PIONEER LOGO
Pioneer
Capital Growth
Fund
ANNUAL REPORT 10/31/98
<PAGE>
Table of Contents
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<TABLE>
<S> <C>
Letter from the Chairman 1
Portfolio Summary 2
Performance Update 3
Portfolio Management Discussion 7
Schedule of Investments 10
Financial Statements 18
Notes to Financial Statements 25
Report of Independent Public Accountants 30
Results of Shareowner Meeting 31
Trustees, Officers and Service Providers 32
A Salute to Pioneer Fund 33
Programs and Services for Pioneer Shareowners 34
Retirement Plans from Pioneer 36
The Pioneer Family of Mutual Funds 37
</TABLE>
<PAGE>
Pioneer Capital Growth Fund
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LETTER FROM THE CHAIRMAN 10/31/98
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Dear Shareowner,
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The end of October marked the close of Pioneer Capital Growth Fund's eighth
fiscal year. I appreciate this opportunity to comment on the challenges and
progress of a fast-paced period that investors will not soon forget.
The past 12 months were volatile for financial markets in the United States and
around the globe. Volatility is, and always will be, part of investing. But we
think it is important to point out that the current fluctuations in stock prices
are relatively normal, compared to historical market movements. Short-term
memory to the contrary, it is the extraordinary rise of stock prices in recent
years that are aberrations, no matter how enjoyable.
But patience and discipline can help mitigate volatility. Pioneer Capital Growth
Fund offers just one example. Since its inception in 1990, your Fund has offered
investors solid performance by focusing on value. In the long term, this has
proved successful - even so, in some individual years, such as this one,
performance has been disappointing. As we move ahead, the Fund's portfolio
management team will be working hard to improve performance, but you should be
prepared for the inevitable ups and downs that are part of stock investing.
I encourage you to read the pages that follow, including the Portfolio
Management Discussion with J. Rodman Wright, your Fund's portfolio manager,
where he discusses how your Fund performed during the past year. We hope you
find the report informative. If you have any questions about the Fund, please
contact your investment professional, or Pioneer at 1-800-225-6292.
Respectfully,
/s/ John F. Coogan, Jr.
- ----------------------------
John F. Cogan, Jr.,
Chairman and President
1
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Pioneer Capital Growth Fund
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PORTFOLIO SUMMARY 10/31/98
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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)
<TABLE>
<S> <C>
U.S. Common Stocks 91%
Short-Term Cash Equivalents 6%
International Common Stocks 2%
Depositary Receipts for International Stocks 1%
</TABLE>
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)
<TABLE>
<S> <C>
Technology 16%
Other 14%
Financial 12%
Consumer Cyclicals 11%
Consumer Staples 10%
Capital Goods 9%
Communication Services 8%
Basic Materials 7%
Utilities 7%
Energy 6%
</TABLE>
1 0 La 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. NCR Corp. 3.16% 6. Viacom, Inc. (Class B) 2.44%
(Non-voting)
2. McDonald's Corp. 2.82 7. Union Pacific Corp. 2.33
3. Frontier Corp. 2.67 8. Conseco, Inc. 2.14
4. Hasbro, Inc. 2.62 9. Imation Corp. 2.14
5. 20th Century Industries 2.47 10. Eastman Kodak Co. 2.11
</TABLE>
Fund holdings will vary for other periods.
2
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Pioneer Capital Growth Fund
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PERFORMANCE UPDATE 10/31/98 CLASS A SHARES
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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 10/31/98 10/31/97
$ 19.02 $ 23.23
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
$ 0.104 $ 0.617 $ 1.628
</TABLE>
I n v e s t m e n t R e t u r n s
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The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Capital Growth Fund at public offering price, compared to the growth
of the Standard & Poor's 500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
Net Asset Public Offering
Period Value Price*
Life-of-Fund 14.23% 13.41%
(7/25/90)
5 Years 12.46 11.13
1 Year -8.74 -13.99
</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.
Pioneer Capital Growth Fund*
Standard & Poor's 500 Index
CLASS A SHARES
<TABLE>
<S> <C> <C>
"7/90" 9425 10000
"10/90" 6732 8597
9470 10794
"10/91" 10395 11477
12315 12311
"10/92" 11526 12616
14341 13446
"10/93" 15743 14494
16752 14162
"10/94" 18738 15055
20575 16628
"10/95" 22348 19023
26375 21639
"10/96" 25292 23593
26832 27073
"10/97" 31026 31168
35328 38170
"10/98" 28316 38018
</TABLE>
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
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
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Pioneer Capital Growth Fund
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PERFORMANCE UPDATE 10/31/98 CLASS B SHARES
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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 10/31/98 10/31/97
$ 18.52 $ 22.73
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
- $ 0.617 $ 1.628
</TABLE>
I n v e s t m e n t R e t u r n s
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The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Capital Growth Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 12.10% 11.81%
(4/4/94)
1 Year -9.42 -12.67
</TABLE>
* 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.
Pioneer Capital Growth Fund*
Standard & Poor's 500 Index
CLASS B SHARES
<TABLE>
<S> <C> <C>
"4/94" 10000 10000
10321 10273
10489 10521
"10/94" 11513 10921
11396 10956
12589 12062
13789 13259
"10/95" 13633 13800
14640 15181
16019 15697
14726 15443
"10/96" 15306 17115
16635 19176
16168 19639
18791 23490
"10/97" 18627 22610
18477 24332
21137 27689
19114 28014
"10/98" 16673 27579
</TABLE>
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
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
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Pioneer Capital Growth Fund
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PERFORMANCE UPDATE 10/31/98 CLASS C SHARES
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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 10/31/98 10/31/97
$ 18.49 $ 22.69
Distributions per Share Income Short-Term Long-Term
(10/31/97 - 10/31/98) Dividends Capital Gains Capital Gains
- $ 0.617 $ 1.628
</TABLE>
I n v e s t m e n t R e t u r n s
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The mountain chart on the right shows the growth of a $10,000 investment made
in Pioneer Capital Growth Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Average Annual Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed*
Life-of-Fund 5.31% 5.31%
(1/31/96)
1 Year -9.38 -9.38
</TABLE>
* Assumes reinvestment of distributions.
