[PIONEER LOGO]
Pioneer
Real Estate
Shares
ANNUAL REPORT 12/31/98
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 7
Schedule of Investments 10
Financial Statements 12
Notes to Financial Statements 20
Report of Independent Public Accountants 25
Trustees, Officers and Service Providers 26
Retirement Plans from Pioneer 27
Programs and Services for Pioneer Shareowners 28
</TABLE>
<PAGE>
Pioneer Real Estate Shares
LETTER FROM THE CHAIRMAN 12/31/98
D e a r S h a r e o w n e r,
- --------------------------------------------------------------------------------
I am pleased to introduce this annual report for Pioneer Real Estate Shares,
covering the 12 months ended December 31, 1998. On behalf of your investment
team, I would like to thank you for this opportunity and your interest in
Pioneer.
No single year in recent memory better illustrated both the potential rewards
and the risks that accompany investing in the stock market. The dramatic market
fluctuations in the United States put equity investors to the test every
quarter during the period. So did the divergence in prices of large company
stocks and those of real estate investment trusts and small company stocks.
Maintaining an investment strategy could not have been easy for individual
investors who saw a little of everything in the last 12 months.
Discipline, clear thinking and patience were required for investing in 1998.
Discipline to recall the risks inherent in any investment when the markets were
up. Clear thinking when prices were down, to keep emotion at bay and to
remember the potential rewards of investing in well-run companies. Finally,
patience to invest for the long term and to understand that a single year is
not a definitive time period for success or failure.
For any individual, these traits are difficult to maintain. For Pioneer, they
define the work we do everyday. Seventy years of experience, coupled with
in-depth research capabilities, gives us the knowledge to stay disciplined,
patient and thoughtful for you and your money. As the 1990s close, and we enter
a new decade and a new era, these investing fundamentals should accompany all
investors into the future.
I encourage you to read on to learn more about Pioneer Real Estate Shares. If
you have questions, please contact your investment professional, or Pioneer at
1-800-225-6292.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.
Chairman and President
1
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO SUMMARY 12/31/98
P o r t f o l i o D i v e r s i f i c a t i o n
- --------------------------------------------------------------------------------
(As a percentage of total investment portfolio)
[BEGIN DESCRIPTION OF PIE CHART]
Real Estate Investment Trust Common Stocks 86%
Real-Estate Related Common Stocks 14%
[END DESCRIPTION OF PIE CHART]
S e c t o r A l l o c a t i o n
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
[BEGIN DESCRIPTION OF PIE CHART]
Office/Industrial 29%
Apartments 15%
Hotels 15%
Diversified 14%
Retail 11%
Storage 5%
Triple-Net 5%
Manufactured Homes 3%
Other 3%
[END DESCRIPTION OF PIE CHART]
1 0 L a r g e s t H o l d i n g s
- --------------------------------------------------------------------------------
(As a percentage of equity holdings)
<TABLE>
<S> <C> <C> <C>
1. Cousins Properties, Inc. 4.53% 6. Simon Property Group, Inc. 4.10%
2. Charles E. Smith 4.39 7. Bedford Property Investors, 4.05
Residential Realty, Inc. Inc.
3. Prentiss Properties Trust 4.37 8. Equity Residential Property 4.03
Trust
4. Catellus Development 4.12 9. The Macerich Co. 4.03
Corp.
5. Apartment Investment & 4.12 10. Equity Office Properties 4.02
Management Co. Trust
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/98 CLASS A SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 12/31/98 12/31/97
$13.46 $17.81
Income Short-Term Long-Term
Distributions per Share
(12/31/97 - 12/31/98)++ Dividends Capital Gains Capital Gains
$0.505 -- $0.274
</TABLE>
++ The Fund also paid non-taxable distributions of $0.081 per share.
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Real Estate Shares at public offering price, compared to the growth
of the Standard & Poor's (S&P) 500 Index and the Wilshire Real Estate
Securities Index.
<TABLE>
Average Annual Total Returns
(As of December 31, 1998)
Net Asset Public Offering
Period Value Price*
<S> <C> <C>
Life-of-Fund 6.94% 5.73%
(10/25/93)
5 Years 8.05 6.78
1 Year -19.77 -24.40
</TABLE>
* Reflects deduction of the maximum
5.75% sales charge at the beginning of
the period and assumes reinvestment
of distributions at net asset value.
[BEGIN DESCRIPTION CLASS A MOUNTAIN CHART]
Growth of $10,000+
Pioneer Real Standard & Poor's Wilshire Real Estate
Estate Shares* 500 Index Securities Index
10/93 9425 10000 10000
9184 10025 9553
9409 9686 9884
9206 10156 9709
12/94 9558 12206 10170
10321 13967 11034
10858 15374 12046
12/96 14083 17168 15103
14839 20704 16088
16863 22892 18093
15773 26947 17133
12/98 13528 29468 14904
[END DESCRIPTION CLASS A MOUNTAIN CHART]
+ Index comparison begins 10/31/93. The S&P 500 Index is an unmanaged measure of
500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the over-the-counter market. The Wilshire Real Estate
Securities Index is a market-capitalization weighted measure of the
performance of 119 real estate securities. The Index is 94.1% REITs (equity
and hybrid) and 5.9% real estate operating companies, and its returns are
calculated monthly. Index returns assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees or expenses. You cannot invest directly
in the Indexes.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
3
<PAGE>
Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/98 CLASS B SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 12/31/98 12/31/97
$13.38 $17.70
Income Short-Term Long-Term
Distributions per Share
(12/31/97 - 12/31/98)++ Dividends Capital Gains Capital Gains
$0.416 -- $0.274
</TABLE>
++ The Fund also paid non-taxable distributions of $0.0486 per share.
