[PIONEER LOGO]
Pioneer
Micro-Cap
Fund
SEMIANNUAL REPORT 5/31/97
<PAGE>
T a b l e o f C o n t e n t s
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<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 5
Schedule of Investments 9
Financial Statements 13
Notes to Financial Statements 18
Report of Independent Public Accountants 23
Trustees, Officers and Service Providers 24
Programs and Services for Pioneer Shareowners 26
The Pioneer Family of Mutual Funds 29
</TABLE>
<PAGE>
Pioneer Micro-Cap Fund
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LETTER FROM THE CHAIRMAN 5/31/97
_______________________________________________________________________________
D e a r S h a r e o w n e r ,
- ----------------------------------------------------------------------------
I am pleased to introduce this first report to shareowners of Pioneer Micro-Cap
Fund. This report covers the period from the Fund's inception on February 28,
1997, through the midpoint of its fiscal year on May 31, 1997. On behalf of the
Fund's investment management team, I thank you for your interest.
Pioneer Micro-Cap Fund is a way for investors to participate in the fortunes of
the smallest publicly held companies, those with a capitalization of $300
million or less. Your management team, with the direction of portfolio manager
William "Pete" Taussig, looks for stocks trading at low prices in comparison to
the companies' financial position and long-term prospects. They have a distinct
preference for companies in turnaround situations, or those that are likely
takeover candidates.
You should consider the Fund to be an aggressive portion of your portfolio. Even
though we look for stocks with low valuations, which can prove to be quite
rewarding in the long-term, investing in small companies is an inherently
volatile proposition. That said, your Fund's investment strategy has been
successful so far, and the Fund outperformed small stocks as a whole over its
brief life.
I encourage you to read on to learn more about your Fund and our efforts to
build a solid foundation for long-term success. Please contact your investment
representative, or Pioneer at 1-800-225-6292, if you have questions about
Pioneer Micro-Cap Fund. Thank you for your support.
Respectfully,
/s/ John F. Cogan, Jr.
John F. Cogan, Jr.,
Chairman and President
1
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Pioneer Micro-Cap Fund
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PORTFOLIO SUMMARY 5/31/97
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P o r t f o l i o D i v e r s i f i c a t i o n
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(As a percentage of total investment portfolio)
(graphic: pie graph)
--- U.S. Common Stocks 87%
.
.
.
Short-Term Cash---
Equivalents 13%
S e c t o r D i s t r i b u t i o n
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(As a percentage of equity holdings)
(graphic: pie graph)
Transportation 3%|
| ---Technology 44%
Consumer --- |
Durables 3%|
---
Capital Goods 4%------
--- Consumer
Services 9%------ Non-Durables 14%
| |
Basic Industries 9%--| |
|
--Financial 14%
1 0 L a r g e s t H o l d i n g s
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(As a percentage of equity holdings)
<TABLE>
<S> <C> <C> <C>
1. Mercury Interactive Corp. 3.79% 6. National Presto Industries, Inc. 3.11%
2. C.P. Clare Corp. 3.72 7. Ply-Gem Industries, Inc. 3.11
3. MicroAge, Inc. 3.55 8. ArQule, Inc. 3.05
4. SystemSoft Corp. 3.21 9. Litchfield Financial Corp. 2.98
5. Broadway & Seymour, Inc. 3.15 10. DSP Communications, Inc. 2.98
</TABLE>
Fund holdings will vary for other periods.
2
<PAGE>
Pioneer Micro-Cap Fund
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PERFORMANCE UPDATE 5/31/97 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
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<TABLE>
<S> <C> <C> <C>
Net Asset Value
per Share 5/31/97 2/28/97
$15.72 $15.00
Distributions per Share Income Short-Term Long-Term
(2/28/97 - 5/31/97) Dividends Capital Gains Capital Gains
- - -
</TABLE>
I n v e s t m e n t R e t u r n s
- ----------------------------------------------------------------------------
The table below shows the Fund's total return since its recent inception. A
mountain chart comparing the Fund to a relevant stock market index will appear
once the Fund has a longer performance history.
____________________________________________
Cumulative Total Returns
(AS of May 31, 1997)
Net Public
Asset Offering
Period Value Price*
Life-of-Fund 4.80% -1.26%
(2/28/97)
____________________________________________
* Reflects deduction of the maximum 5.75% sales charge at the beginning of the
period and assumes reinvestment of distributions at net asset value.