The 1% contingent deferred sales charge
(CDSC) applies to redemptions made within one year of purchase.
Pioneer Capital Growth Fund*
Standard & Poor's 500 Index
CLASS C SHARES
<TABLE>
<S> <C> <C>
"1/96" 10000 10000
"4/96" 10931 10340
10053 10172
"10/96" 10449 11274
11359 12632
"4/97" 11045 12937
12833 15473
"10/97" 12721 14894
12619 16028
"4/98" 14433 18240
13055 18454
"10/98" 11527 18167
</TABLE>
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-Counter market. Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
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.
5
<PAGE>
Pioneer Capital Growth Fund
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PERFORMANCE UPDATE 10/31/98 CLASS Y SHARES
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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 10/31/98 7/2/98
$ 19.06 $ 23.00
Distributions per Share Income Short-Term Long-Term
(7/2/98 - 10/31/98) Dividends Capital Gains Capital Gains
- - -
</TABLE>
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 Capital Growth Fund, compared to the growth of the Standard & Poor's
500 Index.
<TABLE>
<S> <C> <C>
Cumulative Total Returns
(As of October 31, 1998)
If If
Period Held Redeemed
Life-of-Fund -17.13% -17.13%
(7/2/98)
</TABLE>
* Assumes reinvestment of distributions.
Pioneer Capital Growth Fund*
Standard & Poor's 500 Index
CLASS Y SHARES
<TABLE>
<S> <C> <C>
"7/2/98" 10000 10000
"7/31/98" 9352 9775
"8/98" 7739 8350
"9/98" 7796 8909
"10/98" 8287 9624
</TABLE>
The Standard & Poor's (S&P) 500 Index is an unmanaged measure of 500 widely held
common stocks listed on the New York Stock Exchange, American Stock Exchange and
the over-the-counter market. Index returns assume reinvestment of dividends and,
unlike Fund returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in the Index.
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.
6
<PAGE>
Pioneer Capital Growth Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/98
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Pioneer Capital Growth Fund's fiscal year ended on October 31, 1998. The
following discussion with Rod Wright provides a detailed account of the
investment environment and the strategies that affected your Fund's performance
during the year. An investment professional for more than 10 years, Mr. Wright
oversees the team responsible for the Fund's daily management.
Q: How did the Fund perform?
A: We were disappointed in the Fund's performance. Gains from large-company
stocks were offset by declines in mid-sized, and especially small company,
holdings. In addition, market conditions did not favor our value investment
style.
For the 12 months through October, the Fund's Class A Shares generated a
total return of -8.74% based on net asset value. Over the same period, the
Standard & Poor's 500 Index, a benchmark of large company performance, gained
21.98%. The Standard & Poor's MidCap 400 Index returned 6.71%. Small
companies, by comparison, posted an -11.84% return, as represented by the
Russell 2000 Index.
Q: What were the major market themes during the past year?
A: In 1998 we again saw a flight to the familiar. Currency and economic
problems in Asia and Russia, coupled with increased market volatility
worldwide, led investors to gravitate toward the largest and most well-known
U.S. companies. Blue chip stocks were particularly popular, and really drove
Index performance. For example, over the last 10 months, the average return
of the 30 largest stocks in the Standard & Poor's 500 Index was 38.7%, more
than 16 percentage points higher than the return for the Index overall.
Q: What specific sectors or stocks affected Fund performance?
A: The Fund's small, value-oriented holdings suffered, especially companies
with exposure to Asia. We sold Reebok and Belden, a manufacturer of cable
for electrical applications, because of their vulnerability to downturns
overseas. Oil-related stocks like Atlantic Richfield and
7
<PAGE>
Pioneer Capital Growth Fund
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PORTFOLIO MANAGEMENT DISCUSSION 10/31/98 (continued)
- --------------------------------------------------------------------------------
Union Pacific Resources hurt performance when energy prices dropped
significantly throughout the year.
On a more positive note, just like the overall stock market, the largest
stocks in the portfolio performed best. Examples include mid-sized NCR Corp.
and The Learning Company, a developer of educational software programs - two
technology companies that benefited from the ever-increasing demand for
faster applications. Kodak, Viacom and McDonald's - all names very familiar
to shareowners - also fall into this category and were positive contributors
to Fund performance.
Q: What types of companies do you prefer?
A: We use a value style for Pioneer Capital Growth Fund. We like to find unique
opportunities in enterprises that do not have a large Wall Street following.
This means that they typically are out of favor and are selling at
relatively low prices but have solid cash flows and strong management.
We also seek a catalyst to unlock a company's potential value. Examples of a
positive catalyst include management changes, asset sales or acquisitions,
new products and capital structure changes. We look at, and select, companies
of all sizes.
Q: What are some recent changes to the portfolio?
A: The portfolio is leaner than one year ago. We reduced the number of holdings
to 93 stocks, down from 123 this time last year. We improved the portfolio,
which we think is particularly prudent in an uncertain economic environment.
We sold stocks that were not meeting expectations and replaced them with, or
increased the commitment to, stocks of companies with better balance sheets,
stronger managements and solid product lines. We found many of these
opportunities in larger companies. As a result, the portfolio's median
market capitalization increased to $1.5 billion. Going forward, these
changes should also help us more quickly adjust the Fund's holdings when we
see opportunities.
8
<PAGE>
Pioneer Capital Growth Fund
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- --------------------------------------------------------------------------------
Q: A portion of the Fund is invested in international stocks. What do you look
for when selecting companies that are based abroad?
A: We apply the same criteria and analysis to our international holdings that
we do to U.S.-based companies. Although the Fund is allowed to invest
globally, we don't invest in a company just because it's based overseas. In
fact, we rarely find the need to invest internationally, and only about 4%
of the portfolio currently is invested in companies based outside the United
States. The portfolio's largest international holding is Alcatel Alsthom, a
telecommunications equipment company based in France. It was hurt by
exposure to Asia and Russia, but we have confidence in its strong management
and competitive position in a growing industry.
Q: What is your outlook for the next six months?