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Real Estate Shares, compared to the growth of the Standard & Poor's
(S&P) 500 Index and the Wilshire Real Estate Securities Index.
<TABLE>
Average Annual Total Returns
(As of December 31, 1998)
Period If Held If Redeemed*
<S> <C> <C>
Life-of-Fund 8.71% 7.83%
(1/31/96)
1 Year -20.36 -23.39
</TABLE>
* Reflects deduction of the maximum
applicable contingent deferred sales
charge (CDSC) at the end of the period
and assumes reinvestment of
distribu-tions. The maximum CDSC of 4%
declines over six years.
[BEGIN DESCRIPTION CLASS B MOUNTAIN CHART]
Growth of $10,000
Pioneer Real Standard & Poor's Wilshire Real Estate
Estate Shares* 500 Index Securities Index
1/96 10000 10000 10000
10108 10190 10281
10427 10646 10768
11555 10974 11404
12/96 13481 11888 13501
13628 12208 13749
14156 14326 14381
16260 15408 16198
12/97 16023 15851 16174
15872 18061 16052
14945 18659 15315
12844 16806 13484
12/98 12461 20405 13323
[END DESCRIPTION CLASS B MOUNTAIN CHART]
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange and the
Over-the-Counter market. The Wilshire Real Estate Securities Index is a
market-capitalization weighted measure of the performance of 119 real estate
securities. The Index is 94.1% REITs (equity and hybrid) and 5.9% real estate
operating companies, and its returns are calculated monthly. Index returns
assume reinvestment of dividends and, unlike Fund returns, do not reflect any
fees or expenses. You cannot invest directly in the Indexes.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
4
<PAGE>
Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/98 CLASS C SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 12/31/98 12/31/97
$13.37 $17.70
Income Short-Term Long-Term
Distributions per Share
(12/31/97 - 12/31/98)++ Dividends Capital Gains Capital Gains
$0.422 -- $0.274
</TABLE>
++ The Fund also paid non-taxable distributions of $0.0493 per share.
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Real Estate Shares, compared to the growth of the Standard & Poor's
(S&P) 500 Index and the Wilshire Real Estate Securities Index.
<TABLE>
Average Annual Total Returns
(As of December 31, 1998)
Period If Held If Redeemed*
<S> <C> <C>
Life-of-Fund 8.69% 8.69%
(1/31/96)
1 Year -20.38 -20.38
</TABLE>
* Assumes reinvestment of distributions.
The 1% contingent deferred sales
charge (CDSC) applies to redemptions
made within one year of purchase.
[BEGIN DESCRIPTION CLASS C MOUNTAIN CHART]
Growth of $10,000
Pioneer Real Standard & Poor's Wilshire Real Estate
Estate Shares* 500 Index Securities Index
1/96 10000 10000 10000
10108 10190 10281
10418 10646 10768
11545 10974 11404
12/96 13476 11888 13501
13613 12208 13749
14150 14336 14381
16252 15408 16198
12/97 16019 15851 16174
15867 18061 16052
14941 18659 15315
12840 16806 13484
12/98 12754 20405 13323
[END DESCRIPTION CLASS C MOUNTAIN CHART]
The S&P 500 Index is an unmanaged measure of 500 widely held common stocks
listed on the New York Stock Exchange, American Stock Exchange and the
over-the-counter market. The Wilshire Real Estate Securities Index is a
market-capitalization weighted measure of the performance of 119 real estate
securities. The Index is 94.1% REITs (equity and hybrid) and 5.9% real estate
operating companies, and its returns are calculated monthly. Index returns
assume reinvestment of dividends and, unlike Fund returns, do not reflect any
fees or expenses. You cannot invest directly in the Indexes.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
5
<PAGE>
Pioneer Real Estate Shares
PERFORMANCE UPDATE 12/31/98 CLASS Y SHARES
S h a r e P r i c e s a n d D i s t r i b u t i o n s
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 12/31/98 4/9/98
$13.46 $17.52
Income Short-Term Long-Term
Distributions per Share
(4/9/98 - 12/31/98)++ Dividends Capital Gains Capital Gains
$0.443 -- $0.274
</TABLE>
++ The Fund also paid non-taxable distributions of $0.0628 per share.
I n v e s t m e n t R e t u r n s
- --------------------------------------------------------------------------------
The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Real Estate Shares, compared to the growth of the Standard & Poor's
(S&P) 500 Index and the Wilshire Real Estate Securities Index.
<TABLE>
<CAPTION>
Cumulative Total Returns
(As of December 31, 1998)
Period If Held If Redeemed
<S> <C> <C>
Life-of-Fund -18.78% -18.78%
(4/9/98)
</TABLE>
* Assumes reinvestment of distributions.
[BEGIN DESCRIPTION CLASS C MOUNTAIN CHART]
Growth of $10,000
Pioneer Real Standard & Poor's Wilshire Real Estate
Estate Shares* 500 Index Securities Index
10000 10000 10000
9929 9828 9904
9720 10227 9852
9121 10119 9166
8011 8656 8214
8383 9211 8673
8227 9959 8555
8299 10563 8715
8361 11184 8570
[END DESCRIPTION CLASS C MOUNTAIN CHART]
+ Index comparison begins 4/30/98. The S&P 500 Index is an unmanaged measure of
500 widely held common stocks listed on the New York Stock Exchange, American
Stock Exchange and the over-the-counter market. The Wilshire Real Estate
Securities Index is a market-capitalization weighted measure of the
performance of 119 real estate securities. The Index is 94.1% REITs (equity
and hybrid) and 5.9% real estate operating companies, and its returns are
calculated monthly. Index returns assume reinvestment of dividends and, unlike
Fund returns, do not reflect any fees or expenses. You cannot invest directly
in the Indexes.