Past performance does not guarantee future results. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
3
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
PERFORMANCE UPDATE 5/31/97 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 5/31/97 2/28/97
$15.70 $15.00
Distributions per Share Income Short-Term Long-Term
(2/28/97 - 5/31/97) Dividends Capital Gains Capital Gains
- - -
</TABLE>
I n v e s t m e n t R e t u r n s
- ----------------------------------------------------------------------------
The table below shows the Fund's total return since its recent inception. A
mountain chart comparing the Fund to a relevant stock market index will appear
once the Fund has a longer performance history.
_________________________________________________
Cumulative Total Returns
(As of May 31, 1997)
If If
Period Held Redeemed*
Life-of-Fund 4.67% 0.67%
(2/28/97)
___________________________________________________
* Reflects deduction of the maximum applicable contingent deferred sales charge
(CDSC) at the end of the period and assumes reinvestment of distributions.
The maximum CDSC of 4% declines over six years.
Past performance does not guarantee future results. Returns and share prices
fluctuate, and your shares, when redeemed, may be worth more or less than their
original cost.
4
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
PORTFOLIO MANAGEMENT DISCUSSION 5/31/97
_______________________________________________________________________________
D e a r S h a r e o w n e r ,
- ----------------------------------------------------------------------------
It is with pleasure that I provide this review of Pioneer Micro-Cap Fund's
growth and progress over the first three months of its life. The Fund was
introduced on February 28, 1997, and reached the halfway point of its fiscal
year on May 31 with more than 4,500 shareowners and $57 million in assets. On
behalf of the entire team of portfolio managers and analysts who contribute to
the Fund, I'd like to thank you for your interest.
Small Company Stocks Surged Late in Period
Small-company stocks did what they do best over the course of Pioneer Micro-Cap
Fund's brief life - quickly change in price. Large stocks dominated the market
for most of the period, with the Dow Jones Industrial Average (DJIA) of 30 big
issues racking up a return of 2.42% in March and April, compared to -4.45% for
the Russell 2000 Index of small stocks. This continued the pattern of the past
year, with investors seeming to have difficulty summoning the discipline to
choose small, less-familiar issues over popular "blue-chip" companies. These
were two frustrating months for those watching the performance of smaller,
lesser-known stocks. For us, however, the dip was timely - lower prices created
some interesting buying opportunities, as we discuss later in this report.
In May, investors began to show more interest in smaller stocks. In fact, the
Russell 2000 rose 11.12% in May, bringing its three-month return to 6.18%. By
contrast, the DJIA returned 4.60% for the month and 7.13% for the quarter. These
swift changes are not uncommon when dealing with smaller stocks, and offer
compelling evidence for remaining invested, rather than attempt to "time" the
stock market.
5
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
PORTFOLIO MANAGEMENT DISCUSSION 5/31/97 (continued)
_______________________________________________________________________________
Using "Aggressive Value" Strategy to Build the Portfolio
Our goal for Pioneer Micro-Cap Fund is to provide long-term capital growth. The
Fund invests only in stocks of companies with a market capitalization (that is,
the value of outstanding stock shares) of $300 million or less. Nearly 7,000
U.S. companies fall into this category, giving us a huge base of stocks from
which to choose. Micro-cap companies have the potential for impressive growth
although their stocks can be quite volatile and less liquid than stocks of
larger companies. In fact, as measured by the Merrill Lynch Micro-Cap Index,
micro-caps were the best-performing sector of the U.S. equity market over the 20
years ended December 31, 1996.
We use an "aggressive value" investment style for your Fund. This means we
prefer stocks that are out of favor and selling at relatively low prices - even
though the companies have strong cash flows, strong market shares, solid balance
sheets and proactive management. We look for companies that generate excess cash
flow from their operations, since businesses that regularly turn to the markets
to raise cash are more vulnerable to external factors. Undervalued companies are
what we're seeking, so it isn't enough for a stock to be cheap we want to know
why. Does the company have a legitimate franchise and a defensible competitive
position? Or did it previously enjoy a stock price that exceeded its real value?
We are only interested in the first scenario.