A: We are cautiously optimistic. The U.S. economic picture remains relatively
strong, and interest rates remain low. These are both positive factors for
companies and, therefore, the stock market.
We think the overall quality of the companies in the Fund will increase, even
as we concentrate on value stocks. To us, the valuations of mid-cap companies
now are more attractive than larger companies, and so we expect to focus our
attention in this area. Mid-sized companies (generally between $1 billion and
$7 billion in size) are typically stronger, better managed and more liquid
than smaller companies. Even so, they sell at significant discounts to larger
firms. While it may take others some time to see the value we recognize
today, we believe we will ultimately be rewarded for our patience.
I would like to thank all of the Fund's shareowners for their support in what
was a difficult year. Our expectations are high for 1999, and we remain
committed to helping you achieve your goals.
9
<PAGE>
Pioneer Capital Growth Fund
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SCHEDULE OF INVESTMENTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
COMMON STOCKS - 94.6%
Basic Materials - 7.4%
Chemicals - 1.5%
1,325,000 The Geon Co.+ $ 28,735,938
------------
Chemicals (Specialty) - 2.1%
2,108,300 Agrium, Inc. $ 22,137,150
990,000 Borden Chemicals & Plastics, L.P. 3,836,250
1,266,700 Wellman Inc. 15,912,919
------------
$ 41,886,319
------------
Gold & Precious Metals Mining - 0.4%
350,000 Barrick Gold Corp. $ 7,481,250
------------
Metals Mining - 0.6%
800,000 Usec Inc.* $ 11,700,000
------------
Paper & Forest Products - 2.8%
700,000 Bowater, Inc. $ 28,568,750
1,480,900 Louisiana-Pacific Corp. 26,285,975
------------
$ 54,854,725
------------
Total Basic Materials $144,658,232
------------
Capital Goods - 9.2%
Electrical Equipment - 1.5%
1,018,600 CommScope, Inc.* $ 14,196,738
1,000,000 Vishay Intertechnology, Inc.* 15,125,000
------------
$ 29,321,738
------------
Engineering & Construction - 1.3%
2,475,000 Morrison Knudsen Corp.* $ 24,595,313
------------
Manufacturing (Diversified) - 1.3%
400,000 Corning, Inc. $ 14,525,000
300,000 Kaydon Corp. 10,537,500
------------
$ 25,062,500
------------
</TABLE>
10 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Metal Fabricators - 2.8%
490,000 Avondale Industries, Inc.* $ 12,770,625
850,000 Brush Wellman, Inc.+ 14,450,000
769,300 Sealed Air Corp.* 27,262,069
------------
$ 54,482,694
------------
Office Equipment & Supplies - 0.5%
950,000 Moore Corporation Ltd. $ 10,746,875
------------
Waste Management - 1.8%
761,250 Waste Management, Inc. $ 34,351,407
------------
Total Capital Goods $178,560,527
------------
Communication Services - 8.1%
Telecommunications (Long Distance) - 1.3%
325,000 Sprint Corp. $ 24,943,750
------------
Telephone - 6.8%
325,000 Bell Atlantic Corp. $ 17,265,625
1,605,159 Citizens Utilities Co. (Class B)* 14,446,431
1,635,000 Frontier Corp. 49,152,188
425,000 GTE Corp. 24,942,188
675,000 Telephone and Data Systems, Inc. 26,915,625
------------
$132,722,057
------------
Total Communication Services $157,665,807
------------
Consumer Cyclicals - 11.3%
Auto Parts & Equipment - 1.2%
675,000 ITT Industries, Inc. $ 24,131,250
------------
Consumer (Jewelry, Novelties & Gifts) - 0.8%
700,000 Jostens, Inc. $ 15,793,750
------------
Household Furniture & Appliances - 1.3%
442,500 Harman International Industries, Inc. $ 17,893,594
876,000 Helig-Meyers Co. 6,734,250
------------
$ 24,627,844
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 11
<PAGE>
Pioneer Capital Growth Fund
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SCHEDULE OF INVESTMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Leisure Time (Products) - 2.9%
856,000 Arctic Cat Inc. $ 7,918,000
1,375,000 Hasbro, Inc. 48,210,938
------------
$ 56,128,938
------------
Publishing - 0.5%
803,800 PRIMEDIA, Inc.* $ 8,691,088
------------
Retail (Specialty) - 2.7%
735,000 Cole National Corp.* $ 15,251,250
1,600,000 Pep Boys - Manny, Moe & Jack 25,000,000
1,381,000 Venator Group Inc.* 11,652,188
------------
$ 51,903,438
------------
Textiles (Apparel) - 1.7%
1,386,700 Justin Industries+ $ 20,107,150
1,493,500 The Stride Rite Corp. 13,628,188
------------
$ 33,735,338
------------
Textiles (Home Furnishings) - 0.2%
1,132,200 Worldtex, Inc.*+ $ 4,811,850
------------
Total Consumer Cyclicals $219,823,496
------------
Consumer Staples - 10.3%
Foods - 1.6%
1,339,800 Tyson Foods, Inc. $ 30,815,400
------------
Entertainment - 2.3%
750,000 Viacom, Inc. (Class B) (Non-voting)* $ 44,906,250
------------
Household Products (Non-Durables) - 0.3%
880,000 The Rival Co.+ $ 6,105,000
------------
Restaurants - 3.2%
1,225,000 Lone Star Steakhouse & Saloon, Inc.* $ 9,800,000
775,000 McDonald's Corp. 51,828,125
------------
$ 61,628,125
------------
</TABLE>
12 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Retail Stores (Food Chains) - 1.9%
450,000 American Stores Co. $ 14,653,125
731,000 The Great Atlantic & Pacific Tea Co., Inc. 17,178,500
131,400 Winn-Dixie Stores, Inc. 4,380,364
------------
$ 36,211,989
------------
Specialty Printing - 1.0%