Past performance does not guarantee future results. Return and share price
fluctuate, and your shares, when redeemed, may be worth more or less than
their original cost.
6
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO MANAGEMENT DISCUSSION 12/31/98
Fiscal 1998 was a year filled with challenges for Pioneer Real Estate Shares.
Many factors influenced the performance of the Fund's holdings, as well as the
broad real estate market in which it invests. In the report that follows,
Portfolio Manager Robert Benson provides a detailed review of the strategies
the Fund's management team has employed, and their outlook for the months
ahead.
Q: How did the Fund perform for fiscal 1998?
A: For the 12 months ended December 31, 1998, the Fund's total return was
approximately -20.00% at net asset value. For the same period, the Wilshire
Real Estate Securities Index returned -17.43% and the 100 real estate
related funds tracked by Lipper Inc. posted an average return of -15.39%.
(Lipper is an independent research organization that tracks the performance
of mutual funds.) Throughout the period, the Fund's income stream remained
highly attractive, with investors in Class A Shares receiving income
dividends totaling $.505.
Q: Why did real estate investment trusts (REITs) and the Fund have such a
difficult time during 1998?
A: There is no simple answer to that question. Clearly, investor sentiment
played a leading role. It drove the prices of bonds and stocks, the REIT
sector, and in turn, the Fund. Unpredictability, the hallmark of investor
sentiment, made calendar 1998 not only a challenging year for most
securities markets but a particularly arduous one for REIT stocks.
In addition to the general fear of risk from investors, the REIT sector,
had some fear-provoking problems of its own and remained at depressed
levels through November, although December brought an uptick in
performance.
Some of the more influential factors that affected REITs included: The
introduction and subsequent passage of legislation that eliminated some of
the tax-advantages of a select group of REITs known as "paired-share"
REITs, which placed considerable downward pressure on the hotel and office
sectors for much of the period. Also earnings growth rates in the real
estate industry slowed. Many momentum investors - those who chase the
fastest growing sectors of the stock
7
<PAGE>
Pioneer Real Estate Shares
PORTFOLIO MANAGEMENT DISCUSSION 12/31/98 (continued)
market - feared that the bulk of REITs' growth was decelerating and exited
the sector en masse. This, in turn, pushed securities prices down further.
The global credit crunch this past summer, along with words of caution from
the Federal Reserve Board about bank lending strategies to REITs, cast
further doubt over the group. And then in the fall, the tightening of
credit and an unprecedented halt in trading within the commercial
mortgage-backed securities market combined to complete the sector's rout.
Q: What defensive actions did you take to address the volatility?
A: In light of the continued strong business results from the real estate
industry and many of the companies in our portfolio, we felt that many
investors over emphasized the impact of the previously mentioned problems.
Our investment experience has taught us that often the best strategy during
times of excessive volatility is holding a steady course. Because it seemed
that investor sentiment was driving the sector's performance - and not the
underlying fundamentals of the industry - we kept the turnover of the
Fund's portfolio extremely low. We held on to the REITs that our research
showed were not only generating attractive earnings growth today but also
exhibited the potential to continue doing so in the future.
Q: Did any holdings significantly influence the Fund's performance?
A: Yes. Starwood Hotels & Resorts, Patriot American Hospitality, and AMRESCO,
were three of the Fund's more prominent holdings that detracted
substantially from performance. The general pullback in hotel REITs hobbled
both Starwood and Patriot. Then, Patriot experienced significant financial
problems that further added to its difficulties. AMRESCO got hard hit by
the collapse of the commercial mortgage market. Starwood and AMRESCO have
since bounced back from their lows and Patriot is making concerted efforts
to address its financial situation. Simon Property Group, Macerich, and
Developers Diversified Realty were three of the Fund's retail REITs that
produced strong performance relative to the market. Cousins Properties
posted notable performance, returning more than 15% in 1998.
8
<PAGE>
Pioneer Real Estate Shares
Q: Were the underlying fundamentals of the real estate industry itself as weak
as REIT market performance suggested?
A: In general, no. Our research indicates that the industry's underlying
fundamentals remain sound and that growth opportunities still exist. There
are pockets of overbuilding and, yes earnings growth rates and the rapid
pace of property acquisitions have slowed. But funds from operations - a
yardstick for earnings growth - remained on average in the double digits.
For 1999, we anticipate growth rates to be in the 10% range, which may well
exceed the earnings growth of many companies in the S&P 500.
Growth opportunities, although not as numerous as in previous years, have
not come to a standstill either. For example, despite higher property
values and tighter lending standards, acquisitions continue to fuel
external growth. Higher rents also point toward internal growth. Although
the possibility of a recession has been a nagging concern for some
investors, our research suggests the industry is not headed that way.
Q: What is your outlook for 1999?
A: Because our investment approach focuses on the underlying fundamentals of
the real estate industry - which are indeed quite positive - we enter
fiscal 1999 looking for a rebound. The fact that valuations are extremely
attractive now and a considerable number of REITs are well positioned to
continue exceeding earnings expectations should also help renew investor
interest. Furthermore, the relatively high real income generated by REITs
should once again attract investors, particularly in light of today's low
interest rate environment. Although 1998 proved there is no predicting
investor behavior, we believe once investors recognize the industry's
fundamental growth possibilities and steady income potential, share prices
should regain their footing.
