UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08786
Pioneer Variable Contracts Trust
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Terrence J. Cullen, Amundi Asset Management, Inc.,
60 State Street, Boston, MA 02109
(Name and address of agent for service)
Registrant’s telephone number, including area code: (617) 742-7825
Date of fiscal year end: December 31, 2021
Date of reporting period: January 1, 2021 through June 30, 2021
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.
Pioneer Variable Contracts Trust
Pioneer Bond
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Bond VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
5 Largest Holdings
(As a percentage of total investments)*
1. | U.S. Treasury Bills, 8/5/21 | | 7.48% |
2. | U.S. Treasury Bills, 7/27/21 | | 4.75 |
3. | Fannie Mae, 4.5%, 7/1/51 (TBA) | | 3.58 |
4. | U.S. Treasury Bills, 8/17/21 | | 3.44 |
5. | Fannie Mae, 2.5%, 7/1/51 (TBA) | | 3.44 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities |
(j) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
Performance Update 6/30/21 | | |
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Prices and Distributions | | |
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Net Asset Value per Share | 6/30/21 | 12/31/20 |
Class I | $11.36 | $11.78 |
Class II | $11.39 | $11.80 |
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| Net | | |
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains |
Class I | $0.1369 | $0.1058 | $0.1924 |
Class II | $0.1229 | $0.1058 | $0.1924 |
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Bond VCT Portfolio at net asset value during the periods shown, compared to that of the Bloomberg Barclays U.S. Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
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Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
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| | | U.S. Aggregate |
| Class I | Class II | Bond Index |
10 Years | 4.32% | 4.07% | 3.39% |
5 Years | 4.13% | 3.89% | 3.03% |
1 Year | 6.06% | 5.79% | -0.33% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. Divide your account value by $1,000
Example: an $8,600 account value ÷ $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,001.50 | $1,001.20 |
Expenses Paid During Period* | $2.88 | $4.17 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.58% and 0.84% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Bond VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
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Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,021.92 | $1,020.63 |
Expenses Paid During Period* | $2.91 | $4.21 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.58% and 0.84% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, Brad Komenda discusses the factors that affected the performance of Pioneer Bond VCT Portfolio during the six-month period ended June 30, 2021. Mr. Komenda, Senior Vice President, Deputy Director of Investment Grade Corporates, and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), is responsible for the daily management of the Portfolio, along with Kenneth J. Taubes, Executive Vice President and Chief Investment Officer, US, and a portfolio manager at Amundi US, and Timothy Rowe, Managing Director, Director of Multisector Fixed Income, and a portfolio manager at Amundi US.
Q:How did the Portfolio perform during the six-month period ended June 30, 2021?
A: Pioneer Bond VCT Portfolio’s Class I shares returned 0.15% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 0.12%, while the Portfolio’s benchmark, the Bloomberg Barclays US Aggregate Bond Index, returned -1.60%.
Q:How would you describe the investment environment in the fixed-income markets during the six-month period ended June 30, 2021?
A:The three months of the period saw strong equity market returns, notably higher US Treasury yields, and rising inflation expectations, driven by investor optimism regarding the global economic growth outlook. Contributing to the optimistic view was the Democratic Party’s gaining control of both houses of Congress in early January, which gave rise to a new $1.9 trillion US fiscal stimulus package and, later, a proposed $3 billion-plus infrastructure bill. In addition, the continued distribution of COVID-19 vaccines in the US as well as a general decline in severe virus cases, coupled with the ongoing reopening of the economy, helped boost market sentiment during the period.
As the six-month period progressed, the continued, highly dovish posture on monetary policy from the US Federal Reserve (Fed) lent further support to the markets, as the US central bank expressed its intention to remain “on the sidelines” with regard to major policy changes until at least 2023. The Fed based its projection on the view that near-term increases in inflation above the usual 2% target would be transitory, and not structural. The Fed also messaged that it would look at average inflation over time, rather than focusing on isolated upticks in prices and thus feeling compelled to raise rates in response.
However, the “reflation trade” wobbled during June as market participants navigated growing apprehension over the spread of COVID-19 variants and a somewhat “hawkish” Fed Open Market Committee (FOMC) meeting that month. Investors in the Treasury market reacted to the updated Fed “dot plot” displaying FOMC member forecasts for the federal funds rate, which pointed to a median year-end 2023 target rate of 0.625%, or 50 basis points (bps) higher than the March forecast. (The Fed’s “dot” plot/projection is a quarterly chart summarizing the outlook for the federal funds rate for each of the FOMC’s members. A basis point is equal to 1/100th of a percentage point.)
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The yield curve twisted around the intermediate portion, with short-end yields rising and long-end yields falling. Notably, breakeven inflation rates fell significantly. The movement suggested investor doubts regarding the Fed’s long-term commitment to its current average inflation targeting framework. (Breakeven rates represent the difference(s) between the yield of a nominal bond and an inflation-linked bond of the same maturity.)
Within the fixed-income markets, investment-grade corporate bonds posted a return of -1.27% for the six-month period, as rising Treasury yields weighed on prices, while less interest-rate-sensitive high-yield corporates returned 3.62% (as measured by the Bloomberg Barclays US Corporate Bond Index and the Bloomberg Barclays US Corporate High Yield Index, respectively). Returns for longer-term Treasuries were well into negative territory for the period, given the rise in yields seen over the first quarter of 2021. Securitized assets ended the six-month period with modest losses, while still outperforming Treasuries.
Q:What factors influenced the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021?
A:The Portfolio’s sector allocations were the biggest positive contributions to performance relative to the Bloomberg Barclays US Aggregate Bond Index (the Bloomberg Barclays Index) over the six-month period. Security selection and interest-rate positioning also aided the Portfolio’s relative returns.
An off-benchmark allocation to non-agency mortgage-backed securities (MBS) proved beneficial for relative performance. Within the Portfolio’s non-agency MBS allocation, positive contributions were led by exposure to credit-risk-transfer securities (CRTs), which benefited over the six-month period from strong home-price appreciation. (CRTs are investments that transfer a portion of the risk associated with credit losses within pools of conventional residential mortgage loans from the government-sponsored entities, or GSEs, Fannie Mae and Freddie Mac, to the private sector.) Another positive contributor to the Portfolio’s return versus the Bloomberg Barclays Index was exposure to below-investment-grade high-yield corporates within the industrials and financials sectors. The Portfolio’s industrials holdings fared well during the period due to the strong performance of commodity-related issues, particularly energy pipelines. Within financials, relative performance benefited from the Portfolio’s allocations to surplus notes of US insurers and convertible preferred securities issued by European banks.
We have preferred to invest the Portfolio in securitized assets in lieu of having credit exposures within the off-benchmark holdings, and we have also focused on agency pass-through MBS over Treasuries, given historically low interest rates. The positioning worked out well for the Portfolio as Treasury yields drifted higher in the first quarter of 2021. In addition, the Portfolio’s modest off-benchmark allocation to Treasury inflation-protected securities (TIPS) aided returns over the six-month period, as inflation expectations moved higher in the first quarter.
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Portfolio Management Discussion 6/30/21 (continued) | |
Within securitized assets, allocations to commercial MBS (CMBS) and asset-backed securities (ABS) proved beneficial to relative returns as investors continued to seek investments in sectors that had been lagging the recovery in riskier assets. The Portfolio’s positioning with respect to agency MBS also aided relative performance, as we were able to identify opportunities created by the Fed’s broad-based purchases within the asset class in its efforts to drive down borrowing costs.
Finally, the Portfolio’s interest-rate positioning benefited relative returns for the six-month period. Most notably, a short-duration stance compared with the Bloomberg Barclays Index entering 2021 (given low Treasury yields) contributed positively to relative performance, as yields on securities with longer maturities moved higher in the first quarter of the year. (Duration is a measure of the sensitivity of the price, or the value of principal, of a fixed-income investment to a change in interest rates, expressed as a number of years.)
There were no material detractors from the Portfolio’s benchmark-relative performance over the six-month period, given the negative return generated by the Bloomberg Barclays Index.
Q:Did the Portfolio have any investments in derivative securities during the six-month period ended June 30, 2021? If so, did the derivatives have any material impact on performance?
A: Yes, we invested the Portfolio in Treasury futures and credit-default swaps. We have typically invested in Treasury futures as part of our duration-management strategy for the Portfolio. We believe the use of Treasury futures has allowed us to express our views on duration and yield-curve positioning in the most efficient manner. We typically have invested in credit-default swaps to either gain or reduce Portfolio exposure to corporate bonds very quickly, as cash-bond transactions take a little more time to settle and have a higher liquidity cost.
The use of derivatives has allowed the Portfolio to benefit from the performance of the targeted asset classes, while retaining a better liquidity profile, which in turn may help to reduce risk. Treasury futures generally have not had an impact on the Portfolio’s performance, as we have used them primarily for hedging purposes. The use of credit-default swaps had no material impact on the Portfolio’s performance over the six-month period.
Q:What factors affected the Portfolio’s yield, or distributions* to shareholders, during the six-month period ended June 30, 2021?
A: The Portfolio’s monthly distribution rate decreased slightly over the six-month period. The increase in Treasury rates helped support the Portfolio’s yield, but tightening credit spreads ended up reducing the yield as the market began looking beyond COVID-19 and spread levels became more reflective of investors’ expectations of future economic stability. (Credit
* Distributions are not guaranteed.
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spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities.) The tightening of spreads, while reducing the Portfolio’s yield, had a positive effect on overall performance, due to capital appreciation.
Q:What is your investment outlook heading into the second half of the Portfolios’ fiscal year, and how is the Portfolio positioned?
A: The COVID-19 situation has remained a key driver of global economic activity, both positive and negative, and, in turn, the performance of financial markets. Though the spread of the highly contagious “Delta” variant of the virus has been driving an increase in COVID-19 infections (particularly in those regions with lower vaccination rates), in our view, the spread of the variant may not derail the economic recovery already underway in major developed economies where vaccination rates have been relatively high. While the vaccines apparently have not provided 100 percent protection against infection, “breakthrough” infections in vaccinated individuals have so far been less severe and resulted in fewer hospitalizations and deaths. It is important to keep this point in mind as the world transitions from fighting COVID-19 to living with COVID-19.
In his June post-FOMC meeting press conference, Fed Chair Powell reported that the committee has begun to talk about tapering its monthly purchases of Treasuries and agency MBS. Logically, some market participants have become worried about a repeat of the 2013 “taper tantrum,” if and when a taper plan is announced (possibly late this year). We do not expect a replay of 2013, however, as the current environment is quite different. The 2013 “tantrum” was triggered by Fed Chair Bernanke surprising investors during a May 2013 appearance before Congress by mentioning the possible curbing of near-term asset purchases if the US economy continued to improve. With no prior tapering experience and no road map from the Fed, market participants at that time struggled to determine the policy implications and reacted by repricing interest rates sharply higher. Fed officials, having learned from 2013, have been offering investors plenty of guidance and a good sense of their eventual policy game plan. While we still think it likely that the ultimate announcement of tapering could still precipitate some financial market volatility (as did the June FOMC meeting), unlike eight years ago, we believe any such episode could be relatively short lived.
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Portfolio Management Discussion 6/30/21 (continued) | |
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
When interest rates rise, the prices of fixed- income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Portfolio will generally rise.
Investments in the Portfolio are subject to possible loss due to the financial failure of the issuers of the underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that an issuer may exercise its right to prepay its security, if falling interest rates prompt the issuer to do so. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation.
Investments in high-yield or lower-rated securities are subject to greater-than-average price volatility, illiquidity and possibility of default.
The securities issued by U.S. Government-sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. Government.
The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-backed securities are also subject to prepayments.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
The Portfolio’s current positioning has continued to balance a positive outlook for economic growth and accommodative financial conditions against credit spreads that we believe have been offering much-lower-than-average compensation for the risk assumed in most sectors. One exception is agency MBS, where recent spread-widening has resulted in relatively attractive spread levels compared to Treasuries and credit-sensitive spread sectors, in our opinion.
We have continued to take steps aimed at reducing the Portfolio’s overall risk exposures, and have become increasingly selective with regard to sub-sector and issuer exposures.
Please refer to the Schedule of Investments on pages 9 to 33 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Schedule of Investments 6/30/21 (unaudited) | |
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Shares | | | Value |
| | UNAFFILIATED ISSUERS – 113.0% | |
| | COMMON STOCK – 0.0%† of Net Assets | |
| | Auto Components – 0.0%† | |
89 | | Lear Corp. | $ 15,600 |
| | Total Auto Components | $ 15,600 |
| | TOTAL COMMON STOCK | |
| | (Cost $10,396) | $ 15,600 |
| | CONVERTIBLE PREFERRED STOCK – 1.4% of Net Assets | |
| | Banks – 1.4% | |
1,667(a) | | Wells Fargo & Co., 7.5% | $ 2,544,192 |
| | Total Banks | $ 2,544,192 |
| | TOTAL CONVERTIBLE PREFERRED STOCK | |
| | (Cost $2,324,754) | $ 2,544,192 |
Principal | | | |
Amount | | | |
USD ($) | | | |
| | ASSET BACKED SECURITIES – 8.7% of Net Assets | |
500,000 | | American Credit Acceptance Receivables Trust, Series 2019-2, Class E, 4.29%, 6/12/25 | |
| | (144A) | $ 524,398 |
100,000 | | Amur Equipment Finance Receivables VI LLC, Series 2018-2A, Class C, 4.27%, 1/20/23 (144A) | 102,833 |
200,000 | | Amur Equipment Finance Receivables VI LLC, Series 2018-2A, Class D, 4.45%, 6/20/23 (144A) | 204,384 |
250,000(b) | | ASSURANT CLO, Ltd., Series 2019-5A, Class D, 4.384% (3 Month USD LIBOR + 420 bps), | |
| | 1/15/33 (144A) | 251,200 |
250,000(b) | | Battalion CLO XV, Ltd., Series 2020-15A, Class D, 3.44% (3 Month USD LIBOR + 325 bps), | |
| | 1/17/33 (144A) | 250,621 |
16,855 | | BCC Funding XIV LLC, Series 2018-1A, Class B, 3.39%, 8/21/23 (144A) | 16,890 |
250,000(b) | | Benefit Street Partners CLO XIX, Ltd., Series 2019-19A, Class E, 7.204% (3 Month USD | |
| | LIBOR + 702 bps), 1/15/33 (144A) | 249,988 |
250,000 | | Blackbird Capital Aircraft, Series 2021-1A, Class A, 2.443%, 7/15/46 (144A) | 251,446 |
250,000(b) | | Carlyle US CLO, Ltd., Series 2019-4A, Class C, 4.184% (3 Month USD LIBOR + 400 bps), | |
| | 1/15/33 (144A) | 251,035 |
400,000 | | CIG Auto Receivables Trust, Series 2019-1A, Class B, 3.59%, 8/15/24 (144A) | 406,835 |
57,871 | | Conn’s Receivables Funding LLC, Series 2019-B, Class B, 3.62%, 6/17/24 (144A) | 58,084 |
300,000 | | Continental Credit Card ABS LLC, Series 2019-1A, Class A, 3.83%, 8/15/26 (144A) | 305,731 |
100,000 | | CoreVest American Finance Trust, Series 2017-1, Class C, 3.756%, 10/15/49 (144A) | 101,455 |
313,576 | | CoreVest American Finance Trust, Series 2020-3, Class A, 1.358%, 8/15/53 (144A) | 310,741 |
100,000 | | DataBank Issuer, Series 2021-1A, Class B, 2.65%, 2/27/51 (144A) | 101,157 |
296,250 | | Domino’s Pizza Master Issuer LLC, Series 2019-1A, Class A2, 3.668%, 10/25/49 (144A) | 320,522 |
70,000 | | Drive Auto Receivables Trust, Series 2020-2, Class C, 2.28%, 8/17/26 | 71,827 |
50,000 | | Drive Auto Receivables Trust, Series 2020-2, Class D, 3.05%, 5/15/28 | 52,028 |
21,897(c) | | Equifirst Mortgage Loan Trust, Series 2003-1, Class IF1, 4.01%, 12/25/32 | 22,338 |
43,373 | | FCI Funding LLC, Series 2019-1A, Class A, 3.63%, 2/18/31 (144A) | 43,906 |
323,154 | | Finance of America Structured Securities Trust, Series 2019-JR3, Class JR2, 2.0%, 9/25/69 | 344,732 |
240,065 | | Finance of America Structured Securities Trust, Series 2021-JR1, 0.0%, 4/25/51 | 238,208 |
250,000 | | Foundation Finance Trust, Series 2019-1A, Class B, 4.22%, 11/15/34 (144A) | 267,347 |
250,000 | | Foursight Capital Automobile Receivables Trust, Series 2019-1, Class D, 3.27%, | |
| | 6/16/25 (144A) | 258,192 |
250,000(b) | | Goldentree Loan Management US CLO 6, Ltd., Series 2019-6A, Class D, 4.038% (3 Month | |
| | USD LIBOR + 385 bps), 1/20/33 (144A) | 251,650 |
91,127 | | Home Partners of America Trust, Series 2019-1, Class D, 3.406%, 9/17/39 (144A) | 91,357 |
18,515 | | Icon Brand Holdings LLC, Series 2013-1A, Class A2, 4.352%, 1/25/43 (144A) | 7,870 |
The accompanying notes are an integral part of these financial statements.
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Schedule of Investments 6/30/21 (unaudited) (continued) | |
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Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | ASSET BACKED SECURITIES – (continued) | |
100,000(b) | | Invitation Homes Trust, Series 2018-SFR1, Class C, 1.332% (1 Month USD LIBOR + 125 bps), | |
| | 3/17/37 (144A) | $ 100,157 |
159,968(b) | | Invitation Homes Trust, Series 2018-SFR2, Class D, 1.523% (1 Month USD LIBOR + 145 bps), | |
| | 6/17/37 (144A) | 160,274 |
167,443(b) | | Invitation Homes Trust, Series 2018-SFR3, Class D, 1.732% (1 Month USD LIBOR + 165 bps), | |
| | 7/17/37 (144A) | 167,605 |
222,424 | | JG Wentworth XLIII LLC, Series 2019-1A, Class A, 3.82%, 8/17/71 (144A) | 249,481 |
15,735 | | JG Wentworth XXII LLC, Series 2010-3A, Class A, 3.82%, 12/15/48 (144A) | 16,569 |
250,000(b) | | Madison Park Funding XXXVI, Ltd., Series 2019-36A, Class E, 7.434% (3 Month USD LIBOR + | |
| | 725 bps), 1/15/33 (144A) | 250,234 |
150,000 | | Marlette Funding Trust, Series 2019-2A, Class C, 4.11%, 7/16/29 (144A) | 153,360 |
100,000 | | Mercury Financial Credit Card Master Trust, Series 2021-1A, Class A, 1.54%, 3/20/26 (144A) | 100,295 |
479,277(d) | | Mill City Mortgage Loan Trust, Series 2018-2, Class M1, 3.75%, 5/25/58 (144A) | 509,575 |
106,451 | | Mosaic Solar Loan Trust, Series 2019-2A, Class A, 2.88%, 9/20/40 (144A) | 111,757 |
115,161 | | MVW LLC, Series 2020-1A, Class C, 4.21%, 10/20/37 (144A) | 121,966 |
200,000 | | Nelnet Student Loan Trust, Series 2021-A, Class B1, 2.85%, 4/20/62 (144A) | 204,164 |
84,791(b) | | Newtek Small Business Loan Trust, Series 2017-1, Class A, 2.092% (1 Month USD LIBOR + | |
| | 200 bps), 2/25/43 (144A) | 84,362 |
300,000 | | NMEF Funding LLC, Series 2019-A, Class B, 3.06%, 8/17/26 (144A) | 304,272 |
100,000 | | NMEF Funding LLC, Series 2019-A, Class C, 3.3%, 8/17/26 (144A) | 102,233 |
100,000 | | NMEF Funding LLC, Series 2021-A, Class C, 2.58%, 12/15/27 (144A) | 99,789 |
100,000 | | Progress Residential Trust, Series 2018-SFR2, Class D, 4.338%, 8/17/35 (144A) | 99,844 |
110,000 | | Progress Residential Trust, Series 2018-SFR2, Class E, 4.656%, 8/17/35 (144A) | 110,611 |
190,000 | | Progress Residential Trust, Series 2018-SFR3, Class E, 4.873%, 10/17/35 (144A) | 192,213 |
300,000 | | Progress Residential Trust, Series 2019-SFR2, Class E, 4.142%, 5/17/36 (144A) | 306,270 |
300,000 | | Republic Finance Issuance Trust, Series 2019-A, Class A, 3.43%, 11/22/27 (144A) | 303,194 |
315,000 | | SCF Equipment Leasing LLC, Series 2019-1A, Class C, 3.92%, 11/20/26 (144A) | 316,449 |
200,000 | | SCF Equipment Leasing LLC, Series 2019-2A, Class C, 3.11%, 6/21/27 (144A) | 209,286 |
199,192(d) | | Sequoia Mortgage Trust, Series 2021-3, Class B1, 2.664%, 5/25/51 (144A) | 196,480 |
200,000 | | Small Business Lending Trust, Series 2019-A, Class B, 3.42%, 7/15/26 (144A) | 199,246 |
250,000(b) | | Sound Point CLO XXV, Ltd., Series 2019-4A, Class D, 4.294% (3 Month USD LIBOR + 411 bps), | |
| | 1/15/33 (144A) | 251,117 |
250,000(b) | | Sound Point CLO XXVIII, Ltd., Series 2020-3A, Class D, 3.905% (3 Month USD LIBOR + | |
| | 365 bps), 1/25/32 (144A) | 250,517 |
268,447 | | SpringCastle America Funding LLC, Series 2020-AA, Class A, 1.97%, 9/25/37 (144A) | 271,100 |
250,000(b) | | Symphony CLO XXII, Ltd., Series 2020-22A, Class C, 2.34% (3 Month USD LIBOR + 215 bps), | |
| | 4/18/33 (144A) | 248,555 |
250,000(d) | | Towd Point Mortgage Trust, Series 2015-2, Class 1B3, 3.434%, 11/25/60 (144A) | 259,391 |
300,000(d) | | Towd Point Mortgage Trust, Series 2015-6, Class B1, 3.859%, 4/25/55 (144A) | 318,310 |
300,000(d) | | Towd Point Mortgage Trust, Series 2016-1, Class B1, 3.725%, 2/25/55 (144A) | 309,442 |
225,000(d) | | Towd Point Mortgage Trust, Series 2016-3, Class B1, 4.094%, 4/25/56 (144A) | 240,316 |
300,000(d) | | Towd Point Mortgage Trust, Series 2016-4, Class B1, 3.86%, 7/25/56 (144A) | 327,409 |
640,000(d) | | Towd Point Mortgage Trust, Series 2017-4, Class M2, 3.25%, 6/25/57 (144A) | 679,094 |
325,000(d) | | Towd Point Mortgage Trust, Series 2018-3, Class M1, 3.875%, 5/25/58 (144A) | 346,244 |
350,000(d) | | Towd Point Mortgage Trust, Series 2018-3, Class M2, 3.875%, 5/25/58 (144A) | 371,472 |
600,000(d) | | Towd Point Mortgage Trust, Series 2019-4, Class M2B, 3.25%, 10/25/59 (144A) | 625,328 |
634,000(b) | | Towd Point Mortgage Trust, Series 2019-HY2, Class M2, 1.992% (1 Month USD LIBOR + 190 | |
| | bps), 5/25/58 (144A) | 654,907 |
27,075(d) | | Towd Point Mortgage Trust, Series 2019-HY2, Class XA, 5.0%, 5/25/58 (144A) | 27,046 |
The accompanying notes are an integral part of these financial statements.
10
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | ASSET BACKED SECURITIES – (continued) | |
309,794 | | Tricon American Homes Trust, Series 2019-SFR1, Class A, 2.75%, 3/17/38 (144A) | $ 323,237 |
180,000 | | Tricon American Homes Trust, Series 2020-SFR2, Class E1, 2.73%, 11/17/39 (144A) | 178,947 |
53,552 | | US Auto Funding LLC, Series 2019-1A, Class B, 3.99%, 12/15/22 (144A) | 53,925 |
125,048 | | Welk Resorts LLC, Series 2019-AA, Class D, 4.03%, 6/15/38 (144A) | 128,777 |
74,832 | | Westgate Resorts LLC, Series 2018-1A, Class C, 4.1%, 12/20/31 (144A) | 75,676 |
9,029 | | WRG Debt Funding II LLC, Series 2017-1, Class A, 4.458%, 3/15/26 (144A) | 9,030 |
| | TOTAL ASSET BACKED SECURITIES | |
| | (Cost $15,547,807) | $ 15,976,301 |
| | COLLATERALIZED MORTGAGE OBLIGATIONS – 14.7% of Net Assets | |
225,733(d) | | Ajax Mortgage Loan Trust, Series 2021-A, Class A1, 1.065%, 9/25/65 (144A) | $ 225,537 |
100,000 | | American Homes 4 Rent Trust, Series 2015-SFR1, Class C, 4.11%, 4/17/52 (144A) | 106,672 |
100,000(d) | | Angel Oak Mortgage Trust I LLC, Series 2019-1, Class M1, 4.5%, 11/25/48 (144A) | 101,193 |
230,000(d) | | Angel Oak Mortgage Trust I LLC, Series 2019-2, Class M1, 4.065%, 3/25/49 (144A) | 232,975 |
238,654(d) | | Bayview Opportunity Master Fund IVa Trust, Series 2017-SPL5, Class A, 3.5%, 6/28/57 (144A) | 244,067 |
73,029(b) | | Bear Stearns ALT-A Trust, Series 2005-7, Class 11A1, 0.632% (1 Month USD LIBOR + 54 bps), 8/25/35 | 73,559 |
67,206(b) | | Bellemeade Re, Ltd., Series 2018-1A, Class M1B, 1.692% (1 Month USD LIBOR + 160 bps), | |
| | 4/25/28 (144A) | 67,249 |
275,589(b) | | Bellemeade Re, Ltd., Series 2018-3A, Class M1B, 1.942% (1 Month USD LIBOR + 185 bps), | |
| | 10/25/28 (144A) | 276,318 |
180,000(b) | | Bellemeade Re, Ltd., Series 2018-3A, Class M2, 2.842% (1 Month USD LIBOR + 275 bps), | |
| | 10/25/28 (144A) | 181,348 |
150,000(b) | | Bellemeade Re, Ltd., Series 2019-1A, Class M1B, 1.842% (1 Month USD LIBOR + 175 bps), | |
| | 3/25/29 (144A) | 150,000 |
150,000(b) | | Bellemeade Re, Ltd., Series 2019-1A, Class M2, 2.792% (1 Month USD LIBOR + 270 bps), | |
| | 3/25/29 (144A) | 150,283 |
190,000(b) | | Bellemeade Re, Ltd., Series 2020-3A, Class M1C, 3.792% (1 Month USD LIBOR + 370 bps), | |
| | 10/25/30 (144A) | 198,514 |
150,000(b) | | Bellemeade Re, Ltd., Series 2020-3A, Class M2, 4.942% (1 Month USD LIBOR + 485 bps), | |
| | 10/25/30 (144A) | 157,852 |
210,000(b) | | Bellemeade Re, Ltd., Series 2020-4A, Class M2B, 3.692% (1 Month USD LIBOR + 360 bps), | |
| | 6/25/30 (144A) | 212,612 |
100,000(d) | | Bunker Hill Loan Depositary Trust, Series 2020-1, Class A2, 2.6%, 2/25/55 (144A) | 101,559 |
100,000(d) | | Bunker Hill Loan Depositary Trust, Series 2020-1, Class A3, 3.253%, 2/25/55 (144A) | 102,364 |
100,000(d) | | Cascade Funding Mortgage Trust, Series 2021-HB6, Class M3, 3.735%, 6/25/36 (144A) | 100,000 |
200,000 | | Cascade MH Asset Trust, Series 2021-MH1, Class M1, 2.992%, 2/25/46 (144A) | 205,789 |
100,000 | | Cascade MH Asset Trust, Series 2021-MH1, Class M2, 3.693%, 2/25/46 (144A) | 104,782 |
300,000(d) | | CFMT LLC, Series 2021-HB5, Class M3, 2.91%, 2/25/31 (144A) | 298,955 |
385,480(d) | | CIM Trust, Series 2019-J2, Class B4, 3.825%, 10/25/49 (144A) | 386,337 |
250,000(d) | | CIM Trust, Series 2019-R5, Class M3, 3.5%, 9/25/59 (144A) | 263,115 |
180,000(d) | | CIM Trust, Series 2020-R2, Class M3, 3.0%, 10/25/59 (144A) | 182,309 |
248,006(d) | | CIM Trust, Series 2021-J1, Class B1, 2.675%, 3/25/51 (144A) | 249,976 |
500,000 | | Citigroup Commercial Mortgage Trust, Series 2020-GC46, Class A5, 2.717%, 2/15/53 | 528,593 |
248,506(d) | | Citigroup Mortgage Loan Trust, Inc., Series 2018-RP2, Class A1, 2.987%, 2/25/58 (144A) | 257,528 |
400,000(d) | | Citigroup Mortgage Loan Trust, Inc., Series 2018-RP3, Class M3, 3.25%, 3/25/61 (144A) | 411,227 |
100,000(d) | | Citigroup Mortgage Loan Trust, Series 2021-INV1, Class B1W, 2.71%, 5/25/2051 (144A) | 100,924 |
186,236(b) | | Connecticut Avenue Securities Trust, Series 2019-R01, Class 2M2, 2.542% (1 Month USD | |
| | LIBOR + 245 bps), 7/25/31 (144A) | 187,246 |
48,436(b) | | Connecticut Avenue Securities Trust, Series 2019-R03, Class 1M2, 2.242% (1 Month USD | |
| | LIBOR + 215 bps), 9/25/31 (144A) | 48,781 |
The accompanying notes are an integral part of these financial statements.
11
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS – (continued) | |
141,970(b) | | Connecticut Avenue Securities Trust, Series 2019-R06, Class 2M2, 2.192% (1 Month USD | |
| | LIBOR + 210 bps), 9/25/39 (144A) | $ 142,643 |
182,376(b) | | Connecticut Avenue Securities Trust, Series 2019-R07, Class 1M2, 2.192% (1 Month USD | |
| | LIBOR + 210 bps), 10/25/39 (144A) | 183,129 |
104,714(b) | | Connecticut Avenue Securities Trust, Series 2020-R02, Class 2M2, 2.092% (1 Month USD | |
| | LIBOR + 200 bps), 1/25/40 (144A) | 105,175 |
104,209(d) | | CSMC Trust, Series 2013-IVR3, Class B4, 3.386%, 5/25/43 (144A) | 104,448 |
200,000(d) | | CSMC Trust, Series 2021-RPL2, Class M1, 2.75%, 1/25/60 (144A) | 212,688 |
150,000(d) | | CSMC Trust, Series 2021-RPL2, Class M2, 3.25%, 1/25/60 (144A) | 161,416 |
65,384(b) | | Eagle Re, Ltd., Series 2018-1, Class M1, 1.792% (1 Month USD LIBOR + 170 bps), 11/25/28 (144A) | 65,428 |
228,595(b) | | Eagle Re, Ltd., Series 2019-1, Class M1B, 1.892% (1 Month USD LIBOR + 180 bps), 4/25/29 (144A) | 229,349 |
150,000(b) | | Eagle Re, Ltd., Series 2020-2, Class M1C, 4.592% (1 Month USD LIBOR + 450 bps), 10/25/30 (144A) | 152,401 |
230,000(b) | | Eagle Re, Ltd., Series 2020-2, Class M2, 5.692% (1 Month USD LIBOR + 560 bps), 10/25/30 (144A) | 235,687 |
21,649 | | Federal Home Loan Mortgage Corp. REMICS, Series 2944, Class OH, 5.5%, 3/15/35 | 25,129 |
272,830(b)(e) | | Federal Home Loan Mortgage Corp. REMICS, Series 4091, Class SH, 6.477% (1 Month USD | |
| | LIBOR + 655 bps), 8/15/42 | 57,050 |
2,414 | | Federal National Mortgage Association REMICS, Series 2009-36, Class HX, 4.5%, 6/25/29 | 2,540 |
550,000 | | Federal National Mortgage Association REMICS, Series 2013-61, Class BY, 3.0%, 6/25/43 | 585,777 |
498,766(d) | | Flagstar Mortgage Trust, Series 2021-3INV, Class A16, 2.5%, 6/25/51 (144A) | 505,154 |
280,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA3, Class B1, 5.192% (1 Month USD LIBOR + | |
| | 510 bps), 6/25/50 (144A) | 293,156 |
280,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B1, 6.092% (1 Month USD LIBOR + | |
| | 600 bps), 8/25/50 (144A) | 299,962 |
65,429(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class M2, 3.842% (1 Month USD LIBOR + | |
| | 375 bps), 8/25/50 (144A) | 66,134 |
190,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class B1, 4.818% (SOFR30A + 480 | |
| | bps), 10/25/50 (144A) | 201,727 |
220,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class M2, 2.818% (SOFR30A + 280 | |
| | bps), 10/25/50 (144A) | 223,291 |
110,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B2, 5.668% (SOFR30A + 565 | |
| | bps), 12/25/50 (144A) | 114,402 |
130,000(b) | | Freddie Mac Stacr Remic Trust, Series 2020-HQA4, Class B1, 5.342% (1 Month USD LIBOR + | |
| | 525 bps), 9/25/50 (144A) | 137,240 |
170,000(b) | | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B1, 2.668% (SOFR30A + 265 bps), | |
| | 1/25/51 (144A) | 168,418 |
320,000(b) | | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B2, 4.768% (SOFR30A + 475 bps), | |
| | 1/25/51 (144A) | 328,059 |
160,000(b) | | Freddie Mac Stacr Remic Trust, Series 2021-HQA1, Class B2, 5.018% (SOFR30A + 500 bps), | |
| | 8/25/33 (144A) | 161,601 |
310,000(b) | | Freddie Mac Stacr Trust, Series 2018-HQA2, Class M2, 2.392% (1 Month USD LIBOR + 230 bps), | |
| | 10/25/48 (144A) | 312,800 |
320,000(b) | | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2017-DNA2, Class M2, | |
| | 3.542% (1 Month USD LIBOR + 345 bps), 10/25/29 | 334,310 |
160,000(b) | | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B2, | |
| | 7.418% (SOFR30A + 740 bps), 11/25/50 (144A) | 186,879 |
156,768(d) | | FWD Securitization Trust, Series 2019-INV1, Class A1, 2.81%, 6/25/49 (144A) | 160,272 |
12,784 | | Government National Mortgage Association, Series 2005-61, Class UZ, 5.25%, 8/16/35 | 13,216 |
4,062 | | Government National Mortgage Association, Series 2012-130, Class PA, 3.0%, 4/20/41 | 4,142 |
730,150(e) | | Government National Mortgage Association, Series 2019-159, Class CI, 3.5%, 12/20/49 | 96,452 |
678,456(b)(e) | | Government National Mortgage Association, Series 2020-9, Class SA, 3.257% (1 Month | |
| | USD LIBOR + 335 bps), 1/20/50 | 53,427 |
The accompanying notes are an integral part of these financial statements.
12
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS – (continued) | |
282,505(d) | | GS Mortgage-Backed Securities Corp. Trust, Series 2021-PJ1, Class A4, 2.5%, 6/25/51 (144A) | $ 285,425 |
641,957(d) | | GS Mortgage-Backed Securities Corp. Trust, Series 2021-PJ4, Class A4, 2.5%, 9/25/51 (144A) | 646,972 |
250,000(d) | | GS Mortgage-Backed Securities Corp. Trust, Series 2021-RPL1, Class M1, 2.25%, | |
| | 12/25/60 (144A) | 245,481 |
217,945(d) | | GS Mortgage-Backed Securities Trust, Series 2020-NQM1, Class A3, 2.352%, 9/27/60 (144A) | 221,020 |
68,968(b) | | Home Re, Ltd., Series 2019-1, Class M1, 1.742% (1 Month USD LIBOR + 165 bps), 5/25/29 (144A) | 69,016 |
150,000(b) | | Home Re, Ltd., Series 2020-1, Class M1C, 4.242% (1 Month USD LIBOR + 415 bps), | |
| | 10/25/30 (144A) | 152,250 |
150,000(b) | | Home Re, Ltd., Series 2020-1, Class M2, 5.342% (1 Month USD LIBOR + 525 bps), | |
| | 10/25/30 (144A) | 153,459 |
130,000(d) | | Homeward Opportunities Fund I Trust, Series 2020-2, Class A3, 3.196%, 5/25/65 (144A) | 134,032 |
100,000(d) | | Homeward Opportunities Fund I Trust, Series 2020-2, Class M1, 3.897%, 5/25/65 (144A) | 104,184 |
450,000 | | IMS Ecuadorian Mortgage Trust, Series 2021-1, Class GA, 3.4%, 8/18/43 (144A) | 467,437 |
621,857(d) | | JP Morgan Mortgage Trust, Series 2021-3, Class A3, 2.5%, 7/1/51 (144A) | 632,949 |
437,843(d) | | JP Morgan Mortgage Trust, Series 2021-4, Class A3, 2.5%, 8/25/51 (144A) | 445,653 |
367,938(d) | | JP Morgan Mortgage Trust, Series 2021-6, Class A3, 2.5%, 10/25/51 (144A) | 374,501 |
245,292(d) | | JP Morgan Mortgage Trust, Series 2021-6, Class A15, 2.5%, 10/25/51 (144A) | 248,819 |
249,069(d) | | JP Morgan Mortgage Trust, Series 2021-6, Class B1, 2.861%, 10/25/51 (144A) | 253,111 |
547,684(d) | | JP Morgan Mortgage Trust, Series 2021-7, Class A3, 2.5%, 11/25/51 (144A) | 557,454 |
299,439(d) | | JP Morgan Mortgage Trust, Series 2021-7, Class B2, 2.82%, 11/25/51 (144A) | 302,235 |
450,000(d) | | JP Morgan Mortgage Trust, Series 2021-8, Class A3, 2.5%, 12/25/51 (144A) | 457,031 |
296,620(d) | | JP Mortgage Trust, Series 2021-INV1, Class A5A, 2.5%, 10/25/51 (144A) | 300,328 |
249,521(d) | | JP Mortgage Trust, Series 2021-INV1, Class B1, 3.036%, 10/25/51 (144A) | 258,475 |
199,617(d) | | JP Mortgage Trust, Series 2021-INV1, Class B2, 3.036%, 10/25/51 (144A) | 204,362 |
368,290(b) | | JPMorgan Chase Bank NA, Series 2021-CL1, Class M2, 1.568% (SOFR30A + 155 bps), | |
| | 3/25/51 (144A) | 368,670 |
70,389(b) | | La Hipotecaria Panamanian Mortgage Trust, Series 2007-1GA, Class A, 4.5% (Panamanian | |
| | Mortgage Reference Rate - 125 bps), 12/23/36 (144A) | 72,809 |
21,126(b) | | La Hipotecaria Panamanian Mortgage Trust, Series 2010-1GA, Class A, 2.75% (Panamanian | |
| | Mortgage Reference Rate - 300 bps), 9/8/39 (144A) | 21,852 |
244,296(b) | | LSTAR Securities Investment, Ltd., Series 2019-3, Class A1, 2.592% (1 Month USD LIBOR + | |
| | 250 bps), 4/1/24 (144A) | 243,077 |
218,271(d) | | MFA Trust, Series 2020-NQM1, Class A3, 2.3%, 8/25/49 (144A) | 221,366 |
350,000(d) | | MFA Trust, Series 2021-RPL1, Class A2, 2.072%, 7/25/60 (144A) | 349,826 |
696,156(d) | | Mill City Mortgage Loan Trust, Series 2018-4, Class A1B, 3.5%, 4/25/66 (144A) | 725,982 |
400,000(d) | | Mill City Mortgage Loan Trust, Series 2019-GS2, Class M3, 3.25%, 8/25/59 (144A) | 416,977 |
312,086(b) | | New Residential Mortgage Loan Trust, Series 2018-4A, Class B1, 1.142% (1 Month USD | |
| | LIBOR + 105 bps), 1/25/48 (144A) | 304,574 |
190,571(d) | | New Residential Mortgage Loan Trust, Series 2019-NQM4, Class A1, 2.492%, 9/25/59 (144A) | 192,446 |
143,815(d) | | New Residential Mortgage Loan Trust, Series 2019-RPL2, Class A1, 3.25%, 2/25/59 (144A) | 151,398 |
150,000(b) | | Oaktown Re V, Ltd., Series 2020-2A, Class M1B, 3.692% (1 Month USD LIBOR + 360 bps), | |
| | 10/25/30 (144A) | 152,625 |
150,000(b) | | Oaktown Re V, Ltd., Series 2020-2A, Class M2, 5.342% (1 Month USD LIBOR + 525 bps), | |
| | 10/25/30 (144A) | 158,033 |
345,617(d) | | OBX Trust, Series 2021-J1, Class A19, 2.5%, 5/25/51 (144A) | 348,014 |
348,552(d) | | PRMI Securitization Trust, Series 2021-1, Class B1, 2.482%, 4/25/51 (144A) | 344,135 |
7,458(b) | | Radnor Re, Ltd., Series 2018-1, Class M1, 1.492% (1 Month USD LIBOR + 140 bps), 3/25/28 (144A) | 7,459 |
197,944(b) | | Radnor Re, Ltd., Series 2019-1, Class M1B, 2.042% (1 Month USD LIBOR + 195 bps), 2/25/29 (144A) | 198,478 |
370,000(b) | | Radnor Re, Ltd., Series 2020-1, Class M1C, 1.842% (1 Month USD LIBOR + 175 bps), 1/25/30 (144A) | 361,691 |
The accompanying notes are an integral part of these financial statements.
13
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS – (continued) | |
400,000(d) | | RCKT Mortgage Trust, Series 2021-2, Class B1A, 2.567%, 6/25/51 (144A) | $ 398,905 |
156,575(d) | | RMF Proprietary Issuance Trust, Series 2019-1, Class A, 2.75%, 10/25/63 (144A) | 156,043 |
64,067(d) | | Sequoia Mortgage Trust, Series 2018-CH3, Class A1, 4.5%, 8/25/48 (144A) | 65,599 |
149,094+(d) | | Sequoia Mortgage Trust, Series 2021-2, Class B1, 2.557%, 4/25/51 (144A) | 150,363 |
199,192(d) | | Sequoia Mortgage Trust, Series 2021-3, Class B2, 2.664%, 5/25/51 (144A) | 195,025 |
380,000(b) | | STACR Trust, Series 2018-HRP2, Class B1, 4.292% (1 Month USD LIBOR + 420 bps), | |
| | 2/25/47 (144A) | 401,226 |
80,000(b) | | STACR Trust, Series 2018-HRP2, Class M3, 2.492% (1 Month USD LIBOR + 240 bps), | |
| | 2/25/47 (144A) | 81,476 |
550,000(d) | | Towd Point Mortgage Trust, Series 2019-4, Class M1, 3.5%, 10/25/59 (144A) | 584,637 |
398,492(d) | | Towd Point Mortgage Trust, Series 2021-R1, Class A1, 2.918%, 11/30/60 (144A) | 406,650 |
150,000(b) | | Traingle Re, Ltd., Series 2020-1, Class M1C, 4.592% (1 Month USD LIBOR + 450 bps), | |
| | 10/25/30 (144A) | 153,000 |
150,000(b) | | Traingle Re, Ltd., Series 2020-1, Class M2, 5.692% (1 Month USD LIBOR + 560 bps), | |
| | 10/25/30 (144A) | 151,875 |
480,000(b) | | Traingle Re, Ltd., Series 2021-1, Class M1C, 3.492% (1 Month USD LIBOR + 340 bps), | |
| | 8/25/33 (144A) | 481,189 |
333,780(d) | | Visio Trust, Series 2019-2, Class A1, 2.722%, 11/25/54 (144A) | 342,653 |
610,000(d) | | Vista Point Securitization Trust, Series 2020-1, Class A3, 3.201%, 3/25/65 (144A) | 626,461 |
| | TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |
| | (Cost $26,920,003) | $ 27,179,874 |
| | COMMERCIAL MORTGAGE-BACKED SECURITIES – 6.1% of Net Assets | |
410,000 | | BANK, Series 2017-BNK7, Class AS, 3.748%, 9/15/60 | $ 452,509 |
185,281(c)(e) | | Bayview Commercial Asset Trust, Series 2007-2A, Class IO, 0.0%, 7/25/37 (144A) | — |
250,000(b) | | Beast Mortgage Trust, Series 2021-1818, Class A, 1.3% (1 Month USD LIBOR + 105 bps), | |
| | 3/15/36 (144A) | 250,547 |
125,000 | | Benchmark Mortgage Trust, Series 2018-B5, Class A3, 3.944%, 7/15/51 | 142,420 |
250,000 | | Benchmark Mortgage Trust, Series 2018-B8, Class A4, 3.963%, 1/15/52 | 281,448 |
200,000(d) | | Benchmark Mortgage Trust, Series 2020-IG3, Class B, 3.388%, 9/15/48 (144A) | 210,931 |
150,000 | | Benchmark Mortgage Trust, Series 2021-B27, Class A5, 2.39%, 7/15/54 | 154,517 |
194,098(b) | | BX Commercial Mortgage Trust, Series 2020-BXLP, Class D, 1.323% (1 Month USD LIBOR + | |
| | 125 bps), 12/15/36 (144A) | 194,098 |
400,000 | | BX Trust, Series 2019-OC11, Class A, 3.202%, 12/9/41 (144A) | 431,330 |
140,000 | | CFCRE Commercial Mortgage Trust, Series 2016-C3, Class A2, 3.597%, 1/10/48 | 152,461 |
148,913(b) | | CHC Commercial Mortgage Trust, Series 2019-CHC, Class D, 2.123% (1 Month USD LIBOR + | |
| | 205 bps), 6/15/34 (144A) | 145,734 |
250,000(d) | | Citigroup Commercial Mortgage Trust, Series 2014-GC19, Class B, 4.805%, 3/10/47 | 270,684 |
250,000(d) | | Citigroup Commercial Mortgage Trust, Series 2014-GC25, Class B, 4.345%, 10/10/47 | 269,871 |
125,000(d) | | Citigroup Commercial Mortgage Trust, Series 2015-GC33, Class B, 4.726%, 9/10/58 | 137,435 |
250,000 | | Citigroup Commercial Mortgage Trust, Series 2016-P5, Class D, 3.0%, 10/10/49 (144A) | 203,143 |
150,000 | | Citigroup Commercial Mortgage Trust, Series 2017-C4, Class A4, 3.471%, 10/12/50 | 165,070 |
100,000(d) | | Citigroup Commercial Mortgage Trust, Series 2018-B2, Class AS, 4.179%, 3/10/51 | 111,509 |
300,000 | | Citigroup Commercial Mortgage Trust, Series 2019-SMRT, Class A, 4.149%, 1/10/36 (144A) | 322,170 |
245,748(b) | | Cold Storage Trust, Series 2020-ICE5, Class D, 2.173% (1 Month USD LIBOR + 210 bps), | |
| | 11/15/37 (144A) | 246,672 |
241,251 | | COMM Mortgage Trust, Series 2012-CR3, Class A3, 2.822%, 10/15/45 | 245,160 |
238,711 | | COMM Mortgage Trust, Series 2014-UBS3, Class A3, 3.546%, 6/10/47 | 253,441 |
150,000 | | COMM Mortgage Trust, Series 2014-UBS4, Class A4, 3.42%, 8/10/47 | 157,989 |
175,000(d) | | COMM Mortgage Trust, Series 2015-DC1, Class B, 4.035%, 2/10/48 | 187,436 |
The accompanying notes are an integral part of these financial statements.
14
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COMMERCIAL MORTGAGE-BACKED SECURITIES – (continued) | |
184,679 | | COMM Mortgage Trust, Series 2016-CR28, Class AHR, 3.651%, 2/10/49 | $ 197,112 |
250,000(b) | | Credit Suisse Mortgage Capital Certificates, Series 2019-ICE4, Class E, 2.223% (1 Month | |
| | USD LIBOR + 215 bps), 5/15/36 (144A) | 250,471 |
53,849(b) | | FREMF Mortgage Trust, Series 2014-KF05, Class B, 4.086% (1 Month USD LIBOR + 400 bps), | |
| | 9/25/22 (144A) | 53,979 |
90,000(d) | | FREMF Mortgage Trust, Series 2017-K66, Class B, 4.173%, 7/25/27 (144A) | 100,269 |
150,000(d) | | FREMF Mortgage Trust, Series 2017-KW03, Class B, 4.199%, 7/25/27 (144A) | 159,414 |
100,000(d) | | FREMF Mortgage Trust, Series 2019-K88, Class C, 4.526%, 2/25/52 (144A) | 110,786 |
148,610(b) | | FREMF Mortgage Trust, Series 2019-KF64, Class B, 2.386% (1 Month USD LIBOR + 230 | |
| | bps), 6/25/26 (144A) | 149,309 |
172,398(d) | | FRESB Mortgage Trust, Series 2018-SB52, Class A7F, 3.39%, 6/25/25 | 182,176 |
781,486(d)(e) | | Government National Mortgage Association, Series 2017-21, Class IO, 0.702%, 10/16/58 | 40,188 |
200,000 | | GS Mortgage Securities Trust, Series 2015-GC28, Class A5, 3.396%, 2/10/48 | 215,454 |
323,000 | | ILPT Trust, Series 2019-SURF, Class A, 4.145%, 2/11/41 (144A) | 370,502 |
450,000 | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2016-JP2, Class A4, | |
| | 2.822%, 8/15/49 | 476,703 |
200,000(d) | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2018-BCON, Class C, | |
| | 3.881%, 1/5/31 (144A) | 204,046 |
250,000 | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2018-WPT, Class AFX, | |
| | 4.248%, 7/5/33 (144A) | 263,363 |
150,000(d) | | JPMDB Commercial Mortgage Securities Trust, Series 2016-C2, Class B, 3.99%, 6/15/49 | 156,237 |
200,000 | | JPMDB Commercial Mortgage Securities Trust, Series 2016-C4, Class A3, 3.141%, 12/15/49 | 216,651 |
100,000(d) | | JPMDB Commercial Mortgage Securities Trust, Series 2016-C4, Class D, 3.2%, 12/15/49 (144A) | 89,346 |
250,000 | | JPMDB Commercial Mortgage Securities Trust, Series 2018-C8, Class A4, 4.211%, 6/15/51 | 287,034 |
1,600,000(d)(e) | | JPMDB Commercial Mortgage Securities Trust, Series 2018-C8, Class XB, 0.192%, 6/15/51 | 14,849 |
225,000 | | Key Commercial Mortgage Securities Trust, Series 2019-S2, Class A3, 3.469%, 6/15/52 (144A) | 238,069 |
60,000(d) | | Morgan Stanley Bank of America Merrill Lynch Trust, Series 2015-C21, Class C, 4.279%, 3/15/48 | 59,698 |
250,000(d) | | Morgan Stanley Capital I Trust, Series 2018-MP, Class A, 4.419%, 7/11/40 (144A) | 282,632 |
120,765(b) | | Multifamily Connecticut Avenue Securities Trust, Series 2019-01, Class M7, 1.792% (1 Month | |
| | USD LIBOR + 170 bps), 10/15/49 (144A) | 120,671 |
150,000 | | Palisades Center Trust, Series 2016-PLSD, Class A, 2.713%, 4/13/33 (144A) | 139,921 |
550,000 | | SLG Office Trust, Series 2021-OVA, Class E, 2.851%, 7/15/41 (144A) | 538,991 |
260,000 | | Wells Fargo Commercial Mortgage Trust, Series 2015-NXS3, Class A4, 3.617%, 9/15/57 | 284,656 |
237,834 | | Wells Fargo Commercial Mortgage Trust, Series 2016-C32, Class A3, 3.294%, 1/15/59 | 255,570 |
200,000 | | Wells Fargo Commercial Mortgage Trust, Series 2016-LC24, Class A3, 2.684%, 10/15/49 | 210,349 |
450,000(d) | | Wells Fargo Commercial Mortgage Trust, Series 2018-C43, Class A4, 4.012%, 3/15/51 | 511,333 |
| | TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | |
| | (Cost $10,857,206) | $ 11,166,354 |
| | CORPORATE BONDS – 33.7% of Net Assets | |
| | Advertising – 0.3% | |
407,000 | | Interpublic Group of Cos., Inc., 4.75%, 3/30/30 | $ 480,945 |
| | Total Advertising | $ 480,945 |
| | Aerospace/Defense – 1.5% | |
774,000 | | Boeing Co., 3.75%, 2/1/50 | $ 798,286 |
480,000 | | Boeing Co., 3.9%, 5/1/49 | 505,839 |
470,000 | | Raytheon Technologies Corp., 3.2%, 3/15/24 | 499,665 |
270,000 | | Raytheon Technologies Corp., 4.125%, 11/16/28 | 310,914 |
660,000 | | Teledyne Technologies, Inc., 2.25%, 4/1/28 | 672,580 |
| | Total Aerospace/Defense | $ 2,787,284 |
The accompanying notes are an integral part of these financial statements.
15
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Airlines – 0.9% | |
231,080 | | Air Canada 2017-1 Class AA Pass Through Trust, 3.3%, 1/15/30 (144A) | $ 233,962 |
380,479 | | Alaska Airlines 2020-1 Class A Pass Through Trust, 4.8%, 8/15/27 (144A) | 421,156 |
55,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.5%, 4/20/26 (144A) | 58,231 |
50,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.75%, 4/20/29 (144A) | 53,979 |
154,947 | | British Airways 2019-1 Class A Pass Through Trust, 3.35%, 6/15/29 (144A) | 155,177 |
154,386 | | British Airways 2019-1 Class AA Pass Through Trust, 3.3%, 12/15/32 (144A) | 157,175 |
50,378 | | British Airways 2020-1 Class A Pass Through Trust, 4.25%, 11/15/32 (144A) | 54,260 |
68,484 | | British Airways 2020-1 Class B Pass Through Trust, 8.375%, 11/15/28 (144A) | 79,196 |
85,000 | | Delta Air Lines, Inc./SkyMiles IP, Ltd., 4.75%, 10/20/28 (144A) | 94,555 |
152,124 | | JetBlue 2019-1 Class AA Pass Through Trust, 2.75%, 5/15/32 | 156,361 |
59,004 | | JetBlue 2020-1 Class A Pass Through Trust, 4.0%, 11/15/32 | 65,101 |
94,139 | | United Airlines 2020-1 Class B Pass Through Trust, 4.875%, 1/15/26 | 99,834 |
50,000 | | United Airlines, Inc., 4.375%, 4/15/26 (144A) | 51,750 |
50,000 | | United Airlines, Inc., 4.625%, 4/15/29 (144A) | 51,750 |
| | Total Airlines | $ 1,732,487 |
| | Auto Manufacturers – 2.0% | |
720,000(b) | | BMW US Capital LLC, 0.58% (SOFRRATE + 53 bps), 4/1/24 (144A) | $ 726,160 |
200,000 | | Ford Motor Credit Co. LLC, 3.625%, 6/17/31 | 203,876 |
225,000 | | Ford Motor Credit Co. LLC, 5.584%, 3/18/24 | 246,420 |
216,000 | | General Motors Co., 6.6%, 4/1/36 | 296,873 |
545,000(b) | | General Motors Financial Co., Inc., 0.804% (SOFRRATE + 76 bps), 3/8/24 | 548,857 |
353,000 | | General Motors Financial Co., Inc., 4.0%, 1/15/25 | 384,683 |
400,000 | | Hyundai Capital Services, Inc., 3.0%, 8/29/22 (144A) | 410,158 |
810,000(b) | | Toyota Motor Credit Corp., 0.337% (SOFRRATE + 32 bps), 4/6/23 | 811,612 |
| | Total Auto Manufacturers | $ 3,628,639 |
| | Auto Parts & Equipment – 0.1% | |
105,000 | | Dana, Inc., 4.25%, 9/1/30 | $ 108,019 |
110,000 | | Lear Corp., 3.5%, 5/30/30 | 118,308 |
| | Total Auto Parts & Equipment | $ 226,327 |
| | Banks – 4.2% | |
535,000(d) | | AIB Group Plc, 4.263% (3 Month USD LIBOR + 187 bps), 4/10/25 (144A) | $ 576,383 |
318,000 | | Banco Santander Chile, 2.7%, 1/10/25 (144A) | 331,963 |
663,000(d) | | Bank of America Corp., 2.884% (3 Month USD LIBOR + 119 bps), 10/22/30 | 699,096 |
200,000 | | BPCE SA, 4.875%, 4/1/26 (144A) | 226,905 |
400,000(a)(d) | | Credit Suisse Group AG, 7.125% (5 Year USD Swap Rate + 511 bps) | 417,500 |
410,000 | | Danske Bank AS, 5.375%, 1/12/24 (144A) | 454,659 |
286,000(d) | | Goldman Sachs Group, Inc., 3.272% (3 Month USD LIBOR + 120 bps), 9/29/25 | 305,994 |
215,000(d) | | Goldman Sachs Group, Inc., 4.223% (3 Month USD LIBOR + 130 bps), 5/1/29 | 245,406 |
150,000 | | HSBC Bank Plc, 7.65%, 5/1/25 | 181,312 |
400,000 | | Lloyds Banking Group Plc, 4.65%, 3/24/26 | 453,052 |
335,000(d) | | Macquarie Group Ltd., 2.691% (SOFRRATE + 144 bps), 6/23/32 (144A) | 336,271 |
435,000(a)(d) | | Natwest Group Plc, 8.625% (5 Year USD Swap Rate + 760 bps) | 438,589 |
200,000(a)(d) | | Societe Generale SA, 4.75% (5 Year CMT Index + 393 bps) (144A) | 207,250 |
200,000(a)(d) | | Societe Generale SA, 5.375% (5 Year CMT Index + 451 bps) (144A) | 211,750 |
400,000(a)(d) | | Societe Generale SA, 7.375% (5 Year USD Swap Rate + 624 bps) (144A) | 403,520 |
400,000 | | Sumitomo Mitsui Financial Group, Inc., 3.202%, 9/17/29 | 426,088 |
The accompanying notes are an integral part of these financial statements.
16
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Banks – (continued) | |
250,000 | | UBS AG, 7.625%, 8/17/22 | $ 268,929 |
400,000(a)(d) | | UBS Group AG, 7.0% (5 Year USD Swap Rate + 434 bps) (144A) | 440,500 |
200,000(a)(d) | | UBS Group AG, 7.125% (5 Year USD Swap Rate + 588 bps) | 201,000 |
700,000(d) | | UniCredit S.p.A., 2.569% (1 Year CMT Index + 230 bps), 9/22/26 (144A) | 709,964 |
200,000(d) | | UniCredit S.p.A., 7.296% (5 Year USD 1100 Run ICE Swap Rate + 491 bps), 4/2/34 (144A) | 240,464 |
| | Total Banks | $ 7,776,595 |
| | Beverages – 0.7% | |
800,000 | | Anheuser-Busch InBev Worldwide, Inc., 5.55%, 1/23/49 | $ 1,103,917 |
172,000 | | Bacardi, Ltd., 5.3%, 5/15/48 (144A) | 224,392 |
| | Total Beverages | $ 1,328,309 |
| | Building Materials – 0.2% | |
174,000 | | Carrier Global Corp., 2.722%, 2/15/30 | $ 180,571 |
125,000 | | Standard Industries, Inc., 4.375%, 7/15/30 (144A) | 128,906 |
10,000 | | Summit Materials LLC/Summit Materials Finance Corp., 5.25%, 1/15/29 (144A) | 10,625 |
| | Total Building Materials | $ 320,102 |
| | Chemicals – 0.4% | |
75,000 | | Ingevity Corp., 3.875%, 11/1/28 (144A) | $ 74,438 |
103,000 | | NOVA Chemicals Corp., 5.25%, 6/1/27 (144A) | 111,013 |
341,000 | | Olin Corp., 5.0%, 2/1/30 | 363,591 |
35,000 | | Olin Corp., 5.625%, 8/1/29 | 38,725 |
200,000 | | Tronox, Inc., 4.625%, 3/15/29 (144A) | 202,246 |
| | Total Chemicals | $ 790,013 |
| | Commercial Services – 0.7% | |
123,000 | | Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.625%, 7/15/26 (144A) | $ 130,408 |
115,000 | | CoreLogic, Inc., 4.5%, 5/1/28 (144A) | 113,994 |
150,000 | | Element Fleet Management Corp., 1.6%, 4/6/24 (144A) | 152,451 |
200,000 | | ERAC USA Finance LLC, 3.3%, 12/1/26 (144A) | 218,086 |
165,000 | | Garda World Security Corp., 4.625%, 2/15/27 (144A) | 165,825 |
50,000 | | President & Fellows of Harvard College, 2.3%, 10/1/23 | 51,858 |
180,000 | | Prime Security Services Borrower LLC/Prime Finance, Inc., 6.25%, 1/15/28 (144A) | 191,475 |
200,000 | | Sotheby’s, 7.375%, 10/15/27 (144A) | 215,750 |
| | Total Commercial Services | $ 1,239,847 |
| | Cosmetics/Personal Care – 0.1% | |
120,000 | | Edgewell Personal Care Co., 5.5%, 6/1/28 (144A) | $ 127,200 |
| | Total Cosmetics/Personal Care | $ 127,200 |
| | Diversified Financial Services – 1.6% | |
215,000 | | Air Lease Corp., 3.125%, 12/1/30 | $ 218,654 |
315,000 | | Alliance Data Systems Corp., 7.0%, 1/15/26 (144A) | 337,444 |
30,000 | | Avolon Holdings Funding, Ltd., 3.95%, 7/1/24 (144A) | 32,000 |
170,000 | | Capital One Financial Corp., 3.3%, 10/30/24 | 183,110 |
400,000 | | Capital One Financial Corp., 3.75%, 4/24/24 | 432,167 |
270,000(a)(d) | | Capital One Financial Corp., 3.95% (5 Year CMT Index + 316 bps) | 275,737 |
180,000 | | Capital One Financial Corp., 4.25%, 4/30/25 | 200,631 |
450,000 | | GE Capital Funding LLC, 4.55%, 5/15/32 | 535,372 |
65,000 | | Nationstar Mortgage Holdings, Inc., 5.125%, 12/15/30 (144A) | 64,675 |
15,000 | | Nationstar Mortgage Holdings, Inc., 6.0%, 1/15/27 (144A) | 15,544 |
The accompanying notes are an integral part of these financial statements.
17
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Diversified Financial Services – (continued) | |
140,000 | | OneMain Finance Corp., 3.5%, 1/15/27 | $ 141,050 |
404,000 | | OneMain Finance Corp., 4.0%, 9/15/30 | 399,831 |
120,000 | | United Wholesale Mortgage LLC, 5.5%, 4/15/29 (144A) | 119,972 |
| | Total Diversified Financial Services | $ 2,956,187 |
| | Electric – 2.5% | |
274,050 | | Adani Renewable Energy RJ, Ltd./Kodangal Solar Parks Pvt, Ltd./Wardha Solar Maharash, | |
| | 4.625%, 10/15/39 (144A) | $ 278,051 |
280,000 | | AES Corp., 2.45%, 1/15/31 (144A) | 277,352 |
100,000 | | AES Corp., 3.95%, 7/15/30 (144A) | 109,350 |
699,000 | | Calpine Corp., 3.75%, 3/1/31 (144A) | 665,693 |
133,000(c) | | Dominion Energy, Inc., 3.071%, 8/15/24 | 141,000 |
135,000 | | Iberdrola International BV, 6.75%, 7/15/36 | 204,481 |
430,000 | | NextEra Energy Capital Holdings, Inc., 3.55%, 5/1/27 | 474,776 |
290,000 | | NRG Energy, Inc., 2.45%, 12/2/27 (144A) | 292,095 |
40,000 | | Pattern Energy Operations LP/Pattern Energy Operations, Inc., 4.5%, 8/15/28 (144A) | 41,408 |
255,000 | | Puget Energy, Inc., 2.379%, 6/15/28 (144A) | 257,833 |
240,000 | | Puget Energy, Inc., 4.1%, 6/15/30 | 268,868 |
14,286 | | San Diego Gas & Electric Co., 1.914%, 2/1/22 | 14,339 |
335,000 | | Sempra Energy, 3.4%, 2/1/28 | 368,389 |
39,286 | | Southern California Edison Co., 1.845%, 2/1/22 | 39,305 |
121,000 | | Talen Energy Supply LLC, 6.625%, 1/15/28 (144A) | 110,715 |
130,000 | | Talen Energy Supply LLC, 7.625%, 6/1/28 (144A) | 121,642 |
470,000 | | Vistra Operations Co. LLC, 3.7%, 1/30/27 (144A) | 502,390 |
200,000 | | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | 201,000 |
150,000 | | Xcel Energy, Inc., 3.4%, 6/1/30 | 164,584 |
| | Total Electric | $ 4,533,271 |
| | Electronics – 0.3% | |
300,000 | | Amphenol Corp., 3.125%, 9/15/21 | $ 300,968 |
102,000 | | Amphenol Corp., 3.2%, 4/1/24 | 108,224 |
70,000 | | Atkore, Inc., 4.25%, 6/1/31 (144A) | 70,896 |
| | Total Electronics | $ 480,088 |
| | Energy-Alternate Sources – 0.0%† | |
41,923 | | Alta Wind Holdings LLC, 7.0%, 6/30/35 (144A) | $ 47,566 |
| | Total Energy-Alternate Sources | $ 47,566 |
| | Engineering & Construction – 0.1% | |
152,000 | | Dycom Industries, Inc., 4.5%, 4/15/29 (144A) | $ 153,316 |
| | Total Engineering & Construction | $ 153,316 |
| | Entertainment – 0.0%† | |
35,000 | | Boyne USA, Inc., 4.75%, 5/15/29 (144A) | $ 36,111 |
| | Total Entertainment | $ 36,111 |
| | Environmental Control – 0.1% | |
205,000 | | Covanta Holding Corp., 5.0%, 9/1/30 | $ 215,250 |
72,000 | | Covanta Holding Corp., 6.0%, 1/1/27 | 74,880 |
| | Total Environmental Control | $ 290,130 |
The accompanying notes are an integral part of these financial statements.
18
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Food – 0.5% | |
75,000 | | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 4.875%, 2/15/30 (144A) | $ 79,988 |
150,000 | | Kellogg Co., 2.1%, 6/1/30 | 150,899 |
235,000 | | Minerva Luxembourg SA, 4.375%, 3/18/31 (144A) | 233,472 |
60,000 | | Pilgrim’s Pride Corp., 5.875%, 9/30/27 (144A) | 63,900 |
100,000 | | Smithfield Foods, Inc., 2.65%, 10/3/21 (144A) | 100,487 |
200,000 | | Smithfield Foods, Inc., 3.0%, 10/15/30 (144A) | 201,860 |
21,000 | | Smithfield Foods, Inc., 5.2%, 4/1/29 (144A) | 24,467 |
| | Total Food | $ 855,073 |
| | Forest Products & Paper – 0.2% | |
80,000 | | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | $ 79,700 |
234,000 | | International Paper Co., 7.3%, 11/15/39 | 362,304 |
| | Total Forest Products & Paper | $ 442,004 |
| | Gas – 0.2% | |
110,000 | | Boston Gas Co., 3.15%, 8/1/27 (144A) | $ 117,990 |
178,994 | | Nakilat, Inc., 6.267%, 12/31/33 (144A) | 219,974 |
| | Total Gas | $ 337,964 |
| | Hand/Machine Tools – 0.1% | |
125,000 | | Kennametal, Inc., 2.8%, 3/1/31 | $ 125,884 |
| | Total Hand/Machine Tools | $ 125,884 |
| | Healthcare-Products – 0.6% | |
390,000 | | Boston Scientific Corp., 2.65%, 6/1/30 | $ 403,802 |
225,000 | | Edwards Lifesciences Corp., 4.3%, 6/15/28 | 261,095 |
500,000 | | Smith & Nephew Plc, 2.032%, 10/14/30 | 489,598 |
| | Total Healthcare-Products | $ 1,154,495 |
| | Healthcare-Services – 0.6% | |
164,000 | | Anthem, Inc., 3.65%, 12/1/27 | $ 183,649 |
41,000 | | Anthem, Inc., 4.101%, 3/1/28 | 46,895 |
525,000 | | Fresenius Medical Care US Finance III, Inc., 2.375%, 2/16/31 (144A) | 512,789 |
130,000 | | Humana, Inc., 3.95%, 3/15/27 | 145,870 |
250,000 | | Laboratory Corp. of America Holdings, 2.7%, 6/1/31 | 255,039 |
| | Total Healthcare-Services | $ 1,144,242 |
| | Insurance – 1.3% | |
190,000 | | Arthur J Gallagher & Co., 2.5%, 5/20/31 | $ 192,113 |
90,000 | | AXA SA, 8.6%, 12/15/30 | 136,901 |
100,000(d) | | Farmers Exchange Capital III, 5.454% (3 Month USD LIBOR + 345 bps), 10/15/54 (144A) | 125,311 |
340,000(d) | | Farmers Insurance Exchange, 4.747% (3 Month USD LIBOR + 323 bps), 11/1/57 (144A) | 383,454 |
645,000 | | Liberty Mutual Insurance Co., 7.697%, 10/15/97 (144A) | 1,003,560 |
475,000 | | Nationwide Mutual Insurance Co., 4.35%, 4/30/50 (144A) | 532,699 |
26,000 | | Teachers Insurance & Annuity Association of America, 6.85%, 12/16/39 (144A) | 39,457 |
| | Total Insurance | $ 2,413,495 |
| | Internet – 0.4% | |
75,000 | | ANGI Group LLC, 3.875%, 8/15/28 (144A) | $ 74,531 |
562,000 | | Expedia Group, Inc., 3.25%, 2/15/30 | 587,617 |
| | Total Internet | $ 662,148 |
The accompanying notes are an integral part of these financial statements.
19
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Lodging – 0.6% | |
155,000 | | Hilton Domestic Operating Co., Inc., 3.75%, 5/1/29 (144A) | $ 156,194 |
520,000 | | Marriott International, Inc., 3.5%, 10/15/32 | 553,083 |
100,000 | | Marriott International, Inc., 4.625%, 6/15/30 | 115,284 |
40,000 | | Marriott International, Inc., 5.75%, 5/1/25 | 46,187 |
220,000 | | Sands China Ltd., 4.375%, 6/18/30 | 237,857 |
| | Total Lodging | $ 1,108,605 |
| | Machinery-Construction & Mining – 0.1% | |
205,000 | | Weir Group Plc, 2.2%, 5/13/26 (144A) | $ 205,927 |
| | Total Machinery-Construction & Mining | $ 205,927 |
| | Media – 0.6% | |
40,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 4.5%, 6/1/33 (144A) | $ 40,930 |
275,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 4.75%, 3/1/30 (144A) | 290,469 |
270,000 | | Comcast Corp., 4.15%, 10/15/28 | 313,030 |
200,000 | | CSC Holdings LLC, 4.625%, 12/1/30 (144A) | 196,222 |
33,000 | | Diamond Sports Group LLC/Diamond Sports Finance Co., 6.625%, 8/15/27 (144A) | 16,170 |
70,000 | | News Corp., 3.875%, 5/15/29 (144A) | 70,700 |
210,000 | | Sirius XM Radio, Inc., 4.0%, 7/15/28 (144A) | 216,523 |
| | Total Media | $ 1,144,044 |
| | Mining – 0.4% | |
220,000 | | Anglo American Capital Plc, 2.25%, 3/17/28 (144A) | $ 222,625 |
416,000 | | FMG Resources August 2006 Pty Ltd., 4.375%, 4/1/31 (144A) | 444,080 |
50,000 | | Kaiser Aluminum Corp., 4.5%, 6/1/31 (144A) | 51,277 |
| | Total Mining | $ 717,982 |
| | Miscellaneous Manufacturers – 0.0%† | |
65,000 | | Hillenbrand, Inc., 3.75%, 3/1/31 | $ 64,452 |
| | Total Miscellaneous Manufacturers | $ 64,452 |
| | Multi-National – 0.5% | |
370,000 | | Africa Finance Corp., 4.375%, 4/17/26 (144A) | $ 402,693 |
200,000 | | African Export-Import Bank, 3.994%, 9/21/29 (144A) | 210,565 |
230,000 | | Banque Ouest Africaine de Developpement, 4.7%, 10/22/31 (144A) | 248,584 |
| | Total Multi-National | $ 861,842 |
| | Oil & Gas – 1.5% | |
595,000 | | Cenovus Energy, Inc., 6.75%, 11/15/39 | $ 808,237 |
55,000 | | EQT Corp., 3.125%, 5/15/26 (144A) | 56,222 |
60,000 | | EQT Corp., 3.625%, 5/15/31 (144A) | 62,550 |
60,000 | | Hilcorp Energy I LP/Hilcorp Finance Co., 6.0%, 2/1/31 (144A) | 63,546 |
640,000 | | Lundin Energy Finance BV, 3.1%, 7/15/31 (144A) | 647,221 |
150,000 | | MEG Energy Corp., 7.125%, 2/1/27 (144A) | 159,799 |
55,000 | | PBF Holding Co. LLC/PBF Finance Corp., 9.25%, 5/15/25 (144A) | 55,406 |
185,000 | | Petroleos Mexicanos, 5.35%, 2/12/28 | 181,938 |
120,000 | | Phillips 66, 2.15%, 12/15/30 | 118,103 |
90,000 | | Phillips 66, 3.85%, 4/9/25 | 99,059 |
115,000 | | Valero Energy Corp., 2.15%, 9/15/27 | 116,884 |
312,000 | | Valero Energy Corp., 6.625%, 6/15/37 | 428,018 |
| | Total Oil & Gas | $ 2,796,983 |
The accompanying notes are an integral part of these financial statements.