1,400,000 John H. Harland Co. $ 20,300,000
------------
Total Consumer Staples $199,966,764
------------
Energy - 5.6%
Oil & Gas (Drilling & Equipment) - 0.7%
350,000 Smith International Inc.* $ 12,578,125
------------
Oil & Gas (Exploration/Production) - 2.5%
350,000 Apache Corp. $ 9,909,375
397,600 Burlington Resources Inc. 16,376,150
850,000 Seagull Energy Corp.* 10,146,875
900,000 Union Pacific Resources Group, Inc. 11,700,000
------------
$ 48,132,400
------------
Oil (Domestic Integrated) - 1.8%
515,000 Atlantic Richfield Co. $ 35,470,625
------------
Oil (International Integrated)- 0.6%
497,000 Conoco Inc.* $ 12,362,875
------------
Total Energy $108,544,025
------------
Financial - 12.4%
Consumer Finance - 0.9%
450,000 SLM Holdings Corp. $ 18,028,125
------------
Financial (Diversified) - 1.1%
425,000 Equitable Companies, Inc. $ 20,825,000
------------
Insurance (Life/Health) - 2.0%
1,135,000 Conseco, Inc. $ 39,370,313
------------
</TABLE>
The accompanying notes are an integral part of these financial statements. 13
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Insurance (Property/Casualty) - 5.4%
425,000 Allmerica Financial Corp. $ 21,250,000
450,000 Financial Security Assurance Holdings Ltd. 22,415,625
660,000 Gryphon Holdings, Inc.*+ 11,137,500
214,400 HCC Insurance Holdings Inc. 3,845,800
1,850,000 20th Century Industries 45,440,625
------------
$104,089,550
------------
Investment Management - 1.1%
850,000 United Asset Management Corp. $ 20,612,500
------------
Savings & Loan Companies - 1.9%
475,000 Charter One Financial Inc. $ 13,032,813
650,000 Washington Mutual, Inc. 24,334,375
------------
$ 37,367,188
------------
Total Financial $240,292,676
------------
Healthcare - 5.0%
Healthcare (Diversified) - 0.3%
742,800 IVAX Corp.* $ 7,056,600
------------
Healthcare (Hospital Management) - 1.9%
1,800,000 Columbia/HCA Healthcare Corp. $ 37,800,000
------------
Healthcare (Long-Term Care) - 1.0%
1,085,000 Integrated Health Services, Inc. $ 17,563,438
------------
Healthcare (Managed Care) - 1.0%
1,000,000 Humana Inc.* $ 18,937,500
------------
Healthcare (Medical Products/Supplies) - 0.8%
349,800 Beckman Coulter, Inc. $ 16,440,600
------------
Total Healthcare $ 97,798,138
------------
</TABLE>
14 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Technology - 16.2%
Communications Equipment - 2.3%
1,250,000 Alcatel Alsthom (A.D.R.) $27,500,000
1,000,000 Andrew Corp.* 16,375,000
-----------
$43,875,000
-----------
Computer (Hardware) - 3.0%
1,725,000 NCR Corp.* $58,003,125
-----------
Computer (Networking) - 0.8%
300,000 Ascend Communications Inc.* $14,475,000
-----------
Computer (Peripherals) - 0.8%
600,000 Seagate Technology, Inc.* $15,825,000
-----------
Computer (Software & Services) - 1.0%
800,000 The Learning Company* $20,650,000
-----------
Electronics (Defense) - 0.4%
645,000 Whittaker Corp.*+ $ 8,586,563
-----------
Electronics (Component Distributors) - 1.5%
300,000 Adaptec Inc.* $ 4,856,250
875,000 Marshall Industries*+ 25,156,250
-----------
$30,012,500
-----------
Equipment (Semiconductor) - 0.5%
61,900 Altera Corp.* $ 2,576,583
300,000 Analog Devices Inc.* 5,962,500
-----------
$ 8,539,083
-----------
Services (Data Processing) - 1.9%
1,357,200 First Data Corp. $35,965,800
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements. 15
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Photography/Imaging - 4.0%
500,000 Eastman Kodak Co. $ 38,750,000
2,225,000 Imation Corp.*+ 39,354,684
--------------
$ 78,104,684
--------------
Total Technology $ 314,036,755
--------------
Transportation - 2.2%
Railroads - 2.2%
900,000 Union Pacific Corp. 42,862,500
--------------
Total Transportation $ 42,862,500
--------------
Utilities - 6.9%
Electric Companies - 5.9%
329,800 Allegheny Energy Inc. $ 10,141,350
300,000 Baltimore Gas and Electric Co. 9,412,500
576,000 BEC Energy 22,860,000
475,000 Dominion Resources, Inc. 21,939,061
441,300 DTE Energy Co. 18,810,413
623,800 Edison International 16,452,726
375,000 Public Services Enterprises 14,250,000
--------------
$ 113,866,050
--------------
Natural Gas- 1.0%
350,000 Keyspan Energy Corp. $ 10,456,250
300,000 Sonat, Inc. 9,093,750
--------------
$ 19,550,000
--------------
Total Utilities $ 133,416,050
--------------
Total Common Stocks
(Cost $1,801,232,350) $1,837,624,970
--------------
</TABLE>
16 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
TEMPORARY CASH INVESTMENTS - 5.4%
Commercial Paper - 5.4%
$28,186,000 American Express Credit Corp., 5.12%, 11/02/98 $ 28,186,000
20,297,000 Chevron Oil Finance Co., 5.40%, 11/6/98 20,297,000
10,000,000 Citigroup Inc., 5.50%, 11/03/98 10,000,000
19,959,000 Ford Motor Credit Co., 5.25%, 11/05/98 19,959,000
9,343,000 General Electric Credit Corp., 5.18%, 11/03/98 9,343,000
17,018,000 Prudential Funding Inc., 5.15%, 11/04/98 17,018,000
--------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $104,803,000) $ 104,803,000
--------------
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $1,906,035,350)(a) $1,942,427,970
==============
</TABLE>
* Non-income producing security.
+ Investment held by the Fund representing 5% or more of the outstanding voting
stock of such company.