9
<PAGE>
Pioneer Real Estate Shares
SCHEDULE OF INVESTMENTS 12/31/98
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 100%
Real Estate Investment Trusts - 85.9%
150,000 Apartment Investment & Management Co. $ 5,578,125
325,000 Bedford Property Investors, Inc. 5,484,375
300,000 Brandywine Realty Trust 5,362,500
115,000 Camden Property Trust 2,990,000
185,000 Charles E. Smith Residential Realty, Inc. 5,943,125
190,000 Cousins Properties, Inc. 6,127,500
300,000 Developers Diversified Realty Corp. 5,325,000
226,882 Equity Office Properties Trust 5,445,168
135,000 Equity Residential Property Trust 5,459,063
184,800 FelCor Suite Hotels, Inc. 4,261,950
150,000 Franchise Finance Corporation of America 3,600,000
260,000 Glenborough Realty Trust 5,297,500
120,000 Highwoods Properties, Inc. 3,090,000
120,000 Home Properties of New York, Inc. 3,090,000
212,800 The Macerich Co. 5,453,000
175,000 Mack-Cali Realty Corp. 5,403,125
180,000 National Golf Properties, Inc. 5,208,750
227,300 Pacific Gulf Properties, Inc. 4,560,206
352,804 Patriot American Hospitality, Inc. 2,116,824
265,000 Prentiss Properties Trust 5,912,812
200,000 Public Storage, Inc. 5,412,500
195,000 Simon Property Group, Inc. 5,557,500
135,000 Spieker Properties, Inc. 4,674,375
180,000 Starwood Hotels & Resorts Trust 4,083,750
35,000 Storage Trust Realty 818,125
------------
Total Real Estate Investment Trusts $116,255,273
------------
Real Estate Services - 10.5%
235,000 AMRESCO, Inc.* $ 2,056,250
390,000 Catellus Development Corp.* 5,581,875
83,400 CB Richard Ellis Services 1,511,625
251,100 Trizec Hahn Corp. 5,147,550
------------
Total Real Estate Services $ 14,297,300
------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Real Estate Shares
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Hotels & Restaurants - 3.6%
350,000 Host Marriott Corp.* $ 4,834,375
------------
Total Hotel & Restaurants $ 4,834,375
------------
6,229,086 TOTAL INVESTMENT IN SECURITIES
(Cost $143,907,577) (a) $135,386,948
------------
</TABLE>
* Non-income producing security.
(a) At December 31, 1998, the net unrealized loss on investments based on cost
for federal income tax purposes of $143,907,577 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 8,693,736
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (17,214,365)
------------
Net unrealized loss $ (8,520,629)
------------
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for
the year ended December 31, 1998 aggregated $20,859,348 and $54,376,558,
respectively.
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Real Estate Shares
BALANCE SHEET 12/31/98
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (cost $143,907,577) $135,386,948
Receivables -
Investment securities sold 1,538,204
Fund shares sold 539,969
Dividends and interest 1,487,635
Other 1,270
------------
Total assets $138,954,026
------------
LIABILITIES:
Payables -
Fund shares repurchased $ 773,958
Due to bank 724,978
Due to affiliates 252,478
Accrued expenses 80,054
------------
Total liabilities $ 1,831,468
------------
NET ASSETS:
Paid-in capital $145,293,288
Accumulated undistributed net investment income 349,899
Net unrealized loss on investments (8,520,629)
------------
Total net assets $137,122,558
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $67,618,836/5,022,720 shares) $ 13.46
------------
Class B (based on $55,406,812/4,139,938 shares) $ 13.38
------------
Class C (based on $12,735,057/952,189 shares) $ 13.37
------------
Class Y (based on $1,361,853/101,173 shares) $ 13.46
------------
MAXIMUM OFFERING PRICE:
Class A $ 14.28
------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Real Estate Shares
STATEMENT OF OPERATIONS
For the Year Ended 12/31/98
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends (net of foreign taxes withheld of $12,650) $9,394,474
Interest 39,476
----------
Total investment income $ 9,433,950
------------
EXPENSES:
Management fees $1,848,200
Transfer agent fees
Class A 231,633
Class B 187,806
Class C 41,567
Class Y 205
Distribution fees
Class A 232,361
Class B 726,094
Class C 190,315
Accounting 49,214
Custodian fees 46,038
Registration fees 120,815
Professional fees 52,064
Printing 33,248
Fees and expenses of nonaffiliated trustees 11,858
Organization costs 19,466
Miscellaneous 17,920
----------
Total expenses $ 3,808,804
Less fees paid indirectly (20,548)
------------
Net expenses $ 3,788,256
------------
Net investment income $ 5,645,694
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 2,677,399
Change in net unrealized gain on investments (50,906,919)
------------
Net loss on investments $(48,229,520)
------------
Net decrease in net assets resulting from operations $(42,583,826)
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Real Estate Shares
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended 12/31/98 and 12/31/97
<TABLE>
<CAPTION>
Year Ended Year Ended
FROM OPERATIONS: 12/31/98 12/31/97
<S> <C> <C>
Net investment income $ 5,645,694 $ 3,900,994
Net realized gain on investments 2,677,399 2,506,156
Change in net unrealized gain on investments (50,906,919) 26,016,052
------------ -------------
Net increase (decrease) in net assets resulting from
operations $(42,583,826) $ 32,423,202
------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.51 and $0.36 per share, respectively) $ (2,854,293) $ (2,173,335)
Class B ($0.42 and $0.29 per share, respectively) (1,878,714) (1,105,424)
Class C ($0.42 and $0.30 per share, respectively) (480,177) (341,360)
Class Y ($0.44 and $0.00 per share, respectively) (46,919) -
Net realized gain:
Class A ($0.27 and $0.23 per share, respectively) (1,358,104) (1,455,824)
Class B ($0.27 and $0.23 per share, respectively) (1,129,556) (1,022,676)