This investment approach means we avoid crowds, and you may not recognize many
of the 46 names in the Fund's portfolio. We prefer to find unique opportunities
offered by lesser-known, often complicated or misunderstood enterprises. Our
favorite companies bring the potential for what we call "double-barreled"
improvement - significant sales growth and expanding profit margins.
Accordingly, we focus on companies in turnaround, transition and special
situations, along with niche firms. We are prepared to be patient, and expect
holdings may take several years to achieve the target prices we set at the time
of purchase.
6
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
_______________________________________________________________________________
Technology and Biotechnology Favored
By the close of the period, we had invested 87% of the Fund's assets in stocks,
with only 13% held in short-term cash equivalents. Our target is to have each
holding represent about 2% of the portfolio, and we have been able to do that in
most cases.
To date, the majority of companies that have met our criteria are in the
technology and biotechnology sectors. (As of May 31, technology represented 44%
of the Fund's equity assets, including an 11% position in biotechnology.) These
industries have the potential for fantastic returns if a company succeeds. They
also are areas where psychology and emotion play a big role. When a short-term
problem appears, emotional reactions often push down technology stocks to prices
that are exceedingly attractive on a longer-term basis. A disciplined,
value-oriented investor can profit from these bouts of investor fear.
Just such a break in the market came in March, and again in April. We took the
opportunity to build positions in computer service companies such as Mercury
Interactive (automated client/server testing tools), Broadway & Seymour
(technology business solutions for financial and professional services firms)
and FileNet (document imaging and management software). In electronics, we
selected C.P. Clare (semiconductor switches and relays), while adding DSP
Communications, a developer of chipsets for the wireless market.
Technology-related stocks include MicroAge, a retailer of computers and
equipment. When all was said and done, the technology stocks in the portfolio
quickly rebounded over the past three months.
In the biotechnology world, we look for companies likely to introduce new
products in the next 12-24 months. Here we expect to give firms two or three
years to show results, so we are sanguine about the group's relatively poor
recent performance. Biotechnology holdings include Chirex (an outsource for
biotechnology and pharmaceutical firms), ArQule (chemical compounds for biotech
and drug companies), ImClone Systems (therapeutic products for the treatment of
cancer-related diseases) and Texas Biotechnology (developing a new generation of
therapeutics for the vascular system).
7
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
PORTFOLIO MANAGEMENT DISCUSSION 5/31/97 (continued)
_______________________________________________________________________________
The portfolio also contains a significant number of companies in the financial
sector. Among these are Ocwen Asset Investment, a spin-off of Ocwen Financial.
We used the Fund's flexibility and invested in real estate investment trusts
(REITs). We are especially cognitive of quality when looking at REITs. We want
to see real assets, savvy management and solid financial standing with
fixed-rate, if any, debt. REIT holdings include Bedford Property Investors
(suburban office and industrial properties in the Western U.S.) and Glenborough
Realty Trust, which boasts a well-rounded portfolio of income-producing
properties.
Moving Forward
As we enter the second half of Pioneer Micro-Cap Fund's fiscal year, we expect
to continue much as we have begun. We'll look for companies that meet our strict
value criteria and growth prospects. We'll also monitor the portfolio for stocks
that begin to hit our target prices, or that suffer a significant change in
their fundamental business. Your investment management team is confident that
our aggressive value strategy brings shareowners a real opportunity to
participate in the fast-paced micro-cap market, an opportunity that cannot
easily be replicated without the skill and energy of professional management.
