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, 2022
Date of reporting period: January 1, 2022 through June 30, 2022
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, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22
Portfolio Diversification
(As a percentage of total investments)*
† Amount rounds to less than 0.1%.
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | U.S. Treasury Bills, 7/5/22 | 7.38% |
2. | Fannie Mae, 2.500%, | |
7/1/52 (TBA) | 4.00 | |
3. | U.S. Treasury Bills, 7/7/22 | 3.99 |
4. | Fannie Mae, 2.000%, | |
7/1/52 (TBA) | 3.38 | |
5. | U.S. Treasury Bills, 7/12/22 | 2.50 |
* | Excludes short term 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. |
(l) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. |
Performance Update 6/30/22
Prices and Distributions | ||
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class l | $9.76 | $11.27 |
Class ll | $9.78 | $11.30 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 – 6/30/22) | Income | Capital Gains | Capital Gains |
Class l | $0.1012 | $0.0155 | $0.1970 |
Class ll | $0.0883 | $0.0155 | $0.1970 |
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 U.S. Aggregate Bond Index. Portfolio returns are based on net asset value and do not reflect any applicable insurance fees or surrender charges.
The Bloomberg U.S. Aggregate Bond Index is an unmanaged, market value-weighted measure of Treasury and agency issues, corporate bond issues and mortgage-backed 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.
Average Annual Total Returns
(As of June 30, 2022)
Bloomberg | |||
U.S. Aggregate | |||
Class I | Class II | Bond Index | |
10 Years | 2.53% | 2.27% | 1.54% |
5 Years | 1.44% | 1.19% | 0.88% |
1 Year | -10.42% | -10.70% | -10.29% |
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 Bond 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 Bond VCT Portfolio
Based on actual returns from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 893.80 | $ 892.10 |
Expenses Paid During Period* | $ 2.25 | $ 3.42 |
* Expenses are equal to the Portfolio’s annualized net expense ratio of 0.48% and 0.73% 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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,022.41 | $1,021.17 |
Expenses Paid During Period* | $ 2.41 | $ 3.66 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.48% and 0.73% 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 Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
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, 2022. Mr. Komenda, a Managing Director and 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, Timothy Rowe, Managing Director, Director of Multisector Fixed Income, and a portfolio manager at Amundi US, and Jonathan Scott, a senior vice president, Deputy Director of Multi-Sector Fixed Income, and a portfolio manager at Amundi US.
Q: | How did the Portfolio perform during the six-month period ended June 30, 2022? |
A: | Pioneer Bond VCT Portfolio’s Class I shares returned -10.62% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -10.79%, while the Portfolio’s benchmark, the Bloomberg US Aggregate Bond Index (the Bloomberg Index), returned -10.35%. |
Q: | How would you describe the investment environment in the fixed-income markets during the six-month period ended June 30, 2022? |
A: | The first quarter of 2022 saw negative market sentiment driven by increased geopolitical tensions, a worsening growth/inflation mix arising from a spike in commodity prices, and the prospect of rising interest rates. In combination, those factors contributed to losses across most fixed-income asset classes. Russia’s invasion of Ukraine in late February, together with US and European sanctions on Russia, led to a spike in energy, metals, and food prices, which added to downside risk to real economic growth and to upside risk to inflation. In addition, another round of lockdowns in China in the wake of increasing COVID-19 infection rates exacerbated supply chain disruptions and raised concerns about further risks to global economic growth. |
At its mid-March meeting, the Federal Open Market Committee (FOMC) raised the federal funds rate target range by a quarter-point, to 0.25%-0.50%, and indicated that further increases in the benchmark overnight lending rate would follow rapidly. The Fed also formally ended its pandemic-era quantitative easing program and signaled it would soon begin reducing its holdings of Treasury securities and agency mortgage-backed securities (MBS) by reinvesting only part of the proceeds from maturing securities. The Fed went on to implement hikes of 50 basis points and 75 basis points (bps) in May and June, respectively, bringing the federal funds target up to a range of 1.50% to 1.75%, its highest level since before the onset of the pandemic in March of 2020. (A basis point is equal to 1/100th of a percentage point.)