(a) At October 31, 1998, the net unrealized gain on investments based on cost
for federal income tax purposes of $1,908,679,428 was as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $215,536,058
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (181,787,516)
------------
Net unrealized gain $ 33,748,542
============
</TABLE>
Purchases and sales of securities (excluding temporary cash investments) for the
year ended October 31, 1998 aggregated $1,357,614,769 and $1,629,410,999,
respectively.
The accompanying notes are an integral part of these financial statements. 17
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
BALANCE SHEET 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in securities, at value (including temporary cash
investments of $104,803,000)(cost $1,906,035,350) $ 1,942,427,970
Cash 491
Receivables -
Investment securities sold 11,793,016
Fund shares sold 1,639,179
Dividends and interest 1,285,984
Other 5,357
---------------
Total assets $ 1,957,151,997
---------------
LIABILITIES:
Payables -
Investment securities purchased $ 14,779,643
Fund shares repurchased 3,477,771
Due to affiliates 2,211,977
Accrued expenses 253,678
---------------
Total liabilities $ 20,723,069
---------------
NET ASSETS:
Paid-in capital $ 1,809,596,509
Accumulated undistributed net investment income 2,528,415
Accumulated undistributed net realized gain on investments 87,911,384
Net unrealized gain on investments 36,392,620
---------------
Total net assets $ 1,936,428,928
===============
NET ASSET VALUE PER SHARE:
(Unlimited number of shares authorized)
Class A (based on $1,308,334,534/68,772,409 shares) $ 19.02
===============
Class B (based on $574,259,184/30,999,507 shares) $ 18.52
===============
Class C (based on $49,842,455/2,695,960 shares) $ 18.49
===============
Class Y (based on $3,992,755/209,460 shares) $ 19.06
===============
MAXIMUM OFFERING PRICE:
Class A $ 20.18
===============
</TABLE>
18 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended 10/31/98
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends (net of foreign taxes withheld of $284,216) $26,468,318
Interest 6,969,260
-----------
Total investment income $ 33,437,578
-------------
EXPENSES:
Management fees $13,455,298
Transfer agent fees
Class A 3,183,140
Class B 1,561,151
Class C 132,539
Class Y 67
Distribution fees
Class A 3,951,774
Class B 7,199,320
Class C 615,853
Accounting 550,551
Custodian fees 170,446
Registration fees 265,750
Professional fees 100,285
Printing 179,400
Fees and expenses of nonaffiliated trustees 45,185
Miscellaneous 115,640
-----------
Total expenses $ 31,526,399
Less fees paid indirectly (298,963)
-------------
Net expenses $ 31,227,436
-------------
Net investment income $ 2,210,142
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments (including net realized
loss of $1,916,040 from affiliated companies) $ 88,383,725
Change in net unrealized gain on investments (282,031,277)
-------------
Net loss on investments $(193,647,552)
-------------
Net decrease in net assets resulting from operations $(191,437,410)
=============
</TABLE>
The accompanying notes are an integral part of these financial statements. 19
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the Years Ended 10/31/98 and 10/31/97
<TABLE>
<CAPTION>
Year Ended Year Ended
FROM OPERATIONS: 10/31/98 10/31/97
<S> <C> <C>
Net investment income $ 2,210,142 $ 9,267,366
Net realized gain on investments 88,383,725 235,661,875
Change in net unrealized gain or loss on investments (282,031,277) 203,007,226
--------------- ---------------
Net increase (decrease) in net assets resulting from
operations $ (191,437,410) $ 447,936,467
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Class A ($0.10 and $0.06 per share, respectively) $ (7,125,475) $ (4,238,978)
Class C ($0.00 and $0.04 per share, respectively) -- (64,617)
Net realized gain:
Class A ($2.25 and $0.88 per share, respectively) (154,430,807) (58,684,558)
Class B ($2.25 and $0.88 per share, respectively) (73,633,217) (27,212,132)
Class C ($2.25 and $0.88 per share, respectively) (6,091,331) (1,392,090)
--------------- ---------------
Total distributions to shareholders $ (241,280,830) $ (91,592,375)
--------------- ---------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 479,028,328 $ 765,729,787
Reinvestment of distributions 209,303,525 79,547,895
Cost of shares repurchased (716,309,430) (720,497,724)
--------------- ---------------
Net increase (decrease) in net assets resulting from
fund share transactions $ (27,977,577) $ 124,779,958
--------------- ---------------
Net increase (decrease) in net assets $ (460,695,817) $ 481,124,050
NET ASSETS:
Beginning of year 2,397,124,745 1,916,000,695
--------------- ---------------
End of year (including accumulated undistributed net
investment income of $2,528,415 and $7,387,854,
respectively) $1,936,428,928 $2,397,124,745
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CLASS A '98 Shares '98 Amount '97 Shares '97 Amount
Shares sold 15,904,559 $ 343,579,340 25,780,570 $549,681,572
Reinvestment of distributions 7,251,884 148,518,582 2,920,874 57,365,349
Less shares repurchased (22,914,494) (490,608,971) (25,642,389) (562,314,860)
----------- -------------- ----------- -------------
Net increase 241,949 $ 1,488,951 3,059,055 $ 44,732,061
=========== ============== =========== =============
CLASS B
Shares sold 5,151,319 $ 109,379,552 8,593,655 $181,607,305
Reinvestment of distributions 2,889,094 58,013,010 1,116,304 21,600,490
Less shares repurchased (9,828,979) (202,913,967) (7,093,350) (149,421,822)
----------- -------------- ----------- -------------
Net increase (decrease) (1,788,566) $ (35,521,405) 2,616,609 $ 53,785,973
=========== ============== =========== =============
CLASS C
Shares sold 995,367 $ 20,998,898 1,640,290 $ 34,440,910
Reinvestment of distributions 138,320 2,771,933 30,143 582,056
Less shares repurchased (1,091,750) (22,518,084) (409,184) (8,761,042)
----------- -------------- ----------- -------------
Net increase 41,937 $ 1,252,747 1,261,249 $ 26,261,924
=========== ============== =========== =============
CLASS Y(a)
Shares sold 223,052 $ 5,070,538
Less shares repurchased (13,592) (268,408)
----------- --------------
Net increase 209,460 $ 4,802,130
=========== ==============
</TABLE>
(a) Class Y shares were first publicly offered July 2, 1998.