Respectfully,
/s/ William M. Taussig
William "Pete" Taussig,
Portfolio Manager
8
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
SCHEDULE OF INVESTMENTS 5/31/97
_______________________________________________________________________________
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 87.1%
Basic Industries - 7.8%
Chemicals - 2.6%
60,000 McWhorter Technologies, Inc.* $1,320,000
21,000 Triple S Plastic, Inc.* 149,625
-----------
$1,469,625
-----------
Iron & Steel - 3.4%
50,000 Atchinson Casting Corp.* $ 856,250
289,000 Ocal, Inc.*+ 1,011,500
-----------
$1,867,750
-----------
Pollution/Waste - 1.8%
50,000 Tetra Tech, Inc.* $1,000,000
-----------
Total Basic Industries $4,337,375
-----------
Capital Goods - 3.3%
Construction & Engineering - 2.7%
90,000 Ply-Gem Industries, Inc. $1,507,500
-----------
Producer Goods - 0.6%
3,000 Gleason Corp. $ 111,375
5,100 Helix Technology Corp. 206,550
-----------
$ 317,925
-----------
Total Capital Goods $1,825,425
-----------
Consumer Durables - 2.7%
Durables - 2.7%
40,000 National Presto Industries, Inc. $1,510,000
-----------
Total Consumer Durables $1,510,000
-----------
Consumer Non-Durables - 11.9%
Agriculture & Food - 1.2%
34,700 Alico, Inc. $ 685,325
-----------
Retail Non-Food - 8.9%
88,600 Dylex Ltd.* $ 404,244
53,000 Jan Bell Marketing, Inc.* 119,250
49,000 Koala Corp.* 588,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
SCHEDULE OF INVESTMENTS 5/31/97 (continued)
_______________________________________________________________________________
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Retail Non-Food - (continued)
95,000 MicroAge, Inc.* $1,721,875
160,000 Programmer's Paradise Inc.* 1,280,000
255,600 Transmedia Network Inc. 862,650
-----------
$4,976,019
-----------
Textiles/Clothes - 1.8%
102,400 Marisa Christina, Inc.* $ 998,400
-----------
Total Consumer Non - Durables $6,659,744
-----------
Financial - 12.5%
Commercial Bank - 2.4%
105,000 Century Bancorp, Inc. $1,351,875
-----------
Insurance - 1.5%
55,000 Summit Holding Southeast Inc.* $ 825,000
-----------
Misc. Finance - 2.4%
75,000 Ocwen Asset Investment Corp.* $1,359,375
-----------
Real Estate Investment Trusts - 3.6%
70,000 Bedford Property Investors, Inc. $1,312,500
30,500 Glenborough Realty Trust 663,375
-----------
$1,975,875
-----------
Savings & Loan - 2.6%
89,000 Litchfield Financial Corp. $1,446,250
-----------
Total Financial $6,958,375
-----------
Services - 8.2%
Broadcasting & Media - 2.1%
160,000 National Media Corporation* $1,180,000
-----------
Pharmaceuticals - 6.1%
80,000 ArQule, Inc.* $1,480,000
55,000 ChiRex Inc.* 632,500
75,000 National Dentex Corp.* 1,293,750
-----------
$3,406,250
-----------
Total Services $4,586,250
-----------
</TABLE>
10 The accompanying notes are an integral part of these financial
statements.
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
_______________________________________________________________________________
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Technology - 38.5%
Biotechnology - 9.7%
200,000 Aronex Pharmaceuticals, Inc.* $ 850,000
160,000 Genzyme Transgenics Corp.* 1,220,000
170,000 ImClone Systems, Inc.* 1,041,250
240,000 Immulogic Pharmaceutical Corporation* 960,000
250,000 Texas Biotechnology Corp.* 1,343,750
------------
$ 5,415,000
------------
Business Machines - 2.5%
120,000 Nashua Corp.* $ 1,395,000
------------
Computer Services - 11.5%
125,000 Broadway & Seymour, Inc.* $ 1,531,250
76,000 CMG Information Services, Inc.* 1,311,000
20,000 Creative Computers, Inc.* 113,750
80,000 FileNet Corp.* 1,330,000
105,000 Mercury Interactive Corp.* 1,837,500
62,000 Meridian Data, Inc.* 259,625
------------
$ 6,383,125
------------
Computer Software - 9.0%
150,000 Platinum Software Corp.* $ 1,359,375
60,000 Progress Software Corp.* 1,050,000
130,000 SystemSoft Corp.* 1,560,000
67,500 Viewlogic Systems, Inc.* 1,012,500
------------
$ 4,981,875
------------
Electronics - 3.2%
130,000 C.P. Clare Corp.* $ 1,803,750
------------
Telecommunications - 2.6%
130,000 DSP Communications, Inc.* $ 1,446,250
------------
Total Technology $21,425,000
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
SCHEDULE OF INVESTMENTS 5/31/97 (continued)
_______________________________________________________________________________
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Transportation - 2.2%
Air Transport - 2.2%
130,000 First Aviation Services, Inc.* $ 1,235,000
------------
Total Transportation $ 1,235,000
------------
Total Common Stocks
(Cost $45,091,282) $48,537,169
------------
Principal
Amount
TEMPORARY CASH INVESTMENT - 12.9%
Repurchase Agreement - 12.9%
$7,200,000 Aubrey Lanston, 5/30/97, 5.50%, repurchase
price of $7,200,000 plus accrued interest on
6/2/97, collateralized by $6,880,000 U.S.