Class C ($0.27 and $0.23 per share, respectively) (261,168) (304,298)
Class Y ($0.27 and $0.00 per share, respectively) (26,854) -
Tax return of capital:
Class A ($0.08 and $0.14 per share, respectively) (458,088) (822,854)
Class B ($0.05 and $0.11 per share, respectively) (217,538) (410,540)
Class C ($0.05 and $0.11 per share, respectively) (55,170) (126,400)
------------ -------------
Class Y ($0.06 and $0.00 per share, respectively) (6,641) -
Total distributions to shareholders $ (8,773,222) $ (7,762,711)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 42,387,508 $125,997,468
Reinvestment of distributions 6,654,714 5,943,982
Cost of shares repurchased (83,257,141) (39,558,026)
------------ -------------
Net increase (decrease) in net assets resulting from
fund share transactions $(34,214,919) $ 92,383,424
------------ -------------
Net increase (decrease) in net assets $(85,571,967) $117,043,915
NET ASSETS:
Beginning of year 222,694,525 105,650,610
------------ -------------
End of year (including accumulated undistributed net
investment income of $349,899 and $134,364,
respectively) $137,122,558 $222,694,525
------------ -------------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Real Estate Shares
<TABLE>
<CAPTION>
CLASS A '98 Shares '98 Amount '97 Shares '97 Amount
<S> <C> <C> <C> <C>
Shares sold 1,181,291 $ 19,016,383 3,141,703 $50,938,999
Reinvestment of distributions 279,733 4,023,577 229,099 3,867,046
Less shares repurchased (2,940,201) (45,729,358) (1,543,533) (25,309,824)
---------- ------------ ---------- -----------
Net increase (decrease) (1,479,177) $(22,689,398) 1,827,269 $29,496,221
---------- ------------ ---------- -----------
CLASS B
Shares sold 1,004,622 $ 16,386,086 3,587,708 $58,161,195
Reinvestment of distributions 144,220 2,032,031 95,689 1,611,879
Less shares repurchased (1,680,658) (25,450,815) (718,590) (11,817,807)
---------- ------------ ---------- -----------
Net increase (decrease) (531,816) $ (7,032,698) 2,964,807 $47,955,267
---------- ------------ ---------- -----------
CLASS C
Shares sold 308,128 $ 4,957,748 1,054,335 $16,897,274
Reinvestment of distributions 36,667 518,692 27,620 465,057
Less shares repurchased (761,505) (11,790,559) (146,353) (2,430,395)
---------- ------------ ---------- -----------
Net increase (decrease) (416,710) $ (6,314,119) 935,602 $14,931,936
---------- ------------ ---------- -----------
CLASS Y*
Shares sold 116,914 $ 2,027,291
Reinvestment of distributions 5,786 80,414
Less shares repurchased (21,527) (286,409)
---------- ------------
Net increase 101,173 $ 1,821,296
---------- ------------
</TABLE>
*Class Y shares were first publicly offered on April 9, 1998.
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
CLASS A 12/31/98 12/31/97 12/31/96
<S> <C> <C> <C>
Net asset value, beginning of period $ 17.81 $ 15.52 $ 12.02
--------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.56 $ 0.41 $ 0.42
Net realized and unrealized gain (loss) on investments ( 4.05) 2.61 3.82
--------- ------- -------
Net increase (decrease) from investment operations $ (3.49) $ 3.02 $ 4.24
Distributions to shareholders:
Net investment income ( 0.51) ( 0.36) ( 0.40)
In excess of net investment income - - -
Net realized gain ( 0.27) ( 0.23) ( 0.34)
Tax return of capital ( 0.08) ( 0.14) -
--------- ------- -------
Net increase (decrease) in net asset value $ (4.35) $ 2.29 $ 3.50
--------- ------- -------
Net asset value, end of period $ 13.46 $ 17.81 $ 15.52
--------- ------- -------
Total return* (19.77)% 19.74% 36.45%
Ratio of net expenses to average net assets 1.69%+ 1.65%+ 1.71%+
Ratio of net investment income to average net assets 3.29%+ 2.51%+ 3.52%+
Portfolio turnover rate 11% 28% 47%
Net assets, end of period (in thousands) $ 67,619 $115,772 $72,572
Ratios assuming no waiver of management fees and assumption
of expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.69% 1.65% 2.09%
Net investment income 3.29% 2.51% 3.14%
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.67% 1.63% 1.69%
Net investment income 3.31% 2.53% 3.54%
FINANCIAL HIGHLIGHTS 12/31/98
Pioneer Real Estate Shares
<CAPTION>
Six Months
Year Ended Ended 10/25/93 to
CLASS A 12/31/95 12/31/94(a) 6/30/94
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.38 $ 12.02 $ 12.50
------- -------- ---------
Increase (decrease) from investment operations:
Net investment income $ 0.32 $ 0.21 $ 0.27
Net realized and unrealized gain (loss) on investments 1.01 (0.48) (0.45)
------- --------- ---------
Net increase (decrease) from investment operations $ 1.33 $ (0.27) $ (0.18)
Distributions to shareholders:
Net investment income (0.33) (0.20) (0.27)
In excess of net investment income (0.02) - -
Net realized gain - (0.02) -
Tax return of capital (0.34) (0.15) (0.03)
------- --------- ---------
Net increase (decrease) in net asset value $ 0.64 $ (0.64) $ (0.48)
------- --------- ---------
Net asset value, end of period $ 12.02 $ 11.38 $ 12.02
------- --------- ---------
Total return* 12.11% (2.16)% (1.47)%
Ratio of net expenses to average net assets 1.77%+ 1.75%** 1.71%**
Ratio of net investment income to average net assets 2.73%+ 3.72%** 3.73%**
Portfolio turnover rate 10% 17%** 24%**
Net assets, end of period (in thousands) $27,491 $ 28,068 $ 29,584
Ratios assuming no waiver of management fees and assumption
of expenses by PIM and no reduction for fees paid indirectly:
Net expenses 2.59% 2.27%** 2.15%**
Net investment income 1.91% 3.20%** 3.28%**
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.75% - -
Net investment income 2.75% - -
</TABLE>
(a) Subsequent to December 31, 1994, the Fund's year end was changed to
December 31.