20
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Packaging & Containers – 0.1% | |
135,000 | | TriMas Corp., 4.125%, 4/15/29 (144A) | $ 136,660 |
| | Total Packaging & Containers | $ 136,660 |
| | Pharmaceuticals – 1.5% | |
500,000 | | AmerisourceBergen Corp., 0.737%, 3/15/23 | $ 500,960 |
166,000 | | Bausch Health Americas, Inc., 9.25%, 4/1/26 (144A) | 180,558 |
200,000 | | Bayer US Finance II LLC, 4.25%, 12/15/25 (144A) | 222,884 |
22,031 | | CVS Pass-Through Trust, 5.298%, 1/11/27 (144A) | 24,164 |
74,431 | | CVS Pass-Through Trust, 5.773%, 1/10/33 (144A) | 88,267 |
43,254 | | CVS Pass-Through Trust, 5.926%, 1/10/34 (144A) | 52,339 |
112,724 | | CVS Pass-Through Trust, 6.036%, 12/10/28 | 132,020 |
100,166 | | CVS Pass-Through Trust, 8.353%, 7/10/31 (144A) | 131,351 |
200,000 | | Jazz Securities, DAC, 4.375%, 1/15/29 (144A) | 207,360 |
200,000 | | Organon & Co./Organon Foreign Debt Co.-Issuer BV, 4.125%, 4/30/28 (144A) | 203,960 |
165,000 | | Pfizer, Inc., 2.625%, 4/1/30 | 175,845 |
369,000 | | Teva Pharmaceutical Finance Netherlands III BV, 3.15%, 10/1/26 | 351,011 |
200,000 | | Teva Pharmaceutical Finance Netherlands III BV, 6.75%, 3/1/28 | 219,000 |
200,000 | | Teva Pharmaceutical Finance Netherlands III BV, 7.125%, 1/31/25 | 220,500 |
| | Total Pharmaceuticals | $ 2,710,219 |
| | Pipelines – 3.2% | |
170,000 | | DCP Midstream Operating LP, 5.375%, 7/15/25 | $ 189,329 |
100,000 | | DCP Midstream Operating LP, 5.6%, 4/1/44 | 110,000 |
40,000 | | Enable Midstream Partners LP, 4.15%, 9/15/29 | 43,837 |
479,000 | | Enable Midstream Partners LP, 4.95%, 5/15/28 | 548,862 |
360,000 | | Enbridge, Inc., 3.7%, 7/15/27 | 397,261 |
224,000 | | Energy Transfer LP, 5.35%, 5/15/45 | 259,276 |
140,000 | | Energy Transfer LP, 6.0%, 6/15/48 | 177,075 |
25,000 | | Energy Transfer LP, 6.1%, 2/15/42 | 31,094 |
40,000 | | Energy Transfer LP, 6.125%, 12/15/45 | 51,003 |
125,000 | | Energy Transfer LP, 6.5%, 2/1/42 | 162,361 |
340,000(a)(d) | | Energy Transfer LP, 7.125% (5 Year CMT Index + 531 bps) | 351,050 |
20,000 | | EnLink Midstream LLC, 5.375%, 6/1/29 | 20,872 |
280,000 | | EnLink Midstream Partners LP, 5.45%, 6/1/47 | 248,500 |
134,000 | | EnLink Midstream Partners LP, 5.6%, 4/1/44 | 121,270 |
145,000 | | Hess Midstream Operations LP, 5.125%, 6/15/28 (144A) | 152,069 |
373,000 | | Midwest Connector Capital Co. LLC, 4.625%, 4/1/29 (144A) | 396,796 |
340,000 | | MPLX LP, 4.25%, 12/1/27 | 385,526 |
110,000 | | MPLX LP, 4.875%, 12/1/24 | 123,106 |
175,000 | | MPLX LP, 4.875%, 6/1/25 | 197,602 |
205,000 | | MPLX LP, 5.5%, 2/15/49 | 265,521 |
230,000 | | NGPL PipeCo LLC, 3.25%, 7/15/31 (144A) | 237,313 |
450,000 | | Phillips 66 Partners LP, 3.75%, 3/1/28 | 492,746 |
375,000 | | Sabine Pass Liquefaction LLC, 5.0%, 3/15/27 | 433,222 |
300,000 | | Texas Eastern Transmission LP, 3.5%, 1/15/28 (144A) | 326,537 |
89,000 | | Williams Cos., Inc., 7.75%, 6/15/31 | 123,756 |
| | Total Pipelines | $ 5,845,984 |
The accompanying notes are an integral part of these financial statements.
21
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | REITs – 2.6% | |
155,000 | | Alexandria Real Estate Equities, Inc., 1.875%, 2/1/33 | $ 146,727 |
90,000 | | Alexandria Real Estate Equities, Inc., 3.45%, 4/30/25 | 98,135 |
25,000 | | Alexandria Real Estate Equities, Inc., 3.95%, 1/15/27 | 27,881 |
47,000 | | Alexandria Real Estate Equities, Inc., 4.3%, 1/15/26 | 52,696 |
195,000 | | Corporate Office Properties LP, 2.75%, 4/15/31 | 196,400 |
260,000 | | Duke Realty LP, 3.75%, 12/1/24 | 282,476 |
100,000 | | Essex Portfolio LP, 3.375%, 4/15/26 | 108,441 |
360,000 | | Essex Portfolio LP, 3.5%, 4/1/25 | 389,884 |
190,000 | | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | 191,425 |
160,000 | | Healthcare Realty Trust, Inc., 2.05%, 3/15/31 | 154,847 |
131,000 | | Healthcare Realty Trust, Inc., 2.4%, 3/15/30 | 131,814 |
333,000 | | Healthcare Trust of America Holdings LP, 3.1%, 2/15/30 | 354,025 |
200,000 | | Healthcare Trust of America Holdings LP, 3.75%, 7/1/27 | 222,357 |
63,000 | | Highwoods Realty LP, 2.6%, 2/1/31 | 63,372 |
290,000 | | Highwoods Realty LP, 3.625%, 1/15/23 | 299,788 |
105,000 | | Highwoods Realty LP, 4.125%, 3/15/28 | 117,710 |
193,000 | | Iron Mountain, Inc., 4.5%, 2/15/31 (144A) | 195,412 |
110,000 | | iStar, Inc., 4.75%, 10/1/24 | 115,775 |
255,000 | | iStar, Inc., 4.25%, 8/1/25 | 262,331 |
35,000 | | iStar, Inc., 5.5%, 2/15/26 | 36,662 |
165,000 | | Lexington Realty Trust, 2.7%, 9/15/30 | 167,902 |
318,000 | | MPT Operating Partnership LP/MPT Finance Corp., 4.625%, 8/1/29 | 340,407 |
125,000 | | MPT Operating Partnership LP/MPT Finance Corp., 3.5%, 3/15/31 | 126,249 |
235,000 | | SBA Tower Trust, 3.869%, 10/8/24 (144A) | 246,934 |
75,000 | | UDR, Inc., 2.95%, 9/1/26 | 80,148 |
180,000 | | UDR, Inc., 4.4%, 1/26/29 | 208,569 |
219,000 | | Uniti Group LP/Uniti Fiber Holdings, Inc./CSL Capital LLC, 7.875%, 2/15/25 (144A) | 234,056 |
| | Total REITs | $ 4,852,423 |
| | Retail – 0.3% | |
320,000 | | 7-Eleven, Inc., 1.8%, 2/10/31 (144A) | $ 306,259 |
125,000 | | AutoNation, Inc., 4.75%, 6/1/30 | 147,983 |
85,000 | | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | 84,783 |
| | Total Retail | $ 539,025 |
| | Semiconductors – 0.5% | |
158,000 | | Broadcom, Inc., 4.11%, 9/15/28 | $ 177,887 |
100,000 | | Broadcom, Inc., 4.3%, 11/15/32 | 114,011 |
475,000 | | Broadcom, Inc., 5.0%, 4/15/30 | 561,448 |
130,000 | | Skyworks Solutions, Inc., 3.0%, 6/1/31 | 133,232 |
| | Total Semiconductors | $ 986,578 |
| | Software – 0.8% | |
680,000 | | Broadridge Financial Solutions, Inc., 2.6%, 5/1/31 | $ 693,197 |
470,000 | | Citrix Systems, Inc., 3.3%, 3/1/30 | 494,968 |
295,000 | | Infor, Inc., 1.75%, 7/15/25 (144A) | 301,084 |
| | Total Software | $ 1,489,249 |
The accompanying notes are an integral part of these financial statements.
22
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Telecommunications – 1.0% | |
255,000 | | Altice France SA, 5.5%, 1/15/28 (144A) | $ 264,614 |
95,000 | | Level 3 Financing, Inc., 4.625%, 9/15/27 (144A) | 98,602 |
40,000 | | Lumen Technologies, Inc., 4.0%, 2/15/27 (144A) | 40,800 |
315,000 | | Motorola Solutions, Inc., 2.3%, 11/15/30 | 309,690 |
125,000 | | Plantronics, Inc., 4.75%, 3/1/29 (144A) | 124,091 |
145,000 | | T-Mobile USA, Inc., 2.55%, 2/15/31 | 146,504 |
25,000 | | T-Mobile USA, Inc., 2.875%, 2/15/31 | 24,813 |
190,000 | | T-Mobile USA, Inc., 3.375%, 4/15/29 (144A) | 196,079 |
375,000 | | T-Mobile USA, Inc., 3.5%, 4/15/31 (144A) | 387,971 |
195,000 | | T-Mobile USA, Inc., 3.875%, 4/15/30 | 217,725 |
| | Total Telecommunications | $ 1,810,889 |
| | Trucking & Leasing – 0.3% | |
260,000 | | Penske Truck Leasing Co. LP/PTL Finance Corp., 1.7%, 6/15/26 (144A) | $ 261,494 |
95,000 | | Penske Truck Leasing Co. LP/PTL Finance Corp., 3.35%, 11/1/29 (144A) | 101,490 |
156,000 | | Penske Truck Leasing Co. LP/PTL Finance Corp., 4.2%, 4/1/27 (144A) | 175,442 |
| | Total Trucking & Leasing | $ 538,426 |
| | Water – 0.1% | |
110,000 | | Essential Utilities, Inc., 3.566%, 5/1/29 | $ 121,871 |
| | Total Water | $ 121,871 |
| | TOTAL CORPORATE BONDS | |
| | (Cost $58,607,790) | $ 62,000,881 |
| | FOREIGN GOVERNMENT BOND – 0.3% of Net Assets | |
| | Mexico – 0.3% | |
475,000 | | Mexico Government International Bond, 4.6%, 2/10/48 | $ 509,551 |
| | Total Mexico | $ 509,551 |
| | TOTAL FOREIGN GOVERNMENT BOND | |
| | (Cost $438,596) | $ 509,551 |
|
|
|
|
Face |
|
|
|
Amount |
|
|
|
USD ($) |
|
|
|
|
| INSURANCE-LINKED SECURITIES – 0.0%† of Net Assets# |
|
|
| Reinsurance Sidecars – 0.0%† |
|
|
| Multiperil – Worldwide – 0.0%† |
|
50,000+(f)(g) |
| Lorenz Re 2018, 7/1/21 | $ 255 |
25,723+(f)(g) |
| Lorenz Re 2019, 6/30/22 | 2,822 |
|
|
| $ 3,077 |
|
| Total Reinsurance Sidecars | $ 3,077 |
|
| TOTAL INSURANCE-LINKED SECURITIES | |
|
| (Cost $18,895) | $ 3,077 |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | |
| | MUNICIPAL BOND – 0.0%† of Net Assets(h) | |
| | Municipal General – 0.0%† | |
50,000 | | Virginia Commonwealth Transportation Board, Transportation Capital Projects, 4.0%, | |
| | 5/15/32 | $ 54,499 |
| | Total Municipal General | $ 54,499 |
| | TOTAL MUNICIPAL BOND | |
| | (Cost $52,530) | $ 54,499 |
The accompanying notes are an integral part of these financial statements.
23
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | SENIOR SECURED FLOATING RATE LOAN INTERESTS – 0.6% of Net Assets*(b) | |
| | Broadcasting & Entertainment – 0.0%† | |
63,747 | | Sinclair Television Group, Inc., Tranche B Term Loan, 2.36% (LIBOR + 225 bps), 1/3/24 | $ 63,242 |
| | Total Broadcasting & Entertainment | $ 63,242 |
| | Computers & Electronics – 0.0%† | |
49,923 | | Energy Acquisition LP (aka Electrical Components International), First Lien Initial | |
| | Term Loan, 4.368% (LIBOR + 425 bps), 6/26/25 | $ 49,424 |
| | Total Computers & Electronics | $ 49,424 |
| | Diversified & Conglomerate Service – 0.1% | |
95,750 | | Team Health Holdings, Inc., Initial Term Loan, 3.75% (LIBOR + 275 bps), 2/6/24 | $ 93,185 |
| | Total Diversified & Conglomerate Service | $ 93,185 |
| | Electronics – 0.1% | |
170,833 | | Scientific Games International, Inc., Initial Term B-5 Loan, 2.854% (LIBOR + 275 bps), 8/14/24 | $ 169,818 |
16,685 | | Verint Systems, Inc., Refinancing Term Loan, 2.086% (LIBOR + 200 bps), 6/28/24 | 16,623 |
| | Total Electronics | $ 186,441 |
| | Forest Products – 0.1% | |
145,000 | | Schweitzer-Mauduit International, Inc., Term Loan B, 4.5% (LIBOR + 375 bps), 2/9/28 | $ 143,369 |
| | Total Forest Products | $ 143,369 |
| | Healthcare, Education & Childcare – 0.1% | |
107,035 | | KUEHG Corp. (fka KC MergerSub, Inc.) (aka KinderCare), Term B-3 Loan, 4.75% (LIBOR + | |
| | 375 bps), 2/21/25 | $ 105,608 |
| | Total Healthcare, Education & Childcare | $ 105,608 |
| | Hotel, Gaming & Leisure – 0.1% | |
151,728 | | 1011778 B.C. Unlimited Liability Co. (New Red Finance, Inc.) (aka Burger King/Tim | |
| | Hortons), Term B-4 Loan, 1.854% (LIBOR + 175 bps), 11/19/26 | $ 149,832 |
| | Total Hotel, Gaming & Leisure | $ 149,832 |
| | Leasing – 0.1% | |
62,397 | | Avolon TLB Borrower 1 (US) LLC, Term B-4 Loan, 2.25% (LIBOR + 150 bps), 2/12/27 | $ 61,748 |
183,825 | | IBC Capital I, Ltd. (aka Goodpack, Ltd.), First Lien Tranche B-1 Term Loan, 3.875% | |
| | (LIBOR + 375 bps), 9/11/23 | 182,619 |
| | Total Leasing | $ 244,367 |
| | Telecommunications – 0.0%† | |
67,466 | | Level 3 Financing, Inc., Tranche B 2027 Term Loan, 1.854% (LIBOR + 175 bps), 3/1/27 | $ 66,580 |
| | Total Telecommunications | $ 66,580 |
| | TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | |
| | (Cost $1,112,903) | $ 1,102,048 |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – 47.5% of Net Assets | |
1,500,000 | | Fannie Mae, 1.5%, 7/1/36 (TBA) | $ 1,516,888 |
1,150,000 | | Fannie Mae, 2.0%, 7/1/36 (TBA) | 1,186,532 |
800,000 | | Fannie Mae, 2.0%, 7/1/51 (TBA) | 808,844 |
1,200,000 | | Fannie Mae, 2.0%, 7/1/51 (TBA) | 1,210,875 |
13,348 | | Fannie Mae, 2.5%, 7/1/30 | 14,051 |
14,946 | | Fannie Mae, 2.5%, 7/1/30 | 15,710 |
24,139 | | Fannie Mae, 2.5%, 7/1/30 | 25,388 |
9,466 | | Fannie Mae, 2.5%, 2/1/43 | 9,815 |
41,696 | | Fannie Mae, 2.5%, 2/1/43 | 43,579 |
8,364 | | Fannie Mae, 2.5%, 3/1/43 | 8,725 |
8,175 | | Fannie Mae, 2.5%, 8/1/43 | 8,533 |
The accompanying notes are an integral part of these financial statements.
24
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
8,780 | | Fannie Mae, 2.5%, 4/1/45 | $ 9,127 |
8,941 | | Fannie Mae, 2.5%, 4/1/45 | 9,264 |
9,808 | | Fannie Mae, 2.5%, 4/1/45 | 10,201 |
21,682 | | Fannie Mae, 2.5%, 4/1/45 | 22,551 |
22,802 | | Fannie Mae, 2.5%, 4/1/45 | 23,685 |
24,694 | | Fannie Mae, 2.5%, 4/1/45 | 25,685 |
30,821 | | Fannie Mae, 2.5%, 4/1/45 | 31,986 |
33,810 | | Fannie Mae, 2.5%, 8/1/45 | 35,049 |
7,000,000 | | Fannie Mae, 2.5%, 7/1/51 (TBA) | 7,244,727 |
11,151 | | Fannie Mae, 3.0%, 3/1/29 | 11,788 |
49,222 | | Fannie Mae, 3.0%, 10/1/30 | 52,121 |
25,058 | | Fannie Mae, 3.0%, 8/1/42 | 26,836 |
230,021 | | Fannie Mae, 3.0%, 8/1/42 | 245,524 |
56,085 | | Fannie Mae, 3.0%, 9/1/42 | 59,784 |
108,887 | | Fannie Mae, 3.0%, 11/1/42 | 116,075 |
48,056 | | Fannie Mae, 3.0%, 12/1/42 | 51,146 |
50,845 | | Fannie Mae, 3.0%, 4/1/43 | 54,115 |
12,644 | | Fannie Mae, 3.0%, 5/1/43 | 13,455 |
45,961 | | Fannie Mae, 3.0%, 5/1/43 | 49,223 |
109,161 | | Fannie Mae, 3.0%, 5/1/43 | 115,537 |
20,782 | | Fannie Mae, 3.0%, 8/1/43 | 22,039 |
17,170 | | Fannie Mae, 3.0%, 9/1/43 | 18,162 |
17,220 | | Fannie Mae, 3.0%, 3/1/45 | 18,196 |
23,126 | | Fannie Mae, 3.0%, 4/1/45 | 24,648 |
119,364 | | Fannie Mae, 3.0%, 6/1/45 | 127,806 |
2,000,000 | | Fannie Mae, 3.0%, 7/1/51 (TBA) | 2,083,906 |
3,300,000 | | Fannie Mae, 3.0%, 7/1/51 (TBA) | 3,440,637 |
12,141 | | Fannie Mae, 3.5%, 11/1/40 | 13,075 |
7,131 | | Fannie Mae, 3.5%, 10/1/41 | 7,790 |
82,045 | | Fannie Mae, 3.5%, 6/1/42 | 89,020 |
37,248 | | Fannie Mae, 3.5%, 7/1/42 | 40,143 |
29,863 | | Fannie Mae, 3.5%, 8/1/42 | 32,406 |
38,386 | | Fannie Mae, 3.5%, 8/1/42 | 41,364 |
64,150 | | Fannie Mae, 3.5%, 5/1/44 | 68,831 |
37,822 | | Fannie Mae, 3.5%, 12/1/44 | 40,812 |
169,789 | | Fannie Mae, 3.5%, 2/1/45 | 185,732 |
96,806 | | Fannie Mae, 3.5%, 6/1/45 | 104,146 |
142,065 | | Fannie Mae, 3.5%, 8/1/45 | 156,111 |
31,520 | | Fannie Mae, 3.5%, 9/1/45 | 34,351 |
47,585 | | Fannie Mae, 3.5%, 9/1/45 | 50,945 |
152,789 | | Fannie Mae, 3.5%, 9/1/45 | 165,697 |
188,433 | | Fannie Mae, 3.5%, 11/1/45 | 207,064 |
41,712 | | Fannie Mae, 3.5%, 5/1/46 | 45,290 |
10,103 | | Fannie Mae, 3.5%, 10/1/46 | 10,882 |
132,608 | | Fannie Mae, 3.5%, 1/1/47 | 143,937 |
179,184 | | Fannie Mae, 3.5%, 1/1/47 | 192,758 |
141,365 | | Fannie Mae, 3.5%, 12/1/47 | 149,855 |
The accompanying notes are an integral part of these financial statements.
25
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
2,800,000 | | Fannie Mae, 3.5%, 7/1/51 (TBA) | $ 2,947,930 |
130,929 | | Fannie Mae, 4.0%, 10/1/40 | 146,001 |
16,836 | | Fannie Mae, 4.0%, 12/1/40 | 18,774 |
2,799 | | Fannie Mae, 4.0%, 11/1/41 | 3,049 |
3,565 | | Fannie Mae, 4.0%, 12/1/41 | 3,920 |
2,029 | | Fannie Mae, 4.0%, 1/1/42 | 2,210 |
29,916 | | Fannie Mae, 4.0%, 1/1/42 | 32,748 |
103,448 | | Fannie Mae, 4.0%, 1/1/42 | 112,690 |
26,559 | | Fannie Mae, 4.0%, 2/1/42 | 28,935 |
28,459 | | Fannie Mae, 4.0%, 4/1/42 | 31,105 |
60,858 | | Fannie Mae, 4.0%, 5/1/42 | 66,307 |
80,443 | | Fannie Mae, 4.0%, 7/1/42 | 88,459 |
196,881 | | Fannie Mae, 4.0%, 8/1/42 | 216,063 |
78,096 | | Fannie Mae, 4.0%, 8/1/43 | 85,094 |
56,068 | | Fannie Mae, 4.0%, 11/1/43 | 61,719 |
10,832 | | Fannie Mae, 4.0%, 4/1/46 | 11,698 |
54,121 | | Fannie Mae, 4.0%, 7/1/46 | 58,316 |
108,737 | | Fannie Mae, 4.0%, 7/1/46 | 117,573 |
55,420 | | Fannie Mae, 4.0%, 8/1/46 | 59,750 |
16,783 | | Fannie Mae, 4.0%, 11/1/46 | 18,047 |
27,975 | | Fannie Mae, 4.0%, 11/1/46 | 30,154 |
56,278 | | Fannie Mae, 4.0%, 4/1/47 | 61,108 |
73,998 | | Fannie Mae, 4.0%, 4/1/47 | 79,992 |
10,290 | | Fannie Mae, 4.0%, 6/1/47 | 11,089 |
24,791 | | Fannie Mae, 4.0%, 6/1/47 | 26,801 |
37,658 | | Fannie Mae, 4.0%, 6/1/47 | 40,552 |
52,224 | | Fannie Mae, 4.0%, 6/1/47 | 56,221 |
29,818 | | Fannie Mae, 4.0%, 7/1/47 | 31,931 |
43,433 | | Fannie Mae, 4.0%, 7/1/47 | 47,053 |
85,448 | | Fannie Mae, 4.0%, 12/1/47 | 91,354 |
1,900,000 | | Fannie Mae, 4.0%, 7/1/51 (TBA) | 2,023,723 |
19,156 | | Fannie Mae, 4.5%, 11/1/40 | 21,305 |
2,968 | | Fannie Mae, 4.5%, 4/1/41 | 3,278 |
56,463 | | Fannie Mae, 4.5%, 5/1/41 | 63,036 |
139,418 | | Fannie Mae, 4.5%, 5/1/41 | 155,031 |
156,435 | | Fannie Mae, 4.5%, 5/1/41 | 174,019 |
329,740 | | Fannie Mae, 4.5%, 6/1/44 | 366,721 |
145,800 | | Fannie Mae, 4.5%, 5/1/49 | 159,463 |
100,908 | | Fannie Mae, 4.5%, 4/1/50 | 109,444 |
7,000,000 | | Fannie Mae, 4.5%, 7/1/51 (TBA) | 7,535,664 |
44,890 | | Fannie Mae, 5.0%, 5/1/31 | 50,522 |
3,505 | | Fannie Mae, 5.0%, 6/1/40 | 4,022 |
2,037 | | Fannie Mae, 5.0%, 7/1/40 | 2,277 |
3,542 | | Fannie Mae, 5.5%, 9/1/33 | 4,080 |
4,364 | | Fannie Mae, 5.5%, 12/1/34 | 5,000 |
14,934 | | Fannie Mae, 5.5%, 10/1/35 | 17,243 |
2,814 | | Fannie Mae, 6.0%, 9/1/29 | 3,207 |
812 | | Fannie Mae, 6.0%, 10/1/32 | 925 |
The accompanying notes are an integral part of these financial statements.
26
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
2,316 | | Fannie Mae, 6.0%, 11/1/32 | $ 2,601 |
6,077 | | Fannie Mae, 6.0%, 11/1/32 | 6,818 |
7,523 | | Fannie Mae, 6.0%, 4/1/33 | 8,616 |
2,631 | | Fannie Mae, 6.0%, 5/1/33 | 2,953 |
3,860 | | Fannie Mae, 6.0%, 6/1/33 | 4,333 |
13,332 | | Fannie Mae, 6.0%, 7/1/34 | 15,463 |
1,595 | | Fannie Mae, 6.0%, 9/1/34 | 1,807 |
1,301 | | Fannie Mae, 6.0%, 7/1/38 | 1,471 |
710 | | Fannie Mae, 6.5%, 4/1/29 | 796 |
1,650 | | Fannie Mae, 6.5%, 1/1/32 | 1,849 |
981 | | Fannie Mae, 6.5%, 2/1/32 | 1,132 |
1,535 | | Fannie Mae, 6.5%, 3/1/32 | 1,733 |
2,588 | | Fannie Mae, 6.5%, 4/1/32 | 2,900 |
1,098 | | Fannie Mae, 6.5%, 8/1/32 | 1,249 |
1,838 | | Fannie Mae, 6.5%, 8/1/32 | 2,085 |
17,849 | | Fannie Mae, 6.5%, 7/1/34 | 20,571 |
581 | | Fannie Mae, 7.0%, 11/1/29 | 583 |
777 | | Fannie Mae, 7.0%, 9/1/30 | 779 |
344 | | Fannie Mae, 7.0%, 7/1/31 | 354 |
1,356 | | Fannie Mae, 7.0%, 1/1/32 | 1,609 |
399 | | Fannie Mae, 7.5%, 2/1/31 | 470 |
2,562 | | Fannie Mae, 8.0%, 10/1/30 | 3,031 |
26,583 | | Federal Home Loan Mortgage Corp., 3.0%, 10/1/29 | 28,119 |
12,287 | | Federal Home Loan Mortgage Corp., 3.0%, 9/1/42 | 13,165 |
20,428 | | Federal Home Loan Mortgage Corp., 3.0%, 9/1/42 | 21,784 |
108,342 | | Federal Home Loan Mortgage Corp., 3.0%, 11/1/42 | 115,539 |
24,910 | | Federal Home Loan Mortgage Corp., 3.0%, 1/1/43 | 26,689 |
41,890 | | Federal Home Loan Mortgage Corp., 3.0%, 2/1/43 | 44,882 |
63,240 | | Federal Home Loan Mortgage Corp., 3.0%, 2/1/43 | 67,753 |
37,725 | | Federal Home Loan Mortgage Corp., 3.0%, 4/1/43 | 40,232 |
105,730 | | Federal Home Loan Mortgage Corp., 3.0%, 4/1/43 | 113,282 |
42,264 | | Federal Home Loan Mortgage Corp., 3.0%, 5/1/43 | 45,068 |
85,924 | | Federal Home Loan Mortgage Corp., 3.0%, 6/1/46 | 91,618 |
27,403 | | Federal Home Loan Mortgage Corp., 3.0%, 12/1/46 | 29,168 |
35,662 | | Federal Home Loan Mortgage Corp., 3.0%, 12/1/46 | 37,721 |
32,063 | | Federal Home Loan Mortgage Corp., 3.5%, 7/1/29 | 34,655 |
8,891 | | Federal Home Loan Mortgage Corp., 3.5%, 10/1/40 | 9,580 |
23,670 | | Federal Home Loan Mortgage Corp., 3.5%, 5/1/42 | 25,518 |
24,468 | | Federal Home Loan Mortgage Corp., 3.5%, 10/1/42 | 26,422 |
28,610 | | Federal Home Loan Mortgage Corp., 3.5%, 10/1/42 | 31,072 |
126,710 | | Federal Home Loan Mortgage Corp., 3.5%, 6/1/45 | 137,619 |
109,020 | | Federal Home Loan Mortgage Corp., 3.5%, 10/1/45 | 118,406 |
183,785 | | Federal Home Loan Mortgage Corp., 3.5%, 11/1/45 | 197,780 |
123,759 | | Federal Home Loan Mortgage Corp., 3.5%, 7/1/46 | 135,457 |
168,601 | | Federal Home Loan Mortgage Corp., 3.5%, 8/1/46 | 183,117 |
181,846 | | Federal Home Loan Mortgage Corp., 3.5%, 8/1/46 | 196,548 |
217,492 | | Federal Home Loan Mortgage Corp., 3.5%, 12/1/46 | 236,224 |
11,928 | | Federal Home Loan Mortgage Corp., 3.5%, 6/1/47 | 12,867 |
The accompanying notes are an integral part of these financial statements.
27
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
126,418 | | Federal Home Loan Mortgage Corp., 4.0%, 11/1/41 | $ 141,013 |
81,052 | | Federal Home Loan Mortgage Corp., 4.0%, 10/1/42 | 88,338 |
17,588 | | Federal Home Loan Mortgage Corp., 4.0%, 5/1/46 | 19,111 |
47,271 | | Federal Home Loan Mortgage Corp., 4.0%, 6/1/46 | 50,979 |
75,280 | | Federal Home Loan Mortgage Corp., 4.0%, 7/1/46 | 81,215 |
54,532 | | Federal Home Loan Mortgage Corp., 4.0%, 8/1/46 | 58,845 |
20,028 | | Federal Home Loan Mortgage Corp., 4.0%, 3/1/47 | 21,479 |
37,180 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 40,454 |
49,514 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 53,868 |
91,660 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 98,556 |
94,159 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 101,837 |
175,924 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 189,008 |
91,839 | | Federal Home Loan Mortgage Corp., 4.0%, 5/1/47 | 98,546 |
14,028 | | Federal Home Loan Mortgage Corp., 4.0%, 6/1/47 | 15,092 |
23,868 | | Federal Home Loan Mortgage Corp., 4.0%, 7/1/47 | 25,660 |
80,042 | | Federal Home Loan Mortgage Corp., 4.0%, 10/1/47 | 85,585 |
236,358 | | Federal Home Loan Mortgage Corp., 4.5%, 7/1/49 | 255,498 |
285,166 | | Federal Home Loan Mortgage Corp., 4.5%, 8/1/49 | 308,342 |
12 | | Federal Home Loan Mortgage Corp., 5.0%, 12/1/21 | 12 |
2,459 | | Federal Home Loan Mortgage Corp., 5.0%, 9/1/38 | 2,821 |
2,695 | | Federal Home Loan Mortgage Corp., 5.0%, 10/1/38 | 3,091 |
5,662 | | Federal Home Loan Mortgage Corp., 5.0%, 5/1/39 | 6,501 |
12,893 | | Federal Home Loan Mortgage Corp., 5.0%, 12/1/39 | 14,804 |
6,906 | | Federal Home Loan Mortgage Corp., 5.5%, 9/1/33 | 7,977 |
9,367 | | Federal Home Loan Mortgage Corp., 5.5%, 6/1/41 | 10,886 |
331 | | Federal Home Loan Mortgage Corp., 6.0%, 10/1/32 | 371 |
2,895 | | Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 | 3,256 |
3,197 | | Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 | 3,798 |
5,909 | | Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 | 7,019 |
2,755 | | Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 | 3,119 |
710 | | Federal Home Loan Mortgage Corp., 6.0%, 12/1/36 | 814 |
1,732 | | Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 | 1,956 |
852 | | Federal Home Loan Mortgage Corp., 6.5%, 4/1/31 | 979 |
3,765 | | Federal Home Loan Mortgage Corp., 6.5%, 10/1/31 | 4,221 |
1,217 | | Federal Home Loan Mortgage Corp., 6.5%, 2/1/32 | 1,394 |
1,715 | | Federal Home Loan Mortgage Corp., 6.5%, 3/1/32 | 1,923 |
6,250 | | Federal Home Loan Mortgage Corp., 6.5%, 4/1/32 | 7,182 |
2,761 | | Federal Home Loan Mortgage Corp., 6.5%, 7/1/32 | 3,189 |
111 | | Federal Home Loan Mortgage Corp., 7.0%, 8/1/22 | 112 |
319 | | Federal Home Loan Mortgage Corp., 7.0%, 9/1/22 | 321 |
871 | | Federal Home Loan Mortgage Corp., 7.0%, 2/1/31 | 1,026 |
1,435 | | Federal Home Loan Mortgage Corp., 7.0%, 4/1/32 | 1,645 |
28,207 | | Federal Home Loan Mortgage Corp., 7.0%, 10/1/46 | 29,345 |
1,004 | | Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 | 1,150 |
1,100,000 | | Federal National Mortgage Association, 4.0%, 7/1/51 (TBA) | 1,172,574 |
500,000 | | Government National Mortgage Association, 2.0%, 7/1/51 (TBA) | 509,648 |
3,000,000 | | Government National Mortgage Association, 2.5%, 7/1/51 (TBA) | 3,105,352 |
300,000 | | Government National Mortgage Association, 3.0%, 7/1/51 (TBA) | 312,867 |
The accompanying notes are an integral part of these financial statements.
28
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
129,542 | | Government National Mortgage Association I, 3.5%, 11/15/41 | $ 139,301 |
49,398 | | Government National Mortgage Association I, 3.5%, 8/15/42 | 53,126 |
15,579 | | Government National Mortgage Association I, 3.5%, 10/15/42 | 16,617 |
54,661 | | Government National Mortgage Association I, 3.5%, 1/15/45 | 58,299 |
38,402 | | Government National Mortgage Association I, 3.5%, 8/15/46 | 40,729 |
64,009 | | Government National Mortgage Association I, 4.0%, 1/15/25 | 69,460 |
55,617 | | Government National Mortgage Association I, 4.0%, 8/15/43 | 63,489 |
208,822 | | Government National Mortgage Association I, 4.0%, 3/15/44 | 225,767 |
16,953 | | Government National Mortgage Association I, 4.0%, 9/15/44 | 18,808 |
39,805 | | Government National Mortgage Association I, 4.0%, 4/15/45 | 43,639 |
64,113 | | Government National Mortgage Association I, 4.0%, 6/15/45 | 70,730 |
7,436 | | Government National Mortgage Association I, 4.0%, 7/15/45 | 8,204 |
9,354 | | Government National Mortgage Association I, 4.0%, 8/15/45 | 10,348 |
37,923 | | Government National Mortgage Association I, 4.5%, 5/15/39 | 43,104 |
1,561 | | Government National Mortgage Association I, 4.5%, 8/15/41 | 1,763 |
6,128 | | Government National Mortgage Association I, 5.5%, 3/15/33 | 6,873 |
6,619 | | Government National Mortgage Association I, 5.5%, 7/15/33 | 7,711 |
17,670 | | Government National Mortgage Association I, 5.5%, 8/15/33 | 20,586 |
9,599 | | Government National Mortgage Association I, 5.5%, 10/15/34 | 10,881 |
5,761 | | Government National Mortgage Association I, 6.0%, 4/15/28 | 6,613 |
4,808 | | Government National Mortgage Association I, 6.0%, 2/15/29 | 5,405 |
6,421 | | Government National Mortgage Association I, 6.0%, 9/15/32 | 7,447 |
1,301 | | Government National Mortgage Association I, 6.0%, 10/15/32 | 1,459 |
8,031 | | Government National Mortgage Association I, 6.0%, 11/15/32 | 9,327 |
13,607 | | Government National Mortgage Association I, 6.0%, 11/15/32 | 15,304 |
4,139 | | Government National Mortgage Association I, 6.0%, 1/15/33 | 4,926 |
10,074 | | Government National Mortgage Association I, 6.0%, 12/15/33 | 11,545 |
6,028 | | Government National Mortgage Association I, 6.0%, 8/15/34 | 7,104 |
7,777 | | Government National Mortgage Association I, 6.0%, 8/15/34 | 8,721 |
802 | | Government National Mortgage Association I, 6.5%, 3/15/26 | 894 |
2,479 | | Government National Mortgage Association I, 6.5%, 6/15/28 | 2,817 |
2,872 | | Government National Mortgage Association I, 6.5%, 6/15/28 | 3,203 |
268 | | Government National Mortgage Association I, 6.5%, 2/15/29 | 298 |
2,498 | | Government National Mortgage Association I, 6.5%, 5/15/29 | 2,859 |
7,121 | | Government National Mortgage Association I, 6.5%, 5/15/29 | 8,099 |
16,350 | | Government National Mortgage Association I, 6.5%, 7/15/31 | 18,234 |
2,885 | | Government National Mortgage Association I, 6.5%, 9/15/31 | 3,218 |
5,336 | | Government National Mortgage Association I, 6.5%, 10/15/31 | 5,951 |
1,274 | | Government National Mortgage Association I, 6.5%, 12/15/31 | 1,425 |
2,144 | | Government National Mortgage Association I, 6.5%, 12/15/31 | 2,392 |
314 | | Government National Mortgage Association I, 6.5%, 4/15/32 | 354 |
936 | | Government National Mortgage Association I, 6.5%, 4/15/32 | 1,055 |
736 | | Government National Mortgage Association I, 6.5%, 6/15/32 | 820 |
1,345 | | Government National Mortgage Association I, 6.5%, 6/15/32 | 1,500 |
4,310 | | Government National Mortgage Association I, 6.5%, 7/15/32 | 4,837 |
11,892 | | Government National Mortgage Association I, 6.5%, 12/15/32 | 13,949 |
11,881 | | Government National Mortgage Association I, 7.0%, 7/15/26 | 12,325 |
1,017 | | Government National Mortgage Association I, 7.0%, 9/15/27 | 1,035 |
The accompanying notes are an integral part of these financial statements.
29
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | |
12,024 | | Government National Mortgage Association I, 7.0%, 2/15/28 | $ 12,526 |
2,841 | | Government National Mortgage Association I, 7.0%, 11/15/28 | 3,106 |
2,295 | | Government National Mortgage Association I, 7.0%, 1/15/29 | 2,563 |
3,172 | | Government National Mortgage Association I, 7.0%, 6/15/29 | 3,425 |
567 | | Government National Mortgage Association I, 7.0%, 7/15/29 | 590 |
1,553 | | Government National Mortgage Association I, 7.0%, 7/15/29 | 1,705 |
564 | | Government National Mortgage Association I, 7.0%, 12/15/30 | 574 |
1,475 | | Government National Mortgage Association I, 7.0%, 2/15/31 | 1,504 |
1,852 | | Government National Mortgage Association I, 7.0%, 8/15/31 | 2,207 |
2,361 | | Government National Mortgage Association I, 7.0%, 5/15/32 | 2,371 |
87 | | Government National Mortgage Association I, 7.5%, 10/15/22 | 87 |
62 | | Government National Mortgage Association I, 7.5%, 6/15/23 | 62 |
1,596 | | Government National Mortgage Association I, 7.5%, 10/15/29 | 1,654 |
500,000 | | Government National Mortgage Association II, 2.0%, 7/1/51 (TBA) | 508,730 |
4,721 | | Government National Mortgage Association II, 3.5%, 3/20/45 | 5,008 |
6,171 | | Government National Mortgage Association II, 3.5%, 4/20/45 | 6,572 |
12,285 | | Government National Mortgage Association II, 3.5%, 4/20/45 | 13,153 |
19,780 | | Government National Mortgage Association II, 3.5%, 4/20/45 | 21,254 |
57,516 | | Government National Mortgage Association II, 3.5%, 1/20/46 | 61,247 |
24,660 | | Government National Mortgage Association II, 3.5%, 3/20/46 | 26,717 |
113,424 | | Government National Mortgage Association II, 3.5%, 11/20/46 | 120,468 |
12,532 | | Government National Mortgage Association II, 4.0%, 8/20/39 | 13,732 |
15,513 | | Government National Mortgage Association II, 4.0%, 7/20/42 | 17,000 |
203,407 | | Government National Mortgage Association II, 4.0%, 7/20/44 | 222,405 |
19,928 | | Government National Mortgage Association II, 4.0%, 9/20/44 | 21,776 |
23,053 | | Government National Mortgage Association II, 4.0%, 3/20/46 | 24,979 |
70,261 | | Government National Mortgage Association II, 4.0%, 10/20/46 | 75,914 |
42,765 | | Government National Mortgage Association II, 4.0%, 2/20/48 | 46,856 |
52,870 | | Government National Mortgage Association II, 4.0%, 4/20/48 | 57,928 |
5,550 | | Government National Mortgage Association II, 4.5%, 9/20/41 | 6,138 |
34,227 | | Government National Mortgage Association II, 4.5%, 5/20/43 | 37,853 |
103,267 | | Government National Mortgage Association II, 4.5%, 1/20/44 | 114,200 |
64,742 | | Government National Mortgage Association II, 4.5%, 9/20/44 | 69,639 |
26,362 | | Government National Mortgage Association II, 4.5%, 10/20/44 | 29,150 |
55,051 | | Government National Mortgage Association II, 4.5%, 11/20/44 | 60,879 |
190,530 | | Government National Mortgage Association II, 4.5%, 2/20/48 | 203,117 |
6,970 | | Government National Mortgage Association II, 6.0%, 11/20/33 | 8,167 |
1,323 | | Government National Mortgage Association II, 6.5%, 8/20/28 | 1,496 |
2,101 | | Government National Mortgage Association II, 6.5%, 12/20/28 | 2,380 |
1,273 | | Government National Mortgage Association II, 6.5%, 9/20/31 | 1,498 |
1,340 | | Government National Mortgage Association II, 7.0%, 5/20/26 | 1,453 |
4,149 | | Government National Mortgage Association II, 7.0%, 2/20/29 | 4,684 |
654 | | Government National Mortgage Association II, 7.0%, 1/20/31 | 769 |
338 | | Government National Mortgage Association II, 7.5%, 8/20/27 | 383 |
108 | | Government National Mortgage Association II, 8.0%, 8/20/25 | 117 |
10,000,000(i) | | U.S. Treasury Bills, 7/27/21 | 9,999,711 |
15,753,200(i) | | U.S. Treasury Bills, 8/5/21 | 15,752,526 |
The accompanying notes are an integral part of these financial statements.
30
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | | | |
Principal | | | | | | |
Amount | | | | | | |
USD ($) | | | | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – (continued) | | |
7,246,800(i) | | U.S. Treasury Bills, 8/17/21 | | | | $ 7,246,365 |
1,970,652 | | U.S. Treasury Inflation Indexed Bonds, 0.125%, 2/15/51 | | | 2,168,487 |
571,930 | | U.S. Treasury Inflation Indexed Bonds, 0.25%, 2/15/50 | | | 648,426 |
958,420 | | U.S. Treasury Inflation Indexed Bonds, 1.0%, 2/15/48 | | | 1,279,914 |
1,808,404 | | U.S. Treasury Inflation Indexed Bonds, 1.0%, 2/15/49 | | | 2,438,284 |
| | TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS | | |
| | (Cost $85,841,126) | | | | $ 87,338,592 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 113.0% | | |
| | (Cost $201,732,006) | | | | $207,890,969 |
| | | | | Change | |
| | | | | in Net | |
| | | | Net | Unrealized | |
| | | Dividend | Realized | Appreciation | |
Shares | | | Income | Gain (Loss) | (Depreciation) | Value |
| | AFFILIATED ISSUER – 1.5% | | | | |
| | CLOSED-END FUND – 1.5% of Net Assets | | | |
321,413(j) | | Pioneer ILS Interval Fund | $— | $— | $44,998 | $ 2,773,791 |
| | TOTAL CLOSED-END FUND | | | | |
| | (Cost $3,263,545) | | | | $ 2,773,791 |
| | TOTAL INVESTMENTS IN AFFILIATED ISSUER – 1.5% | | | |
| | (Cost $3,263,545) | | | | $ 2,773,791 |
| | OTHER ASSETS AND LIABILITIES – (14.5)% | | | $ (26,798,637) |
| | NET ASSETS – 100.0% | | | | $183,866,123 |
| |
bps CMT FREMF ICE LIBOR REIT REMICS SOFRRATE (144A) | Basis Points. Constant Maturity Treasury Index. Freddie Mac Multifamily Fixed-Rate Mortgage Loans. Intercontinental Exchange. London Interbank Offered Rate. Real Estate Investment Trust. Real Estate Mortgage Investment Conduits. Secured Overnight Financing Rate. Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified institutional buyers in a transaction exempt from registration. At June 30, 2021, the value of these securities amounted to $71,400,377, or 38.8% of net assets. |
(TBA) † * | “To Be Announced” Securities. Amount rounds to less than 0.1%. Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as LIBOR, (ii) the prime rate offered by one or more major United States banks, (iii) the rate of a certificate of deposit or (iv) other base lending rates used by commercial lenders. The interest rate shown is the rate accruing at June 30, 2021. |
+ (a) (b) (c) (d) (e) (f) (g) | Security that used significant unobservable inputs to determine its value. Security is perpetual in nature and has no stated maturity date. Floating rate note. Coupon rate, reference index and spread shown at June 30, 2021. Debt obligation initially issued at one coupon which converts to a higher coupon at a specific date. The rate shown is the rate at June 30, 2021. The interest rate is subject to change periodically. The interest rate and/or reference index and spread shown at June 30, 2021. Security represents the interest-only portion payments on a pool of underlying mortgages or mortgage-backed securities. Issued as preference shares. Non-income producing security. |
The accompanying notes are an integral part of these financial statements.
31
| |
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
(h) (i) (j) # | Consists of Revenue Bonds unless otherwise indicated. Security issued with a zero coupon. Income is recognized through accretion of discount. Pioneer ILS Interval Fund is an affiliated closed-end fund managed by the Adviser. Securities are restricted as to resale. |
| | | |
Restricted Securities | Acquisition date | Cost | Value |
Lorenz Re 2018 | 6/26/2018 | $ 10,733 | $ 255 |
Lorenz Re 2019 | 7/10/2019 | 8,162 | 2,822 |
Total Restricted Securities | | | $ 3,077 |
|
% of Net assets | | | 0.0% |
| | | | | |
FUTURES CONTRACTS | | | | |
FIXED INCOME INDEX FUTURES CONTRACTS | | | |
| | | | | Unrealized |
Number of | | Expiration | Notional | Market | Appreciation |
Contracts Long | Description | Date | Amount | Value | (Depreciation) |
32 | U.S. 2 Year Note (CBT) | 9/30/21 | $ 7,061,141 | $ 7,050,250 | $ (10,891) |
129 | U.S. 5 Year Note (CBT) | 9/30/21 | 15,959,273 | 15,922,429 | (36,844) |
2 | U.S. Long Bond (CBT) | 9/21/21 | 312,172 | 321,500 | 9,328 |
39 | U.S. Ultra Bond (CBT) | 9/21/21 | 7,225,680 | 7,514,813 | 289,133 |
| | | $30,558,266 | $30,808,992 | $ 250,726 |
|
Number of | | Expiration | Notional | Market | Unrealized |
Contracts Short | Description | Date | Amount | Value | (Depreciation) |
68 | U.S. 10 Year Note (CBT) | 9/21/21 | $ (8,966,891) | $ (9,010,000) | $ (43,109) |
58 | U.S. 10 Year Ultra | 9/21/21 | (8,411,406) | (8,537,781) | (126,375) |
| | | $(17,378,297) | $(17,547,781) | $(169,484) |
TOTAL FUTURES CONTRACTS | | $ 13,179,969 | $ 13,261,211 | $ 81,242 |
SWAP CONTRACT | | | | | | |
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – SELL PROTECTION | | | | |
Notional | | Pay/ | Annual | Expiration | Premiums | Unrealized | Market |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | Paid | Appreciation | Value |
2,850,000 | Markit CDX North America High | | | | | | |
| Yield Series 36 | Receive | 5.00% | 6/20/26 | $275,839 | $17,109 | $292,948 |
TOTAL SWAP CONTRACT | | | | $275,839 | $17,109 | $292,948 |
(1) | The notional amount is the maximum amount that a seller of credit protection would be obligated to pay upon occurrence of a credit event. |
(2) | Receive quarterly. |
| | |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021 were as follows:
|
| Purchases | Sales |
Long-Term U.S. Government Securities | $ 5,806,550 | $23,191,156 |
Other Long-Term Securities | $37,262,827 | $41,748,810 |
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which the Adviser serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
The accompanying notes are an integral part of these financial statements.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| |
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $205,467,765 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 7,214,962 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (1,643,777) |
Net unrealized appreciation | $ 5,571,185 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
| | | | |
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments:
|
| Level 1 | Level 2 | Level 3 | Total |
Common Stock | $ 15,600 | $ — | $ — | $ 15,600 |
Convertible Preferred Stock | 2,544,192 | — | — | 2,544,192 |
Asset Backed Securities | — | 15,976,301 | — | 15,976,301 |
Collateralized Mortgage Obligations | — | 27,179,874 | — | 27,179,874 |
Commercial Mortgage-Backed Securities | — | 11,166,354 | — | 11,166,354 |
Corporate Bonds | — | 62,000,881 | — | 62,000,881 |
Foreign Government Bond | — | 509,551 | — | 509,551 |
Insurance-Linked Securities | | | | |
Reinsurance Sidecars | | | | |
Multiperil - Worldwide | — | — | 3,077 | 3,077 |
Municipal Bond | — | 54,499 | — | 54,499 |
Senior Secured Floating Rate Loan Interests | — | 1,102,048 | — | 1,102,048 |
U.S. Government and Agency Obligations | — | 87,338,592 | — | 87,338,592 |
Affiliated Closed-End Fund | — | 2,773,791 | — | 2,773,791 |
Total Investments in Securities | $2,559,792 | $208,101,891 | $3,077 | $210,664,760 |
|
Other Financial Instruments | | | | |
Net unrealized appreciation on futures contracts | $ 81,242 | $ — | $ — | $ 81,242 |
Swap contracts, at value | — | 292,948 | — | 292,948 |
Total Other Financial Instruments | $ 81,242 | $ 292,948 | $ — | $ 374,190 |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
| Insurance- Linked Securities | |
Balance as of 12/31/20 Realized gain (loss)(1) Change in unrealized appreciation (depreciation)(2) Accrued discounts/premiums Purchases Sales Transfers in to Level 3* Transfers out of Level 3* | $2,290 — 1,757 — — (970) — — $3,077 | |
(1) | Realized gain (loss) on these securities is included in net realized gain (loss) on investments in the Statement of Operations. |
(2) | Unrealized appreciation (depreciation) on these securities is included in change in net unrealized appreciation (depreciation) on investments in the Statement of Operations. |
* | Transfers are calculated on the beginning of period value. For the six months ended June 30, 2021, there were no transfers in or out of Level 3. |
Net change in unrealized appreciation (depreciation) of Level 3 investments still held and considered Level 3 at June 30, 2021: $1,757
The accompanying notes are an integral part of these financial statements.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
| |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $201,732,006) | $ 207,890,969 |
Investments in affiliated issuers, at value (cost $3,263,545) | 2,773,791 |
Cash | 7,602,179 |
Foreign currencies, at value (cost $123,832) | 120,555 |
Futures collateral | 199,159 |
Swaps collateral | 250,834 |
Due from broker for futures | 507,915 |
Variation margin for futures contracts | 9,969 |
Variation margin for centrally cleared swap contracts | 521 |
Net unrealized appreciation on futures contracts | 81,242 |
Swap contracts, at value (net premiums paid $275,839) | 292,948 |
Receivables — | |
Investment securities sold | 7,438,701 |
Portfolio shares sold | 92,786 |
Interest | 787,110 |
Other assets | 4,405 |
Total assets | $ 228,053,084 |
|
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 43,696,572 |
Portfolio shares repurchased | 86,247 |
Trustees’ fees | 141 |
Swaps collateral | 16,238 |
Due to broker for swaps | 294,766 |
Due to affiliates | 14,659 |
Accrued expenses | 78,338 |
Total liabilities | $ 44,186,961 |
|
NET ASSETS: | |
Paid-in capital | $ 177,091,935 |
Distributable earnings | 6,774,188 |
Net assets | $ 183,866,123 |
|
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class I (based on $38,015,232/3,345,422 shares) | $ 11.36 |
Class II (based on $145,850,891/12,808,177 shares) | $ 11.39 |
The accompanying notes are an integral part of these financial statements.
34
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | |
| | | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | |
INVESTMENT INCOME: | | | |
Interest from unaffiliated issuers | $ 2,479,758 | | |
Dividends from unaffiliated issuers | 69,426 | | |
Total investment income | | | $ 2,549,184 |
EXPENSES: | | | |
Management fees | $ 381,469 | | |
Administrative expense | 51,347 | | |
Distribution fees | | | |
Class II | 176,480 | | |
Custodian fees | 47,535 | | |
Professional fees | 37,399 | | |
Printing expense | 12,993 | | |
Pricing fees | 44,141 | | |
Trustees’ fees | 3,806 | | |
Insurance expense | 36 | | |
Miscellaneous | 3,203 | | |
Total expenses | | | $ 758,409 |
Less fees waived and expenses reimbursed by the Adviser | | | (23,685) |
Net expenses | | | $ 734,724 |
Net investment income | | | $ 1,814,460 |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | |
Net realized gain (loss) on: | | | |
Investments in unaffiliated issuers | $ 1,486,692 | | |
Short sales | 23,189 | | |
Futures contracts | (349,333) | | |
Swap contracts | 128,315 | | |
Other assets and liabilities denominated in foreign currencies | (1,368) | | $ 1,287,495 |
Change in net unrealized appreciation (depreciation) on: | | | |
Investments in unaffiliated issuers | $(3,109,473) | | |
Investments in affiliated issuers | 44,998 | | |
Futures contracts | 163,742 | | |
Swap contracts | (29,541) | | |
Other assets and liabilities denominated in foreign currencies | (3,277) | | $ (2,933,551) |
Net realized and unrealized gain (loss) on investments | | | $ (1,646,056) |
Net increase in net assets resulting from operations | | | $ 168,404 |
The accompanying notes are an integral part of these financial statements.
35
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| | | |
| Six Months | | |
| Ended | | |
| 6/30/21 | | Year Ended |
| (unaudited) | | 12/31/20 |
FROM OPERATIONS: | | | |
Net investment income (loss) | $ 1,814,460 | | $ 4,594,339 |
Net realized gain (loss) on investments | 1,287,495 | | 6,211,688 |
Change in net unrealized appreciation (depreciation) on investments | (2,933,551) | | 3,781,096 |
Net increase in net assets resulting from operations | $ 168,404 | | $ 14,587,123 |
DISTRIBUTIONS TO SHAREOWNERS: | | | |
Class I ($0.44 and $0.34 per share, respectively) | $ (1,552,863) | | $ (1,461,488) |
Class II ($0.42 and $0.32 per share, respectively) | (5,225,742) | | (3,784,139) |
Total distributions to shareowners | $ (6,778,605) | | $ (5,245,627) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | |
Net proceeds from sales of shares | $ 24,093,046 | | $ 29,369,220 |
Reinvestment of distributions | 6,778,605 | | 5,245,627 |
Cost of shares repurchased | (28,083,138) | | (46,368,379) |
Net increase (decrease) in net assets resulting from Portfolio | | | |
share transactions | $ 2,788,513 | | $(11,753,532) |
Net decrease in net assets | $ (3,821,688) | | $ (2,412,036) |
NET ASSETS: | | | |
Beginning of period | $ 187,687,811 | | $190,099,847 |
End of period | $ 183,866,123 | | $187,687,811 |
| | | | | | | |
| Six Months | | Six Months | | | | |
| Ended | | Ended | | | | |
| 6/30/21 | | 6/30/21 | | Year Ended | | Year Ended |
| Shares | | Amount | | 12/31/20 | | 12/31/20 |
| (unaudited) | | (unaudited) | | Shares | | Amount |
Class I | | | | | | | |
Shares sold | 844,414 | | $ 9,861,182 | | 1,151,890 | | $ 12,894,356 |
Reinvestment of distributions | 136,429 | | 1,552,863 | | 129,385 | | 1,461,488 |
Less shares repurchased | (1,634,400) | | (18,972,503) | | (1,679,925) | | (18,956,735) |
Net decrease | (653,557) | | $ (7,558,458) | | (398,650) | | $ (4,600,891) |
Class II | | | | | | | |
Shares sold | 1,222,725 | | $ 14,231,864 | | 1,437,993 | | $ 16,474,864 |
Reinvestment of distributions | 457,875 | | 5,225,742 | | 334,137 | | 3,784,139 |
Less shares repurchased | (784,386) | | (9,110,635) | | (2,455,724) | | (27,411,644) |
Net increase (decrease) | 896,214 | | $ 10,346,971 | | (683,594) | | $ (7,152,641) |
The accompanying notes are an integral part of these financial statements.
36
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| Six Months |
|
|
|
|
|
| Ended |
|
|
|
|
|
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class I |
|
|
|
|
|
|
Net asset value, beginning of period | $ 11.78 | $ 11.17 | $ 10.56 | $ 11.04 | $ 10.96 | $ 10.83 |
Increase (decrease) from investment operations: |
|
|
|
|
Net investment income (loss) (a) | $ 0.12 | $ 0.30 | $ 0.33 | $ 0.33 | $ 0.29 | $ 0.27 |
Net realized and unrealized gain (loss) on investments | (0.10) | 0.65 | 0.64 | (0.42) | 0.14 | 0.18 |
Net increase (decrease) from investment operations | $ 0.02 | $ 0.95 | $ 0.97 | $ (0.09) | $ 0.43 | $ 0.45 |
Distributions to shareowners: |
|
|
|
|
|
|
Net investment income | $ (0.14) | $ (0.34) | $ (0.36) | $ (0.36) | $ (0.31) | $ (0.31) |
Net realized gain | (0.30) | — | — | (0.03) | (0.04) | (0.01) |
Total distributions | $ (0.44) | $ (0.34) | $ (0.36) | $ (0.39) | $ (0.35) | $ (0.32) |
Net increase (decrease) in net asset value | $(0.42) | $ 0.61 | $ 0.61 | $ (0.48) | $ 0.08 | $ 0.13 |
Net asset value, end of period | $11.36 | 11.78 | 11.17 | 10.56 | 11.04 | $10.96 |
Total return (b) | 0.15%(c) | 8.70% | 9.27% | (0.84)% | 4.01% | 4.10% |
Ratio of net expenses to average net assets | 0.58%(d) | 0.59% | 0.59% | 0.61% | 0.61% | 0.62% |
Ratio of net investment income (loss) to average |
|
|
|
|
net assets | 2.08%(d) | 2.68% | 3.03% | 3.07% | 2.59% | 2.46% |
Portfolio turnover rate | 28%(c) | 59% | 48% | 44% | 42% | 50% |
Net assets, end of period (in thousands) | $38,015 | $47,089 | $49,115 | $46,125 | $49,672 | $48,442 |
Ratios with no waiver of fees and assumption of expenses by the Adviser and no reduction for fees paid indirectly: |
Total expenses to average net assets | 0.61%(d) | 0.62% | 0.62% | 0.64% | 0.61% | 0.68% |
Net investment income (loss) to average net assets | 2.05%(d) | 2.65% | 3.00% | 3.04% | 2.59% | 2.40% |
| |
* (a) (b) | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. The per-share data presented above is based on the average shares outstanding for the period presented. Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) (d) | Not annualized. Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
37
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights (continued) | |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class II | | | | | | |
Net asset value, beginning of period | $ 11.80 | $ 11.19 | $ 10.59 | $ 11.07 | $ 10.99 | $ 10.85 |
Increase (decrease) from investment operations: |
|
|
|
|
Net investment income (loss) (a) | $ 0.11 | $ 0.28 | $ 0.31 | $ 0.30 | $ 0.26 | $ 0.25 |
Net realized and unrealized gain (loss) |
|
|
|
|
|
on investments | (0.10) | 0.65 | 0.62 | (0.42) | 0.15 | 0.18 |
Net increase (decrease) from investment operations | $ 0.01 | $ 0.93 | $ 0.93 | $ (0.12) | $ 0.41 | $ 0.43 |
Distributions to shareowners: |
|
|
|
|
|
|
Net investment income | $ (0.12) | $ (0.32) | $ (0.33) | $ (0.33) | $ (0.29) | $ (0.28) |
Net realized gain | (0.30) | — | — | (0.03) | (0.04) | (0.01) |
Total distributions | $ (0.42) | $ (0.32) | $ (0.33) | $ (0.36) | $ (0.33) | $ (0.29) |
Net increase (decrease) in net asset value | $ (0.41) | $ 0.61 | $ 0.60 | $ (0.48) | $ 0.08 | $ 0.14 |
Net asset value, end of period | $ 11.39 | $ 11.80 | $ 11.19 | $ 10.59 | $ 11.07 | $ 10.99 |
Total return (b) | 0.12%(c) | 8.42% | 8.90% | (1.08)% | 3.74% | 3.92% |
Ratio of net expenses to average net assets | 0.84%(d) | 0.84% | 0.84% | 0.86% | 0.86% | 0.88% |
Ratio of net investment income (loss) to average net assets | 1.84%(d) | 2.43% | 2.78% | 2.83% | 2.35% | 2.21% |
Portfolio turnover rate | 28%(c) | 59% | 48% | 44% | 42% | 50% |
Net assets, end of period (in thousands) | $145,851 | $140,599 | $140,985 | $125,865 | $122,239 | $95,484 |
Ratios with no waiver of fees and assumption of expenses by the Adviser and no reduction for fees paid indirectly:
|
|
|
|
|
|
|
Total expenses to average net assets | 0.86%(d) | 0.87% | 0.87% | 0.89% | 0.86% | 0.94% |
Net investment income (loss) to average net assets | 1.82%(d) | 2.40% | 2.76% | 2.80% | 2.35% | 2.16% |
| |
* (a) (b) | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. The per-share data presented above is based on the average shares outstanding for the period presented. Assumes initial investment at net asset value at the beginning of each period, reinvestment of all 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. |
(c) (d) | Not annualized. Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
38
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Bond VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Portfolio seeks current income and total return.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same portfolio of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
In March 2020, FASB issued an Accounting Standard Update, ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (“LIBOR”) and other LIBOR-based reference rates at the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the Portfolio’s investments, derivatives, debt and other contracts, if applicable, that will undergo reference rate-related modifications as a result of the reference rate reform.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Fixed-income securities are valued by using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities, historical trading patterns in the market for fixed-income securities and/or other factors. Non-U.S. debt securities that are listed on an
39
| | |
| Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
| Notes to Financial Statements 6/30/21 (unaudited) (continued) |
exchange will be valued at the bid price obtained from an independent third party pricing service. When independent third party pricing services are unable to supply prices, or when prices or market quotations are considered to be unreliable, the value of that security may be determined using quotations from one or more broker-dealers.
Loan interests are valued in accordance with guidelines established by the Board of Trustees at the mean between the last available bid and asked prices from one or more brokers or dealers as obtained from Loan Pricing Corporation, an independent third party pricing service. If price information is not available from Loan Pricing Corporation, or if the price information is deemed to be unreliable, price information will be obtained from an alternative loan interest pricing service. If no reliable price quotes are available from either the primary or alternative pricing service, broker quotes will be solicited.
Event-linked bonds are valued at the bid price obtained from an independent third party pricing service. Other insurance-linked securities (including reinsurance sidecars, collateralized reinsurance and industry loss warranties) may be valued at the bid price obtained from an independent pricing service, or through a third party using a pricing matrix, insurance industry valuation models, or other fair value methods or techniques to provide an estimated value of the instrument.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
Futures contracts are generally valued at the closing settlement price established by the exchange on which they are traded.
Swap contracts, including interest rate swaps, caps and floors (other than centrally cleared swap contracts), are valued at the dealer quotations obtained from reputable International Swap Dealers Association members. Centrally cleared swaps are valued at the daily settlement price provided by the central clearing counterparty.
Shares of open-end registered investment companies (including money market mutual funds) are valued at such funds’ net asset value. Shares of exchange-listed closed-end funds are valued by using the last sale price on the principal exchange where they are traded. Shares of closed-end interval funds that offer their shares at net asset value are valued at such funds’ net asset value.
Securities or loan interests for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
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Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Principal amounts of mortgage-backed securities are adjusted for monthly paydowns. Premiums and discounts related to certain mortgage-backed securities are amortized or accreted in proportion to the monthly paydowns. All discounts/premiums on purchase prices of debt securities are accreted/amortized for financial reporting purposes over the life of the respective securities, and such accretion/amortization is included in interest income.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| 2020 |
Distributions paid from: | |
Ordinary income | $5,245,627 |
Total | $5,245,627 |
The following shows the components of distributable earnings on a federal income tax basis at December 31, 2020:
| 2020 |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 1,861,101 |
Undistributed long term capital gain | 3,021,965 |
Net unrealized appreciation | 8,501,323 |
Total | $13,384,389 |
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| Notes to Financial Statements 6/30/21 (unaudited) (continued) |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax adjustments relating to wash sales, premium and amortization, credit default swaps, the mark to market of futures contracts and credit default swaps.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated between the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
The Portfolio declares as daily dividends substantially all of its net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates. Dividends and distributions to shareowners are recorded on the ex-dividend date.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Portfolio invests in below-investment-grade (high-yield) debt securities and preferred stocks. Some of these high-yield securities may be convertible into equity securities of the issuer. Debt securities rated below-investment-grade are commonly referred to as “junk bonds” and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
Certain instruments held by the Fund pay an interest rate based on the London Interbank Offered Rate (“LIBOR”), which is the average offered rate for various maturities of short-term loans between certain major international banks. LIBOR is expected to be phased out by the end of 2021. While the effect of the phase out cannot yet be determined, it may result in, among other things, increased volatility or illiquidity in markets for instruments based on LIBOR and changes in the value of such instruments. The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate). Plans are underway to phase out the use of LIBOR. The UK Financial Conduct Authority (“FCA”) and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will no longer be published after June 30, 2023. It is possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the underlying markets. Actions by regulators
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have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), the U.S. Federal Reserve began publishing a Secured Overnight Funding Rate (“SOFR”) that is intended to replace U.S. Dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication, such as SONIA in the United Kingdom. Markets are slowly developing in response to these new rates, and transition planning is at a relatively early stage. Neither the effect of the transition process nor its ultimate success is known. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. The effect of any changes to --or discontinuation of --LIBOR on the portfolio will vary depending on, among other things, provisions in individual contracts and whether, how, and when industry participants develop and adopt new reference rates and alternative reference rates for both legacy and new products and instruments. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could materialize prior to the end of 2021.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
G. Restricted Securities
Restricted Securities are subject to legal or contractual restrictions on resale. Restricted securities generally are resold in transactions exempt from registration under the Securities Act of 1933. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933.
Disposal of restricted investments may involve negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted investments held by the Portfolio at June 30, 2021 are listed in the Schedule of Investments.
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Notes to Financial Statements 6/30/21 (unaudited) (continued) |
H. Insurance-Linked Securities (“ILS”)
The Portfolio invests in ILS. The Portfolio could lose a portion or all of the principal it has invested in an ILS, and the right to additional interest or dividend payments with respect to the security, upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events, generally, are hurricanes, earthquakes, or other natural events of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to accurately predict whether a trigger event will occur, and accordingly, ILS carry significant risk. The Portfolio is entitled to receive principal, and interest and/or dividend payments so long as no trigger event occurs of the description and magnitude specified by the instrument. In addition to the specified trigger events, ILS may expose the Portfolio to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax consequences.
The Portfolio’s investments in ILS may include event-linked bonds. ILS also may include special purpose vehicles (“SPVs”) or similar instruments structured to comprise a portion of a reinsurer’s catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks to insurance or reinsurance companies through a collateralized instrument, known as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties (“ILWs”). A traditional ILW takes the form of a bilateral reinsurance contract, but there are also products that take the form of derivatives, collateralized structures, or exchange-traded instruments.
Where the ILS are based on the performance of underlying reinsurance contracts, the Portfolio has limited transparency into the individual underlying contracts, and therefore must rely upon the risk assessment and sound underwriting practices of the issuer. Accordingly, it may be more difficult for the Adviser to fully evaluate the underlying risk profile of the Portfolio’s structured reinsurance investments, and therefore the Portfolio’s assets are placed at greater risk of loss than if the Adviser had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Portfolio. These securities may be difficult to purchase, sell or unwind. Illiquid securities also may be difficult to value. If the Portfolio is forced to sell an illiquid asset, the Portfolio may be forced to sell at a loss.
Additionally, the Portfolio may gain exposure to ILS by investing in a closed-end interval fund, Pioneer ILS Interval Fund, an affiliate of the Adviser. The Portfolio’s investment in Pioneer ILS Interval Fund at June 30, 2021, is listed in the Schedule of Investments.
I. Futures Contracts
The Portfolio may enter into futures transactions in order to attempt to hedge against changes in interest rates, securities prices and currency exchange rates or to seek to increase total return. Futures contracts are types of derivatives. All futures contracts entered into by the Portfolio are traded on a futures exchange. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum “initial margin” requirements of the associated futures exchange. The amount of cash deposited with the broker as collateral at June 30, 2021, is recorded as “Futures collateral” on the Statement of Assets and Liabilities.
Subsequent payments for futures contracts (“variation margin”) are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized appreciation or depreciation. Cash received from or paid to the broker related to previous margin movement is held in a segregated account at the broker and is recorded as either “Due from broker for futures” or “Due to broker for futures” on the Statement of Assets and Liabilities. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract as well as any fluctuation in foreign currency exchange rates where applicable. Futures contracts are subject to market risk, interest rate risk and currency exchange rate risk. Changes in value of the contracts may not directly correlate to the changes in value of the underlying securities. With futures, there is reduced counterparty credit risk to the Portfolio since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
The average market value of futures contracts open during the six months ended June 30, 2021, was $14,719,307. Open futures contracts outstanding at June 30, 2021, are listed in the Schedule of Investments.
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J. Credit Default Swap Contracts
A credit default swap is a contract between a buyer of protection and a seller of protection against a pre defined credit event or an underlying reference obligation, which may be a single security or a basket or index of securities. The Portfolio may buy or sell credit default swap contracts to seek to increase the Portfolio’s income, or to attempt to hedge the risk of default on portfolio securities. A credit default swap index is used to hedge risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Portfolio would be required to pay the notional (or other agreed-upon) value of the referenced debt obligation to the counterparty in the event of a default by a U.S. or foreign corporate issuer of a debt obligation, which would likely result in a loss to the Portfolio. In return, the Portfolio would receive from the counterparty a periodic stream of payments during the term of the contract, provided that no event of default occurred. The maximum exposure of loss to the seller would be the notional value of the credit default swaps outstanding. If no default occurs, the Portfolio would keep the stream of payments and would have no payment obligation. The Portfolio may also buy credit default swap contracts in order to hedge against the risk of default of debt securities, in which case the Portfolio would function as the counterparty referenced above.
As a buyer of protection, the Portfolio makes an upfront or periodic payment to the protection seller in exchange for the right to receive a contingent payment. An upfront payment made by the Portfolio, as the protection buyer, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Periodic payments received or paid by the Portfolio are recorded as realized gains or losses on the Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations supplied by independent sources, and the change in value, if any, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Payments received or made as a result of a credit event or upon termination of the contract are recognized, net of the appropriate amount of the upfront payment, as realized gains or losses on the Statement of Operations.
Credit default swap contracts involving the sale of protection may involve greater risks than if the Portfolio had invested in the referenced debt instrument directly. Credit default swap contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Portfolio is a protection buyer and no credit event occurs, it will lose its investment. If the Portfolio is a protection seller and a credit event occurs, the value of the referenced debt instrument received by the Portfolio, together with the periodic payments received, may be less than the amount the Portfolio pays to the protection buyer, resulting in a loss to the Portfolio. In addition, obligations under sell protection credit default swaps may be partially offset by net amounts received from settlement of buy protection credit default swaps entered into by the Portfolio for the same reference obligation with the same counterparty.
Certain swap contracts that are cleared through a central clearinghouse are referred to as centrally cleared swaps. All payments made or received by the Portfolio are pursuant to a centrally cleared swap contract with the central clearing party rather than the original counterparty. Upon entering into a centrally cleared swap contract, the Portfolio is required to make an initial margin deposit, either in cash or in securities. The daily change in value on open centrally cleared contracts is recorded as “Variation margin for centrally cleared swap contracts” on the Statement of Assets and Liabilities. Cash received from or paid to the broker related to previous margin movement is held in a segregated account at the broker and is recorded as either “Due from broker for swaps” or “Due to broker for swaps” on the Statement of Assets and Liabilities. The amount of cash deposited with a broker as collateral at June 30, 2021, is recorded as “Swaps collateral” on the Statement of Assets and Liabilities.