Treasury Bill, 8.875%, 2/15/99 $ 7,200,000
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $7,200,000) $ 7,200,000
------------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $52,291,282) (a) $55,737,169
------------
</TABLE>
* Non-income producing security.
+ Investments held by the Fund representing 5% or more of the outstanding
voting stock of such company.
(a)At May 31, 1997, the net unrealized gain on investments based on cost for
federal income tax purposes of $52,291,282 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $ 4,904,183
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (1,458,296)
-------------
Net unrealized gain $ 3,445,887
-------------
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
period ended May 31, 1997, aggregated $45,157,282 and $159,500, respectively.
12 The accompanying notes are an integral part of these financial
statements.
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
BALANCE SHEET 5/31/97
_______________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in securities (including temporary cash investment of
$7,200,000) (cost $52,291,282) $ 55,737,169
Cash 82,138
Receivables -
Fund shares sold 1,744,204
Dividends and interest 4,750
Organizational costs - net 53,451
------------
Total assets $ 57,621,712
------------
LIABILITIES:
Payables -
Investment securities purchased $ 271,530
Fund shares repurchased 9,168
Due to affiliates 93,183
Accrued expenses 44,563
------------
Total liabilities $ 418,444
------------
NET ASSETS:
Paid-in capital $ 53,711,644
Accumulated net investment loss (47,763)
Accumulated undistributed net realized gain 93,500
Net unrealized gain on investments 3,445,887
------------
Total net assets $ 57,203,268
------------
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $26,152,545/1,663,941 shares) $ 15.72
------------
Class B (based on $31,050,723/1,977,232 shares) $ 15.70
------------
MAXIMUM OFFERING PRICE:
Class A $ 16.68
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
STATEMENT OF OPERATIONS
_______________________________________________________________________________
For the Period from 2/28/97 (Commencement of Operations) to 5/31/97
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends $ 18,265
Interest 128,495
---------
Total investment income $ 146,760
----------
EXPENSES:
Management fees $102,038
Transfer agent fees
Class A 34,473
Class B 35,494
Distribution fees
Class A 10,404
Class B 51,146
Accounting 18,100
Custodian fees 6,356
Registration fees 33,479
Professional fees 10,694
Printing 3,906
Organization costs 10,401
Fees and expenses of nonaffiliated trustees 4,650
Miscellaneous 2,216
---------
Total expenses $ 323,357
Less management fees waived and expenses
reimbursed by Pioneering Management
Corporation (118,077)
Less fees paid indirectly (10,757)
----------
Net expenses $ 194,523
----------
Net investment loss $ (47,763)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments $ 93,500
Net unrealized gain on investments 3,445,887
----------
Net gain on investments $3,539,387
----------
Net increase in net assets resulting from operations $3,491,624
==========
</TABLE>
14 The accompanying notes are an integral part of these financial
statements.
