.73 -23.45 7.85 6.78 7.81
Dec 1991 19.30 15.46 12.13 4.95 19.89 5.60
Dec 1992 8.05 7.19 -12.17 3.27 9.39 3.51
Dec 1993 18.24 11.24 32.56 2.88 13.19 2.90
Dec 1994 -7.77 -5.14 7.78 5.40 -5.76 3.90
Dec 1995 31.67 16.80 11.21 5.21 27.20 5.60
Dec 1996 -0.93 2.10 6.05 5.21 1.40 5.21
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
LIPPER MSCI EMERGING
RUSSELL 2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
Dec 1925 N/A N/A N/A N/A N/A N/A N/A
Dec 1926 N/A N/A N/A N/A N/A N/A N/A
Dec 1927 N/A N/A N/A N/A N/A N/A N/A
Dec 1928 N/A N/A N/A N/A N/A N/A N/A
Dec 1929 N/A N/A N/A N/A N/A N/A N/A
Dec 1930 N/A N/A N/A N/A N/A N/A 5.30
Dec 1931 N/A N/A N/A N/A N/A N/A 5.10
Dec 1932 N/A N/A N/A N/A N/A N/A 4.10
Dec 1933 N/A N/A N/A N/A N/A N/A 3.40
Dec 1934 N/A N/A N/A N/A N/A N/A 3.50
Dec 1935 N/A N/A N/A N/A N/A N/A 3.10
Dec 1936 N/A N/A N/A N/A N/A N/A 3.20
Dec 1937 N/A N/A N/A N/A N/A N/A 3.50
Dec 1938 N/A N/A N/A N/A N/A N/A 3.50
Dec 1939 N/A N/A N/A N/A N/A N/A 3.40
Dec 1940 N/A N/A N/A N/A N/A N/A 3.30
Dec 1941 N/A N/A N/A N/A N/A N/A 3.10
Dec 1942 N/A N/A N/A N/A N/A N/A 3.00
Dec 1943 N/A N/A N/A N/A N/A N/A 2.90
Dec 1944 N/A N/A N/A N/A N/A N/A 2.80
Dec 1945 N/A N/A N/A N/A N/A N/A 2.50
Dec 1946 N/A N/A N/A N/A N/A N/A 2.20
Dec 1947 N/A N/A N/A N/A N/A N/A 2.30
Dec 1948 N/A N/A N/A N/A N/A N/A 2.30
Dec 1949 N/A N/A N/A N/A N/A N/A 2.40
Dec 1950 N/A N/A N/A N/A N/A N/A 2.50
Dec 1951 N/A N/A N/A N/A N/A N/A 2.60
Dec 1952 N/A N/A N/A N/A N/A N/A 2.70
Dec 1953 N/A N/A N/A N/A N/A N/A 2.80
Dec 1954 N/A N/A N/A N/A N/A N/A 2.90
Dec 1955 N/A N/A N/A N/A N/A N/A 2.90
Dec 1956 N/A N/A N/A N/A N/A N/A 3.00
Dec 1957 N/A N/A N/A N/A N/A N/A 3.30
Dec 1958 N/A N/A N/A N/A N/A N/A 3.38
Dec 1959 N/A N/A N/A N/A N/A N/A 3.53
Dec 1960 N/A N/A N/A N/A 5.77 N/A 3.86
Dec 1961 N/A N/A N/A N/A 20.59 N/A 3.90
Dec 1962 N/A N/A N/A N/A -6.80 N/A 4.08
Dec 1963 N/A N/A N/A N/A 13.10 N/A 4.17
Dec 1964 N/A N/A N/A N/A 12.36 N/A 4.19
Dec 1965 N/A N/A N/A N/A 9.80 N/A 4.23
Dec 1966 N/A N/A N/A N/A -5.86 N/A 4.45
Dec 1967 N/A N/A N/A N/A 15.09 N/A 4.67
Dec 1968 N/A N/A N/A N/A 13.97 N/A 4.68
Dec 1969 N/A N/A N/A N/A -9.01 N/A 4.80
Dec 1970 N/A N/A N/A N/A 5.62 N/A 5.14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERFORMANCE STATISTICS - TOTAL RETURN PERCENT
<S> <C> <C> <C> <C> <C> <C> <C>
LIPPER MSCI EMERGING
RUSSELL 2000 WILSHIRE REAL S&P MIDCAP BALANCED MARKETS FREE BANK