The average market value of credit default swap contracts open during the six months ended June 30, 2021, was $230,439. Open credit default swap contracts at June 30, 2021, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.40% of the Portfolio’s average daily net assets. For the six months ended June 30, 2021, the effective management fee (excluding waivers and/or assumption of expenses and acquired fund fees and expenses) was equivalent to 0.40% (annualized) of the Portfolio’s average daily net assets.
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Notes to Financial Statements 6/30/21 (unaudited) (continued) |
The Adviser has agreed to waive its management fee with respect to any portion of the Portfolio’s assets invested in Pioneer ILS Interval Fund, an affiliated fund managed by the Adviser. For the six months ended June 30, 2021, the Adviser waived $23,685 in management fees with respect to the Portfolio, which is reflected on the Statement of Operations as an expense waiver.
The Adviser has contractually agreed to limit ordinary operating expenses (ordinary operating expenses means all Portfolio expenses other than extraordinary expenses, such as litigation, taxes, brokerage commissions and acquired fund fees and expenses) of the Portfolio to the extent required to reduce Portfolio expenses to 0.62% of the average daily net assets attributable to Class I shares. Class II shares expenses will be reduced only to the extent portfolio-wide expenses are reduced for Class I shares. This expense limitation is in effect through May 1, 2022. There can be no assurance that the Adviser will extend the expense limitation agreement for a class of shares beyond the date referred to above. Fees waived and expenses reimbursed during the six months ended June 30, 2021, are reflected on the Statement of Operations.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $9,687 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $3,806 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $141.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to its Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $4,972 in distribution fees payable to the Distributor at June 30, 2021.
6. Affiliated Issuer
An affiliated issuer is a company in which the Portfolio has a direct or indirect ownership of, control of, or voting power of 5 percent or more of the outstanding voting shares or any company which is under common ownership or control. At June 30, 2021, the value of the Portfolio’s investment in affiliated issuers was $2,773,791, which represents 1.5% of the Portfolio’s net assets.
Transactions in affiliated issuers by the Portfolio for the six months ended were as follows:
| | | | | | | |
| | | Change in | Net Realized | | | |
| | | Net Unrealized | Gain/(Loss) | | | |
| | | Appreciation/ | From | Dividends | Shares | |
| Value at | | (Depreciation) | Investments | from | held at | Value at |
Name of the | December 31, | Purchase | from Investments | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2020 | Costs | Affiliated Issuers | Issuers | Affiliated Issuers | 2021 | 2021 |
Pioneer ILS | | | | | | | |
Interval Fund | $2,728,793 | $ — | $44,998 | $ — | $ — | 321,413 | $2,773,791 |
Annual and semi-annual reports for the underlying Pioneer funds are available on the Funds’ web page(s) at www.amundi.com/us.
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7. Additional Disclosures about Derivative Instruments and Hedging Activities
The Portfolio’s use of derivatives may enhance or mitigate the Portfolio’s exposure to the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to make further principal or interest payments on an obligation or commitment that it has to the Portfolio.
Foreign exchange rate risk relates to fluctuations in the value of an asset or liability due to changes in currency exchange rates.
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange rate risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity index will fluctuate based on increases or decreases in the commodities market and factors specific to a particular industry or commodity.
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at June 30, 2021, was as follows:
| | | | | |
Statement of Assets | Interest | Credit | Foreign | Equity | Commodity |
and Liabilities | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Assets | | | | | |
Swap contracts, at value | $ — | $292,948 | $ — | $ — | $ — |
Net unrealized appreciation | | | | | |
on futures contracts | 81,242 | — | — | — | — |
Total Value | $ 81,242 | $292,948 | $ — | $ — | $ — |
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure at June 30, 2021 was as follows:
| | | | | |
Statement of | Interest | Credit | Foreign | Equity | Commodity |
Operations | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Net realized | | | | | |
gain (loss) on: | | | | | |
Futures contracts | $(349,333) | $ — | $ — | $ — | $ — |
Swap contracts | — | 128,315 | — | — | — |
Total Value | $(349,333) | $128,315 | $ — | $ — | $ — |
Change in net | | | | | |
unrealized appreciation | | | | | |
(depreciation) on: | | | | | |
Futures contracts | $ 163,742 | $ — | $ — | $ — | $ — |
Swap contracts | — | (29,541) | — | — | — |
Total Value | $ 163,742 | $ (29,541) | $ — | $ — | $ — |
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Statement Regarding Liquidity Risk Management Program | |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust | Trustees |
| Thomas J. Perna, Chairman |
Officers | John E. Baumgardner, Jr.
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Lisa M. Jones, President and Chief Executive Officer | Diane Durnin
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Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Benjamin M. Friedman |
Accounting Officer | Lisa M. Jones
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Christopher J. Kelley, Secretary and Chief Legal Officer
| Craig C. MacKay |
| Lorraine H. Monchak
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Investment Adviser and Administrator | Marguerite A. Piret |
Amundi Asset Management US, Inc. | Fred J. Ricciardi |
| Kenneth J. Taubes
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Custodian and Sub-Administrator |
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Brown Brothers Harriman & Co. |
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Principal Underwriter | |
Amundi Distributor US, Inc. | |
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Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
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Transfer Agent | |
DST Asset Manager Solutions, Inc. | |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
19617-15-0821
Pioneer Variable Contracts Trust
Pioneer Equity Income
VCT Portfolio
Class I and II SharesSemiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Equity Income VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
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5 Largest Holdings
(As a percentage of total investments)*
1. | KLA-Tencor Corp. | 2.20% |
2. | Eli Lilly & Co. | 2.19 |
3. | Bank of America Corp. | 2.09 |
4. | Verizon Communications, Inc. | 1.96 |
5. | Sun Life Financial, Inc. | 1.93 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
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Performance Update 6/30/21 | | | |
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Prices and Distributions | | | | |
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Net Asset Value per Share | | 6/30/21 | 12/31/20 | |
Class I | | $17.71 | $15.51 | |
Class II | | $18.02 | $15.79 | |
| Net | | | |
Distributions per Share | Investment | Short-Term | Long-Term | |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains | |
Class I | $0.1400 | $ — | $ — | |
Class II | $0.1200 | $ — | $ — | |
Performance of a $10,000 InvestmentThe following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Equity Income VCT Portfolio at net asset value during the periods shown, compared to that of the Russell 1000 Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The Russell 1000 Value Index is an unmanaged index that measures the performance of large-cap U.S. value stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.
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Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
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| Class I | Class II | Value Index |
10 Years | 11.17% | 10.90% | 11.61% |
5 Years | 10.96% | 10.69% | 11.87% |
1 Year | 35.08% | 34.65% | 43.68% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Comparing Ongoing Portfolio Expenses
As a shareowner in the Portfolio, you incur two types of costs:
(1) | ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and
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(2) | transaction costs, including sales charges (loads) on purchase payments. |
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. | Divide your account value by $1,000 |
| Example: an $8,600 account value ÷ $1,000 = 8.6
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2. | Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. |
Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,151.10 | $1,149.10 |
Expenses Paid During Period* | $ 4.27 | $ 5.60 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.80%, 1.05% for Class I and II respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Equity Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,020.83 | $1,019.59 |
Expenses Paid During Period* | $ 4.01 | $ 5.26 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.80%, 1.05% for Class I and II respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, John A. Carey discusses the market environment for equities and the factors that affected the performance of Pioneer Equity Income VCT Portfolio during the six-month period ended June 30, 2021. Mr. Carey, Managing Director, Director of Equity Income, US, and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), is responsible for the day-to-day management of the Portfolio, along with Sammi Truong, a vice president and a portfolio manager at Amundi US, and Walter Hunnewell, Jr., a vice president and a portfolio manager at Amundi US.
Q: How did the Portfolio perform over the six-month period ended June 30, 2021?
A: Pioneer Equity Income VCT Portfolio’s Class I shares returned 15.11% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 14.91%, while the Portfolio’s benchmark, the Russell 1000 Value Index, returned 17.05%.
Q: How would you describe the market for equities during the six-month period ended June 30, 2021, particularly for the types of equities deemed appropriate for the Portfolio?
A: During the six-month period, optimism about an economic recovery pushed the stock market to record highs. Favorable clinical trials for COVID-19 vaccines developed by Pfizer and Moderna led to the Food and Drug Administration’s granting emergency-use authorization for both products in December 2020, just before the start of the period. In practice, that meant almost all adults would be eligible to receive the vaccines. (Pfizer is a Portfolio holding; Moderna is not). The prospect of improvement in the COVID-19 situation, plus new US government fiscal relief packages and the continued “easy-money” policies from the Federal Reserve (Fed), all helped create positive market sentiment during the six-month period.
Investors became especially interested in stocks of cyclical, economically-sensitive companies, or so-called “value” names, which many thought could fare well in a strengthening business environment. In fact, for the first time in several years, value stocks outperformed growth over the six-month period. While growth stocks made up some of the performance gap versus value stocks over the second half of the period, the Portfolio’s benchmark, the Russell 1000 Value Index, still outperformed the Russell 1000 Growth Index by more than four percent for the full six-month period (17.05% return for the Russell 1000 Value Index; 12.99% for the Russell 1000 Growth Index).
The other side of the buoyant economic forecasts featured heightened concerns about potential increases in inflation and interest rates. Rising inflation expectations pushed the 10-Year US Treasury yield up by 55 basis points (bps) during the period. (A basis point is equal to 1/100th of a percentage point.) As price-to-earnings (P/E) multiples have often moved in the opposite direction from interest rates, and as multiples were particularly elevated among some growth stocks, the growth-oriented sectors of the market experienced sometimes-dramatic volatility over the six-month period. We hasten to note, however, that many value stocks, particularly after the rally we saw during the semiannual reporting period, also have been selling at higher-than-customary multiples.
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It appears that much potential good news, hence, is built into current share prices, and therefore, downside risk - should there be disappointments of one kind or another - may be larger than it oftentimes is. While remaining substantially fully invested, which has been our customary investment posture since the Portfolio’s inception in 1995, we believe some caution with regard to valuation levels is indicated.
While all sectors within the Russell 1000 Value Index (the Russell Index) posted positive returns, energy fared best, gaining 46% over the six-month period. The broadening reopening of the economy meant more cars were on the road; fuel needs for commercial-building HVAC (heating, ventilating, and air-conditioning) systems were greater; and factories, which also use a lot of fuel, were operating at higher capacity. West Texas Intermediate crude-oil prices rose significantly over the six months. Other cyclical sectors that performed well during the period included financial services, real estate, and consumer discretionary. On the other hand, utilities and consumer staples, sectors perceived to be more “defensive,” lagged the rest of the Russell Index.
Q: Could you please discuss the main factors that affected the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021, and discuss any investments or strategies that significantly helped or hurt benchmark-relative returns?
A: During the six-month period, as has often been typical in the early stages of economic recoveries, investors, anticipating a sharp earnings recovery for companies that experienced pronounced, recession-driven earnings declines, focused precisely on companies that had done the worst during the downturn. Not infrequently, those companies had cut or omitted their dividends* during calendar year 2020 as the COVID-19 pandemic intensified and economic activity slowed. Our investment strategy for the Portfolio has typically involved seeking to own shares of companies that have featured sustainable and growing dividends, and companies that have been able to remain profitable in trying economic circumstances.
While the Portfolio had an overweight position versus the benchmark in the materials sector, with its many cyclical companies, and an approximate market weight in energy, the Portfolio was underweight in recovering sectors such as financials and real estate, and overweight to the defensive sectors, utilities and consumer staples, that underperformed. That positioning detracted from benchmark-relative returns for the six-month period.
With regard to individual stocks, consistent generally with the Portfolio’s sector overweights and underweights, the top positive performance attributors versus the Russell Index were from the materials sector, notably Nucor and Kaiser Aluminum. In addition, the Portfolio saw strong performance from some energy names (all of them refiners), especially Marathon Petroleum. One of the Portfolio’s holdings within information technology, semiconductor-equipment manufacturer KLA, also stood out during the period.
* | Dividends are not guaranteed. |
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Portfolio Management Discussion 6/30/21 (continued) | |
On the negative side, the Portfolio’s overweight in the underperforming consumer staples sector produced two negative performance attributors, Clorox and McCormick. Similarly, an overweight in the lagging utilities sector led to two negative performance attributors versus the benchmark for the period, WEC Energy (a position we subsequently exited) and Alliant Energy.
The “risk-on” stance of investors over the six-month period resulted in a move away from the defensive utilities and consumer-staples companies that had benefited significantly from the lockdowns and work-from-home directives that prevailed during the early stages of the COVID-19 situation, but could now face challenging sales-and-earnings comparisons as the economy emerges from the pandemic, in our view.
Q: Could you highlight some of the more notable changes you made to the Portfolio during the six-month period ended June 30, 2021?
A: During the six-month period, we added 17 positions to the Portfolio, and exited 13. On concern about increasing agricultural-commodities prices and the potential inability for food processors to pass through the higher costs to customers, we sold the Portfolio’s holdings in Kellogg and General Mills, and we also sold out of Walmart, which these days is heavily involved in the grocery business. On the other hand, we added the consumer-staples stocks PepsiCo and Procter & Gamble. With the economic reopening, we think Pepsi’s higher-margin channels, such as convenience stores and food service, could see improvement. In the case of Procter & Gamble, we think that the company’s strong, world-wide product line-up could give it pricing power in the potentially more inflationary times ahead. In energy, we took the Portfolio from an underweight out of concern for industry fundamentals, to an approximately equal market weight versus the benchmark, as we judged that the market had perhaps been overly pessimistic. Within energy, we added shares of Marathon Petroleum, a refiner that could potentially benefit from increased miles driven and a recovering air-travel industry, to the Portfolio.
As examples of our willingness to take positions in lesser-known names, where we see what we believe are attractive businesses priced at more modest levels than the better-known stocks in the market, Broadridge Financial, Healthcare Realty, and Omnicom stand out as additions. Broadridge Financial provides a range of technological solutions, including investor communications and automated transaction processing, to the financial service industries. The company could stand to benefit from increased digitization trends and the outsourcing of services on mounting cost pressures. Healthcare Realty is a real estate investment trust (REIT) that specializes in leasing, management, and development of outpatient healthcare facilities. We believe increased COVID-19 vaccination rates could increase the comfort level of people in going back to the doctor’s office and thus drive up demand for medical office space. Omnicom, a well-established advertising agency, is in a good position, we think, to help companies find customers for goods and services for which demand could increase as the economy expands after reopening.
Occasionally, a company’s shares reach what we consider fair valuation, and we decide to eliminate the Portfolio’s positions. During the six-month period, that was the case with Morgan Stanley, CME Group, and American Water Works.
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Q: Did the Portfolio have any derivatives exposure during the six-month period ended June 30, 2021?
A: No, the Portfolio held no derivatives during the period.
Q: The Portfolio typically places emphasis on dividend-paying stocks. How would you describe the environment for dividends during the six-month period ended June 30, 2021?
A: As states have been reopening and lifting restrictions put in place during the pandemic, some companies that reduced or even suspended dividends in 2020 to conserve cash have begun restoring and reinstituting dividends. We believe investors will likely be attentive to the amounts of dividend improvement in those situations, to get a sense of whether the companies see their businesses coming back fully or not, and over what stretch of time. While, as noted earlier, the initial enthusiasm over the economic reopening prompted investors to buy shares of some of the companies most beaten-up during the pandemic, and that had even eliminated their dividends, we think that if the recovery continues, investors will again be making comparisons between dividend coverage ratios and consistency, and prospects for stable earnings growth. Financial and business characteristics of companies that typify what we consider higher quality will, we believe, come once more to the fore. We have focused throughout the life of the Portfolio on investing in companies that, in our view, possess those quality characteristics of dividend sustainability and earnings stability, and so we feel that the Portfolio could be in a position to take part in any rally that may occur that is more quality-focused.
We do continue to listen closely and somewhat concernedly to the discussions in Washington, DC, with regard to corporate and personal income-tax rates to fund infrastructure and other spending. One particular risk to the Portfolio would be a possible adjustment to the favorable tax rate, in force since 2003, on so-called “qualified” dividend income. In addition, higher taxes on corporate earnings would reduce the after-tax corporate earnings out of which dividends are paid.
Q: What is your outlook for equities as the US economy emerges from COVID-19 and the effects of the pandemic-related shutdowns diminish?
A: As a larger percentage of the population receives COVID-19 vaccinations, we expect to see further reopening of the economy. Pent-up consumer demand, along with the high levels of savings that have built up during the pandemic, could provide good support for economic growth and a broad-based earnings recovery. However, there is always the prospect of setbacks on the road to “herd immunity” against COVID-19. The recent surge in “Delta” variant COVID-19 cases and the possibility of further mutations and variants of the virus that evade immunity bear watching, and most certainly remain a concern.
From a domestic, economic-policy standpoint, we do not know any better than other observers whether the inflation we have been seeing of late as a result of labor shortages and rising wages and higher raw-materials prices will prove transitory, or develop more fully and become an important
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Portfolio Management Discussion 6/30/21 (continued) | |
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
consideration for both businesses and customers. The new administration has implemented already some regulatory changes that could pose challenges to businesses, and the possibility of increases in corporate and personal tax rates may hamper both business investment and personal spending.
Alongside the risks, though, we think one would do well always to take into account the multiplicity of strengths in the domestic economy and the corporate sector; the inventiveness, entrepreneurial skills, and ingenuity of the American people; and the leadership role the US still has in the world in so many different respects. We have managed the Portfolio through numerous shifts in the political setting, through many movements of the business cycle, and through a lot of market volatility as well as changes in investor preferences. As always, while the Portfolio’s holdings have remained diverse**, a constant has been the kind of companies in which we take an interest on your behalf, companies that we view as skilled at navigating through uncertainty, yet also positioned, we believe, for steady growth in value over time.
Thank you for your support.
** Diversification does not assure a profit nor protect against loss.
Please refer to the Schedule of Investments on pages 9 to 13 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Schedule of Investments 6/30/21 (unaudited) | |
Shares | | | | Value |
| | UNAFFILIATED ISSUERS – 99.9% | | |
| | COMMON STOCKS – 99.9% of Net Assets | | |
| | Air Freight & Logistics – 0.5% | | |
7,123 | | CH Robinson Worldwide, Inc. | | $ 667,211 |
| | Total Air Freight & Logistics | | $ 667,211 |
| | Auto Components – 1.3% | | |
32,059 | | BorgWarner, Inc. | | $ 1,556,144 |
| | Total Auto Components | | $ 1,556,144 |
| | Automobiles – 0.5% | | |
20,602 | | Honda Motor Co., Ltd. (A.D.R.) | | $ 662,972 |
| | Total Automobiles | | $ 662,972 |
| | Banks – 7.7% | | |
61,806 | | Bank of America Corp. | | $ 2,548,261 |
6,915 | | Canadian Imperial Bank of Commerce | | 787,342 |
11,439 | | JPMorgan Chase & Co. | | 1,779,222 |
9,539 | | M&T Bank Corp. | | 1,386,112 |
10,594 | | PNC Financial Services Group, Inc. | | 2,020,911 |
15,089 | | Truist Financial Corp. | | 837,440 |
| | Total Banks | | $ 9,359,288 |
| | Beverages – 0.7% | | |
5,357 | | PepsiCo., Inc. | | $ 793,747 |
| | Total Beverages | | $ 793,747 |
| | Biotechnology – 0.6% | | |
10,465 | | Gilead Sciences, Inc. | | $ 720,620 |
| | Total Biotechnology | | $ 720,620 |
| | Capital Markets – 4.8% | | |
26,156 | | Bank of New York Mellon Corp. | | $ 1,339,972 |
9,775 | | Charles Schwab Corp. | | 711,718 |
12,182 | | Northern Trust Corp. | | 1,408,483 |
12,511 | | State Street Corp. | | 1,029,405 |
6,785 | | T Rowe Price Group, Inc. | | 1,343,226 |
| | Total Capital Markets | | $ 5,832,804 |
| | Chemicals – 3.4% | | |
10,046 | | Celanese Corp. | | $ 1,522,974 |
7,450 | | Corteva, Inc. | | 330,408 |
9,769 | | Dow, Inc. | | 618,182 |
8,972 | | DuPont de Nemours, Inc. | | 694,523 |
2,225 | | Ecolab, Inc. | | 458,283 |
4,347 | | FMC Corp. | | 470,345 |
| | Total Chemicals | | $ 4,094,715 |
| | Commercial Services & Supplies – 1.2% | | |
8,935 | | MSA Safety, Inc. | | $ 1,479,457 |
| | Total Commercial Services & Supplies | | $ 1,479,457 |
| | Containers & Packaging – 0.3% | | |
20,628 | | Graphic Packaging Holding Co. | | $ 374,192 |
| | Total Containers & Packaging | | $ 374,192 |
The accompanying notes are an integral part of these financial statements.
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Schedule of Investments 6/30/21 (unaudited) (continued) | |
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Shares | | | | Value |
| | Diversified Telecommunication Services – 4.0% | | |
64,826 | | AT&T, Inc. | | $ 1,865,692 |
11,521 | | BCE, Inc. | | 568,216 |
42,718 | | Verizon Communications, Inc. | | 2,393,490 |
| | Total Diversified Telecommunication Services | | $ 4,827,398 |
| | Electric Utilities – 2.8% | | |
24,622 | | Alliant Energy Corp. | | $ 1,372,923 |
9,611 | | American Electric Power Co., Inc. | | 812,995 |
8,527 | | Eversource Energy | | 684,206 |
7,325 | | NextEra Energy, Inc. | | 536,776 |
| | Total Electric Utilities | | $ 3,406,900 |
| | Electrical Equipment – 0.7% | | |
9,254 | | Emerson Electric Co. | | $ 890,605 |
| | Total Electrical Equipment | | $ 890,605 |
| | Electronic Equipment, Instruments & Components – 1.7% | | |
2,593 | | CDW Corp. | | $ 452,867 |
9,835 | | Corning, Inc. | | 402,252 |
9,198 | | TE Connectivity, Ltd. | | 1,243,662 |
| | Total Electronic Equipment, Instruments & Components | | $ 2,098,781 |
| | Energy Equipment & Services – 0.4% | | |
22,112 | | Baker Hughes Co. | | $ 505,701 |
| | Total Energy Equipment & Services | | $ 505,701 |
| | Equity Real Estate Investment Trusts (REITs) – 3.8% | | |
11,967 | | Alexandria Real Estate Equities, Inc. | | $ 2,177,276 |
8,140 | | Camden Property Trust | | 1,079,934 |
3,633 | | Digital Realty Trust, Inc. | | 546,621 |
14,857 | | Healthcare Realty Trust, Inc. | | 448,681 |
3,436 | | Prologis, Inc. | | 410,705 |
| | Total Equity Real Estate Investment Trusts (REITs) | | $ 4,663,217 |
| | Food Products – 4.1% | | |
2,626 | | Hershey Co. | | $ 457,397 |
5,580 | | John B Sanfilippo & Son, Inc. | | 494,221 |
6,730 | | Lamb Weston Holdings, Inc. | | 542,842 |
10,163 | | McCormick & Co., Inc., Class VTG | | 897,596 |
28,225 | | Mondelez International, Inc. | | 1,762,369 |
6,748 | | Nestle S.A. (A.D.R.) | | 841,745 |
| | Total Food Products | | $ 4,996,170 |
| | Health Care Equipment & Supplies – 3.1% | | |
18,035 | | Abbott Laboratories | | $ 2,090,798 |
2,857 | | Becton Dickinson and Co. | | 694,794 |
23,096 | | Smith & Nephew Plc (A.D.R.) | | 1,003,290 |
| | Total Health Care Equipment & Supplies | | $ 3,788,882 |
The accompanying notes are an integral part of these financial statements.
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| | | | |
Shares | | | | Value |
| | Health Care Providers & Services – 4.1% | | |
8,540 | | AmerisourceBergen Corp. | | $ 977,745 |
2,397 | | Anthem, Inc. | | 915,175 |
11,210 | | CVS Health Corp. | | 935,362 |
2,327 | | Humana, Inc. | | 1,030,209 |
8,378 | | Quest Diagnostics, Inc. | | 1,105,645 |
| | Total Health Care Providers & Services | | $ 4,964,136 |
| | Health Care Technology – 0.8% | | |
12,760 | | Cerner Corp. | | $ 997,322 |
| | Total Health Care Technology | | $ 997,322 |
| | Hotels, Restaurants & Leisure – 0.6% | | |
15,900(a) | | Cedar Fair LP | | $ 712,797 |
| | Total Hotels, Restaurants & Leisure | | $ 712,797 |
| | Household Durables – 0.4% | | |
3,048 | | Garmin Ltd. | | $ 440,863 |
| | Total Household Durables | | $ 440,863 |
| | Household Products – 1.8% | | |
8,422 | | Clorox Co. | | $ 1,515,202 |
5,382 | | Procter & Gamble Co. | | 726,193 |
| | Total Household Products | | $ 2,241,395 |
| | Industrial Conglomerates – 1.2% | | |
6,880 | | Honeywell International, Inc. | | $ 1,509,128 |
| | Total Industrial Conglomerates | | $ 1,509,128 |
| | Insurance – 5.1% | | |
11,859 | | Chubb, Ltd. | | $ 1,884,869 |
10,373 | | First American Financial Corp. | | 646,757 |
21,961 | | Lincoln National Corp. | | 1,380,029 |
45,811 | | Sun Life Financial, Inc. | | 2,361,099 |
| | Total Insurance | | $ 6,272,754 |
| | IT Services – 2.9% | | |
2,263 | | Accenture Plc | | $ 667,110 |
3,423 | | Automatic Data Processing, Inc. | | 679,876 |
3,143 | | Broadridge Financial Solutions, Inc. | | 507,689 |
5,935 | | Cognizant Technology Solutions Corp. | | 411,058 |
4,225 | | Fidelity National Information Services, Inc. | | 598,555 |
6,956 | | Paychex, Inc. | | 746,379 |
| | Total IT Services | | $ 3.610,667 |
| | Machinery – 5.7% | | |
5,265 | | Caterpillar, Inc. | | $ 1,145,822 |
56,599 | | Gorman-Rupp Co. | | 1,949,269 |
21,938 | | Komatsu, Ltd. (A.D.R.) | | 544,062 |
5,598 | | Oshkosh Corp. | | 697,735 |
18,584 | | PACCAR, Inc. | | 1,658,622 |
11,984 | | Timken Co. | | 965,791 |
| | Total Machinery | | $ 6,961,301 |
The accompanying notes are an integral part of these financial statements.
11
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Shares | | | | Value |
| | Media – 2.6% | | |
30,966 | | Comcast Corp. | | $ 1,765,681 |
22,566 | | Interpublic Group of Cos., Inc. | | 733,170 |
8,726 | | Omnicom Group, Inc. | | 697,993 |
| | Total Media | | $ 3,196,844 |
| | Metals & Mining – 6.5% | | |
12,687 | | Kaiser Aluminum Corp. | | $ 1,566,717 |
14,661 | | Materion Corp. | | 1,104,706 |
10,428 | | Newmont Corp. | | 660,927 |
24,275 | | Nucor Corp. | | 2,328,701 |
15,029 | | Reliance Steel & Aluminum Co. | | 2,267,876 |
| | Total Metals & Mining | | $ 7,928,927 |
| | Multiline Retail – 2.3% | | |
3,181 | | Dollar General Corp. | | $ 688,336 |
8,959 | | Target Corp. | | 2,165,749 |
| | Total Multiline Retail | | $ 2,854,085 |
| | Multi-Utilities – 1.3% | | |
10,850 | | Ameren Corp. | | $ 868,434 |
12,219 | | CMS Energy Corp. | | 721,898 |
| | Total Multi-Utilities | | $ 1,590,332 |
| | Oil, Gas & Consumable Fuels – 5.5% | | |
13,040 | | Chevron Corp. | | $ 1,365,810 |
15,160 | | ConocoPhillips | | 923,244 |
27,186 | | Marathon Petroleum Corp. | | 1,642,578 |
18,585 | | Phillips 66 | | 1,594,965 |
14,916 | | Valero Energy Corp. | | 1,164,641 |
| | Total Oil, Gas & Consumable Fuels | | $ 6,691,238 |
| | Pharmaceuticals – 6.2% | | |
28,076 | | AstraZeneca Plc (A.D.R.) | | $ 1,681,752 |
11,658 | | Eli Lilly & Co. | | 2,675,744 |
21,841 | | Novo Nordisk AS (A.D.R.) | | 1,829,621 |
35,791 | | Pfizer, Inc. | | 1,401,576 |
| | Total Pharmaceuticals | | $ 7,588,693 |
| | Professional Services – 0.8% | | |
9,429 | | Leidos Holdings, Inc. | | $ 953,272 |
| | Total Professional Services | | $ 953,272 |
| | Semiconductors & Semiconductor Equipment – 5.9% | | |
9,066 | | Analog Devices, Inc. | | $ 1,560,802 |
2,908 | | CMC Materials, Inc. | | 438,352 |
14,026 | | Intel Corp. | | 787,420 |
8,280 | | KLA-Tencor Corp. | | 2,684,459 |
9,013 | | Texas Instruments, Inc. | | 1,733,200 |
| | Total Semiconductors & Semiconductor Equipment | | $ 7,204,233 |
| | Technology Hardware, Storage & Peripherals – 0.5% | | |
39,568 | | Hewlett Packard Enterprise Co. | | $ 576,901 |
| | Total Technology Hardware, Storage & Peripherals | | $ 576,901 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Shares | | | | Value |
| | Textiles, Apparel & Luxury Goods – 2.1% | | |
12,169 | | Carter’s, Inc. | | $ 1,255,476 |
16,258 | | VF Corp. | | 1,333,806 |
| | Total Textiles, Apparel & Luxury Goods | | $ 2,589,282 |
| | Trading Companies & Distributors – 2.0% | | |
24,426 | | Fastenal Co. | | $ 1,270,152 |
8,339 | | Ferguson Plc | | 1,163,624 |
| | Total Trading Companies & Distributors | | $ 2,433,776 |
| | TOTAL COMMON STOCKS | | |
| | (Cost $80,802,917) | | $122,036,750 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 99.9% | | |
| | (Cost $80,802,917) | | $122,036,750 |
| | OTHER ASSETS AND LIABILITIES – 0.1% | | $ 69,726 |
| | NET ASSETS – 100.0% | | $122,106,476 |
REIT (A.D.R.) (a) | Real Estate Investment Trust. American Depositary Receipts. Non-income producing security. |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021, aggregated $18,172,179 and $20,344,138, respectively.
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which Amundi Asset Management US, Inc. (the “Adviser”) serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $80,598,245 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 42,232,394 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (793,889) |
Net unrealized appreciation | $ 41,438,505 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements – Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements – Note 1A.
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments:
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Common Stocks | | $ | 122,036,750 | | | $ | — | | | $ | — | | | $ | 122,036,750 | |
Total Investments in Securities | | $ | 122,036,750 | | | $ | — | | | $ | — | | | $ | 122,036,750 | |
During the six months ended June 30, 2021, there were no transfers in or out of Level 3. | | | | |
The accompanying notes are an integral part of these financial statements.
13
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
ASSETS: | | | |
Investments in unaffiliated issuers, at value (cost $80,802,917) | | $ | 122,036,750 | |
Foreign currencies, at value (cost $6,659) | | | 6,684 | |
Receivables — | | | | |
Investment securities sold | | | 1,127,057 | |
Portfolio shares sold | | | 20,939 | |
Dividends | | | 208,063 | |
Interest | | | 4,130 | |
Other assets | | | 5,687 | |
Total assets | | $ | 123,409,310 | |
LIABILITIES: | | | | |
Due to custodian | | $ | 101,572 | |
Payables — | | | | |
Investment securities purchased | | | 1,085,693 | |
Portfolio shares repurchased | | | 64,804 | |
Due to affiliates | | | 12,318 | |
Accrued expenses | | | 38,447 | |
Total liabilities | | $ | 1,302,834 | |
NET ASSETS: | | | | |
Paid-in capital | | $ | 77,146,218 | |
Distributable earnings | | | 44,960,258 | |
Net assets | | $ | 122,106,476 | |
NET ASSET VALUE PER SHARE: | | | | |
No par value (unlimited number of shares authorized) | | | | |
Class I (based on $86,953,867/4,909,961 shares) | | $ | 17.71 | |
Class II (based on $35,152,609/1,950,217 shares) | | $ | 18.02 | |
The accompanying notes are an integral part of these financial statements.
14
| | |
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | | |
|
FOR THE SIX MONTHS ENDED 6/30/21 | | |
INVESTMENT INCOME: | | | | | | |
Dividends from unaffiliated issuers (net of foreign taxes withheld $11,536) | | $ | 1,450,882 | | | | |
Interest from unaffiliated issuers | | | 660 | | | | |
Total investment income | | | | | | $ | 1,451,542 | |
EXPENSES: | | | | | | | | |
Management fees | | $ | 377,642 | | | | | |
Administrative expense | | | 40,984 | | | | | |
Distribution fees | | | | | | | | |
Class II | | | 44,610 | | | | | |
Custodian fees | | | 2,974 | | | | | |
Professional fees | | | 27,903 | | | | | |
Printing expense | | | 11,707 | | | | | |
Trustees’ fees | | | 3,572 | | | | | |
Miscellaneous | | | 882 | | | | | |
Total expenses | | | | | | $ | 510,274 | |
Net investment income | | | | | | $ | 941,268 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
Net realized gain (loss) on: | | | | | | | | |
Investments in unaffiliated issuers | | $ | 6,937,441 | | | | | |
Other assets and liabilities denominated in foreign currencies | | | 1,889 | | | $ | 6,939,330 | |
Change in net unrealized appreciation (depreciation) on: | | | | | | | | |
Investments in unaffiliated issuers | | $ | 8,152,740 | | | | | |
Other assets and liabilities denominated in foreign currencies | | | (4,152 | ) | | $ | 8,148,588 | |
Net realized and unrealized gain (loss) on investments | | | | | | $ | 15,087,918 | |
Net increase in net assets resulting from operations | | | | | | $ | 16,029,186 | |
The accompanying notes are an integral part of these financial statements.
15
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | | | | | |
| | Six Months | | | | |
| | Ended | | | | |
| | 6/30/21 | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | |
FROM OPERATIONS: | | | | | | |
Net investment income (loss) | | $ | 941,268 | | | $ | 1,971,494 | |
Net realized gain (loss) on investments | | | 6,939,330 | | | | (3,593,904 | ) |
Change in net unrealized appreciation (depreciation) on investments | | | 8,148,588 | | | | (367,986 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | 16,029,186 | | | $ | (1,990,396 | ) |
DISTRIBUTIONS TO SHAREOWNERS: | | | | | | | | |
Class I ($0.14 and $0.96 per share, respectively) | | $ | (675,590 | ) | | $ | (4,783,755 | ) |
Class II ($0.12 and $0.92 per share, respectively) | | | (243,299 | ) | | | (2,044,931 | ) |
Total distributions to shareowners | | $ | (918,889 | ) | | $ | (6,828,686 | ) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | | | | | | |
Net proceeds from sales of shares | | $ | 9,959,948 | | | $ | 10,173,594 | |
Reinvestment of distributions | | | 918,889 | | | | 6,828,686 | |
Cost of shares repurchased | | | (14,219,205 | ) | | | (26,377,213 | ) |
Net decrease in net assets resulting from Portfolio share transactions | | $ | (3,340,368 | ) | | $ | (9,374,933 | ) |
Net increase (decrease) in net assets | | $ | 11,769,929 | | | $ | (18,194,015 | ) |
NET ASSETS: | | | | | | | | |
Beginning of period | | $ | 110,336,547 | | | $ | 128,530,562 | |
End of period | | $ | 122,106,476 | | | $ | 110,336,547 | |
| | Six Months | | | Six Months | | | | | | | |
| | Ended | | | Ended | | | | | | | |
| | 6/30/21 | | | 6/30/21 | | | Year Ended | | | Year Ended | |
| | Shares | | | Amount | | | 12/31/20 | | | 12/31/20 | |
| | (unaudited) | | | (unaudited) | | | Shares | | | Amount | |
Class I | | | | | | | | | | | | |
Shares sold | | | 335,844 | | | $ | 6,032,729 | | | | 153,265 | | | $ | 2,184,035 | |
Reinvestment of distributions | | | 39,192 | | | | 675,590 | | | | 356,246 | | | | 4,783,755 | |
Less shares repurchased | | | (339,087 | ) | | | (5,726,027 | ) | | | (1,017,480 | ) | | | (14,858,098 | ) |
Net increase (decrease) | | | 35,949 | | | $ | 982,292 | | | | (507,969 | ) | | $ | (7,890,308 | ) |
Class II | | | | | | | | | | | | | | | | |
Shares sold | | | 224,848 | | | $ | 3,927,219 | | | | 550,488 | | | $ | 7,989,559 | |
Reinvestment of distributions | | | 13,883 | | | | 243,299 | | | | 149,550 | | | | 2,044,931 | |
Less shares repurchased | | | (487,673 | ) | | | (8,493,178 | ) | | | (800,045 | ) | | | (11,519,115 | ) |
Net decrease | | | (248,942 | ) | | $ | (4,322,660 | ) | | | (100,007 | ) | | $ | (1,484,625 | ) |
The accompanying notes are an integral part of these financial statements.
16
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights
|
| | Six Months | | | | | | | | | | | | | | |
| |
| | Ended | | | | | | | | | | | | | | |
| |
| | 6/30/21
| | | Year Ended | | | Year Ended | | | Year Ended
| | | Year Ended | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class I | | | | | | | | | | | | | | | | |
| |
Net asset value, beginning of period | | $ | 15.51 | | | $ | 16.65 | | | $ | 23.41 | | | $ | 32.49 | | | $ | 31.25 | | | $ | 28.18 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.14 | | | $ | 0.28 | | | $ | 0.42 | | | $ | 0.81 | | | $ | 0.60 | | | $ | 0.67 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 2.20 | | | | (0.46 | ) | | | 4.45 | | | | (2.99 | ) | | | 3.91 | | | | 4.69 | |
Net increase (decrease) from investment operations | | $ | 2.34 | | | $ | (0.18 | ) | | $ | 4.87 | | | $ | (2.18 | ) | | $ | 4.51 | | | $ | 5.36 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.14 | ) | | $ | (0.39 | ) | | $ | (0.56 | ) | | $ | (0.70 | ) | | $ | (0.55 | ) | | $ | (0.61 | ) |
Net realized gain | | | — | | | | (0.57 | ) | | | (11.07 | ) | | | (6.20 | ) | | | (2.72 | ) | | | (1.68 | ) |
Total distributions | | $ | (0.14 | ) | | $ | (0.96 | ) | | $ | (11.63 | ) | | $ | (6.90 | ) | | $ | (3.27 | ) | | $ | (2.29 | ) |
| |
Net increase (decrease) in net asset value
| | $ | 2.20 | | | $ | (1.14 | ) | | $ | (6.76 | ) | | $ | (9.08 | ) | | $ | 1.24 | | | $ | 3.07 | |
Net asset value, end of period | | $ | 17.71 | | | $ | 15.51 | | | $ | 16.65 | | | $ | 23.41 | | | $ | 32.49 | | | $ | 31.25 | |
Total return (b) |
|
| 15.11 | %(c) |
|
| (0.04 | )% |
| | 25.56 | % |
|
| (8.59 | )%(d) | | | 15.46 | % | | | 19.80 | %(e) |
Ratio of net expenses to average net assets | | | 0.80 | %(f) | | | 0.80 | % | | | 0.79 | % | | | 0.79 | % | | | 0.71 | % | | | 0.72 | % |
Ratio of net investment income (loss) to average | | | | | | | | | | | | | | | | | | | | | | | | |
net assets | | | 1.70 | %(f) | | | 1.95 | % | | | 2.18 | % | | | 2.82 | % | | | 1.90 | % | | | 2.31 | % |
Portfolio turnover rate | | | 16 | %(c) | | | 14 | % | | | 21 | % | | | 28 | % | | | 33 | % | | | 37 | % |
Net assets, end of period (in thousands) | | $ | 86,954 | | | $ | 75,613 | | | $ | 89,623 | | | $ | 82,212 | | | $ | 105,198 | | | $ | 131,825 | |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions, the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2018, the total return would have been (8.63)%. |
(e) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2016, the total return would have been 19.76%. |
(f) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
17
| | | | | | | | | | | | | |
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights (continued) | | | | | | | | | | | | | |
|
|
| | Six Months | | | | | | | | | | | | | | |
| |
| | Ended | | | | | | | | | | | | | | |
| |
| | 6/30/21
| | | Year Ended | | | Year Ended | | | Year Ended
| | | Year Ended | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class II | | | | | | | | | | | | | | | | |
| |
Net asset value, beginning of period | | $ | 15.79 | | | $ | 16.92 | | | $ | 23.62 | | | $ | 32.70 | | | $ | 31.43 | | | $ | 28.33 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.12 | | | $ | 0.25 | | | $ | 0.38 | | | $ | 0.50 | | | $ | 0.52 | | | $ | 0.60 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 2.23 | | | | (0.46 | ) | | | 4.49 | | | | (2.75 | ) | | | 3.94 | | | | 4.72 | |
Net increase (decrease) from investment operations | | $ | 2.35 | | | $ | (0.21 | ) | | $ | 4.87 | | | $ | (2.25 | ) | | $ | 4.46 | | | $ | 5.32 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.12 | ) | | $ | (0.35 | ) | | $ | (0.50 | ) | | $ | (0.63 | ) | | $ | (0.47 | ) | | $ | (0.54 | ) |
Net realized gain | | | — | | | | (0.57 | ) | | | (11.07 | ) | | | (6.20 | ) | | | (2.72 | ) | | | (1.68 | ) |
Total distributions | | $ | (0.12 | ) | | $ | (0.92 | ) | | $ | (11.57 | ) | | $ | (6.83 | ) | | $ | (3.19 | ) | | $ | (2.22 | ) |
| |
Net increase (decrease) in net asset value | | $ | 2.23 | | | $ | (1.13 | ) | | $ | (6.70 | ) | | $ | (9.08 | ) | | $ | 1.27 | | | $ | 3.10 | |
Net asset value, end of period
| | $ | 18.02 | | | $ | 15.79 | | | $ | 16.92 | | | $ | 23.62 | | | $ | 32.70 | | | $ | 31.43 | |
Total return (b) | | | 14.91 | %(c) | | | (0.26 | )% | | | 25.23 | % | | | (8.77 | )%(d) | | | 15.18 | % | | | 19.53 | %(e) |
Ratio of net expenses to average net assets | | | 1.05 | %(f) | | | 1.05 | % | | | 1.04 | % | | | 0.98 | % | | | 0.97 | % | | | 0.96 | % |
Ratio of net investment income (loss) to average | | | | | | | | | | | | | | | | | | | | | | | | |
net assets | | | 1.45 | %(f) | | | 1.70 | % | | | 1.93 | % | | | 1.61 | % | | | 1.65 | % | | | 2.07 | % |
Portfolio turnover rate | | | 16 | %(c) | | | 14 | % | | | 21 | % | | | 28 | % | | | 33 | % | | | 37 | % |
Net assets, end of period (in thousands) | | $ | 35,153 | | | $ | 34,723 | | | $ | 38,908 | | | $ | 33,569 | | | $ | 247,973 | | | $ | 230,107 | |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all 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. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2018, the total return would have been (8.81)%. |
(e) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2016, the total return would have been 19.49%. |
(f) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
18
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Equity Income VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objectives of the Portfolio are current income and long-term growth of capital from a portfolio consisting primarily of income producing equity securities of U.S. corporations.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same schedule of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareholder approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareholder’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior o the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
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Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
Securities for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
A portion of the dividend income recorded by the Portfolio is from distributions by publicly traded Real Estate Investment Trusts (“REITs”), and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs
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subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Portfolio as a reduction of the cost basis of the securities held and those determined to be capital gain are reflected as such on the Statement of Operations.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| | 2020 | |
Distributions paid from: | | | |
Ordinary income | | $ | 2,715,228 | |
Long-term capital gain | | | 4,113,458 | |
Total | | $ | 6,828,686 | |
The following shows the components of distributable earnings on a federal income tax basis at December 31, 2020:
| | 2020 | |
Distributable earnings/(losses): | | | |
Undistributed ordinary income | | $ | 77,497 | |
Capital loss carry forward | | | (3,506,061 | ) |
Net unrealized appreciation | | | 33,278,525 | |
Total | | $ | 29,849,961 | |
The difrence between book-basis and tax-basis net unrealized appreciation is attributable to the tax deferral of losses on wash sales, the tax basis adjustment on partnerships, REITs and common stocks.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated among the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
Dividends and distributions to shareowners are recorded as of the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
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Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.65% of the Portfolio’s average daily net assets up to $1 billion and 0.60% of the Portfolio’s average daily net assets over $1 billion. For the six months ended June 30, 2021, the effective management fee was equivalent to 0.65% (annualized) of the Portfolio’s average daily net assets.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $11,105 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $3,572 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $–.
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4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan“) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $1,213 in distribution fees payable to the Distributor at June 30, 2021.
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Statement Regarding Liquidity Risk Management Program |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust Officers
Lisa M. Jones, President and Chief Executive Officer
Anthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting Officer
Christopher J. Kelley, Secretary and Chief Legal Officer
Investment Adviser and Administrator
Amundi Asset Management US, Inc.
Custodian and Sub-Administrator
Brown Brothers Harriman & Co.
Principal UnderwriterAmundi Distributor US, Inc.
Legal Counsel
Morgan, Lewis & Bockius LLP
Transfer Agent
DST Asset Manager Solutions, Inc. | Trustees Thomas J. Perna, Chairman John E. Baumgardner, Jr. Diane Durnin Benjamin M. Friedman Lisa M. Jones Craig C. MacKay Lorraine H. Monchak Marguerite A. Piret Fred J. Ricciardi Kenneth J. Taubes |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
19610-15-0821
Pioneer Variable Contracts Trust
Pioneer Select Mid Cap Growth
VCT Portfolio
Class I Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
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![](https://capedge.com/proxy/N-CSRS/0001821268-21-000378/selectmidcap82532x4x1.gif)
5 Largest Holdings
(As a percentage of total investments)*
1. | Generac Holdings, Inc. | 2.61% |
2. | Micron Technology, Inc. | 1.94 |
3. | MSCI, Inc. | 1.86 |
4. | Synopsys, Inc. | 1.79 |
5. | Veeva Systems, Inc. | 1.70 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
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Performance Update 6/30/21 | | | |
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Prices and Distributions | | | | |
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Net Asset Value per Share | | 6/30/21 | 12/31/20 | |
Class I | | $35.70 | $37.52 | |
| Net | | | |
Distributions per Share | Investment | Short-Term | Long-Term | |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains | |
Class I | $ — | $0.3544 | $5.2059 | |
Performance of a $10,000 InvestmentThe following chart shows the change in value of an investment made in Class I shares of Pioneer Select Mid Cap Growth VCT Portfolio at net asset value during the periods shown, compared to that of the Russell Midcap Growth Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The Russell Midcap Growth Index is an unmanaged index that measures the performance of U.S. mid-cap growth stocks. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.
Average Annual Total Returns(As of June 30, 2021)
| | Russell Midcap |
| Class I | Growth Index |
10 Years | 14.50% | 15.13% |
5 Years | 20.82% | 20.52% |
1 Year | 49.90% | 43.77% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) | ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and |
(2) | transaction costs, including sales charges (loads) on purchase payments. |
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. | Divide your account value by $1,000 |
| Example: an $8,600 account value ÷ $1,000 = 8.6
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2. | Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. |
Expenses Paid on a $1,000 Investment in Pioneer Select Mid Cap Growth VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021. | |
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Share Class | I |
Beginning Account Value on 1/1/21 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,105.50 |
Expenses Paid During Period* | $ 4.70 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.90% for Class I shares multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Select Mid Cap Growth VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
Share Class | I |
Beginning Account Value on 1/1/21 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,020.33 |
Expenses Paid During Period* | $ 4.51 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.90% for Class I shares multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, Ken Winston discusses the market environment and the factors that affected the performance of Pioneer Select Mid Cap Growth VCT Portfolio during the six-month period ended June 30, 2021. Mr. Winston, a senior vice president at Amundi Asset Management US, Inc. (Amundi US) and lead portfolio manager, is responsible for the day-to-day management of the Portfolio, along with Shaji John, a vice president and a portfolio manager at Amundi US, and David Sobell, a vice president and portfolio manager at Amundi US.
Q: How did the Portfolio perform during the six-month period ended June 30, 2021?
A: Pioneer Select Mid Cap Growth VCT Portfolio’s Class I shares returned 10.55% at net asset value (NAV) during the six-month period ended June 30, 2021, while the Portfolio’s benchmark, the Russell Midcap Growth Index (the Russell Index), returned 10.44%.
Q: How would you describe the investment environment in the equity market during the six-month period ended June 30, 2021?
A: Domestic equities delivered strong returns during the six-month period, with value stocks outpacing the performance of growth stocks. The Standard & Poor’s 500 Index (the S&P 500) registered a total return of 15.25% for the six-month period, adding to an already impressive performance that saw the S&P 500 return more than 40% for the full year ended June 30, 2021.
For most of the six-month period, investors aggressively purchased shares of economically sensitive, “re-opening” companies; that is, companies thought to be prime candidates to benefit from a broader reopening of the domestic economy after more than a year of restricted activity due to the COVID-19 pandemic. Better-than-expected progress on the pace of COVID-19 vaccine distributions in the US coupled with the passage of another $1.9 trillion stimulus package by US lawmakers drove the rally, as market participants gained confidence that the domestic economy might fully reopen if widespread vaccinations reduced the public-health threat of COVID-19, which in turn could lead to a sharp acceleration in economic growth throughout 2021.
The yield on the 10-year US Treasury bond rose from 0.93% on December 31, 2020, to 1.49% at the end of the six-month period on June 30, 2021. The rise in the 10-year Treasury yield presented a significant headwind to the performance of growth stocks, and particularly those with high valuations based largely on future corporate earnings. Meanwhile, mid-cap growth stocks, as measured by the Portfolio’s benchmark, the Russell Index, underperformed the S&P 500 for the six-month period, returning 10.44%, and significantly underperformed mid-cap value stocks, which returned more than 19%, as measured by the Russell Midcap Value Index (the Midcap Value Index).
Over the second half of the six-month period, however, growth stocks recovered and outpaced value stocks as investors grappled with growing apprehension over the spread of COVID-19 variants and a somewhat “hawkish” Fed Open Market Committee (FOMC) meeting. In June, for instance, 10-year Treasury yields declined from 1.60% to 1.49%, while the Portfolio’s benchmark greatly outperformed the Midcap Value Index for the month (7% versus –1.16%).
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Within the Portfolio’s benchmark (taking into account sectors representing at least 1% of the Russell Index’s components), real estate, which returned more than 43%, was by far the best-performing sector for the six-month period, followed by consumer discretionary, health care, and industrials, at 15%, 12%, and 12%, respectively. Conversely, materials, which finished in negative territory (–0.9%), and consumer staples, which returned less than 1%, were the Russell Index’s laggards over the six-month period.
Q: Which of your investment decisions had the greatest effects on the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021?
A: The Portfolio slightly outperformed the Russell Index for the six-month period, with stock selection across multiple sectors driving positive benchmark-relative returns. The biggest benefits to the Portfolio’s relative performance came from selection results in the communication services and industrials sectors. Sector allocations detracted slightly from the Portfolio’s benchmark-relative performance for the period, with an underweight to the outperforming real estate sector and an overweight to materials, which was the Russell Index’s biggest underperformer for the period, proving to be the largest drags on relative returns.
With regard to individual securities, the Portfolio’s benchmark-relative performance for the six-month period benefited the most from positions in Lam Research, Generac Holdings, and EPAM Systems.
Lam Research manufactures equipment used to fabricate semiconductors, and the company is a leader in “dry etch,” a critical step in the chip-making process where material is selectively removed. The company’s shares performed well for the six-month period, as Lam reported financial results that came in ahead of expectations for both its fiscal second and third quarters. We believe Lam Research has an economic wide moat around its business – that is, a sustainable competitive advantage that makes it difficult for rivals to wear down its market share – due to cost advantages and the company’s intangible assets related to equipment design. Additionally, Lam has anticipated growing its equipment sales in 2021 as major customers, such as Taiwan Semiconductor (not a Portfolio holding), build additional leading-edge capacity to try and catch up with a broad-based shortage in semiconductors as well as booming demand for advanced chips driven by 5G networks, remote working, electric cars, and artificial intelligence applications. Those applications have been among the leading drivers of Lam’s etching and deposition-device sales.
Generac is a leading manufacturer of a broad range of residential standby and portable generators, with a dominant market share in the North American standby generator market as well as a leading position in portable generators. Generac’s shares outperformed during the six-month period as the company benefited from increased demand for its products, driven by factors such as wildfires in California, an active hurricane season in the Atlantic, and the COVID-19 pandemic, which kept people across the country inside their homes for months. All of those issues helped generate greater interest in Generac’s backup-power solutions. Additionally, the company delivered yet another strong financial report for its fiscal fourth quarter of 2020, which handily beat “Street” estimates. We believe Generac could continue to benefit from its strong product positioning as well as a rapidly expanding clean-energy market.
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Portfolio Management Discussion 6/30/21 (continued) | |
EPAM Systems is a leading provider of global IT services and product & software development, with a core expertise in digital services. EPAM’s shares rose in the second quarter of 2021 after the company’s first-quarter financial results exceeded expectations, with gains driven by increased volumes and demand for EPAM’s core digital services. We believe EPAM could be in a good position to benefit from accelerated demand for innovation as well as the need for companies to engage in digital transformations of their businesses. Additionally, EPAM has been benefiting from an industry-wide shortage of software engineering talent, which has led clients to outsource more of their development efforts to EPAM.
Individual stocks that detracted from the Portfolio’s benchmark-relative performance during the six-month period included positions in Mirati Therapeutics and Fibrogen, and lack of exposure to Simon Property Group.
Mirati Therapeutics is a clinical-stage oncology company developing therapies for genetically defined tumors. The company has two leading drug candidates for hard-to-treat cancer indications that have been advancing rapidly in clinical trials. Mirati’s share price declined over the six-month period, falling victim to a broad market sell-off in biotech stocks of companies viewed as having earnings potential in future years. We have maintained a Portfolio overweight position in Mirati versus the benchmark, as we believe the company could be successful in commercializing its development-stage drugs, which we think feature well-differentiated product profiles.
Fibrogen has focused on the development of two potential first-in-class drug candidates, including Rokadustat, a treatment for anemia associated with chronic kidney disease. Fibrogen’s shares underperformed during the period after the company made a clarification to the cardiovascular safety analysis of its Roxadustat drug, which investors perceived as a potential negative for the drug’s future sales potential. We sold the Portfolio’s position in Fibrogen during the period.
Not owning shares of Russell Index member Simon Property Group detracted from the Portfolio’s relative returns for the period. Simon is a real estate investment trust (REIT) which owns, develops, and manages retail real estate properties, including regional malls. Simon’s share price increased over the six-month period as investors appeared to conclude that the expanding distribution of COVID-19 vaccines combined with pent-up consumer demand for physical (in-person) retail spending could likely benefit Simon’s business in the second half of the calendar year.
Q: Did the Portfolio have any exposure to derivative securities during the six-month period ended June 30, 2021?
A: No, the Portfolio had no exposure to derivatives during the period.
Q: What is your outlook entering the second half of the Portfolio’s fiscal year?
A: We continue to see some positives and negatives with respect to the outlook for domestic equities.
On the positive side, the pace of the rollout of COVID-19 vaccinations has been surpassing previous estimates, which has led to a lifting of many of the pandemic-related restrictions on individual and business activities in recent months. That, in turn, could unleash significant pent-up demand and robust economic growth in the US as 2021 progresses, if the recent spread of the
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COVID-19 variants begins to abate and renewed lockdowns and restrictions on activities can be avoided. In addition, the accommodative monetary policies of the Federal Reserve (Fed) seem likely to continue into 2022, based on the Fed’s recent pronouncements; meanwhile, the latest round of US government fiscal stimulus, totaling $1.9 trillion, has “added fuel to the fire.” Moreover, a proposed federal infrastructure spending initiative currently under consideration and debate could provide still more stimulus.
On the negative side, the forecasted significant increase in economic demand may overwhelm supply to the point that inflation ramps up at a faster-than-expected pace. A faster rise in the rate of inflation could result in a further, rapid increase in long-term interest rates, which might be a potential negative for equity prices. Additionally, if investors believe that the Fed may likely fall behind the curve in letting inflation rise too quickly, equities could sell off on those inflation fears, which might trigger an even broader market sell-off. Another issue that bears watching is the US government’s already high debt level, which has been ballooning due to the stimulus spending needed to help offset the effects of the pandemic on the economy. There could be a price to pay for that in the future, we think, with equity markets likely beginning to discount that negative factor.
On the government-policy side, the power shift in both the Executive Branch and in Congress last January could lead to tax increases on both businesses and individuals, including a rise in the capital gains tax. In fact, the Biden administration has already floated the idea of large tax hikes that could affect individuals and businesses. An increase to the capital gains tax rate, for example, could result in a downturn in equity performance if individuals were to view stocks as a less attractive investment option due to a higher tax burden on potential gains. Businesses, too, could curtail both hiring and spending to offset the effects of higher taxes on their bottom lines. Such a scenario could lead to an eventual, substantial weakening in both corporate earnings and economic activity.
In the end, however, we believe investors are likely to favor owning stocks of well-positioned growth companies with reasonable valuations that are not highly dependent on positive macroeconomic conditions in order to flourish. Such companies have typically exhibited sustainable growth characteristics and innovation. Those characteristics also typify the types of equities that we seek to hold in the Portfolio.
Please refer to the Schedule of Investments on pages 8 to 13 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than investments in larger, more established companies.
When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Portfolio will generally rise.
The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
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Schedule of Investments 6/30/21 (unaudited) | |
| | | | |
Shares | | | | Value |
| | UNAFFILIATED ISSUERS – 99.2% | | |
| | COMMON STOCKS – 99.2% of Net Assets | | |
| | Aerospace & Defense – 1.1% | | |
5,054 | | HEICO Corp. | | $ 704,629 |
22,285 | | Spirit AeroSystems Holdings, Inc. | | 1,051,629 |
| | Total Aerospace & Defense | | $ 1,756,258 |
| | Banks – 0.5% | | |
2,995 | | Signature Bank/New York NY | | $ 735,722 |
| | Total Banks | | $ 735,722 |
| | Beverages – 0.3% | | |
6,511(a) | | Celsius Holdings, Inc. | | $ 495,422 |
| | Total Beverages | | $ 495,422 |
| | Biotechnology – 5.6% | | |
7,493(a) | | Alnylam Pharmaceuticals, Inc. | | $ 1,270,213 |
2,069(a) | | Exact Sciences Corp. | | 257,197 |
19,766(a) | | Fate Therapeutics, Inc. | | 1,715,491 |
5,219(a) | | Mirati Therapeutics, Inc. | | 843,025 |
6,623(a) | | Moderna, Inc. | | 1,556,273 |
17,162(a) | | Natera, Inc. | | 1,948,402 |
13,385(a) | | Replimune Group, Inc. | | 514,252 |
9,546(a) | | Sage Therapeutics, Inc. | | 542,308 |
| | Total Biotechnology | | $ 8,647,161 |
| | Building Products – 1.0% | | |
5,709 | | Johnson Controls International | | $ 391,808 |
11,413(a) | | Trex Co., Inc. | | 1,166,523 |
| | Total Building Products | | $ 1,558,331 |
| | Capital Markets – 2.8% | | |
5,375 | | MSCI, Inc. | | $ 2,865,305 |
17,926 | | Tradeweb Markets, Inc. | | 1,515,822 |
| | Total Capital Markets | | $ 4,381,127 |
| | Chemicals – 1.2% | | |
4,523 | | Albemarle Corp. | | $ 761,944 |
48,557 | | Element Solutions, Inc. | | 1,135,263 |
| | Total Chemicals | | $ 1,897,207 |
| | Commercial Services & Supplies – 0.8% | | |
8,868(a) | | Copart, Inc. | | $ 1,169,068 |
| | Total Commercial Services & Supplies | | $ 1,169,068 |
| | Communications Equipment – 0.4% | | |
2,895 | | Motorola Solutions, Inc. | | $ 627,781 |
| | Total Communications Equipment | | $ 627,781 |
| | Consumer Discretionary – 0.9% | | |
26,635(a) | | Skechers U.S.A., Inc. | | $ 1,327,222 |
| | Total Consumer Discretionary | | $ 1,327,222 |
| | Containers & Packaging – 0.6% | | |
9,804 | | Crown Holdings, Inc. | | $ 1,002,067 |
| | Total Containers & Packaging | | $ 1,002,067 |
| | Distributors – 0.6% | | |
2,001 | | Pool Corp. | | $ 917,779 |
| | Total Distributors | | $ 917,779 |
The accompanying notes are an integral part of these financial statements.
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| | | | |
Shares | | | | Value |
| | Diversified Consumer Services – 0.3% | | |
10,791(a) | | Terminix Global Holdings, Inc. | | $ 514,839 |
| | Total Diversified Consumer Services | | $ 514,839 |
| | Electrical Equipment – 4.9% | | |
9,707(a) | | Generac Holdings, Inc. | | $ 4,029,861 |
19,381(a) | | Plug Power, Inc. | | 662,636 |
2,750 | | Rockwell Automation, Inc. | | 786,555 |
20,974(a) | | Sunrun, Inc. | | 1,169,930 |
33,905 | | Vertiv Holdings Co. | | 925,607 |
| | Total Electrical Equipment | | $ 7,574,589 |
| | Electronic Equipment, Instruments & Components – 2.2% | | |
6,777 | | CDW Corp. | | $ 1,183,603 |
69,921(a) | | Flex Ltd. | | 1,249,488 |
13,245(a) | | II-VI, Inc. | | 961,455 |
| | Total Electronic Equipment, Instruments & Components | | $ 3,394,546 |
| | Entertainment – 2.5% | | |
5,571(a) | | Roku, Inc. | | $ 2,558,482 |
4,631(a) | | Spotify Technology S.A. | | 1,276,257 |
| | Total Entertainment | | $ 3,834,739 |
| | Equity Real Estate Investment Trusts (REITs) – 0.4% | | |
27,463(a) | | Park Hotels & Resorts, Inc. | | $ 566,012 |
| | Total Equity Real Estate Investment Trusts (REITs) | | $ 566,012 |
| | Food & Staples Retailing – 0.5% | | |
17,431(a) | | BJ’s Wholesale Club Holdings, Inc. | | $ 829,367 |
| | Total Food & Staples Retailing | | $ 829,367 |
| | Food Products – 1.6% | | |
6,116 | | Bunge, Ltd. | | $ 477,965 |
4,509 | | Hershey Co. | | 785,378 |
44,872(a) | | Nomad Foods, Ltd. | | 1,268,531 |
| | Total Food Products | | $ 2,531,874 |
| | Health Care Equipment & Supplies – 5.5% | | |
662(a) | | Align Technology, Inc. | | $ 404,482 |
2,206(a) | | DexCom, Inc. | | 941,962 |
2,071(a) | | IDEXX Laboratories, Inc. | | 1,307,940 |
4,949(a) | | Insulet Corp. | | 1,358,550 |
4,201(a) | | Penumbra, Inc. | | 1,151,326 |
10,040 | | ResMed, Inc. | | 2,475,061 |
2,252 | | Teleflex, Inc. | | 904,831 |
| | Total Health Care Equipment & Supplies | | $ 8,544,152 |
| | Health Care Providers & Services – 2.1% | | |
5,342(a) | | Amedisys, Inc. | | $ 1,308,416 |
7,923(a) | | Molina Healthcare, Inc. | | 2,004,994 |
| | Total Health Care Providers & Services | | $ 3,313,410 |
| | Health Care Technology – 2.0% | | |
2,730(a) | | Teladoc Health, Inc. | | $ 453,971 |
8,444(a) | | Veeva Systems, Inc. | | 2,625,662 |
| | Total Health Care Technology | | $ 3,079,633 |
The accompanying notes are an integral part of these financial statements.
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Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Shares | | | | Value |
| | Hotels, Restaurants & Leisure – 4.3% | | |
37,984(a) | | Brinker International, Inc. | | $ 2,349,311 |
956(a) | | Chipotle Mexican Grill, Inc. | | 1,482,125 |
14,707(a) | | DraftKings, Inc. | | 767,264 |
7,657(a) | | Penn National Gaming, Inc. | | 585,684 |
15,712 | | Wendy’s Co. | | 367,975 |
3,171 | | Wingstop, Inc. | | 499,845 |
5,401(a) | | Wynn Resorts Ltd. | | 660,542 |
| | Total Hotels, Restaurants & Leisure | | $ 6,712,746 |
| | Household Durables – 0.9% | | |
6,229 | | Dr Horton, Inc. | | $ 562,915 |
4,413(a) | | TopBuild Corp. | | 872,803 |
| | Total Household Durables | | $ 1,435,718 |
| | Information Technology – 2.7% | | |
33,220 | | Amphenol Corp. | | $ 2,272,580 |
3,008 | | Lam Research Corp. | | 1,957,306 |
| | Total Information Technology | | $ 4,229,886 |
| | Insurance – 0.4% | | |
59,954(a) | | MetroMile, Inc. | | $ 548,579 |
| | Total Insurance | | $ 548,579 |
| | Interactive Media & Services – 4.7% | | |
5,064(a) | | Charles River Laboratories International, Inc. | | $ 1,873,275 |
9,232(a) | | IAC/InterActiveCorp | | 1,423,298 |
7,512(a) | | Match Group, Inc. | | 1,211,310 |
16,440(a) | | Pinterest, Inc. | | 1,297,938 |
7,572(a) | | Twitter, Inc. | | 521,029 |
21,387(a) | | Vimeo, Inc. | | 1,047,963 |
| | Total Interactive Media & Services | | $ 7,374,813 |
| | Internet & Direct Marketing Retail – 1.2% | | |
1,718(a) | | Etsy, Inc. | | $ 353,633 |
1,891(a) | | Stamps.com, Inc. | | 378,749 |
3,520(a) | | Wayfair, Inc. | | 1,111,299 |
| | Total Internet & Direct Marketing Retail | | $ 1,843,681 |
| | IT Services – 8.5% | | |
8,979(a) | | Akamai Technologies, Inc. | | $ 1,046,952 |
8,613 | | Booz Allen Hamilton Holding Corp. | | 733,655 |
4,849(a) | | EPAM Systems, Inc. | | 2,477,645 |
28,553 | | Genpact, Ltd. | | 1,297,163 |
5,528 | | Global Payments, Inc. | | 1,036,721 |
4,805(a) | | Okta, Inc. | | 1,175,688 |
24,774(a) | | Rackspace Technology, Inc. | | 485,818 |
300(a) | | Shopify, Inc. | | 438,456 |
4,033(a) | | Square, Inc. | | 983,245 |
6,582(a) | | Twilio, Inc. | | 2,594,361 |
4,660(a) | | WEX, Inc. | | 903,574 |
| | Total IT Services | | $ 13,173,278 |
| | Leisure Products – 0.8% | | |
10,548(a) | | Peloton Interactive, Inc. | | $ 1,308,163 |
| | Total Leisure Products | | $ 1,308,163 |
The accompanying notes are an integral part of these financial statements.
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Shares | | | | Value |
| | Life Sciences Tools & Services – 2.8% | | |
7,726(a) | | 10X Genomics, Inc. | | $ 1,512,905 |
9,233 | | Agilent Technologies, Inc. | | 1,364,730 |
10,262 | | Bruker Corp. | | 779,707 |
21,736(a) | | Pacific Biosciences of California, Inc. | | 760,108 |
| | Total Life Sciences Tools & Services | | $ 4,417,450 |
| | Machinery – 2.0% | | |
8,650(a) | | Middleby Corp. | | $ 1,498,699 |
12,614 | | Oshkosh Corp. | | 1,572,209 |
| | Total Machinery | | $ 3,070,908 |
| | Materials – 1.0% | | |
41,517 | | Freeport-McMoRan, Inc. | | $ 1,540,696 |
| | Total Materials | | $ 1,540,696 |
| | Media – 0.7% | | |
7,751 | | Nexstar Media Group, Inc. | | $ 1,146,218 |
| | Total Media | | $ 1,146,218 |
| | Multiline Retail – 0.9% | | |
6,193 | | Dollar General Corp. | | $ 1,340,103 |
| | Total Multiline Retail | | $ 1,340,103 |
| | Oil, Gas & Consumable Fuels – 0.3% | | |
8,560(a) | | Renewable Energy Group, Inc. | | $ 533,630 |
| | Total Oil, Gas & Consumable Fuels | | $ 533,630 |
| | Professional Services – 3.8% | | |
92,028(a) | | Clarivate Analytics Plc | | $ 2,533,531 |
17,464(a) | | CoStar Group, Inc. | | 1,446,368 |
7,652 | | Thomson Reuters Corp. | | 759,997 |
6,817 | | Verisk Analytics, Inc. | | 1,191,066 |
| | Total Professional Services | | $ 5,930,962 |
| | Real Estate Management & Development – 0.8% | | |
14,689(a) | | CBRE Group, Inc. | | $ 1,259,288 |
| | Total Real Estate Management & Development | | $ 1,259,288 |
| | Road & Rail – 0.9% | | |
14,550 | | TFI International, Inc. | | $ 1,326,814 |
| | Total Road & Rail | | $ 1,326,814 |
| | Semiconductors & Semiconductor Equipment – 6.5% | | |
16,789(a) | | Cohu, Inc. | | $ 617,667 |
14,899 | | Marvell Technology, Inc. | | 869,059 |
35,217(a) | | Micron Technology, Inc. | | 2,992,741 |
8,321 | | MKS Instruments, Inc. | | 1,480,722 |
6,432 | | NXP Semiconductors NV | | 1,323,191 |
5,463(a) | | Qorvo, Inc. | | 1,068,836 |
2,748(a) | | SolarEdge Technologies, Inc. | | 759,465 |
6,421 | | Xilinx, Inc. | | 928,733 |
| | Total Semiconductors & Semiconductor Equipment | | $ 10,040,414 |
The accompanying notes are an integral part of these financial statements.
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Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Shares | | | | Value |
| | Software – 14.4% | | |
4,469(a) | | ANSYS, Inc. | | $ 1,551,011 |
5,414(a) | | Atlassian Corp. Plc | | 1,390,640 |
4,821(a) | | Avalara, Inc. | | 780,038 |
6,518(a) | | Crowdstrike Holdings, Inc. | | 1,638,039 |
8,922(a) | | DocuSign, Inc. | | 2,494,323 |
5,873(a) | | Guidewire Software, Inc. | | 662,004 |
26,576 | | NortonLifeLock, Inc. | | 723,399 |
4,500(a) | | Palo Alto Networks, Inc. | | 1,669,725 |
1,991(a) | | Paycom Software, Inc. | | 723,669 |
3,912(a) | | RingCentral, Inc. | | 1,136,749 |
2,263(a) | | ServiceNow, Inc. | | 1,243,632 |
8,291(a) | | Splunk, Inc. | | 1,198,713 |
10,455 | | SS&C Technologies Holdings, Inc. | | 753,387 |
10,020(a) | | Synopsys, Inc. | | 2,763,416 |
18,526(a) | | Trade Desk, Inc. | | 1,433,171 |
15,620(a) | | Zendesk, Inc. | | 2,254,591 |
| | Total Software | | $ 22,416,507 |
| | Specialty Retail – 2.9% | | |
949(a) | | AutoZone, Inc. | | $ 1,416,117 |
5,089(a) | | Burlington Stores, Inc. | | 1,638,607 |
9,282(a) | | Floor & Decor Holdings, Inc. | | 981,107 |
10,148(a) | | GrowGeneration Corp. | | 488,119 |
| | Total Specialty Retail | | $ 4,523,950 |
| | Textiles, Apparel & Luxury Goods – 0.9% | | |
3,913(a) | | Lululemon Athletica, Inc. | | $ 1,428,128 |
| | Total Textiles, Apparel & Luxury Goods | | $ 1,428,128 |
| | TOTAL COMMON STOCKS | | |
| | (Cost $89,925,059) | | $154,300,238 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 99.2% | | |
| | (Cost $89,925,059) | | $154,300,238 |
| | OTHER ASSETS AND LIABILITIES – 0.8% | | $ 1,215,708 |
| | NET ASSETS – 100.0% | | $155,515,946 |
REIT | Real Estate Investment Trust. | |
(a) | Non-income producing security. | |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021, aggregated $25,582,826 and $39,974,929, respectively.
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which Amundi Asset Management US, Inc. (the “Adviser”) serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $90,809,999 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 64,869,158 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (1,378,919) |
Net unrealized appreciation | $ 63,490,239 |
The accompanying notes are an integral part of these financial statements.
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Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
| | | | |
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments: | | | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Common Stocks | | $ | 154,300,238 | | | $ | — | | | $ | — | | | $ | 154,300,238 | |
Total Investments in Securities | | $ | 154,300,238 | | | $ | — | | | $ | — | | | $ | 154,300,238 | |
During the six months ended June 30, 2021, there were no transfers in or out of Level 3. | | | | |
The accompanying notes are an integral part of these financial statements.