20 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/98 10/31/97
<S> <C> <C>
CLASS A
Net asset value, beginning of year $ 23.23 $ 19.85
---------- ----------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.08 $ 0.15
Net realized and unrealized gain (loss) on investments ( 1.94) 4.17
---------- ----------
Net increase (decrease) from investment operations $ (1.86) $ 4.32
Distributions to shareholders:
Net investment income (0.10) ( 0.06)
Net realized gain (2.25) ( 0.88)
---------- ----------
Net increase (decrease) in net asset value $ (4.21) $ 3.38
---------- ----------
Net asset value, end of year $ 19.02 $ 23.23
========== ==========
Total return* (8.74)% 22.67%
Ratio of net expenses to average net assets 1.08%+ 1.00%+
Ratio of net investment income (loss) to average net assets 0.33%+ 0.64%+
Portfolio turnover rate 61% 63%
Net assets, end of year (in thousands) $1,308,335 $1,591,655
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.07% 0.98%
Net investment income 0.34% 0.66%
<CAPTION>
Year Ended Year Ended Year Ended
10/31/96 10/31/95 10/31/94
<S> <C> <C> <C>
CLASS A
Net asset value, beginning of year $ 19.42 $ 17.26 $ 16.17
---------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.08 $ 0.08 $ (0.05)
Net realized and unrealized gain (loss) on investments 2.31 3.03 2.80
---------- -------- --------
Net increase (decrease) from investment operations $ 2.39 $ 3.11 $ 2.75
Distributions to shareholders:
Net investment income (0.09) - -
Net realized gain (1.87) (0.95) (1.66)
---------- -------- --------
Net increase (decrease) in net asset value $ 0.43 $ 2.16 $ 1.09
---------- -------- --------
Net asset value, end of year $ 19.85 $ 19.42 $ 17.26
========== ======== ========
Total return* 13.12% 19.32% 19.03%
Ratio of net expenses to average net assets 1.02%+ 1.16%+ 1.26%
Ratio of net investment income (loss) to average net assets 0.43%+ 0.53%+ ( 0.44)%
Portfolio turnover rate 37% 59% 47%
Net assets, end of year (in thousands) $1,299,611 $845,415 $405,904
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.00% 1.14% -
Net investment income 0.45% 0.55% -
</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.
+ Ratio assuming no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements. 21
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
10/31/98 10/31/97
<S> <C> <C>
CLASS B
Net asset value, beginning of period $ 22.73 $ 19.53
-------- --------
Increase (decrease) from investment operations:
Net investment loss $ (0.10) $ (0.02)
Net realized and unrealized gain (loss) on investments (1.86) 4.10
-------- --------
Net increase (decrease) from investment operations $ (1.96) $ 4.08
Distributions to shareholders:
Net investment income - -
Net realized gain (2.25) (0.88)
-------- --------
Net increase (decrease) in net asset value $ (4.21) $ 3.20
-------- --------
Net asset value, end of period $ 18.52 $ 22.73
======== ========
Total return* (9.42)% 21.70%
Ratio of net expenses to average net assets 1.85%+ 1.76%+
Ratio of net investment loss to average net assets (0.43)%+ (0.12)%+
Portfolio turnover rate 61% 63%
Net assets, end of period (in thousands) $574,259 $745,258
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.84% 1.75%
Net investment loss (0.42)% (0.11)%
<CAPTION>
Year Ended Year Ended 4/4/94 to
10/31/96 10/31/95 10/31/95
<S> <C> <C> <C>
CLASS B
Net asset value, beginning of period $ 19.20 $ 17.20 $ 14.94
-------- -------- --------
Increase (decrease) from investment operations:
Net investment loss $ (0.04) $ (0.01) $ (0.04)
Net realized and unrealized gain (loss) on investments 2.26 2.96 2.30
-------- -------- --------
Net increase (decrease) from investment operations $ 2.22 $ 2.95 $ 2.26
Distributions to shareholders:
Net investment income (0.02) - -
Net realized gain (1.87) (0.95) -
-------- -------- --------
Net increase (decrease) in net asset value $ 0.33 $ 2.00 $ 2.26
-------- -------- --------
Net asset value, end of period $ 19.53 $ 19.20 $ 17.20
======== ======== ========
Total return* 12.27% 18.42% 15.13%
Ratio of net expenses to average net assets 1.79%+ 1.93%+ 2.04%**
Ratio of net investment loss to average net assets (0.35)%+ (0.18)%+ (1.12)%**
Portfolio turnover rate 37% 59% 47%
Net assets, end of period (in thousands) $589,188 $311,672 $ 42,459
Ratios assuming reduction for fees paid indirectly:
Net expenses 1.78% 1.88% -
Net investment loss (0.34)% (0.13)% -
</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.
22 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year 1/31/96
Ended Ended to
10/31/98 10/31/97(a) 10/31/96
<S> <C> <C> <C>
CLASS C
Net asset value, beginning of period $ 22.69 $ 19.53 $ 18.69
-------- -------- --------
Increase (decrease) from investment operations:
Net investment loss $ (0.09) $ (0.03) $ (0.02)
Net realized and unrealized gain (loss) on
investments (1.86) 4.11 0.86
-------- -------- --------
Net increase (decrease) from investment
operations $ (1.95) $ 4.08 $ 0.84
Distributions to shareholders:
Net investment income - (0.04) -
Net realized gain (2.25) (0.88) -
-------- -------- --------
Net increase (decrease) in net asset value $ (4.20) $ 3.16 $ 0.84
-------- -------- --------
Net asset value, end of period $ 18.49 $ 22.69 $ 19.53
======== ======== ========
Total return* (9.38)% 21.74% 4.50%
Ratio of net expenses to average net assets 1.84%+ 1.75%+ 1.79%**+
Ratio of net investment loss to average net
assets (0.43)%+ (0.15)%+ (0.39)%**+
Portfolio turnover rate 61% 63% 37%
Net assets, end of period (in thousands) $ 49,842 $ 60,211 $ 27,202
Ratios assuming reduction for fees paid
indirectly:
Net expenses 1.83% 1.73% 1.74%**
Net investment loss (0.42)% (0.13)% (0.34)**
</TABLE>
(a) The per share data presented above is based upon the average shares
outstanding for the period presented.