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
STATEMENT OF CHANGES IN NET ASSETS
_______________________________________________________________________________
For the Period from 2/28/97 (Commencement of Operations) to 5/31/97
<TABLE>
<CAPTION>
Period
Ended
FROM OPERATIONS: 5/31/97
<S> <C>
Net investment loss $ (47,763)
Net realized gain on investments 93,500
Net unrealized gain on investments 3,445,887
-----------
Net increase in net assets resulting from operations $ 3,491,624
-----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $54,119,277
Cost of shares repurchased (507,633)
-----------
Net increase in net assets resulting from fund share
transactions $53,611,644
-----------
Net increase in net assets $57,103,268
NET ASSETS:
Beginning of period (initial capitalization - 6,666 shares) 100,000
-----------
End of period $57,203,268
===========
</TABLE>
<TABLE>
<CAPTION>
CLASS A '97 Shares '97 Amount
<S> <C> <C>
Shares sold 1,684,645 $ 24,812,572
Less shares repurchased (24,037) (347,803)
--------- ------------
Net increase 1,660,608 $ 24,464,769
========= ============
CLASS B
Shares sold 1,985,217 $ 29,306,705
Less shares repurchased (11,318) (159,830)
--------- ------------
Net increase 1,973,899 $ 29,146,875
========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
FINANCIAL HIGHLIGHTS 5/31/97
_______________________________________________________________________________
<TABLE>
<CAPTION>
2/28/97
to
5/31/97
<S> <C>
CLASS A
Net asset value, beginning of period $ 15.00
-----------
Increase from investment operations:
Net realized and unrealized gain on
investments $ 0.72
-----------
Net increase in net asset value $ 0.72
-----------
Net asset value, end of period $ 15.72
===========
Total return* 4.80%
Ratio of net expenses to average net assets 1.87%**+
Ratio of net investment loss to average net assets (0.29)%**+
Portfolio turnover rate 2%**
Average commission rate paid (1) $ 0.0475
Net assets, end of period (in thousands) $ 26,153
Ratios assuming no waiver of management fees and
assumption of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 3.16%**
Net investment loss (1.58)%**
Ratios assuming waiver of management fees and
assumption of expenses by PMC and reduction for
fees paid indirectly:
Net expenses 1.75%**
Net investment loss (0.17)%**
</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.
(1)Amount represents the rate of commission paid per share on the Fund's
exchange listed security transactions.
16 The accompanying notes are an integral part of these financial
statements.
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
FINANCIAL HIGHLIGHTS 5/31/97
_______________________________________________________________________________
<TABLE>
<CAPTION>
2/28/97
to
5/31/97
<S> <C>
CLASS B
Net asset value, beginning of period $ 15.00
-----------
Increase (decrease) from investment operations:
Net investment loss $ (0.02)
Net realized and unrealized gain on investments 0.72
-----------
Net increase in net asset value $ 0.70
-----------
Net asset value, end of period $ 15.70
===========
Total return* 4.67%
Ratio of net expenses to average net assets 2.49%**+
Ratio of net investment loss to average net assets (0.90)%**+
Portfolio turnover rate 2%**
Average commission rate paid (1) $ 0.0475
Net assets, end of period (in thousands) $ 31,051
Ratios assuming no waiver of management fees and
assumption of expenses by PMC and no reduction
for fees paid indirectly:
Net expenses 3.75%**
Net investment loss (2.16)%**
Ratios assuming waiver of management fees and
assumption of expenses by PMC and reduction for
fees paid indirectly:
Net expenses 2.38%**
Net investment loss (0.79)%**
</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.
(1)Amount represents the rate of commission paid per share on the Fund's
exchange listed security transactions.
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Micro-Cap Fund
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS 5/31/97
_______________________________________________________________________________
1. Organization and Significant Accounting Policies
Pioneer Micro-Cap Fund (the Fund) is a Delaware business trust registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund was organized on December 3, 1996 and commenced
operations on February 28, 1997. Prior to February 28, the Fund had no
operations other than those relating to organizational matters and the initial
capitalization of the Fund by Pioneer Funds Distributor, Inc. (PFD). The
investment objective of the Fund is to seek long-term growth of capital.
The Fund offers two classes of shares - Class A and Class B shares. Shares of
Class A and Class B each represent an interest in the same portfolio of
investments of the Fund and have equal rights to voting, redemptions, dividends
and liquidation, except that each class of shares can bear different transfer
agent and distribution fees and have exclusive voting rights with respect to the
distribution plans that have been adopted by Class A and Class B shareholders,
respectively.
The Fund's financial statements have been prepared in conformity with generally
accepted accounting principles that require the management of the Fund to, among
other things, make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. The following is a summary of significant accounting policies
consistently followed by the Fund, which are in conformity with those generally
accepted in the investment company industry:
A. Security Valuation
Security transactions are recorded on trade date. Each day, securities are
valued at the last sale price on the principal exchange where they are traded.
Securities that have not traded on the date of valuation, or securities for
which sale prices are not generally reported, are valued at the mean between
the last bid and asked prices. Securities for which market quotations are not
readily available are valued at their fair values as determined by, or under
the direction of, the Board of Trustees. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis.
Temporary cash investments are valued at amortized cost.
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Pioneer Micro-Cap Fund
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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.