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Statement of Assets and Liabilities 6/30/21 (unaudited) | |
| | | |
ASSETS: | | | |
Investments in unaffiliated issuers, at value (cost $89,925,059) | | $ | 154,300,238 | |
Cash | | | 469,030 | |
Receivables — | | | | |
Investment securities sold | | | 2,373,883 | |
Portfolio shares sold | | | 443,384 | |
Dividends | | | 19,183 | |
Due from the Adviser | | | 20,905 | |
Other assets | | | 955 | |
Total assets | | $ | 157,627,578 | |
LIABILITIES: | | | | |
Payables — | | | | |
Investment securities purchased | | $ | 2,004,202 | |
Portfolio shares repurchased | | | 41,689 | |
Trustees’ fees | | | 488 | |
Due to affiliates | | | 15,962 | |
Accrued expenses | | | 49,291 | |
Total liabilities | | $ | 2,111,632 | |
NET ASSETS: | | | | |
Paid-in capital | | $ | 81,004,299 | |
Distributable earnings | | | 74,511,647 | |
Net assets | | $ | 155,515,946 | |
NET ASSET VALUE PER SHARE: | | | | |
No par value (unlimited number of shares authorized) | | | | |
Class I (based on $155,515,946/4,356,521 shares) | | $ | 35.70 | |
The accompanying notes are an integral part of these financial statements.
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Statement of Operations (unaudited) | |
| | | | | | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | | | | |
| | | | | | |
INVESTMENT INCOME: | | | | | | |
Dividends from unaffiliated issuers (net of foreign taxes withheld $2,909) | | $ | 186,471 | | | | |
Interest from unaffiliated issuers | | | 1,972 | | | | |
Total investment income | | | | | | $ | 188,443 | |
EXPENSES: | | | | | | | | |
Management fees | | $ | 561,437 | | | | | |
Administrative expense | | | 41,886 | | | | | |
Custodian fees | | | 28,560 | | | | | |
Professional fees | | | 30,025 | | | | | |
Printing expense | | | 13,500 | | | | | |
Trustees’ fees | | | 4,000 | | | | | |
Insurance expense | | | 113 | | | | | |
Miscellaneous | | | 2,345 | | | | | |
Total expenses | | | | | | $ | 681,866 | |
Net investment income | | | | | | $ | (493,423 | ) |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
Net realized gain (loss) on: | | | | | | | | |
Investments in unaffiliated issuers | | | | | | $ | 11,514,971 | |
Change in net unrealized appreciation (depreciation) on: | | | | | | | | |
Investments in unaffiliated issuers | | | | | | $ | 4,340,892 | |
Net realized and unrealized gain (loss) on investments | | | | | | $ | 15,855,863 | |
Net increase in net assets resulting from operations | | | | | | $ | 15,362,440 | |
The accompanying notes are an integral part of these financial statements.
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Statements of Changes in Net Assets | |
| | | | | | |
| | Six Months | | | | |
| | Ended | | | | |
| | 6/30/21 | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | |
FROM OPERATIONS: | | | | | | |
Net investment income (loss) | | $ | (493,423 | ) | | $ | (623,222 | ) |
Net realized gain (loss) on investments | | | 11,514,971 | | | | 21,457,402 | |
Change in net unrealized appreciation (depreciation) on investments | | | 4,340,892 | | | | 23,666,446 | |
Net increase in net assets resulting from operations | | $ | 15,362,440 | | | $ | 44,500,626 | |
DISTRIBUTIONS TO SHAREOWNERS: | | | | | | | | |
Class I ($5.56 and $2.21 per share, respectively) | | $ | (20,921,742 | ) | | $ | (9,090,931 | ) |
Total distributions to shareowners | | $ | (20,921,742 | ) | | $ | (9,090,931 | ) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | | | | | | |
Net proceeds from sales of shares | | $ | 2,494,272 | | | $ | 5,665,634 | |
Reinvestment of distributions | | | 20,921,742 | | | | 9,090,931 | |
Cost of shares repurchased | | | (15,760,704 | ) | | | (22,338,514 | ) |
Net increase (decrease) in net assets resulting from Portfolio | | | | | | | | |
share transactions | | $ | 7,655,310 | | | $ | (7,581,949 | ) |
Net increase in net assets | | $ | 2,096,008 | | | $ | 27,827,746 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | $ | 153,419,938 | | | $ | 125,592,192 | |
End of period | | $ | 155,515,946 | | | $ | 153,419,938 | |
| | | | | | | | | | | | |
| | Six Months | | | Six Months | | | | | | | |
| | Ended | | | Ended | | | | | | | |
| | 6/30/21 | | | 6/30/21 | | | Year Ended | | | Year Ended | |
| | Shares | | | Amount | | | 12/31/20 | | | 12/31/20 | |
| | (unaudited) | | | (unaudited) | | | Shares | | | Amount | |
Class I | | | | | | | | | | | | |
Shares sold | | | 65,221 | | | $ | 2,494,272 | | | | 187,263 | | | $ | 5,665,634 | |
Reinvestment of distributions | | | 608,898 | | | | 20,921,742 | | | | 329,024 | | | | 9,090,931 | |
Less shares repurchased | | | (406,937 | ) | | | (15,760,704 | ) | | | (739,340 | ) | | | (22,338,514 | ) |
Net increase (decrease) | | | 267,182 | | | $ | 7,655,310 | | | | (223,053 | ) | | $ | (7,581,949 | ) |
The accompanying notes are an integral part of these financial statements.
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Financial Highlights | |
| | Six Months | | | | | | | | | | | | | | | | |
| | Ended | | | | | | | | | | | | | | | | |
| | 6/30/21 | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class I | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | $ | 37.52 | | | $ | 29.12 | | | $ | 24.82 | | | $ | 30.23 | | | $ | 23.56 | | | $ | 26.11 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | (0.13 | ) | | $ | (0.15 | ) | | $ | (0.09 | ) | | $ | (0.10 | ) | | $ | (0.05 | ) | | $ | 0.01 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 3.87 | | | | 10.76 | | | | 8.13 | | | | (1.22 | ) | | | 7.07 | | | | 0.88 | |
Net increase (decrease) from investment | | | | | | | | | | | | | | | | | | | | | | | | |
operations | | $ | 3.74 | | | $ | 10.61 | | | $ | 8.04 | | | $ | (1.32 | ) | | $ | 7.02 | | | $ | 0.89 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | (0.02 | ) | | $ | — | |
Net realized gain | | | (5.56 | ) | | | (2.21 | ) | | | (3.74 | ) | | | (4.09 | ) | | | (0.33 | ) | | | (3.44 | ) |
Total distributions | | $ | (5.56 | ) | | $ | (2.21 | ) | | $ | (3.74 | ) | | $ | (4.09 | ) | | $ | (0.35 | ) | | $ | (3.44 | ) |
Net increase (decrease) in net asset value | | $ | (1.82 | ) | | $ | 8.40 | | | $ | 4.30 | | | $ | (5.41 | ) | | $ | 6.67 | | | $ | (2.55 | ) |
Net asset value, end of period | | $ | 35.70 | | | $ | 37.52 | | | $ | 29.12 | | | $ | 24.82 | | | $ | 30.23 | | | $ | 23.56 | |
Total return (b) | | | 10.55 | %(c) | | | 39.17 | % | | | 33.08 | % | | | (6.48 | )% | | | 30.03 | % | | | 3.74 | %(d) |
Ratio of net expenses to average net assets | | | 0.90 | %(e) | | | 0.89 | % | | | 0.88 | % | | | 0.90 | % | | | 0.88 | % | | | 0.86 | % |
Ratio of net investment income (loss) to | | | | | | | | | | | | | | | | | | | | | | | | |
average net assets | | | (0.65 | )%(e) | | | (0.49 | )% | | | (0.30 | )% | | | (0.33 | )% | | | (0.20 | )% | | | 0.06 | % |
Portfolio turnover rate | | | 17 | %(c) | | | 82 | % | | | 58 | % | | | 83 | % | | | 85 | % | | | 97 | % |
Net assets, end of period (in thousands) | | $ | 155,516 | | | $ | 153,420 | | | $ | 125,592 | | | $ | 105,450 | | | $ | 123,007 | | | $ | 109,926 | |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2016, the total return would have been 3.65%. |
(e) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Select Mid Cap Growth VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Portfolio is to seek growth of capital.
The Portfolio offers one class of shares designated as Class I shares. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
Securities for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the
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determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
A portion of the dividend income recorded by the Portfolio is from distributions by publicly traded Real Estate Investment Trusts (“REITs”), and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Portfolio as a reduction of the cost basis of the securities held and those determined to be capital gain are reflected as such on the Statement of Operations.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
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Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| 2020 |
Distributions paid from: | |
Long-term capital gain | $9,090,931 |
Total | $9,090,931 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2020:
| |
| 2020 |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 1,333,388 |
Undistributed long-term capital gain | 19,588,214 |
Net unrealized appreciation | 59,149,347 |
Total | $ 80,070,949 |
The difference between book-basis and tax-basis net unrealized appreciation is attributable to the tax deferral of losses on wash sales.
E. Portfolio Shares
The Portfolio records sales and repurchases of its shares as of trade date. Dividends and distributions to shareowners are recorded on the ex-dividend date.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than investments in larger, more established companies. Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates and economic and political conditions.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
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With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.74% of the Portfolio’s average daily net assets. For the six months ended June 30, 2021, the effective management fee was equivalent to 0.74% (annualized) of the Portfolio’s average daily net assets.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $15,962 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $4,000 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $488.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Statement Regarding Liquidity Risk Management Program | |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts TrustOfficersLisa M. Jones, President and Chief Executive OfficerAnthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting OfficerChristopher J. Kelley, Secretary and Chief Legal OfficerInvestment Adviser and AdministratorAmundi Asset Management US, Inc.Custodian and Sub-AdministratorBrown Brothers Harriman & Co.
Principal UnderwriterAmundi Distributor US, Inc.Legal CounselMorgan, Lewis & Bockius LLPTransfer AgentDST Asset Manager Solutions, Inc. | Trustees Thomas J. Perna, Chairman John E. Baumgardner, Jr. Diane Durnin Benjamin M. Friedman Lisa M. Jones Craig C. MacKay Lorraine H. Monchak Marguerite A. Piret Fred J. Ricciardi Kenneth J. Taubes |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
![](https://capedge.com/proxy/N-CSRS/0001821268-21-000378/bondvctlx1x1.gif)
19616-15-0821
Pioneer Variable Contracts Trust
Pioneer High Yield
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Table of Contents | |
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Pioneer High Yield VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/21Portfolio Diversification(As a percentage of total investments)* 5 Largest Holdings
(As a percentage of total investments)*
1. | U.S. Treasury Bills, 8/5/21 | 1.47% |
2. | CCO Holdings LLC/CCO Holdings | |
| Capital Corp., 5.5%, 5/1/26 (144A)
| 1.15
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3. | Pioneer ILS Interval Fund (k) | 1.11 |
4. | Element Solutions, Inc., 3.875%, | |
| 9/1/28 (144A) | 1.04 |
5. | Scotts Miracle-Gro Co., 4.0%, | |
| 4/1/31 (144A) | 1.02 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
(k) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
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Performance Update 6/30/21 | | | |
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Prices and Distributions | | | | |
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Net Asset Value per Share | | 6/30/21 | 12/31/20 | |
Class I | | $9.44 | $9.29 | |
Class II | | $9.31 | $9.16 | |
| Net | | | |
Distributions per Share | Investment | Short-Term | Long-Term | |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains | |
Class I | $0.2400 | $ — | $ — | |
Class II | $0.2251 | $ — | $ — | |
Performance of a $10,000 InvestmentThe following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer High Yield VCT Portfolio at net asset value during the periods shown, compared to that of the ICE Bank of America (BofA) U.S. High Yield Index and the ICE BofA U.S. All-Convertibles Speculative Quality Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The ICE BofA U.S. High Yield Index is an unmanaged, commonly accepted measure of the performance of high-yield securities. The ICE BofA U.S. All-Convertibles Speculative Quality Index is an unmanaged index of high-yield U.S. convertible securities. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.
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Average Annual Total Returns | | | |
(As of June 30, 2021) | | | | |
| | | | ICE BofA U.S. |
| | | ICE BofA | All-Convertibles |
| | | U.S. High ICE | Speculative |
| Class I | Class II | Yield Index | Quality Index |
10 Years | 5.73% | 5.34% | 6.50% | 17.04% |
5 Years | 6.41% | 6.02% | 7.30% | 30.67% |
1 Year | 16.20% | 15.81% | 15.62% | 111.19% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) | ongoing costs, including management fees, distribution and/or service (12b–1) fees, and other Portfolio expenses; and
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(2) | transaction costs, including sales charges (loads) on purchase payments. |
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. | Divide your account value by $1,000 |
| Example: an $8,600 account value ÷ $1,000 = 8.6
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2. | Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. |
Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
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Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,042.50 | $1,041.40 |
Expenses Paid During Period* | $ 4.56 | $ 5.82 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.90%, 1.15% for Class I and Class II respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer High Yield VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
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Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,020.33 | $1,019.09 |
Expenses Paid During Period* | $ 4.51 | $ 5.76 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.90%, 1.15% for Class I and Class II respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, portfolio managers Andrew Feltus, Matthew Shulkin, and Ken Monaghan discuss the factors that influenced Pioneer High Yield VCT Portfolio’s performance for the six-month period ended June 30, 2021. Mr. Feltus, Managing Director, Co-Director of High Yield, and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), Mr. Shulkin, a senior vice president and a portfolio manager at Amundi US, and Mr. Monaghan, Co-Director of High Yield and a portfolio manager at Amundi US, are responsible for the daily management of the Portfolio.
Q: How did the Portfolio perform during the six-month period ended June 30, 2021?
A: Pioneer High Yield VCT Portfolio’s Class I shares returned 4.25% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 4.14%. During the same period, the Portfolio’s benchmarks, the ICE Bank of America (ICE BofA) US High Yield Index (the US High Yield Index) and the ICE BofA All-Convertibles Speculative Quality Index, returned 3.70% and 12.80%, respectively.
Q: Could you please describe the market environment for high-yield bonds during the six-month period ended June 30, 2021?
A: The first three months of the period saw strong returns for riskier assets, such as high-yield bonds and equities, notably higher US Treasury yields, and rising inflation expectations, driven by investor optimism regarding the global economic growth outlook. Contributing to the optimistic view was the Democratic Party’s gaining control of both houses of Congress in early January, which gave rise to a new $1.9 trillion US fiscal stimulus package and, later, a proposed $3 billion-plus infrastructure bill. In addition, the continued distribution of COVID-19 vaccines in the US as well as a general decline in severe virus cases, coupled with the ongoing reopening of the economy, helped boost market sentiment during the period.
As the six-month period progressed, the continued, highly dovish posture on monetary policy from the US Federal Reserve (Fed) lent further support to the markets, as the US central bank expressed its intention to remain “on the sidelines” with regard to major policy changes until at least 2023. The Fed based its projection on the view that near-term increases in inflation above the usual 2% target would be transitory, and not structural. The Fed also messaged that it would look at average inflation over time, rather than focusing on isolated upticks in prices and thus feeling compelled to raise rates in response.
However, the “reflation trade” wobbled during June as market participants navigated growing apprehension over the spread of COVID-19 variants and a somewhat “hawkish” Fed Open Market Committee (FOMC) meeting that month. Investors in the Treasury market reacted to the updated Fed “dot plot” displaying FOMC member forecasts for the federal funds rate, which pointed to a median year-end 2023 target rate of 0.625%, or 50 basis points (bps) higher than the March forecast. (The Fed’s “dot” plot/projection is a quarterly chart summarizing the outlook for the federal funds rate for each of the FOMC’s members. A basis point is equal to 1/100th of a percentage point.)
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The yield curve twisted around the intermediate portion, with short-end yields rising and long-end yields falling. Notably, breakeven inflation rates fell significantly. The movement suggested investor doubts regarding the Fed’s long-term commitment to its current average inflation-targeting framework. (Breakeven rates represent the difference(s) between the yield of a nominal bond and an inflation-linked bond of the same maturity.)
Q: Can you review your principal strategies in managing the Portfolio during the six-month period ended June 30, 2021, and the degree to which they contributed to or detracted from benchmark-relative returns?
A: Asset allocations and security selections both aided the Portfolio’s benchmark-relative performance during the six-month period.
At the sector level, non-US High Yield Index allocations to convertible bonds and common stocks were positive contributors to the Portfolio’s relative returns. Within common stocks, holdings in the energy sector, particularly of companies that had previously experienced defaults on their debt and then recovered strongly during the period, were the top performers for the Portfolio. Bond positioning within the energy sector also was a source of strong relative returns for the Portfolio during the six-month period, with both a slight underweight allocation versus the US High Yield Index as well as security selection in the sector contributing positively to relative performance. On the negative side, the Portfolio’s cash position, which we maintained to ensure adequate liquidity, was the largest detractor from relative returns from an asset allocation standpoint.
With regard to individual holdings, security selection results were strong overall. The leading positive contributors to the Portfolio’s benchmark-relative performance included positions in Shelf Drilling, FTS International, and Baytex Energy. Shelf Drilling is an operator of shallow-water, jack-up drilling rigs outside the US; FTS International is one of the largest oil & gas well-completion companies in North America; and Baytex Energy is an exploration-and-production company focused on oil-related operations in Western Canada and the Eagle Ford field in Texas. Those positions benefited primarily from the rally in oil prices, and the energy sector in general, during the six-month period.
Among individual Portfolio holdings that detracted from relative performance during the six-month period was a convertible bond position in Tricida, a developer of drugs meant to treat kidney disease. An underweight stake versus the benchmark in Occidental Petroleum, a large global exploration-and-production company, and a position in Transocean, a large offshore drilling company, were other holdings that detracted from the Portfolio’s relative performance for the period.
Q: Can you discuss the factors that affected the Portfolio’s income-generation (or yield), either positively or negatively, during the six-month period ended June 30, 2021?
A: The increase in Treasury rates supported the Portfolio’s yield, partially offsetting a decrease in the yield later in the period caused by tightening credit spreads. The tightening credit spreads reduced the Portfolio’s yield as the market started to look beyond COVID-19 and spread levels became more
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Portfolio Management Discussion 6/30/21 (continued) | |
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
Investments in high-yield or lower-rated securities are subject to greater-than-average price volatility, illiquidity and possibility of default.
When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise. Investments in the Portfolio are subject to possible loss due to the financial failure of the issuers of underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that an issuer may exercise its right to prepay its security, if falling interest rates prompt the issuer to do so. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation.
The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-backed securities are also subject to prepayments.
The Portfolio may use derivatives, such as options, futures, inverse floating rate obligations, swaps, and other instruments, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on Portfolio performance. Derivatives may have a leveraging effect on the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
reflective of investors’ expectations of future economic growth and stability. (Credit spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities.) While narrower spreads led to a decline in the Portfolio’s yield, they had a positive effect on total returns, due to capital appreciation.
Holding positions in convertible securities and investments such as bank loans can result in a lower yield compared to a portfolio composed entirely of high-yield bonds. However, we view those allocations as potentially beneficial to the Portfolio’s total return profile.
Q: Did the Portfolio have any exposure to derivatives during the six-month period ended June 30, 2021? If so, did the derivatives have a material effect on the Portfolio’s performance?
A: We utilized index-based credit-default-swap investments during the six-month period in an effort to maintain the desired level of Portfolio exposure to the high-yield market, and to seek to ensure sufficient liquidity to make opportunistic purchases and help meet any unanticipated shareholder redemption requests. The derivatives strategy had a negative effect on the Portfolio’s performance over the six-month period.
Q: What is your assessment of the current climate for high-yield investing heading into the second half of the Portfolio’s fiscal year?
A: The COVID-19 situation has remained a key driver of global economic activity, both positive and negative, and, in turn, the performance of financial markets. Though the spread of the highly contagious “Delta” variant of the virus has been driving an increase in COVID-19 infections (particularly in those regions with lower vaccination rates), in our view, the spread of the variant may not derail the economic recovery already underway in major developed economies where vaccination rates have been relatively high. While the vaccines apparently have not provided 100 percent protection against infection, “breakthrough” infections in vaccinated individuals have so far been less severe and resulted in fewer hospitalizations and deaths. It is important to keep this point in mind as the world transitions from fighting COVID-19 to living with COVID-19.
In his June post-FOMC meeting press conference, Fed Chair Powell reported that the committee has begun to talk about tapering its monthly purchases of Treasuries and agency MBS. Logically, some market participants have become worried about a repeat of the 2013 “taper tantrum,” if an official taper plan becomes reality (possibly late this year). However, we think Fed officials, having learned from 2013, have been offering investors plenty of guidance and a good sense of their eventual policy game plan. While we still think it likely that the ultimate announcement of tapering could precipitate
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some financial market volatility (as did the June FOMC meeting), unlike eight years ago, we believe any such episode could relatively short lived.
Given the potential for additional US-government stimulus through a proposed infrastructure spending package, and the possibility of a more widespread reopening of the US economy, we have revised upwards our base-case 2021 US gross domestic product growth forecast. We think the demand-driven economic growth dynamic could be positive for corporate fundamentals and consumer balance sheets. In turn, solid issuer fundamentals and still-elevated investor cash balances (which are earning close to 0% yield) may support the performance of credit-sensitive assets going forward.
We currently regard the risk of interest rates moving sharply higher as remote, but we are monitoring conditions closely as strong monthly economic data on the horizon could push Treasury yields higher in the coming months. Should longer-term yields shift materially higher and, in turn, tighten financial conditions, we anticipate that the Fed would ease monetary policy accordingly.
All in all, we believe the current backdrop is supportive for high-yield fundamentals. Strong growth and corporate profits have resulted in decreasing default rates, both the loan and bond markets are open, and companies have had good access to financing.
Our main concern heading into the second half of the Portfolio’s fiscal year is valuations. High-yield spreads, at period-end, were in the lower quartile of historical ranges, but still appear attractive to us, especially compared to those of other “spread assets,” such as investment-grade corporate bonds and government-backed mortgage bonds. Our base case is that default losses might be low, but that the level of valuations and rising Treasury yields could constrain total returns, even if high-yield securities continue to outperform other segments of the bond market.
Please refer to the Schedule of Investments on pages 8 to 20 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) | |
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Shares | | | | Value |
| | UNAFFILIATED ISSUERS – 94.9% | | |
| | COMMON STOCKS – 0.5% of Net Assets | | |
| | Energy Equipment & Services – 0.5% | | |
6,156(a) | | FTS International, Inc. | | $ 174,153 |
1,828^(a) | | Superior Energy Services, Inc. | | 58,039 |
| | Total Energy Equipment & Services | | $ 232,192 |
| | TOTAL COMMON STOCKS | | |
| | (Cost $222,501) | | $ 232,192 |
| | CONVERTIBLE PREFERRED STOCK – 0.3% of Net Assets | | |
| | Banks – 0.3% | | |
95(b) | | Wells Fargo & Co., 7.5% | | $ 144,990 |
| | Total Banks | | $ 144,990 |
| | TOTAL CONVERTIBLE PREFERRED STOCK | | |
| | (Cost $125,547) | | $ 144,990 |
Principal | | | | |
Amount | | | | |
USD ($) | | | | |
| | CONVERTIBLE CORPORATE BONDS – 3.8% of Net Assets | | |
| | Airlines – 0.7% | | |
92,000 | | Air Canada, 4.0%, 7/1/25 | | $ 144,396 |
219,000 | | Spirit Airlines, Inc., 1.0%, 5/15/26 | | 208,729 |
| | Total Airlines | | $ 353,125 |
| | Biotechnology – 0.3% | | |
55,000 | | Insmed, Inc., 0.75%, 6/1/28 | | $ 60,466 |
81,000 | | Insmed, Inc., 1.75%, 1/15/25 | | 84,596 |
| | Total Biotechnology | | $ 145,062 |
| | Commercial Services – 0.0%† | | |
935 | | Macquarie Infrastructure Corp., 2.0%, 10/1/23 | | $ 930 |
| | Total Commercial Services | | $ 930 |
| | Energy-Alternate Sources – 0.4% | | |
179,000(c) | | Enphase Energy, Inc., 3/1/28 (144A) | | $ 173,473 |
| | Total Energy-Alternate Sources | | $ 173,473 |
| | Entertainment – 0.5% | | |
140,000(c) | | DraftKings, Inc., 3/15/28 (144A) | | $ 126,140 |
99,000 | | IMAX Corp., 0.5%, 4/1/26 (144A) | | 103,207 |
| | Total Entertainment | | $ 229,347 |
| | Media – 0.2% | | |
112,000 | | DISH Network Corp., 3.375%, 8/15/26 | | $ 114,296 |
| | Total Media | | $ 114,296 |
| | Mining – 0.3% | | |
110,000 | | Ivanhoe Mines, Ltd., 2.5%, 4/15/26 (144A) | | $ 135,168 |
| | Total Mining | | $ 135,168 |
| | Pharmaceuticals – 0.4% | | |
130,000 | | Revance Therapeutics, Inc., 1.75%, 2/15/27 | | $ 151,666 |
136,000 | | Tricida, Inc., 3.5%, 5/15/27 | | 51,184 |
| | Total Pharmaceuticals | | $ 202,850 |
| | REITs – 0.1% | | |
49,000 | | Summit Hotel Properties, Inc., 1.5%, 2/15/26 | | $ 50,495 |
| | Total REITs | | $ 50,495 |
The accompanying notes are an integral part of these financial statements.
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Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Software – 0.9% | | |
165,000 | | Bentley Systems, Inc., 0.375%, 7/1/27 (144A) | | $ 169,125 |
118,000 | | Ceridian HCM Holding, Inc., 0.25%, 3/15/26 (144A) | | 117,926 |
70,000(c) | | Everbridge, Inc., 3/15/26 (144A) | | 71,488 |
105,000 | | Verint Systems, Inc., 0.25%, 4/15/26 (144A) | | 102,957 |
| | Total Software | | $ 461,496 |
| | TOTAL CONVERTIBLE CORPORATE BONDS | | |
| | (Cost $1,827,322) | | $ 1,866,242 |
| | CORPORATE BONDS – 85.8% of Net Assets | | |
| | Advertising – 1.9% | | |
180,000 | | Clear Channel Outdoor Holdings, Inc., 7.5%, 6/1/29 (144A) | | $ 186,361 |
110,000 | | Clear Channel Outdoor Holdings, Inc., 7.75%, 4/15/28 (144A) | | 115,227 |
65,000 | | Lamar Media Corp., 3.625%, 1/15/31 (144A) | | 63,537 |
412,000(d) | | MDC Partners, Inc., 7.5%, 5/1/24 (144A) | | 417,150 |
70,000 | | Outfront Media Capital LLC/Outfront Media Capital Corp., 4.25%, 1/15/29 (144A) | | 70,438 |
60,000 | | Outfront Media Capital LLC/Outfront Media Capital Corp., 6.25%, 6/15/25 (144A) | | 63,422 |
| | Total Advertising | | $ 916,135 |
| | Aerospace & Defense – 0.1% | | |
29,000 | | Triumph Group, Inc., 8.875%, 6/1/24 (144A) | | $ 32,263 |
| | Total Aerospace & Defense | | $ 32,263 |
| | Airlines – 1.3% | | |
70,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.5%, 4/20/26 (144A) | | $ 74,113 |
55,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.75%, 4/20/29 (144A) | | 59,377 |
197,000 | | Delta Air Lines, Inc., 3.75%, 10/28/29 | | 196,872 |
40,000 | | Hawaiian Brand Intellectual Property, Ltd./HawaiianMiles Loyalty, Ltd., 5.75%, | | |
| | 1/20/26 (144A) | | 43,000 |
165,000 | | Mileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets, Ltd., 6.5%, | | |
| | 6/20/27 (144A) | | 181,665 |
35,000 | | United Airlines, Inc., 4.375%, 4/15/26 (144A) | | 36,225 |
35,000 | | United Airlines, Inc., 4.625%, 4/15/29 (144A) | | 36,225 |
| | Total Airlines | | $ 627,477 |
| | Apparel – 0.2% | | |
75,000 | | Wolverine World Wide, Inc., 6.375%, 5/15/25 (144A) | | $ 79,790 |
| | Total Apparel | | $ 79,790 |
| | Auto Manufacturers – 3.3% | | |
243,000 | | Allison Transmission, Inc., 3.75%, 1/30/31 (144A) | | $ 238,837 |
200,000 | | Ford Motor Credit Co. LLC, 3.375%, 11/13/25 | | 207,250 |
305,000 | | Ford Motor Credit Co. LLC, 3.815%, 11/2/27 | | 317,695 |
300,000 | | Ford Motor Credit Co. LLC, 4.134%, 8/4/25 | | 320,622 |
214,000 | | Ford Motor Credit Co. LLC, 5.113%, 5/3/29 | | 239,569 |
254,000 | | JB Poindexter & Co., Inc., 7.125%, 4/15/26 (144A) | | 268,605 |
| | Total Auto Manufacturers | | $ 1,592,578 |
| | Auto Parts & Equipment – 1.6% | | |
408,000 | | American Axle & Manufacturing, Inc., 6.25%, 3/15/26 | | $ 420,791 |
331,000 | | Dealer Tire LLC/DT Issuer LLC, 8.0%, 2/1/28 (144A) | | 356,973 |
| | Total Auto Parts & Equipment | | $ 777,764 |
The accompanying notes are an integral part of these financial statements.
9
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Banks – 0.4% | | |
15,000 | | Freedom Mortgage Corp., 6.625%, 1/15/27 (144A) | | $ 15,094 |
69,000 | | Freedom Mortgage Corp., 8.125%, 11/15/24 (144A) | | 71,329 |
118,000 | | Freedom Mortgage Corp., 8.25%, 4/15/25 (144A) | | 123,162 |
| | Total Banks | | $ 209,585 |
| | Building Materials – 3.2% | | |
95,000 | | APi Group DE, Inc., 4.125%, 7/15/29 (144A) | | $ 94,525 |
142,000 | | Builders FirstSource, Inc., 6.75%, 6/1/27 (144A) | | 152,117 |
441,000 | | Cornerstone Building Brands, Inc., 6.125%, 1/15/29 (144A) | | 472,973 |
90,000 | | CP Atlas Buyer, Inc., 7.0%, 12/1/28 (144A) | | 93,262 |
79,000 | | Koppers, Inc., 6.0%, 2/15/25 (144A) | | 81,528 |
280,000 | | Patrick Industries, Inc., 7.5%, 10/15/27 (144A) | | 302,742 |
203,000 | | Summit Materials LLC/Summit Materials Finance Corp., 5.125%, 6/1/25 (144A) | | 204,629 |
10,000 | | Summit Materials LLC/Summit Materials Finance Corp., 5.25%, 1/15/29 (144A) | | 10,624 |
112,000 | | Summit Materials LLC/Summit Materials Finance Corp., 6.5%, 3/15/27 (144A) | | 118,550 |
| | Total Building Materials | | $ 1,530,950 |
| | Chemicals – 4.9% | | |
473,000 | | Element Solutions, Inc., 3.875%, 9/1/28 (144A) | | $ 482,602 |
103,000 | | Hexion, Inc., 7.875%, 7/15/27 (144A) | | 111,111 |
477,000 | | Ingevity Corp., 3.875%, 11/1/28 (144A) | | 473,422 |
65,000 | | Kraton Polymers LLC/Kraton Polymers Capital Corp., 4.25%, 12/15/25 (144A) | | 66,300 |
180,000 | | OCI NV, 4.625%, 10/15/25 (144A) | | 187,707 |
283,000 | | Olin Corp., 5.0%, 2/1/30 | | 301,749 |
345,000 | | Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc., 5.125%, 4/1/29 (144A) | | 352,762 |
230,000 | | Tronox, Inc., 4.625%, 3/15/29 (144A) | | 232,583 |
155,000 | | Tronox, Inc., 6.5%, 5/1/25 (144A) | | 164,035 |
| | Total Chemicals | | $ 2,372,271 |
| | Coal – 1.0% | | |
300,000 | | SunCoke Energy Partners LP/SunCoke Energy Partners Finance Corp., 7.5%, 6/15/25 (144A) | | $ 311,565 |
185,000 | | SunCoke Energy, Inc., 4.875%, 6/30/29 (144A) | | 184,769 |
| | Total Coal | | $ 496,334 |
| | Commercial Services – 4.7% | | |
95,000 | | Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.625%, 7/15/26 (144A) | | $ 100,722 |
215,000 | | Allied Universal Holdco LLC/Allied Universal Finance Corp., 9.75%, 7/15/27 (144A) | | 236,769 |
105,000 | | APX Group, Inc., 6.75%, 2/15/27 (144A) | | 111,790 |
140,000 | | Brink’s Co., 5.5%, 7/15/25 (144A) | | 148,400 |
280,000 | | CoreLogic, Inc., 4.5%, 5/1/28 (144A) | | 277,550 |
367,000 | | Garda World Security Corp., 6.0%, 6/1/29 (144A) | | 364,248 |
206,000 | | Garda World Security Corp., 9.5%, 11/1/27 (144A) | | 228,145 |
75,000 | | Gartner, Inc., 3.625%, 6/15/29 (144A) | | 76,125 |
105,000 | | NESCO Holdings II, Inc., 5.5%, 4/15/29 (144A) | | 109,594 |
60,000 | | Nielsen Finance LLC/Nielsen Finance Co., 4.5%, 7/15/29 (144A) | | 60,225 |
60,000 | | Nielsen Finance LLC/Nielsen Finance Co., 4.75%, 7/15/31 (144A) | | 60,150 |
120,000 | | Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 4/15/26 (144A) | | 132,560 |
260,000 | | Prime Security Services Borrower LLC/Prime Finance, Inc., 6.25%, 1/15/28 (144A) | | 276,575 |
80,000 | | Sotheby’s, 7.375%, 10/15/27 (144A) | | 86,300 |
| | Total Commercial Services | | $ 2,269,153 |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Computers – 1.1% | | |
195,000 | | Diebold Nixdorf, Inc., 8.5%, 4/15/24 | | $ 199,631 |
20,000 | | Diebold Nixdorf, Inc., 9.375%, 7/15/25 (144A) | | 22,175 |
140,000 | | KBR, Inc., 4.75%, 9/30/28 (144A) | | 140,000 |
90,000 | | NCR Corp., 5.0%, 10/1/28 (144A) | | 93,066 |
45,000 | | NCR Corp., 5.25%, 10/1/30 (144A) | | 46,688 |
20,000 | | NCR Corp., 8.125%, 4/15/25 (144A) | | 21,870 |
| | Total Computers | | $ 523,430 |
| | Diversified Financial Services – 3.5% | | |
145,000 | | Alliance Data Systems Corp., 4.75%, 12/15/24 (144A) | | $ 148,987 |
360,000(e) | | Avation Capital SA., 8.25% (9.00% PIK or 8.25% cash), 10/31/26 (144A) | | 298,350 |
209,392(e) | | Global Aircraft Leasing Co., Ltd., 6.5% (7.25% PIK or 6.50% cash), 9/15/24 (144A) | | 210,520 |
60,000 | | Nationstar Mortgage Holdings, Inc., 5.5%, 8/15/28 (144A) | | 60,558 |
30,000 | | Nationstar Mortgage Holdings, Inc., 6.0%, 1/15/27 (144A) | | 31,088 |
145,000 | | OneMain Finance Corp., 3.5%, 1/15/27 | | 146,087 |
237,000 | | Provident Funding Associates LP/PFG Finance Corp., 6.375%, 6/15/25 (144A) | | 239,963 |
140,000 | | United Wholesale Mortgage LLC, 5.5%, 4/15/29 (144A) | | 139,968 |
365,000 | | VistaJet Malta Finance Plc/XO Management Holding, Inc., 10.5%, 6/1/24 (144A) | | 397,923 |
| | Total Diversified Financial Services | | $ 1,673,444 |
| | Electric – 1.9% | | |
105,000 | | Clearway Energy Operating LLC, 3.75%, 2/15/31 (144A) | | $ 104,475 |
70,000 | | Leeward Renewable Energy Operations LLC, 4.25%, 7/1/29 (144A) | | 71,050 |
60,000 | | NRG Energy, Inc., 3.375%, 2/15/29 (144A) | | 58,726 |
85,000 | | NRG Energy, Inc., 3.625%, 2/15/31 (144A) | | 83,529 |
175,000 | | Talen Energy Supply LLC, 7.625%, 6/1/28 (144A) | | 163,749 |
235,000 | | Talen Energy Supply LLC, 10.5%, 1/15/26 (144A) | | 172,138 |
90,000 | | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | | 90,450 |
183,000 | | Vistra Operations Co. LLC, 5.625%, 2/15/27 (144A) | | 189,863 |
| | Total Electric | | $ 933,980 |
| | Electrical Components & Equipment – 0.6% | | |
112,000 | | Energizer Holdings, Inc., 4.75%, 6/15/28 (144A) | | $ 114,772 |
90,000 | | WESCO Distribution, Inc., 7.125%, 6/15/25 (144A) | | 97,263 |
60,000 | | WESCO Distribution, Inc., 7.25%, 6/15/28 (144A) | | 66,831 |
| | Total Electrical Components & Equipment | | $ 278,866 |
| | Electronics – 0.4% | | |
70,000 | | Atkore, Inc., 4.25%, 6/1/31 (144A) | | $ 70,896 |
70,000 | | Sensata Technologies BV, 4.0%, 4/15/29 (144A) | | 71,056 |
55,000 | | Sensata Technologies, Inc., 3.75%, 2/15/31 (144A) | | 54,385 |
| | Total Electronics | | $ 196,337 |
| | Energy-Alternate Sources – 0.4% | | |
190,000 | | Renewable Energy Group, Inc., 5.875%, 6/1/28 (144A) | | $ 198,896 |
| | Total Energy-Alternate Sources | | $ 198,896 |
| | Engineering & Construction – 1.8% | | |
80,000 | | Arcosa, Inc., 4.375%, 4/15/29 (144A) | | $ 81,400 |
182,000 | | Dycom Industries, Inc., 4.5%, 4/15/29 (144A) | | 183,576 |
340,000 | | PowerTeam Services LLC, 9.033%, 12/4/25 (144A) | | 374,000 |
240,000 | | TopBuild Corp., 3.625%, 3/15/29 (144A) | | 237,600 |
| | Total Engineering & Construction | | $ 876,576 |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Entertainment – 2.6% | | |
55,000 | | Boyne USA, Inc., 4.75%, 5/15/29 (144A) | | $ 56,745 |
257,000 | | Caesars Entertainment, Inc., 8.125%, 7/1/27 (144A) | | 285,836 |
25,000 | | Everi Holdings, Inc., 5.0%, 7/15/29 (144A) | | 25,000 |
145,000 | | Lions Gate Capital Holdings LLC, 5.5%, 4/15/29 (144A) | | 152,431 |
200,000 | | Mohegan Gaming & Entertainment, 8.0%, 2/1/26 (144A) | | 208,980 |
35,000 | | Penn National Gaming, Inc., 5.625%, 1/15/27 (144A) | | 36,356 |
100,000 | | Scientific Games International, Inc., 7.0%, 5/15/28 (144A) | | 109,250 |
100,000 | | Scientific Games International, Inc., 7.25%, 11/15/29 (144A) | | 112,800 |
242,000 | | Scientific Games International, Inc., 8.25%, 3/15/26 (144A) | | 259,540 |
| | Total Entertainment | | $ 1,246,938 |
| | Environmental Control – 1.1% | | |
330,000 | | Covanta Holding Corp., 6.0%, 1/1/27 | | $ 343,200 |
55,000 | | GFL Environmental, Inc., 4.0%, 8/1/28 (144A) | | 54,332 |
145,000 | | Tervita Corp., 11.0%, 12/1/25 (144A) | | 162,361 |
| | Total Environmental Control | | $ 559,893 |
| | Food – 2.0% | | |
65,000 | | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 3.5%, 3/15/29 (144A) | | $ 64,269 |
30,000 | | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 5.75%, 3/15/25 | | 30,675 |
253,000 | | FAGE International SA./FAGE USA Dairy Industry, Inc., 5.625%, 8/15/26 (144A) | | 260,590 |
82,000 | | Ingles Markets, Inc., 5.75%, 6/15/23 | | 82,123 |
415,000 | | Simmons Foods, Inc./Simmons Prepared Foods, Inc./Simmons Pet Food, Inc./Simmons Feed, | | |
| | 4.625%, 3/1/29 (144A) | | 418,606 |
120,000 | | US Foods, Inc., 4.75%, 2/15/29 (144A) | | 122,400 |
| | Total Food | | $ 978,663 |
| | Forest Products & Paper – 1.5% | | |
96,000 | | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | | $ 95,640 |
300,000 | | Mercer International, Inc., 5.125%, 2/1/29 (144A) | | 308,700 |
285,000 | | Schweitzer-Mauduit International, Inc., 6.875%, 10/1/26 (144A) | | 301,744 |
| | Total Forest Products & Paper | | $ 706,084 |
| | Healthcare-Services – 1.8% | | |
65,000 | | Legacy LifePoint Health LLC, 6.75%, 4/15/25 (144A) | | $ 69,144 |
75,000 | | LifePoint Health, Inc., 5.375%, 1/15/29 (144A) | | 73,125 |
135,000 | | Prime Healthcare Services, Inc., 7.25%, 11/1/25 (144A) | | 145,462 |
22,000 | | RegionalCare Hospital Partners Holdings, Inc./LifePoint Health, Inc., 9.75%, 12/1/26 (144A) | | 23,677 |
57,000 | | Surgery Center Holdings, Inc., 6.75%, 7/1/25 (144A) | | 58,140 |
293,000 | | Surgery Center Holdings, Inc., 10.0%, 4/15/27 (144A) | | 321,568 |
45,000 | | US Acute Care Solutions LLC, 6.375%, 3/1/26 (144A) | | 46,499 |
146,000 | | US Renal Care, Inc., 10.625%, 7/15/27 (144A) | | 153,117 |
| | Total Healthcare-Services | | $ 890,732 |
| | Home Builders – 2.8% | | |
125,000 | | Beazer Homes USA, Inc., 5.875%, 10/15/27 | | $ 130,937 |
182,000 | | Beazer Homes USA, Inc., 6.75%, 3/15/25 | | 187,915 |
167,000 | | Beazer Homes USA, Inc., 7.25%, 10/15/29 | | 185,423 |
108,000 | | Brookfield Residential Properties, Inc./Brookfield Residential US Corp., 6.25%, 9/15/27 (144A) | | 114,075 |
83,000 | | Brookfield Residential Properties, Inc./Brookfield Residential US LLC, 4.875%, 2/15/30 (144A) | | 82,195 |
250,000 | | KB Home, 4.0%, 6/15/31 | | 252,187 |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Home Builders – (continued) | | |
195,000 | | M/I Homes, Inc., 4.95%, 2/1/28 | | $ 203,434 |
147,000 | | Taylor Morrison Communities, Inc., 5.875%, 6/15/27 (144A) | | 166,294 |
55,000 | | Williams Scotsman International, Inc., 4.625%, 8/15/28 (144A) | | 56,799 |
| | Total Home Builders | | $ 1,379,259 |
| | Household Products/Wares – 0.4% | | |
65,000 | | Central Garden & Pet Co., 4.125%, 4/30/31 (144A) | | $ 65,731 |
105,000 | | Spectrum Brands, Inc., 5.5%, 7/15/30 (144A) | | 113,138 |
12,000 | | Spectrum Brands, Inc., 5.75%, 7/15/25 | | 12,297 |
| | Total Household Products/Wares | | $ 191,166 |
| | Housewares – 1.0% | | |
476,000 | | Scotts Miracle-Gro Co., 4.0%, 4/1/31 (144A) | | $ 475,453 |
| | Total Housewares | | $ 475,453 |
| | Internet – 0.7% | | |
110,000 | | Netflix, Inc., 3.625%, 6/15/25 (144A) | | $ 118,122 |
97,000 | | Netflix, Inc., 4.875%, 4/15/28 | | 112,641 |
90,000 | | Netflix, Inc., 5.375%, 11/15/29 (144A) | | 109,314 |
| | Total Internet | | $ 340,077 |
| | Iron & Steel – 1.9% | | |
200,000 | | Carpenter Technology Corp., 6.375%, 7/15/28 | | $ 219,627 |
320,000 | | Cleveland-Cliffs, Inc., 6.75%, 3/15/26 (144A) | | 345,200 |
11,000 | | Cleveland-Cliffs, Inc., 9.875%, 10/17/25 (144A) | | 12,892 |
100,000 | | Commercial Metals Co., 3.875%, 2/15/31 | | 100,625 |
215,000 | | TMS International Corp., 6.25%, 4/15/29 (144A) | | 225,750 |
| | Total Iron & Steel | | $ 904,094 |
| | Leisure Time – 1.6% | | |
65,000 | | Carnival Corp., 7.625%, 3/1/26 (144A) | | $ 70,606 |
35,000 | | Carnival Corp., 10.5%, 2/1/26 (144A) | | 40,749 |
140,000 | | NCL Corp., Ltd., 5.875%, 3/15/26 (144A) | | 146,650 |
40,000 | | NCL Finance, Ltd., 6.125%, 3/15/28 (144A) | | 41,918 |
80,000 | | Royal Caribbean Cruises, Ltd., 5.5%, 4/1/28 (144A) | | 83,784 |
30,000 | | Royal Caribbean Cruises, Ltd., 9.125%, 6/15/23 (144A) | | 32,925 |
73,000 | | Royal Caribbean Cruises, Ltd., 11.5%, 6/1/25 (144A) | | 84,132 |
109,000 | | Viking Cruises, Ltd., 5.875%, 9/15/27 (144A) | | 107,714 |
69,000 | | Viking Cruises, Ltd., 6.25%, 5/15/25 (144A) | | 68,655 |
80,000 | | Viking Ocean Cruises Ship VII, Ltd., 5.625%, 2/15/29 (144A) | | 80,800 |
| | Total Leisure Time | | $ 757,933 |
| | Lodging – 1.2% | | |
70,000 | | Boyd Gaming Corp., 4.75%, 6/15/31 (144A) | | $ 72,732 |
100,000 | | Boyd Gaming Corp., 8.625%, 6/1/25 (144A) | | 110,237 |
135,000 | | Hilton Grand Vacations Borrower Escrow LLC/Hilton Grand Vacations Borrower Esc, 5.0%, | | |
| | 6/1/29 (144A) | | 138,038 |
137,000 | | Station Casinos LLC, 4.5%, 2/15/28 (144A) | | 139,335 |
90,000 | | Travel + Leisure Co., 6.625%, 7/31/26 (144A) | | 101,970 |
| | Total Lodging | | $ 562,312 |
| | Machinery-Construction & Mining – 0.2% | | |
110,000 | | Terex Corp., 5.0%, 5/15/29 (144A) | | $ 114,675 |
| | Total Machinery-Construction & Mining | | $ 114,675 |
The accompanying notes are an integral part of these financial statements.
13
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Media – 4.1% | | |
50,000 | | Audacy Capital Corp., 6.75%, 3/31/29 (144A) | | $ 51,881 |
175,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 5.125%, 5/1/27 (144A) | | 183,558 |
515,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 5.5%, 5/1/26 (144A) | | 532,458 |
200,000 | | CSC Holdings LLC, 5.375%, 2/1/28 (144A) | | 211,516 |
200,000 | | CSC Holdings LLC, 7.5%, 4/1/28 (144A) | | 219,500 |
111,000 | | Diamond Sports Group LLC/Diamond Sports Finance Co., 6.625%, 8/15/27 (144A) | | 54,390 |
106,000 | | Gray Television, Inc., 5.875%, 7/15/26 (144A) | | 109,445 |
80,000 | | News Corp., 3.875%, 5/15/29 (144A) | | 80,800 |
230,000 | | Sinclair Television Group, Inc., 5.5%, 3/1/30 (144A) | | 233,535 |
119,000 | | Sirius XM Radio, Inc., 4.0%, 7/15/28 (144A) | | 122,696 |
200,000 | | Summer BC Bidco B LLC, 5.5%, 10/31/26 (144A) | | 203,410 |
| | Total Media | | $ 2,003,189 |
| | Mining – 1.5% | | |
248,000 | | Coeur Mining, Inc., 5.125%, 2/15/29 (144A) | | $ 245,520 |
200,000 | | First Quantum Minerals, Ltd., 7.25%, 4/1/23 (144A) | | 203,876 |
77,000 | | Hudbay Minerals, Inc., 6.125%, 4/1/29 (144A) | | 82,005 |
81,000 | | Joseph T Ryerson & Son, Inc., 8.5%, 8/1/28 (144A) | | 89,910 |
92,000 | | Novelis Corp., 5.875%, 9/30/26 (144A) | | 95,703 |
| | Total Mining | | $ 717,014 |
| | Miscellaneous Manufacturers – 0.4% | | |
115,000 | | Bombardier, Inc., 7.125%, 6/15/26 (144A) | | $ 119,887 |
70,000 | | Hillenbrand, Inc., 3.75%, 3/1/31 | | 69,410 |
| | Total Miscellaneous Manufacturers | | $ 189,297 |
| | Oil & Gas – 7.2% | | |
151,000 | | Aethon United BR LP/Aethon United Finance Corp., 8.25%, 2/15/26 (144A) | | $ 163,488 |
130,000 | | Ascent Resources Utica Holdings LLC/ARU Finance Corp., 5.875%, 6/30/29 (144A) | | 130,000 |
300,000 | | Baytex Energy Corp., 8.75%, 4/1/27 (144A) | | 302,250 |
65,000 | | Cenovus Energy, Inc., 6.75%, 11/15/39 | | 88,295 |
225,000 | | Colgate Energy Partners III LLC, 7.75%, 2/15/26 (144A) | | 246,656 |
60,000 | | EQT Corp., 3.125%, 5/15/26 (144A) | | 61,333 |
60,000 | | EQT Corp., 3.625%, 5/15/31 (144A) | | 62,550 |
90,000 | | Hilcorp Energy I LP/Hilcorp Finance Co., 6.0%, 2/1/31 (144A) | | 95,319 |
185,000 | | Indigo Natural Resources LLC, 5.375%, 2/1/29 (144A) | | 193,325 |
175,000 | | MEG Energy Corp., 5.875%, 2/1/29 (144A) | | 182,438 |
42,000 | | MEG Energy Corp., 6.5%, 1/15/25 (144A) | | 43,486 |
25,000 | | MEG Energy Corp., 7.125%, 2/1/27 (144A) | | 26,633 |
219,000 | | Neptune Energy Bondco Plc, 6.625%, 5/15/25 (144A) | | 224,847 |
250,000 | | Occidental Petroleum Corp., 4.4%, 4/15/46 | | 240,125 |
35,000 | | Occidental Petroleum Corp., 5.5%, 12/1/25 | | 38,646 |
104,000 | | Parkland Corp., 5.875%, 7/15/27 (144A) | | 110,850 |
156,000 | | PBF Holding Co. LLC/PBF Finance Corp., 6.0%, 2/15/28 | | 106,860 |
95,000 | | PBF Holding Co. LLC/PBF Finance Corp., 9.25%, 5/15/25 (144A) | | 95,702 |
130,000 | | Precision Drilling Corp., 6.875%, 1/15/29 (144A) | | 133,900 |
148,000 | | Shelf Drilling Holdings, Ltd., 8.25%, 2/15/25 (144A) | | 117,586 |
105,000 | | Shelf Drilling Holdings, Ltd., 8.875%, 11/15/24 (144A) | | 108,413 |
249,041 | | Transocean Sentry, Ltd., 5.375%, 5/15/23 (144A) | | 243,438 |
The accompanying notes are an integral part of these financial statements.
14
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Oil & Gas – (continued) | | |
200,000 | | Tullow Oil Plc, 10.25%, 5/15/26 (144A) | | $ 209,860 |
235,000 | | Vine Energy Holdings LLC, 6.75%, 4/15/29 (144A) | | 247,564 |
| | Total Oil & Gas | | $ 3,473,564 |
| | Oil & Gas Services – 0.8% | | |
80,000 | | Archrock Partners LP/Archrock Partners Finance Corp., 6.25%, 4/1/28 (144A) | | $ 83,513 |
77,000 | | Archrock Partners LP/Archrock Partners Finance Corp., 6.875%, 4/1/27 (144A) | | 81,716 |
89,000 | | Exterran Energy Solutions LP/EES Finance Corp., 8.125%, 5/1/25 | | 78,765 |
130,000 | | TechnipFMC Plc, 6.5%, 2/1/26 (144A) | | 140,390 |
| | Total Oil & Gas Services | | $ 384,384 |
| | Packaging & Containers – 2.1% | | |
254,000 | | Crown Cork & Seal Co., Inc., 7.375%, 12/15/26 | | $ 311,150 |
324,000 | | Greif, Inc., 6.5%, 3/1/27 (144A) | | 341,723 |
135,000 | | Intertape Polymer Group, Inc., 4.375%, 6/15/29 (144A) | | 137,026 |
210,000 | | TriMas Corp., 4.125%, 4/15/29 (144A) | | 212,583 |
| | Total Packaging & Containers | | $ 1,002,482 |
| | Pharmaceuticals – 2.4% | | |
80,000 | | Bausch Health Cos., Inc., 5.5%, 11/1/25 (144A) | | $ 82,080 |
105,000 | | Endo Dac/Endo Finance LLC/Endo Finco, Inc., 6.0%, 6/30/28 (144A) | | 70,807 |
83,000 | | Endo Dac/Endo Finance LLC/Endo Finco, Inc., 9.5%, 7/31/27 (144A) | | 84,660 |
200,000 | | Jazz Securities, DAC, 4.375%, 1/15/29 (144A) | | 207,360 |
110,000 | | P&L Development LLC/PLD Finance Corp., 7.75%, 11/15/25 (144A) | | 115,500 |
139,000 | | Par Pharmaceutical, Inc., 7.5%, 4/1/27 (144A) | | 142,128 |
456,000 | | Teva Pharmaceutical Finance Netherlands III BV, 2.8%, 7/21/23 | | 454,399 |
| | Total Pharmaceuticals | | $ 1,156,934 |
| | Pipelines – 4.5% | | |
205,000 | | CQP Holdco LP/BIP-V Chinook Holdco LLC, 5.5%, 6/15/31 (144A) | | $ 213,608 |
49,000 | | DCP Midstream Operating LP, 4.95%, 4/1/22 | | 49,919 |
200,000 | | DCP Midstream Operating LP, 5.375%, 7/15/25 | | 222,740 |
165,000 | | Delek Logistics Partners LP/Delek Logistics Finance Corp., 6.75%, 5/15/25 | | 169,537 |
115,000 | | Delek Logistics Partners LP/Delek Logistics Finance Corp., 7.125%, 6/1/28 (144A) | | 121,325 |
220,000(b)(f) | | Energy Transfer LP, 7.125% (5 Year CMT Index + 531 bps) | | 227,150 |
5,000 | | EnLink Midstream LLC, 5.375%, 6/1/29 | | 5,218 |
40,000 | | EnLink Midstream Partners LP, 5.05%, 4/1/45 | | 34,400 |
99,000 | | EnLink Midstream Partners LP, 5.45%, 6/1/47 | | 87,862 |
116,000 | | EnLink Midstream Partners LP, 5.6%, 4/1/44 | | 104,980 |
80,000 | | Genesis Energy LP/Genesis Energy Finance Corp., 8.0%, 1/15/27 | | 84,050 |
111,000 | | Global Partners LP/GLP Finance Corp., 7.0%, 8/1/27 | | 117,660 |
273,000 | | Harvest Midstream I LP, 7.5%, 9/1/28 (144A) | | 296,478 |
138,000 | | Northriver Midstream Finance LP, 5.625%, 2/15/26 (144A) | | 143,175 |
135,000 | | NuStar Logistics LP, 6.375%, 10/1/30 | | 149,162 |
135,000 | | PBF Logistics LP/PBF Logistics Finance Corp., 6.875%, 5/15/23 | | 132,638 |
| | Total Pipelines | | $ 2,159,902 |
| | REITs – 1.9% | | |
200,000 | | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | | $ 201,500 |
105,000 | | iStar, Inc., 4.25%, 8/1/25 | | 108,019 |
195,000 | | iStar, Inc., 4.75%, 10/1/24 | | 205,237 |
The accompanying notes are an integral part of these financial statements.
15
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | REITs – (continued) | | |
146,000 | | MPT Operating Partnership LP/MPT Finance Corp., 4.625%, 8/1/29 | | $ 156,287 |
93,000 | | Uniti Group LP/Uniti Fiber Holdings, Inc./CSL Capital LLC, 7.875%, 2/15/25 (144A) | | 99,394 |
140,000 | | Uniti Group LP/Uniti Group Finance, Inc./CSL Capital LLC, 6.5%, 2/15/29 (144A) | | 140,350 |
| | Total REITs | | $ 910,787 |
| | Retail – 3.8% | | |
150,000 | | AAG FH LP/AAG FH Finco, Inc., 9.75%, 7/15/24 (144A) | | $ 148,500 |
60,000 | | Ambience Merger Sub, Inc., 7.125%, 7/15/29 (144A) | | 60,525 |
93,000 | | Asbury Automotive Group, Inc., 4.5%, 3/1/28 | | 95,557 |
135,000 | | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | | 134,655 |
20,000 | | GYP Holdings III Corp., 4.625%, 5/1/29 (144A) | | 20,075 |
60,000 | | Ken Garff Automotive LLC, 4.875%, 9/15/28 (144A) | | 61,200 |
60,000 | | L Brands, Inc., 6.625%, 10/1/30 (144A) | | 69,300 |
160,000 | | LCM Investments Holdings II LLC, 4.875%, 5/1/29 (144A) | | 164,000 |
85,000 | | Lithia Motors, Inc., 3.875%, 6/1/29 (144A) | | 88,107 |
110,000 | | Murphy Oil USA, Inc., 3.75%, 2/15/31 (144A) | | 108,762 |
93,000 | | Party City Holdings, Inc., 8.75%, 2/15/26 (144A) | | 99,278 |
90,000 | | Penske Automotive Group, Inc., 3.5%, 9/1/25 | | 93,222 |
220,000 | | Penske Automotive Group, Inc., 3.75%, 6/15/29 | | 221,373 |
155,000 | | QVC, Inc., 4.375%, 9/1/28 | | 158,100 |
77,000 | | QVC, Inc., 4.75%, 2/15/27 | | 81,594 |
50,000 | | SRS Distribution, Inc., 4.625%, 7/1/28 (144A) | | 51,125 |
35,000 | | SRS Distribution, Inc., 6.125%, 7/1/29 (144A) | | 36,019 |
91,000 | | Staples, Inc., 7.5%, 4/15/26 (144A) | | 94,413 |
75,000 | | Victoria’s Secret & Co., 4.625%, 7/15/29 (144A) | | 75,000 |
| | Total Retail | | $ 1,860,805 |
| | Semiconductors – 0.3% | | |
170,000 | | Entegris, Inc., 3.625%, 5/1/29 (144A) | | $ 172,125 |
| | Total Semiconductors | | $ 172,125 |
| | Software – 0.3% | | |
150,000 | | Rackspace Technology Global, Inc., 5.375%, 12/1/28 (144A) | | $ 153,938 |
| | Total Software | | $ 153,938 |
| | Telecommunications – 3.6% | | |
200,000 | | Altice France Holding SA., 6.0%, 2/15/28 (144A) | | $ 198,446 |
260,000 | | Altice France SA., 5.125%, 7/15/29 (144A) | | 261,274 |
78,000 | | CommScope Technologies LLC, 6.0%, 6/15/25 (144A) | | 79,657 |
63,000 | | CommScope, Inc., 8.25%, 3/1/27 (144A) | | 67,334 |
55,000 | | Level 3 Financing, Inc., 3.75%, 7/15/29 (144A) | | 53,488 |
200,000 | | LogMeIn, Inc., 5.5%, 9/1/27 (144A) | | 207,010 |
80,000 | | Lumen Technologies, Inc., 4.0%, 2/15/27 (144A) | | 81,600 |
200,000 | | Lumen Technologies, Inc., 4.5%, 1/15/29 (144A) | | 195,190 |
135,000 | | Plantronics, Inc., 4.75%, 3/1/29 (144A) | | 134,019 |
80,000 | | Switch Ltd., 4.125%, 6/15/29 (144A) | | 82,100 |
180,000 | | T-Mobile USA, Inc., 3.5%, 4/15/31 (144A) | | 186,226 |
185,000 | | Windstream Escrow LLC/Windstream Escrow Finance Corp., 7.75%, 8/15/28 (144A) | | 190,550 |
| | Total Telecommunications | | $ 1,736,894 |
The accompanying notes are an integral part of these financial statements.
16
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Transportation – 1.6% | | |
205,000 | | Danaos Corp., 8.5%, 3/1/28 (144A) | | $ 224,797 |
200,000 | | Seaspan Corp., 6.5%, 4/29/26 (144A) | | 210,750 |
75,000 | | Watco Cos., LLC/Watco Finance Corp., 6.5%, 6/15/27 (144A) | | 80,250 |
250,000 | | Western Global Airlines LLC, 10.375%, 8/15/25 (144A) | | 285,847 |
| | Total Transportation | | $ 801,644 |
| | Trucking & Leasing – 0.2% | | |
85,000 | | Fortress Transportation & Infrastructure Investors LLC, 9.75%, 8/1/27 (144A) | | $ 98,281 |
| | Total Trucking & Leasing | | $ 98,281 |
| | TOTAL CORPORATE BONDS | | |
| | (Cost $39,972,281) | | $ 41,514,348 |
Face | | | | |
Amount | | | | |
USD ($) | | | | |
| | INSURANCE-LINKED SECURITIES – 0.0%† of Net Assets# | | |
| | Reinsurance Sidecars – 0.0%† | | |
| | Multiperil – Worldwide – 0.0%† | | |
50,000+(a)(g) | | Lorenz Re 2018, 7/1/21 | | $ 255 |
25,723+(a)(g) | | Lorenz Re 2019, 6/30/22 | | 2,822 |
| | | | $ 3,077 |
| | Total Reinsurance Sidecars | | $ 3,077 |
| | TOTAL INSURANCE-LINKED SECURITIES | | |
| | (Cost $18,895) | | $ 3,077 |
Principal | | | | |
Amount | | | | |
USD ($) | | | | |
| | SENIOR SECURED FLOATING RATE LOAN INTERESTS – 2.3% of Net Assets*(h) | | |
| | Aerospace & Defense – 0.4% | | |
140,000 | | Grupo Aeromexico, SAB de CV, DIP Tranche 1 Term Loan, 9.0% (LIBOR + 800 bps), 12/31/21 | | $ 141,050 |
40,014 | | Grupo Aeromexico, SAB de CV, DIP Tranche 2 Term Loan, 15.5% (LIBOR + 1,450 bps), 12/31/21 | | 41,064 |
| | Total Aerospace & Defense | | $ 182,114 |
| | Diversified & Conglomerate Service – 0.5% | | |
95,760 | | First Brands Group LLC, 2021 First Lien Term Loan, 6.0% (LIBOR + 500 bps), 3/30/27 | | $ 97,017 |
152,609 | | Team Health Holdings, Inc., Initial Term Loan, 3.75% (LIBOR + 275 bps), 2/6/24 | | 148,521 |
| | Total Diversified & Conglomerate Service | | $ 245,538 |
| | Entertainment & Leisure – 0.6% | | |
276,500 | | Enterprise Development Authority, Term Loan B, 5.0% (LIBOR + 425 bps), 2/28/28 | | $ 277,882 |
| | Total Entertainment & Leisure | | $ 277,882 |
| | Healthcare, Education & Childcare – 0.0%† | | |
24,938 | | Surgery Center Holdings, Inc. 2021 Term Loan, 4.5% (LIBOR + 375 bps), 8/31/26 | | $ 25,076 |
| | Total Healthcare, Education & Childcare | | $ 25,076 |
| | Securities & Trusts – 0.5% | | |
214,862 | | Spectacle Gary Holdings LLC, Closing Date Term Loan, 11.0% (LIBOR + 900 bps), 12/23/25 | | $ 234,199 |
15,561 | | Spectacle Gary Holdings LLC, Delayed Draw Term Loan, 11.0% (LIBOR + 900 bps), 12/23/25 | | 16,962 |
| | Total Securities & Trusts | | $ 251,161 |
| | Telecommunications – 0.2% | | |
96,380 | | Commscope, Inc., Initial Term Loan, 3.354% (LIBOR + 325 bps), 4/6/26 | | $ 96,078 |
| | Total Telecommunications | | $ 96,078 |
The accompanying notes are an integral part of these financial statements.
17
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Principal | | | | |
Amount | | | | |
USD ($) | | | | Value |
| | Utilities – 0.1% | | |
59,400 | | PG & E Corp., Term Loan, 3.5% (LIBOR + 300 bps), 6/23/25 | | $ 58,695 |
| | Total Utilities | | $ 58,695 |
| | TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | | |
| | (Cost $1,083,433) | | $ 1,136,544 |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS – 2.1% of Net Assets | | |
684,900(c) | | U.S. Treasury Bills, 8/5/21 | | $ 684,871 |
315,100(c) | | U.S. Treasury Bills, 8/17/21 | | 315,081 |
| | TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS | | |
| | (Cost $999,956) | | $ 999,952 |
Shares | | | | |
| | RIGHTS/WARRANTS – 0.1% of Net Assets | | |
| | Health Care Providers & Services – 0.0%† | | |
80^(a)(i) | | Option Care Health, Inc. 6/30/25 | | $ 167 |
80^(a)(i) | | Option Care Health, Inc. 6/30/25 | | 135 |
| | Total Health Care Providers & Services | | $ 302 |
| | Transportation – 0.1% | | |
1,007^(a)(j) | | Syncreon Group, 10/01/24 | | $ 25,447 |
| | Total Transportation | | $ 25,447 |
| | TOTAL RIGHTS/WARRANTS | | |
| | (Cost $0) | | $ 25,749 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 94.9% | | |
| | (Cost $44,249,935) | | $ 45,923,094 |
| | | | | Change | |
| | | | | in Net | |
| | | | Net | Unrealized | |
| | | Dividend | Realized | Appreciation | |
| | | Income | Gain (Loss) | (Depreciation) | Value |
| | AFFILIATED ISSUER – 1.1% | | | | |
| | CLOSED-END FUND – 1.1% of Net Assets | | | | |
60,000(k) | | Pioneer ILS Interval Fund | $ — | $ — | 8,400 | $ 517,800 |
| | TOTAL CLOSED-END FUND | | | | |
| | (Cost $636,000) | | | | $ 517,800 |
| | TOTAL INVESTMENTS IN AFFILIATED ISSUER – 1.1% | | | |
| | (Cost $636,000) | | | | $ 517,800 |
| | OTHER ASSETS AND LIABILITIES – 4.0% | | | | $ 1,957,707 |
| | NET ASSETS – 100.0% | | | | $ 48,398,601 |
bps | Basis Points. |
CMT | Constant Maturity Treasury. |
LIBOR | London Interbank Offered Rate. |
REIT | Real Estate Investment Trust. |
(144A) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified |
| institutional buyers in a transaction exempt from registration. At June 30, 2021, the value of these securities amounted to $34,410,127, or |
| 71.1% of net assets. |
† | Amount rounds to less than 0.1%. |
*
| Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major European banks, such as LIBOR, (ii) the prime rate offered by one or more major United States banks, (iii) the rate of a certificate of deposit or (iv) other base lending rates used by commercial lenders. The interest rate shown is the rate accruing at June 30, 2021. |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
| |
+ | Security that used significant unobservable inputs to determine its value. |
^ | Security is valued using fair value methods (other than supplied by independent pricing services). |
(a) | Non-income producing security. |
(b) | Security is perpetual in nature and has no stated maturity date. |
(c) | Security issued with a zero coupon. Income is recognized through accretion of discount. |
(d) | Debt obligation initially issued at one coupon which converts to a higher coupon at a specific date. The rate shown is the rate at June 30, 2021. |
(e) | Payment-in-kind (PIK) security which may pay interest in the form of additional principal amount. |
(f) | The interest rate is subject to change periodically. The interest rate and/or reference index and spread shown at June 30, 2021. |
(g) | Issued as preference shares. |
(h) | Floating rate note. Coupon rate, reference index and spread shown at June 30, 2021. |
(i) | Option Care Health, Inc. warrants are exercisable into 160 shares. |
(j) | Syncreon Group warrants are exercisable into 1,007 shares. |
(k) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
# | Securities are restricted as to resale. |
| Acquisition | | |
Restricted Securities | date | Cost | Value |
Lorenz Re 2018 | 6/26/2018 | $10,733 | $ 255 |
Lorenz Re 2019 | 7/10/2019 | 8,162 | 2,822 |
Total Restricted Securities | | | $3,077 |
% of Net assets | | | 0.0%† |
† | Amount rounds to less than 0.1%. |
| | | | | | |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | | | | |
Currency | | Currency | | | Settlement | Unrealized |
Purchased | In Exchange for | Sold | Deliver | Counterparty | Date | Appreciation |
USD | 111,342 | EUR | (91,000) | Goldman Sachs International | 8/26/21 | $ 3,416 |
USD | 121,021 | EUR | (100,000) | State Street Bank & Trust Co. | 7/27/21 | 2,493 |
TOTAL FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | | | $ 5,909 |
SWAP CONTRACTS | | | | | | |
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – BUY PROTECTION | | | | |
Notional | | Pay/ | Annual | Expiration | Premiums | Unrealized | Market |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | Paid | (Depreciation) | Value |
1,640,000 | Markit CDX North America High Yield Index | | | | | | |
| Series 36 | Receive | 5.00% | 6/20/26 | $ 2,505 | $(171,079)
| $(168,574) |
TOTAL CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – BUY PROTECTION | | $ 2,505 | $(171,079)
| $(168,574) |
| | | | | | | |
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – SELL PROTECTION | | | | |
|
Notional | | Pay/ | Annual | Expiration | Premiums | Unrealized | Market |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | (Received) | Appreciation | Value |
309,616 | Markit CDX North America High Yield | | | | | | |
| Index Series 31 | Receive | 5.00% | 12/20/21 | $(2,451) | $ 9,214 | $ 6,763 |
TOTAL CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – SELL PROTECTION | | $(2,451) | $ 9,214 | $ 6,763 |
TOTAL SWAP CONTRACTS | | | | $ 54 | $(161,865)
| $(161,811) |
(1) | The notional amount is the maximum amount that a seller of credit protection would be obligated to pay upon occurrence of a credit event. |
(2) | Receives Quarterly. |
Principal amounts are denominated in U.S. dollars (“USD”) unless otherwise noted.
EUR — Euro
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021, aggregated $22,001,290 and $17,030,166, respectively.
The accompanying notes are an integral part of these financial statements.
19
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which the Adviser serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $44,978,487 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 2,119,986 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (813,481) |
Net unrealized appreciation | $ 1,306,505 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments: | | | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Common Stocks | | | | | | | | | | | | |
Energy Equipment & Services | | $ | 174,153 | | | $ | 58,039 | | | $ | — | | | $ | 232,192 | |
Convertible Preferred Stock | | | 144,990 | | | | — | | | | — | | | | 144,990 | |
Convertible Corporate Bonds | | | — | | | | 1,866,242 | | | | — | | | | 1,866,242 | |
Corporate Bonds | | | — | | | | 41,514,348 | | | | — | | | | 41,514,348 | |
Insurance-Linked Securities | | | | | | | | | | | | | | | | |
Reinsurance Sidecars | | | | | | | | | | | | | | | | |
Multiperil - Worldwide | | | — | | | | — | | | | 3,077 | | | | 3,077 | |
Senior Secured Floating Rate Loan Interests | | | — | | | | 1,136,544 | | | | — | | | | 1,136,544 | |
U.S. Government and Agency Obligations | | | — | | | | 999,952 | | | | — | | | | 999,952 | |
Affiliated Closed-End Fund | | | — | | | | 517,800 | | | | — | | | | 517,800 | |
Rights/Warrants | | | — | | | | 25,749 | | | | — | | | | 25,749 | |
Total Investments in Securities | | $ | 319,143 | | | $ | 46,118,674 | | | $ | 3,077 | | | $ | 46,440,894 | |
| |
Other Financial Instruments | | | | | | | | | | | | | | | | |
Net unrealized appreciation on forward foreign currency exchange contracts | | $ | — | | | $ | 5,909 | | | $ | — | | | $ | 5,909 | |
Swap contracts, at value | | | — | | | | (161,811 | ) | | | — | | | | (161,811 | ) |
Total Other Financial Instruments | | $ | — | | | $ | (155,902 | ) | | $ | — | | | $ | (155,902 | ) |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
| | | | | | | | | |
| | Insurance- | | | | | | | |
| | Linked | | | Rights/ | | | | |
| | Securities | | | Warrants | | | Total | |
Balance as of 12/31/20 | | $ | 2,290 | | | $ | 162 | * | | $ | 2,452 | |
Realized gain (loss)(1) | | | — | | | | — | | | | — | |
Change in unrealized appreciation (depreciation)(2) | | | 1,757 | | | | — | | | | 1,757 | |
Accrued discounts/premiums | | | — | | | | — | | | | — | |
Purchases | | | — | | | | — | | | | — | |
Sales | | | (970 | ) | | | — | | | | (970 | ) |
Transfers in to Level 3** | | | — | | | | — | | | | — | |
Transfer out of Level 3** | | | — | | | | (162 | )* | | | (162 | ) |
Balance as of 6/30/21 | | $ | 3,077 | | | $ | — | | | $ | 3,077 | |
(1) | Realized gain (loss) on these securities is included in the realized gain (loss) from investments on the Statement of Operations. |
(2) | Unrealized appreciation (depreciation) on these securities is included in the change in unrealized appreciation (depreciation) from investments on the Statement of Operations. |
* | Includes security that is valued at $0. |
** | Transfers are calculated on the beginning of period value. For the six months ended June 31, 2021, securities with an aggregate market value of $162 transferred from Level 3 to Level 2 as there were observable inputs available to determine their value. There were no other transfers in or out of Level 3. |
| |
Net change in unrealized appreciation (depreciation) of Level 3 investments still held and considered Level 3 at June 30, 2021: | $1,757 |
The accompanying notes are an integral part of these financial statements.