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended 1/31/96 to
12/31/98 12/31/97 12/31/96
<S> <C> <C> <C>
CLASS B
Net asset value, beginning of period $ 17.70 $ 15.45 $ 12.09
-------- ------- -------
Increase (decrease) from investment
operations:
Net investment income $ 0.45 $ 0.28 $ 0.35
Net realized and unrealized gain (loss)
on investments (4.03) 2.60 3.73
-------- ------- -------
Net increase (decrease) from
investment operations $ (3.58) $ 2.88 $ 4.08
Distributions to shareholders:
Net investment income (0.42) (0.29) (0.35)
In excess of net investment income - - (0.03)
Net realized gain (0.27) (0.23) (0.34)
Tax return of capital (0.05) (0.11) -
-------- ------- --------
Net increase (decrease) in net asset value $ (4.32) $ 2.25 $ 3.36
-------- ------- --------
Net asset value, end of period $ 13.38 $ 17.70 $ 15.45
-------- ------- --------
Total return* (20.36)% 18.85% 34.81%
Ratio of net expenses to average net assets 2.45%+ 2.39%+ 2.33%**+
Ratio of net investment income to average
net assets 2.77%+ 1.82%+ 3.73%**+
Portfolio turnover rate 11% 28% 47%
Net assets, end of period (in thousands) $ 55,407 $82,695 $26,379
Ratios assuming no waiver of management
fees by PIM and no reduction for fees paid
indirectly:
Net expenses 2.45% 2.39% 2.45%**
Net investment income 2.77% 1.82% 3.61%**
Ratios assuming waiver of management fees by
PIM and reduction for fees paid indirectly:
Net expenses 2.44% 2.36% 2.30%**
Net investment income 2.78% 1.85% 3.76%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
Year Ended Year Ended 1/31/96 to
12/31/98 12/31/97 12/31/96
CLASS C
<S> <C> <C> <C>
Net asset value, beginning of period $ 17.70 $ 15.46 $ 12.09
-------- ------- -------
Increase (decrease) from investment
operations:
Net investment income $ 0.45 $ 0.29 $ 0.34
Net realized and unrealized gain (loss)
on investments (4.04) 2.59 3.73
-------- ------- -------
Net increase (decrease) from
investment operations $ (3.59) $ 2.88 $ 4.07
Distributions to shareholders:
Net investment income (0.42) (0.30) (0.34)
In excess of net investment income - - (0.02)
Net realized gain (0.27) (0.23) (0.34)
Tax return of capital (0.05) (0.11) -
-------- ------- --------
Net increase (decrease) in net asset value $ (4.33) $ 2.24 $ 3.37
-------- ------- --------
Net asset value, end of period $ 13.37 $ 17.70 $ 15.46
-------- ------- --------
Total return* (20.38)% 18.86% 34.76%
Ratio of net expenses to average net assets 2.41%+ 2.35%+ 2.35%**+
Ratio of net investment income to average
net assets 2.67%+ 1.88%+ 3.66%**+
Portfolio turnover rate 11% 28% 47%
Net assets, end of period (in thousands) $ 12,735 $24,227 $ 6,699
Ratios assuming no waiver of management
fees by PIM and no reduction for fees paid
indirectly:
Net expenses 2.41% 2.35% 2.48%**
Net investment income 2.67% 1.88% 3.53%**
Ratios assuming waiver of management fees by
PIM and reduction for fees paid indirectly:
Net expenses 2.40% 2.32% 2.32%**
Net investment income 2.68% 1.91% 3.69%**
</TABLE>
* Assumes initial investment at net asset value at the beginning of each
period, reinvestment of distributions, the complete redemption of the
investment at net asset value at the end of each period, and no sales
charges. Total return would be reduced if sales charges were taken into
account.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Real Estate Shares
FINANCIAL HIGHLIGHTS 12/31/98
<TABLE>
<CAPTION>
4/9/98 to
12/31/98
<S> <C>
CLASS Y (a)
Net asset value, beginning of period $ 17.52
--------
Increase (decrease) from investment operations:
Net investment income $ 0.47
Net realized and unrealized loss on investments (3.76)
---------
Net decrease from investment operations $ (3.29)
Distributions to shareholders:
Net investment income (0.44)
Net realized gain (0.27)
---------
Tax return of capital (0.06)
---------
Net decrease in net asset value $ (4.06)
---------
Net asset value, end of period $ 13.46
---------
Total return* (18.78)%
Ratio of net expenses to average net assets 1.21%**+
Ratio of net investment income to average net assets 4.31%**+
Portfolio turnover rate 11%
Net assets, end of period (in thousands) $ 1,362
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.21%**
Net investment income 4.31%**
</TABLE>
(a) Class Y shares were first publicly offered on April 9, 1998.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of distributions, and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/98
1. Organization and Significant Accounting Policies
Pioneer Real Estate Shares (the Fund) is a Delaware business trust registered
under the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The investment objective of the Fund is to seek
long-term growth of capital. Current income is a secondary objective.
The Fund offers four classes of shares - Class A, Class B, Class C, and Class Y
shares. Class Y shares were first publicly offered on April 9, 1998. Each class
of shares represents an interest in the same portfolio of investments of the
Fund and have equal rights to voting, redemptions, dividends and liquidation,
except that the level of transfer agent and distribution fees may differ among
classes. Class A, Class B and Class C shareholders have exclusive voting rights
with respect to the distribution plan for each class. There is no distribution
plan for Class Y shares.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to,
among other things, make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts
of revenues and expenses during the reporting periods. Actual results could
differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund, which are in conformity
with those generally accepted in the investment company industry.