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 PFD, the
principal underwriter for the Fund and an indirect subsidiary of The Pioneer
Group, Inc. (PGI). PFD earned $22,910 in underwriting commissions on the sale
of fund shares during the period ended May 31, 1997.
D. Class Allocations
Distribution fees are calculated based on the average daily net asset value
attributable to Class A and Class B shares of the Fund, respectively.
Shareholders of each class share all expenses and fees paid to the transfer
agent, Pioneering Services Corporation (PSC), for their services, which are
allocated based on the number of accounts in each class and the ratable
allocation of related out-of-pocket expense (see Note 3). Income, common
expenses and realized and unrealized gains and losses are calculated at the
Fund level and allocated daily to each class of shares based on the respective
percentage of adjusted net assets at the beginning of the day.
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Pioneer Micro-Cap Fund
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS 5/31/97 (continued)
_______________________________________________________________________________
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 and Class B shares can bear different transfer agent and
distribution fees.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Fund, the value of
the underlying securities (collateral), including accrued interest received
from counterparties, is required to be at least equal to or in excess of the
value of the repurchase agreement at the time of purchase. The collateral for
all repurchase agreements is held in safekeeping in the customer-only account
of the Fund's custodian, or subcustodians. The Fund's investment adviser,
Pioneering Management Corporation (PMC), is responsible for determining that
the value of the collateral remains at least equal to the repurchase price.
F. Deferred Organization Costs
The costs incurred by the Fund in connection with its organization have been
deferred and are amortized on a straight-line basis over a period of up to
five years. If PMC redeems any of its initial investment prior to the end of
the amortization period, the redemption proceeds will be decreased by the pro
rata share of the unamortized expenses as of the date of redemption. The pro
rata share is derived by dividing the number of original shares redeemed by
the total number of original shares outstanding at the time of redemption.
2. Management Agreement
PMC manages the Fund's portfolio and is a wholly owned subsidiary of PGI.
Management fees are calculated daily at the annual rate of 1.10% of the Fund's
average daily net assets.
PMC has agreed not to impose a portion of its management fee and to assume other
operating expenses of the Fund to the extent necessary to limit Class A expenses
to 1.75% of the average daily net assets attributable to Class A shares; the
portion of the Fund-wide expenses attributable to Class B shares will be reduced
only to the extent that such expenses are reduced for Class A shares. PMC's
agreement is voluntary and temporary and may be revised or terminated at any
time.
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Pioneer Micro-Cap Fund
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_______________________________________________________________________________
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At May 31, 1997, $9,240 was payable to PMC related to management fees
and certain other services.
3. Transfer Agent
PSC, a wholly owned subsidiary of PGI, provides substantially all transfer agent
and shareholder services to the Fund at negotiated rates. Included in due to
affiliates is $52,193 in transfer agent fees payable to PSC at May 31, 1997.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each class of shares (Class A Plan
and Class B 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, 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 shares. Included in due to affiliates is $31,750 in
distribution fees payable to PFD at May 31, 1997.
Class B shares that are redeemed within six years of purchase are subject to a
CDSC at declining rates beginning at 4.0%, based on the lower of cost or market
value of shares being redeemed. Proceeds from the CDSC are paid to PFD. For the
period ended May 31, 1997, CDSCs in the amount of $2,269 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 period ended May 31, 1997, the
Fund's expenses were reduced by $10,757 under such arrangements.