20
| |
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
| | | |
ASSETS: | | | |
Investments in unaffiliated issuers, at value (cost $44,249,935) | | $ | 45,923,094 | |
Investments in affiliated issuers, at value (cost $636,000) | | | 517,800 | |
Cash | | | 1,337,425 | |
Foreign currencies, at value (cost $249,084) | | | 241,787 | |
Swaps collateral | | | 109,744 | |
Due from broker for swaps | | | 162,837 | |
Net unrealized appreciation on forward foreign currency exchange contracts | | | 5,909 | |
Receivables — | | | | |
Investment securities sold | | | 235,217 | |
Portfolio shares sold | | | 22,170 | |
Interest | | | 633,618 | |
Due from the Adviser | | | 9,522 | |
Other assets | | | 951 | |
Total assets | | $ | 49,200,074 | |
| | | |
|
LIABILITIES: | | | | |
Payables — | | | | |
Investment securities purchased | | $ | 558,250 | |
Portfolio shares repurchased | | | 1,938 | |
Trustees’ fees | | | 385 | |
Swaps collateral | | | 20,277 | |
Variation margin for centrally cleared swap contracts | | | 291 | |
Swap contracts, at value (net premiums paid $54) | | | 161,811 | |
Due to affiliates | | | 11,767 | |
Accrued expenses | | | 46,754 | |
Total liabilities | | $ | 801,473 | |
| | | |
|
NET ASSETS: | | | | |
Paid-in capital | | $ | 48,104,806 | |
Distributable earnings | | | 293,795 | |
Net assets | | $ | 48,398,601 | |
| | | |
|
NET ASSET VALUE PER SHARE: | | | | |
No par value (unlimited number of shares authorized) | | | | |
Class I (based on $35,556,674/3,764,815 shares) | | $ | 9.44 | |
Class II (based on $12,841,927/1,379,223 shares) | | $ | 9.31 | |
The accompanying notes are an integral part of these financial statements.
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Statement of Operations (unaudited) | |
| | | | | | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | | | | |
INVESTMENT INCOME: | | | | | | |
Interest from unaffiliated issuers | | $ | 1,270,055 | | | | |
Dividends from unaffiliated issuers | | | 3,563 | | | | |
Total investment income | | | | | | $ | 1,273,618 | |
EXPENSES: | | | | | | | | |
Management fees | | $ | 147,404 | | | | | |
Administrative expense | | | 33,481 | | | | | |
Distribution fees | | | | | | | | |
Class II | | | 13,679 | | | | | |
Custodian fees | | | 9,357 | | | | | |
Professional fees | | | 30,755 | | | | | |
Printing expense | | | 19,792 | | | | | |
Pricing fees | | | 9,238 | | | | | |
Trustees’ fees | | | 4,163 | | | | | |
Miscellaneous | | | 1,900 | | | | | |
Total expenses | | | | | | $ | 269,769 | |
Less fees waived and expenses reimbursed by the Adviser | | | | | | | (51,993 | ) |
Net expenses | | | | | | $ | 217,776 | |
Net investment income | | | | | | $ | 1,055,842 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
Net realized gain (loss) on: | | | | | | | | |
Investments in unaffiliated issuers | | $ | 741,744 | | | | | |
Forward foreign currency exchange contracts | | | (1,015 | ) | | | | |
Swap contracts | | | 159,991 | | | | | |
Other assets and liabilities denominated in foreign currencies | | | (397 | ) | | $ | 900,323 | |
Change in net unrealized appreciation (depreciation) on: | | | | | | | | |
Investments in unaffiliated issuers | | $ | 135,707 | | | | | |
Investments in affiliated issuers | | | 8,400 | | | | | |
Forward foreign currency exchange contracts | | | 9,384 | | | | | |
Swap contracts | | | (206,518 | ) | | | | |
Unfunded loan commitments | | | (1,096 | ) | | | | |
Other assets and liabilities denominated in foreign currencies | | | (7,333 | ) | | $ | (61,456 | ) |
Net realized and unrealized gain (loss) on investments | | | | | | $ | 838,867 | |
Net increase in net assets resulting from operations | | | | | | $ | 1,894,709 | |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| | | | | | |
| | Six Months | | | | |
| | Ended | | | | |
| | 6/30/21 | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | |
FROM OPERATIONS: | | | | | | |
Net investment income (loss) | | $ | 1,055,842 | | | $ | 2,132,091 | |
Net realized gain (loss) on investments | | | 900,323 | | | | (2,075,577 | ) |
Change in net unrealized appreciation (depreciation) on investments | | | (61,456 | ) | | | 711,921 | |
Net increase in net assets resulting from operations | | $ | 1,894,709 | | | $ | 768,435 | |
DISTRIBUTIONS TO SHAREOWNERS: | | | | | | | | |
Class I ($0.24 and $0.48 per share, respectively) | | $ | (889,095 | ) | | $ | (1,780,149 | ) |
Class II ($0.23 and $0.45 per share, respectively) | | | (267,507 | ) | | | (456,509 | ) |
Total distributions to shareowners | | $ | (1,156,602 | ) | | $ | (2,236,658 | ) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | | | | | | |
Net proceeds from sales of shares | | $ | 10,721,513 | | | $ | 16,972,174 | |
Reinvestment of distributions | | | 1,156,602 | | | | 2,236,658 | |
Cost of shares repurchased | | | (6,560,339 | ) | | | (22,691,653 | ) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | | $ | 5,317,776 | | | $ | (3,482,821 | ) |
Net increase (decrease) in net assets | | $ | 6,055,883 | | | $ | (4,951,044 | ) |
NET ASSETS: | | | | | | | | |
Beginning of period | | $ | 42,342,718 | | | $ | 47,293,762 | |
End of period | | $ | 48,398,601 | | | $ | 42,342,718 | |
| | | | | | | | | | | | |
| | Six Months | | | Six Months | | | | | | | |
| | Ended | | | Ended | | | | | | | |
| | 6/30/21 | | | 6/30/21 | | | Year Ended | | | Year Ended | |
| | Shares | | | Amount | | | 12/31/20 | | | 12/31/20 | |
| | (unaudited) | | | (unaudited) | | | Shares | | | Amount | |
Class I | | | | | | | | | | | | |
Shares sold | | | 272,405 | | | $ | 2,549,132 | | | | 480,687 | | | $ | 4,158,198 | |
Reinvestment of distributions | | | 95,001 | | | | 889,095 | | | | 202,848 | | | | 1,780,149 | |
Less shares repurchased | | | (283,895 | ) | | | (2,653,744 | ) | | | (723,721 | ) | | | (6,405,539 | ) |
Net increase (decrease) | | | 83,511 | | | $ | 784,483 | | | | (40,186 | ) | | $ | (467,192 | ) |
Class II | | | | | | | | | | | | | | | | |
Shares sold | | | 887,405 | | | $ | 8,172,381 | | | | 1,476,731 | | | $ | 12,813,976 | |
Reinvestment of distributions | | | 29,023 | | | | 267,507 | | | | 53,056 | | | | 456,509 | |
Less shares repurchased | | | (423,933 | ) | | | (3,906,595 | ) | | | (1,872,863 | ) | | | (16,286,114 | ) |
Net increase (decrease) | | | 492,495 | | | $ | 4,533,293 | | | | (343,076 | ) | | $ | (3,015,629 | ) |
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| | | | | | | | | | | | | | | | | | |
| | Six Months | | | | | | | | | | | | | | | | |
| | Ended | | | | | | | | | | | | | | | | |
| | 6/30/21
| | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | (unaudited)
| | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class I | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | $ | 9.29 | | | $ | 9.58 | | | $ | 8.79 | | | $ | 9.53 | | | $ | 9.31 | | | $ | 8.55 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.22 | | | $ | 0.46 | | | $ | 0.47 | | | $ | 0.44 | | | $ | 0.43 | | | $ | 0.46 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 0.17 | | | | (0.27 | ) | | | 0.78 | | | | (0.74 | ) | | | 0.22 | | | | 0.74 | |
Net increase (decrease) from investment operations | | $ | 0.39 | | | $ | 0.19 | | | $ | 1.25 | | | $ | (0.30 | ) | | $ | 0.65 | | | $ | 1.20 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.24 | ) | | $ | (0.48 | ) | | $ | (0.46 | ) | | $ | (0.44 | ) | | $ | (0.43 | ) | | $ | (0.44 | ) |
Total distributions | | $ | (0.24 | ) | | $ | (0.48 | ) | | $ | (0.46 | ) | | $ | (0.44 | ) | | $ | (0.43 | ) | | $ | (0.44 | ) |
Net increase (decrease) in net asset value | | $ | 0.15 | | | $ | (0.29 | ) | | $ | 0.79 | | | $ | (0.74 | ) | | $ | 0.22 | | | $ | 0.76 | |
Net asset value, end of period | | $ | 9.44 | | | $ | 9.29 | | | $ | 9.58 | | | $ | 8.79 | | | $ | 9.53 | | | $ | 9.31 | |
Total return (b) | | | 4.25 | %(c) | | | 2.37 | % | | | 14.44 | % | | | (3.30 | )% | | | 7.14 | % | | | 14.35 | % |
Ratio of net expenses to average net assets | | | 0.90 | %(d) | | | 1.02 | % | | | 1.03 | % | | | 1.03 | % | | | 0.91 | % | | | 0.92 | % |
Ratio of net investment income (loss) to | | | | | | | | | | | | | | | | | | | | | | | | |
average net assets | | | 4.74 | %(d) | | | 5.15 | % | | | 5.03 | % | | | 4.76 | % | | | 4.57 | % | | | 5.24 | % |
Portfolio turnover rate | | | 40 | %(c) | | | 90 | % | | | 66 | % | | | 45 | % | | | 44 | % | | | 57 | % |
Net assets, end of period (in thousands) | | $ | 35,557 | | | $ | 34,218 | | | $ | 35,652 | | | $ | 33,476 | | | $ | 42,728 | | | $ | 48,953 | |
Ratios with no waiver of fees and assumption of | | | | | | | | | | | | | | | | | | | | | | | | |
expenses by the Adviser and no reduction for | | | | | | | | | | | | | | | | | | | | | | | | |
fees paid indirectly: | | | | | | | | | | | | | | | | | | | | | | | | |
Total expenses to average net assets | | | 1.13 | %(d) | | | 1.10 | % | | | 1.07 | % | | | 1.07 | % | | | 0.91 | % | | | 0.92 | % |
Net investment income (loss) to average net assets | | | 4.51 | %(d) | | | 5.07 | % | | | 4.99 | % | | | 4.72 | % | | | 4.57 | % | | | 5.24 | % |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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| | Six Months | | | | | | | | | | | | | | | | |
| | Ended | | | | | | | | | | | | | | | | |
| | 6/30/21 | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | | | Year Ended | |
| | (unaudited)
| | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class II | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | $ | 9.16 | | | $ | 9.47 | | | $ | 8.68 | | | $ | 9.45 | | | $ | 9.23 | | | $ | 8.49 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.20 | | | $ | 0.42 | | | $ | 0.44 | | | $ | 0.41 | | | $ | 0.41 | | | $ | 0.43 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 0.18 | | | | (0.28 | ) | | | 0.78 | | | | (0.77 | ) | | | 0.22 | | | | 0.72 | |
Net increase (decrease) from investment operations | | $ | 0.38 | | | $ | 0.14 | | | $ | 1.22 | | | $ | (0.36 | ) | | $ | 0.63 | | | $ | 1.15 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.23 | ) | | $ | (0.45 | ) | | $ | (0.43 | ) | | $ | (0.41 | ) | | $ | (0.41 | ) | | $ | (0.41 | ) |
Total distributions | | $ | (0.23 | ) | | $ | (0.45 | ) | | $ | (0.43 | ) | | $ | (0.41 | ) | | $ | (0.41 | ) | | $ | (0.41 | ) |
Net increase (decrease) in net asset value | | $ | 0.15 | | | $ | (0.31 | ) | | $ | 0.79 | | | $ | (0.77 | ) | | $ | 0.22 | | | $ | 0.74 | |
Net asset value, end of period | | $ | 9.31 | | | $ | 9.16 | | | $ | 9.47 | | | $ | 8.68 | | | $ | 9.45 | | | $ | 9.23 | |
Total return (b) | | | 4.14 | %(c) | | | 1.87 | % | | | 14.28 | % | | | (3.94 | )% | | | 6.89 | %(d) | | | 13.89 | % |
Ratio of net expenses to average net assets | | | 1.15 | %(e) | | | 1.26 | % | | | 1.28 | % | | | 1.28 | % | | | 1.16 | % | | | 1.16 | % |
Ratio of net investment income (loss) to average | | | | | | | | | | | | | | | | | | | | | | | | |
net assets | | | 4.40 | %(e) | | | 4.81 | % | | | 4.79 | % | | | 4.50 | % | | | 4.31 | % | | | 4.91 | % |
Portfolio turnover rate | | | 40 | %(c) | | | 90 | % | | | 66 | % | | | 45 | % | | | 44 | % | | | 57 | % |
Net assets, end of period (in thousands) | | $ | 12,842 | | | $ | 8,125 | | | $ | 11,642 | | | $ | 8,085 | | | $ | 11,594 | | | $ | 11,529 | |
Ratios with no waiver of fees and assumption of | | | | | | | | | | | | | | | | | | | | | | | | |
expenses by the Adviser and no reduction for | | | | | | | | | | | | | | | | | | | | | | | | |
fees paid indirectly: | | | | | | | | | | | | | | | | | | | | | | | | |
Total expenses to average net assets | | | 1.38 | %(e) | | | 1.33 | % | | | 1.32 | % | | | 1.32 | % | | | 1.16 | % | | | 1.16 | % |
Net investment income (loss) to average net assets | | | 4.17 | %(e) | | | 4.74 | % | | | 4.74 | % | | | 4.45 | % | | | 4.31 | % | | | 4.91 | % |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2017, the total return would have been 6.83%. |
(e) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer High Yield VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Portfolio is to maximize total return through a combination of income and capital appreciation.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same portfolio of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
In March 2020, FASB issued an Accounting Standard Update, ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (“LIBOR”) and other LIBOR-based reference rates at the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the Portfolio’s investments, derivatives, debt and other contracts, if applicable, that will undergo reference rate-related modifications as a result of the reference rate reform.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Fixed-income securities are valued by using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or
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instrument. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities, historical trading patterns in the market for fixed-income securities and/or other factors. Non-U.S. debt securities that are listed on an exchange will be valued at the bid price obtained from an independent third party pricing service. When independent third party pricing services are unable to supply prices, or when prices or market quotations are considered to be unreliable, the value of that security may be determined using quotations from one or more broker-dealers.
Loan interests are valued in accordance with guidelines established by the Board of Trustees at the mean between the last available bid and asked prices from one or more brokers or dealers as obtained from Loan Pricing Corporation, an independent third party pricing service. If price information is not available from Loan Pricing Corporation, or if the price information is deemed to be unreliable, price information will be obtained from an alternative loan interest pricing service. If no reliable price quotes are available from either the primary or alternative pricing service, broker quotes will be solicited.
Event-linked bonds are valued at the bid price obtained from an independent third party pricing service. Other insurance-linked securities (including reinsurance sidecars, collateralized reinsurance and industry loss warranties) may be valued at the bid price obtained from an independent pricing service, or through a third party using a pricing matrix, insurance industry valuation models, or other fair value methods or techniques to provide an estimated value of the instrument.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
Forward foreign currency exchange contracts are valued daily using the foreign exchange rate or, for longer term forward contract positions, the spot currency rate and the forward points on a daily basis, in each case provided by a third party pricing service. Contracts whose forward settlement date falls between two quoted days are valued by interpolation.
Swap contracts, including interest rate swaps, caps and floors (other than centrally cleared swap contracts), are valued at the dealer quotations obtained from reputable International Swap Dealers Association members. Centrally cleared swaps are valued at the daily settlement price provided by the central clearing counterparty.
Shares of open-end registered investment companies (including money market mutual funds) are valued at such funds’ net asset value. Shares of exchange-listed closed-end funds are valued by using the last sale price on the principal exchange where they are traded. Shares of closed-end interval funds that offer their shares at net asset value are valued at such funds’ net asset value.
Securities or loan interests for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, four securities were valued using fair value methods (in addition to securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance pricing model) representing 0.2% of net assets. The value of these fair valued securities was $83,788.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) |
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Principal amounts of mortgage-backed securities are adjusted for monthly paydowns. Premiums and discounts related to certain mortgage-backed securities are amortized or accreted in proportion to the monthly paydowns. All discounts/premiums on purchase prices of debt securities are accreted/amortized for financial reporting purposes over the life of the respective securities, and such accretion/amortization is included in interest income.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| 2020 |
Distributions paid from: | |
Ordinary income | $2,236,658 |
Total | $2,236,658 |
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The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2020:
| 2020 |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 429,171 |
Capital loss carryforward | (2,285,325) |
Net unrealized appreciation | 1,411,842 |
Total | $ (444,312) |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales, the mark to market of swaps, forward currency, and adjustments relating to credit default swaps and catastrophe bonds.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of the adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated among the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
The Portfolio declares as daily dividends substantially all of its net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates. Dividends and distributions to shareowners are recorded on the ex-dividend date.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Portfolio invests in below-investment-grade (high-yield) debt securities and preferred stocks. Some of these high-yield securities may be convertible into equity securities of the issuer. Debt securities rated below-investment-grade are commonly referred to as “junk bonds” and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate). Plans are underway to phase out the use of LIBOR. The UK Financial Conduct Authority (“FCA”) and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will no longer be published after June 30, 2023. It is possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a
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Notes to Financial Statements 6/30/21 (unaudited) (continued) |
“synthetic” basis, but any such publications would be considered non-representative of the underlying markets. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), the U.S. Federal Reserve began publishing a Secured Overnight Funding Rate (“SOFR”) that is intended to replace U.S. Dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication, such as SONIA in the United Kingdom. Markets are slowly developing in response to these new rates, and transition planning is at a relatively early stage. Neither the effect of the transition process nor its ultimate success is known. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. The effect of any changes to — or discontinuation of —LIBOR on the portfolio will vary depending on, among other things, provisions in individual contracts and whether, how, and when industry participants develop and adopt new reference rates and alternative reference rates for both legacy and new products and instruments. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could materialize prior to the end of 2021.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
G. Restricted Securities
Restricted Securities are subject to legal or contractual restrictions on resale. Restricted securities generally are resold in transactions exempt from registration under the Securities Act of 1933. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933.
Disposal of restricted investments may involve negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted investments held by the Portfolio at June 30, 2021 are listed in the Schedule of Investments.
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H. Insurance-Linked Securities (“ILS”)
The Portfolio invests in ILS. The Portfolio could lose a portion or all of the principal it has invested in an ILS, and the right to additional interest or dividend payments with respect to the security, upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events, generally, are hurricanes, earthquakes, or other natural events of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to accurately predict whether a trigger event will occur, and accordingly, ILS carry significant risk. The Portfolio is entitled to receive principal, and interest and/or dividend payments so long as no trigger event occurs of the description and magnitude specified by the instrument. In addition to the specified trigger events, ILS may expose the Portfolio to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax consequences.
The Portfolio’s investments in ILS may include event-linked bonds. ILS also may include special purpose vehicles (“SPVs”) or similar instruments structured to comprise a portion of a reinsurer’s catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks to insurance or reinsurance companies through a collateralized instrument, known as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties (“ILWs”). A traditional ILW takes the form of a bilateral reinsurance contract, but there are also products that take the form of derivatives, collateralized structures, or exchange-traded instruments.
Where the ILS are based on the performance of underlying reinsurance contracts, the Portfolio has limited transparency into the individual underlying contracts, and therefore must rely upon the risk assessment and sound underwriting practices of the issuer. Accordingly, it may be more difficult for the Adviser to fully evaluate the underlying risk profile of the Portfolio’s structured reinsurance investments, and therefore the Portfolio’s assets are placed at greater risk of loss than if the Adviser had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Portfolio. These securities may be difficult to purchase, sell or unwind. Illiquid securities also may be difficult to value. If the Portfolio is forced to sell an illiquid asset, the Portfolio may be forced to sell at a loss.
Additionally, the Portfolio may gain exposure to ILS by investing in a closed-end interval fund, Pioneer ILS Interval Fund, an affiliate of the Adviser. The Portfolio’s investment in Pioneer ILS Interval Fund at June 30, 2021, is listed in the Schedule of Investments.
I. Forward Foreign Currency Exchange Contracts
The Portfolio may enter into forward foreign currency exchange contracts (“contracts”) for the purchase or sale of a specific foreign currency at a fixed price on a future date. All contracts are marked-to-market daily at the applicable exchange rates, and any resulting unrealized appreciation or depreciation is recorded in the Portfolio’s financial statements. The Portfolio records realized gains and losses at the time a contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 7).
During the six months ended June 30, 2021, the Portfolio had entered into various forward foreign currency exchange contracts that obligated the Portfolio to deliver or take delivery of currencies at specified future maturity dates. Alternatively, prior to the settlement date of a forward foreign currency exchange contract, the Portfolio may close out such contract by entering into an offsetting contract.
The average market value of forward foreign currency exchange contracts open during the six months ended June 30, 2021, was $(268,401). Open forward foreign currency exchange contracts outstanding at June 30, 2021, are listed in the Schedule of Investments.
J. Credit Default Swap Contracts
A credit default swap is a contract between a buyer of protection and a seller of protection against a pre defined credit event or an underlying reference obligation, which may be a single security or a basket or index of securities. The Portfolio may buy or sell credit default swap contracts to seek to increase the Portfolio’s income, or to attempt to hedge the risk of default on portfolio securities. A credit default swap index is used to hedge risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Portfolio would be required to pay the notional (or other agreed-upon) value of the referenced debt obligation to the counterparty in the event of a default by a U.S. or foreign corporate issuer of a debt obligation, which would likely result in a loss to the Portfolio. In return, the Portfolio would receive from the counterparty a periodic stream of payments during the term of the contract, provided that no event of default occurred. The maximum exposure of loss to the
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Notes to Financial Statements 6/30/21 (unaudited) (continued) |
seller would be the notional value of the credit default swaps outstanding. If no default occurs, the Portfolio would keep the stream of payments and would have no payment obligation. The Portfolio may also buy credit default swap contracts in order to hedge against the risk of default of debt securities, in which case the Portfolio would function as the counterparty referenced above.
As a buyer of protection, the Portfolio makes an upfront or periodic payment to the protection seller in exchange for the right to receive a contingent payment. An upfront payment made by the Portfolio, as the protection buyer, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Periodic payments received or paid by the Portfolio are recorded as realized gains or losses on the Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations supplied by independent sources, and the change in value, if any, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Payments received or made as a result of a credit event or upon termination of the contract are recognized, net of the appropriate amount of the upfront payment, as realized gains or losses on the Statement of Operations.
Credit default swap contracts involving the sale of protection may involve greater risks than if the Portfolio had invested in the referenced debt instrument directly. Credit default swap contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Portfolio is a protection buyer and no credit event occurs, it will lose its investment. If the Portfolio is a protection seller and a credit event occurs, the value of the referenced debt instrument received by the Portfolio, together with the periodic payments received, may be less than the amount the Portfolio pays to the protection buyer, resulting in a loss to the Portfolio. In addition, obligations under sell protection credit default swaps may be partially offset by net amounts received from settlement of buy protection credit default swaps entered into by the Portfolio for the same reference obligation with the same counterparty.
Certain swap contracts that are cleared through a central clearinghouse are referred to as centrally cleared swaps. All payments made or received by the Portfolio are pursuant to a centrally cleared swap contract with the central clearing party rather than the original counterparty. Upon entering into a centrally cleared swap contract, the Portfolio is required to make an initial margin deposit, either in cash or in securities. The daily change in value on open centrally cleared contracts is recorded as “Variation margin for centrally cleared swap contracts” on the Statement of Assets and Liabilities. Cash received from or paid to the broker related to previous margin movement is held in a segregated account at the broker and is recorded as either “Due from broker for swaps” or “Due to broker for swaps” on the Statement of Assets and Liabilities. The amount of cash deposited with a broker as collateral at June 30, 2021, is recorded as “Swaps collateral” on the Statement of Assets and Liabilities.
The average market value of credit default swap contracts open during the six months ended June 30, 2021, was $(82,434). Open credit default swap contracts at June 30, 2021, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.65% of the Portfolio’s average daily net assets up to $1 billion and 0.60% of the Portfolio’s average daily net assets over $1 billion. For the six months ended June 30, 2021, the effective management fee (excluding waivers and/or assumption of expenses and acquired fund fees and expenses) was equivalent to 0.63% (annualized) of the Portfolio’s average daily net assets.
The Adviser has agreed to waive its management fee with respect to any portion of the Portfolio’s assets invested in Pioneer ILS Interval Fund, an affiliated fund managed by the Adviser. For the six months ended June 30, 2021, the Adviser waived $4,421 in management fees with respect to the Portfolio, which is reflected on the Statement of Operations as an expense waiver.
Effective October 1, 2020, the Adviser has contractually agreed to limit ordinary operating expenses (ordinary operating expenses means all Portfolio expenses other than extraordinary expenses, such as litigation, taxes, brokerage commissions and acquired fund fees and expenses) of the Portfolio to the extent required to reduce Portfolio expenses to 0.90% and 1.15% of the average daily net assets attributable to Class I shares and Class II shares respectively. Fees waived and expenses reimbursed during the six months ended June 30, 2021, are reflected on the Statement of Operations. This expense limitation are in effect through May 1, 2022. There can be no assurance that the Adviser will extend the expense limitation agreement for a class of shares beyond the date referred to above.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $11,329 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
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3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $4,163 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $385.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to its Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $438 in distribution fees payable to the Distributor at June 30, 2021.
6. Master Netting Agreements
The Portfolio has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with substantially all of its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Portfolio and a counterparty that governs the trading of certain Over the Counter (“OTC”) derivatives and typically contains, among other things, close-out and set-off provisions which apply upon the occurrence of an event of default and/or a termination event as defined under the relevant ISDA Master Agreement. The ISDA Master Agreement may also give a party the right to terminate all transactions traded under such agreement if, among other things, there is deterioration in the credit quality of the other party.
Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions under such agreement and to net amounts owed under each transaction to determine one net amount payable by one party to the other. The right to close out and net payments across all transactions under the ISDA Master Agreement could result in a reduction of the Portfolio’s credit risk to its counterparty equal to any amounts payable by the Portfolio under the applicable transactions, if any. However, the Portfolio’s right to set-off may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which each specific ISDA Master Agreement of each counterparty is subject.
The collateral requirements for derivatives transactions under an ISDA Master Agreement are governed by a credit support annex to the ISDA Master Agreement. Collateral requirements are generally determined at the close of business each day and are typically based on changes in market values for each transaction under an ISDA Master Agreement and netted into one amount for such agreement. Generally, the amount of collateral due from or to a counterparty is subject to threshold (a “minimum transfer amount”) before a transfer is required, which may vary by counterparty. Collateral pledged for the benefit of the Portfolio and/or counterparty is held in segregated accounts by the Portfolio’s custodian and cannot be sold, re-pledged, assigned or otherwise used while pledged. Cash that has been segregated to cover the Portfolio’s collateral obligations, if any, will be reported separately on the Statement of Assets and Liabilities as “Swaps collateral”. Securities pledged by the Portfolio as collateral, if any, are identified as such in the Schedule of Investments.
Financial instruments subject to an enforceable master netting agreement, such as an ISDA Master Agreement, have been offset on the Statement of Assets and Liabilities. The following charts show gross assets and liabilities of the Portfolio as of June 30, 2021.
| Derivative | | | | |
| Assets | | | | |
| Subject to | Derivatives | Non-Cash | | Net Amount of |
| Master Netting | Available | Collateral | Cash Collateral | Derivative |
Counterparty | Agreement | for Offset | Received (a) | Received (a) | Assets (b) |
Goldman Sachs International | $3,416 | $ — | $ — | $ — | $3,416 |
State Street Bank & | | | | | |
Trust Co. | 2,493 | — | — | — | 2,493 |
Total | $5,909 | $ — | $ — | $ — | $5,909 |
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Notes to Financial Statements 6/30/21 (unaudited) (continued) |
| Derivative | | | | |
| Liabilities | | | | |
| Subject to | Derivatives | Non-Cash | | Net Amount of |
| Master Netting | Available | Collateral | Cash Collateral | Derivative |
Counterparty | Agreement | for Offset | Pledged (a) | Pledged (a) | Liabilities (c) |
Goldman Sachs International | $ — | $ — | $ — | $ — | $ — |
State Street Bank & | | | | | |
Trust Co. | | | | | |
Total | $ — | $ — | $ — | $ — | $ — |
(a) | The amount presented here may be less than the total amount of collateral received/pledged as the net amount of derivative assets and liabilities cannot be less than $0. |
(b) | Represents the net amount due from the counterparty in the event of default. |
(c) | Represents the net amount payable to the counterparty in the event of default. |
7. Additional Disclosures about Derivative Instruments and Hedging Activities
The Portfolio’s use of derivatives may enhance or mitigate the Portfolio’s exposure to the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to make further principal or interest payments on an obligation or commitment that it has to the Portfolio.
Foreign exchange rate risk relates to fluctuations in the value of an asset or liability due to changes in currency exchange rates.
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange rate risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity index will fluctuate based on increases or decreases in the commodities market and factors specific to a particular industry or commodity.
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at June 30, 2021, was as follows:
Statement of Assets | Interest | Credit
| Foreign | Equity | Commodity |
and Liabilities | Rate Risk | Risk
| Exchange Rate Risk | Risk | Risk |
Assets | | | | | |
Net unrealized appreciation | | | | | |
on forward foreign | | | | | |
currency exchange | | | | | |
contracts | $ — | $ — | $5,909 | $ — | $ — |
Total Value | $ — | $ — | $5,909 | $ — | $ — |
Liabilities | |
| | | |
Swap contracts, at value | $ — | $161,811 | $ — | $ — | $ — |
Total Value | $ — | $161,811 | $ — | $ — | $ — |
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The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure at June 30, 2021, was as follows:
Statement of | Interest | Credit | Foreign | Equity | Commodity |
Operations | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Net realized | | | | | |
gain (loss) on: | | | | | |
Forward foreign | | | | | |
currency exchange | | | | | |
contracts | $ — | $ — | $(1,015) | $ — | $ — |
Swap contracts | — | 159,991 | — | — | — |
Total Value | $ — | $ 159,991 | $(1,015) | $ — | $ — |
Change in net | | | | | |
unrealized appreciation | | | | | |
(depreciation) on: | | | | | |
Forward foreign | | | | | |
currency exchange | | | | | |
contracts | $ — | $ — | $9,384 | $ — | $— |
Swap contracts | — | (206,518) | — | — | — |
Total Value | $ — | $ (206,518) | $9,384 | $ — | $ — |
8. Unfunded Loan Commitments
The Portfolio may enter into unfunded loan commitments. Unfunded loan commitments may be partially or wholly unfunded. During the contractual period, the Portfolio is obliged to provide funding to the borrower upon demand. A fee is earned by the Portfolio on the unfunded loan commitment and is recorded as interest income on the Statement of Operations. Unfunded loan commitments are fair valued in accordance with the valuation policy described in Footnote 1A and unrealized appreciation or depreciation, if any, is recorded on the Statement of Assets and Liabilities.
As of June 30, 2021, the Portfolio had no unfunded loan commitments outstanding.
9. Affiliated Issuer
An affiliated issuer is a company in which the Portfolio has a direct or indirect ownership of, control of, or voting power of 5 percent or more of the outstanding voting shares or any company which is under common ownership or control. At June 30, 2021, the value of the Portfolio’s investment in affiliated issuers was $517,800, which represents 1.1% of the Portfolio’s net assets. Transactions in affiliated issuers by the Portfolio for the six months ended were as follows:
| | | Change in | Net Realized | | | |
| | | Net Unrealized | Gain/(Loss) | | | |
| | | Appreciation/ | From | Dividends | Shares | |
| Value at | | (Depreciation) | Investments | from | held at | Value at |
Name of the | December 31, | Purchase | from Investments | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2020 | Costs | Affiliated Issuers | Issuers | Affiliated Issuers | 2021 | 2021 |
Pioneer ILS | | | | | | | |
Interval Fund | $509,400 | $ — | $8,400 | $ — | $ — | 60,000 | $517,800 |
Annual and semi-annual reports for the underlying Pioneer funds are available on the Funds’ web page(s) at www.amundi.com/us.
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Statement Regarding Liquidity Risk Management Program 6/30/21 |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts TrustOfficersLisa M. Jones, President and Chief Executive OfficerAnthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting OfficerChristopher J. Kelley, Secretary and Chief Legal OfficerInvestment Adviser and AdministratorAmundi Asset Management US, Inc.Custodian and Sub-AdministratorBrown Brothers Harriman & Co.
Principal UnderwriterAmundi Distributor US, Inc.Legal CounselMorgan, Lewis & Bockius LLPTransfer AgentDST Asset Manager Solutions, Inc. | Trustees Thomas J. Perna, Chairman John E. Baumgardner, Jr. Diane Durnin Benjamin M. Friedman Lisa M. Jones Craig C. MacKay Lorraine H. Monchak Marguerite A. Piret Fred J. Ricciardi Kenneth J. Taube |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
![](https://capedge.com/proxy/N-CSRS/0001821268-21-000378/bondvctlx1x1.gif)
19622-15-0821
Pioneer Variable Contracts Trust
Pioneer Mid Cap Value
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Mid Cap Value VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
5 Largest Holdings
(As a percentage of total investments)*
1. | Marathon Petroleum Corp. | 2.43% |
2. | Schlumberger, Ltd. | 2.33 |
3. | Zimmer Biomet Holdings, Inc. | 2.23 |
4. | M&T Bank Corp. | 2.21 |
5. | McKesson Corp. | 2.18 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
Performance Update 6/30/21
Prices and Distributions | | |
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Net Asset Value per Share | 6/30/21 | 12/31/20 |
Class I | $21.18 | $17.97 |
Class II | $20.93 | $17.74 |
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| Net | | |
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains |
Class I | $0.2016 | $ — | $ — |
Class II | $0.1556 | $ — | $ — |
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Mid Cap Value VCT Portfolio at net asset value during the periods shown, compared to that of the Russell Midcap Value Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
| | | Russell Midcap |
| Class I | Class II | Value Index |
10 Years | 9.00% | 8.72% | 11.75% |
5 Years | 9.66% | 9.40% | 11.79% |
1 Year | 48.29% | 47.98% | 53.06% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. Divide your account value by $1,000
Example: an $8,600 account value ÷ $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,189.90 | $1,188.70 |
Expenses Paid During Period* | $3.91 | $5.26 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.72% and 0.97% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Mid Cap Value VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,021.22 | $1,019.98 |
Expenses Paid During Period* | $3.61 | $4.86 |
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| Expenses are equal to the Portfolio’s annualized net expense ratio of 0.72% and 0.97% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
Domestic mid-cap stocks climbed sharply during the six-month period ended June 30, 2021. In the following interview, Timothy Stanish and Raymond Haddad discuss the factors that affected the performance of Pioneer Mid Cap Value VCT Portfolio during the six-month period ended June 30, 2021. Mr. Stanish, a vice president, a portfolio EVA (economic value added) analyst, and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), and Mr. Haddad, a vice president and a portfolio manager at Amundi US, are responsible for the day-to-day management of the Portfolio.
Q:How did the Portfolio perform during the six-month period ended June 30, 2021?
A:Pioneer Mid Cap Value VCT Portfolio’s Class I shares returned 18.99% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 18.87%, while the Portfolio’s benchmark, the Russell Midcap Value Index (the Russell Index), returned 19.45%.
Q:How would you describe the investment environment for equities during the six-month period ended June 30, 2021?
A:While markets endured bouts of volatility, the six-month period saw equities generally trend higher and finish with very strong gains. Markets continued to rally early in the period, sustaining the upward momentum seen in the so-called “risk” markets beginning in the final weeks of 2020. The accelerating pace of COVID-19 vaccine distributions, the passage of a new $1.9 trillion fiscal stimulus package by the US government, and further supportive messaging from the Federal Reserve (Fed) helped investors gain confidence in the prospects for a sharp economic recovery as 2021 progressed.
Within the US stock market, shares of small- and mid-cap companies outperformed large caps in the early part of the period, reflecting market participants’ increasing comfort level with taking on the higher risk of investing in smaller companies. Later in the period, however, large-cap stocks outperformed, nearly catching up to the performance of small- and mid-cap stocks by June 30. Value stocks outperformed growth stocks over the full six-month period, finally reversing a long-standing streak of underperformance by the value segment that had lasted for several years. For much of the period, investors aggressively purchased economically sensitive “re-opening” stocks, or shares of companies seen as potential beneficiaries from a broader reopening of the economy. With the move to value came a corresponding sell-off of growth stocks of companies with less exposure to the economic cycle. Those trends favored the value segment of the equity market. A substantial rise in the 10-year Treasury bond yield during the first quarter of 2021 also weighed on the performance of growth stocks, especially those with high valuations based largely on earnings projections far into the future. A subsequent pullback in Treasury yields following on the heels of a relatively hawkish Fed meeting in mid-June led to a reversal of some of the outperformance of value stocks versus growth stocks near the end of the six-month period.
Within the Portfolio’s benchmark, the Russell Index, cyclical sectors – or sectors with greater exposure to the ebbs and flows of the economy – such as financials, materials, consumer discretionary, and industrials, stood out as
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
strong performers for the six-month period. Conversely, defensive sectors, such as utilities, health care, and consumer staples, were laggards. Investors generally expressed a preference for what we view as low-quality stocks over high-quality stocks during the period, as shares of companies featuring factors such as low debt and high returns on assets, typically associated with higher quality, underperformed.
Q:How did you position the Portfolio during the six-month period ended June 30, 2021, and how did the positioning affect performance relative to the benchmark?
A:The Portfolio’s positioning featured increased exposure to cyclical stocks in anticipation of further fiscal stimulus measures from the government, the further reopening of previously closed sectors of the economy, and the drawdown of accumulated consumer savings (a side effect of the pandemic-related lockdowns). The positioning reflected our belief that there was still value available in the sectors hardest hit by the spread of COVID-19 during 2020. In particular, the Portfolio was overweight in the materials, consumer discretionary, financials, real estate, and industrials sectors; meanwhile, we had maintained significant underweight exposures versus the Russell Index to communication services, utilities, consumer staples, information technology, health care, and energy stocks.
From a sector perspective, stock selection results in the communication services and materials sectors were the most significant detractors from the Portfolio’s relative performance over the six-month period. Stock selection in industrials also weighed on benchmark-relative returns, as did the Portfolio’s modestly underweight allocation to the energy sector.
By contrast, stock selection results in, and an overweight allocation to, the consumer discretionary sector made the most significant contributions to relative performance. Underweight allocations to utilities and consumer staples stocks also aided relative returns, as did stock selection within the consumer discretionary sector.
With regard to individual stocks, notable detractors from the Portfolio’s benchmark-relative performance during the six-month period included a lack of exposure to Ford Motor, and positions in discount retailer Dollar General and Allison Transmission Holdings, a manufacturer of components for commercial vehicles. Ford Motor’s stock price rallied strongly during the period as the automaker moved aggressively to capitalize on the electric vehicle trend, including the release of its Mustang Mach-E SUV and the announcement of its forthcoming F-150 Lightning electric pickup truck. Lack of Portfolio exposure to the stock detracted from relative returns. Shares of Dollar General lagged primarily because investors sold off the stock in the wake of its strong performance during 2020. We have retained the Portfolio’s position in Dollar General, as we believe the company has the potential to take additional market share within a fragmented industry. Allison Transmission produces transmission systems for commercial on-road and off-highway vehicles. We had underestimated the level of additional investment in research and development that will be necessary for the company to make
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 (continued) | |
the transition from manufacturing internal combustion engine-driven components to electric-axle products, a factor that weighed on the stock price over the six-month period.
On the positive side, the individual stocks that made the largest positive contributions to benchmark-relative returns for the six-month period included regional banking institution East West Bancorp, oilfield services provider Schlumberger, and athletic footwear and apparel retailer Foot Locker. East West Bancorp benefited from the steepening of the yield curve in the first quarter of 2021. We have maintained the Portfolio’s position, as we believe a further economic recovery could ease credit concerns and cause investors to gain a larger appreciation for what we view as East West’s attractive valuation in comparison to its peers. Schlumberger’s valuation continued to expand during the period, due to the improving outlook for global oil-and-gas spending. We see potential for the company’s profit margins to improve as its business mix becomes more software-focused. Foot Locker’s stock moved higher during the six-month period and aided the Portfolio’s relative performance, as the company’s sales returned to high levels amid the broader reopening of the global economy.
Q:Did the Portfolio have any exposure to derivative securities during the six-month period ended June 30, 2021?
A:No, the Portfolio did not have any derivatives exposure during the six-month period.
Q:What is your investment outlook and how have you positioned the Portfolio with regard to that outlook for the remainder of the fiscal year?
A:As we look ahead, we believe the ongoing distribution of COVID-19 vaccinations and the most recent round of economic stimulus from the US government could lead to robust growth in the US economy during the second half of the calendar year. In our view, corporate earnings growth could be strongest for those companies with cyclical exposure to the economy. Under that scenario, a resulting shift in market leadership toward cyclical stocks and away from the high-valuation stocks that benefited from historically low rates in 2020 could be generally favorable for the Portfolio’s holdings.
That said, we think there is the potential for significant increases in economic demand that could outpace supply, to such an extent that inflation rates rise at a faster-than-expected pace. Any resulting and rapid upward movement in long-term interest rates could cause equity prices to fall. Another issue that bears watching is the US government’s already extensive debt burden, which moved sharply higher due to stimulus spending used to help offset the economic effects of the pandemic. Equity markets, we think, may begin discounting the potential long-term negative effects of such high levels of debt at some point in the future. The possibility of higher income and capital gains taxes on businesses and individuals could also weigh on corporate earnings, overall economic activity, and equity prices.
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A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than larger, more established companies.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Portfolio will generally rise.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
We believe the Portfolio’s current positioning could help performance benefit from a potential full reopening of the US and global economies, as the Portfolio features holdings of what we view as attractively valued stocks of high-quality companies in the value universe, many of which have cyclical economic exposure. By contrast, many high-valuation stocks that were among 2020’s strongest performers have already started to underperform in 2021, and we think there is still significant downside risk associated with owning those more speculative stocks in the coming year.
We had already significantly increased the Portfolio’s exposure to cyclical stocks in anticipation of further stimulus measures, the reopening of previously closed sectors of the economy, and the drawdown of accumulated consumer savings. Despite strong recent performance, we believe there is still value available among cyclical stocks, particularly within the sectors that struggled the most during the height of the pandemic.
Accordingly, we have maintained the Portfolio’s exposures to the financials, materials, consumer discretionary, and energy sectors. We believe stocks in those sectors that we view as intrinsically undervalued may see better share-price performance. We have also increased exposure to utilities because we think valuations in the sector have remained attractive. At the same time, we have limited the Portfolio’s exposures to cyclical market segments that we believe feature lower-quality stocks, including oil & gas exploration and production companies within energy, and airlines within industrials, as we see both segments as facing long-term structural headwinds that have the potential to create “value traps.”
Regardless of the macroeconomic backdrop, we have remained committed to investing the Portfolio in companies that have been profitable and that have featured strong balance sheets and sustainable business models. We seek to hold companies that we think are capable of surviving recessions and emerging with the financial firepower to invest and thrive during the subsequent recovery. Moreover, we see the post-pandemic recovery in economic growth as possibly producing outperformance in what we have viewed as traditional high-quality value stocks, and we believe that our investment strategy for the Portfolio is a good fit with the economic and market conditions that could prevail over the remainder of 2021, and perhaps beyond.
Please refer to the Schedule of Investments on pages 8 to 12 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) | |
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Shares | | | Value |
| | UNAFFILIATED ISSUERS – 98.3% | |
| | COMMON STOCKS – 98.3% of Net Assets | |
| | Aerospace & Defense – 1.0% | |
64,845 | | Spirit AeroSystems Holdings, Inc. | $ 3,060,036 |
| | Total Aerospace & Defense | $ 3,060,036 |
| | Airlines – 0.8% | |
53,753(a) | | Delta Air Lines, Inc. | $ 2,325,355 |
| | Total Airlines | $ 2,325,355 |
| | Auto Components – 1.1% | |
66,031 | | BorgWarner, Inc. | $ 3,205,145 |
| | Total Auto Components | $ 3,205,145 |
| | Banks – 10.5% | |
103,554 | | Citizens Financial Group, Inc. | $ 4,750,022 |
51,326 | | East West Bancorp, Inc. | 3,679,561 |
132,169 | | First Hawaiian, Inc. | 3,745,669 |
32,308 | | First Republic Bank | 6,047,088 |
43,668 | | M&T Bank Corp. | 6,345,397 |
6,160 | | Signature Bank/New York NY | 1,513,204 |
86,467 | | Zions Bancorp N.A. | 4,570,646 |
| | Total Banks | $ 30,651,587 |
| | Building Products – 1.5% | |
23,633 | | Trane Technologies Plc | $ 4,351,781 |
| | Total Building Products | $ 4,351,781 |
| | Capital Markets – 2.3% | |
23,966 | | Artisan Partners Asset Management, Inc. | $ 1,217,952 |
123,755 | | Brightsphere Investment Group, Inc. | 2,899,580 |
14,975 | | Nasdaq, Inc. | 2,632,605 |
| | Total Capital Markets | $ 6,750,137 |
| | Chemicals – 6.7% | |
33,776 | | Celanese Corp. | $ 5,120,442 |
155,375 | | Element Solutions, Inc. | 3,632,668 |
114,399 | | Huntsman Corp. | 3,033,861 |
33,373 | | PPG Industries, Inc. | 5,665,734 |
100,153 | | Tronox Holdings PLC | 2,243,427 |
| | Total Chemicals | $ 19,696,132 |
| | Communications Equipment – 1.2% | |
16,751 | | Motorola Solutions, Inc. | $ 3,632,454 |
| | Total Communications Equipment | $ 3,632,454 |
| | Consumer Durables & Apparel – 1.1% | |
114,043 | | Newell Brands, Inc. | $ 3,132,761 |
| | Total Consumer Durables & Apparel | $ 3,132,761 |
| | Containers & Packaging – 1.5% | |
244,524 | | Graphic Packaging Holding Co. | $ 4,435,665 |
| | Total Containers & Packaging | $ 4,435,665 |
| | Electric Utilities – 1.8% | |
51,928 | | Entergy Corp. | $ 5,177,222 |
| | Total Electric Utilities | $ 5,177,222 |
The accompanying notes are an integral part of these financial statements.
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Shares | | | Value |
| | Electrical Equipment – 1.6% | |
30,901 | | Eaton Corp. Plc | $ 4,578,910 |
| | Total Electrical Equipment | $ 4,578,910 |
| | Electronic Equipment, Instruments & Components – 3.8% | |
18,375 | | CDW Corp. | $ 3,209,194 |
30,888 | | Dolby Laboratories, Inc. | 3,035,981 |
14,382(a) | | Keysight Technologies, Inc. | 2,220,725 |
64,225 | | National Instruments Corp. | 2,715,433 |
| | Total Electronic Equipment, Instruments & Components | $ 11,181,333 |
| | Energy Equipment & Services – 2.3% | |
208,272 | | Schlumberger, Ltd. | $ 6,666,787 |
| | Total Energy Equipment & Services | $ 6,666,787 |
| | Equity Real Estate Investment Trusts (REITs) – 10.3% | |
7,924 | | Alexandria Real Estate Equities, Inc. | $ 1,441,692 |
11,522 | | Camden Property Trust | 1,528,624 |
47,668 | | Duke Realty Corp. | 2,257,080 |
6,640 | | Essex Property Trust, Inc. | 1,992,066 |
8,847 | | Extra Space Storage, Inc. | 1,449,315 |
24,874 | | First Industrial Realty Trust, Inc. | 1,299,169 |
135,102 | | Kimco Realty Corp. | 2,816,877 |
108,652(a) | | Outfront Media, Inc. | 2,610,908 |
100,531(a) | | Park Hotels & Resorts, Inc. | 2,071,944 |
21,200 | | Safehold, Inc. | 1,664,200 |
29,600 | | SL Green Realty Corp. | 2,368,000 |
21,426 | | Sun Communities, Inc. | 3,672,416 |
54,901 | | UDR, Inc., Class REIT | 2,689,051 |
26,546 | | Welltower, Inc. | 2,205,973 |
| | Total Equity Real Estate Investment Trusts (REITs) | $ 30,067,315 |
| | Food & Staples Retailing – 0.7% | |
27,782 | | Sysco Corp. | $ 2,160,050 |
| | Total Food & Staples Retailing | $ 2,160,050 |
| | Food Products – 1.4% | |
245,412(a) | | Hostess Brands, Inc. | $ 3,973,220 |
| | Total Food Products | $ 3,973,220 |
| | Health Care Equipment & Supplies – 3.8% | |
13,139 | | STERIS Plc | $ 2,710,576 |
5,611 | | West Pharmaceutical Services, Inc. | 2,014,910 |
39,675 | | Zimmer Biomet Holdings, Inc. | 6,380,533 |
| | Total Health Care Equipment & Supplies | $ 11,106,019 |
| | Health Care Providers & Services – 2.1% | |
32,751 | | McKesson Corp. | $ 6,263,301 |
| | Total Health Care Providers & Services | $ 6,263,301 |
| | Hotels, Restaurants & Leisure – 2.9% | |
25,337 | | Darden Restaurants, Inc. | $ 3,698,949 |
30,566(a) | | Hilton Worldwide Holdings, Inc. | 3,686,871 |
49,575(a) | | International Game Technology Plc | 1,187,817 |
| | Total Hotels, Restaurants & Leisure | $ 8,573,637 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Shares | | | Value |
| | Household Durables – 1.0% | |
28,045 | | Lennar Corp. | $ 2,786,271 |
| | Total Household Durables | $ 2,786,271 |
| | Information Technology – 1.3% | |
20,986 | | MKS Instruments, Inc. | $ 3,734,459 |
| | Total Information Technology | $ 3,734,459 |
| | Insurance – 6.1% | |
77,281 | | Aflac, Inc. | $ 4,146,898 |
10,831 | | Assurant, Inc. | 1,691,586 |
84,731 | | Hartford Financial Services Group, Inc. | 5,250,780 |
37,240 | | Lincoln National Corp. | 2,340,162 |
170,310 | | Old Republic International Corp. | 4,242,422 |
| | Total Insurance | $ 17,671,848 |
| | Internet & Direct Marketing Retail – 1.8% | |
31,956(a) | | Expedia, Inc. | $ 5,231,517 |
| | Total Internet & Direct Marketing Retail | $ 5,231,517 |
| | Machinery – 7.8% | |
31,266 | | AGCO Corp. | $ 4,076,461 |
26,723 | | Donaldson Co., Inc. | 1,697,712 |
72,899 | | Flowserve Corp. | 2,939,288 |
106,429(a) | | Ingersoll Rand, Inc. | 5,194,799 |
48,670 | | PACCAR, Inc. | 4,343,797 |
15,234 | | Stanley Black & Decker, Inc. | 3,122,818 |
16,918 | | Timken Co. | 1,363,422 |
| | Total Machinery | $ 22,738,297 |
| | Materials – 1.8% | |
14,203 | | Crown Holdings, Inc. | $ 1,451,688 |
62,379 | | Sealed Air Corp. | 3,695,956 |
| | Total Materials | $ 5,147,644 |
| | Media – 1.1% | |
69,315(a) | | Liberty Media Corp.-Liberty SiriusXM | $ 3,215,523 |
| | Total Media | $ 3,215,523 |
| | Metals & Mining – 2.9% | |
58,780(a) | | Arconic Corp. | $ 2,093,744 |
38,025 | | Freeport-McMoRan, Inc. | 1,411,108 |
33,198 | | Reliance Steel & Aluminum Co. | 5,009,578 |
| | Total Metals & Mining | $ 8,514,430 |
| | Multi-Utilities – 3.7% | |
214,472 | | CenterPoint Energy, Inc. | $ 5,258,854 |
90,372 | | Public Service Enterprise Group, Inc. | 5,398,823 |
| | Total Multi-Utilities | $ 10,657,677 |
| | Oil, Gas & Consumable Fuels – 2.4% | |
115,254 | | Marathon Petroleum Corp. | $ 6,963,647 |
| | Total Oil, Gas & Consumable Fuels | $ 6,963,647 |
The accompanying notes are an integral part of these financial statements.
10
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Shares | | | Value |
| | Personal Products – 0.5% | |
32,665 | | Edgewell Personal Care Co. | $ 1,433,993 |
| | Total Personal Products | $ 1,433,993 |
| | Professional Services – 0.9% | |
22,253 | | ManpowerGroup, Inc. | $ 2,646,104 |
| | Total Professional Services | $ 2,646,104 |
| | Real Estate Management & Development – 1.1% | |
37,641(a) | | CBRE Group, Inc. | $ 3,226,963 |
| | Total Real Estate Management & Development | $ 3,226,963 |
| | Road & Rail – 1.0% | |
18,495 | | JB Hunt Transport Services, Inc. | $ 3,013,760 |
| | Total Road & Rail | $ 3,013,760 |
| | Software – 1.5% | |
29,418(a) | | Manhattan Associates, Inc. | $ 4,260,903 |
| | Total Software | $ 4,260,903 |
| | Specialty Retail – 4.1% | |
35,443(a) | | AutoNation, Inc. | $ 3,360,351 |
37,271 | | Foot Locker, Inc. | 2,297,012 |
8,388(a) | | O’Reilly Automotive, Inc. | 4,749,369 |
38,309(a) | | Urban Outfitters, Inc. | 1,579,097 |
| | Total Specialty Retail | $ 11,985,829 |
| | Textiles, Apparel & Luxury Goods – 0.9% | |
21,262 | | Ralph Lauren Corp. | $ 2,504,876 |
| | Total Textiles, Apparel & Luxury Goods | $ 2,504,876 |
| | TOTAL COMMON STOCKS | |
| | (Cost $213,522,537) | $286,722,588 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 98.3% | |
| | (Cost $213,522,537) | $286,722,588 |
| | OTHER ASSETS AND LIABILITIES – 1.7% | $ 4,950,312 |
| | NET ASSETS – 100.0% | $291,672,900 |
REIT | Real Estate Investment Trust. |
(a) | Non-income producing security. |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021 were as follows:
| | |
| Purchases | Sales |
Long-Term U.S. Government Securities | $ — | $ 2,002,143 |
Other Long-Term Securities | $95,182,854 | $140,150,235 |
The accompanying notes are an integral part of these financial statements.
11
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which Amundi Asset Management US, Inc. (the “Adviser”) serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $214,160,020 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $73,420,590 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (858,022) |
Net unrealized appreciation | $72,562,568 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments:
| Level 1 | Level 2 | Level 3 | Total |
Common Stocks | $286,722,588 | $ — | $ — | $286,722,588 |
Total Investments in Securities | $286,722,588 | $ — | $ — | $286,722,588 |
During the six months ended June 30, 2021, there were no transfers in or out of Levels 3.
The accompanying notes are an integral part of these financial statements.
12
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
| |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $213,522,537) | $ 286,722,588 |
Cash | 5,983,191 |
Receivables — | |
Investment securities sold | 1,309,014 |
Portfolio shares sold | 5,278 |
Dividends | 228,111 |
Other assets | 2,432 |
Total assets | $ 294,250,614 |
|
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 2,213,387 |
Portfolio shares repurchased | 285,276 |
Due to affiliates | 35,614 |
Accrued expenses | 43,437 |
Total liabilities | $ 2,577,714 |
|
NET ASSETS: | |
Paid-in capital | $ 186,617,118 |
Distributable earnings | 105,055,782 |
Net assets | $ 291,672,900 |
|
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class I (based on $37,104,731/1,752,193 shares) | $ 21.18 |
Class II (based on $254,568,169/12,165,409 shares) | $ 20.93 |
The accompanying notes are an integral part of these financial statements.
13
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | |
| | | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | |
INVESTMENT INCOME: | | | |
Dividends from unaffiliated issuers | $2,696,564 | | |
Interest from unaffiliated issuers | 1,579 | | |
Total investment income | | | $ 2,698,143 |
EXPENSES: | | | |
Management fees | $ 969,585 | | |
Administrative expense | 63,309 | | |
Distribution fees | | | |
Class II | 328,299 | | |
Custodian fees | 4,601 | | |
Professional fees | 23,696 | | |
Printing expense | 10,302 | | |
Pricing fees | 105 | | |
Trustees’ fees | 3,239 | | |
Miscellaneous | 4,083 | | |
Total expenses | | | $ 1,407,219 |
Net investment income | | | $ 1,290,924 |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | |
Net realized gain (loss) on: | | | |
Investments in unaffiliated issuers | | | $ 35,383,146 |
Change in net unrealized appreciation (depreciation) on: | | | |
Investments in unaffiliated issuers | | | $ 15,773,066 |
Net realized and unrealized gain (loss) on investments | | | $51,156,212 |
Net increase in net assets resulting from operations | | | $52,447,136 |
The accompanying notes are an integral part of these financial statements.
14
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| Six Months | | |
| Ended | | |
| 6/30/21 | | Year Ended |
| (unaudited) | | 12/31/20 |
FROM OPERATIONS: | | | |
Net investment income (loss) | $ 1,290,924 | | $ 2,242,673 |
Net realized gain (loss) on investments | 35,383,146 | | (4,437,300) |
Change in net unrealized appreciation (depreciation) on investments | 15,773,066 | | 10,121,721 |
Net increase in net assets resulting from operations | $ 52,447,136 | | $ 7,927,094 |
DISTRIBUTIONS TO SHAREOWNERS: | | | |
Class I ($0.20 and $0.73 per share, respectively) | $ (351,985) | | $ (1,370,948) |
Class II ($0.16 and $0.68 per share, respectively) | (1,889,458) | | (9,892,768) |
Total distributions to shareowners | $ (2,241,443) | | $(11,263,716) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | |
Net proceeds from sales of shares | $ 3,643,299 | | $ 28,775,060 |
Reinvestment of distributions | 2,241,443 | | 11,263,715 |
Cost of shares repurchased | (47,376,027) | | (38,185,994) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | $ (41,491,285) | | $ 1,852,781 |
Net increase (decrease) in net assets | $ 8,714,408 | | $ (1,483,841) |
NET ASSETS: | | | |
Beginning of period | $ 282,958,492 | | $284,442,333 |
End of period | $ 291,672,900 | | $282,958,492 |
| Six Months | | Six Months | | | | |
| Ended | | Ended | | Year Ended | | Year Ended |
| 6/30/21 | | 6/30/21 | | 12/31/20 | | 12/31/20 |
| Shares | | Amount | | Shares | | Amount |
Class I | | | | | | | |
Shares sold | 45,554 | | $ 925,578 | | 155,710 | | $ 2,367,823 |
Reinvestment of distributions | 16,753 | | 351,985 | | 93,198 | | 1,370,947 |
Less shares repurchased | (146,362) | | (2,908,811) | | (437,701) | | (6,992,205) |
Net decrease | (84,055) | | $ (1,631,248) | | (188,793) | | $ (3,253,435) |
Class II | | | | | | | |
Shares sold | 136,100 | | $ 2,717,721 | | 1,796,718 | | $ 26,407,237 |
Reinvestment of distributions | 91,014 | | 1,889,458 | | 680,383 | | 9,892,768 |
Less shares repurchased | (2,154,078) | | (44,467,216) | | (1,936,058) | | (31,193,789) |
Net increase (decrease) | (1,926,964) | | $(39,860,037) | | 541,043 | | $ 5,106,216 |
The accompanying notes are an integral part of these financial statements.
15
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class I | | | | | | |
Net asset value, beginning of period | $ 17.97 | $ 18.46 | $ 15.53 | $ 21.11 | $ 20.49 | $ 18.88 |
Increase (decrease) from investment operations: | | |
Net investment income (loss) (a) | $ 0.11 | $ 0.17 | $ 0.20 | $ 0.23 | $ 0.13 | $ 0.17 |
Net realized and unrealized gain (loss) | | | |
on investments | 3.30 | 0.07 | 4.11 | (4.01) | 2.36 | 2.81 |
Net increase (decrease) from investment operations | $ 3.41 | $ 0.24 | $ 4.31 | $ 3.78 | $ 2.49 | $ 2.98 |
Distributions to shareowners: | | | | |
Net investment income | $ (0.20) | $ (0.20) | $ (0.24) | $ (0.14) | $ (0.18) | $ (0.14) |
Net realized gain | — | (0.53) | (1.14) | (1.66) | (1.69) | (1.23) |
Total distributions | $ (0.20) | $ (0.73) | $ (1.38) | $ (1.80) | $ (1.87) | $ (1.37) |
Net increase (decrease) in net asset value | 3.21 | (0.49)
| 2.93 | (5.58) | 0.62 | 1.61 |
Net asset value, end of period | $21.18
| $17.97
| $18.46
| $15.53
| $21.11
| $20.49
|
Total return (b) | 18.99%(c) | 2.14% | 28.44% | (19.34)% | 13.17% | 16.56% |
Ratio of net expenses to average net assets | 0.72%(d) | 0.74% | 0.73% | 0.73% | 0.71% | 0.71% |
Ratio of net investment income (loss) to average | | |
net assets | 1.09%(d) | 1.10% | 1.14% | 1.19% | 0.64% | 0.91% |
Portfolio turnover rate | 32%(c) | 88% | 93% | 81% | 61% | 75% |
Net assets, end of period (in thousands) | $37,105 | $32,989 | $37,384 | $33,506 | $48,082 | $68,552 |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | Annualized. |
| |
NOTE: | The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges. |
The accompanying notes are an integral part of these financial statements.
16
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class II | | | | | | |
Net asset value, beginning of period | $ 17.74 | $ 18.23 | $ 15.35 | $ 20.87 | $ 20.28 | $ 18.70 |
Increase (decrease) from investment operations: | | |
Net investment income (loss) (a) | $ 0.08 | $ 0.13 | $ 0.15 | $ 0.18 | $ 0.08 | $ 0.12 |
Net realized and unrealized gain (loss) | | | |
on investments | 3.27 | 0.06 | 4.06 | (3.95) | 2.33 | 2.78 |
Net increase (decrease) from investment operations | $ 3.35 | $ 0.19 | $ 4.21 | $ (3.77) | $ 2.41 | $ 2.90 |
Distributions to shareowners: | | | | |
Net investment income | $ (0.16) | $ (0.15) | $ (0.19) | $ (0.09) | $ (0.13) | $ (0.09) |
Net realized gain | — | (0.53) | (1.14) | (1.66) | (1.69) | (1.23) |
Total distributions | $ (0.16) | $ (0.68) | $ (1.33) | $ (1.75) | $ (1.82) | $ (1.32) |
Net increase (decrease) in net asset value | $ 3.19
| $ (0.49) | $ 2.88
| $ (5.52)
| $ 0.59
| $ 1.58
|
Net asset value, end of period
| $ 20.93
| $ 17.74
| $ 18.23
| $ 15.35
| $ 20.87
| $ 20.28
|
Total return (b) | 18.87%(c) | 1.87% | 28.08% | (19.49)% | 12.87% | 16.23% |
Ratio of net expenses to average net assets | 0.97%(d) | 0.99% | 0.98% | 0.98% | 0.96% | 0.96% |
Ratio of net investment income (loss) to average | | |
net assets | 0.83%(d) | 0.85% | 0.89% | 0.95% | 0.39% | 0.67% |
Portfolio turnover rate | 32%(c) | 88% | 93% | 81% | 61% | 75% |
Net assets, end of period (in thousands) | $ 254,568 | $ 249,969 | $ 247,058 | $ 223,863 | $298,671 | $294,399 |
| |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all 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. |
(c) | Not annualized. |
(d) | Annualized. |
|
NOTE: | The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
|
The accompanying notes are an integral part of these financial statements.
17
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Mid Cap Value VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Portfolio is capital appreciation by investing in a diversified portfolio of securities consisting primarily of common stocks.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same schedule of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
Securities for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
18
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| |
| 2020 |
Distributions paid from: | |
Ordinary income | $ 2,621,881 |
Long-term capital gain | 8,641,835 |
Total distributions | $11,263,716 |
The following shows the components of distributable earnings on a federal income tax basis at December 31, 2020:
| |
| 2020 |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 2,240,275 |
Undistributed long-term capital gain | (4,179,688) |
Unrealized depreciation | 56,789,502 |
Total | $54,850,089 |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales.
19
| |
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) |
D. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated between the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates. Dividends and distributions to shareowners are recorded on the ex-dividend date.
E. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
Investments in mid-sized companies may offer the potential for higher returns, but are also subject to greater short-term price fluctuations than investments in larger, more established companies.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates and economic and political conditions.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.65% of the Portfolio’s average daily net assets. For the six months ended June 30, 2021, the effective management fee was equivalent to 0.65% (annualized) of the Portfolio’s average daily net assets.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $26,814 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $3,239 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $0.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $8,800 in distribution fees payable to the Distributor at June 30, 2021.
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statement Regarding Liquidity Risk Management Program 6/30/21 |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust | Trustees |
| Thomas J. Perna, Chairman |
Officers | John E. Baumgardner, Jr.
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Lisa M. Jones, President and Chief Executive Officer | Diane Durnin
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Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Benjamin M. Friedman
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Accounting Officer | Lisa M. Jones
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Christopher J. Kelley, Secretary and Chief Legal Officer | Craig C. MacKay
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| Lorraine H. Monchak
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Investment Adviser and Administrator | Marguerite A. Piret
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Amundi Asset Management US, Inc. | Fred J. Ricciardi
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| Kenneth J. Taubes
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Custodian and Sub-Administrator |
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Brown Brothers Harriman & Co. |
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Principal Underwriter | |
Amundi Distributor US, Inc. | |
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Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
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Transfer Agent | |
DST Asset Manager Solutions, Inc. | |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
19609-15-0821
Pioneer Variable Contracts Trust
Pioneer Fund
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Fund VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
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5 Largest Holdings
(As a percentage of total investments)*
1. | Alphabet, Inc. | 6.72% |
2. | Microsoft Corp. | 4.91 |
3. | Apple, Inc. | 4.78 |
4. | Analog Devices, Inc. | 4.45 |
5. | Wells Fargo & Co. | 4.44 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
Performance Update 6/30/21 | | | |
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Prices and Distributions | | | | |
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Net Asset Value per Share | | 6/30/21 | 12/31/20 | |
Class I | | $18.22 | $16.83 | |
Class II | | $18.38 | $16.97 | |
| Net | | | |
Distributions per Share | Investment | Short-Term | Long-Term | |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains | |
Class I | $0.0300 | $0.2980 | $1.2074 | |
Class II | $0.0100 | $0.2980 | $1.2074 | |
Performance of a $10,000 InvestmentThe following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Fund VCT Portfolio at net asset value during the periods shown, compared to that of the Standard & Poor’s 500 Index (the S&P 500). Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The Standard & Poor’s 500 Index (the S&P 500) is an unmanaged, commonly used measure of the broad U.S. stock market. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.
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Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
| Class I | Class II | S&P 500 Index |
10 Years | 14.18% | 13.90% | 14.84% |
5 Years | 19.61% | 19.32% | 17.65% |
1 Year | 45.81% | 45.47% | 40.79% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) | ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and
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(2) | transaction costs, including sales charges (loads) on purchase payments. |
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. | Divide your account value by $1,000 |
| Example: an $8,600 account value ÷ $1,000 = 8.6
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2. | Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. |
Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,175.90 | $1,174.40 |
Expenses Paid During Period* | $ 4.37 | $ 5.77 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.81% and 1.07% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Fund VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,020.78 | $1,019.49 |
Expenses Paid During Period* | $ 4.06 | $ 5.36 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.81% and 1.07% for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following discussion, Jeff Kripke discusses the market environment during the six-month period ended June 30, 2021, and Pioneer Fund VCT Portfolio’s performance during the period. Mr. Kripke, a senior vice president and a portfolio manager at Amundi Asset Management US, Inc. (Amundi US), is responsible for the day-to-day management of the Portfolio, along with James Yu, a vice president and associate portfolio manager at Amundi US, Craig Sterling, Managing Director, Director of Core Equity and Director of Equity Research, US, and a portfolio manager at Amundi US, and John Carey, Managing Director, Director of Equity Income, US, and a portfolio manager at Amundi US.
Q: How did the Portfolio perform over the six-month period ended June 30, 2021?
A: Pioneer Fund VCT Portfolio’s Class I shares returned 17.59% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 17.44%, while the Portfolio’s benchmark, the Standard & Poor’s 500 Index (the S&P 500), returned 15.25%.
Q: How would you describe the investment environment in the equity market during the six-month period ended June 30, 2021?
A: Domestic equities delivered strong returns during the six-month period, with value stocks outpacing the performance of growth stocks. The Standard & Poor’s 500 Index (the S&P 500), the Portfolio’s benchmark, registered a total return of 15.25% for the six-month period, adding to an already impressive performance that saw the S&P 500 return more than 40% for the full year ended June 30, 2021.
For most of the six-month period, investors aggressively purchased shares of economically sensitive, “re-opening” companies; that is, companies thought to be prime candidates to benefit from a broader reopening of the domestic economy after more than a year of restricted activity due to the COVID-19 pandemic. Better-than-expected progress on the pace of COVID-19 vaccine distributions in the US coupled with the passage of another $1.9 trillion stimulus package by US lawmakers drove the rally, as market participants gained confidence that the domestic economy might fully reopen if widespread vaccinations reduced the public-health threat of COVID-19, which in turn could lead to a sharp acceleration in economic growth throughout 2021.
Value stocks have posted the strongest returns year-to-date, with the Russell 1000 Value Index gaining 17.05% through June 30, versus the benchmark’s 15.25% return and the 12.99% gain for the Russell 1000 Growth Index. Over the second half of the six-month period, however, growth stocks recovered and outpaced value stocks as investors grappled with growing apprehension over the spread of COVID-19 variants and a somewhat “hawkish” Fed Open Market Committee (FOMC) meeting. In the second quarter of 2021, growth stocks returned 11.93% while value stocks returned 5.23%. The pace of the leadership shift accelerated in June, with the Russell 1000 Growth Index returning 6.27% versus a negative return (-1.15%) for the Russell 1000 Value Index during the final month of the period. The S&P 500 returned 2.33% during June and 8.55% for the full second quarter.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
For the full six-month period, cyclical stocks – or shares of companies with more exposure to the ebbs and flows of the economic cycle – have led the S&P 500, as evidenced by the strong performance of the energy sector, which has outgained every other segment of the benchmark. Financial stocks have also performed well so far this year, as have the real estate, communication services, and materials sectors. The worst-performing sectors within the S&P 500 for the six-month period were consumer staples and utilities.
Q: Which of your investment decisions either contributed positively to, or detracted from, the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021?
A: Stock selection results were the key driver of the Portfolio’s benchmark-relative outperformance during the six-month period, particularly within the communication services and information technology sectors. Selection results in the consumer discretionary and health care sectors were less successful, and detracted slightly from benchmark-relative returns. Asset allocation made a modest, positive contribution to the Portfolio’s benchmark-relative performance for the six-month period; notably, an underweight to the underperforming consumer staples sector and lack of exposure to the lagging utilities sector aided relative returns.
With regard to individual stocks, the Portfolio’s benchmark-relative results benefited over the six-month period from several positions, including Schlumberger, Alphabet, and NVIDIA.