NAREIT-EQUITY INDEX ESTATE 400 FUND INDEX SAVINGS ACCOUNT
SECURITIES INDEX INDEX
- -----------------------------------------------------------------------------------------------------------------------
Dec 1971 N/A N/A N/A N/A 13.90 N/A 5.30
Dec 1972 8.01 N/A N/A N/A 11.13 N/A 5.37
Dec 1973 -15.52 N/A N/A N/A -12.24 N/A 5.51
Dec 1974 -21.40 N/A N/A N/A -18.71 N/A 5.96
Dec 1975 19.30 N/A N/A N/A 27.10 N/A 6.21
Dec 1976 47.59 N/A N/A N/A 26.03 N/A 6.23
Dec 1977 22.42 N/A N/A N/A -0.72 N/A 6.39
Dec 1978 10.34 N/A 13.04 N/A 4.80 N/A 6.56
Dec 1979 35.86 43.09 70.81 N/A 14.67 N/A 7.29
Dec 1980 24.37 38.58 22.08 N/A 19.70 N/A 8.78
Dec 1981 6.00 2.03 7.18 N/A 1.86 N/A 10.71
Dec 1982 21.60 24.95 24.47 22.68 30.63 N/A 11.19
Dec 1983 30.64 29.13 27.61 26.10 17.44 N/A 9.71
Dec 1984 20.93 -7.30 20.64 1.18 7.46 N/A 9.92
Dec 1985 19.10 31.05 22.20 35.58 29.83 N/A 9.02
Dec 1986 19.16 5.68 20.30 16.21 18.43 N/A 7.84
Dec 1987 -3.64 -8.77 -7.86 -2.03 4.13 N/A 6.92
Dec 1988 13.49 24.89 24.18 20.87 11.18 40.43 7.20
Dec 1989 8.84 16.24 2.37 35.54 19.70 64.96 7.91
Dec 1990 -15.35 -19.51 -33.46 -5.12 0.66 10.55 7.80
Dec 1991 35.70 46.05 20.03 50.10 25.83 59.91 4.61
Dec 1992 14.59 18.41 7.36 11.91 7.46 11.40 2.89
Dec 1993 19.65 18.91 15.24 13.96 11.95 74.83 2.73
Dec 1994 3.17 -1.82 1.64 -3.57 -2.05 7.32 4.96
Dec 1995 15.27 28.44 13.65 30.94 24.89 5.21 5.24
Dec 1996 35.26 16.53 36.87 19.20 13.01 6.03 4.95
</TABLE>
Source: Lipper
<PAGE>
APPENDIX B
ADDITIONAL PIONEER INFORMATION
The Pioneer group of mutual funds was established in 1928 with the
creation of Pioneer Fund. Pioneer is one of the oldest and most experienced
money managers in the United States.
As of December 31, 1996, PMC employed a professional investment staff
of 53, with a combined average of twelve years' experience in the financial
services industry.
Total assets of all Pioneer mutual funds at December 31, 1996, were
approximately $15.8 billion representing 1,086,554 shareholder accounts, 722,661
non-retirement accounts and 363,893 retirement accounts.
<PAGE>
Part C
- ------
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements:
The financial statements of Class A, Class B and Class C shares of
the Registrant are incorporated by reference from the Annual Report
to Shareholders for the fiscal year ended December 31, 1996 (filed
with the Securities and Exchange Commission on February 28, 1997,
Accession No. 0000908996-97-000005).