A. Security Valuation
Security transactions are recorded on trade date. The net asset value is
computed once daily, on each day the New York Stock Exchange is open, as of
the close of regular trading on the Exchange. In computing the net asset
value, securities are valued at the last sale price on the principal exchange
where they are traded. Securities that have not traded on the date of
valuation, or securities for which sale prices are not generally reported,
are valued at the mean between the last bid and asked prices. Securities for
which market quotations are not readily available are valued at their fair
values as determined by, or under the direction of, the Board of Trustees.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Temporary cash investments are valued at
amortized cost.
20
<PAGE>
Pioneer Real Estate Shares
Because the Fund may invest a substantial portion of its assets in Real
Estate Investment Trusts (REITs), the Fund may be subject to certain risks
associated with direct investments in REITs. REITs may be affected by changes
in the value of their underlying properties and by defaults by borrowers or
tenants. REITs depend generally on their ability to generate cash flow to
make distributions to shareowners, and certain REITs have self-liquidation
provisions by which mortgages held may be paid in full and distributions of
capital returns may be made at any time. In addition, the performance of a
REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain exemption
from registration under the Investment Company Act of 1940.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes. It
is the Fund's practice to first select for sale those securities that have
the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
B. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareholders. Therefore, no federal income tax provision is required.
The characterization of distributions to shareholders for financial reporting
purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Fund's distributions may be shown in the
accompanying financial statements as either from or in excess of net
investment income or net realized gain on investment transactions, or from
paid-in capital, depending on the type of book/tax differences that may
exist.
A portion of the dividend income recorded by the Fund is from distributions
by publicly traded REITs, and such distributions for tax purposes may also
consist of capital gains and return of capital. The actual return of capital
and capital gains portions of such distributions will be determined by formal
notifications from the REITs subsequent to the calendar year-end.
Distributions received from the REITs that are determined to be a return of
capital are recorded by the Fund as a reduction of the cost basis of the
securities held.
21
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/98 (continued)
At December 31, 1998, the Fund reclassified $19,466 and $170,056 from paid-in
capital and accumulated undistributed net investment income, respectively, to
accumulated net realized loss on investments. The reclassification has no
impact on the net asset value of the Fund and is designed to present the
Fund's capital accounts on a tax basis.
In order to comply with federal income tax regulations, the Fund has
designated $2,774,566 as a capital gain dividend for the purposes of the
dividend paid deduction.
C. Fund Shares
The Fund records sales and repurchases of its shares on trade date. Net
losses, if any, as a result of cancellations are absorbed by Pioneer Funds
Distributor, Inc. (PFD), the principal underwriter for the Fund and an
indirect subsidiary of The Pioneer Group, Inc. (PGI). PFD earned $51,168 in
underwriting commissions on the sale of fund shares during the year ended
December 31, 1998.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A, Class B and Class C shares of the Fund,
respectively. Class Y shares are not subject to a distribution plan.
Shareholders of each class share all expenses and fees paid to the transfer
agent, Pioneering Services Corporation (PSC), for their services, which are
allocated based on the number of accounts in each class and the ratable
allocation of related out-of-pocket expense (see Note 3). Income, common
expenses and realized and unrealized gains and losses are calculated at the
Fund level and allocated daily to all classes of shares based on their
respective percentage of adjusted net assets at the beginning of the day.
Distributions to shareholders are recorded as of the ex-dividend date.
Distributions paid by the Fund with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class A, Class B, and Class C can bear different transfer agent
and distribution fees.
E. Deferred Organization Costs
The costs incurred by the Fund in connection with its organization were
deferred and amortized on a straight-line basis over a period of five years.
22
<PAGE>
Pioneer Real Estate Shares
2. Management Agreement
PIM, the Fund's investment adviser, manages the Fund's portfolio and is a
wholly owned subsidiary of PGI. Management fees are calculated daily at the
annual rate of 1.00% of the Fund's average daily net assets. PIM has appointed
Boston Financial Securities, Inc. (BFS) as the Fund's subadviser. As
compensation for its subadvisory services, PIM pays BFS a management fee at the
annual rate of 0.25% of the Fund's average daily net assets up to $27 million
and 0.50% of excess over $27 million.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Fund. At December 31, 1998, $125,054 was payable to
PIM related to management fees, administrative and certain other services.
3. Transfer Agent
Pioneering Services Corp. (PSC), a wholly owned subsidiary of PGI, provides
substantially all transfer agent and shareholder services to the Fund at
negotiated rates. Included in due to affiliates is $52,415 in transfer agent
fees payable to PSC at December 31, 1998.
4. Distribution Plans
The Fund adopted Distributions Plans with respect to Class A, Class B and Class
C shares (Class A Plan, Class B Plan and Class C Plan) in accordance with Rule
12b-1 of the Investment Company Act of 1940. Pursuant to the Class A Plan, the
Fund pays PFD a service fee of up to 0.25% of the Fund's average daily net
assets in reimbursement of its actual expenditures to finance activities
primarily intended to result in the sale of Class A shares. Pursuant to the
Class B Plan and the Class C Plan, the Fund pays PFD 1.00% of the average daily
net assets attributable to each class of shares. The fee consists of a 0.25%
service fee and a 0.75% distribution fee paid as compensation for personal
services and/or account maintenance services or distribution services with
regard to Class B and Class C shares. Included in due to affiliates is $75,009
in distribution fees payable to PFD at December 31, 1998.