A position in Schlumberger, a large oilfield services company, has aided the Portfolio’s relative performance over the first six months of 2021. Not only has the company been strong competitively, in our view, but we also believe it is financially sound. Schlumberger generated nearly $2 billion in free cash flow last year, despite a difficult environment for energy companies. From an environmental, social, and governance (ESG) perspective, the company has played a critical role in addressing climate change by helping oil and gas companies improve operational efficiency while reducing emissions and lowering water usage. The company has also been making investments in businesses that support clean energy, carbon-capture services, and geothermal energy. Alphabet (parent of Google), a leading web search and online advertising company, recently reported better-than-expected quarterly results driven by broad-based growth in its businesses, including search, YouTube, and cloud computing. YouTube now has 2 billion monthly users, and its content accounts for more than one billion video hours watched per day. With regard to ESG, Alphabet has been carbon neutral since 2007 and has been working toward decarbonizing its electricity supply completely by 2030. The stock was a top positive contributor to the Portfolio’s relative returns over the six-month period. NVIDIA develops three-dimensional processors used in autonomous vehicles, cryptocurrency, and gaming. The company reported a strong increase in revenue in its most recent quarter, which came in well ahead of expectations (mostly due to gaming). We hold the stock in the
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 (continued) | |
Portfolio because it meets our sustainability criteria. NVIDIA has dominated the graphic-processing unit industry and has generated strong financial returns, including return-on-capital last year. We also like the company from an ESG perspective, particularly relating to steps NVIDIA has taken to address employee compensation/pay parity (meaning there is no statistical difference in pay based on gender, race, and ethnicity).
Individual stocks that detracted from the Portfolio’s benchmark-relative performance over the six-month period included Visa, Freeport McMoRan, and Alibaba.
Shares of Visa, a market leader in electronic payments, have underperformed year-to-date. However, we believe the company could be poised for growth as Visa Direct, which allows customers to transfer and receive money globally, has continued to gain traction, the shift to a cashless society has been moving forward, and a full recovery in global travel could potentially occur if the COVID-19 situation abates and become less of a public-health threat. Freeport-McMoRan is a mining company with a leading amount of proven and probable copper reserves. The stock detracted from the Portfolio’s relative performance over the six-month period, as copper prices have retreated from their earlier highs. Copper prices had surged earlier in 2021 as the global economic recovery increased demand for the commodity, a key component used in electrical equipment, construction (plumbing), and industrial machinery (heat exchangers). However, we believe copper demand could remain strong if the economic recovery continues. Though natural-resource companies have been inherently risky from an environmental perspective, Freeport McMoRan has been taking steps to mitigate its environmental impact. As an example, the company recycles and reuses 82% of the water it uses for its operations. Alibaba is a China-based holding company that provides e-commerce and internet infrastructure through its global subsidiaries. The stock has continued to struggle this year as the company and Jack Ma, its legendary founder, have faced closer scrutiny from the Chinese government. Fundamentally, we believe Alibaba remains attractive, given its strong market positioning and continued strong top- and bottom-line growth. From a global perspective, we believe the shares also have traded much less expensively than the company’s e-commerce peers.
Q: Did the Portfolio have any exposure to derivative investments during the six-month period ended June 30, 2021?
A: No, the Portfolio had no exposure to derivatives during the six-month period.
Q: Could you discuss the Portfolio’s commitment to ESG investing?
A: ESG refers to the three central factors in measuring the sustainability and ethical impact of an investment in a company or business. We have historically followed an ESG-friendly approach when building the Portfolio. We use specific screening criteria to exclude investments from the Portfolio in
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
A Word About Risk:All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
The Portfolio generally excludes corporate issuers that do not meet or exceed minimum ESG standards. Excluding specific issuers limits the universe of investments available to the Portfolio, which may mean forgoing some investment opportunities available to portfolios without similar ESG standards.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
companies that fail to meet certain ESG standards across all industries. Per the prospectus, the Portfolio generally will not invest in companies significantly involved in certain business activities, including but not limited to, the production of alcohol, tobacco products, and certain controversial military weapons, and the operation of thermal coal mines, gambling casinos and other gaming businesses. In addition, we view the “governance” aspect of ESG as critically important, as we believe companies that take steps to better manage risk exposure than their competitors can help reduce volatility and lead to solid performance during more difficult periods for both the economy and the markets.
Q: What is your outlook as the Portfolio enters the second half of its fiscal year?
A: We believe pent-up consumer demand, a recovery in the industrial economy, and continued fiscal stimulus are potential tailwinds for US economic growth during the second half of 2021. Corporate earnings growth could be highest, in our view, for those companies with cyclical economic exposure, which could support the performance of cyclical stocks as the calendar year progresses.
With regard to positioning, the Portfolio remains overweight versus the S&P 500 to cyclical stocks and underweight to defensive stocks, in anticipation of a strong economic recovery. We have maintained the Portfolio’s overweight in the information technology sector, with an orientation towards cyclical growth stocks, such as payment-processors. There is a corresponding Portfolio underweight in the technology-centric communication services sector, due to valuation concerns.
Please refer to the Schedule of Investments on pages 8 to 11 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) | |
| | | | |
Shares | | | | Value |
| | UNAFFILIATED ISSUERS – 98.7% | | |
| | COMMON STOCKS – 98.7% of Net Assets | | |
| | Air Freight & Logistics – 3.4% | | |
5,003 | | FedEx Corp. | | $ 1,492,545 |
18,174 | | United Parcel Service, Inc., Class B | | 3,779,647 |
| | Total Air Freight & Logistics | | $ 5,272,192 |
| | Banks – 8.7% | | |
71,774 | | Citizens Financial Group, Inc. | | $ 3,292,273 |
60,355 | | Truist Financial Corp. | | 3,349,702 |
149,064 | | Wells Fargo & Co. | | 6,751,109 |
| | Total Banks | | $ 13,393,084 |
| | Beverages – 2.8% | | |
80,704 | | Coca-Cola Co. | | $ 4,366,893 |
| | Total Beverages | | $ 4,366,893 |
| | Biotechnology – 0.6% | | |
2,695(a) | | Biogen, Inc. | | $ 933,198 |
| | Total Biotechnology | | $ 933,198 |
| | Building Products – 1.6% | | |
50,473 | | Carrier Global Corp. | | $ 2,452,988 |
| | Total Building Products | | $ 2,452,988 |
| | Capital Markets – 1.6% | | |
11,402 | | CME Group, Inc. | | $ 2,424,977 |
| | Total Capital Markets | | $ 2,424,977 |
| | Chemicals – 3.1% | | |
32,350 | | International Flavors & Fragrances, Inc. | | $ 4,833,090 |
| | Total Chemicals | | $ 4,833,090 |
| | Commercial Services & Supplies – 0.5% | | |
2,044 | | Cintas Corp. | | $ 780,808 |
| | Total Commercial Services & Supplies | | $ 780,808 |
| | Construction Materials – 2.1% | | |
9,299 | | Martin Marietta Materials, Inc. | | $ 3,271,481 |
| | Total Construction Materials | | $ 3,271,481 |
| | Electrical Equipment – 0.7% | | |
6,764 | | Eaton Corp. Plc | | $ 1,002,290 |
| | Total Electrical Equipment | | $ 1,002,290 |
| | Energy Equipment & Services – 3.6% | | |
173,208 | | Schlumberger, Ltd. | | $ 5,544,388 |
| | Total Energy Equipment & Services | | $ 5,544,388 |
| | Entertainment – 2.1% | | |
13,466 | | Electronic Arts, Inc. | | $ 1,936,815 |
7,473(a) | | Walt Disney Co. | | 1,313,529 |
| | Total Entertainment | | $ 3,250,344 |
| | Food & Staples Retailing – 1.4% | | |
5,593 | | Costco Wholesale Corp. | | $ 2,212,982 |
| | Total Food & Staples Retailing | | $ 2,212,982 |
| | Health Care – 1.8% | | |
5,462 | | Thermo Fisher Scientific, Inc. | | $ 2,755,415 |
| | Total Health Care | | $ 2,755,415 |
The accompanying notes are an integral part of these financial statements.
8
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
| | | | |
Shares | | | | Value |
| | Health Care Equipment & Supplies – 2.1% | | |
8,114 | | Danaher Corp. | | $ 2,177,473 |
8,645 | | Medtronic PLC | | 1,073,104 |
| | Total Health Care Equipment & Supplies | | $ 3,250,577 |
| | Hotels, Restaurants & Leisure – 2.3% | | |
16,636(a) | | Planet Fitness, Inc. | | $ 1,251,859 |
11,920(a) | | Shake Shack, Inc. | | 1,275,678 |
9,596 | | Starbucks Corp. | | 1,072,929 |
| | Total Hotels, Restaurants & Leisure | | $ 3,600,466 |
| | Household Products – 0.2% | | |
3,528 | | Church & Dwight Co., Inc. | | $ 300,656 |
| | Total Household Products | | $ 300,656 |
| | Industrial Conglomerates – 1.0% | | |
7,879 | | 3M Co. | | $ 1,565,006 |
| | Total Industrial Conglomerates | | $ 1,565,006 |
| | Interactive Media & Services – 6.6% | | |
4,190(a) | | Alphabet, Inc. | | $ 10,231,100 |
| | Total Interactive Media & Services | | $ 10,231,100 |
| | Internet & Direct Marketing Retail – 5.4% | | |
6,766(a) | | Alibaba Group Holding, Ltd. (A.D.R.) | | $ 1,534,394 |
1,508(a) | | Amazon.com, Inc. | | 5,187,761 |
727(a) | | Booking Holdings, Inc. | | 1,590,741 |
| | Total Internet & Direct Marketing Retail | | $ 8,312,896 |
| | IT Services – 7.2% | | |
19,831(a) | | Akamai Technologies, Inc. | | $ 2,312,295 |
7,982(a) | | PayPal Holdings, Inc. | | 2,326,593 |
27,279 | | Visa, Inc. | | 6,378,376 |
| | Total IT Services | | $ 11,017,264 |
| | Life Sciences Tools & Services – 1.2% | | |
12,143 | | Agilent Technologies, Inc. | | $ 1,794,857 |
| | Total Life Sciences Tools & Services | | $ 1,794,857 |
| | Machinery – 1.5% | | |
10,635 | | Caterpillar, Inc. | | $ 2,314,495 |
| | Total Machinery | | $ 2,314,495 |
| | Metals & Mining – 1.4% | | |
59,563 | | Freeport-McMoRan, Inc. | | $ 2,210,383 |
| | Total Metals & Mining | | $ 2,210,383 |
| | Personal Products – 1.1% | | |
5,082 | | Estee Lauder Cos, Inc. | | $ 1,616,483 |
| | Total Personal Products | | $ 1,616,483 |
| | Pharmaceuticals – 4.4% | | |
153,890(a) | | Elanco Animal Health, Inc. | | $ 5,338,444 |
18,699 | | Merck & Co., Inc. | | 1,454,221 |
| | Total Pharmaceuticals | | $ 6,792,665 |
| | Road & Rail – 3.0% | | |
20,791 | | Union Pacific Corp. | | $ 4,572,565 |
| | Total Road & Rail | | $ 4,572,565 |
The accompanying notes are an integral part of these financial statements.
9
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
Shares | | | | Value |
| | Semiconductors & Semiconductor Equipment – 9.7% | | |
39,373 | | Analog Devices, Inc. | | $ 6,778,456 |
4,025 | | Lam Research Corp. | | 2,619,067 |
7,015 | | NVIDIA Corp. | | 5,612,702 |
| | Total Semiconductors & Semiconductor Equipment | | $ 15,010,225 |
| | Software – 5.8% | | |
27,603 | | Microsoft Corp. | | $ 7,477,653 |
835(a) | | MicroStrategy, Inc. | | 554,857 |
3,852(a) | | salesforce.com, Inc. | | 940,928 |
| | Total Software | | $ 8,973,438 |
| | Software & Services – 2.5% | | |
10,462 | | Mastercard, Inc. | | $ 3,819,572 |
| | Total Software & Services | | $ 3,819,572 |
| | Specialty Retail – 3.6% | | |
7,282 | | Home Depot, Inc. | | $ 2,322,157 |
9,257(a) | | Ulta Beauty, Inc. | | 3,200,793 |
| | Total Specialty Retail | | $ 5,522,950 |
| | Technology Hardware, Storage & Peripherals – 4.7% | | |
53,116 | | Apple, Inc. | | $ 7,274,767 |
| | Total Technology Hardware, Storage & Peripherals | | $ 7,274,767 |
| | Textiles, Apparel & Luxury Goods – 1.0% | | |
9,606 | | NIKE, Inc., Class B | | $ 1,484,031 |
| | Total Textiles, Apparel & Luxury Goods | | $ 1,484,031 |
| | TOTAL COMMON STOCKS | | |
| | (Cost $99,584,975) | | $152,158,526 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 98.7% | | |
| | (Cost $99,584,975) | | $152,158,526 |
| | OTHER ASSETS AND LIABILITIES – 1.3% | | $ 1,950,824 |
| | NET ASSETS – 100.0% | | $154,109,350 |
(A.D.R.) American Depositary Receipts.
(a) Non-income producing security.
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021, aggregated $66,389,604 and $69,273,473, respectively.
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which Amundi Asset Management US, Inc. (the “Adviser”) serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $100,150,810 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $53,112,595 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (1,104,879) |
Net unrealized appreciation | $52,007,716 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The accompanying notes are an integral part of these financial statements.
10
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments: |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Common Stocks | | $ | 152,158,526 | | | $ | — | | | $ | — | | | $ | 152,158,526 | |
Total Investments in Securities | | $ | 152,158,526 | | | $ | — | | | $ | — | | | $ | 152,158,526 | |
During the six months ended June 30, 2021, there were no transfers in or out of Level 3.
|
11
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
ASSETS: | | | |
Investments in unaffiliated issuers, at value (cost $99,584,975) | | $ | 152,158,526 | |
Cash | | | 2,433,291 | |
Receivables — | | | | |
Investment securities sold | | | 1,469,592 | |
Portfolio shares sold | | | 91,429 | |
Dividends | | | 133,389 | |
Other assets | | | 564 | |
Total assets | | $ | 156,286,791 | |
LIABILITIES: | | | | |
Payables — | | | | |
Investment securities purchased | | $ | 1,051,084 | |
Portfolio shares repurchased | | | 1,067,441 | |
Due to affiliates | | | 14,909 | |
Accrued expenses | | | 44,007 | |
Total liabilities | | $ | 2,177,441 | |
NET ASSETS: | | | | |
Paid-in capital | | $ | 87,752,484 | |
Distributable earnings | | | 66,356,866 | |
Net assets | | $ | 154,109,350 | |
NET ASSET VALUE PER SHARE: | | | | |
No par value (unlimited number of shares authorized) | | | | |
Class I (based on $129,054,911/7,081,943 shares) | | $ | 18.22 | |
Class II (based on $25,054,439/1,363,040 shares) | | $ | 18.38 | |
The accompanying notes are an integral part of these financial statements.
12
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | | | | |
INVESTMENT INCOME: | | | | | | |
Dividends from unaffiliated issuers (net of foreign taxes withheld $4,438) | | $ | 768,252 | | | | |
Interest from unaffiliated issuers | | | 1,356 | | | | |
Total investment income | | | | | | $ | 769,608 | |
EXPENSES: | | | | | | | | |
Management fees | | $ | 460,850 | | | | | |
Administrative expense | | | 44,117 | | | | | |
Distribution fees | | | | | | | | |
Class II | | | 25,985 | | | | | |
Custodian fees | | | 13,020 | | | | | |
Professional fees | | | 32,543 | | | | | |
Printing expense | | | 19,215 | | | | | |
Pricing fees | | | 44 | | | | | |
Trustees’ fees | | | 3,439 | | | | | |
Miscellaneous | | | 3,552 | | | | | |
Total expenses | | | | | | $ | 602,765 | |
Net investment income | | | | | | $ | 166,843 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | | | | | |
Net realized gain (loss) on: | | | | | | | | |
Investments in unaffiliated issuers | | | | | | $ | 14,270,284 | |
Change in net unrealized appreciation (depreciation) on: | | | | | | | | |
Investments in unaffiliated issuers | | $ | 8,698,952 | | | | | |
Other assets and liabilities denominated in foreign currencies | | | (388 | ) | | $ | 8,698,564 | |
Net realized and unrealized gain (loss) on investments | | | | | | $ | 22,968,848 | |
Net increase in net assets resulting from operations | | | | | | $ | 23,135,691 | |
The accompanying notes are an integral part of these financial statements.
13
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| | | | | | |
| | Six Months | | | | |
| | Ended | | | | |
| | 6/30/21 | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | |
FROM OPERATIONS: | | | | | | |
Net investment income (loss) | | $ | 166,843 | | | $ | 849,251 | |
Net realized gain (loss) on investments | | | 14,270,284 | | | | 11,578,710 | |
Change in net unrealized appreciation (depreciation) on investments | | | 8,698,564 | | | | 13,527,030 | |
Net increase in net assets resulting from operations | | $ | 23,135,691 | | | $ | 25,954,991 | |
DISTRIBUTIONS TO SHAREOWNERS: | | | | | | | | |
Class I ($1.54 and $1.42 per share, respectively) | | $ | (10,145,493 | ) | | $ | (9,128,227 | ) |
Class II ($1.52 and $1.38 per share, respectively) | | | (1,974,739 | ) | | | (1,308,500 | ) |
Total distributions to shareowners | | $ | (12,120,232 | ) | | $ | (10,436,727 | ) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | | | | | | |
Net proceeds from sales of shares | | $ | 9,059,807 | | | $ | 15,433,978 | |
Reinvestment of distributions | | | 12,120,231 | | | | 10,436,727 | |
Cost of shares repurchased | | | (12,648,746 | ) | | | (20,317,379 | ) |
Net increase in net assets resulting from Portfolio share transactions | | $ | 8,531,292 | | | $ | 5,553,326 | |
Net increase in net assets | | $ | 19,546,751 | | | $ | 21,071,590 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | $ | 134,562,599 | | | $ | 113,491,009 | |
End of period | | $ | 154,109,350 | | | $ | 134,562,599 | |
| | | | | | | | | | | | |
| | Six Months | | | Six Months | | | | | | | |
| | Ended | | | Ended | | | | | | | |
| | 6/30/21 | | | 6/30/21 | | | Year Ended | | | Year Ended | |
| | Shares | | | Amount | | | 12/31/20 | | | 12/31/20 | |
| | (unaudited) | | | (unaudited) | | | Shares | | | Amount | |
Class I | | | | | | | | | | | | |
Shares sold | | | 140,099 | | | $ | 2,624,005 | | | | 638,060 | | | $ | 9,584,681 | |
Reinvestment of distributions | | | 568,996 | | | | 10,145,493 | | | | 663,204 | | | | 9,128,227 | |
Less shares repurchased | | | (543,341 | ) | | | (9,753,225 | ) | | | (1,064,140 | ) | | | (15,621,508 | ) |
Net increase | | | 165,754 | | | $ | 3,016,273 | | | | 237,124 | | | $ | 3,091,400 | |
Class II | | | | | | | | | | | | | | | | |
Shares sold | | | 344,806 | | | $ | 6,435,802 | | | | 383,975 | | | $ | 5,849,297 | |
Reinvestment of distributions | | | 109,829 | | | | 1,974,738 | | | | 94,337 | | | | 1,308,500 | |
Less shares repurchased | | | (161,945 | ) | | | (2,895,521 | ) | | | (313,716 | ) | | | (4,695,871 | ) |
Net increase | | | 292,690 | | | $ | 5,515,019 | | | | 164,596 | | | $ | 2,461,926 | |
The accompanying notes are an integral part of these financial statements.
14
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| | | | | | | | | | | | | | | | | | |
| | Six Months | | | | | | | | | | | | | | | | |
| | Ended | | | | | | | | | | | | | | | | |
| | 6/30/21 | | | Year Ended | | | Year Ended | | | Year Ended Year Ended | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class I | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | $ | 16.83 | | | $ | 14.95 | | | $ | 13.52 | | | $ | 18.29 | | | $ | 17.72 | | | $ | 19.75 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.02 | | | $ | 0.11 | | | $ | 0.16 | | | $ | 0.18 | | | $ | 0.21 | | | $ | 0.24 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 2.91 | | | | 3.19 | | | | 3.83 | | | | (0.24 | ) | | | 3.31 | | | | 1.46 | |
Net increase (decrease) from | | | | | | | | | | | | | | | | | | | | | | | | |
investment operations | | $ | 2.93 | | | $ | 3.30 | | | $ | 3.99 | | | $ | (0.06 | ) | | $ | 3.52 | | | $ | 1.70 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.03 | ) | | $ | (0.11 | ) | | $ | (0.15 | ) | | $ | (0.19 | ) | | $ | (0.21 | ) | | $ | (0.24 | ) |
Net realized gain | | | (1.51 | ) | | | (1.31 | ) | | | (2.41 | ) | | | (4.52 | ) | | | (2.74 | ) | | | (3.49 | ) |
Total distributions | | $ | (1.54 | ) | | $ | (1.42 | ) | | $ | (2.56 | ) | | $ | (4.71 | ) | | $ | (2.95 | ) | | $ | (3.73 | ) |
Net increase (decrease) in net asset value | | $ | 1.39 | | | $ | 1.88 | | | $ | 1.43 | | | $ | (4.77 | ) | | $ | 0.57 | | | $ | (2.03 | ) |
Net asset value, end of period | | $ | 18.22 | | | $ | 16.83 | | | $ | 14.95 | | | $ | 13.52 | | | $ | 18.29 | | | $ | 17.72 | |
Total return (b) | | | 17.59 | %(c) | | | 24.28 | % | | | 31.33 | % | | | (1.51 | )%(d) | | | 21.72 | % | | | 9.81 | % |
Ratio of net expenses to average net assets | | | 0.81 | %(e) | | | 0.79 | % | | | 0.82 | % | | | 0.82 | % | | | 0.77 | % | | | 0.75 | % |
Ratio of net investment income (loss) to average | | | | | | | | | | | | | | | | | | | | | | | | |
net assets | | | 0.27 | %(e) | | | 0.77 | % | | | 1.08 | % | | | 1.12 | % | | | 1.16 | % | | | 1.32 | % |
Portfolio turnover rate | | | 48 | %(c) | | | 91 | % | | | 70 | % | | | 58 | % | | | 59 | % | | | 60 | % |
Net assets, end of period (in thousands) | | $ | 129,055 | | | $ | 116,401 | | | $ | 99,853 | | | $ | 84,375 | | | $ | 101,056 | | | $ | 121,626 | |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2018, the total return would have been (1.55)%. |
(e) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
15
| |
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights (continued) | |
| | | | | | | | | | | | | | | | | | |
| | Six Months | | | | | | | | | | | | | | | | |
| | Ended | | | | | | | | | | | | | | | | |
| | 6/30/21 | | | Year Ended | | | Year Ended | | | Year Ended
| | | Year Ended | | | Year Ended | |
| | (unaudited) | | | 12/31/20 | | | 12/31/19 | | | 12/31/18 | | | 12/31/17 | | | 12/31/16* | |
Class II | | | | | | | | | | | | | | | | | | |
Net asset value, beginning of period | | $ | 16.97 | | | $ | 15.06 | | | $ | 13.60 | | | $ | 18.35 | | | $ | 17.78 | | | $ | 19.79 | |
Increase (decrease) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (a) | | $ | 0.00(b | ) | | $ | 0.08 | | | $ | 0.12 | | | $ | 0.14 | | | $ | 0.16 | | | $ | 0.19 | |
Net realized and unrealized gain (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
on investments | | | 2.93 | | | | 3.21 | | | | 3.86 | | | | (0.24 | ) | | | 3.32 | | | | 1.48 | |
Net increase (decrease) from | | | | | | | | | | | | | | | | | | | | | | | | |
investment operations | | $ | 2.93 | | | $ | 3.29 | | | $ | 3.98 | | | $ | (0.10 | ) | | $ | 3.48 | | | $ | 1.67 | |
Distributions to shareowners: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income | | $ | (0.01 | ) | | $ | (0.07 | ) | | $ | (0.11 | ) | | $ | (0.13 | ) | | $ | (0.17 | ) | | $ | (0.19 | ) |
Net realized gain | | | (1.51 | ) | | | (1.31 | ) | | | (2.41 | ) | | | (4.52 | ) | | | (2.74 | ) | | | (3.49 | ) |
Total distributions | | $ | (1.52 | ) | | $ | (1.38 | ) | | $ | (2.52 | ) | | $ | (4.65 | ) | | $ | (2.91 | ) | | $ | (3.68 | ) |
Net increase (decrease) in net asset value | | $ | 1.41 | | | $ | 1.91 | | | $ | 1.46 | | | $ | (4.75 | ) | | $ | 0.57 | | | $ | (2.01 | ) |
Net asset value, end of period | | $ | 18.38 | | | $ | 16.97 | | | $ | 15.06 | | | $ | 13.60 | | | $ | 18.35 | | | $ | 17.78 | |
Total return (c) | | | 17.44 | %(d) | | | 23.96 | % | | | 31.03 | % | | | (1.74 | )%(e) | | | 21.36 | % | | | 9.62 | % |
Ratio of net expenses to average net assets | | | 1.07 | %(f) | | | 1.04 | % | | | 1.07 | % | | | 1.07 | % | | | 1.02 | % | | | 1.00 | % |
Ratio of net investment income (loss) to average | | | | | | | | | | | | | | | | | | | | | | | | |
net assets | | | 0.03 | %(f) | | | 0.50 | % | | | 0.83 | % | | | 0.88 | % | | | 0.91 | % | | | 1.07 | % |
Portfolio turnover rate | | | 48 | %(d) | | | 91 | % | | | 70 | % | | | 58 | % | | | 59 | % | | | 60 | % |
Net assets, end of period (in thousands) | | $ | 25,054 | | | $ | 18,162 | | | $ | 13,638 | | | $ | 11,237 | | | $ | 13,060 | | | $ | 15,328 | |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Amount rounds to less than $0.01 or $(0.01) per-share. |
(c) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(d) | Not annualized. |
(e) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2018, the total return would have been (1.78)%. |
(f) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Fund VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objectives of the Portfolio are reasonable income and capital growth.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same portfolio of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) |
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
Securities for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
A portion of the dividend income recorded by the Portfolio is from distributions by publicly traded Real Estate Investment Trusts (“REITs”), and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Portfolio as a reduction of the cost basis of the securities held and those determined to be capital gain are reflected as such on the Statement of Operations.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
| 2020 |
Distributions paid from: | |
Ordinary income | $ 2,349,207 |
Long-term capital gain | 8,087,520 |
Total | $ 10,436,727 |
The following shows the components of distributable earnings on a federal income tax basis at December 31, 2020.
| 2020 |
Distributable Earnings: | |
Undistributed long-term capital gain | $ 9,551,896 |
Undistributed ordinary income | 2,479,934 |
Net unrealized appreciation | 43,309,577 |
Total | $ 55,341,407 |
The difference between book-basis and tax-basis net unrealized appreciation is attributable to the tax deferral of losses on wash sales and the tax basis adjustments on REITs and common stocks.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of the adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated among the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) |
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.65% of the Portfolio’s average daily net assets. For the six months ended June 30, 2021, the effective management fee was equivalent to 0.65% (annualized) of the Portfolio’s average daily net assets.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $14,054 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $3,439 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $–.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to its Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $855 in distribution fees payable to the Distributor at June 30, 2021.
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Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statement Regarding Liquidity Risk Management Program | |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust
Officers
Lisa M. Jones, President and Chief Executive Officer
Anthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting Officer
Christopher J. Kelley, Secretary and Chief Legal Officer
Investment Adviser and Administrator
Amundi Asset Management US, Inc.
Custodian and Sub-AdministratorBrown Brothers Harriman & Co.
Principal Underwriter
Amundi Distributor US, Inc.
Legal Counsel
Morgan, Lewis & Bockius LLP Transfer Agent
DST Asset Manager Solutions, Inc. | Trustees Thomas J. Perna, Chairman John E. Baumgardner, Jr. Diane Durnin Benjamin M. Friedman Lisa M. Jones Craig C. MacKay Lorraine H. Monchak Marguerite A. Piret Fred J. Ricciardi Kenneth J. Taubes |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
![](https://capedge.com/proxy/N-CSRS/0001821268-21-000378/bondvctlx1x1.gif)
19611-15-0821
Pioneer Variable Contracts Trust
Pioneer Real Estate Shares
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Real Estate VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
5 Largest Holdings
(As a percentage of total investments)*
1. | Prologis, Inc. | 8.90% |
2. | Equinix, Inc. | 8.77 |
3. | Simon Property Group, Inc. | 5.70 |
4. | National Storage Affiliates Trust | 4.48 |
5. | Extra Space Storage, Inc. | 3.80 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
Performance Update 6/30/21
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Prices and Distributions | | |
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Net Asset Value per Share | 6/30/21 | 12/31/20 |
Class I | $8.91 | $7.63 |
Class II | $8.94 | $7.67 |
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| Net | | |
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains |
Class I | $0.0400 | $ — | $ — |
Class II | $0.0400 | $ — | $ — |
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Real Estate Shares VCT Portfolio at net asset value during the periods shown, compared to that of the Morgan Stanley Capital International (MSCI) U.S. REIT Index. Portfolio returns are based on net asset value and do not reflect applicable insurance fees and surrender charges.
Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
| | | MSCI U.S. |
| Class I | Class II | REIT Index |
10 Years | 8.64% | 8.36% | 9.38% |
5 Years | 5.13% | 4.85% | 6.32% |
1 Year | 33.68% | 33.25% | 38.05% |
All total returns shown assume reinvestment of distributions at net asset value.
The performance table does not reflect the deduction of taxes that a shareowner would pay on distributions or the redemption of shares.
Effective January 1, 2018, the Adviser became directly responsible for portfolio management of the Portfolio. The performance shown for periods prior to January 1, 2018 reflects the investment strategies employed during those periods.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers, performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Comparing Ongoing Portfolio Expenses | |
As a shareowner in the Portfolio, you incur two types of costs:
(1) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and
(2) transaction costs, including sales charges (loads) on purchase payments.
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. Divide your account value by $1,000
Example: an $8,600 account value ÷ $1,000 = 8.6
2. Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
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Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,173.30 | $1,171.00 |
Expenses Paid During Period* | $ 7.71 | $ 9.04 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 1.43% and 1.68%, for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Real Estate Shares VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
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Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,017.70 | $1,016.46 |
Expenses Paid During Period* | $ 7.15 | $ 8.40 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 1.43% and 1.68%, for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, Raymond Haddad discusses the market environment for real estate investment trusts (REITs) and other real estate-related investments and the factors that influenced the performance of Pioneer Real Estate Shares VCT Portfolio during the six-month reporting period ended June 30, 2021. Mr. Haddad, a vice president and portfolio manager at Amundi Asset Management US, Inc. (Amundi US), is responsible for the day-to-day management of the Portfolio.
Q:How did the Portfolio perform during the six-month period ended June 30, 2021?
A:Pioneer Real Estate Shares VCT Portfolio’s Class I shares returned 17.33% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 17.10%, while the Portfolio’s benchmark, the Morgan Stanley Capital International (MSCI) US Real Estate Investment Trust (REIT) Index1, returned 21.80%.
Q:How would you describe the market environment for REIT investors during the six-month period ended June 30, 2021?
A:Amid stronger economic growth and aided by considerable fiscal stimulus from the US government, the environment for the US real estate market continued to improve during the first half of 2021. The easing of COVID-19-related restrictions in the wake of more widespread vaccine distributions, pent-up demand, and consumer savings amassed while many businesses either closed or operated at lower capacity for roughly a year helped the US economy, as measured by gross domestic product (GDP), grow at a 6.4% pace in the first quarter of 2021. That backdrop, combined with investors’ appetite for higher-risk assets, contributed to strong gains for real estate-related assets and helped the sector recoup much of the ground it had lost during 2020.
While all seven subsectors within the Portfolio’s benchmark, the MSCI US REIT Index, posted positive results for the six-month period, those that had struggled the most under COVID-19-related lockdown measures outperformed during the reporting period. Accordingly, malls, lodging, and apartment REITs led the rebound. Office REITs and “stay-at-home” REIT sectors, such as data centers and wireless towers, also saw positive results for the six-month period, but lagged the overall market.
Despite positive overall performance, the six-month period was not without headwinds and bouts of market volatility. Uncertainty with regard to inflationary pressures and the emergence of the COVID-19 “Delta” variant, which caused a large spike in virus cases in Asia and other areas, weighed on investor sentiment at times.
1 | The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. |
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Q:Which investments detracted from the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021?
A:We had a guarded short-term outlook when the reporting period began back in January. The lingering uncertainty created by the pandemic, questions about the timing of a full economic recovery, and the risk of a sudden reversal in investor confidence had contributed to a fragile backdrop, in our view. With that in mind, we positioned the Portfolio with underweight exposures versus the benchmark in coastal apartments and mall REITs. However, given the surprising speed and strength of the US recovery during the first half of 2021, those allocation decisions detracted from the Portfolio’s benchmark-relative results. Our more cautious stance also meant that we had underestimated how fast the self-storage REIT subsector would recover, which proved to be another detractor from relative returns.
With regard to individual REITs, our decision to avoid investing in Equity Residential (EQR), Avalon Apartments (AVB), and Public Storage detracted the most from the Portfolio’s benchmark-relative results during the six-month period, as each of those REITs turned in solid performance. The Portfolio’s lack of exposure to those REITs stemmed purely from our decision to invest in other companies within the apartments and storage subsectors. With regard to EQR and AVB, both of which have a focus on large metropolitan cities on the east and west coasts, we thought it was more prudent to invest the Portfolio in apartment REITs that had less geographical exposure to the bi-coastal pandemic outbreaks. However, when investor sentiment shifted during the period, EQR and AVB rallied more strongly than the Portfolio’s investments in REITs that had not experienced the same degree of price deterioration during the height of the pandemic.
The Portfolio’s holdings within storage REITs saw a similar story play out over the six-month period. The Portfolio’s investments in storage REITs fared well, but the holdings lagged the performance of Public Storage, a benchmark component within the sector that outperformed the broader REIT market. Despite their underperformance over the period, we believe the Portfolio’s storage REITs, most of which have typically focused on smaller, less-fragmented markets, continue to be attractive investments, and could potentially be more active on the mergers and acquisitions front.
Q:Which investments or strategies aided the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2021?
A:Overweight exposures to lodging, retail, and other companies that we believed could stand to benefit from a broader reopening of the US economy performed well and aided the Portfolio’s benchmark-relative returns during the six-month period. Within the lodging subsector, the Portfolio’s investment in Park Hotels and Resorts was the top positive contributor to relative performance for the period. The REIT has a diverse portfolio of iconic hotels and resorts located in top US and international markets. We believe Park could benefit from continued property openings and a potential recovery in business travel.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 (continued) | |
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
The Portfolio invests in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
The Portfolio invests in a limited number of securities and, as a result, the Portfolio’s performance may be more volatile than the performance of other portfolios holding more securities.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall, the prices of fixed-income securities in the Portfolio will generally rise.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
The second- and third-best relative performers for the Portfolio during the period were holdings in companies that fell outside of the MSCI US REIT benchmark, but still reside within the real estate sector. A position in Urban Outfitters fared well, as mall reopenings and increased consumer spending boosted the company’s performance. Finally, given a booming housing market, the Portfolio’s investment in Jones LaSalle, a real estate services company, benefited from increased lease transactions over the six-month period.
Q:Did you make any noteworthy adjustments to the Portfolio’s sector allocations during the six-month period ended June 30, 2021?
A:Yes. During the first four months of the period, we began shifting some of the Portfolio’s investments into the REIT subsectors that had faced the biggest challenges from the lockdown measures related to the pandemic. As part of the strategy, we increased the Portfolio’s exposure to economically sensitive, cyclical subsectors that we believed could perform well if the US economy continued on a path towards a full reopening.
Q:Did the Portfolio have exposure to any derivative securities during the six-month period ended June 30, 2021?
A:No, the Portfolio had no exposure to derivative investments during the six-month period.
Q:What is your outlook?
A:In our view, the performance of the REIT market has continued to depend largely on the pace of reopenings, the path of COVID-19 variants, and vaccination rates. We believe a muted interest-rate environment could continue to act as a sign to investors that the economy is improving, with a lower risk of an overheated economy.
We feel that the biggest headwinds to further improvements include sharply rising interest rates, an increase in COVID-19 hospitalizations, and the potential for more economic shutdowns should cases and hospitalizations spike dramatically. On the other hand, we think continued improvement in economic growth and employment trends, coupled with strong consumer spending, might bode well for real estate-related assets.
Please refer to the Schedule of Investments on pages 7 to 8 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) | |
| | | |
Shares | | | Value |
| | UNAFFILIATED ISSUERS – 98.5% | |
| | COMMON STOCKS – 98.5% of Net Assets | |
| | Equity Real Estate Investment Trusts (REITs) – 96.2% | |
7,890 | | Acadia Realty Trust | $ 173,264 |
4,169 | | Alexandria Real Estate Equities, Inc. | 758,508 |
19,055 | | American Homes 4 Rent | 740,287 |
1,592 | | American Tower Corp. | 430,063 |
18,870 | | Brixmor Property Group, Inc. | 431,934 |
8,204 | | Broadstone Net Lease, Inc. | 192,056 |
3,502 | | Camden Property Trust | 464,610 |
15,479(a) | | CorePoint Lodging, Inc. | 165,625 |
2,648 | | CyrusOne, Inc. | 189,385 |
9,871(a) | | DiamondRock Hospitality Co. | 95,749 |
18,729(a) | | DigitalBridge Group, Inc. | 147,959 |
4,930 | | EastGroup Properties, Inc. | 810,738 |
2,647 | | Equinix, Inc. | 2,124,482 |
12,310 | | Essential Properties Realty Trust, Inc. | 332,862 |
3,006 | | Essex Property Trust, Inc. | 901,830 |
5,625 | | Extra Space Storage, Inc. | 921,488 |
7,350 | | First Industrial Realty Trust, Inc. | 383,891 |
2,757 | | Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 154,806 |
17,805 | | Independence Realty Trust, Inc. | 324,585 |
1,535 | | Innovative Industrial Properties, Inc. | 293,216 |
778(a) | | Jones Lang LaSalle, Inc. | 152,068 |
19,991 | | Kimco Realty Corp. | 416,812 |
6,406 | | Kite Realty Group Trust | 140,996 |
1,101 | | Lamar Advertising Co. | 114,966 |
4,750 | | Life Storage, Inc. | 509,913 |
27,027 | | Macerich Co. | 493,243 |
6,900 | | MGM Growth Properties LLC | 252,678 |
4,515 | | Mid-America Apartment Communities, Inc. | 760,416 |
21,450 | | National Storage Affiliates Trust | 1,084,512 |
5,938 | | NETSTREIT Corp. | 136,930 |
4,140 | | NexPoint Residential Trust, Inc. | 227,617 |
23,615(a) | | Park Hotels & Resorts, Inc. | 486,705 |
8,716 | | Pebblebrook Hotel Trust | 205,262 |
2,925 | | Preferred Apartment Communities, Inc. | 28,519 |
18,035 | | Prologis, Inc. | 2,155,724 |
3,274 | | Regency Centers Corp. | 209,765 |
33,499 | | Retail Properties of America, Inc. | 383,564 |
3,629 | | Retail Value, Inc. | 78,931 |
5,104 | | Rexford Industrial Realty, Inc. | 290,673 |
1,969(a) | | Ryman Hospitality Properties, Inc. | 155,472 |
2,772 | | Safehold, Inc. | 217,602 |
10,583 | | Simon Property Group, Inc. | 1,380,870 |
17,701 | | SITE Centers Corp. | 266,577 |
5,538 | | SL Green Realty Corp. | 443,040 |
3,659 | | STAG Industrial, Inc. | 136,956 |
4,090 | | Sun Communities, Inc. | 701,026 |
7,228 | | Tanger Factory Outlet Centers, Inc. | 136,248 |
16,336 | | UDR, Inc. | 800,137 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Shares | | | Value |
| | Equity Real Estate Investment Trusts (REITs) – (continued) | |
5,324 | | Urstadt Biddle Properties, Inc. | $ 103,179 |
8,793 | | VICI Properties, Inc. | 272,759 |
10,414 | | Welltower, Inc. | 865,403 |
391(a) | | Xenia Hotels & Resorts, Inc. | 7,323 |
| | Total Equity Real Estate Investment Trusts (REITs) | $23,653,224 |
| | Real Estate Management & Development – 1.9% | |
6,823(a) | | eXp World Holdings, Inc. | $ 264,528 |
11,741(a) | | Realogy Holdings Corp. | 213,921 |
| | Total Real Estate Management & Development | $ 478,449 |
| | Specialty Retail – 0.4% | |
2,325(a) | | Urban Outfitters, Inc. | $ 95,837 |
| | Total Specialty Retail | $ 95,837 |
| | TOTAL COMMON STOCKS | |
| | (Cost $17,847,809) | $24,227,510 |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS – 98.5% | |
| | (Cost $17,847,809) | $24,227,510 |
| | OTHER ASSETS AND LIABILITIES – 1.5% | $ 359,957 |
| | NET ASSETS – 100.0% | $24,587,467 |
REIT | Real Estate Investment Trust. |
(a) | Non-income producing security. |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021, aggregated $13,733,520 and $15,112,845, respectively.
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which Amundi Asset Management US, Inc. (the “Adviser”) serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $17,927,077 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 6,400,391 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (99,958) |
Net unrealized appreciation | $ 6,300,433 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments:
| | | | |
| Level 1 | Level 2 | Level 3 | Total |
Common Stocks | $24,227,510 | $ — | $ — | $ 24,227,510 |
Total Investments in Securities | $24,227,510 | $ — | $ — | $ 24,227,510 |
During the six months ended June 30, 2021, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/21 (unaudited) | |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $17,847,809) | $24,227,510 |
Receivables — | |
Investment securities sold | 817,327 |
Portfolio shares sold | 308 |
Dividends | 55,646 |
Other assets | 660 |
Total assets | $25,101,451 |
|
LIABILITIES: | |
Due to custodian | $ 27,981 |
Payables — | |
Investment securities purchased | 409,450 |
Portfolio shares repurchased | 45,004 |
Professional fees | 27,935 |
Due to affiliates | 627 |
Accrued expenses | 2,987 |
Total liabilities | $ 513,984 |
|
NET ASSETS: | |
Paid-in capital | $18,128,928 |
Distributable earnings | 6,458,539 |
Net assets | $24,587,467 |
|
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class I (based on $6,474,060/726,955 shares) | $ 8.91 |
Class II (based on $18,113,407/2,025,335 shares) | $ 8.94 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | |
| | | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | |
INVESTMENT INCOME: | | | |
Dividends from unaffiliated issuers | $ 295,627 | | |
Interest from unaffiliated issuers | 54 | | |
Total investment income | | | $ 295,681 |
EXPENSES: | | | |
Management fees | $ 92,920 | | |
Administrative expense | 29,608 | | |
Distribution fees | | | |
Class II | 21,364 | | |
Custodian fees | 3,500 | | |
Professional fees | 28,929 | | |
Printing expense | 7,000 | | |
Trustees’ fees | 3,509 | | |
Insurance expense | 38 | | |
Miscellaneous | 298 | | |
Total expenses | | | $ 187,166 |
Net investment income | | | $ 108,515 |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | |
Net realized gain (loss) on: | | | |
Investments in unaffiliated issuers | | | $ 2,766,350 |
Change in net unrealized appreciation (depreciation) on: | | | |
Investments in unaffiliated issuers | $ 854,073 | | |
Other assets and liabilities denominated in foreign currencies | 6 | | $ 854,079 |
Net realized and unrealized gain (loss) on investments | | | $ 3,620,429 |
Net increase in net assets resulting from operations | | | $ 3,728,944 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| | |
| Six Months | |
| Ended | |
| 6/30/21 | Year Ended |
| (unaudited) | 12/31/20 |
FROM OPERATIONS: | | |
Net investment income (loss) | $ 108,515 | $ 128,997 |
Net realized gain (loss) on investments | 2,766,350 | (2,658,239) |
Change in net unrealized appreciation (depreciation) on investments | 854,079 | 407,425 |
Net increase (decrease) in net assets resulting from operations | $ 3,728,944 | $ (2,121,817) |
DISTRIBUTIONS TO SHAREOWNERS: | | |
Class I ($0.04 and $2.54 per share, respectively) | $ (29,896) | $ (1,496,545) |
Class II ($0.04 and $2.52 per share, respectively) | (82,637) | (4,189,955) |
Tax return of capital: | | |
Class I ($— and $0.09 per share, respectively) | — | (57,589) |
Class II ($— and $0.09 per share, respectively) | — | (163,361) |
Total distributions to shareowners | $ (112,533) | $ (5,907,450) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | |
Net proceeds from sales of shares | $ 591,702 | $ 1,406,759 |
Reinvestment of distributions | 112,533 | 5,907,450 |
Cost of shares repurchased | (2,139,961) | (3,955,339) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | $ (1,435,726) | $ 3,358,870 |
Net increase (decrease) in net assets | $ 2,180,685 | $ (4,670,397) |
NET ASSETS: | | |
Beginning of period | $ 22,406,782 | $ 27,077,179 |
End of period | $ 24,587,467 | $ 22,406,782 |
|
|
|
|
|
|
| |
| Six Months |
| Six Months |
|
|
| |
| Ended |
| Ended |
|
|
| |
| 6/30/21 |
| 6/30/21 |
| Year Ended |
| Year Ended |
| Shares |
| Amount |
| 12/31/20 |
| 12/31/20 |
| (unaudited) |
| (unaudited) |
| Shares |
| Amount |
Class I |
|
|
|
|
|
| |
Shares sold | 23,418 |
| $ 189,948 |
| 34,380 |
| $ 274,499 |
Reinvestment of distributions | 3,519 |
| 29,896 |
| 221,074 |
| 1,554,134 |
Less shares repurchased | (71,453) |
| (592,708) |
| (92,700) |
| (767,176) |
Net increase (decrease) | (44,516) |
| $ (372,864) |
| 162,754 |
| $ 1,061,457 |
Class II |
|
|
|
|
|
| |
Shares sold | 49,008 |
| $ 401,754 |
| 133,758 |
| $ 1,132,260 |
Reinvestment of distributions | 9,684 |
| 82,637 |
| 615,229 |
| 4,353,316 |
Less shares repurchased | (187,527) |
| (1,547,253) |
| (364,158) |
| (3,188,163) |
Net increase (decrease) | (128,835) |
| $ (1,062,862) |
| 384,829 |
| $ 2,297,413 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| Six Months |
|
|
|
| |
| Ended |
|
|
|
| |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class I |
|
|
|
|
| |
Net asset value, beginning of period | $ 7.63 | $11.35 | $12.55 | $15.40 | $16.37 | $19.53 |
Increase (decrease) from investment operations: |
| |
Net investment income (loss) (a) | $ 0.05 | $ 0.06 | $ 0.16 | $ 0.25 | $ 0.26 | $ 0.26 |
Net realized and unrealized gain (loss) |
|
| |
on investments | 1.27 | (1.15) | 3.16 | (1.26) | 0.28 | 0.95 |
Net increase (decrease) from investment operations | $ 1.32 | $ (1.09) | $ 3.32 | $ (1.01) | $ 0.54 | $ 1.21 |
Distributions to shareowners: |
|
|
| |
Net investment income | $ (0.04) | $ (0.06) | $ (0.19) | $ (0.25) | $ (0.26) | $(0.27) |
Net realized gain | — | (2.48) | (4.33) | (1.59) | (1.25) | (4.10) |
Tax return of capital | — | (0.09) | — | — | — | — |
Total distributions | $ (0.04) | $ (2.63) | $ (4.52) | $ (1.84) | $ (1.51) | $(4.37) |
Net increase (decrease) in net asset value | $ 1.28 | ($3.72) | $ (1.20) | $ (2.85) | $ (0.97) | $(3.16) |
Net asset value, end of period | 8.91 | $ 7.63 | $11.35 | $12.55 | $15.40 | $16.37 |
Total return (b) | 17.33%(c) | (7.34)% | 28.16% | (7.24)% | 3.50% | 6.05% |
Ratio of net expenses to average net assets | 1.43%(d) | 1.46% | 1.33% | 1.37% | 1.12% | 1.06% |
Ratio of net investment income (loss) to average |
| |
net assets | 1.12%(d) | 0.77% | 1.29% | 1.76% | 1.63% | 1.42% |
Portfolio turnover rate | 60%(c) | 155% | 125% | 154% | 8% | 9% |
Net assets, end of period (in thousands) | $ 6,474 | $5,885 | $6,910 | $6,210 | $7,824 | $8,993 |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period.
|
(c) | Not annualized. |
(d) | Annualized. |
|
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
|
The accompanying notes are an integral part of these financial statements.
12
Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class II | | | | | | |
Net asset value, beginning of period | $ 7.67 | $ 11.40 | $ 12.58 | $ 15.44 | $ 16.40 | $ 19.55 |
Increase (decrease) from investment operations: | | |
Net investment income (loss) (a) | $ 0.04 | $ 0.04 | $ 0.13 | $ 0.21 | $ 0.22 | $ 0.21 |
Net realized and unrealized gain (loss) | | | |
on investments | 1.27 | (1.16) | 3.17 | (1.27) | 0.29 | 0.96 |
Net increase (decrease) from investment operations | $ 1.31 | $ (1.12) | $ 3.30 | $ (1.06) | $ 0.51 | $ 1.17 |
Distributions to shareowners: | | | | |
Net investment income | $ (0.04) | $ (0.04) | $ (0.15) | $ (0.21) | $ (0.22) | $ (0.22) |
Net realized gain | — | (2.48) | (4.33) | (1.59) | (1.25) | (4.10) |
Tax return of capital | — | (0.09) | — | — | — | — |
Total distributions | $ (0.04) | $ (2.61) | $ (4.48) | $ (1.80) | $ (1.47) | $ (4.32) |
Net increase (decrease) in net asset value | $1.27 | ($3.73) | ($1.18) | ($2.86) | ($0.96) | ($3.15) |
Net asset value, end of period | $8.94 | $ 7.67 | $11.40 | $12.58 | $15.44 | $16.40 |
Total return (b) | 17.10%(c) | (7.62)% | 27.91% | (7.54)% | 3.30% | 5.82% |
Ratio of net expenses to average net assets | 1.68%(d) | 1.71% | 1.58% | 1.62% | 1.37% | 1.31% |
Ratio of net investment income (loss) to average | | |
net assets | 0.87%(d) | 0.51% | 1.04% | 1.51% | 1.37% | 1.18% |
Portfolio turnover rate | 60%(c) | 155% | 125% | 154% | 8% | 9% |
Net assets, end of period (in thousands) | $18,113 | $16,522 | $20,167 | $18,393 | $23,592 | $28,116 |
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* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the period presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all 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.
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(c) | Not annualized. |
(d) | Annualized. |
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NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance |
| products, such as mortality and expense risk charges, separate account charges, and sales charges. |
The accompanying notes are an integral part of these financial statements.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Real Estate Shares VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Portfolio is to pursue long-term capital growth, with current income as a secondary objective.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same schedule of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Equity securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Securities for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, no securities were valued using fair value methods (other than securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance industry pricing model).
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
A portion of the dividend income recorded by the Portfolio is from distributions by publicly traded Real Estate Investment Trusts (“REITs”), and such distributions for tax purposes may also consist of capital gains and return of capital. The actual return of capital and capital gains portions of such distributions will be determined by formal notifications from the REITs subsequent to the calendar year-end. Distributions received from the REITs that are determined to be a return of capital are recorded by the Portfolio as a reduction of the cost basis of the securities held and those determined to be capital gain are reflected as such on the Statement of Operations.
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| Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
| Notes to Financial Statements 6/30/21 (unaudited) (continued) |
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
The tax character of current year distributions payable will be determined at the end of the current taxable year. The tax character of distributions paid during the year ended December 31, 2020 was as follows:
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| 2020 |
Distributions paid from: | |
Ordinary income | $ 151,038 |
Long-term capital gain | 5,535,462 |
Tax return of capital | 220,950 |
Total | $ 5,907,450 |
The following shows the components of distributable earnings on a federal income tax basis at December 31, 2020:
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| 2020 |
Distributable earnings/(losses): | |
Capital loss carryforward | $(2,665,498) |
Net unrealized appreciation | 5,507,626 |
Total | $ 2,842,128 |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses (excluding transfer agent and distribution fees) and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated between the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
Dividends and distributions to shareowners are recorded on the ex-dividend date. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
Because the Portfolio may invest a substantial portion of its assets in REITs, the Portfolio may be subject to certain risks associated with direct investments in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital return may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code or its failure to maintain exemption from registration under the Investment Company Act of 1940.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.80% of the Portfolio’s average daily net assets up to $500 million and 0.75% of the Portfolio’s average daily net assets over $500 million. For the six months ended June 30, 2021, the effective management fee was equivalent to 0.80% (annualized) of the Portfolio’s average daily net assets.
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| Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
| Notes to Financial Statements 6/30/21 (unaudited) (continued) |
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $- in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $3,509 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $–.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor a distribution fee of 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $627 in distribution fees payable to the Distributor at June 30, 2021.
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Pioneer Real Estate VCT Portfolio | Pioneer Variable Contracts Trust |
Statement Regarding Liquidity Risk Management Program | |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust | Trustees |
| Thomas J. Perna, Chairman |
Officers | John E. Baumgardner, Jr.
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Lisa M. Jones, President and Chief Executive Officer | Diane Durnin
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Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Benjamin M. Friedman |
Accounting Officer | Lisa M. Jones
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Christopher J. Kelley, Secretary and Chief Legal Officer | Craig C. MacKay |
| Lorraine H. Monchak
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Investment Adviser and Administrator | Marguerite A. Piret |
Amundi Asset Management US, Inc. | Fred J. Ricciardi |
| Kenneth J. Taubes |
Custodian and Sub-Administrator |
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Brown Brothers Harriman & Co. |
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Principal Underwriter | |
Amundi Distributor US, Inc. | |
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Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
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Transfer Agent | |
DST Asset Manager Solutions, Inc. | |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
19614-15-0821
Pioneer Variable Contracts Trust
Pioneer Strategic Income
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2021
Paper copies of the Portfolio’s shareholder reports may no longer be sent by mail, unless you specifically request paper copies of the reports from the insurance company that offers your variable annuity or variable life insurance contract, or from your financial intermediary. Instead, the insurance company may choose to make the reports available on a website, and will notify you by mail each time a shareholder report is posted and provide you with a website link to access the report. Instructions for requesting paper copies will be provided by your insurance company.
You may elect to receive all future Portfolio shareholder reports in paper form, free of charge, from the insurance company. You can inform the insurance company or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by following the instructions provided by the insurance company, or by contacting your financial intermediary. Your election to receive reports in paper form will apply to all portfolios available under your contract with the insurance company.
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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Pioneer Strategic Income VCT Portfolio | |
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This report is authorized for distribution only when preceded or accompanied by a prospectus for the Portfolio being offered.
Pioneer Variable Contracts Trust files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Shareholders may view the filed Form N-PORT by visiting the Commission’s web site at https://www.sec.gov.
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
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5 Largest Holdings
(As a percentage of total investments)*
1. | U.S. Treasury Bills, 8/26/21 | 8.17% |
2. | U.S. Treasury Bills, 7/27/21 | 7.15 |
3. | U.S. Treasury Bills, 8/3/21 | 3.06 |
4. | Fannie Mae, 2.5%, 7/1/51 (TBA) | 2.54 |
5. | Fannie Mae, 4.5%, 7/1/51 (TBA) | 2.42 |
* | Excludes temporary cash investments and all derivative contracts except for options purchased. The Portfolio is actively managed, and current holdings may be different. The holdings listed should not be considered recommendations to buy or sell any securities. |
(q) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
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Performance Update 6/30/21 | | | |
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Prices and Distributions | | | | |
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Net Asset Value per Share | | 6/30/21 | 12/31/20 | |
Class I | | $10.56 | $10.69 | |
Class II | | $10.54 | $10.67 | |
| Net | | | |
Distributions per Share | Investment | Short-Term | Long-Term | |
(1/1/21 – 6/30/21) | Income | Capital Gains | Capital Gains | |
Class I | $0.1750 | $ — | $0.1003 | |
Class II | $0.1614 | $ — | $0.1003 | |
Performance of a $10,000 InvestmentThe following chart shows the change in value of an investment made in Class I and Class II shares of Pioneer Strategic Income VCT Portfolio at net asset value during the periods shown, compared to that of the Bloomberg Barclays U.S. Universal Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The Bloomberg Barclays U.S. Universal Index is an unmanaged index that represents the union of the U.S. Aggregate Index, the US High Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, the non-ERISA portion of the CMBS Index, and the CMBS High Yield Index. Municipal debt, private placements and non-dollar-denominated issues are excluded from the Index. Index returns are calculated monthly, assume reinvestment of dividends and, unlike Portfolio returns, do not reflect any fees, expenses or sales charges. It is not possible to invest directly in an index.
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Average Annual Total Returns | | | |
(As of June 30, 2021) | | | |
| | | Bloomberg |
| | | Barclays U.S. |
| Class I | Class II | Universal Index |
10 Years | 4.52% | 4.27% | 3.74% |
5 Years | 4.96% | 4.70% | 3.48% |
1 Year | 11.35% | 10.98% | 1.12% |
All total returns shown assume reinvestment of distributions at net asset value.
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Comparing Ongoing Portfolio Expenses |
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As a shareowner in the Portfolio, you incur two types of costs:
(1) | ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Portfolio expenses; and |
(2) | transaction costs, including sales charges (loads) on purchase payments. |
This example is intended to help you understand your ongoing expenses (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds offered through your variable annuity contract. The example is based on an investment of $1,000 at the beginning of the Portfolio’s latest six-month period and held throughout the six months.
Using the Tables
Actual Expenses
The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period as follows:
1. | Divide your account value by $1,000 |
| Example: an $8,600 account value ÷ $1,000 = 8.6 |
2. | Multiply the result in (1) above by the corresponding share class’s number in the third row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. |
Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio
Based on actual returns from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,023.50 | $1,022.20 |
Expenses Paid During Period* | $ 3.76 | $ 5.01 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.75% and 1.00%, for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the Portfolio and other variable annuities. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other variable annuities.
Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) that are charged at the time of the transaction. Therefore, the table below is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different variable annuities. In addition, if these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Strategic Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2021 through June 30, 2021.
Share Class | I | II |
Beginning Account Value on 1/1/21 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/21 | $1,021.08 | $1,019.84 |
Expenses Paid During Period* | $3.76 | $5.01 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.75% and 1.00%, for Class I and Class II shares, respectively, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/21 | |
Call 1-800-688-9915 or visit www.amundi.com/us for the most recent month-end performance results. Current performance may be lower or higher than the performance data quoted.
The performance data quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost.
The returns for the Portfolio do not reflect the deduction of expenses associated with variable products, such as mortality and expense risk charges, separate account charges, and sales charges. These expenses would reduce the overall returns shown.
Performance results reflect any applicable expense waivers in effect during the periods shown. Without such waivers performance would be lower. Waivers may not be in effect for all portfolios. Certain fee waivers are contractual through a specified period. Otherwise, fee waivers can be rescinded at any time. See the prospectus and financial statements for more information.
In the following interview, Jonathan Scott and Andrew Feltus discuss the factors that affected the performance of Pioneer Strategic Income VCT Portfolio during the six-month period ended June 30, 2021. Mr. Scott, a Vice President and portfolio manager at Amundi Asset Management US, Inc. (Amundi US), Mr. Feltus, Managing Director, Co-Director of High Yield, and a portfolio manager at Amundi US, Brad Komenda, a Senior Vice President, Deputy Director of Investment Grade Corporates, and a portfolio manager at Amundi US, and Kenneth J. Taubes, Executive Vice President and Chief Investment Officer, US, and a portfolio manager at Amundi US, are responsible for the day-to-day management of the Portfolio.
Q: How did the Portfolio perform during the six-month period ended June 30, 2021?
A: Pioneer Strategic Income VCT Portfolio’s Class I shares returned 2.35% at net asset value during the six-month period ended June 30, 2021, and Class II shares returned 2.22%, while the Portfolio’s benchmark, the Bloomberg Barclays US Universal Index (the Bloomberg Barclays Index), returned -1.15%. |
Q: How would you describe the investment environment in the fixed-income markets during the six-month period ended June 30, 2021?
A. The three months of the period saw strong equity market returns, notably higher US Treasury yields, and rising inflation expectations, driven by investor optimism regarding the global economic growth outlook. Contributing to the optimistic view was the Democratic Party’s gaining control of both houses of Congress in early January, which gave rise to a new $1.9 trillion US fiscal stimulus package and, later, a proposed $3 billion-plus infrastructure bill. In addition, the continued distribution of COVID-19 vaccines in the US as well as a general decline in severe virus cases, coupled with the ongoing reopening of the economy, helped boost market sentiment during the period.
As the six-month period progressed, the continued, highly dovish posture on monetary policy from the US Federal Reserve (Fed) lent further support to the markets, as the US central bank expressed its intention to remain “on the sidelines” with regard to major policy changes until at least 2023. The Fed based its projection on the view that near-term increases in inflation above the usual 2% target would be transitory, and not structural. The Fed also messaged that it would look at average inflation over time, rather than focusing on isolated upticks in prices and thus feeling compelled to raise rates in response.
However, the “reflation trade” wobbled during June as market participants navigated growing apprehension over the spread of COVID-19 variants and a somewhat “hawkish” Fed Open Market Committee (FOMC) meeting that month. Investors in the Treasury market reacted to the updated Fed “dot plot” displaying FOMC member forecasts for the federal funds rate, which pointed to a median year-end 2023 target rate of 0.625%, or 50 basis points (bps) higher than the March forecast. (The Fed’s “dot” plot/projection is a quarterly chart summarizing the outlook for the federal funds rate for each of the FOMC’s members. A basis point is equal to 1/100th of a percentage point.)
The yield curve twisted around the intermediate portion, with short-end yields rising and long-end yields falling. Notably, breakeven inflation rates fell significantly. The movement suggested investor doubts regarding the Fed’s
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| |
long-term commitment to its current average inflation targeting framework. (Breakeven rates represent the difference(s) between the yield of a nominal bond and an inflation-linked bond of the same maturity.)
For the six months ended June 30, 2021, spread sectors, other than agency mortgage-backed securities (MBS), outperformed Treasuries, benefiting from rebounding global economic growth, supportive monetary and fiscal policies, record corporate earnings, and strong consumer balance sheets.(Spread sectors are defined as nongovernmental fixed-income market sectors that offer higher yields, at greater risk, than governmental investments.)
However, most investment-grade-rated assets with greater sensitivity to movements in interest rates sustained losses over the six-month period, as average yields rose on a steepening yield curve, while Treasury prices fell. Within the investment-grade universe, corporate bonds led performance for the period. Meanwhile, agency MBS underperformed Treasuries as banks reduced investment levels in the second quarter and prepayments on higher-coupon mortgages exceeded model expectations. Other securitized sectors, including non-agency MBS, commercial MBS (CMBS), and asset-backed securities (ABS), enjoyed a strong rebound, benefiting from record housing prices, declining mortgage forbearance rates, a strong consumer, and a surge in economic growth.
High-yield corporate bonds, which have been typically less sensitive to interest rates, provided strong positive returns for the six-month period, while more rate-sensitive emerging markets sovereign debt delivered losses. Emerging markets corporates, benefiting from the rebound in global credit markets, provided a modest positive return.
Finally, the US dollar (USD) rose by 1.95% against a broad basket of major currencies on a trade-weighted basis.
Q: What factors influenced the Portfolio’s performance relative to the benchmark Bloomberg Barclays Index during the six-month period ended June 30, 2021?
A: As a multisector fixed-income strategy, we have managed the Portfolio with the aim of potentially delivering strong returns, while experiencing volatility similar to its benchmark, by investing across a diversified* range of investment-grade and non-investment-grade global fixed-income asset classes. We seek to add value through both sector allocation and security selection, focusing on sectors that trade at a yield advantage relative to US Treasuries, including corporate bonds, agency MBS, securitized assets, and emerging markets, which have typically offered higher risk-adjusted returns than Treasuries as well as greater security selection opportunities. We have typically taken a dynamic approach to sector allocation, and may seek to increase the Portfolio’s risk profile when we feel the markets have offered significant compensation for taking on risk, while seeking to reduce the risk profile when we feel markets have offered less-attractive value.
During the six-month period, the Portfolio’s sector allocations benefited relative returns, primarily due to overweights in the credit sectors, including an approximately 4% overweight to CMBS and a 15% allocation to non-agency MBS, along with a modest overweight to industrials within investment-grade
* Diversification does not assure a profit nor protect against loss.
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Portfolio Management Discussion 6/30/21 (continued) | |
corporates. Portfolio underweights to defensive sectors also contributed positively to benchmark-relative performance, most notably an approximately 28% underweight to US Treasuries and a 5% underweight to agency MBS. With respect to CMBS and industrials, much of the benefit to relative returns from sector allocations derived from the lower quality (versus the benchmark) of the Portfolio’s holdings, as lower-quality “BBB” securities and high-yield assets outperformed for the six-month period. Additionally, a 3.1% exposure to Treasury inflation-protected securities (TIPS) aided the Portfolio’s relative performance as inflation expectations rebounded, particularly during the first part of the period. Finally, a roughly 7% allocation to high-yield credit-default-swap index contracts and a 3% stake in convertible securities benefited relative returns.
With regard to security selection, the Portfolio’s benchmark-relative results benefited primarily from outperformance within holdings of industrials issues and, to a lesser extent, within financials and agency MBS. Energy credits outperformed within industrials as oil prices rose sharply over the six-month period. One positive contributor to the Portfolio’s performance was a position in Cenovus, a Canadian oil company that became the third-largest energy firm in Canada after making an acquisition. The company enjoyed particularly strong performance during the six-month period, benefiting from a ratings upgrade. Other holdings within cyclical sectors and commodities firms, including airlines, also outperformed for the Portfolio during the period as the economy rebounded. Within financials, the strong performance of aircraft-leasing firm Global Aviation aided relative returns, as did holdings of subordinated securities of European banks. The Portfolio’s agency MBS exposures also outperformed, reflecting an overweight to to-be-announced (TBA) securities, which benefited from the Fed’s purchasing program within the MBS asset class. (A “TBA” is a contract to purchase or sell an MBS on a specific date, but it does not include information regarding the pool number, number of pools, or the exact amount that will be included in the transaction.)
The short-US duration position of the Portfolio versus the Bloomberg Barclays Index aided relative performance as average US yields rose and the yield curve steepened over the six-month period. (Duration is a measure of the sensitivity of the price, or the value of principal, of a fixed-income investment to a change in interest rates, expressed as a number of years.) The 10-year Treasury rose from 0.93% at the beginning of the period to a peak of 1.74% in March, settling in at 1.45% as of June 30, 2021.
Given the negative return of the Portfolio’s benchmark for the full six-month period, there were few detractors from relative results. However, non-USD exposures underperformed and acted as a headwind to relative performance, as the USD rose by approximately 2% over the period. Allocations to the Swedish krona, Peruvian sol, and Polish zloty weighed most heavily on the Portfolio’s return.
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Portfolio Management Discussion 6/30/21 (continued) | |
Q: Did the Portfolio have any investments in derivative securities during the six-month period ended June 30, 2021? If so, did the derivatives have any material impact on performance?
A: Yes, the Portfolio had investments in three types of derivatives: Treasury futures, credit-default swaps, and forward foreign currency contracts (“currency forwards”). The exposure to Treasury futures was part of our strategy to maintain a shorter-than-benchmark duration, which had a positive impact on the Portfolio’s results. We used the investments in credit-default swaps to manage the Portfolio’s exposure to credit-sensitive sectors; the swaps represented long-market exposure over the period, resulting in a positive contribution to relative returns. The Portfolio’s allocations to currency forwards and options was a technique used to help manage the risks involved with investments in non-USD currencies. Given that the USD appreciated during the six-month period, the Portfolio’s significantly greater exposure to forwards representing long non-USD exposure, rather than to forwards hedging non-USD exposure, detracted from performance.
Q: What factors affected the Portfolio’s yield, or distributions** to shareholders, during the six-month period ended June 30, 2021?
A: The sharp increase in Treasury yields during the first half of the period supported the Portfolio’s yield. Towards the close of the six-month period, however, some of the increase reversed amid concerns about the economic effects of COVID-19 variants and a potentially more “hawkish” Fed policy. As the period progressed, tightening credit spreads ended up reducing the Portfolio’s yield as the market began looking beyond COVID-19 and spread levels became more reflective of investors’ expectations of future economic growth and stability. (Credit spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities.) In addition, as spreads narrowed, valuations became less attractive, in our view, and we reduced credit exposure within the Portfolio, which caused a further drop in the yield. However, while narrower spreads led to a decline in the Portfolio’s yield, they had a positive effect on total returns, due to capital appreciation.
Q: What is your investment outlook and how is the Portfolio positioned?
A: The COVID-19 situation has remained a key driver of global economic activity, both positive and negative, and, in turn, the performance of financial markets. Though the spread of the highly contagious “Delta” variant of the virus has been driving an increase in COVID-19 infections (particularly in those regions with lower vaccination rates), in our view, the spread of the variant may not derail the economic recovery already underway in major developed economies where vaccination rates have been relatively high. While the vaccines apparently have not provided 100 percent protection against infection, “breakthrough” infections in vaccinated individuals have so far been less severe and resulted in fewer hospitalizations and deaths. It is important to keep this point in mind as the world transitions from fighting COVID-19 to living with COVID-19.
** Distributions are not guaranteed.
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Portfolio Management Discussion 6/30/21 (continued) | |
A Word About Risk:
All investments are subject to risk, including the possible loss of principal. In the past several years, financial markets have experienced increased volatility and heightened uncertainty. The market prices of securities may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political, or regulatory conditions, recessions, inflation, changes in interest or currency rates, lack of liquidity in the bond markets, the spread of infectious illness or other public health issues or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
Investments in high-yield or lower-rated securities are subject to greater-than-average price volatility, illiquidity and possibility of default.
When interest rates rise, the prices of fixed-income securities in the Portfolio will generally fall. Conversely, when interest rates fall the prices of fixed-income securities in the Portfolio will generally rise.
Investments in the Portfolio are subject to possible loss due to the financial failure of the issuers of the underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that an issuer may exercise its right to prepay its security, if falling interest rates prompt the issuer to do so. Forced to reinvest the unanticipated proceeds at lower interest rates, the Portfolio would experience a decline in income and lose the opportunity for additional price appreciation.
The securities issued by U.S. government sponsored entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the U.S. government.
The Portfolio may invest in mortgage-backed securities, which during times of fluctuating interest rates may increase or decrease more than other fixed-income securities. Mortgage-backed securities are also subject to prepayments.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors.
These risks may increase share price volatility.
In his June post-FOMC meeting press conference, Fed Chair Powell reported that the committee has begun to talk about tapering its monthly purchases of Treasuries and agency MBS. Logically, some market participants have become worried about a repeat of the 2013 “taper tantrum,” if an official taper plan becomes reality (possibly late this year). However, we think Fed officials, having learned from 2013, have been offering investors plenty of guidance and a good sense of their eventual policy game plan. While we still think it likely that the ultimate announcement of tapering could precipitate some financial market volatility (as did the June FOMC meeting), unlike eight years ago, we believe any such episode could be relatively short lived.
The Portfolio’s current positioning has continued to balance a positive outlook for economic growth and accommodative financial conditions against credit spreads that we believe have been offering much-lower-than-average compensation for the risk assumed in most sectors. One exception is agency MBS, where recent spread-widening has resulted in relatively attractive spread levels compared to Treasuries and credit-sensitive spread sectors, in our opinion.
We have continued to take steps aimed at reducing the Portfolio’s overall risk exposures, and have become increasingly selective with regard to sub-sector and issuer exposures.
Finally, we continue to believe the USD may depreciate going forward if yield differentials decline and global economic growth improves.
Please refer to the Schedule of Investments on pages 9 to 30 for a full listing of Portfolio securities.
Past performance is no guarantee of future results.
Any information in this shareholder report regarding market or economic trends or the factors influencing the Portfolio’s historical or future performance are statements of opinion as of the date of this report.