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 Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Against this backdrop, the US Treasury yield curve moved higher, with yield increases most significant on securities with shorter maturities as the market priced in the Fed’s interest-rate increases. For the six-month ended June 30, 2022, the two-year Treasury yield finished 219 bps higher, increasing from 0.73% to 2.92%, while the 10-year yield rose by 146 bps, from 1.52% to 2.98%, and the 30-year yield rose by 124 bps, 1.90% to 3.14%.
Rising Treasury yields and widening credit spreads weighed on bond market returns for the six-month period. (Credit spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities.) The investment-grade corporate bond market, as gauged by the Bloomberg US Aggregate Bond Index, posted a return of -10.35%. Within the investment-grade market, corporate bonds were the biggest laggards, returning -14.39% for the period, while securitized assets and Treasuries were also well into negative territory. Below-investment-grade, high-yield corporate bonds performed comparably, returning -14.19%.
Q: | What factors influenced the Portfolio’s performance relative to the Bloomberg Index during the six-month period ended June 30, 2022? |
A: | The Portfolio’s sector allocation results weighed on benchmark-relative returns during the period, most notably an underweight to US Treasuries versus the Bloomberg Index, as credit sectors, including investment-grade corporate bonds, underperformed Treasuries. In addition, the Portfolio’s allocation to non-agency MBS had a negative effect on relative results. A modest allocation to convertible securities also detracted from relative returns, largely due to a position in the banking sector which performed poorly, due to its long spread duration (or sensitivity to changes in credit spreads). |
Within the Portfolio’s corporate exposures, the lower quality of holdings (versus the Bloomberg Index) within the industrials and financials sectors detracted from relative returns. The Portfolio was overweight to “BBB” rated and high-yield issues within those sectors during a six-month period that saw credit spreads widen notably. Within industrials, exposure to commodity- and aviation-related issues constrained relative results. In financials, the Portfolio’s relative performance struggled, due to the underperformance of holdings of subordinated-debt issues, and the debt of an aircraft-leasing firm.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
The negative impact of the Portfolio’s underweight to Treasuries was partially offset by holdings of high-yield, index-based credit-default-swap positions, which we utilized in an attempt to hedge credit risk. Those positions contributed positively to the Portfolio’s relative performance as credit spreads widened over the six-month period.
Overall security selection results were essentially a neutral factor in the Portfolio’s relative performance for the period. With regard to security selection within agency MBS, an overweight to higher-coupon issues that have featured less prepayment sensitivity modestly benefited relative returns.
The Portfolio’s short-duration positioning versus the benchmark aided relative performance during the period, as US Treasury yields as well as European rates moved higher. (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.) In addition, positioning along the yield curve proved additive to relative returns, as the Portfolio was underweight versus the Bloomberg Index to longer maturities, which felt the biggest negative effects of rising interest rates.