* 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.
The accompanying notes are an integral part of these financial statements. 23
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS 10/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7/2/98 to
10/31/98
<S> <C>
CLASS Y(a)
Net asset value, beginning of period $ 23.00
---------
Increase (decrease) from investment operations:
Net investment income $ 0.04
Net realized and unrealized loss on investments (3.98)
---------
Net decrease in net asset value $ (3.94)
---------
Net asset value, end of period $ 19.06
=========
Total return* (17.13)%
Ratio of net expenses to average net assets 0.79%**+
Ratio of net investment income to average net assets 0.68%**+
Portfolio turnover rate 61%
Net assets, end of period (in thousands) $ 3,993
Ratios assuming reduction for fees paid indirectly:
Net expenses 0.78%**
Net investment income 0.69%**
</TABLE>
(a) Class Y shares were first publicly offered on July 2, 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
24 The accompanying notes are an integral part of these financial statements.
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
Pioneer Capital Growth 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 investment objective of the Fund is to seek capital
appreciation by investing in a diversified portfolio of securities consisting
primarily of common stocks.
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 July 2, 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.
25
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
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 first to select for sale those securities that have
the highest cost and also qualify for long-term capital gain or loss
treatment for tax purposes.
Settlements from litigation and class action suits are recognized when the
Fund acquires an enforceable right to such awards. Included in net realized
gain from investments is $81,479 of class action settlements received by the
Fund during the year ended October 31, 1998.
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.
At October 31, 1998, the Fund has reclassified $55,894 and $61 from
accumulated undistributed net realized gain on investments to accumulated
undistributed net investment income and paid-in capital, respectively. 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 $91,013,177 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 wholly owned subsidiary of The Pioneer Group, Inc. (PGI). PFD earned
$878,261 in underwriting commissions on the sale of fund shares during the
year ended October 31, 1998.
26
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 number of accounts in each class and the ratable
allocation of related out-of-pocket expense (see Note 3). Income, common
expenses and realized and unrealized gains and losses are calculated at the
Fund level and allocated daily to each class of shares based on the
respective percentage of adjusted net assets at the beginning of the day.
Distributions to shareholders are recorded as of the ex-dividend date.
Distributions paid by the Fund, if any, with respect to each class of shares
are calculated in the same manner, at the same time, on the same day and in
the same amount, except that Class A, Class B, Class C, and Class Y shares
bear different transfer agent and distribution fees.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), the Fund's investment adviser,
manages the Fund's portfolio and is a wholly owned subsidiary of PGI. Effective
May 1, 1998, PIM receives a basic fee that is calculated at the annual rate of
0.70% of the Fund's average daily net assets up to $500 million; 0.65% of the
next $500 million, and 0.625% of the excess over $1 billion. Effective May 1,
1999, the basic fee will be subject to a performance adjustment up to a maximum
of +/- 0.10% based on the Fund's investment performance as compared with the
Lipper Growth Funds Index.
Prior to May 1, 1998, management fees were calculated daily at the annual rate
of 0.65% of the Fund's average daily net assets up to $300 million; 0.60% of the
next $200 million; 0.50% of the next $500 million; and 0.45% of the excess over
$1 billion. For the year ended October 31, 1998, the management fee was
equivalent to an annualized rate of 0.57% of average daily net assets.
In addition, under the management agreement, certain other services and costs,
including accounting, regulatory reporting and insurance premiums, are paid by
the Fund. At October 31, 1998, $1,047,902 was payable to PIM related to
management fees and certain other services.
27
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 10/31/98 (continued)
- --------------------------------------------------------------------------------
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 $402,091 in transfer agent fees payable to PSC at October 31,
1998.
4. Distribution Plans
The Fund adopted a Plan of Distribution for each Class of shares (Class A Plan,
Class B Plan, and Class C Plan) in accordance with Rule 12b-1 of the Investment
Company Act of 1940. Pursuant to the Class A Plan, the Fund pays PFD a service
fee of up to 0.25% of the Fund's average daily net assets in reimbursement of
its actual expenditures to finance activities primarily intended to result in
the sale of Class A shares. Pursuant to the Class B Plan and the Class C Plan,
the Fund pays PFD 1.00% of the average daily net assets attributable to each
class of shares. The fee consists of a 0.25% service fee and a 0.75%
distribution fee paid as compensation for 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 $761,984 in distribution fees payable
to PFD at October 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 1.0% may be
imposed on certain net asset value purchases of Class A shares that are redeemed
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 shares being redeemed. Redemptions of Class
C shares within one year of purchase are subject to a CDSC of 1.0%. Proceeds
from the CDSCs are paid to PFD. For the year ended October 31, 1998, CDSCs in
the amount of $2,102,846 were paid to PFD.
5. Expense Offsets
The Fund has entered into certain directed brokerage and expense offset
arrangements resulting in a reduction in the Fund's total expenses. For the year
ended October 31, 1998, the Fund's expenses were reduced by $298,963 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
28
<PAGE>
Pioneer Capital Growth Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. For the period ended
October 31,1998, the fund had no borrowings under this agreement.
7. Affiliated Companies
The Fund may invest 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 October 31, 1998:
<TABLE>
<CAPTION>
Dividend
Affiliates Purchases Sales Income Value
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brush Wellman, Inc. $ 480,750 $ 824,036 $ 412,740 $ 14,450,000
Gryphon Holdings, Inc. - - - 11,137,500
Imation Corp. 11,015,218 - - 39,354,688
Justin Industries - 3,855,170 309,485 20,107,150
Marshall Industries 5,867,293 - - 25,156,250
The Geon Co. 7,640,411 3,417,005 658,450 28,735,938
The Rival Co. 51,500 222,343 240,010 6,105,000
Whittaker Corp. - 2,247,101 - 8,586,563
Worldtex, Inc. - 1,692,374 - 4,811,850
----------- ----------- ---------- ------------
$25,055,172 $12,258,029 $1,620,685 $158,444,939
=========== =========== ========== ============
</TABLE>
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Pioneer Capital Growth Fund
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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To the Shareowners and the Board of Trustees of Pioneer Capital Growth Fund:
We have audited the accompanying balance sheet, including the schedule of
investments, of Pioneer Capital Growth Fund as of October 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
October 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 Capital Growth Fund as of October 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
December 4, 1998
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Pioneer Capital Growth Fund
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RESULTS OF SHAREOWNER MEETING
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On June 18, 1998, Pioneer Capital Growth Fund held a special meeting of
shareowners. The following proposal was passed by shareowner vote. Following
are the detailed results of the vote.