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Schedule of Investments 6/30/21 (unaudited) | |
| | | |
Shares | | | Value |
| | UNAFFILIATED ISSUERS — 106.8% | |
| | COMMON STOCKS — 0.0%† of Net Assets | |
| | Auto Components — 0.0%† | |
22 | | Lear Corp. | $ 3,856 |
| | Total Auto Components | $ 3,856 |
| | Household Durables — 0.0%† | |
15,463(a) | | Desarrolladora Homex SAB de CV | $ 15 |
| | Total Household Durables | $ 15 |
| | Paper & Forest Products — 0.0%† | |
1,032 | | Emerald Plantation Holdings, Ltd. | $ 16 |
| | Total Paper & Forest Products | $ 16 |
| | TOTAL COMMON STOCKS | |
| | (Cost $8,087) | $ 3,887 |
| | CONVERTIBLE PREFERRED STOCK — 2.2% of | |
| | Net Assets | |
| | Banks — 2.2% | |
631(b) | | Wells Fargo & Co., 7.5% | $ 963,039 |
| | Total Banks | $ 963,039 |
| | TOTAL CONVERTIBLE PREFERRED STOCK | |
| | (Cost $858,242) | $ 963,039 |
Principal | | | |
Amount | | | |
USD ($) | | | |
| | ASSET BACKED SECURITIES — 5.2% of Net Assets | |
100,000 | | Conn’s Receivables Funding LLC, Series 2019-B, Class C, 4.6%, 6/17/24 (144A) | $ 100,428 |
21,897(c) | | Equifirst Mortgage Loan Trust, Series 2003-1, Class IF1, 4.01%, 12/25/32 | 22,338 |
121,183 | | Finance of America Structured Securities Trust, Series 2019-JR3, Class JR2, 2.0%, 9/25/69 | 129,274 |
96,026 | | Finance of America Structured Securities Trust, Series 2021-JR1, 0.0%, 4/25/51 | 95,283 |
29,175 | | Hardee’s Funding LLC, Series 2018-1A, Class A2II, 4.959%, 6/20/48 (144A) | 30,940 |
37,030 | | Icon Brand Holdings LLC, Series 2013-1A, Class A2, 4.352%, 1/25/43 (144A) | 15,739 |
100,000 | | Progress Residential Trust, Series 2018-SFR3, Class F, 5.368%, 10/17/35 (144A) | 101,144 |
100,000 | | Republic Finance Issuance Trust, Series 2019-A, Class B, 3.93%, 11/22/27 (144A) | 101,889 |
99,596(d) | | Sequoia Mortgage Trust, Series 2021-3, Class B1, 2.664%, 5/25/51 (144A) | 98,240 |
100,000 | | Small Business Lending Trust, Series 2019-A, Class C, 4.31%, 7/15/26 (144A) | 99,094 |
100,000(d) | | Towd Point Mortgage Trust, Series 2015-2, Class 1B3, 3.434%, 11/25/60 (144A) | 103,757 |
150,000(d) | | Towd Point Mortgage Trust, Series 2015-6, Class B1, 3.859%, 4/25/55 (144A) | 159,155 |
150,000(d) | | Towd Point Mortgage Trust, Series 2016-1, Class B1, 3.725%, 2/25/55 (144A) | 154,721 |
125,000(d) | | Towd Point Mortgage Trust, Series 2016-4, Class B1, 3.86%, 7/25/56 (144A) | 136,420 |
150,000(d) | | Towd Point Mortgage Trust, Series 2017-1, Class B2, 3.819%, 10/25/56 (144A) | 159,645 |
100,000(d) | | Towd Point Mortgage Trust, Series 2017-1, Class B3, 3.819%, 10/25/56 (144A) | 104,206 |
100,000(d) | | Towd Point Mortgage Trust, Series 2017-3, Class B3, 3.907%, 7/25/57 (144A) | 104,937 |
150,000(d) | | Towd Point Mortgage Trust, Series 2017-3, Class M2, 3.75%, 7/25/57 (144A) | 158,785 |
175,000(d) | | Towd Point Mortgage Trust, Series 2017-4, Class B1, 3.472%, 6/25/57 (144A) | 189,872 |
100,000(d) | | Towd Point Mortgage Trust, Series 2018-3, Class M1, 3.875%, 5/25/58 (144A) | 106,537 |
150,000(d) | | Towd Point Mortgage Trust, Series 2019-4, Class M2B, 3.25%, 10/25/59 (144A) | 156,332 |
| | TOTAL ASSET BACKED SECURITIES | |
| | (Cost $2,277,785) | $ 2,328,736 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS — 9.6% of Net Assets | |
85,000(d) | | Bayview Opportunity Master Fund IVa Trust, Series 2017-RT5, Class B1, 4.0%, 5/28/69 (144A) | $ 89,500 |
100,000 | | Cascade MH Asset Trust, Series 2021-MH1, Class B1, 4.573%, 2/25/46 (144A) | 104,798 |
100,000(d) | | CIM Trust, Series 2019-R5, Class M3, 3.5%, 9/25/59 (144A) | 105,246 |
64,950(d) | | Citigroup Mortgage Loan Trust, Inc., Series 2018-RP2, Class A1, 2.987%, 2/25/58 (144A) | 67,308 |
30,000(e) | | Connecticut Avenue Securities Trust, Series 2020-SBT1, Class 1M2, 3.742% (1 Month USD LIBOR + | |
| | 365 bps), 2/25/40 (144A) | 30,973 |
50,000(e) | | Connecticut Avenue Securities Trust, Series 2020-SBT1, Class 2M2, 3.742% (1 Month USD LIBOR + | |
| | 365 bps), 2/25/40 (144A) | 51,801 |
150,000(e) | | Eagle Re, Ltd., Series 2019-1, Class B1, 4.592% (1 Month USD LIBOR + 450 bps), 4/25/29 (144A) | 150,477 |
150,000(e) | | Eagle Re, Ltd., Series 2020-2, Class B1, 7.092% (1 Month USD LIBOR + 700 bps), 10/25/30 (144A) | 154,835 |
40,000(e) | | Fannie Mae Connecticut Avenue Securities, Series 2018-C03, Class 1B1, 3.842% (1 Month USD | |
| | LIBOR + 375 bps), 10/25/30 | 41,595 |
72,121(e) | | Fannie Mae Connecticut Avenue Securities, Series 2018-C06, Class 1M2, 2.092% (1 Month | |
| | USD LIBOR + 200 bps), 3/25/31 | 72,634 |
121,885(e)(f) | | Federal Home Loan Mortgage Corp. REMICS, Series 4087, Class SB, 5.957% (1 Month USD LIBOR + | |
| | 603 bps), 7/15/42 | 23,908 |
67,868(e)(f) | | Federal Home Loan Mortgage Corp. REMICS, Series 4091, Class SH, 6.477% (1 Month USD LIBOR + | |
| | 655 bps), 8/15/42 | 14,192 |
2,414 | | Federal National Mortgage Association REMICS, Series 2009-36, Class HX, 4.5%, 6/25/29 | 2,540 |
48,303(e)(f) | | Federal National Mortgage Association REMICS, Series 2012-14, Class SP, 6.459% (1 Month | |
| | USD LIBOR + 655 bps), 8/25/41 | 6,712 |
33,257(e)(f) | | Federal National Mortgage Association REMICS, Series 2018-43, Class SM, 6.109% (1 Month | |
| | USD LIBOR + 620 bps), 6/25/48 | 6,446 |
48,459(e)(f) | | Federal National Mortgage Association REMICS, Series 2019-33, Class S, 5.959% (1 Month | |
| | USD LIBOR + 605 bps), 7/25/49 | 9,755 |
41,053(e)(f) | | Federal National Mortgage Association REMICS, Series 2019-41, Class PS, 5.959% (1 Month | |
| | USD LIBOR + 605 bps), 8/25/49 | 6,241 |
37,782(e)(f) | | Federal National Mortgage Association REMICS, Series 2019-41, Class SM, 5.959% (1 Month | |
| | USD LIBOR + 605 bps), 8/25/49 | 6,870 |
69,382 | | Finance of America Structured Securities Trust, Series 2018-A, Class JR2, 1.646%, 12/26/68 (144A) | 74,910 |
99,753(d) | | Flagstar Mortgage Trust, Series 2021-3INV, Class A2, 2.5%, 6/25/51 (144A) | 101,717 |
30,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA2, Class B1, 2.592% (1 Month USD LIBOR + | |
| | 250 bps), 2/25/50 (144A) | 30,074 |
80,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA3, Class B1, 5.192% (1 Month USD LIBOR + | |
| | 510 bps), 6/25/50 (144A) | 83,759 |
70,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B1, 6.092% (1 Month USD LIBOR + | |
| | 600 bps), 8/25/50 (144A) | 74,991 |
40,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B2, 10.092% (1 Month USD LIBOR + | |
| | 1,000 bps), 8/25/50 (144A) | 50,527 |
60,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class B2, 11.518% (SOFR30A + | |
| | 1,150 bps), 10/25/50 (144A) | 80,404 |
50,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B1, 3.018% (SOFR30A + | |
| | 300 bps), 12/25/50 (144A) | 50,375 |
50,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B2, 5.668% (SOFR30A + | |
| | 565 bps), 12/25/50 (144A) | 52,001 |
50,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-HQA2, Class M2, 3.192% (1 Month USD LIBOR + | |
| | 310 bps), 3/25/50 (144A) | 50,781 |
30,000(e) | | Freddie Mac Stacr Remic Trust, Series 2020-HQA3, Class B2, 10.092% (1 Month USD LIBOR + | |
| | 1,000 bps), 7/25/50 (144A) | 38,309 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS (continued) | |
85,000(e) | | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B1, 2.668% (SOFR30A + | |
| | 265 bps), 1/25/51 (144A) | $ 84,209 |
80,000(e) | | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B2, 4.768% (SOFR30A + | |
| | 475 bps), 1/25/51 (144A) | 82,015 |
70,000(e) | | Freddie Mac Stacr Remic Trust, Series 2021-HQA1, Class B2, 5.018% (SOFR30A + | |
| | 500 bps), 8/25/33 (144A) | 70,700 |
150,000(e) | | Freddie Mac Stacr Trust, Series 2018-HQA2, Class B1, 4.342% (1 Month USD LIBOR + | |
| | 425 bps), 10/25/48 (144A) | 156,357 |
100,000(e) | | Freddie Mac Stacr Trust, Series 2018-HQA2, Class M2, 2.392% (1 Month USD LIBOR + | |
| | 230 bps), 10/25/48 (144A) | 100,903 |
72,392(e) | | Freddie Mac Stacr Trust, Series 2019-HQA1, Class M2, 2.442% (1 Month USD LIBOR + | |
| | 235 bps), 2/25/49 (144A) | 73,138 |
60,000(e) | | Freddie Mac Stacr Trust, Series 2019-HRP1, Class B1, 4.142% (1 Month USD LIBOR + 405 bps), | |
| | 2/25/49 (144A) | 61,204 |
100,000(e) | | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B1, 4.018% | |
| | (SOFR30A + 400 bps), 11/25/50 (144A) | 104,649 |
80,000(e) | | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B2, 7.418% | |
| | (SOFR30A + 740 bps), 11/25/50 (144A) | 93,439 |
70,000(e) | | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2021-DNA2, Class B1, 3.418% | |
| | (SOFR30A + 340 bps), 8/25/33 (144A) | 72,085 |
18,141 | | Government National Mortgage Association, Series 2009-83, Class EB, 4.5%, 9/20/39 | 20,399 |
4,062 | | Government National Mortgage Association, Series 2012-130, Class PA, 3.0%, 4/20/41 | 4,142 |
121,552(e)(f) | | Government National Mortgage Association, Series 2019-90, Class SA, 3.207% (1 Month USD | |
| | LIBOR + 330 bps), 7/20/49 | 10,913 |
209,359(f) | | Government National Mortgage Association, Series 2019-110, Class PI, 3.5%, 9/20/49 | 17,059 |
271,827(e)(f) | | Government National Mortgage Association, Series 2019-117, Class SB, 3.327% (1 Month USD | |
| | LIBOR + 342 bps), 9/20/49 | 21,902 |
270,866(e)(f) | | Government National Mortgage Association, Series 2019-121, Class SA, 3.257% (1 Month USD | |
| | LIBOR + 335 bps), 10/20/49 | 24,013 |
397,583(f) | | Government National Mortgage Association, Series 2019-128, Class IB, 3.5%, 10/20/49 | 51,807 |
515,443(f) | | Government National Mortgage Association, Series 2019-128, Class ID, 3.5%, 10/20/49 | 42,417 |
182,538(f) | | Government National Mortgage Association, Series 2019-159, Class CI, 3.5%, 12/20/49 | 24,113 |
217,928(e)(f) | | Government National Mortgage Association, Series 2020-9, Class SA, 3.257% (1 Month USD | |
| | LIBOR + 335 bps), 1/20/50 | 17,162 |
100,000(d) | | GS Mortgage-Backed Securities Corp. Trust, Series 2021-RPL1, Class M1, 2.25%, 12/25/60 (144A) | 98,192 |
100,000(e) | | Home Partners of America Trust, Series 2017-1, Class D, 1.982% (1 Month USD LIBOR + | |
| | 190 bps), 7/17/34 (144A) | 100,000 |
92,073(e) | | J.P. Morgan Wealth Management, Series 2021-CL1, Class M3, 1.818% (SOFR30A + | |
| | 180 bps), 3/25/51 (144A) | 92,073 |
97,628(d) | | JP Morgan Mortgage Trust, Series 2020-LTV1, Class B4, 4.377%, 6/25/50 (144A) | 103,284 |
143,505(d) | | JP Morgan Mortgage Trust, Series 2021-3, Class A3, 2.5%, 7/1/51 (144A) | 146,065 |
99,628(d) | | JP Morgan Mortgage Trust, Series 2021-6, Class B1, 2.861%, 10/25/51 (144A) | 101,245 |
99,813(d) | | JP Morgan Mortgage Trust, Series 2021-7, Class B3, 2.82%, 11/25/51 (144A) | 99,161 |
150,000(d) | | JP Morgan Mortgage Trust, Series 2021-8, Class B3, 2.869%, 12/25/51 (144A) | 150,656 |
99,808(d) | | JP Mortgage Trust, Series 2021-INV1, Class B3, 3.036%, 10/25/51 (144A) | 100,599 |
100,000(d) | | MFA Trust, Series 2021-RPL1, Class M2, 2.855%, 7/25/60 (144A) | 99,916 |
71,907(d) | | New Residential Mortgage Loan Trust, Series 2019-RPL2, Class A1, 3.25%, 2/25/59 (144A) | 75,699 |
99,641(d) | | Oceanview Mortgage Trust, Series 2021-1, Class B2, 2.738%, 5/25/51 (144A) | 98,956 |
99,596(d) | | Sequoia Mortgage Trust, Series 2021-3, Class B2, 2.664%, 5/25/51 (144A) | 97,512 |
The accompanying notes are an integral part of these financial statements.
11
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COLLATERALIZED MORTGAGE OBLIGATIONS (continued) | |
99,623(d) | | Towd Point Mortgage Trust, Series 2021-R1, Class A1, 2.918%, 11/30/60 (144A) | $ 101,663 |
110,000(e) | | Traingle Re, Ltd., Series 2021-1, Class M2, 3.992% (1 Month USD LIBOR + 390 bps), 8/25/33 (144A) | 110,278 |
| | TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | |
| | (Cost $4,530,646) | $ 4,341,604 |
| | COMMERCIAL MORTGAGE-BACKED SECURITIES — 6.1% of Net Assets | |
40,000 | | Benchmark Mortgage Trust, Series 2018-B5, Class A3, 3.944%, 7/15/51 | $ 45,575 |
100,000(d) | | Benchmark Mortgage Trust, Series 2020-IG3, Class B, 3.388%, 9/15/48 (144A) | 105,465 |
40,000 | | CFCRE Commercial Mortgage Trust, Series 2016-C3, Class A2, 3.597%, 1/10/48 | 43,560 |
99,275(e) | | CHC Commercial Mortgage Trust, Series 2019-CHC, Class E, 2.423% (1 Month USD LIBOR + | |
| | 235 bps), 6/15/34 (144A) | 96,159 |
150,000 | | Citigroup Commercial Mortgage Trust, Series 2018-B2, Class A3, 3.744%, 3/10/51 | 166,406 |
65,000(e) | | CLNY Trust, Series 2019-IKPR, Class E, 2.794% (1 Month USD LIBOR + 272 bps), 11/15/38 (144A) | 64,592 |
98,299(e) | | Cold Storage Trust, Series 2020-ICE5, Class D, 2.173% (1 Month USD LIBOR + 210 bps), 11/15/37 (144A) | 98,669 |
100,000(d) | | COMM Mortgage Trust, Series 2015-CR24, Class D, 3.463%, 8/10/48 | 91,970 |
75,000(d) | | COMM Mortgage Trust, Series 2015-DC1, Class B, 4.035%, 2/10/48 | 80,330 |
100,000(d) | | CSAIL Commercial Mortgage Trust, Series 2015-C1, Class C, 4.405%, 4/15/50 | 95,845 |
25,000(d) | | CSAIL Commercial Mortgage Trust, Series 2015-C4, Class D, 3.714%, 11/15/48 | 25,302 |
100,000(d) | | Fontainebleau Miami Beach Trust, Series 2019-FBLU, Class D, 4.095%, 12/10/36 (144A) | 104,834 |
30,000(d) | | FREMF Mortgage Trust, Series 2017-K66, Class B, 4.173%, 7/25/27 (144A) | 33,423 |
49,000(d) | | FREMF Mortgage Trust, Series 2017-KW02, Class B, 3.915%, 12/25/26 (144A) | 51,292 |
50,000(d) | | FREMF Mortgage Trust, Series 2017-KW03, Class B, 4.199%, 7/25/27 (144A) | 53,138 |
75,000(d) | | FREMF Mortgage Trust, Series 2018-KHG1, Class B, 3.939%, 12/25/27 (144A) | 77,525 |
25,000(d) | | FREMF Mortgage Trust, Series 2018-KW07, Class B, 4.221%, 10/25/31 (144A) | 26,471 |
75,000(d) | | FREMF Mortgage Trust, Series 2019-K88, Class C, 4.526%, 2/25/52 (144A) | 83,090 |
84,654(d) | | FREMF Mortgage Trust, Series 2019-KJ24, Class B, 7.6%, 10/25/27 (144A) | 73,240 |
50,000(d) | | FREMF Mortgage Trust, Series 2020-K106, Class B, 3.707%, 3/25/53 (144A) | 54,031 |
50,000(d) | | FREMF Trust, Series 2018-KW04, Class B, 4.045%, 9/25/28 (144A) | 52,394 |
100,000(e) | | GS Mortgage Securities Corp. Trust, Series 2020-DUNE, Class E, 2.573% (1 Month USD LIBOR + | |
| | 250 bps), 12/15/36 (144A) | 97,185 |
100,000(e) | | GS Mortgage Securities Corp. Trust, Series 2020-DUNE, Class G, 4.073% (1 Month USD LIBOR + | |
| | 400 bps), 12/15/36 (144A) | 91,027 |
50,000 | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2018-WPT, Class BFX, 4.549%, | |
| | 7/5/33 (144A) | 52,616 |
100,000(e) | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2019-BKWD, Class E, 2.673% | |
| | (1 Month USD LIBOR + 260 bps), 9/15/29 (144A) | 98,867 |
100,000(d) | | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2020-LOOP, Class F, 3.99%, | |
| | 12/5/38 (144A) | 93,243 |
50,000 | | Key Commercial Mortgage Securities Trust, Series 2019-S2, | |
| | Class A3, 3.469%, 6/15/52 (144A) | 52,904 |
100,000 | | Morgan Stanley Capital I Trust, Series 2014-150E, Class AS, 4.012%, 9/9/32 (144A) | 106,199 |
15,000 | | Morgan Stanley Capital I Trust, Series 2016-UBS9, Class D, 3.0%, 3/15/49 (144A) | 14,343 |
100,000(d) | | Morgan Stanley Capital I Trust, Series 2018-MP, Class A, 4.419%, 7/11/40 (144A) | 113,053 |
100,000(e) | | Multifamily Connecticut Avenue Securities Trust, Series 2019-01, Class M10, 3.342% (1 Month | |
| | USD LIBOR + 325 bps), 10/15/49 (144A) | 101,394 |
65,000 | | Palisades Center Trust, Series 2016-PLSD, Class A, 2.713%, 4/13/33 (144A) | 60,632 |
100,000(d) | | Ready Capital Mortgage Trust, Series 2019-5, Class E, 5.5%, 2/25/52 (144A) | 92,032 |
100,000 | | SLG Office Trust, Series 2021-OVA, Class E, 2.851%, 7/15/41 (144A) | 97,998 |
The accompanying notes are an integral part of these financial statements.
12
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | COMMERCIAL MORTGAGE-BACKED SECURITIES (continued) | |
125,000 | | SLG Office Trust, Series 2021-OVA, Class F, 2.851%, 7/15/41 (144A) | $ 116,556 |
1,000,000(d)(f) | | UBS Commercial Mortgage Trust, Series 2018-C9, Class XB, 0.441%, 3/15/51 | 23,388 |
| | TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | |
| | (Cost $2,686,603) | $ 2,734,748 |
| | CONVERTIBLE CORPORATE BONDS — 1.4% of Net Assets | |
| | Airlines — 0.1% | |
51,000 | | Spirit Airlines, Inc., 1.0%, 5/15/26 | $ 48,608 |
| | Total Airlines | $ 48,608 |
| | Biotechnology — 0.1% | |
30,000 | | Insmed, Inc., 0.75%, 6/1/28 | $ 32,981 |
35,000 | | Insmed, Inc., 1.75%, 1/15/25 | 36,554 |
| | Total Biotechnology | $ 69,535 |
| | Entertainment — 0.3% | |
122,000(g) | | DraftKings, Inc., 3/15/28 (144A) | $ 109,922 |
15,000 | | IMAX Corp., 0.5%, 4/1/26 (144A) | 15,638 |
| | Total Entertainment | $ 125,560 |
| | Leisure Time — 0.2% | |
77,000(g) | | Peloton Interactive, Inc., 2/15/26 (144A) | $ 74,449 |
| | Total Leisure Time | $ 74,449 |
| | Mining — 0.1% | |
35,000 | | Ivanhoe Mines, Ltd., 2.5%, 4/15/26 (144A) | $ 43,008 |
| | Total Mining | $ 43,008 |
| | Pharmaceuticals — 0.0%† | |
75,000 | | Tricida, Inc., 3.5%, 5/15/27 | $ 28,227 |
| | Total Pharmaceuticals | $ 28,227 |
| | Software — 0.6% | |
65,000 | | Bentley Systems, Inc., 0.375%, 7/1/27 (144A) | $ 66,625 |
91,000 | | Ceridian HCM Holding, Inc., 0.25%, 3/15/26 (144A) | 90,943 |
37,000(g) | | Everbridge, Inc., 3/15/26 (144A) | 37,786 |
65,000 | | Verint Systems, Inc., 0.25%, 4/15/26 (144A) | 63,736 |
| | Total Software | $ 259,090 |
| | TOTAL CONVERTIBLE CORPORATE BONDS | |
| | (Cost $663,342) | $ 648,477 |
| | CORPORATE BONDS — 31.8% of Net Assets | |
| | Aerospace & Defense — 0.8% | |
237,000 | | Boeing Co., 3.75%, 2/1/50 | $ 244,437 |
85,000 | | Boeing Co., 5.805%, 5/1/50 | 114,543 |
| | Total Aerospace & Defense | $ 358,980 |
| | Airlines — 1.4% | |
127,787 | | Alaska Airlines 2020-1 Class A Pass Through Trust, 4.8%, 8/15/27 (144A) | $ 141,449 |
20,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.5%, 4/20/26 (144A) | 21,175 |
20,000 | | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.75%, 4/20/29 (144A) | 21,592 |
43,887 | | British Airways 2019-1 Class A Pass Through Trust, 3.35%, 6/15/29 (144A) | 43,952 |
53,070 | | British Airways 2019-1 Class AA Pass Through Trust, 3.3%, 12/15/32 (144A) | 54,029 |
The accompanying notes are an integral part of these financial statements.
13
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Airlines (continued) | |
17,780 | | British Airways 2020-1 Class A Pass Through Trust, 4.25%, 11/15/32 (144A) | $ 19,151 |
27,048 | | British Airways 2020-1 Class B Pass Through Trust, 8.375%, 11/15/28 (144A) | 31,279 |
110,000 | | Gol Finance SA, 8.0%, 6/30/26 (144A) | 111,376 |
52,586 | | JetBlue 2019-1 Class AA Pass Through Trust, 2.75%, 5/15/32 | 54,050 |
20,313 | | JetBlue 2020-1 Class A Pass Through Trust, 4.0%, 11/15/32 | 22,412 |
80,000 | | Mileage Plus Holdings LLC/Mileage Plus Intellectual Property Assets, Ltd., 6.5%, 6/20/27 (144A) | 88,080 |
10,000 | | United Airlines, Inc., 4.375%, 4/15/26 (144A) | 10,350 |
10,000 | | United Airlines, Inc., 4.625%, 4/15/29 (144A) | 10,350 |
| | Total Airlines | $ 629,245 |
| | Auto Manufacturers — 0.4% | |
135,000 | | Ford Motor Co., 4.346%, 12/8/26 | $ 144,619 |
42,000 | | Ford Motor Co., 5.291%, 12/8/46 | 46,909 |
| | Total Auto Manufacturers | $ 191,528 |
| | Auto Parts & Equipment — 0.2% | |
40,000 | | Dana, Inc., 4.25%, 9/1/30 | $ 41,150 |
45,000 | | Lear Corp., 3.5%, 5/30/30 | 48,399 |
| | Total Auto Parts & Equipment | $ 89,549 |
| | Banks — 3.3% | |
ARS 1,000,000(e) | | Banco de la Ciudad de Buenos Aires, 38.113% (BADLARPP + 399 bps), 12/5/22 | $ 9,184 |
25,000 | | Freedom Mortgage Corp., 6.625%, 1/15/27 (144A) | 25,156 |
25,000 | | Freedom Mortgage Corp., 8.25%, 4/15/25 (144A) | 26,094 |
KZT 49,000,000 | | International Finance Corp., 7.5%, 2/3/23 | 111,326 |
200,000(b)(d) | | Natwest Group Plc, 8.625% (5 Year USD Swap Rate + 760 bps) | 201,650 |
200,000 | | QNB Finansbank AS, 4.875%, 5/19/22 (144A) | 204,186 |
EUR 283,675(b)(c) | | Stichting AK Rabobank Certificaten, 2.188% | 452,196 |
200,000(b)(d) | | UBS Group AG, 7.0% (5 Year USD Swap Rate + 434 bps) (144A) | 220,250 |
200,000(d) | | UniCredit S.p.A., 7.296% (5 Year USD 1100 Run ICE Swap Rate + 491 bps), 4/2/34 (144A) | 240,464 |
| | Total Banks | $ 1,490,506 |
| | Beverages — 0.3% | |
100,000 | | Bacardi, Ltd., 5.3%, 5/15/48 (144A) | $ 130,461 |
| | Total Beverages | $ 130,461 |
| | Building Materials — 0.3% | |
45,000 | | Patrick Industries, Inc., 4.75%, 5/1/29 (144A) | $ 44,719 |
68,000 | | Standard Industries, Inc., 4.375%, 7/15/30 (144A) | 70,125 |
5,000 | | Standard Industries, Inc., 5.0%, 2/15/27 (144A) | 5,178 |
5,000 | | Summit Materials LLC/Summit Materials Finance Corp., 5.25%, 1/15/29 (144A) | 5,312 |
| | Total Building Materials | $ 125,334 |
| | Chemicals — 0.7% | |
28,000 | | NOVA Chemicals Corp., 5.25%, 6/1/27 (144A) | $ 30,178 |
89,000 | | Olin Corp., 5.0%, 2/1/30 | 94,896 |
10,000 | | Olin Corp., 5.625%, 8/1/29 | 11,064 |
50,000 | | Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc., 5.125%, 4/1/29 (144A) | 51,125 |
55,000 | | Tronox, Inc., 4.625%, 3/15/29 (144A) | 55,618 |
50,000 | | Tronox, Inc., 6.5%, 5/1/25 (144A) | 52,915 |
| | Total Chemicals | $ 295,796 |
The accompanying notes are an integral part of these financial statements.
14
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| | | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Commercial Services — 0.9% | |
45,000 | | Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.625%, 7/15/26 (144A) | $ 47,710 |
45,000 | | Brink’s Co., 5.5%, 7/15/25 (144A) | 47,700 |
55,000 | | CoreLogic, Inc., 4.5%, 5/1/28 (144A) | 54,519 |
35,000 | | Garda World Security Corp., 4.625%, 2/15/27 (144A) | 35,175 |
39,000 | | Garda World Security Corp., 6.0%, 6/1/29 (144A) | 38,708 |
24,000 | | Garda World Security Corp., 9.5%, 11/1/27 (144A) | 26,580 |
15,000 | | Nielsen Finance LLC/Nielsen Finance Co., 4.5%, 7/15/29 (144A) | 15,056 |
15,000 | | Nielsen Finance LLC/Nielsen Finance Co., 4.75%, 7/15/31 (144A) | 15,038 |
35,000 | | Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 4/15/26 (144A) | 38,663 |
104,000 | | Prime Security Services Borrower LLC/Prime Finance, Inc., 6.25%, 1/15/28 (144A) | 110,630 |
| | Total Commercial Services | $ 429,779 |
| | Computers — 0.2% | |
40,000 | | KBR, Inc., 4.75%, 9/30/28 (144A) | $ 40,000 |
25,000 | | NCR Corp., 5.0%, 10/1/28 (144A) | 25,852 |
10,000 | | NCR Corp., 5.25%, 10/1/30 (144A) | 10,375 |
| | Total Computers | $ 76,227 |
| | Cosmetics/Personal Care — 0.1% | |
55,000 | | Edgewell Personal Care Co., 5.5%, 6/1/28 (144A) | $ 58,300 |
| | Total Cosmetics/Personal Care | $ 58,300 |
| | Diversified Financial Services — 1.5% | |
70,000 | | Air Lease Corp., 3.125%, 12/1/30 | $ 71,190 |
95,000 | | Alliance Data Systems Corp., 7.0%, 1/15/26 (144A) | 101,769 |
95,000(b)(d) | | Capital One Financial Corp., 3.95% (5 Year CMT Index + 316 bps) | 97,019 |
155,702(h) | | Global Aircraft Leasing Co., Ltd., 6.5%, (7.25% PIK or 6.50% cash), 9/15/24 (144A) | 156,540 |
30,000 | | Nationstar Mortgage Holdings, Inc., 5.125%, 12/15/30 (144A) | 29,850 |
10,000 | | Nationstar Mortgage Holdings, Inc., 6.0%, 1/15/27 (144A) | 10,363 |
55,000 | | OneMain Finance Corp., 3.5%, 1/15/27 | 55,412 |
130,000 | | OneMain Finance Corp., 4.0%, 9/15/30 | 128,658 |
40,000 | | United Wholesale Mortgage LLC, 5.5%, 4/15/29 (144A) | 39,991 |
| | Total Diversified Financial Services | $ 690,792 |
| | Electric — 2.4% | |
20,000 | | AES Corp., 3.95%, 7/15/30 (144A) | $ 21,870 |
226,000 | | Calpine Corp., 3.75%, 3/1/31 (144A) | 215,231 |
15,000 | | Calpine Corp., 4.625%, 2/1/29 (144A) | 14,747 |
15,000 | | Calpine Corp., 5.0%, 2/1/31 (144A) | 14,925 |
40,000 | | Clearway Energy Operating LLC, 3.75%, 2/15/31 (144A) | 39,800 |
65,000 | | Iberdrola International BV, 6.75%, 7/15/36 | 98,454 |
17,000 | | NextEra Energy Operating Partners LP, 4.5%, 9/15/27 (144A) | 18,397 |
15,000 | | NRG Energy, Inc., 3.375%, 2/15/29 (144A) | 14,681 |
20,000 | | NRG Energy, Inc., 3.625%, 2/15/31 (144A) | 19,654 |
200,000 | | NRG Energy, Inc., 4.45%, 6/15/29 (144A) | 220,945 |
10,000 | | Pattern Energy Operations LP/Pattern Energy Operations, Inc., 4.5%, 8/15/28 (144A) | 10,352 |
65,000 | | Southern California Edison Co., 4.875%, 3/1/49 | 76,941 |
28,000 | | Talen Energy Supply LLC, 6.625%, 1/15/28 (144A) | 25,620 |
The accompanying notes are an integral part of these financial statements.
15
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Electric (continued) | |
60,000 | | Talen Energy Supply LLC, 7.625%, 6/1/28 (144A) | $ 56,143 |
150,000 | | Vistra Operations Co. LLC, 3.7%, 1/30/27 (144A) | 160,337 |
75,000 | | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | 75,375 |
| | Total Electric | $ 1,083,472 |
| | Electrical Components & Equipment — 0.6% | |
EUR 100,000 | | Belden, Inc., 2.875%, 9/15/25 (144A) | $ 119,205 |
EUR 100,000 | | Energizer Gamma Acquisition BV, 3.5%, 6/30/29 (144A) | 117,989 |
15,000 | | WESCO Distribution, Inc., 7.25%, 6/15/28 (144A) | 16,708 |
| | Total Electrical Components & Equipment | $ 253,902 |
| | Electronics — 0.2% | |
25,000 | | Atkore, Inc., 4.25%, 6/1/31 (144A) | $ 25,320 |
25,000 | | Sensata Technologies BV, 4.0%, 4/15/29 (144A) | 25,377 |
20,000 | | Sensata Technologies, Inc., 3.75%, 2/15/31 (144A) | 19,777 |
| | Total Electronics | $ 70,474 |
| | Energy-Alternate Sources — 0.6% | |
41,923 | | Alta Wind Holdings LLC, 7.0%, 6/30/35 (144A) | $ 47,566 |
200,000 | | Atlantica Sustainable Infrastructure PLC, 4.125%, 6/15/28 (144A) | 203,760 |
19,000 | | TerraForm Power Operating LLC, 4.75%, 1/15/30 (144A) | 19,459 |
| | Total Energy-Alternate Sources | $ 270,785 |
| | Engineering & Construction — 0.4% | |
20,000 | | Arcosa, Inc., 4.375%, 4/15/29 (144A) | $ 20,350 |
59,000 | | Dycom Industries, Inc., 4.5%, 4/15/29 (144A) | 59,511 |
75,000 | | PowerTeam Services LLC, 9.033%, 12/4/25 (144A) | 82,500 |
| | Total Engineering & Construction | $ 162,361 |
| | Entertainment — 0.2% | |
5,000 | | Everi Holdings, Inc., 5.0%, 7/15/29 (144A) | $ 5,000 |
15,000 | | Scientific Games International, Inc., 7.0%, 5/15/28 (144A) | 16,387 |
15,000 | | Scientific Games International, Inc., 7.25%, 11/15/29 (144A) | 16,920 |
31,000 | | Scientific Games International, Inc., 8.25%, 3/15/26 (144A) | 33,247 |
| | Total Entertainment | $ 71,554 |
| | Environmental Control — 0.4% | |
70,000 | | Covanta Holding Corp., 5.0%, 9/1/30 | $ 73,500 |
56,000 | | Covanta Holding Corp., 6.0%, 1/1/27 | 58,240 |
30,000 | | Tervita Corp., 11.0%, 12/1/25 (144A) | 33,592 |
| | Total Environmental Control | $ 165,332 |
| | Food — 0.9% | |
40,000 | | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 3.5%, 3/15/29 (144A) | $ 39,550 |
30,000 | | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 4.875%, 2/15/30 (144A) | 31,995 |
50,000 | | JBS USA LUX SA/JBS USA Finance, Inc., 6.75%, 2/15/28 (144A) | 54,938 |
39,000 | | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 5.5%, 1/15/30 (144A) | 43,617 |
200,000 | | Minerva Luxembourg SA, 5.875%, 1/19/28 (144A) | 212,200 |
30,000 | | Pilgrim’s Pride Corp., 5.875%, 9/30/27 (144A) | 31,950 |
| | Total Food | $ 414,250 |
The accompanying notes are an integral part of these financial statements.
16
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Forest Products & Paper — 0.0%† | |
22,000 | | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | $ 21,917 |
| | Total Forest Products & Paper | $ 21,917 |
| | Healthcare-Services — 0.1% | |
10,000 | | ModivCare, Inc., 5.875%, 11/15/25 (144A) | $ 10,700 |
15,000 | | Molina Healthcare, Inc., 4.375%, 6/15/28 (144A) | 15,638 |
31,000 | | US Renal Care, Inc., 10.625%, 7/15/27 (144A) | 32,511 |
| | Total Healthcare-Services | $ 58,849 |
| | Home Builders — 0.1% | |
9,000 | | KB Home, 6.875%, 6/15/27 | $ 10,710 |
19,000 | | Meritage Homes Corp., 6.0%, 6/1/25 | 21,660 |
| | Total Home Builders | $ 32,370 |
| | Household Products/Wares — 0.1% | |
10,000 | | Central Garden & Pet Co., 4.125%, 10/15/30 | $ 10,212 |
20,000 | | Central Garden & Pet Co., 4.125%, 4/30/31 (144A) | 20,225 |
| | Total Household Products/Wares | $ 30,437 |
| | Insurance — 0.5% | |
60,000(d) | | Farmers Exchange Capital III, 5.454% (3 Month USD LIBOR + 345 bps), 10/15/54 (144A) | $ 75,186 |
120,000(d) | | Farmers Insurance Exchange, 4.747% (3 Month USD LIBOR + 323 bps), 11/1/57 (144A) | 135,337 |
| | Total Insurance | $ 210,523 |
| | Internet — 0.6% | |
35,000 | | ANGI Group LLC, 3.875%, 8/15/28 (144A) | $ 34,781 |
121,000 | | Expedia Group, Inc., 3.25%, 2/15/30 | 126,515 |
100,000 | | Expedia Group, Inc., 3.8%, 2/15/28 | 108,843 |
| | Total Internet | $ 270,139 |
| | Iron & Steel — 0.1% | |
20,000 | | Cleveland-Cliffs, Inc., 6.75%, 3/15/26 (144A) | $ 21,575 |
6,000 | | Cleveland-Cliffs, Inc., 9.875%, 10/17/25 (144A) | 7,032 |
| | Total Iron & Steel | $ 28,607 |
| | Leisure Time — 0.4% | |
15,000 | | Carnival Corp., 7.625%, 3/1/26 (144A) | $ 16,294 |
10,000 | | NCL Finance, Ltd., 6.125%, 3/15/28 (144A) | 10,479 |
55,000 | | Royal Caribbean Cruises, Ltd., 5.5%, 4/1/28 (144A) | 57,602 |
5,000 | | Viking Ocean Cruises Ship VII, Ltd., 5.625%, 2/15/29 (144A) | 5,050 |
94,000 | | VOC Escrow, Ltd., 5.0%, 2/15/28 (144A) | 95,034 |
| | Total Leisure Time | $ 184,459 |
| | Lodging — 0.8% | |
15,000 | | Hilton Domestic Operating Co., Inc., 3.625%, 2/15/32 (144A) | $ 14,812 |
40,000 | | Hilton Domestic Operating Co., Inc., 3.75%, 5/1/29 (144A) | 40,308 |
40,000 | | Hilton Domestic Operating Co., Inc., 4.0%, 5/1/31 (144A) | 40,355 |
5,000 | | Hilton Domestic Operating Co., Inc., 5.75%, 5/1/28 (144A) | 5,410 |
30,000 | | Hilton Grand Vacations Borrower Escrow LLC/Hilton Grand Vacations Borrower Esc, | |
| | 5.0%, 6/1/29 (144A) | 30,675 |
180,000 | | Marriott International, Inc., 3.5%, 10/15/32 | 191,452 |
25,000 | | Marriott International, Inc., 4.625%, 6/15/30 | 28,821 |
| | Total Lodging | $ 351,833 |
The accompanying notes are an integral part of these financial statements.
17
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Media — 1.2% | |
10,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 4.5%, 6/1/33 (144A) | $ 10,233 |
125,000 | | CCO Holdings LLC/CCO Holdings Capital Corp., 4.75%, 3/1/30 (144A) | 132,031 |
200,000 | | CSC Holdings LLC, 5.5%, 4/15/27 (144A) | 210,010 |
19,000 | | Diamond Sports Group LLC/Diamond Sports Finance Co., 6.625%, 8/15/27 (144A) | 9,310 |
69,000 | | Gray Television, Inc., 7.0%, 5/15/27 (144A) | 74,606 |
25,000 | | News Corp., 3.875%, 5/15/29 (144A) | 25,250 |
20,000 | | Sinclair Television Group, Inc., 4.125%, 12/1/30 (144A) | 19,650 |
75,000 | | Sirius XM Radio, Inc., 4.0%, 7/15/28 (144A) | 77,330 |
| | Total Media | $ 558,420 |
| | Mining — 1.0% | |
44,000 | | Coeur Mining, Inc., 5.125%, 2/15/29 (144A) | $ 43,560 |
133,000 | | FMG Resources August 2006 Pty Ltd., 4.375%, 4/1/31 (144A) | 141,977 |
149,000 | | Freeport-McMoRan, Inc., 5.45%, 3/15/43 | 182,126 |
47,000 | | IAMGOLD Corp., 5.75%, 10/15/28 (144A) | 48,896 |
27,000 | | Joseph T Ryerson & Son, Inc., 8.5%, 8/1/28 (144A) | 29,970 |
25,000 | | Kaiser Aluminum Corp., 4.5%, 6/1/31 (144A) | 25,639 |
| | Total Mining | $ 472,168 |
| | Miscellaneous Manufacturers — 0.1% | |
14,000 | | Amsted Industries, Inc., 5.625%, 7/1/27 (144A) | $ 14,752 |
30,000 | | Hillenbrand, Inc., 3.75%, 3/1/31 | 29,747 |
| | Total Miscellaneous Manufacturers | $ 44,499 |
| | Multi-National — 0.9% | |
200,000 | | African Export-Import Bank, 3.994%, 9/21/29 (144A) | $ 210,565 |
IDR 1,997,800,000 | | European Bank for Reconstruction & Development, 6.45%, 12/13/22 | 141,017 |
IDR 980,000,000 | | Inter-American Development Bank, 7.875%, 3/14/23 | 71,114 |
| | Total Multi-National | $ 422,696 |
| | Oil & Gas — 1.9% | |
275,000 | | Cenovus Energy, Inc., 6.75%, 11/15/39 | $ 373,555 |
20,000 | | EQT Corp., 3.125%, 5/15/26 (144A) | 20,444 |
20,000 | | EQT Corp., 3.625%, 5/15/31 (144A) | 20,850 |
10,000 | | EQT Corp., 5.0%, 1/15/29 | 11,150 |
30,000 | | Hilcorp Energy I LP/Hilcorp Finance Co., 6.0%, 2/1/31 (144A) | 31,773 |
40,000 | | Indigo Natural Resources LLC, 5.375%, 2/1/29 (144A) | 41,800 |
5,000 | | MEG Energy Corp., 5.875%, 2/1/29 (144A) | 5,212 |
21,000 | | MEG Energy Corp., 6.5%, 1/15/25 (144A) | 21,743 |
30,000 | | MEG Energy Corp., 7.125%, 2/1/27 (144A) | 31,960 |
90,000 | | Occidental Petroleum Corp., 4.4%, 4/15/46 | 86,445 |
30,000 | | PBF Holding Co. LLC/PBF Finance Corp., 9.25%, 5/15/25 (144A) | 30,222 |
42,000 | | Petroleos Mexicanos, 5.35%, 2/12/28 | 41,305 |
25,000 | | Petroleos Mexicanos, 6.875%, 10/16/25 (144A) | 27,675 |
25,000 | | Precision Drilling Corp., 6.875%, 1/15/29 (144A) | 25,750 |
25,000 | | Precision Drilling Corp., 7.125%, 1/15/26 (144A) | 25,750 |
22,000 | | Shelf Drilling Holdings, Ltd., 8.875%, 11/15/24 (144A) | 22,715 |
30,000 | | YPF SA, 6.95%, 7/21/27 (144A) | 21,132 |
ARS 175,000 | | YPF SA, 16.5%, 5/9/22 (144A) | 1,645 |
| | Total Oil & Gas | $ 841,126 |
The accompanying notes are an integral part of these financial statements.
18
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Packaging & Containers — 0.3% | |
65,000 | | Greif, Inc., 6.5%, 3/1/27 (144A) | $ 68,555 |
60,000 | | TriMas Corp., 4.125%, 4/15/29 (144A) | 60,738 |
| | Total Packaging & Containers | $ 129,293 |
| | Pharmaceuticals — 1.0% | |
7,000 | | Bausch Health Americas, Inc., 8.5%, 1/31/27 (144A) | $ 7,608 |
71,000 | | Bausch Health Americas, Inc., 9.25%, 4/1/26 (144A) | 77,227 |
15,000 | | Bausch Health Cos., Inc., 5.0%, 1/30/28 (144A) | 14,229 |
30,449 | | CVS Pass-Through Trust, 5.773%, 1/10/33 (144A) | 36,109 |
49,010 | | CVS Pass-Through Trust, 6.036%, 12/10/28 | 57,400 |
16,694 | | CVS Pass-Through Trust, 8.353%, 7/10/31 (144A) | 21,892 |
31,000 | | Par Pharmaceutical, Inc., 7.5%, 4/1/27 (144A) | 31,698 |
197,000 | | Teva Pharmaceutical Finance Netherlands III BV, 3.15%, 10/1/26 | 187,396 |
| | Total Pharmaceuticals | $ 433,559 |
| | Pipelines — 2.3% | |
16,000 | | DCP Midstream Operating LP, 5.6%, 4/1/44 | $ 17,600 |
30,000 | | Enable Midstream Partners LP, 4.15%, 9/15/29 | 32,878 |
35,000 | | Energy Transfer LP, 6.0%, 6/15/48 | 44,269 |
19,000 | | Energy Transfer LP, 6.1%, 2/15/42 | 23,632 |
10,000 | | Energy Transfer LP, 6.125%, 12/15/45 | 12,751 |
21,000 | | Energy Transfer LP, 6.5%, 2/1/42 | 27,277 |
15,000(b)(d) | | Energy Transfer LP, 6.625% (3 Month USD LIBOR + 416 bps) | 14,681 |
313,000(b)(d) | | Energy Transfer LP, 7.125% (5 Year CMT Index + 531 bps) | 323,172 |
4,000 | | EnLink Midstream LLC, 5.375%, 6/1/29 | 4,174 |
9,000 | | EnLink Midstream Partners LP, 5.05%, 4/1/45 | 7,740 |
135,000 | | EnLink Midstream Partners LP, 5.45%, 6/1/47 | 119,812 |
34,000 | | EnLink Midstream Partners LP, 5.6%, 4/1/44 | 30,770 |
30,000 | | Hess Midstream Operations LP, 5.125%, 6/15/28 (144A) | 31,463 |
38,000 | | Midwest Connector Capital Co. LLC, 4.625%, 4/1/29 (144A) | 40,424 |
125,000 | | Phillips 66 Partners LP, 3.75%, 3/1/28 | 136,874 |
38,000 | | Sunoco Logistics Partners Operations LP, 5.4%, 10/1/47 | 45,046 |
95,000 | | Williams Cos., Inc., 7.5%, 1/15/31 | 131,742 |
| | Total Pipelines | $ 1,044,305 |
| | REITs — 1.7% | |
65,000 | | Corporate Office Properties LP, 2.75%, 4/15/31 | $ 65,467 |
75,000 | | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | 75,562 |
45,000 | | Highwoods Realty LP, 4.125%, 3/15/28 | 50,447 |
120,000 | | iStar, Inc., 4.25%, 8/1/25 | 123,450 |
30,000 | | iStar, Inc., 4.75%, 10/1/24 | 31,575 |
20,000 | | iStar, Inc., 5.5%, 2/15/26 | 20,950 |
65,000 | | MPT Operating Partnership LP/MPT Finance Corp., 3.5%, 3/15/31 | 65,649 |
86,000 | | MPT Operating Partnership LP/MPT Finance Corp., 4.625%, 8/1/29 | 92,059 |
150,000 | | SBA Tower Trust, 3.869%, 10/8/24 (144A) | 157,618 |
73,000 | | Uniti Group LP/Uniti Fiber Holdings, Inc./CSL Capital LLC, 7.875%, 2/15/25 (144A) | 78,019 |
30,000 | | Uniti Group LP/Uniti Group Finance, Inc./CSL Capital LLC, 6.5%, 2/15/29 (144A) | 30,075 |
8,000 | | VICI Properties LP/VICI Note Co., Inc., 4.125%, 8/15/30 (144A) | 8,215 |
| | Total REITs | $ 799,086 |
The accompanying notes are an integral part of these financial statements.
19
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Retail — 0.6% | |
15,000 | | Asbury Automotive Group, Inc., 4.5%, 3/1/28 | $ 15,412 |
15,000 | | Asbury Automotive Group, Inc., 4.75%, 3/1/30 | 15,675 |
30,000 | | AutoNation, Inc., 4.75%, 6/1/30 | 35,516 |
30,000 | | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | 29,923 |
35,000 | | LCM Investments Holdings II LLC, 4.875%, 5/1/29 (144A) | 35,875 |
30,000 | | Lithia Motors, Inc., 3.875%, 6/1/29 (144A) | 31,096 |
90,000 | | Penske Automotive Group, Inc., 3.75%, 6/15/29 | 90,562 |
15,000 | | SRS Distribution, Inc., 4.625%, 7/1/28 (144A) | 15,338 |
5,000 | | SRS Distribution, Inc., 6.125%, 7/1/29 (144A) | 5,146 |
| | Total Retail | $ 274,543 |
| | Software — 0.4% | |
170,000 | | Citrix Systems, Inc., 3.3%, 3/1/30 | $ 179,031 |
| | Total Software | $ 179,031 |
| | Telecommunications — 1.8% | |
50,000 | | CommScope Technologies LLC, 5.0%, 3/15/27 (144A) | $ 51,187 |
165,000 | | Level 3 Financing, Inc., 3.75%, 7/15/29 (144A) | 160,463 |
55,000 | | Level 3 Financing, Inc., 4.625%, 9/15/27 (144A) | 57,086 |
45,000 | | LogMeIn, Inc., 5.5%, 9/1/27 (144A) | 46,577 |
25,000 | | Lumen Technologies, Inc., 4.0%, 2/15/27 (144A) | 25,500 |
45,000 | | Lumen Technologies, Inc., 4.5%, 1/15/29 (144A) | 43,918 |
11,700 | | Millicom International Cellular SA, 6.25%, 3/25/29 (144A) | 12,792 |
45,000 | | Plantronics, Inc., 4.75%, 3/1/29 (144A) | 44,673 |
30,000 | | Sprint Corp., 7.25%, 9/15/21 | 30,443 |
45,000 | | T-Mobile USA, Inc., 2.875%, 2/15/31 | 44,663 |
80,000 | | T-Mobile USA, Inc., 3.375%, 4/15/29 (144A) | 82,559 |
165,000 | | T-Mobile USA, Inc., 3.5%, 4/15/31 (144A) | 170,707 |
35,000 | | Windstream Escrow LLC/Windstream Escrow Finance Corp., 7.75%, 8/15/28 (144A) | 36,050 |
| | Total Telecommunications | $ 806,618 |
| | Transportation — 0.1% | |
60,000 | | Western Global Airlines LLC, 10.375%, 8/15/25 (144A) | $ 68,603 |
| | Total Transportation | $ 68,603 |
| | TOTAL CORPORATE BONDS | |
| | (Cost $13,611,504) | $14,321,708 |
| | FOREIGN GOVERNMENT BONDS — 3.0% of Net Assets | |
| | Argentina — 0.6% | |
145,500(c) | | Argentine Republic Government International Bond, 0.125%, 7/9/35 | $ 46,052 |
6,500 | | Argentine Republic Government International Bond, 1.0%, 7/9/29 | 2,462 |
250,000 | | Ciudad Autonoma De Buenos Aires, 7.5%, 6/1/27 (144A) | 213,752 |
| | Total Argentina | $ 262,266 |
| | Egypt — 0.3% | |
EGP 1,754,000 | | Egypt Government Bond, 15.7%, 11/7/27 | $ 116,119 |
| | Total Egypt | $ 116,119 |
| | Indonesia — 0.3% | |
IDR 1,784,000,000 | | Indonesia Treasury Bond, 6.125%, 5/15/28 | $ 122,911 |
| | Total Indonesia | $ 122,911 |
The accompanying notes are an integral part of these financial statements.
20
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Ivory Coast — 0.5% | |
EUR 100,000 | | Ivory Coast Government International Bond, 4.875%, 1/30/32 (144A) | $ 118,335 |
EUR 100,000 | | Ivory Coast Government International Bond, 5.875%, 10/17/31 (144A) | 127,338 |
| | Total Ivory Coast | $ 245,673 |
| | Mexico — 0.8% | |
MXN 5,490,000 | | Mexican Bonos, 8.5%, 5/31/29 | $ 303,049 |
MXN 1,525,572 | | Mexican Udibonos, 2.0%, 6/9/22 | 76,969 |
| | Total Mexico | $ 380,018 |
| | Qatar — 0.5% | |
200,000 | | Qatar Government International Bond, 3.4%, 4/16/25 (144A) | $ 217,790 |
| | Total Qatar | $ 217,790 |
| | TOTAL FOREIGN GOVERNMENT BONDS | |
| | (Cost $1,421,415) | $ 1,344,777 |
Face | | | |
Amount | | | |
USD ($) | | | |
| | INSURANCE-LINKED SECURITIES — 0.0%† of Net Assets# | |
| | Reinsurance Sidecars — 0.0%† | |
| | Multiperil – Worldwide — 0.0%† | |
40,000+(a)(i) | | Lorenz Re 2018, 7/1/21 | $ 204 |
20,578+(a)(i) | | Lorenz Re 2019, 6/30/22 | 2,257 |
| | | $ 2,461 |
| | Total Reinsurance Sidecars | $ 2,461 |
| | TOTAL INSURANCE-LINKED SECURITIES | |
| | (Cost $15,117) | $ 2,461 |
Principal | | | |
Amount | | | |
USD ($) | | | |
| | SENIOR SECURED FLOATING RATE LOAN INTERESTS — 1.1% of Net Assets*(e) | |
| | Aerospace & Defense — 0.1% | |
30,000 | | Grupo Aeromexico, SAB de CV, DIP Tranche 1 Term Loan, 1.0% (LIBOR + 800 bps), 12/31/21 | $ 30,225 |
| | Total Aerospace & Defense | $ 30,225 |
| | Airlines — 0.0%† | |
8,003 | | Grupo Aeromexico, SAB de CV, DIP Tranche 2 Term Loan, 15.5% (LIBOR + 1,450 bps), 12/31/21 | $ 8,213 |
| | Total Airlines | $ 8,213 |
| | Automobile — 0.1% | |
33,270 | | Navistar, Inc., Tranche B Term Loan, 0.1% (LIBOR + 350 bps), 11/6/24 | $ 33,326 |
| | Total Automobile | $ 33,326 |
| | Broadcasting & Entertainment — 0.1% | |
39,047 | | Sinclair Television Group, Inc., Tranche B Term Loan, 0.11% (LIBOR + 225 bps), 1/3/24 | $ 38,738 |
| | Total Broadcasting & Entertainment | $ 38,738 |
| | Computers & Electronics — 0.0%† | |
12,329 | | Energy Acquisition LP (aka Electrical Components International), First Lien Initial Term Loan, | |
| | 0.118% (LIBOR + 425 bps), 6/26/25 | $ 12,206 |
| | Total Computers & Electronics | $ 12,206 |
The accompanying notes are an integral part of these financial statements.
21
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | Finance — 0.2% | |
110,000 | | Bank of Industry Ltd., 0.119% (LIBOR + 600 bps), 12/11/23 | $ 109,648 |
| | Total Finance | $ 109,648 |
| | Healthcare, Education & Childcare — 0.2% | |
34,307 | | Alliance HealthCare Services, Inc., First Lien Initial Term Loan, 1.0% (LIBOR + 450 bps), 10/24/23 | $ 34,178 |
35,559 | | KUEHG Corp. (fka KC MergerSub, Inc.) (aka KinderCare), Term B-3 Loan, 4.75% | |
| | (LIBOR + 375 bps), 2/21/25 | 35,085 |
| | Total Healthcare, Education & Childcare | $ 69,263 |
| | Hotel, Gaming & Leisure — 0.2% | |
70,138 | | 1011778 B.C. Unlimited Liability Co. (New Red Finance, Inc.) (aka Burger King/Tim Hortons), | |
| | Term B-4 Loan, 0.104% (LIBOR + 175 bps), 11/19/26 | $ 69,261 |
| | Total Hotel, Gaming & Leisure | $ 69,261 |
| | Insurance — 0.2% | |
96,250 | | USI, Inc. (fka Compass Investors, Inc.), 2017 New Term Loan, 0.147% (LIBOR + 300 bps), 5/16/24 | $ 95,494 |
| | Total Insurance | $ 95,494 |
| | Leisure & Entertainment — 0.0%† | |
15,560 | | Fitness International LLC, Term B Loan, 1.0% (LIBOR + 325 bps), 4/18/25 | $ 14,918 |
| | Total Leisure & Entertainment | $ 14,918 |
| | Retail — 0.0%† | |
14,700 | | Staples, Inc., 2019 Refinancing New Term B-2 Loan, 0.176% (LIBOR + 450 bps), 9/12/24 | $ 14,516 |
| | Total Retail | $ 14,516 |
| | TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | |
| | (Cost $492,936) | $ 495,808 |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS — 46.4% of Net Assets | |
400,000 | | Fannie Mae, 1.5%, 8/1/51 (TBA) | $ 404,504 |
210,000 | | Fannie Mae, 2.0%, 7/1/36 (TBA) | 216,671 |
200,000 | | Fannie Mae, 2.0%, 7/1/51 (TBA) | 202,211 |
500,000 | | Fannie Mae, 2.0%, 8/1/51 (TBA) | 504,531 |
1,200,000 | | Fannie Mae, 2.5%, 7/1/51 (TBA) | 1,241,953 |
20,136 | | Fannie Mae, 3.0%, 10/1/30 | 21,322 |
44,384 | | Fannie Mae, 3.0%, 5/1/43 | 46,976 |
1,223 | | Fannie Mae, 3.0%, 5/1/46 | 1,302 |
1,280 | | Fannie Mae, 3.0%, 10/1/46 | 1,358 |
634 | | Fannie Mae, 3.0%, 1/1/47 | 674 |
3,691 | | Fannie Mae, 3.0%, 7/1/49 | 3,938 |
600,000 | | Fannie Mae, 3.0%, 7/1/51 (TBA) | 625,570 |
300,000 | | Fannie Mae, 3.0%, 8/1/51 (TBA) | 312,586 |
31,228 | | Fannie Mae, 3.5%, 6/1/45 | 33,595 |
45,837 | | Fannie Mae, 3.5%, 9/1/45 | 49,709 |
10,103 | | Fannie Mae, 3.5%, 10/1/46 | 10,882 |
31,793 | | Fannie Mae, 3.5%, 1/1/47 | 33,783 |
56,130 | | Fannie Mae, 3.5%, 1/1/47 | 60,382 |
800,000 | | Fannie Mae, 3.5%, 7/1/51 (TBA) | 842,266 |
38,188 | | Fannie Mae, 4.0%, 10/1/40 | 42,584 |
5,612 | | Fannie Mae, 4.0%, 12/1/40 | 6,258 |
The accompanying notes are an integral part of these financial statements.
22
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS (continued) | |
17,354 | | Fannie Mae, 4.0%, 11/1/43 | $ 19,103 |
26,981 | | Fannie Mae, 4.0%, 11/1/43 | 29,674 |
15,758 | | Fannie Mae, 4.0%, 4/1/47 | 17,110 |
22,199 | | Fannie Mae, 4.0%, 4/1/47 | 23,998 |
8,264 | | Fannie Mae, 4.0%, 6/1/47 | 8,934 |
12,410 | | Fannie Mae, 4.0%, 7/1/47 | 13,444 |
300,000 | | Fannie Mae, 4.0%, 7/1/51 (TBA) | 319,535 |
33,569 | | Fannie Mae, 4.5%, 11/1/40 | 37,335 |
18,003 | | Fannie Mae, 4.5%, 5/1/41 | 20,098 |
44,996 | | Fannie Mae, 4.5%, 6/1/44 | 50,042 |
98,237 | | Fannie Mae, 4.5%, 5/1/49 | 107,443 |
137,767 | | Fannie Mae, 4.5%, 4/1/50 | 149,420 |
1,100,000 | | Fannie Mae, 4.5%, 7/1/51 (TBA) | 1,184,176 |
200,000 | | Fannie Mae, 4.5%, 8/1/51 (TBA) | 215,492 |
17,015 | | Fannie Mae, 5.0%, 4/1/30 | 18,848 |
14,971 | | Fannie Mae, 5.0%, 1/1/39 | 16,927 |
3,505 | | Fannie Mae, 5.0%, 6/1/40 | 4,022 |
95 | | Fannie Mae, 6.0%, 3/1/32 | 113 |
15,950 | | Federal Home Loan Mortgage Corp., 3.0%, 10/1/29 | 16,871 |
11,887 | | Federal Home Loan Mortgage Corp., 3.0%, 12/1/46 | 12,574 |
33,185 | | Federal Home Loan Mortgage Corp., 3.0%, 2/1/47 | 35,699 |
43,152 | | Federal Home Loan Mortgage Corp., 3.0%, 2/1/47 | 45,546 |
1,593 | | Federal Home Loan Mortgage Corp., 3.0%, 11/1/47 | 1,701 |
30,420 | | Federal Home Loan Mortgage Corp., 3.5%, 11/1/45 | 32,736 |
36,669 | | Federal Home Loan Mortgage Corp., 3.5%, 7/1/46 | 40,135 |
10,935 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 11,898 |
14,671 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 15,961 |
27,392 | | Federal Home Loan Mortgage Corp., 4.0%, 4/1/47 | 29,625 |
143 | | Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 | 165 |
588 | | Federal Home Loan Mortgage Corp., 5.0%, 6/1/35 | 646 |
3,266 | | Federal Home Loan Mortgage Corp., 5.0%, 10/1/38 | 3,747 |
13,114 | | Federal Home Loan Mortgage Corp., 5.0%, 11/1/39 | 14,992 |
7,025 | | Federal Home Loan Mortgage Corp., 5.5%, 6/1/41 | 8,165 |
400,000 | | Federal National Mortgage Association, 4.0%, 8/1/51 (TBA) | 426,391 |
100,000 | | Government National Mortgage Association, 2.0%, 7/1/51 (TBA) | 101,930 |
600,000 | | Government National Mortgage Association, 2.5%, 7/1/51 (TBA) | 621,070 |
300,000 | | Government National Mortgage Association, 3.0%, 8/1/51 (TBA) | 312,867 |
4,793 | | Government National Mortgage Association I, 3.5%, 10/15/42 | 5,113 |
1,905 | | Government National Mortgage Association I, 4.0%, 12/15/41 | 2,055 |
99,816 | | Government National Mortgage Association I, 4.0%, 4/15/42 | 108,096 |
55,617 | | Government National Mortgage Association I, 4.0%, 8/15/43 | 63,489 |
4,264 | | Government National Mortgage Association I, 4.0%, 3/15/44 | 4,706 |
11,302 | | Government National Mortgage Association I, 4.0%, 9/15/44 | 12,538 |
11,266 | | Government National Mortgage Association I, 4.0%, 4/15/45 | 12,351 |
21,371 | | Government National Mortgage Association I, 4.0%, 6/15/45 | 23,577 |
The accompanying notes are an integral part of these financial statements.
23
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS (continued) | |
3,500 | | Government National Mortgage Association I, 4.5%, 9/15/33 | $ 3,934 |
6,612 | | Government National Mortgage Association I, 4.5%, 4/15/35 | 7,428 |
14,461 | | Government National Mortgage Association I, 4.5%, 1/15/40 | 16,439 |
35,214 | | Government National Mortgage Association I, 4.5%, 3/15/40 | 39,372 |
8,527 | | Government National Mortgage Association I, 4.5%, 9/15/40 | 9,566 |
10,836 | | Government National Mortgage Association I, 4.5%, 7/15/41 | 12,239 |
2,905 | | Government National Mortgage Association I, 5.0%, 4/15/35 | 3,376 |
2,631 | | Government National Mortgage Association I, 5.5%, 1/15/34 | 3,068 |
3,774 | | Government National Mortgage Association I, 5.5%, 4/15/34 | 4,402 |
1,060 | | Government National Mortgage Association I, 5.5%, 7/15/34 | 1,235 |
3,914 | | Government National Mortgage Association I, 5.5%, 6/15/35 | 4,373 |
394 | | Government National Mortgage Association I, 6.0%, 2/15/33 | 469 |
581 | | Government National Mortgage Association I, 6.0%, 3/15/33 | 653 |
679 | | Government National Mortgage Association I, 6.0%, 3/15/33 | 808 |
907 | | Government National Mortgage Association I, 6.0%, 6/15/33 | 1,065 |
813 | | Government National Mortgage Association I, 6.0%, 7/15/33 | 925 |
855 | | Government National Mortgage Association I, 6.0%, 7/15/33 | 993 |
148 | | Government National Mortgage Association I, 6.0%, 9/15/33 | 166 |
611 | | Government National Mortgage Association I, 6.0%, 9/15/33 | 684 |
1,037 | | Government National Mortgage Association I, 6.0%, 10/15/33 | 1,205 |
1,802 | | Government National Mortgage Association I, 6.0%, 8/15/34 | 2,021 |
280 | | Government National Mortgage Association I, 6.5%, 3/15/29 | 313 |
927 | | Government National Mortgage Association I, 6.5%, 1/15/30 | 1,033 |
197 | | Government National Mortgage Association I, 6.5%, 2/15/32 | 231 |
212 | | Government National Mortgage Association I, 6.5%, 3/15/32 | 249 |
359 | | Government National Mortgage Association I, 6.5%, 11/15/32 | 424 |
41 | | Government National Mortgage Association I, 7.0%, 3/15/31 | 42 |
100,000 | | Government National Mortgage Association II, 2.0%, 8/1/51 (TBA) | 101,746 |
6,171 | | Government National Mortgage Association II, 3.5%, 4/20/45 | 6,572 |
9,890 | | Government National Mortgage Association II, 3.5%, 4/20/45 | 10,627 |
12,330 | | Government National Mortgage Association II, 3.5%, 3/20/46 | 13,358 |
19,928 | | Government National Mortgage Association II, 4.0%, 9/20/44 | 21,776 |
28,795 | | Government National Mortgage Association II, 4.0%, 10/20/46 | 31,112 |
27,166 | | Government National Mortgage Association II, 4.0%, 1/20/47 | 29,247 |
14,255 | | Government National Mortgage Association II, 4.0%, 2/20/48 | 15,619 |
17,623 | | Government National Mortgage Association II, 4.0%, 4/20/48 | 19,309 |
6,475 | | Government National Mortgage Association II, 4.5%, 9/20/41 | 7,161 |
16,562 | | Government National Mortgage Association II, 4.5%, 9/20/44 | 17,815 |
7,716 | | Government National Mortgage Association II, 4.5%, 10/20/44 | 8,532 |
16,939 | | Government National Mortgage Association II, 4.5%, 11/20/44 | 18,732 |
1,961 | | Government National Mortgage Association II, 5.5%, 3/20/34 | 2,296 |
3,206 | | Government National Mortgage Association II, 6.0%, 11/20/33 | 3,756 |
3,500,000(g) | | U.S. Treasury Bills, 7/27/21 | 3,499,899 |
1,500,000(g) | | U.S. Treasury Bills, 8/3/21 | 1,499,936 |
4,000,000(g) | | U.S. Treasury Bills, 8/26/21 | 3,999,736 |
The accompanying notes are an integral part of these financial statements.
24
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | | | |
Amount | | | |
USD ($) | | | Value |
| | U.S. GOVERNMENT AND AGENCY OBLIGATIONS (continued) | |
451,326 | | U.S. Treasury Inflation Indexed Bonds, 0.125%, 2/15/51 | $ 496,634 |
343,927 | | U.S. Treasury Inflation Indexed Bonds, 0.25%, 2/15/50 | 389,927 |
185,186 | | U.S. Treasury Inflation Indexed Bonds, 1.0%, 2/15/48 | 247,305 |
393,731 | | U.S. Treasury Inflation Indexed Bonds, 1.0%, 2/15/49 | 530,871 |
975,000 | | U.S. Treasury Notes, 0.125%, 10/31/22 | 974,543 |
| | TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS | |
| | (Cost $20,635,398) | $20,926,635 |
Number of | | | | | Strike | Expiration | |
Contracts | | Description | Counterparty | Amount | Price | Date | |
| | OVER THE COUNTER (OTC) CALL OPTIONS PURCHASED — 0.0% | |
3,182^(j) | | Desarrolladora Homex | Bank of New York . | MXN — | MXN(l)— | 10/23/22 | $ — |
| | SAB de CV | Mellon Corp | | | | |
3,182^(k) | | Desarrolladora Homex | Bank of New York . | MXN — | MXN(l)— | 10/23/22 | — |
| | SAB de CV | Mellon Corp | | | | |
| | | | | | | $ — |
| | TOTAL OVER THE COUNTER (OTC) CALL OPTIONS PURCHASED | |
| | (Premiums paid $0) | | | | | $ — |
| | TOTAL OPTIONS PURCHASED | | | | |
| | (Premiums paid $0) | | | | | $ — |
| | TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 106.8% | | |
| | (Cost $47,201,075) | | | | | $48,111,880 |
| | | | | Change | |
| | | | | in Net | |
| | | | Net | Unrealized | |
| | | Dividend | Realized
| Appreciation | |
Shares | | | Income | Gain (Loss) | (Depreciation)
| |
| | AFFILIATED ISSUER — 1.8% | | | | |
| | CLOSED-END FUND — 1.8% of Net Assets | | | |
97,089(m) | | Pioneer ILS Interval Fund | $ — | $ — | $13,593 | $ 837,880 |
| | Total | | | | $ 837,880 |
| | TOTAL CLOSED-END FUND | | | | |
| | (Cost $998,388) | | | | $ 837,880 |
| | TOTAL INVESTMENTS IN AFFILIATED ISSUER — 1.8% | | |
| | (Cost $998,388) | | | | $ 837,880 |
| | OTHER ASSETS AND LIABILITIES — (8.6)% | | | $ (3,891,651) |
| | NET ASSETS — 100.0% | | | | $45,058,109 |
The accompanying notes are an integral part of these financial statements.
25
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| |
bps | Basis Points. |
BADLARPP | Argentine Deposit Rate Badlar Private Banks 30-35 Days. |
FREMF | Freddie Mac Multifamily Fixed-Rate Mortgage Loans. |
ICE | Intercontinental Exchange. |
LIBOR | London Interbank Offered Rate. |
REIT | Real Estate Investment Trust. |
REMICS | Real Estate Mortgage Investment Conduits. |
SOFRRATE | Secured Overnight Financing Rate. |
(144A) | Security is exempt from registration under Rule 144A of the Securities Act of 1933. Such securities may be resold normally to qualified |
| institutional buyers in a transaction exempt from registration. At June 30, 2021, the value of these securities amounted to $17,892,993, or |
| 39.7% of net assets. |
(TBA) | “To Be Announced” Securities. |
† | Amount rounds to less than 0.1%. |
* | Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically redetermined by |
| reference to a base lending rate plus a premium. These base lending rates are generally (i) the lending rate offered by one or more major |
| European banks, such as LIBOR, (ii) the prime rate offered by one or more major United States banks, (iii) the rate of a certificate of deposit or |
| (iv) other base lending rates used by commercial lenders. The interest rate shown is the rate accruing at June 30, 2021. |
+ | Security that used significant unobservable inputs to determine its value. |
^ | Security is valued using fair value methods (other than prices supplied by independent pricing services or brokerdealers). |
(a) | Non-income producing security. |
(b) | Security is perpetual in nature and has no stated maturity date. |
(c) | Debt obligation initially issued at one coupon which converts to a higher coupon at a specific date. The rate shown is the rate at June 30, 2021. |
(d) | The interest rate is subject to change periodically. The interest rate and/or reference index and spread shown at June 30, 2021. |
(e) | Floating rate note. Coupon rate, reference index and spread shown at June 30, 2021. |
(f) | Security represents the interest-only portion payments on a pool of underlying mortgages or mortgage-backed securities. |
(g) | Security issued with a zero coupon. Income is recognized through accretion of discount. |
(h) | Payment-in-kind (PIK) security which may pay interest in the form of additional principal amount. |
(i) | Issued as preference shares. |
(j) | Option does not become effective until underlying company’s outstanding common shares reach a market capitalization of MXN 12.5 billion. |
(k) | Option does not become effective until underlying company’s outstanding common shares reach a market capitalization of MXN 14.5 billion. |
(l) | Strike price is 1 Mexican peso (MXN). |
(m) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by the Adviser. |
# | Securities are restricted as to resale. |
Restricted Securities | Acquisition date | Cost | Value |
Lorenz Re 2018 | 6/26/2018 | $8,588 | $ 204 |
Lorenz Re 2019 | 7/10/2019 | 6,529 | 2,257 |
Total Restricted Securities | | | $2,461 |
% of Net assets | | | 0.0%† |
† Amount rounds to less than 0.1%. | | | |
The accompanying notes are an integral part of these financial statements.