The financial statements of Class A, Class B and Class C shares of
the Registrant are incorporated by reference from the Semi-Annual
Report to Shareholders for the six month period ended June 30, 1997
(filed with the Securities and Exchange Commission on August 27,
1998, Accession No. 0000908996-97-000015)
(b) Exhibits:
1.1 Agreement and Declaration of Trust*
1.2 Certificate of Trust.***
1.3 Amendment to Certificate of Trust.***
1.4 Amendment to Agreement and Declaration of Trust.***
1.5 Establishment and Designation of Classes.****
2. By-Laws.*
3. None.
4. None.
5.1. Management Contract between the Registrant and Pioneering
Management Corporation.****
5.2. Form of Subadvisory Agreement by and among the Registrant,
Pioneering Management Corporation and Boston Financial
Securities, Inc.*****
6.1. Underwriting Agreement between the Registrant and Pioneer
Funds Distributor, Inc.*
6.2. Form of Dealer Sales Agreement.**
7. None.
8. Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co.*
<PAGE>
9. Investment Company Service Agreement between the Registrant
and Pioneering Services Corporation.*
10. Opinion and Consent of Counsel.***
11. Consent of Independent Public Accountants.+
12. None.
13. Share Purchase Agreement.*
14. None.
15.1 Distribution Plan relating to Class A shares.*
15.2 Distribution Plan relating to Class B shares.****
15.3 Distribution Plan relating to Class C shares.****
16. None.
17. Financial Data Schedule.+
18. Multiple Class Plan pursuant to Rule 18f-3
dated March 26, 1998.+
19. Powers of Attorney.*, ***** and +
- --------------
+ Filed herewith.
* Filed with Post-Effective Amendment No. 4 to the Registration
Statement on April 25, 1995 and incorporated herein by
reference.
** Filed with Pre-Effective Amendment No. 1 on September 20, 1993 and
incorporated herein by reference.
*** Filed with Post-Effective Amendment No. 5 to the Registration Statement
on November 8, 1995 and incorporated herein by reference.
**** Filed with Post-Effective Amendment No. 6 to the Registration Statement
on November 14, 1995 and incorporated herein by reference.
***** Filed with Post-Effective Amendment No. 8 to the Registration Statement
and incorporated herein by reference.
****** Filed with Post-Effective Amendment No. 10 to the Registration Statement
and incorporated herein by reference.
C-2
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is controlled by the Registrant. A common control
relationship could exist from a management perspective because the Chairman and
President of the Registrant owns approximately 14% of the outstanding shares of
The Pioneer Group, Inc. (PGI), the parent company of the Registrant's investment
adviser, and certain Trustees or officers of the Registrant (i) hold similar
positions with other investment companies advised by PGI and (ii) are directors
or officers of PGI and/or its direct or indirect subsidiaries. The following
lists all U.S. and the principal non-U.S. subsidiaries of PGI and those
registered investment companies with a common or similar Board of Trustees
advised by PGI.
<TABLE>
<S> <C> <C> <C>
Owned By Percent of Shares State/Country of
Company Incorporation
Pioneering Management Corp. (PMC) PGI 100% DE
Pioneer Funds Distributor, Inc. (PFD) PMC 100% MA
Pioneer Explorer, Inc. (PEI) PMC 100% DE
Pioneer Fonds Marketing GmbH (GmbH) PFD 100% Germany
Pioneer Forest, Inc. (PFI) PGI 100% DE
CJSC "Forest-Starma" (Forest-Starma) PFI 95% Russia
Pioneer Metals and Technology, Inc. (PMT) PGI 100% DE
Pioneer Capital Corp. (PCC) PGI 100% DE
Pioneer SBIC Corp. PCC 100% MA
Pioneer Real Estate Advisors, Inc. (PREA) PGI 100% DE
Pioneer Management (Ireland) Ltd. (PMIL) PGI 100% Ireland
Pioneer Plans Corporation (PPC) PGI 100% DE
PIOGlobal Corp. (PIOGlobal) PGI 100% DE
Pioneer Investments Corp. (PIC) PGI 100% MA
Pioneer Goldfields Holdings, Inc. (PGH) PGI 100% DE
Pioneer Goldfields Ltd. (PGL) PGH 100% Guernsey
Teberebie Goldfields Ltd. (TGL) PGL 90% Ghana
Pioneer Omega, Inc. (Omega) PGI 100% DE
Pioneer First Russia, Inc. (First Russia) Omega 81.65% DE
Pioneering Services Corp. (PSC) PGI 100% MA
Pioneer International Corp. (PIntl) PGI 100% DE
Pioneer First Polish Trust Fund JSC, S.A. (First
Polish) PIntl 100% Poland
Pioneer Czech Investment Company, A.S.