Q: | Did the Portfolio have any investments in derivative securities during the six-month period ended June 30, 2022? If so, did the derivatives have any material impact on performance? |
A: | Yes, as noted earlier, we invested the Portfolio in high-yield, index-based credit-default-swaps during the period, which aided relative returns. We also invested in Treasury futures. We have used 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 used the credit-default-swap positions as part of our efforts to either gain or reduce the Portfolio’s exposures to both investment-grade and high-yield 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, we think, may allow the Portfolio to potentially benefit from the performance impact of the targeted asset class, while retaining a better liquidity profile, which may help reduce risk. |
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Q: | What factors affected the Portfolio’s yield, or distributions* to shareholders, during the six-month period ended June 30, 2022? |
A: | Rising Treasury yields and the widening in credit spreads over the period resulted in the Portfolio’s monthly distribution rate finishing the six months ended June 30 slightly higher than it was at the beginning of the period in January 2022. Those same factors had a negative effect on total returns, due to declining bond prices. |
Q: | What is your investment outlook, and how is the Portfolio positioned heading into the second half of its fiscal year? |
A: | The financial media has framed the question as: “Is the economy headed for recession?” In our view, the focus on “recession, or not,” is too simplistic. We believe it is better to consider the full range of possible outcomes. First, with the Fed apparently determined to slow the economy in order to control inflation, the best-case scenario, in our view, is a “soft landing.” Even in that scenario, economic growth could be relatively slow and the unemployment rate could rise. Secondly, historically there has usually been a significant difference between the investment implications of a mild recession and a severe recession. We believe some characteristics of the current economic environment increase the likelihood of a mild recession: household and business balance sheets are mostly strong, and risks in the financial system appear to be manageable. At present, we believe that a meaningful economic slowdown has been priced into the market, as spreads have widened significantly from last year’s tighter levels. |
A severe recession, in our view, is more likely to have ties to a Fed policy mistake, or an unforeseen global crisis. Fed Chair Powell and others have indicated that they intend to keep tightening policy until reported inflation numbers come down. Since inflation is typically a lagging economic indicator, such a policy framework could result in the Fed’s raising rates too far and thus causing a “hard landing” for the economy. After being too slow to tighten policy as the economy recovered from the COVID-19-driven recession, the Fed now seems at risk of making another mistake by perhaps being too late to respond to weaker economic conditions. We suspect this is mostly a communications problem, and that the FOMC could take a more forward-looking approach in setting the level of the federal funds target range once it has raised rates to neutral. However, with current inflation readings well above target and the federal funds rate still below neutral, we believe the Fed wants to communicate a simple and forceful message to keep inflation expectations from becoming unanchored.