26
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
| | | |
| In | | | | | | Unrealized |
Currency | Exchange | | Currency | | | Settlement | Appreciation |
Purchased | for | | Sold | Deliver | Counterparty | Date | (Depreciation) |
SEK | 2,136,507 | | EUR | (210,693) | Bank of America NA | 9/3/21 | $ (332) |
SGD | 299,729 | | USD | (225,944) | Brown Brothers Harriman & Co. | 9/3/21 | (3,250) |
USD | 133,336 | | NOK | (1,110,000) | Brown Brothers Harriman & Co. | 8/4/21 | 4,579 |
EUR | 100,000 | | USD | (119,483) | Citibank NA | 9/28/21 | (796) |
KRW | 260,950,000 | | USD | (233,728) | Citibank NA | 9/2/21 | (3,014) |
NOK | 69,900 | | USD | (8,510) | Citibank NA | 8/4/21 | (402) |
PLN | 405,000 | | EUR | (89,458) | Citibank NA | 8/24/21 | (16) |
AUD | 587,000 | | USD | (454,232) | Goldman Sachs International | 8/26/21 | (14,140) |
CZK | 2,357,000 | | USD | (109,851) | Goldman Sachs International | 7/29/21 | (376) |
EGP | 795,790 | | USD | (49,737) | Goldman Sachs International | 8/26/21 | 270 |
EUR | 1,139 | | NOK | (11,465) | Goldman Sachs International | 7/6/21 | 20 |
GHS | 579,382 | | USD | (99,167) | Goldman Sachs International | 8/27/21 | (2,648) |
PEN | 790,000 | | USD | (209,914) | Goldman Sachs International | 8/26/21 | (3,986) |
PLN | 420,000 | | EUR | (92,805) | Goldman Sachs International | 8/24/21 | (58) |
USD | 112,229 | | CZK | (2,357,000) | Goldman Sachs International | 7/29/21 | 2,755 |
USD | 121,102 | | IDR | (1,740,000,000) | Goldman Sachs International | 8/27/21 | 1,662 |
USD | 110,713 | | INR | (8,165,000) | Goldman Sachs International | 7/30/21 | 1,247 |
USD | 102,399 | | MXN | (2,065,000) | Goldman Sachs International | 7/29/21 | (868) |
EUR | 30,000 | | USD | (36,133) | HSBC Bank USA NA | 7/27/21 | (575) |
IDR | 1,500,000,000 | | USD | (102,951) | HSBC Bank USA NA | 8/27/21 | 15 |
INR | 16,000,000 | | USD | (210,156) | HSBC Bank USA NA | 7/30/21 | 4,353 |
NOK | 1,861,465 | | EUR | (184,917) | HSBC Bank USA NA | 7/6/21 | (3,188) |
SEK | 3,493 | | EUR | (345) | HSBC Bank USA NA | 9/3/21 | (1) |
USD | 213,207 | | EUR | (175,000) | HSBC Bank USA NA | 8/26/21 | 5,655 |
USD | 177,532 | | MXN | (3,586,000) | HSBC Bank USA NA | 7/29/21 | (1,798) |
EUR | 775,000 | | USD | (938,061) | JPMorgan Chase Bank NA | 7/27/21 | (19,471) |
NOK | 2,930,100 | | USD | (356,825) | JPMorgan Chase Bank NA | 8/4/21 | (16,943) |
PLN | 900,000 | | USD | (238,322) | JPMorgan Chase Bank NA | 8/25/21 | (2,595) |
SEK | 3,104,326 | | USD | (370,546) | JPMorgan Chase Bank NA | 7/29/21 | (8,010) |
INR | 9,000,000 | | USD | (119,029) | State Street Bank & Trust Co. | 7/30/21 | 1,632 |
USD | 547,057 | | EUR | (450,000) | State Street Bank & Trust Co. | 8/26/21 | 13,353 |
USD | 119,229 | | EUR | (100,000) | State Street Bank & Trust Co. | 9/28/21 | 542 |
USD | 66,657 | | SEK | (555,000) | State Street Bank & Trust Co. | 7/29/21 | 1,842 |
TOTAL FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
| | | $ (44,542)
|
FUTURES CONTRACTS | | | | | |
FIXED INCOME INDEX FUTURES CONTRACTS | | | | |
| | | | | Unrealized |
Number of | | Expiration | Notional | Market | Appreciation |
Contracts Long | Description | Date | Amount | Value | (Depreciation) |
8 | U.S. 2 Year Note (CBT) | 9/30/21 | $1,765,282 | $1,762,563 | $ (2,719) |
3 | U.S. 10 Year Note (CBT) | 9/21/21 | 395,226 | 397,500 | 2,274 |
8 | U.S. Ultra Bond (CBT) | 9/21/21 | 1,473,016 | 1,541,500 | 68,484 |
| | | $3,633,524 | $3,701,563 | $ 68,039 |
The accompanying notes are an integral part of these financial statements.
27
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | | |
| | | | | Unrealized |
Number of | | Expiration | Notional | Market | Appreciation |
Contracts Short | Description | Date | Amount | Value | (Depreciation) |
9
| Euro-Bobl | 9/8/21 | $(1,428,368) | $(1,430,287) | $ (1,919) |
21
| Euro-Bund | 9/8/21 | (4,266,766) | (4,294,131) | (27,365) |
1
| U.S. 5 Year Note (CBT) | 9/30/21 | (123,891) | (123,430) | 461 |
12
| U.S. 10 Year Ultra | 9/21/21 | (1,759,766) | (1,766,438) | (6,672) |
5
| U.S. Long Bond (CBT) | 9/21/21 | (780,000) | (803,750) | (23,750) |
| | | $(8,358,791) | $(8,418,036) | $(59,245) |
TOTAL FUTURES CONTRACTS | | $(4,725,267) | $(4,716,473) | $ 8,794 |
| | | | | | | | |
SWAP CONTRACTS | | | | | | | |
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT – SELL PROTECTION | | | | |
Notional | | | Pay/ | Annual | Expiration | Premiums | Unrealized | Market |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | Paid | Appreciation | Value |
3,000,000 | Markit CDX North America | Receive | 5.00% | 6/20/26 | $290,357 | $18,010 | $308,367 |
| High Yield Series 35 | | | | | | |
TOTAL CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACT - SELL PROTECTION | | $290,357 | $18,010 | $308,367 |
|
OVER THE COUNTER (OTC) CREDIT DEFAULT SWAP CONTRACTS – SELL PROTECTION | | | |
| | | | | | Premiums | | |
Notional | | Obligation | Pay/ | Annual | Expiration | Paid/ | Unrealized | Market |
Amount ($)(1) | Counterparty | Reference/Index | Receive(2) | Fixed Rate | Date | (Received) | Appreciation | Value |
70,000 | JP Morgan Chase | Delta Air Lines, Inc. | Receive | 5.00% | 12/20/25 | $ 4,363 | $ 3,974 | $ 8,337 |
| Bank NA | | | | | | | |
70,000 | JP Morgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (2,645) | 7,519 | 4,874 |
| Bank NA | Holdings, Inc. | | | | | | |
15,000 | JP Morgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (602) | 1,647 | 1,045 |
| Bank NA | Holdings, Inc. | | | | | | |
25,000 | JP Morgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (972) | 2,720 | 1,748 |
| Bank NA | Holdings, Inc. | | | | | | |
45,000 | JP Morgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (1,975) | 5,109 | 3,134 |
| Bank NA | Holdings, Inc. | | | | | | |
25,000 | JP Morgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (1,317) | 3,058 | 1,741 |
| Bank NA | Holdings, Inc. | | | | | | |
TOTAL OVER THE COUNTER (OTC) CREDIT DEFAULT SWAP CONTRACTS – SELL PROTECTION | $(3,148) | $24,027 | $20,879 |
|
OVER THE COUNTER (OTC) TOTAL RETURN SWAP CONTRACT – SELL PROTECTION | | | | |
| | | | | | Premiums | | |
Notional | | Obligation | Pay/ | | Expiration | Paid/ | Unrealized | Market |
Amount ($)(1) | Counterparty | Reference/Index | Receive(2) | Coupon | Date | (Received) | Appreciation | Value |
8,930,000 | JP Morgan Chase | China Government | Receive | 3.27% | 11/19/30 | $1,388,663 | $32,659 | $1,421,322 |
| Bank NA | Bond | | | | | | |
TOTAL OVER THE COUNTER (OTC) TOTAL RETURN SWAP CONTRACT - SELL PROTECTION | | $1,388,663 | $32,659 | $1,421,322 |
TOTAL SWAP CONTRACTS | | | | | $1,675,872 | $74,696 | $1,750,568 |
(1) | The notional amount is the maximum amount that a seller of credit protection would be obligated to pay upon occurrence of a credit event. |
(2) | Receives quarterly. |
The accompanying notes are an integral part of these financial statements.
28
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| |
Principal amounts are denominated in U.S. dollars (“USD”) unless otherwise noted. |
ARS — | Argentine Peso |
AUD — | Australian Dollar |
CNY — | China Yuan Renminbi |
CZK — | Czech Koruna |
EGP — | Egyptian Pound |
EUR — | Euro |
GHS — | Cedi |
IDR —
| Indonesian Rupiah |
INR —
| Indian Rupee |
KRW — | Korean Won |
KZT —
| Kazakhstan Tenge |
MXN — | Mexican Peso |
NOK — | Norwegian Krone |
PEN — | Peruvian Sol |
PLN —
| Polish Zloty |
SEK —
| Swedish Krona |
SGD — | Singapore Dollar |
Purchases and sales of securities (excluding temporary cash investments) for the six months ended June 30, 2021 were as follows: | |
| Purchases | Sales |
Long-Term U.S. Government Securities | $1,508,898 | $ 3,214,564 |
Other Long-Term Securities | $9,256,960 | $11,893,261 |
The Portfolio is permitted to engage in purchase and sale transactions (“cross trades”) with certain funds and accounts for which the Adviser serves as the Portfolio’s investment adviser, as set forth in Rule 17a-7 under the Investment Company Act of 1940, pursuant to procedures adopted by the Board of Trustees. Under these procedures, cross trades are effected at current market prices. During the six months ended June 30, 2021, the Portfolio did not engage in any cross trade activity.
| |
At June 30, 2021, the net unrealized appreciation on investments based on cost for federal tax purposes of $50,155,081 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 1,813,227 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (1,303,728) |
Net unrealized appreciation | $ 509,499 |
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels below.
Level 1 – unadjusted quoted prices in active markets for identical securities.
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). See Notes to Financial Statements — Note 1A.
Level 3 – significant unobservable inputs (including the Portfolio’s own assumptions in determining fair value of investments). See Notes to Financial Statements — Note 1A.
The accompanying notes are an integral part of these financial statements.
29
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/21 (unaudited) (continued) | |
| | | | |
The following is a summary of the inputs used as of June 30, 2021, in valuing the Portfolio’s investments: | | | |
| Level 1 | Level 2 | Level 3 | Total |
Common Stocks | | | | |
Paper & Forest Products | $ — | $ 16 | $ — | $ 16 |
All Other Common Stocks | 3,871 | — | — | 3,871 |
Convertible Preferred Stock | 963,039 | — | — | 963,039 |
Asset Backed Securities | — | 2,328,736 | — | 2,328,736 |
Collateralized Mortgage Obligations | — | 4,341,604 | — | 4,341,604 |
Commercial Mortgage-Backed Securities | — | 2,734,748 | — | 2,734,748 |
Convertible Corporate Bonds | — | 648,477 | — | 648,477 |
Corporate Bonds | — | 14,321,708 | — | 14,321,708 |
Foreign Government Bonds | — | 1,344,777 | — | 1,344,777 |
Insurance-Linked Securities | | | | |
Reinsurance Sidecars | | | | |
Multiperil - Worldwide | — | — | 2,461 | 2,461 |
Senior Secured Floating Rate Loan Interests | — | 495,808 | — | 495,808 |
U.S. Government and Agency Obligations | — | 20,926,635 | — | 20,926,635 |
Over The Counter (OTC) Call Option Purchased | — | —* | — | —* |
Affiliated Closed-End Fund | — | 837,880 | — | 837,880 |
Total Investments in Securities | $966,910 | $ 47,980,389 | $2,461 | $ 48,949,760 |
|
Other Financial Instruments | | | | |
Net unrealized depreciation on forward foreign currency | | | | |
exchange contracts | $ — | $ (44,542) | $ — | $ (44,542) |
Net unrealized appreciation on futures contracts | 8,794 | — | — | 8,794 |
Swap contracts, at value | — | 1,750,568 | — | 1,750,568 |
Total Other Financial Instruments | $ 8,794 | $ 1,706,026 | $ — | $ 1,714,820 |
|
* Securities valued at $0. | | | | |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
| Insurance- Linked Securities |
Balance as of 12/31/20 Realized gain (loss)(1) Change in unrealized appreciation (depreciation)(2) Accrued discounts/premiums Purchases Sales Transfers in to Level 3** Transfers out of Level 3** Balance as of 6/30/21 | $1,832 — 1,405 — — (776) —
— $2,461 |
(1) | Realized gain (loss) on these securities is included in the realized gain (loss) from investments on the Statement of Operations. |
(2) | Unrealized appreciation (depreciation) on these securities is included in change in net unrealized appreciation (depreciation) on investments in the Statement of Operations. |
** | Transfers are calculated on the beginning of period value. For the six months ended June 30, 2021, there were no transfers in or out of Level 3. |
| | |
Net change in unrealized appreciation (depreciation) of Level 3 investments still held and considered Level 3 at June 30, 2021: | $1,405 | |
The accompanying notes are an integral part of these financial statements.
30
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities (unaudited) | |
| |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $47,201,075) | $48,111,880 |
Investments in affiliated issuers, at value (cost $998,388) | 837,880 |
Cash | 1,471,829 |
Foreign currencies, at value (cost $35,609) | 34,030 |
Futures collateral | 65,171 |
Swaps collateral | 246,998 |
Due from broker for futures | 306,319 |
Variation margin for centrally cleared swap contracts | 548 |
Net unrealized appreciation on futures contracts | 8,794 |
Swap contracts, at value (net premiums paid $1,675,872) | 1,750,568 |
Receivables — | |
Investment securities sold | 1,492,738 |
Portfolio shares sold | 38,857 |
Interest | 235,902 |
Due from the Adviser | 17,989 |
Other assets | 2,340 |
Total assets | $54,621,843 |
|
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 9,120,973 |
Portfolio shares repurchased | 4,739 |
Swaps collateral | 54 |
Due to broker for swaps | 310,281 |
Variation margin for futures contracts | 14,319 |
Net unrealized depreciation on forward foreign currency exchange contracts | 44,542 |
Reserve for repatriation taxes | 4,582 |
Due to affiliates | 20,371 |
Accrued expenses | 43,873 |
Total liabilities | $ 9,563,734 |
|
NET ASSETS: | |
Paid-in capital | $43,336,047 |
Distributable earnings | 1,722,062 |
Net assets | $45,058,109 |
|
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class I (based on $6,517,808/617,246 shares) | $ 10.56 |
Class II (based on $38,540,301/3,656,368 shares) | $ 10.54 |
The accompanying notes are an integral part of these financial statements.
31
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) | |
FOR THE SIX MONTHS ENDED 6/30/21 | | | |
INVESTMENT INCOME: | | | |
Interest from unaffiliated issuers (net of foreign taxes withheld $2,521) | $ 705,779 | | |
Dividends from unaffiliated issuers | 24,114 | | |
Total investment income | | | $ 729,893 |
EXPENSES: | | | |
Management fees | $ 143,732 | | |
Administrative expense | 33,362 | | |
Distribution fees | | | |
Class II | 47,263 | | |
Custodian fees | 21,195 | | |
Professional fees | 28,370 | | |
Printing expense | 13,295 | | |
Pricing fees | 15,421 | | |
Trustees’ fees | 2,065 | | |
Insurance expense | 32 | | |
Miscellaneous | 457 | | |
Total expenses | | | $ 305,192 |
Less fees waived and expenses reimbursed by the Adviser | | | (92,251) |
Net expenses | | | $ 212,941 |
Net investment income | | | $ 516,952 |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | |
Net realized gain (loss) on: | | | |
Investments in unaffiliated issuers | $ 629,350 | | |
Written options | 16,469 | | |
Forward foreign currency exchange contracts | 119,475 | | |
Futures contracts | 20,778 | | |
Swap contracts | 271,784 | | |
Other assets and liabilities denominated in foreign currencies | 1,504 | | $ 1,059,360 |
Change in net unrealized appreciation (depreciation) on: | | | |
Investments in unaffiliated issuers (net of foreign capital gains tax of $(1,220) | $(769,562) | | |
Investments in affiliated issuers | 13,593 | | |
Written options | 8,171 | | |
Forward foreign currency exchange contracts | (172,918) | | |
Futures contracts | 39,627 | | |
Swap contracts | (124,682) | | |
Unfunded loan commitments | (219) | | |
Other assets and liabilities denominated in foreign currencies | (186) | | $(1,006,176) |
Net realized and unrealized gain (loss) on investments | | | $ 53,184 |
Net increase in net assets resulting from operations | | | $ 570,136 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets | |
| Six Months | | |
| Ended | | |
| 6/30/21 | | Year Ended |
| (unaudited) | | 12/31/20 |
FROM OPERATIONS: | | | |
Net investment income (loss) | $ 516,952 | | $ 1,307,041 |
Net realized gain (loss) on investments | 1,059,360 | | 617,577 |
Change in net unrealized appreciation (depreciation) on investments | (1,006,176) | | 796,001 |
Net increase in net assets resulting from operations | $ 570,136 | | $ 2,720,619 |
DISTRIBUTIONS TO SHAREOWNERS: | | | |
Class I ($0.28 and $0.39 per share, respectively) | $ (168,368) | | $ (221,198) |
Class II ($0.26 and $0.36 per share, respectively) | (944,855) | | (1,278,984) |
Total distributions to shareowners | $(1,113,223) | | $ (1,500,182) |
FROM PORTFOLIO SHARE TRANSACTIONS: | | | |
Net proceeds from sales of shares | $ 4,627,426 | | $ 15,191,829 |
Reinvestment of distributions | 1,113,223 | | 1,500,182 |
Cost of shares repurchased | (4,949,095) | | (15,711,900) |
Net increase in net assets resulting from Portfolio share transactions | $ 791,554 | | $ 980,111 |
Net increase in net assets | $ 248,467 | | $ 2,200,548 |
NET ASSETS: | | | |
Beginning of period | $44,809,642 | | $ 42,609,094 |
End of period | $45,058,109 | | $ 44,809,642 |
| | | | | | | |
| Six Months | | Six Months | | | | |
| Ended | | Ended | | | | |
| 6/30/21 | | 6/30/21 | | Year Ended | | Year Ended |
| Shares | | Amount | | 12/31/20 | | 12/31/20 |
| (unaudited) | | (unaudited) | | Shares | | Amount |
Class I | | | | | | | |
Shares sold | 27,781 | | $ 293,920 | | 89,934 | | $ 931,452 |
Reinvestment of distributions | 15,972 | | 168,368 | | 21,812 | | 221,198 |
Less shares repurchased | (39,503) | | (418,325) | | (76,209) | | (769,467) |
Net increase | 4,250 | | $ 43,963 | | 35,537 | | $ 383,183 |
Class II | | | | | | | |
Shares sold | 410,924 | | $ 4,333,506 | | 1,404,551 | | $ 14,260,377 |
Reinvestment of distributions | 89,822 | | 944,855 | | 126,398 | | 1,278,984 |
Less shares repurchased | (429,597) | | (4,530,770) | | (1,502,700) | | (14,942,433) |
Net increase | 71,149 | | $ 747,591 | | 28,249 | | $ 596,928 |
The accompanying notes are an integral part of these financial statements.
33
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights | |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended
| Year Ended
|
| (unaudited)
| 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class I | | | | | | |
Net asset value, beginning of period | $10.69 | $10.32 | $ 9.71 | $ 10.28 | $ 10.16 | $ 9.78 |
Increase (decrease) from investment operations: | | | | | | |
Net investment income (loss) (a) | $ 0.13 | $ 0.34 | $ 0.34 | $ 0.34 | $ 0.35 | $ 0.38 |
Net realized and unrealized gain (loss) | | | | | | |
on investments | 0.02 | 0.42 | 0.61 | (0.52) | 0.15 | 0.35 |
Net increase (decrease) from investment operations | $ 0.15 | $ 0.76 | $ 0.95 | $ (0.18) | $ 0.50 | $ 0.73 |
Distributions to shareowners: | | | | | | |
Net investment income | $ (0.18) | $ (0.36) | $ (0.34) | $ (0.28) | $ (0.37) | $ (0.35) |
Net realized gain | (0.10) | (0.03) | — | (0.07) | (0.01) | — |
Tax return of capital | — | — | — | (0.04) | — | — |
Total distributions | $ (0.28) | $ (0.39) | $ (0.34) | $ (0.39) | $ (0.38) | $ (0.35) |
Net increase (decrease) in net asset value | $ (0.13) | $ 0.37 | $ 0.61 | $ (0.57) | $ 0.12 | $ 0.38 |
Net asset value, end of period | $10.56 | $10.69 | $10.32 | $ 9.71 | $ 10.28 | $ 10.16 |
Total return (b) | 2.35%(c) | 7.63% | 9.89% | (1.78)% | 4.99%(d) | 7.58% |
Ratio of net expenses to average net assets | 0.75%(e) | 0.75% | 0.75% | 0.75% | 0.75% | 0.75% |
Ratio of net investment income (loss) to average | | | | | | |
net assets | 2.55%(e) | 3.38% | 3.38% | 3.41% | 3.43% | 3.76% |
Portfolio turnover rate | 31%(c) | 62% | 62% | 37% | 48% | 61% |
Net assets, end of period (in thousands) | $6,518 | $6,552 | $5,962 | $10,296 | $10,886 | $10,890 |
Ratios with no waiver of fees and assumption | | | | | | |
of expenses by the Adviser and no reduction | | | | | | |
for fees paid indirectly: | | | | | | |
Total expenses to average net assets | 1.17%(e) | 1.31% | 1.33% | 1.32% | 1.18% | 1.17% |
Net investment income (loss) to average net assets | 2.13%(e) | 2.82% | 2.80% | 2.84% | 3.00% | 3.34% |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the periods presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | If the Portfolio had not recognized gains in settlement of class action lawsuits during the year ended December 31, 2017, the total return would have been 4.94%. |
(e) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| Six Months | | | | | |
| Ended | | | | | |
| 6/30/21 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended |
| (unaudited) | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | 12/31/16* |
Class II | | | | | | |
Net asset value, beginning of period | $ 10.67 | $ 10.30 | $ 9.70 | $ 10.26 | $ 10.14 | $ 9.76 |
Increase (decrease) from investment operations: | | |
Net investment income (loss) (a) | $ 0.12 | $ 0.32 | $ 0.32 | $ 0.31 | $ 0.33 | $ 0.35 |
Net realized and unrealized gain (loss) | | | |
on investments | 0.01 | 0.41 | 0.59 | (0.50) | 0.14 | 0.36 |
Net increase (decrease) from investment operations | $ 0.13 | $ 0.73 | $ 0.91 | $ (0.19) | $ 0.47 | $ 0.71 |
Distributions to shareowners: | | | | |
Net investment income | $ (0.16) | $ (0.33) | $ (0.31) | $ (0.26) | $ (0.34) | $ (0.33) |
Net realized gain | (0.10) | (0.03) | — | (0.07) | (0.01) | — |
Tax return of capital | — | — | — | (0.04) | — | — |
Total distributions | $ (0.26) | $ (0.36) | $ (0.31) | $ (0.37) | $ (0.35) | $ (0.33) |
Net increase (decrease) in net asset value | $ (0.13) | $ 0.37 | $ 0.60 | $ (0.56) | $ 0.12 | $ 0.38 |
Net asset value, end of period | $ 10.54 | $ 10.67 | $ 10.30 | $ 9.70 | $ 10.26 | $ 10.14 |
Total return (b) | 2.22%(c) | 7.37% | 9.52% | (1.93)% | 4.74% | 7.32% |
Ratio of net expenses to average net assets | 1.00%(d) | 0.99% | 1.00% | 1.00% | 1.00% | 1.00% |
Ratio of net investment income (loss) to average | | |
net assets | 2.30%(d) | 3.11% | 3.16% | 3.16% | 3.18% | 3.51% |
Portfolio turnover rate | 31%(c) | 62% | 62% | 37% | 48% | 61% |
Net assets, end of period (in thousands) | $38,540 | $38,258 | $36,647 | $32,664 | $35,585 | $34,020 |
Ratios with no waiver of fees and assumption | | |
of expenses by the Adviser and no reduction | | |
for fees paid indirectly: | | | | |
Total expenses to average net assets | 1.42%(e) | 1.55% | 1.59% | 1.57% | 1.43% | 1.42% |
Net investment income (loss) to average net assets | 1.88%(e) | 2.55% | 2.57% | 2.59% | 2.75% | 3.09% |
* | The Portfolio was audited by an independent registered public accounting firm other than Ernst & Young LLP. |
(a) | The per-share data presented above is based on the average shares outstanding for the periods presented. |
(b) | Assumes initial investment at net asset value at the beginning of each period, reinvestment of all distributions and the complete redemption of the investment at net asset value at the end of each period. |
(c) | Not annualized. |
(d) | Annualized. |
NOTE: The above financial highlights do not reflect the deduction of non-portfolio expenses associated with variable insurance products, such as mortality and expense risk charges, separate account charges, and sales charges.
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) | |
1. Organization and Significant Accounting Policies
Pioneer Strategic Income VCT Portfolio (the “Portfolio”) is one of 8 portfolios comprising Pioneer Variable Contracts Trust (the “Trust”), a Delaware statutory trust. The Portfolio is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The investment objective of the Portfolio is to produce a high level of current income.
The Portfolio offers two classes of shares designated as Class I and Class II shares. Each class of shares represents an interest in the same schedule of investments of the Portfolio and has identical rights (based on relative net asset values) to assets and liquidation proceeds. Share classes can bear different rates of class-specific fees and expenses, such as transfer agent and distribution fees. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different dividends from net investment income earned by each class. The Amended and Restated Declaration of Trust of the Trust gives the Board of Trustees the flexibility to specify either per-share voting or dollar-weighted voting when submitting matters for shareowner approval. Under per-share voting, each share of a class of the Portfolio is entitled to one vote. Under dollar-weighted voting, a shareowner’s voting power is determined not by the number of shares owned, but by the dollar value of the shares on the record date. Each share class has exclusive voting rights with respect to matters affecting only that class, including with respect to the distribution plan for that class. There is no distribution plan for Class I shares.
Portfolio shares may be purchased only by insurance companies for the purpose of funding variable annuity and variable life insurance contracts, or by qualified pension and retirement plans.
Amundi Asset Management US, Inc., an indirect, wholly owned subsidiary of Amundi and Amundi’s wholly owned subsidiary, Amundi USA, Inc., serves as the Portfolio’s investment adviser (the “Adviser”). Prior to January 1, 2021, the Adviser was named Amundi Pioneer Asset Management, Inc. Amundi Distributor US, Inc., an affiliate of Amundi Asset Management US, Inc., serves as the Portfolio’s distributor (the “Distributor”).
In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-13 “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”) which modifies disclosure requirements for fair value measurements, principally for Level 3 securities and transfers between levels of the fair value hierarchy. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Portfolio has adopted ASU 2018-13 for the six months ended June 30, 2021. The impact to the Portfolio’s adoption was limited to changes in the Portfolio’s disclosures regarding fair value, primarily those disclosures related to transfers between levels of the fair value hierarchy and disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value investments, when applicable.
In March 2020, FASB issued an Accounting Standard Update, ASU 2020-04, Reference Rate Reform (Topic 848) — Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (“LIBOR”) and other LIBOR-based reference rates at the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the Portfolio’s investments, derivatives, debt and other contracts, if applicable, that will undergo reference rate-related modifications as a result of the reference rate reform.
The Portfolio is an investment company and follows investment company accounting and reporting guidance under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). U.S. GAAP requires the management of the Portfolio to 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 income, expenses and gain or loss on investments during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the Portfolio in the preparation of its financial statements:
A. Security Valuation
The net asset value of the Portfolio is computed once daily, on each day the New York Stock Exchange (“NYSE”) is open, as of the close of regular trading on the NYSE.
Fixed-income securities are valued by using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument. A pricing matrix is a means of valuing a debt security on the basis of current market prices for other debt securities, historical trading patterns in the market for fixed-income securities and/or other factors. Non-U.S. debt securities that are listed on an
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
exchange will be valued at the bid price obtained from an independent third party pricing service. When independent third party pricing services are unable to supply prices, or when prices or market quotations are considered to be unreliable, the value of that security may be determined using quotations from one or more broker-dealers.
Loan interests are valued in accordance with guidelines established by the Board of Trustees at the mean between the last available bid and asked prices from one or more brokers or dealers as obtained from Loan Pricing Corporation, an independent third party pricing service. If price information is not available from Loan Pricing Corporation, or if the price information is deemed to be unreliable, price information will be obtained from an alternative loan interest pricing service. If no reliable price quotes are available from either the primary or alternative pricing service, broker quotes will be solicited.
Event-linked bonds are valued at the bid price obtained from an independent third party pricing service. Other insurance-linked securities (including reinsurance sidecars, collateralized reinsurance and industry loss warranties) may be valued at the bid price obtained from an independent pricing service, or through a third party using a pricing matrix, insurance industry valuation models, or other fair value methods or techniques to provide an estimated value of the instrument.
Equity securities which may include restricted securities that have traded on an exchange are valued by using the last sale price on the principal exchange where they are traded. Equity securities which may include restricted securities that have not traded on the date of valuation, or securities for which sale prices are not available, generally are valued using the mean between the last bid and asked prices or, if both last bid and asked prices are not available, at the last quoted bid price. Last sale and bid and asked prices are provided by independent third party pricing services. In the case of equity securities which may include restricted securities not traded on an exchange, prices are typically determined by independent third party pricing services using a variety of techniques and methods.
The value of foreign securities is translated into U.S. dollars based on foreign currency exchange rate quotations supplied by a third party pricing source. Trading in non-U.S. equity securities is substantially completed each day at various times prior to the close of the NYSE. The values of such securities used in computing the net asset value of the Portfolio’s shares are determined as of such times. The Portfolio may use a fair value model developed by an independent pricing service to value non-U.S. equity securities.
Options contracts are generally valued at the mean between the last bid and ask prices on the principal exchange where they are traded. Over-the-counter (“OTC”) options and options on swaps (“swaptions”) are valued using prices supplied by independent pricing services, which consider such factors as market prices, market events, quotations from one or more brokers, Treasury spreads, yields, maturities and ratings, or may use a pricing matrix or other fair value methods or techniques to provide an estimated value of the security or instrument.
Forward foreign currency exchange contracts are valued daily using the foreign exchange rate or, for longer term forward contract positions, the spot currency rate and the forward points on a daily basis, in each case provided by a third party pricing service. Contracts whose forward settlement date falls between two quoted days are valued by interpolation.
Futures contracts are generally valued at the closing settlement price established by the exchange on which they are traded.
Swap contracts, including interest rate swaps, caps and floors (other than centrally cleared swap contracts), are valued at the dealer quotations obtained from reputable International Swap Dealers Association members. Centrally cleared swaps are valued at the daily settlement price provided by the central clearing counterparty.
Shares of open-end registered investment companies (including money market mutual funds) are valued at such funds’ net asset value. Shares of exchange-listed closed-end funds are valued by using the last sale price on the principal exchange where they are traded. Shares of closed-end interval funds that offer their shares at net asset value are valued at such funds’ net asset value.
Securities or loan interests for which independent pricing services or broker-dealers are unable to supply prices or for which market prices and/or quotations are not readily available or are considered to be unreliable are valued by a fair valuation team comprised of certain personnel of the Adviser pursuant to procedures adopted by the Portfolio’s Board of Trustees. The Adviser’s fair valuation team uses fair value methods approved by the Valuation Committee of the Board of Trustees. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities and for discussing and assessing fair values on an ongoing basis, and at least quarterly, with the Valuation Committee of the Board of Trustees.
Inputs used when applying fair value methods to value a security may include credit ratings, the financial condition of the company, current market conditions and comparable securities. The Portfolio may use fair value methods if it is determined that a significant event has occurred after the close of the exchange or market on which the security trades and prior to the
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
determination of the Portfolio’s net asset value. Examples of a significant event might include political or economic news, corporate restructurings, natural disasters, terrorist activity or trading halts. Thus, the valuation of the Portfolio’s securities may differ significantly from exchange prices, and such differences could be material.
At June 30, 2021, two securities were valued using fair value methods (in addition to securities valued using prices supplied by independent pricing services, broker-dealers or using a third party insurance pricing model) representing 0% of net assets. The value of these fair valued securities was $0.
B. Investment Income and Transactions
Dividend income is recorded on the ex-dividend date, except that certain dividends from foreign securities where the ex-dividend date may have passed are recorded as soon as the Portfolio becomes aware of the ex-dividend data in the exercise of reasonable diligence.
Interest income, including interest on income-bearing cash accounts, is recorded on the accrual basis. Dividend and interest income are reported net of unrecoverable foreign taxes withheld at the applicable country rates and net of income accrued on defaulted securities.
Interest and dividend income payable by delivery of additional shares is reclassified as PIK (payment-in-kind) income upon receipt and is included in interest and dividend income, respectively.
Principal amounts of mortgage-backed securities are adjusted for monthly paydowns. Premiums and discounts related to certain mortgage-backed securities are amortized or accreted in proportion to the monthly paydowns. All discounts/premiums on purchase prices of debt securities are accreted/amortized for financial reporting purposes over the life of the respective securities, and such accretion/amortization is included in interest income.
Security transactions are recorded as of trade date. Gains and losses on sales of investments are calculated on the identified cost method for both financial reporting and federal income tax purposes.
C. Foreign Currency Translation
The books and records of the Portfolio are maintained in U.S. dollars. Amounts denominated in foreign currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions, if any, represent, among other things, the net realized gains and losses on foreign currency exchange contracts, disposition of foreign currencies and the difference between the amount of income accrued and the U.S. dollars actually received. Further, the effects of changes in foreign currency exchange rates on investments are not segregated on the Statement of Operations from the effects of changes in the market prices of those securities, but are included with the net realized and unrealized gain or loss on investments.
D. Federal Income Taxes
It is the Portfolio’s policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its net taxable income and net realized capital gains, if any, to its shareowners. Therefore, no provision for federal income taxes is required. As of December 31, 2020, the Portfolio did not accrue any interest or penalties with respect to uncertain tax positions, which, if applicable, would be recorded as an income tax expense on the Statement of Operations. Tax returns filed within the prior three years remain subject to examination by federal and state tax authorities.
In addition to meeting the requirements of the Internal Revenue Code, the Portfolio may be required to pay local taxes on the recognition of capital gains and/or the repatriation of foreign currencies in certain countries. During the year ended December 31, 2020, the Portfolio paid no such taxes.
The amount and character of income and capital gain distributions to shareowners are determined in accordance with federal income tax rules, which may differ from U.S. GAAP. Distributions in excess of net investment income or net realized gains are temporary over distributions for financial statement purposes resulting from differences in the recognition or classification of income or distributions for financial statement and tax purposes. Capital accounts within the financial statements are adjusted for permanent book/tax differences to reflect tax character, but are not adjusted for temporary differences.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
| |
The tax character of distributions paid during the year ended December 31, 2020 was as follows: | |
|
| 2020 |
Distributions paid from: | |
Ordinary income | $1,440,804 |
Long-term capital gain | 59,378 |
Total | $1,500,182 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2020:
| |
| 2020 |
Distributable earnings: | |
Undistributed ordinary income | $ 349,240 |
Undistributed long term capital gain | 423,541 |
Net unrealized appreciation | 1,492,368 |
Total | $2,265,149 |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales, the mark to market of swaps, forward currency exchange contracts, futures contracts, adjustments relating to insurance-linked securities and credit default swaps.
E. Portfolio Shares and Class Allocations
The Portfolio records sales and repurchases of its shares as of trade date. Distribution fees for Class II shares are calculated based on the average daily net asset value attributable to Class II shares of the Portfolio (see Note 5). Class I shares do not pay distribution fees.
Income, common expenses and realized and unrealized gains and losses are calculated at the Portfolio level and allocated daily to each class of shares based on its respective percentage of adjusted net assets at the beginning of the day.
All expenses and fees paid to the Portfolio’s transfer agent for its services are allocated between the classes of shares based on the number of accounts in each class and the ratable allocation of related out-of-pocket expenses (see Note 4).
The Portfolio declares as daily dividends substantially all of its net investment income. All dividends are paid on a monthly basis. Short-term capital gain distributions, if any, may be declared with the daily dividends. Distributions paid by the Portfolio with respect to each class of shares are calculated in the same manner and at the same time, except that net investment income dividends to Class I and Class II shares can reflect different transfer agent and distribution expense rates. Dividends and distributions to shareowners are recorded on the ex-dividend date.
F. Risks
The value of securities held by the Portfolio may go up or down, sometimes rapidly or unpredictably, due to general market conditions, such as real or perceived adverse economic, political or regulatory conditions, recessions, the spread of infectious illness or other public health issues, inflation, changes in interest rates, lack of liquidity in the bond markets or adverse investor sentiment. In the past several years, financial markets have experienced increased volatility, depressed valuations, decreased liquidity and heightened uncertainty. These conditions may continue, recur, worsen or spread. A general rise in interest rates could adversely affect the price and liquidity of fixed-income securities and could also result in increased redemptions from the Portfolio.
At times, the Portfolio’s investments may represent industries or industry sectors that are interrelated or have common risks, making the Portfolio more susceptible to any economic, political, or regulatory developments or other risks affecting those industries and sectors. The Portfolio’s investments in foreign markets and countries with limited developing markets may subject the Portfolio to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions and the imposition of adverse governmental laws or currency exchange restrictions.
The Portfolio invests in below-investment-grade (high-yield) debt securities and preferred stocks. Some of these high-yield securities may be convertible into equity securities of the issuer. Debt securities rated below-investment-grade are commonly referred to as “junk bonds” and are considered speculative. These securities involve greater risk of loss, are subject to greater price volatility, and are less liquid, especially during periods of economic uncertainty or change, than higher rated debt securities.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate). Plans are underway to phase out the use of LIBOR. The UK Financial Conduct Authority (“FCA”) and LIBOR’s administrator, ICE Benchmark Administration (“IBA”), have announced that most LIBOR rates will no longer be published after the end of 2021 and a majority of U.S. dollar LIBOR rates will no longer be published after June 30, 2023. It is possible that the FCA may compel the IBA to publish a subset of LIBOR settings after these dates on a “synthetic” basis, but any such publications would be considered non-representative of the underlying markets. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Based on the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee (comprised of major derivative market participants and their regulators), the U.S. Federal Reserve began publishing a Secured Overnight Funding Rate (“SOFR”) that is intended to replace U.S. Dollar LIBOR. Proposals for alternative reference rates for other currencies have also been announced or have already begun publication, such as SONIA in the United Kingdom. Markets are slowly developing in response to these new rates, and transition planning is at a relatively early stage. Neither the effect of the transition process nor its ultimate success is known. The transition process may lead to increased volatility and illiquidity in markets that currently rely on LIBOR to determine interest rates. The effect of any changes to — or discontinuation of —LIBOR on the portfolio will vary depending on, among other things, provisions in individual contracts and whether, how, and when industry participants develop and adopt new reference rates and alternative reference rates for both legacy and new products and instruments. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could materialize prior to the end of 2021.
The Portfolio may invest in REIT securities, the value of which can fall for a variety of reasons, such as declines in rental income, fluctuating interest rates, poor property management, environmental liabilities, uninsured damage, increased competition, or changes in real estate tax laws.
With the increased use of technologies such as the Internet to conduct business, the Portfolio is susceptible to operational, information security and related risks. While the Portfolio’s Adviser has established business continuity plans in the event of, and risk management systems to prevent, limit or mitigate, such cyber-attacks, there are inherent limitations in such plans and systems, including the possibility that certain risks have not been identified. Furthermore, the Portfolio cannot control the cybersecurity plans and systems put in place by service providers to the Portfolio such as Brown Brothers Harriman & Co., the Portfolio’s custodian and accounting agent, and DST Asset Manager Solutions, Inc., the Portfolio’s transfer agent. In addition, many beneficial owners of Portfolio shares hold them through accounts at broker-dealers, retirement platforms and other financial market participants over which neither the Portfolio nor the Adviser exercises control. Each of these may in turn rely on service providers to them, which are also subject to the risk of cyber-attacks. Cybersecurity failures or breaches at the Adviser or the Portfolio’s service providers or intermediaries have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, interference with the Portfolio’s ability to calculate its net asset value, impediments to trading, the inability of Portfolio shareowners to effect share purchases, redemptions or exchanges or receive distributions, loss of or unauthorized access to private shareowner information and violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, or additional compliance costs. Such costs and losses may not be covered under any insurance. In addition, maintaining vigilance against cyber-attacks may involve substantial costs over time, and system enhancements may themselves be subject to cyber-attacks.
COVID-19
The respiratory illness COVID-19 caused by a novel coronavirus has resulted in a global pandemic and major disruption to economies and markets around the world, including the United States. Global financial markets have experienced extreme volatility and severe losses, and trading in many instruments has been disrupted. Liquidity for many instruments has been greatly reduced for periods of time. Some interest rates are very low and in some cases yields are negative. Some sectors of the economy and individual issuers have experienced particularly large losses. These circumstances may continue for an extended period of time, and may continue to affect adversely the value and liquidity of the Portfolio’s investments. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. Governments and central banks, including the Federal Reserve in the U.S., have taken extraordinary and unprecedented actions to support local and global economies and the financial markets. These actions have resulted in significant expansion of public debt, including in the U.S. The impact of these measures, and whether they will be effective to mitigate the economic and market disruption, will not be known for some time. The consequences of high public debt, including its future impact on the economy and securities markets, likewise may not be known for some time.
The Portfolio’s prospectus contains unaudited information regarding the Portfolio’s principal risks. Please refer to that document when considering the Portfolio’s principal risks.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
G. Restricted Securities
Restricted Securities are subject to legal or contractual restrictions on resale. Restricted securities generally are resold in transactions exempt from registration under the Securities Act of 1933. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933.
Disposal of restricted investments may involve negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted investments held by the Portfolio at June 30, 2021 are listed in the Schedule of Investments.
H. Insurance-Linked Securities (“ILS”)
The Portfolio invests in ILS. The Portfolio could lose a portion or all of the principal it has invested in an ILS, and the right to additional interest or dividend payments with respect to the security, upon the occurrence of one or more trigger events, as defined within the terms of an insurance-linked security. Trigger events, generally, are hurricanes, earthquakes, or other natural events of a specific size or magnitude that occur in a designated geographic region during a specified time period, and/or that involve losses or other metrics that exceed a specific amount. There is no way to accurately predict whether a trigger event will occur, and accordingly, ILS carry significant risk. The Portfolio is entitled to receive principal, and interest and/or dividend payments so long as no trigger event occurs of the description and magnitude specified by the instrument. In addition to the specified trigger events, ILS may expose the Portfolio to other risks, including but not limited to issuer (credit) default, adverse regulatory or jurisdictional interpretations and adverse tax consequences.
The Portfolio’s investments in ILS may include event-linked bonds. ILS also may include special purpose vehicles (“SPVs”) or similar instruments structured to comprise a portion of a reinsurer’s catastrophe-oriented business, known as quota share instruments (sometimes referred to as reinsurance sidecars), or to provide reinsurance relating to specific risks to insurance or reinsurance companies through a collateralized instrument, known as collateralized reinsurance. Structured reinsurance investments also may include industry loss warranties (“ILWs”). A traditional ILW takes the form of a bilateral reinsurance contract, but there are also products that take the form of derivatives, collateralized structures, or exchange-traded instruments.
Where the ILS are based on the performance of underlying reinsurance contracts, the Portfolio has limited transparency into the individual underlying contracts, and therefore must rely upon the risk assessment and sound underwriting practices of the issuer. Accordingly, it may be more difficult for the Adviser to fully evaluate the underlying risk profile of the Portfolio’s structured reinsurance investments, and therefore the Portfolio’s assets are placed at greater risk of loss than if the Adviser had more complete information. Structured reinsurance instruments generally will be considered illiquid securities by the Portfolio. These securities may be difficult to purchase, sell or unwind. Illiquid securities also may be difficult to value. If the Portfolio is forced to sell an illiquid asset, the Portfolio may be forced to sell at a loss.
Additionally, the Portfolio may gain exposure to ILS by investing in a closed-end interval fund, Pioneer ILS Interval Fund, an affiliate of the Adviser. The Portfolio’s investment in Pioneer ILS Interval Fund at June 30, 2021, is listed in the Schedule of Investments.
I. Purchased Options
The Portfolio may purchase put and call options to seek to increase total return. Purchased call and put options entitle the Portfolio to buy and sell a specified number of shares or units of a particular security, currency or index at a specified price at a specific date or within a specific period of time. Upon the purchase of a call or put option, the premium paid by the Portfolio is included on the Statement of Assets and Liabilities as an investment. All premiums are marked-to-market daily, and any unrealized appreciation or depreciation is recorded on the Portfolio’s Statement of Operations. As the purchaser of an index option, the Portfolio has the right to receive a cash payment equal to any depreciation in the value of the index below the strike price of the option (in the case of a put) or equal to any appreciation in the value of the index over the strike price of the option (in the case of a call) as of the valuation date of the option. Premiums paid for purchased call and put options which have expired are treated as realized losses on investments on the Statement of Operations. Upon the exercise or closing of a purchased put option, the premium is offset against the proceeds on the sale of the underlying security or financial instrument in order to determine the realized gain or loss on investments. Upon the exercise or closing of a purchased call option, the premium is added to the cost of the security or financial instrument. The risk associated with purchasing options is limited to the premium originally paid.
The average market value of purchased options contracts open during the six months ended June 30, 2021, was $720. Open purchased options at June 30, 2021, are listed in the Schedule of Investments.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
J. Option Writing
The Portfolio may write put and covered call options to seek to increase total return. When an option is written, the Portfolio receives a premium and becomes obligated to purchase or sell the underlying security at a fixed price, upon the exercise of the option. When the Portfolio writes an option, an amount equal to the premium received by the Portfolio is recorded as “Written options outstanding” on the Statement of Assets and Liabilities and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Portfolio on the expiration date as realized gains from investments on the Statement of Operations. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain on the Statement of Operations, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss on the Statement of Operations. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Portfolio has realized a gain or loss. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
The average market value of written options for the six months ended June 30, 2021, was $(9,973). There were no open written options contracts at June 30, 2021.
K. Forward Foreign Currency Exchange Contracts
The Portfolio may enter into forward foreign currency exchange contracts (“contracts”) for the purchase or sale of a specific foreign currency at a fixed price on a future date. All contracts are marked-to-market daily at the applicable exchange rates, and any resulting unrealized appreciation or depreciation is recorded in the Portfolio’s financial statements. The Portfolio records realized gains and losses at the time a contract is offset by entry into a closing transaction or extinguished by delivery of the currency. Risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of the contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar (see Note 7).
During the six months ended June 30, 2021, the Portfolio had entered into various forward foreign currency exchange contracts that obligated the Portfolio to deliver or take delivery of currencies at specified future maturity dates. Alternatively, prior to the settlement date of a forward foreign currency exchange contract, the Portfolio may close out such contract by entering into an offsetting contract.
The average market value of forward foreign currency exchange contracts open during the six months ended June 30, 2021, was $3,036,158. Open forward foreign currency exchange contracts outstanding at June 30, 2021, are listed in the Schedule of Investments.
L. Futures Contracts
The Portfolio may enter into futures transactions in order to attempt to hedge against changes in interest rates, securities prices and currency exchange rates or to seek to increase total return. Futures contracts are types of derivatives. All futures contracts entered into by the Portfolio are traded on a futures exchange. Upon entering into a futures contract, the Portfolio is required to deposit with a broker an amount of cash or securities equal to the minimum “initial margin” requirements of the associated futures exchange. The amount of cash deposited with the broker as collateral at June 30, 2021, is recorded as “Futures collateral” on the Statement of Assets and Liabilities.
Subsequent payments for futures contracts (“variation margin”) are paid or received by the Portfolio, depending on the daily fluctuation in the value of the contracts, and are recorded by the Portfolio as unrealized appreciation or depreciation. Cash received from or paid to the broker related to previous margin movement is held in a segregated account at the broker and is recorded as either “Due from broker for futures” or “Due to broker for futures” on the Statement of Assets and Liabilities. When the contract is closed, the Portfolio realizes a gain or loss equal to the difference between the opening and closing value of the contract as well as any fluctuation in foreign currency exchange rates where applicable. Futures contracts are subject to market risk, interest rate risk and currency exchange rate risk. Changes in value of the contracts may not directly correlate to the changes in value of the underlying securities. With futures, there is reduced counterparty credit risk to the Portfolio since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
The average market value of futures contracts open during the six months ended June 30, 2021, was $(4,149,409). Open futures contracts outstanding at June 30, 2021, are listed in the Schedule of Investments.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
M. Credit Default Swap Contracts
A credit default swap is a contract between a buyer of protection and a seller of protection against a predefined credit event or an underlying reference obligation, which may be a single security or a basket or index of securities. The Portfolio may buy or sell credit default swap contracts to seek to increase the Portfolio’s income, or to attempt to hedge the risk of default on portfolio securities. A credit default swap index is used to hedge risk or take a position on a basket of credit entities or indices.
As a seller of protection, the Portfolio would be required to pay the notional (or other agreed-upon) value of the referenced debt obligation to the counterparty in the event of a default by a U.S. or foreign corporate issuer of a debt obligation, which would likely result in a loss to the Portfolio. In return, the Portfolio would receive from the counterparty a periodic stream of payments during the term of the contract, provided that no event of default occurred. The maximum exposure of loss to the seller would be the notional value of the credit default swaps outstanding. If no default occurs, the Portfolio would keep the stream of payments and would have no payment obligation. The Portfolio may also buy credit default swap contracts in order to hedge against the risk of default of debt securities, in which case the Portfolio would function as the counterparty referenced above.
As a buyer of protection, the Portfolio makes an upfront or periodic payment to the protection seller in exchange for the right to receive a contingent payment. An upfront payment made by the Portfolio, as the protection buyer, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Periodic payments received or paid by the Portfolio are recorded as realized gains or losses on the Statement of Operations.
Credit default swap contracts are marked-to-market daily using valuations supplied by independent sources, and the change in value, if any, is recorded within the “Swap contracts, at value” line item on the Statement of Assets and Liabilities. Payments received or made as a result of a credit event or upon termination of the contract are recognized, net of the appropriate amount of the upfront payment, as realized gains or losses on the Statement of Operations.
Credit default swap contracts involving the sale of protection may involve greater risks than if the Portfolio had invested in the referenced debt instrument directly. Credit default swap contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Portfolio is a protection buyer and no credit event occurs, it will lose its investment. If the Portfolio is a protection seller and a credit event occurs, the value of the referenced debt instrument received by the Portfolio, together with the periodic payments received, may be less than the amount the Portfolio pays to the protection buyer, resulting in a loss to the Portfolio. In addition, obligations under sell protection credit default swaps may be partially offset by net amounts received from settlement of buy protection credit default swaps entered into by the Portfolio for the same reference obligation with the same counterparty.
Certain swap contracts that are cleared through a central clearinghouse are referred to as centrally cleared swaps. All payments made or received by the Portfolio are pursuant to a centrally cleared swap contract with the central clearing party rather than the original counterparty. Upon entering into a centrally cleared swap contract, the Portfolio is required to make an initial margin deposit, either in cash or in securities. The daily change in value on open centrally cleared contracts is recorded as “Variation margin for centrally cleared swap contracts” on the Statement of Assets and Liabilities. Cash received from or paid to the broker related to previous margin movement is held in a segregated account at the broker and is recorded as either “Due from broker for swaps” or “Due to broker for swaps” on the Statement of Assets and Liabilities. The amount of cash deposited with a broker as collateral at June 30, 2021, is recorded as “Swaps collateral” on the Statement of Assets and Liabilities.
The average market value of credit default swap contracts open during the six months ended June 30, 2021, was $275,165. Open credit default swap contracts at June 30, 2021, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees are calculated daily and paid monthly at the annual rate of 0.65% of the Portfolio’s average daily net assets. For the six months ended June 30, 2021, the effective management fee (excluding waivers and/or assumption of acquired fund fees and expenses) was equivalent to 0.65% (annualized) of the Portfolio’s average daily net assets.
The Adviser has agreed to waive its management fee with respect to any portion of the Portfolio’s assets invested in Pioneer ILS Interval Fund, an affiliated fund managed by the Adviser. For the six months ended June 30, 2021, the Adviser waived $14,521 in management fees with respect to the Portfolio, which is reflected on the Statement of Operations as an expense waiver.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
The Adviser has contractually agreed to limit ordinary operating expenses (ordinary operating expenses means all portfolio expenses other than extraordinary expenses, such as litigation, taxes, brokerage commissions and acquired fund expenses) of the Portfolio to the extent required to reduce Portfolio expenses to 0.75% and 1.00%, of the average daily net assets attributable to Class I and Class II shares, respectively. These expense limitations are in effect through May 1, 2022. There can be no assurance that the Adviser will extend the expense limitation agreement for a class of shares beyond the date referred to above. Fees waived and expenses reimbursed for the six months ended June 30, 2021, are reflected on the Statement of Operations.
In addition, under the management and administration agreements, certain other services and costs, including accounting, regulatory reporting and insurance premiums, are paid by the Portfolio as administrative reimbursements. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $19,058 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2021.
3. Compensation of Trustees and Officers
The Portfolio pays an annual fee to its Trustees. The Adviser reimburses the Portfolio for fees paid to the Interested Trustees. The Portfolio does not pay any salary or other compensation to its officers. For the six months ended June 30, 2021, the Portfolio paid $2,065 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2021, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $–.
4. Transfer Agent
DST Asset Manager Solutions, Inc. serves as the transfer agent to the Portfolio at negotiated rates. Transfer agent fees and payables shown on the Statement of Operations and the Statement of Assets and Liabilities, respectively, include sub-transfer agent expenses incurred through the Portfolio’s omnibus relationship contracts.
5. Distribution Plan
The Portfolio has adopted a distribution plan (the “Plan”) pursuant to Rule 12b-1 of the Investment Company Act of 1940 with respect to Class II shares. Pursuant to the Plan, the Portfolio pays the Distributor 0.25% of the average daily net assets attributable to Class II shares to compensate the Distributor for (1) distribution services and (2) personal and account maintenance services performed and expenses incurred by the Distributor in connection with the Portfolio’s Class II shares. Included in “Due to affiliates” reflected on the Statement of Assets and Liabilities is $1,313 in distribution fees payable to the Distributor at June 30, 2021.
6. Master Netting Agreements
The Portfolio has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with substantially all of its derivative counterparties. An ISDA Master Agreement is a bilateral agreement between the Portfolio and a counterparty that governs the trading of certain Over the Counter (“OTC”) derivatives and typically contains, among other things, close-out and set-off provisions which apply upon the occurrence of an event of default and/or a termination event as defined under the relevant ISDA Master Agreement. The ISDA Master Agreement may also give a party the right to terminate all transactions traded under such agreement if, among other things, there is deterioration in the credit quality of the other party.
Upon an event of default or a termination of the ISDA Master Agreement, the non-defaulting party has the right to close out all transactions under such agreement and to net amounts owed under each transaction to determine one net amount payable by one party to the other. The right to close out and net payments across all transactions under the ISDA Master Agreement could result in a reduction of the Portfolio’s credit risk to its counterparty equal to any amounts payable by the Portfolio under the applicable transactions, if any. However, the Portfolio’s right to set-off may be restricted or prohibited by the bankruptcy or insolvency laws of the particular jurisdiction to which each specific ISDA Master Agreement of each counterparty is subject.
The collateral requirements for derivatives transactions under an ISDA Master Agreement are governed by a credit support annex to the ISDA Master Agreement. Collateral requirements are generally determined at the close of business each day and are typically based on changes in market values for each transaction under an ISDA Master Agreement and netted into one amount for such agreement. Generally, the amount of collateral due from or to a counterparty is subject to threshold (a “minimum transfer amount”) before a transfer is required, which may vary by counterparty. Collateral pledged for the benefit of the Portfolio and/or counterparty is held in segregated accounts by the Portfolio’s custodian and cannot be sold, re-pledged, assigned or otherwise used while pledged. Cash that has been segregated to cover the Portfolio’s collateral obligations, if any, will be reported separately on the Statement of Assets and Liabilities as “Swaps collateral”. Securities pledged by the Portfolio as collateral, if any, are identified as such in the Schedule of Investments.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial instruments subject to an enforceable master netting agreement, such as an ISDA Master Agreement, have been offset on the Statement of Assets and Liabilities. The following charts show gross assets and liabilities of the Portfolio as of June 30, 2021.
| | | | | |
| Derivative | | | | |
| Assets | | | | |
| Subject to | Derivatives | Non-Cash | | Net Amount of |
| Master Netting | Available | Collateral | Cash Collateral | Derivative |
Counterparty | Agreement | for Offset | Received (a) | Received (a) | Assets (b) |
Brown Brothers Harriman & Co. | $ 4,579 | $ (3,250) | $ — | $ — | $ 1,329 |
Citibank NA | — | — | — | — | — |
Goldman Sachs International | 5,954 | (5,954) | — | — | — |
JPMorgan Chase Bank NA | — | — | — | — | — |
State Street Bank & Trust Co. | 17,369 | — | — | — | 17,369 |
HSBC Bank USA NA | 10,023 | (5,562) | — | — | 4,461 |
Total | $ 37,925 | $(14,766) | $ — | $ — | $ 23,159 |
|
|
| Derivative | | | | |
| Liabilities | | | | |
| Subject to | Derivatives | Non-Cash | | Net Amount of |
| Master Netting | Available | Collateral | Cash Collateral | Derivative |
Counterparty | Agreement | for Offset | Pledged (a) | Pledged (a) | Liabilities (c) |
Brown Brothers Harriman & Co. | $ 3,250 | $ (3,250) | $ — | $ — | $ — |
Citibank NA | 4,228 | — | — | — | 4,228 |
Goldman Sachs International | 22,076 | (5,954) | — | — | 16,122 |
JPMorgan Chase Bank NA | 47,019 | — | — | — | 47,019 |
State Street Bank & Trust Co. | — | — | — | — | — |
HSBC Bank USA NA | 5,562 | (5,562) | — | — | — |
Total | $82,135 | $(14,766) | $ — | $ — | $67,369 |
(a) | The amount presented here may be less than the total amount of collateral received/pledged, as the net amount of derivative assets and liabilities cannot be less than $0. |
(b) | Represents the net amount due from the counterparty in the event of default. |
(c) | Represents the net amount payable to the counterparty in the event of default. |
7. Additional Disclosures about Derivative Instruments and Hedging Activities
The Portfolio’s use of derivatives may enhance or mitigate the Portfolio’s exposure to the following risks:
Interest rate risk relates to the fluctuations in the value of interest-bearing securities due to changes in the prevailing levels of market interest rates.
Credit risk relates to the ability of the issuer of a financial instrument to make further principal or interest payments on an obligation or commitment that it has to the Portfolio.
Foreign exchange rate risk relates to fluctuations in the value of an asset or liability due to changes in currency exchange rates.
Equity risk relates to the fluctuations in the value of financial instruments as a result of changes in market prices (other than those arising from interest rate risk or foreign exchange rate risk), whether caused by factors specific to an individual investment, its issuer, or all factors affecting all instruments traded in a market or market segment.
Commodity risk relates to the risk that the value of a commodity or commodity index will fluctuate based on increases or decreases in the commodities market and factors specific to a particular industry or commodity.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/21 (unaudited) (continued) | |
The fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) by risk exposure at June 30, 2021, was as follows:
| | | | | |
Statement of Assets | Interest | Credit | Foreign | Equity | Commodity |
and Liabilities | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Assets | | | | | |
Call options purchased* | $ — | $ — | $ — | $ —** | $ — |
Net unrealized appreciation | | | | | |
on futures contracts | 8,794 | — | — | — | — |
Swap contracts, at value | — | 1,750,568 | — | — | — |
Total Value | $8,794 | $1,750,568 | $ — | $ —** | $ — |
|
Statement of Assets | Interest | Credit | Foreign | Equity | Commodity |
and Liabilities | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Liabilities | | | | | |
Net unrealized depreciation | | | | | |
on forward foreign | | | | | |
currency contracts | $ — | $ — | $44,542 | $ — | $ — |
Total Value | $ — | $ — | $44,542 | $ — | $ — |
* | Reflects the market value of purchased option contracts (see Note 1I). These amounts are included in investments in unaffiliated issuers, at value, on the Statement of Assets and Liabilities. |
** | Includes securities that are valued at $0. |
The effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) on the Statement of Operations by risk exposure at June 30, 2021 was as follows:
| | | | | |
Statement of | Interest | Credit | Foreign | Equity | Commodity |
Operations | Rate Risk | Risk | Exchange Rate Risk | Risk | Risk |
Net realized | | | | | |
gain (loss) on: | | | | | |
Currency put | | | | | |
options purchased* | $ — | $ — | $ (16,469) | $ — | $ — |
Written options | — | — | 16,469 | — | — |
Forward foreign | | | | | |
currency exchange | | | | | |
contracts | — | — | 119,475 | — | — |
Futures contracts | 20,778 | — | — | — | — |
Swap contracts | — | 271,784 | — | — | — |
Total Value | $ 20,778 | $ 271,784 | $ 119,475 | $ — | $ — |
Change in net | | | | | |
unrealized appreciation | | | | | |
(depreciation) on: | | | | | |
Currency put | | | | | |
options purchased** | $ — | $ — | $ 13,482 | $ — | $ — |
Written options | — | — | 8,171 | — | — |
Forward foreign | | | | | |
currency exchange | | | | | |
contracts | — | — | (172,918) | — | — |
Futures contracts | 39,627 | — | — | — | — |
Swap contracts | — | (124,682) | — | — | — |
Total Value | $ 39,627 | $(124,682) | $(151,265) | $ — | $ — |
* | Reflects the net realized gain (loss) on purchased option contracts (see Note 1I). These amounts are included in net realized gain (loss) on investments in unaffiliated issuers, on the Statements of Operations. |
** | Reflects the change in net unrealized appreciation (depreciation) on purchased option contracts (see Note 1I). These amounts are included in change in net unrealized appreciation (depreciation) on Investments in unaffiliated issuers, on the Statement of Operations. |
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
8. Unfunded Loan Commitments
The Portfolio may enter into unfunded loan commitments. Unfunded loan commitments may be partially or wholly unfunded. During the contractual period, the Portfolio is obliged to provide funding to the borrower upon demand. A fee is earned by the Portfolio on the unfunded loan commitment and is recorded as interest income on the Statement of Operations. Unfunded loan commitments are fair valued in accordance with the valuation policy described in Footnote 1A and unrealized appreciation or depreciation, if any, is recorded on the Statement of Assets and Liabilities.
As of June 30, 2021, the Portfolio had no unfunded loan commitments outstanding.
9. Affiliated Issuer
An affiliated issuer is a company in which the Portfolio has a direct or indirect ownership of, control of, or voting power of 5 percent or more of the outstanding voting shares or any company which is under common ownership or control. At June 30, 2021, the value of the Portfolio’s investment in affiliated issuers was $837,880, which represents 1.8% of the Portfolio’s net assets. Transactions in affiliated issuers by the Portfolio for the six months ended were as follows:
| | | | | | | |
| | | Change in | Net Realized | | | |
| | | Net Unrealized | Gain/(Loss) | | | |
| | | Appreciation/ | From | Dividends | Shares | |
| Value at | | (Depreciation) | Investments | from | held at | Value at |
Name of the | December 31, | Purchase | from Investments | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2020 | Costs | in Affiliated Issuers | Issuers | Affiliated Issuers | 2021 | 2021 |
Pioneer ILS | | | | | | | |
Interval Fund | $824,287 | $ — | $13,593 | $ — | $ — | 97,089 | $837,880 |
Annual and semi-annual reports for the underlying Pioneer funds are available on the Funds’ web page(s) at www.amundi.com/us.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement Regarding Liquidity Risk Management Program | |
As required by law, the Portfolio has adopted and implemented a liquidity risk management program (the “Program”) that is designed to assess and manage liquidity risk. Liquidity risk is the risk that the Portfolio could not meet requests to redeem its shares without significant dilution of remaining investors’ interests in the Portfolio. The Portfolio’s Board of Trustees designated a liquidity risk management committee (the “Committee”) consisting of employees of Amundi Asset Management US, Inc., to administer the Program.
The Committee provided the Board of Trustees with a report that addressed the operation of the Program and assessed its adequacy and effectiveness of implementation (the “Report”). The Report covered the period from January 1, 2020 through December 31, 2020 (the “Reporting Period”).
The Report confirmed that, throughout the Reporting Period, the Committee had monitored the Portfolio’s portfolio liquidity and liquidity risk on an ongoing basis, as described in the Program and in Board reporting throughout the Reporting Period.
The Report discussed the Committee’s annual review of the Program, which addressed, among other things, the following elements of the Program: The Committee reviewed the Portfolio’s investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions. The Committee noted that the Portfolio’s investment strategy continues to be appropriate for an open-end fund, taking into account, among other things, whether and to what extent the Portfolio held less liquid and illiquid assets and the extent to which any such investments affected the Portfolio’s ability to meet redemption requests. In managing and reviewing the Portfolio’s liquidity risk, the Committee also considered the extent to which the Portfolio’s investment strategy involves a relatively concentrated portfolio or large positions in particular issuers, the extent to which the Portfolio uses borrowing for investment purposes, and the extent to which the Portfolio uses derivatives (including for hedging purposes). The Committee also reviewed the Portfolio’s short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions. In assessing the Portfolio’s cash flow projections, the Committee considered, among other factors, historical net redemption activity, redemption policies, ownership concentration, distribution channels, and the degree of certainty associated with the Portfolio’s short-term and long-term cash flow projections. The Committee also considered the Portfolio’s holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources, including, if applicable, the Portfolio’s participation in a credit facility, as components of the Portfolio’s ability to meet redemption requests. The Portfolio has adopted an in-kind redemption policy which may be utilized to meet larger redemption requests.
The Committee reviewed the Program’s liquidity classification methodology for categorizing the Portfolio’s investments into one of four liquidity buckets. In reviewing the Portfolio’s investments, the Committee considered, among other factors, whether trading varying portions of a position in a particular portfolio investment or asset class in sizes the Portfolio would reasonably anticipate trading, would be reasonably expected to significantly affect liquidity.
The Committee performed an analysis to determine whether the Portfolio is required to maintain a Highly Liquid Investment Minimum, and determined that no such minimum is required because the Portfolio primarily holds highly liquid investments.
The Report stated that the Committee concluded the Program operates adequately and effectively, in all material respects, to assess and manage the Portfolio’s liquidity risk throughout the Reporting Period.
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Pioneer Variable Contracts Trust | Trustees |
Officers Lisa M. Jones, President and Chief Executive Officer Anthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting Officer Christopher J. Kelley, Secretary and Chief Legal Officer
Investment Adviser and Administrator Amundi Asset Management US, Inc.
Custodian and Sub-Administrator Brown Brothers Harriman & Co.
Principal Underwriter Amundi Distributor US, Inc.
Legal Counsel Morgan, Lewis & Bockius LLP
Transfer Agent DST Asset Manager Solutions, Inc.
| Thomas J. Perna, Chairman John E. Baumgardner, Jr. Diane Durnin Benjamin M. Friedman Lisa M. Jones Craig C. MacKay Lorraine H. Monchak Marguerite A. Piret Fred J. Ricciardi Kenneth J. Taubes |
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Proxy Voting Policies and Procedures of the Portfolio are available without charge, upon request, by calling our toll free number (1-800-225-6292). Information regarding how the Portfolio voted proxies relating to Portfolio securities during the most recent 12-month period ended June 30 is publicly available to shareowners at www.amundi.com/us. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.
19636-15-0821
ITEM 2. CODE OF ETHICS.
(a) Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so.
The registrant has adopted, as of the end of the period covered by this report, a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer and controller.
(b) For purposes of this Item, the term “code of ethics” means written standards that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2) Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;
(4) The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5) Accountability for adherence to the code.
(c) The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 10(a), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item.
The registrant has made no amendments to the code of ethics during the period covered by this report.
(d) If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.
Not applicable.
(e) If the registrant intends to satisfy the disclosure requirement under paragraph (c) or (d) of this Item regarding an amendment to, or a waiver from, a provision of its code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and that relates to any element of the code of ethics definition
enumerated in paragraph (b) of this Item by posting such information on its Internet website, disclose the registrant’s Internet address and such intention.
Not applicable.
(1) File with the Commission, pursuant to Item 12(a)(1), a copy of its code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, as an exhibit to its annual report on this Form N-CSR (see attachment);
(2) Post the text of such code of ethics on its Internet website and disclose, in its most recent report on this Form N-CSR, its Internet address and the fact that it has posted such code of ethics on its Internet website; or
(3) Undertake in its most recent report on this Form N-CSR to provide to any person without charge, upon request, a copy of such code of ethics and explain the manner in which such request may be made. See Item 10(2)
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant’s board of trustees has determined that the registrant either:
(i) Has at least one audit committee financial expert serving on its audit committee; or
(ii) Does not have an audit committee financial expert serving on its audit committee.
The registrant’s Board of Trustees has determined that the registrant has at least one audit committee financial expert.
(2) If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is “independent.” In order to be considered “independent” for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of trustees, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or
(ii) Be an “interested person” of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-2(a)(19)).
Mr. Fred J. Ricciardi, an independent trustee, is such an audit committee financial expert.
(3) If the registrant provides the disclosure required by paragraph (a)(1) (ii) of this Item, it must explain why it does not have an audit committee financial expert.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
The Pioneer Funds recognize the importance of maintaining the independence of their outside auditors. Maintaining independence is a shared responsibility involving Amundi Asset Management US, Inc., the audit committee and the independent auditors.
The Funds recognize that a Fund’s independent auditors: 1) possess knowledge of the Funds, 2) are able to incorporate certain services into the scope of the audit, thereby avoiding redundant work, cost and disruption of Fund personnel and processes, and 3) have expertise that has value to the Funds. As a result, there are situations where it is desirable to use the Fund’s independent auditors for services in addition to the annual audit and where the potential for conflicts of interests are minimal. Consequently, this policy, which is intended to comply with Rule 210.2-01(C)(7), sets forth guidelines and procedures to be followed by the Funds when retaining the independent audit firm to perform audit, audit-related tax and other services under those circumstances, while also maintaining independence.
Approval of a service in accordance with this policy for a Fund shall also constitute approval for any other Fund whose pre-approval is required pursuant to Rule 210.2-01(c)(7)(ii).
In addition to the procedures set forth in this policy, any non-audit services that may be provided consistently with Rule 210.2-01 may be approved by the Audit Committee itself and any pre-approval that may be waived in accordance with Rule 210.2-01(c)(7)(i)(C) is hereby waived.
Selection of a Fund’s independent auditors and their compensation shall be determined by the Audit Committee and shall not be subject to this policy.
o For all projects, the officers of the Funds and the Fund’s auditors will each make an assessment to determine that any proposed projects will not impair independence.
o Potential services will be classified into the four non-restricted service categories and the “Approval of Audit, Audit-Related, Tax and Other Services” Policy above will be applied. Any services outside the specific pre-approved service subcategories set forth above must be specifically approved by the Audit Committee.
o At least quarterly, the Audit Committee shall review a report summarizing the services by service category, including fees, provided by the Audit firm as set forth in the above policy.
(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountants engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrants accountant for services rendered to the registrant, and rendered to the registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.
(h) Disclose whether the registrants audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrants investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
The Fund’s audit committee of the Board of Trustees has considered whether the provision of non-audit services that were rendered to the Affiliates (as defined) that were not pre- approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
(a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17 CFR 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. 78c(a)(58)(B)), so state.
(b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17 CFR 240.10A-3(d)) regarding an exemption from the listing standards for audit committees.
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in 210.1212 of Regulation S-X [17 CFR 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to vote proxies relating to portfolio securities.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the following information:
(1) State the name, title, and length of service of the person or persons employed by or associated with the registrant or an investment adviser of the registrant who are primarily responsible for the day-to-day management of the registrant’s portfolio (“Portfolio Manager”). Also state each Portfolio Manager’s business experience during the past 5 years.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
(a) If the registrant is a closed-end management investment company, in the following tabular format, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any affiliated purchaser, as defined in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of any class of the registrant’s equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. 781).
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-R(17 CFR 229.407)(as required by Item 22(b)(15)) of Schedule 14A (17 CFR 240.14a-101), or this Item.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s board of directors since the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-R of Schedule 14(A) in its definitive proxy statement, or this item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant’s principal executive and principal financials officers, or persons performing similar functions, regarding the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30(a)-3(b) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or 240.15d-15(b)).
The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures are effective based on the evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) Disclose any change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17CFR 270.30a-3(d)) that occured during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
(a) If the registrant is a closed-end management investment company, provide the following dollar amounts of income and compensation related to the securities lending activities of the registrant during its most recent fiscal year:
(2) All fees and/or compensation for each of the following securities lending activities and related services: any share of revenue generated by the securities lending program paid to the securities lending agent(s) (revenue split); fees paid for cash collateral management services (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split; administrative fees that are not included in the revenue split; fees for indemnification that are not included in the revenue split; rebates paid to borrowers; and any other fees relating to the securities lending program that are not included in the revenue split, including a description of those other fees;
(4) Net income from securities lending activities (i.e., the dollar amount in paragraph (1) minus the dollar amount in paragraph (3)).
If a fee for a service is included in the revenue split, state that the fee is included in the revenue split.
(b) If the registrant is a closed-end management investment company, describe the services provided to the registrant by the securities lending agent in the registrants most recent fiscal year.
ITEM 13. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
By (Signature and Title)* /s/ Lisa M. Jones
Lisa M. Jones, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* /s/ Lisa M. Jones
Lisa M. Jones, President and Chief Executive Officer
By (Signature and Title)* /s/ Anthony J. Koenig, Jr.
Anthony J. Koenig, Jr., Treasurer and Chief Financial and Accounting Officer
* Print the name and title of each signing officer under his or her signature.