(Pioneer Czech) PIntl 100% Czech Republic
</TABLE>
Registered investment companies that are parties to management contracts with
PMC:
Funds Business Trust
Pioneer International Growth Fund MA
Pioneer World Equity Fund DE
Pioneer Europe Fund MA
Pioneer Emerging Markets Fund DE
Pioneer India Fund DE
Pioneer Growth Trust MA
Pioneer Mid-Cap Fund DE
Pioneer Growth Shares DE
Pioneer Small Company Fund DE
Pioneer Fund DE
Pioneer II DE
Pioneer Real Estate Shares DE
Pioneer Short-Term Income Trust MA
Pioneer America Income Trust MA
Pioneer Bond Fund MA
Pioneer Balanced Fund DE
Pioneer Intermediate Tax-Free Fund MA
Pioneer Tax-Free Income Fund DE
Pioneer Money Market Trust DE
Pioneer Variable Contracts Trust DE
Pioneer Interest Shares DE
Pioneer Micro-Cap Fund DE
The following table list's John F. Cogan, Jr.'s positions with the
investment companies, PGI and principal direct or indirect PGI subsidiaries
referenced above and the Registrant's counsel.
Trustee/
Entity Chairman President Director Other
Pioneer mutual funds
X X X
PGL
X X X
PGI
X X X
PPC
X X
PIC
X X
PIntl
X X
PMT
X X
Omega
X X
PIOGlobal
X X
First Russia
X X
PCC
X
PSC
X
PMIL
X
PEI
X
PFI
X
PREA
X
Forest-Starma
X
PMC
X X
PFD
X X
TGL
X X
First Polish
Chairman of
Supervisory Board
GmbH Chairman of
Supervisory Board
Pioneer Czech Chairman of
Supervisory Board
Hale and Dorr LLP Partner
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Number of Record Holders
Title of Class as of December 31, 1997
-------------- -----------------------
Class A Shares of Beneficial Interest 7,894
Class B Shares of Beneficial Interest 5,184
Class C Shares of Beneficial Interest 1,105
ITEM 27. INDEMNIFICATION.
Except for the Agreement and Declaration of Trust dated March 10,
1995 establishing the Registrant as a Trust under Delaware law, there is no
contract, arrangement or statute under which any director, officer, underwriter
or affiliated person of the Registrant is insured or indemnified. The Agreement
and Declaration of Trust provides that no Trustee or officer will be indemnified
against any liability to which the Registrant would otherwise be subject by
reason of or for willful misfeasance, bad faith, gross negligence or reckless
disregard of such person's duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "Act"), may be available to directors,
officers and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment of the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense
C-5
<PAGE>
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
The business and other connections of the officers and directors of
the Registrant's investment adviser, Pioneering Management Corporation ("PMC"),
and the Registrant's investment subadviser, Boston Financial Securities, Inc.
("BFS"), are listed on the Forms ADV of PMC and BFS as currently on file with
the Commission (PMC File No. 801-8255; BFS File No. 801-11170), the text of
which are hereby incorporated by reference.