* Distributions are not guaranteed.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
For the next few months, at least, we expect FOMC members to continue to say they will do whatever it takes to bring down inflation. In that scenario, we believe growing “hard landing” concerns among investors favor adding to the Portfolio’s duration and being very selective with regard to credit exposures.
Please refer to the Schedule of Investments on pages 9 to 36 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate) or SOFR (Secured Overnight Financing Rate). Plans are underway to phase out the use of LIBOR. There remains uncertainty regarding the nature of any replacement rate and the impact of the transition from LIBOR on the Portfolio, issuers of instruments in which the Portfolio invests, and financial markets generally.
The market price of securities may fluctuate when interest rates change. 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 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.
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 (e.g., 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 pre-payments.
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Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) |
Principal | ||
Amount | ||
USD ($) | Value | |
UNAFFILIATED ISSUERS — 116.9% | ||
SENIOR SECURED FLOATING RATE LOAN INTERESTS — 0.7% of Net Assets*(a) | ||
Chemicals-Diversified — 0.1% | ||
44,887 | LSF11 A5 HoldCo LLC, Term Loan, 5.14% (SOFR + 350 bps), 10/15/28 | $ 42,124 |
143,550 | Schweitzer-Mauduit International, Inc., Term B Loan, 5.438% (LIBOR + 375 bps), 4/20/28 | 136,373 |
Total Chemicals-Diversified | $ 178,497 | |
Electronic Composition — 0.0%† | ||
49,518 | Energy Acquisition LP, First Lien Initial Term Loan, 4.25% (LIBOR + 425 bps), 6/26/25 | $ 45,185 |
Total Electronic Composition | $ 45,185 | |
Enterprise Software & Services — 0.0%† | ||
16,685 | Verint Systems, Inc., Refinancing Term Loan, 3.12% (LIBOR + 200 bps), 6/28/24 | $ 16,393 |
Total Enterprise Software & Services | $ 16,393 | |
Finance-Leasing Company — 0.0%† | ||
61,765 | Avolon TLB Borrower 1 (US) LLC, Term B-4 Loan, 3.095% (LIBOR + 150 bps), 2/12/27 | $ 58,492 |
Total Finance-Leasing Company | $ 58,492 | |
Human Resources — 0.1% | ||
84,673 | Team Health Holdings, Inc., Extended Term Loan, 6.775% (Term SOFR + 525 bps), 3/2/27 | $ 72,078 |
Total Human Resources | $ 72,078 | |
Medical-Wholesale Drug Distribution — 0.1% | ||
69,825 | Owens & Minor, Inc., Term B-1 Loan, 5.375% (Term SOFR + 375 bps), 3/29/29 | $ 69,388 |
Total Medical-Wholesale Drug Distribution | $ 69,388 | |
Metal Processors & Fabrication — 0.1% | ||
114,138 | Grinding Media, Inc. (Molycop, Ltd.), First Lien Initial Term Loan, 4.796% (LIBOR + 400 bps), 10/12/28 | $ 104,436 |
Total Metal Processors & Fabrication | $ 104,436 | |
Rental Auto & Equipment — 0.0%† | ||
34,825 | PECF USS Intermediate Holding III Corp., Initial Term Loan, 5.916% (LIBOR + 425 bps), 12/15/28 | $ 31,577 |
Total Rental Auto & Equipment | $ 31,577 | |
Retail-Restaurants — 0.1% | ||
150,188 | 1011778 B.C. Unlimited Liability Co., Term B-4 Loan, 3.416% (LIBOR + 175 bps), 11/19/26 | $ 143,730 |
Total Retail-Restaurants | $ 143,730 | |
Schools — 0.1% | ||
105,932 | KUEHG Corp. (fka KC MergerSub, Inc.), Term B-3 Loan, 6.00% (LIBOR + 375 bps), 2/21/25 | $ 98,980 |
Total Schools | $ 98,980 | |
Telephone-Integrated — 0.0%† | ||
67,466 | Level 3 Financing, Inc., Tranche B 2027 Term Loan, 3.416% (LIBOR + 175 bps), 3/1/27 | $ 62,687 |