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Pioneer Micro-Cap Fund
_______________________________________________________________________________
NOTES TO FINANCIAL STATEMENTS 5/31/97 (continued)
_______________________________________________________________________________
6. Affiliated Companies
The Fund primarily invests in smaller capitalized company securities that tend
to be more sensitive to changes in earnings expectations and have lower trading
volumes than mid to large capitalized company securities, and as a result, they
may experience more abrupt and erratic price movements. The Fund's investment in
these smaller capitalized companies may exceed 5% of the outstanding voting
stock. Such companies are deemed affiliates of the Fund for financial reporting
purposes. The following summarizes transactions with affiliates of the Fund as
of May 31, 1997:
<TABLE>
<CAPTION>
Dividend
Affiliates Purchases Sales Income Value
- ------------ ------------ ------- --------- -----------
<S> <C> <C> <C> <C>
Ocal, Inc. $1,115,969 $ - $ - $1,011,500
</TABLE>
22
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Pioneer Micro-Cap Fund
_______________________________________________________________________________
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
_______________________________________________________________________________
To The Shareholders And The Board Of Trustees Of Pioneer Micro-Cap Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Micro-Cap Fund as of May 31, 1997, and the related
statement of operations, the statement of changes in net assets, and the
financial highlights for the period from February 28, 1997 (commencement of
operations) to May 31, 1997. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit 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 May 31, 1997 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
audit provides 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 Micro-Cap Fund as of May 31, 1997, the results of its operations, the
changes in its net assets, and the financial highlights for the period
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
July 1, 1997
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Pioneer Micro-Cap Fund
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
_______________________________________________________________________________
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Richard H. Egdahl, M.D. President
Margaret B.W. Graham David D. Tripple, Executive Vice
John W. Kendrick President
Marguerite A. Piret William Taussig, Vice President
David D. Tripple William H. Keough, Treasurer
Stephen K. West Joseph P. Barri, Secretary
John Winthrop
Investment Adviser
Pioneering Management Corporation
Custodian
Brown Brothers Harriman & Co.
Independent Public Accountants
Arthur Andersen LLP
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneering Services Corporation
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This page for your notes.
25
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PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
_______________________________________________________________________________
Your investment representative can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
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.
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Automatic Exchange Program
A simple way to move money from a money market or bond fund into a stock fund
over a period of time. Just invest a lump sum in a Pioneer money market fund or
bond fund. Then, select the Pioneer equity fund or funds you wish to invest in,
and choose the amounts and dates for Pioneer to sell shares of your money market
or bond fund and use the proceeds to buy shares of the Pioneer equity fund you
have chosen. Over time, your original investment will be shifted to your Pioneer
equity fund.
Directed Dividends
Lets you invest cash dividends from one Pioneer fund to an account in another
Pioneer fund with no sales charge or fee. Simply fill out the applicable
information on a Pioneer Account Options Form. (This program is available for
dividend payments only; capital gains distributions are not eligible at this
time.)
Direct Deposit
Lets you move money into your bank account using electronic funds transfer
(EFT). EFT moves your money faster than you would receive a check, eliminates
unnecessary paper and mail, and avoids lost checks. Simply fill out a Pioneer
Direct Deposit Form, giving your instructions.
Systematic Withdrawal Plan (SWP)
Lets you establish automatic withdrawals from your account at set intervals. You
decide the frequency and the day of the month you want. Pioneer will send the
proceeds by check to the address you designate, or electronically to your bank
account. You also can authorize Pioneer to make the redemptions payable to
someone else. (SWPs are available only for accounts with a value of $10,000 or
more.)
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_______________________________________________________________________________
This page for your notes.
28
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_______________________________________________________________________________
THE PIONEER FAMILY OF MUTUAL FUNDS
_______________________________________________________________________________
For information about any Pioneer mutual fund, please contact your investment
representative, or call Pioneer at 1-800-225-6292. Ask for a free fund
information kit, which includes a fund prospectus. Please read the prospectus
carefully before you invest or send money.
Growth Funds Income Funds
Global/International Taxable
Pioneer Emerging Markets Fund Pioneer America Income Trust
Pioneer Europe Fund Pioneer Bond Fund
Pioneer Gold Shares Pioneer Short-Term Income Trust*
Pioneer India Fund
Pioneer International Growth Fund Tax-Exempt
Pioneer World Equity Fund Pioneer Intermediate Tax-Free Fund
Pioneer Tax-Free Income Fund
United States
Pioneer Capital Growth Fund
Pioneer Growth Shares Money Market Fund
Pioneer Micro-Cap Fund* Pioneer Cash Reserves Fund
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
*Offers Class A and B Shares only
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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 at:
Pioneering Services Corporation
60 State Street
Boston, Massachusetts 02109
Our toll-free fax 1-800-225-4240
Our Internet e-mail address [email protected]
(for general questions about Pioneer only)
Visit our web site: www.pioneerfunds.com
This report must be preceded or accompanied by a current Fund prospectus.
[GRAPHIC: Pioneer Funds Distributor, Inc.
PIONEER 60 State Street 0797 - 4312
LOGO] Boston, Massachusetts 02109 (C) Pioneer Funds Distributor, Inc.
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