The following sections of such Forms ADV are incorporated herein by
reference:
(a) Items 1 and 2 of Part 2;
(b) Section IV, Business Background, of each Schedule D.
Item 28. Business and Other Connections of Investment Adviser
All of the information required by this item is set forth in the Form
ADV, as amended, of PMC, the Registrant's investment adviser. The following
sections of such Form ADV are incorporated herein by reference:
(a) Items 1 and 2 of Part 2; and
(b) Section IV, Business Background, of each Schedule D.
Item 29. Principal Underwriters
(a) See Item 25 above.
(b) Directors and officers of PFD:
Positions and Offices Positions and Offices with
Name with Underwriter Registrant
John F. Cogan, Jr. Director and Chairman Chairman of the Board,
President
and Trustee
Robert L. Butler Director and President None
David D. Tripple Director Executive Vice President and
Trustee
Steven M. Graziano Senior Vice President None
Stephen W. Long Senior Vice President None
Barry G. Knight Vice President None
William A. Misata Vice President None
Anne W. Patenaude Vice President None
Elizabeth B. Bennett Vice President None
Gail A. Smyth Vice President None
Constance D. Spiros Vice President None
Marcy L. Supovitz Vice President None
Mary Kleeman Vice President None
Steven R. Berke Assistant Vice President None
Steven H. Forss Assistant Vice President None
Mary Sue Hoban Assistant Vice President None
Debra A. Levine Assistant Vice President None
Junior Roy McFarland Assistant Vice President None
Marie E. Moynihan Assistant Vice President None
William H. Keough Treasurer Treasurer
Roy P. Rossi Assistant Treasurer None
Joseph P. Barri Clerk Secretary
Robert P. Nault Assistant Clerk Assistant Secretary
The principal business address of each of these individuals is 60 State Street,
Boston, Massachusetts 02109-1820.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records are maintained at the Registrant's office
at 60 State Street, Boston, Massachusetts; contact the Treasurer.
ITEM 31. MANAGEMENT SERVICES.
C-7
<PAGE>
The Registrant is not a party to any management-related service
contract, except as described in the Prospectus and Statement of Additional
Information.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) The Registrant undertakes to deliver, or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or given a
copy of the Registrant's report to shareholders furnished pursuant to and
meeting the requirements of Rule 30d-1 under the Investment Company Act of 1940
from which the specified information is incorporated by reference, unless such
person currently holds securities of the Registrant and otherwise has received a
copy of such report, in which case the Registrant shall state in the Prospectus
that it will furnish, without charge, a copy of such report on request, and the
name, address and telephone number of the person to whom such a request should
be directed.
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment No. 11 to
its Registration Statement (the "Amendment") pursuant to Rule 485(a) under the
Securities Act of 1933 and has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston and
The Commonwealth of Massachusetts, on the 27th day of January, 1998.
PIONEER REAL ESTATE SHARES
By: /s/ David D. Tripple
----------------------
David D. Tripple
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment has been signed below by the following persons in the
capacities and on the date indicated:
Title and Signature Date
Principal Executive Officer: )
)
)
John F. Cogan, Jr.* )
- ------------------------------ )
John F. Cogan, Jr., President )
)
)
Principal Financial and )
Accounting Officer: )
)
)
/s/ William H. Keough )
- ------------------------------ )
William H. Keough, Treasurer )
)
)
Trustees: )
)
Mary K. Bush* )
- ------------------------------ )
Mary K. Bush )
John F. Cogan, Jr.* )
- ------------------------------ )
John F. Cogan, Jr. )
)
)
Blake Eagle* )
- ------------------------------ )
Blake Eagle )
-1-
<PAGE>
)
)
Richard H. Egdahl, M.D.* )
- ------------------------------ )
Richard H. Egdahl, M.D. )
)
)
Margaret B. W. Graham* )
- ------------------------------ )
Margaret B. W. Graham )
)
)
Stephen G. Kasnet* )
- ------------------------------ )
Stephen G. Kasnet )
)
)
John W. Kendrick* )
- ------------------------------ )
John W. Kendrick )
)
)
Marguerite A. Piret* )
- ------------------------------ )
Marguerite A. Piret )
)
)
Fred N. Pratt, Jr.* )
- ------------------------------ )
Fred N. Pratt, Jr. )
)
)
/s/ David D. Tripple )
- ------------------------------ )
David D. Tripple )
)
)
Stephen K. West* )
- ------------------------------ )
Stephen K. West )
)
)
John Winthrop* )
- ------------------------------ )
John Winthrop )