In addition, redemptions of each class of shares (except Class Y shares) may be
subject to a contingent deferred sales charge (CDSC). A CDSC of 1.00% may be
imposed on redemptions of certain net asset value purchases of Class A shares
within one year of purchase. Class B shares that are redeemed within six years
of purchase are subject to a CDSC at declining rates beginning at 4.0%, based
on the lower of cost or market value of
23
<PAGE>
Pioneer Real Estate Shares
NOTES TO FINANCIAL STATEMENTS 12/31/98 (continued)
shares being redeemed. Redemptions of Class C shares within one year of
purchase are subject to a CDSC of 1.00%. Proceeds from the CDSC are paid to
PFD. For the year ended December 31, 1998, CDSCs in the amount of $432,372 were
paid to PFD.
5. Expense Offsets
The Fund has entered into certain expense offset arrangements resulting in a
reduction in the Fund's total expenses. For the year ended December 31, 1998,
the Fund's expenses were reduced by $20,548 under such arrangements.
6. Line of Credit Facility
Effective April 14, 1998, the Fund along with certain other funds in the
Pioneer Family of Funds (the Funds) collectively participate in a $50 million
committed, unsecured revolving line of credit facility. Borrowings are used
solely for temporary or emergency purposes. The Fund may borrow up to the
lesser of $50 million or the limits set by its prospectus for borrowings.
Interest on collective borrowings of up to $25 million is payable at the
Federal Funds Rate plus 3/8% on an annualized basis, or at the Federal Funds
Rate plus 1/2% if the borrowing exceeds $25 million at any one time. The Funds
pay an annual commitment fee for this facility. The commitment fee is allocated
among such Funds based on their respective borrowing limits.
The average daily amount of borrowings outstanding during the period from April
14, 1998, through December 31, 1998, was approximately $20,712. The average
daily shares outstanding during the period were 11,801,234 resulting in an
average borrowing of less than one cent per share. The related weighted average
annualized interest rate for the period was 5.60%, and the total interest
expense on such borrowings was $1,257.
24
<PAGE>
Pioneer Real Estate Shares
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareowners and the Board of Trustees of Pioneer Real Estate Shares:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Real Estate Shares as of December 31, 1998, and the
related statement of operations, the statements of changes in net assets, and
the financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1998, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Pioneer Real Estate Shares as of December 31, 1998, the results of its
operations, the changes in its net assets, and the financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 12, 1999
25
<PAGE>
Pioneer Real Estate Shares
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Blake Eagle David D. Tripple, Executive Vice President
Richard H. Egdahl, M.D. Robert W. Benson, Vice President
Margaret B.W. Graham Stephen G. Kasnet, Vice President
Stephen G. Kasnet John A. Boynton, Treasurer
John W. Kendrick Joseph P. Barri, Secretary
Marguerite A. Piret
Fred N. Pratt, Jr.
David D. Tripple
Stephen K. West
John Winthrop
Investment Adviser
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
26
<PAGE>
RETIREMENT PLANS FROM PIONEER
Pioneer offers retirement plans suited to the individual investor and
businesses of all sizes. For information, contact your investment professional,
or call Pioneer at 1-800-622-0176.
Individual Plans
Individual Retirement Account (IRA) The $2,000 maximum annual contribution may
be tax-deductible; earnings are tax-deferred.
Roth IRA The $2,000 maximum annual contribution is not tax-deductible. Earnings
are tax-free for qualified withdrawals.
Plans for Small Businesses or the Self-Employed
SIMPLE (Savings Incentive Match PLan for Employees)
IRA or 401(k) Plan For firms with 100 or fewer employees. Employees can make
pre-tax contributions of up to $6,000 annually, and an employer contribution is
required.
Simplified Employee Pension Plan (SEP) Self-employed people and small- business
owners can make tax-deductible contributions of up to 15% of their income.
Employer-Sponsored Plans
401(k) Plan Allows employees to make pre-tax contributions. Also allows for
employer contributions.
403(b) Plan Lets employees of tax-exempt organizations set aside part of their
salary, before taxes, through payroll deduction.
Profit Sharing Plan Employers contribute on a discretionary basis, usually
based on profits.
Age-Weighted Profit Sharing Plan Employer makes discretionary contributions
based on employees' age and salary.
Money Purchase Pension Plan (MPP) Employers contribute based on a fixed
formula.
Most retirement plan withdrawals must meet
specific conditions to avoid penalties.
27
<PAGE>
PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
Your investment professional can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
FactFoneSM
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as
you meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need
to do is authorize a set amount of money to be moved out of your bank account
into the Pioneer fund of your choice. Investomatic also allows you to change
the dollar amount, frequency and investment date right over the phone. By
putting aside affordable amounts of money regularly, you can build a long-term
investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing
Pioneer to deduct from participating employees' paychecks. You specify the
dollar amount you want to invest into the Pioneer fund(s) of your choice.
28
<PAGE>
Automatic Exchange Program
A simple way to move money from one Pioneer fund to another over a period of
time. Just invest a lump sum in one fund, and select the other Pioneer funds
you wish to invest in. You choose the amounts and dates for Pioneer to sell
shares of your original fund and use the proceeds to buy shares of the other
funds you have chosen. Over time, your investment will be shifted out of the
original fund. (Automatic Exchange is available for originating accounts with a
balance of $5,000 or more.)
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals.
You decide the frequency and the day of the month you want. Pioneer will send
the proceeds by check to the address you designate, or electronically to your
bank account. You also can authorize Pioneer to make the redemptions payable to
someone else. (SWPs are available for accounts with a value of $10,000 or
more.)
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HOW TO CONTACT PIONEER
We are pleased to offer a variety of convenient ways for you to contact us for
assistance or information.
Call us for:
Account information, including existing accounts,
new accounts, prospectuses, applications
and service forms 1-800-225-6292
FactFoneSM for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
Write to us:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current
Fund prospectus.
[PIONEER LOGO] Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
www.pioneerfunds.com
0299-6102
(C) Pioneer Funds Distributor, Inc.
[Recycle logo] Printed on Recycled Paper