Proposal 3 - Allow the Fund to be reorganized as a separate Delaware business
trust.
<TABLE>
<CAPTION>
Affirmative Against Abstain
<S> <C> <C>
57,668,751.772 2,966,986.772 5,202,039.300
</TABLE>
31
<PAGE>
Pioneer Capital Growth Fund
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TRUSTEES, OFFICERS AND SERVICE PROVIDERS
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<TABLE>
<S> <C>
Trustees Officers
John F. Cogan, Jr. John F. Cogan, Jr., Chairman and
Mary K. Bush President
Richard H. Egdahl, M.D. David D. Tripple, Executive Vice President
Margaret B.W. Graham J. Rodman Wright, Vice President
John W. Kendrick John A. Boynton, Treasurer
Marguerite A. Piret Joseph P. Barri, Secretary
David D. Tripple
Stephen K. West
John Winthrop
</TABLE>
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
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A SALUTE TO PIONEER FUND
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[HAPPY 70TH BIRTHDAY
PIONEER FUND LOGO]
This year, 1998, marks a special anniversary for the Pioneer family of mutual
funds and an important milestone for the entire mutual fund industry. In the mid
1920s, a group of forward thinking financial professionals started the first
"open-end" investment companies, known today as mutual funds. They provided a
way for small investors to benefit from professional financial management.
In 1928, Pioneer Fund became the fourth mutual fund created.
Since then, Pioneer Fund has gone to work for its shareowners every day for 70
years. Through 15 bear markets, 16 bull markets and even the Great Depression,
Pioneer Fund has stayed true to an investment ethic that relies on the rewards
of hard work.
Rather than follow trends, the financial professionals at Pioneer roll-up their
sleeves and research. We look for value in an investment: companies that might
not be the current rage on Wall Street, but that we believe have the business
smarts on Main Street to keep their earnings strong. The Fund's investment
objective continues to be growth and income.
For 70 years, Pioneer Fund has made investments based on experience, our own
investment ethic, and the needs of our shareowners.
Every day, the financial professionals at Pioneer Fund come to work, aware of
the job at hand. We know shareowners are investing their hard-earned money to
provide for the future.
In 1928 there were four mutual funds. Today there are 11,000. Only one can tell
the Pioneer Fund story.
For the complete Pioneer Fund story call your investment professional, or
Pioneer at 1-800-225-6292, for a prospectus. Please read it carefully before
you invest or send money. Class B and C Shares have been available since
7/1/96. Past performance does not guarantee future results.
33
<PAGE>
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PROGRAMS AND SERVICES FOR PIONEER SHAREOWNERS
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Your investment representative can give you additional information on Pioneer's
programs and services. If you want to order literature on any of the following
items directly, simply call Pioneer at 1-800-225-6292.
FactFone(SM)
Our automated account information service, available to you 24 hours a day,
seven days a week. FactFone gives you a quick and easy way to check fund share
prices, yields, dividends and distributions, as well as information about your
own account. Simply call 1-800-225-4321. For specific account information, have
your 13-digit account number and four-digit personal identification number at
hand.
90-Day Reinstatement Privilege (for Class A Shares)
Enables you to reinvest all or a portion of the money you redeem from your
Pioneer account - without paying a sales charge - within 90 days of your
redemption. You have the choice of investing in any Pioneer fund, as long as you
meet its minimum investment requirement.
Investomatic Plan
An easy and convenient way for you to invest on a regular basis. All you need to
do is authorize a set amount of money to be moved out of your bank account into
the Pioneer fund of your choice. Investomatic also allows you to change the
dollar amount, frequency and investment date right over the phone. By putting
aside affordable amounts of money regularly, you can build a long-term
investment - without sacrificing your current standard of living.
Payroll Investment Program (PIP)
Lets you invest in a Pioneer fund directly through your paycheck. All that's
involved is for your employer to fill out an authorization form allowing Pioneer
to deduct from participating employees' paychecks. You specify the dollar amount
you want to invest into the Pioneer fund(s) of your choice.
34
<PAGE>
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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 Dividend
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.)
35
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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 New in 1998, $2,000 maximum annual contributions are 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.
36
<PAGE>
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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.
<TABLE>
<S> <C>
Growth Funds Income Funds
United States Taxable
Pioneer Capital Growth Fund Pioneer America Income Trust
Pioneer Growth Shares Pioneer Bond Fund
Pioneer Micro-Cap Fund Pioneer Short-Term Income Trust
Pioneer Mid-Cap Fund
Pioneer Small Company Fund
Tax-Free
Pioneer Intermediate Tax-Free Fund
International/Global Pioneer Tax-Free Income Fund
Pioneer Emerging Markets Fund
Pioneer Europe Fund
Pioneer Gold Shares Money Market Fund
Pioneer Indo-Asia Fund Pioneer Cash Reserves Fund
Pioneer International Growth Fund
Pioneer World Equity Fund
Growth and Income Funds
Pioneer Balanced Fund
Pioneer Equity-Income Fund
Pioneer Fund
Pioneer Real Estate Shares
Pioneer II
</TABLE>
37
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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
FactFone(SM) for automated fund yields, prices,
account information and transactions 1-800-225-4321
Retirement plans information 1-800-622-0176
Telecommunications Device for the Deaf (TDD) 1-800-225-1997
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
1298-5778
(C) Pioneer Funds Distributor, Inc.
[Recycle Logo] Printed on Recycled Paper