* By: /s/ David D. Tripple January 27, 1998
------------------- -------------
David D. Tripple
Attorney-in-fact
-2-
<PAGE>
Exhibit Index
-------------
Exhibit
Number Document Title
- ------ --------------
17. Financial Data Schedule (filed as Exhibit 27)
18. Multiple Class Plan pursuant to Rule 18f-3 dated March 26, 1998.
19. Power of Attorney of Mary K. Bush
-1-
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
dated February 3, 1997 and August 1, 1997 (and to all references to our firm)
inluded in or made a part of Post-Effective Amendment No. 11 and Amendment No.
12 to Registration Statement File Nos. 33-65822 and 811-07379, respectively.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 27, 1998
PIONEER REAL ESTATE SHARES
on behalf of
PIONEER REAL ESTATE SHARES
Multiple Class Plan Pursuant to Rule 18f-3
Class A Shares, Class B Shares, Class C Shares and Class Y Shares
March , 1998
Each class of shares of Pioneer Real Estate Shares (the "Fund"), a
series of Pioneer Real Estate Shares (the "Trust"), will have the same relative
rights and privileges and be subject to the same sales charges, fees and
expenses, except as set forth below. The Board of Trustees may determine in the
future that other distribution arrangements, allocations of expenses (whether
ordinary or extraordinary) or services to be provided to a class of shares are
appropriate and amend this Plan accordingly without the approval of shareholders
of any class. Except as set forth in the Fund's prospectus, shares may be
exchanged only for shares of the same class of another Pioneer mutual fund.
Article I. Class A Shares
Class A Shares are sold at net asset value and subject to the initial
sales charge schedule or contingent deferred sales charge ("CDSC") and minimum
purchase requirements as set forth in the Fund's prospectus. Class A Shares
shall be entitled to the shareholder services set forth from time to time in the
Fund's prospectus with respect to Class A Shares. Class A Shares are subject to
fees calculated as a stated percentage of the net assets attributable to Class A
shares under the Fund's Class A Rule 12b-1 Distribution Plan as set forth in
such Distribution Plan. The Class A Shareholders have exclusive voting rights,
if any, with respect to the Class A Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class A Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the
Internal Revenue Service ("IRS") relating to the issuance of multiple classes of
shares. Class A shares shall bear the costs and expenses associated with
conducting a shareholder meeting for matters relating to Class A shares.
Article II. Class B Shares
Class B Shares are sold at net asset value per share without the
imposition of an initial sales charge. However, Class B shares redeemed within a
specified number of years of purchase will be subject to a CDSC as set forth in
the Fund's prospectus. Class B Shares are sold subject to the minimum purchase
requirements set forth in the Fund's prospectus. Class B Shares shall be
entitled to the shareholder services set forth from time to time in the Fund's
prospectus with respect to Class B Shares. Class B Shares are subject to fees
calculated as a stated percentage of the net assets attributable to Class B
shares under the Class B Rule 12b-1 Distribution Plan as set forth in such
Distribution Plan. The Class B Shareholders of the Fund have exclusive voting
rights, if any, with respect to the Fund's Class B Rule 12b-1 Distribution Plan.
Transfer agency fees are allocated to Class B Shares on a per account basis
except to the extent, if any, such an allocation would cause the Fund to fail to
satisfy any requirement necessary to obtain or rely on a private letter ruling
from the IRS relating to the issuance of multiple classes of shares. Class B
shares shall bear the costs and expenses associated with conducting a
shareholder meeting for matters relating to Class B shares.