Total Telephone-Integrated | $ 62,687 | |
Transport-Equipment & Leasing — 0.1% | ||
181,925 | IBC Capital I, Ltd., First Lien Tranche B-1 Term Loan, 5.78% (LIBOR + 375 bps), 9/11/23 | $ 165,836 |
Total Transport-Equipment & Leasing | $ 165,836 | |
TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | ||
(Cost $1,121,820) | $ 1,047,279 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
ASSET BACKED SECURITIES — 6.1% of Net Assets | ||
500,000 | American Credit Acceptance Receivables Trust, Series 2019-2, Class E, 4.29%, 6/12/25 (144A) | $ 498,695 |
250,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2021-FL3, Class C, 3.174% (1 Month USD | |
LIBOR + 185 bps), 8/15/34 (144A) | 232,193 | |
300,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2021-FL4, Class D, 4.224% (1 Month | |
USD LIBOR + 290 bps), 11/15/36 (144A) | 286,517 | |
395,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2022-FL1, Class C, 3.079% (SOFR30A + | |
230 bps), 1/15/37 (144A) | 375,250 | |
350,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2022-FL2, Class C, 4.729% (1 Month | |
Term SOFR + 345 bps), 5/15/37 (144A) | 338,363 | |
250,000(a) | Benefit Street Partners CLO XIX, Ltd., Series 2019-19A, Class E, 8.064% (3 Month USD | |
LIBOR + 702 bps), 1/15/33 (144A) | 229,439 | |
226,419 | Blackbird Capital Aircraft, Series 2021-1A, Class A, 2.443%, 7/15/46 (144A) | 193,812 |
170,000(a) | BSPRT Issuer, Ltd., Series 2022-FL8, Class C, 3.079% (SOFR30A + 230 bps), 2/15/37 (144A) | 166,562 |
250,000(a) | Carlyle US CLO, Ltd., Series 2019-4A, Class CR, 4.046% (3 Month Term SOFR + 320 bps), 4/15/35 (144A) | 230,435 |
200,000 | Commercial Equipment Finance LLC, Series 2021-A, Class C, 3.55%, 12/15/28 (144A) | 188,764 |
168,186 | Continental Credit Card ABS LLC, Series 2019-1A, Class A, 3.83%, 8/15/26 (144A) | 166,746 |
224,563 | CoreVest American Finance Trust, Series 2020-3, Class A, 1.358%, 8/15/53 (144A) | 203,142 |
100,000 | DataBank Issuer, Series 2021-1A, Class B, 2.65%, 2/27/51 (144A) | 88,902 |
293,250 | Domino’s Pizza Master Issuer LLC, Series 2019-1A, Class A2, 3.668%, 10/25/49 (144A) | 265,435 |
50,000 | Drive Auto Receivables Trust, Series 2020-2, Class D, 3.05%, 5/15/28 | 49,378 |
19,056(b) | Equifirst Mortgage Loan Trust, Series 2003-1, Class IF1, 4.01%, 12/25/32 | 17,910 |
12,835 | FCI Funding LLC, Series 2019-1A, Class A, 3.63%, 2/18/31 (144A) | 12,842 |
400,000(c) | Finance of America HECM Buyout, Series 2022-HB1, Class M3, 5.084%, 2/25/32 (144A) | 384,111 |
347,272 | Finance of America Structured Securities Trust, Series 2022-S1, Class A1, 2.00%, 2/25/52 | 322,192 |
323,228 | Finance of America Structured Securities Trust, Series 2022-S1, Class A2, 3.00%, 2/25/52 | 297,572 |
250,000 | Foundation Finance Trust, Series 2019-1A, Class B, 4.22%, 11/15/34 (144A) | 244,054 |
250,000(a) | Goldentree Loan Management US CLO 6, Ltd., Series 2019-6A, Class DR, 3.951% (3 Month Term | |
SOFR + 310 bps), 4/20/35 (144A) | 229,274 | |
125,000(a) | HGI CRE CLO, Ltd., Series 2021-FL2, Class C, 3.309% (1 Month USD LIBOR + 180 bps), 9/17/36 (144A) | 116,867 |
198,500 | HOA Funding LLC - HOA, Series 2021-1A, Class A2, 4.723%, 8/20/51 (144A) | 169,032 |
82,576 | Home Partners of America Trust, Series 2019-1, Class D, 3.406%, 9/17/39 (144A) | 74,821 |
18,515 | Icon Brand Holdings LLC, Series 2013-1A, Class A2, 4.352%, 1/25/43 (144A) | 5,555 |
99,986(a) | Invitation Homes Trust, Series 2018-SFR1, Class C, 2.773% (1 Month USD LIBOR + 125 bps), 3/17/37 (144A) | 98,229 |
203,516 | JG Wentworth XLIII LLC, Series 2019-1A, Class A, 3.82%, 8/17/71 (144A) | 191,995 |