Class B Shares will automatically convert to Class A Shares of the Fund
at the end of a specified number of years after the initial purchase date of
Class B shares, except as provided in the Fund's prospectus. Such conversion
will occur at the relative net asset value per share of each class without the
imposition of any sales charge, fee or other charge. The conversion of Class B
Shares to Class A Shares may be suspended if it is determined that the
conversion constitutes or is likely to constitute a taxable event under federal
income tax law.
The initial purchase date for Class B shares acquired through (i)
reinvestment of dividends on Class B Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class B
shares were purchased.
Article III. Class C Shares
Class C Shares are sold at net asset value per share without the
imposition of an initial sales charge. However, Class C shares redeemed within
one year of purchase will be subject to a CDSC as set forth in the Fund's
prospectus. Class C Shares are sold subject to the minimum purchase requirements
set forth in the Fund's prospectus. Class C Shares shall be entitled to the
shareholder services set forth from time to time in the Fund's prospectus with
respect to Class C Shares. Class C Shares are subject to fees calculated as a
stated percentage of the net assets attributable to Class C shares under the
Class C Rule 12b-1 Distribution Plan as set forth in such Distribution Plan. The
Class C Shareholders of the Fund have exclusive voting rights, if any, with
respect to the Fund's Class C Rule 12b-1 Distribution Plan. Transfer agency fees
are allocated to Class C Shares on a per account basis except to the extent, if
any, such an allocation would cause the Fund to fail to satisfy any requirement
necessary to obtain or rely on a private letter ruling from the IRS relating to
the issuance of multiple classes of shares. Class C shares shall bear the costs
and expenses associated with conducting a shareholder meeting for matters
relating to Class C shares.
The initial purchase date for Class C shares acquired through (i)
reinvestment of dividends on Class C Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class C
shares were purchased.
Article IV. Class Y Shares
Class Y Shares are sold at net asset value per share without the
imposition of an initial sales charge. Class Y Shares are not subject to a CDSC
upon redemption regardless of the length of the period of time such shares are
held. Class Y Shares are sold subject to the minimum purchase requirements set
forth in the Fund's prospectus. Class Y Shares shall be entitled to the
shareholder services set forth from time to time in the Fund's prospectus with
respect to Class Y Shares. Class Y Shares are not subject to fees payable under
a distribution or other plan adopted to Rule 12b-1. The Class Y Shareholders of
the Fund have exclusive voting rights, if any, with respect to the Fund's
possible future adoption of a Class Y Rule 12b-1 Distribution Plan. Transfer
agency fees are allocated to Class Y Shares on a per account basis except to the
extent, if any, such an allocation would cause the Fund to fail to satisfy any
requirement necessary to obtain or rely on a private letter ruling from the IRS
relating to the issuance of multiple classes of shares. Class Y shares shall
bear the costs and expenses associated with conducting a shareholder meeting for
matters relating to Class Y shares.
The initial purchase date for Class Y shares acquired through (i)
reinvestment of dividends on Class Y Shares or (ii) exchange from another
Pioneer mutual fund will be deemed to be the date on which the original Class Y
shares were purchased.
Article V. Approval by Board of Trustees
This Plan shall not take effect until it has been approved by the vote
of a majority (or whatever greater percentage may, from time to time, be
required under Rule 18f-3 under the Investment Company Act of 1940, as amended
(the "Act")) of (a) all of the Trustees of the Trust, on behalf of the Fund, and
(b) those of the Trustees who are not "interested persons" of the Trust, as such
term may be from time to time defined under the Act.
Article VI. Amendments
No material amendment to the Plan shall be effective unless it is
approved by the Board of Trustees in the same manner as is provided for approval
of this Plan in Article V.
PIONEER EMERGING MARKETS FUND
PIONEER EUROPE FUND
PIONEER GROWTH TRUST
PIONEER INDIA FUND
PIONEER INTERNATIONAL GROWTH FUND
PIONEER WORLD EQUITY FUND
PIONEER GROWTH SHARES
PIONEER MID-CAP FUND
PIONEER SMALL COMPANY FUND
PIONEER MICRO-CAP FUND
PIONEER BALANCED FUND
PIONEER FUND
PIONEER II
PIONEER REAL ESTATE SHARES
PIONEER AMERICA INCOME TRUST
PIONEER BOND FUND
PIONEER SHORT TERM INCOME TRUST
PIONEER INTERMEDIATE TAX-FREE FUND
PIONEER MONEY MARKET TRUST
POWER OF ATTORNEY
Dated October 7, 1997
I, the undersigned Trustee of each of the above-listed registered
investment companies (each a "Fund"), each a Delaware or a Massachusetts
business trust, do hereby constitute and appoint John F. Cogan, Jr., David D.
Tripple, and Joseph P. Barri, and each of them acting singly, to be my true,
sufficient and lawful attorneys, with full power to each of them, and each of
them acting singly, to sign for me, in my name and in my capacity as trustee,
any and all amendments to the Registration Statement on Form N-1A to be filed by
each Fund under the Investment Company Act of 1940, as amended (the "1940 Act"),
and under the Securities Act of 1933, as amended (the "1933 Act"), with respect
to the offering of its shares of beneficial interest and any and all other
documents and papers relating thereto, and generally to do all such things in my
name and on my behalf in my capacity as trustee to enable each Fund to comply
with the 1940 Act and the 1933 Act, and all requirements of the Securities and
Exchange Commission thereunder, hereby ratifying and confirming my signature as
it may be signed by said attorneys or each of them to any and all amendments to
said Registration Statement.
IN WITNESS WHEREOF, I have hereunder set my hand on this Instrument as
of the date first written above.
/s/ Mary K. Bush
Mary K. Bush, Trustee
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000908996
<NAME> PIONEER REAL ESTATE SHARES
<SERIES>
<NUMBER> 001
<NAME> PIONEER REAL ESTATE SHARES CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 151022709
<INVESTMENTS-AT-VALUE> 173925144
<RECEIVABLES> 1897186
<ASSETS-OTHER> 695
<OTHER-ITEMS-ASSETS> 29538
<TOTAL-ASSETS> 175852563
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 644896
<TOTAL-LIABILITIES> 644896
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 152984345
<SHARES-COMMON-STOCK> 6078185
<SHARES-COMMON-PRIOR> 4674628
<ACCUMULATED-NII-CURRENT> 2957
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (682070)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 22902435
<NET-ASSETS> 175207667
<DIVIDEND-INCOME> 3545896
<INTEREST-INCOME> 53185
<OTHER-INCOME> 0
<EXPENSES-NET> (1417082)
<NET-INVESTMENT-INCOME> 2181999
<REALIZED-GAINS-CURRENT> (702925)
<APPREC-INCREASE-CURRENT> 6532197
<NET-CHANGE-FROM-OPS> 8011271
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1357851)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2107759
<NUMBER-OF-SHARES-REDEEMED> 776676
<SHARES-REINVESTED> 72474
<NET-CHANGE-IN-ASSETS> 69557057
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 20855
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 729868
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1440307
<AVERAGE-NET-ASSETS> 87971426
<PER-SHARE-NAV-BEGIN> 15.52
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 0.59
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.12
<EXPENSE-RATIO> 1.67
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000908996
<NAME> PIONEER REAL ESTATE SHARES
<SERIES>
<NUMBER> 002
<NAME> PIONEER REAL ESTATE SHARES CLASS B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<INVESTMENTS-AT-COST> 151022709
<INVESTMENTS-AT-VALUE> 173925144
<RECEIVABLES> 1897186
<ASSETS-OTHER> 695
<OTHER-ITEMS-ASSETS> 29538
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