12,137 | JG Wentworth XXII LLC, Series 2010-3A, Class A, 3.82%, 12/15/48 (144A) | 12,009 |
106,925 | Marlette Funding Trust, Series 2019-2A, Class C, 4.11%, 7/16/29 (144A) | 106,365 |
100,000 | Mercury Financial Credit Card Master Trust, Series 2021-1A, Class A, 1.54%, 3/20/26 (144A) | 95,163 |
350,000(a) | MF1, Ltd., Series 2021-FL7, Class D, 4.162% (1 Month USD LIBOR + 255 bps), 10/16/36 (144A) | 329,063 |
85,169 | Mosaic Solar Loan Trust, Series 2019-2A, Class A, 2.88%, 9/20/40 (144A) | 77,615 |
69,703 | MVW LLC, Series 2020-1A, Class C, 4.21%, 10/20/37 (144A) | 67,418 |
200,000 | Nelnet Student Loan Trust, Series 2021-A, Class B1, 2.85%, 4/20/62 (144A) | 173,249 |
47,310(a) | Newtek Small Business Loan Trust, Series 2017-1, Class A, 3.624% (1 Month USD LIBOR + 200 bps), | |
2/25/43 (144A) | 47,055 | |
130,291 | NMEF Funding LLC, Series 2019-A, Class B, 3.06%, 8/17/26 (144A) | 130,085 |
100,000 | NMEF Funding LLC, Series 2019-A, Class C, 3.30%, 8/17/26 (144A) | 98,605 |
100,000 | NMEF Funding LLC, Series 2021-A, Class C, 2.58%, 12/15/27 (144A) | 92,874 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
ASSET BACKED SECURITIES — (continued) | ||
250,000(a) | Palmer Square Loan Funding, Ltd., Series 2022-1A, Class C, 2.834% (3 Month Term SOFR + | |
260 bps), 4/15/30 (144A) | $ 237,279 | |
280,000 | Republic Finance Issuance Trust, Series 2021-A, Class A, 2.30%, 12/22/31 (144A) | 259,924 |
100,000 | Republic Finance Issuance Trust, Series 2021-A, Class C, 3.53%, 12/22/31 (144A) | 91,161 |
200,000 | SCF Equipment Leasing LLC, Series 2019-2A, Class C, 3.11%, 6/21/27 (144A) | 191,233 |
250,000(a) | Sound Point CLO XXVIII, Ltd., Series 2020-3A, Class D, 4.834% (3 Month USD LIBOR + 365 bps), | |
1/25/32 (144A) | 235,018 | |
184,108 | SpringCastle America Funding LLC, Series 2020-AA, Class A, 1.97%, 9/25/37 (144A) | 170,998 |
350,000(a) | STWD, Ltd., Series 2022-FL3, Class B, 2.729% (SOFR30A + 195 bps), 11/15/38 (144A) | 332,701 |
100,000 | Tricolor Auto Securitization Trust, Series 2021-1A, Class D, 1.92%, 5/15/26 (144A) | 96,881 |
308,918 | Tricon American Homes Trust, Series 2019-SFR1, Class A, 2.75%, 3/17/38 (144A) | 297,730 |
180,000 | Tricon American Homes Trust, Series 2020-SFR2, Class E1, 2.73%, 11/17/39 (144A) | 153,856 |
81,977 | Welk Resorts LLC, Series 2019-AA, Class D, 4.03%, 6/15/38 (144A) | 80,094 |
444,257 | Westgate Resorts LLC, Series 2022-1A, Class C, 2.488%, 8/20/36 (144A) | 424,646 |
TOTAL ASSET BACKED SECURITIES | ||
(Cost $10,068,383) | $ 9,479,109 | |
COLLATERALIZED MORTGAGE OBLIGATIONS — 17.0% of Net Assets | ||
160,493(c) | Ajax Mortgage Loan Trust, Series 2021-A, Class A1, 1.065%, 9/25/65 (144A) | $ 146,645 |
441,557(c) | Bayview MSR Opportunity Master Fund Trust, Series 2021-2, Class A2, 2.50%, 6/25/51 (144A) | 380,549 |
162,808(a) | Bellemeade Re, Ltd., Series 2018-3A, Class M1B, 3.474% (1 Month USD LIBOR + 185 bps), | |
10/25/28 (144A) | 162,044 | |
180,000(a) | Bellemeade Re, Ltd., Series 2018-3A, Class M2, 4.374% (1 Month USD LIBOR + 275 bps), | |
10/25/28 (144A) | 176,241 | |
50,593(a) | Bellemeade Re, Ltd., Series 2019-1A, Class M1B, 3.374% (1 Month USD LIBOR + 175 bps), | |
3/25/29 (144A) | 50,428 | |
150,000(a) | Bellemeade Re, Ltd., Series 2019-1A, Class M2, 4.324% (1 Month USD LIBOR + 270 bps), | |
3/25/29 (144A) | 147,522 | |
190,000(a) | Bellemeade Re, Ltd., Series 2020-3A, Class M1C, 5.324% (1 Month USD LIBOR + 370 bps), | |
10/25/30 (144A) | 190,492 | |
150,000(a) | Bellemeade Re, Ltd., Series 2020-3A, Class M2, 6.474% (1 Month USD LIBOR + 485 bps), | |
10/25/30 (144A) | 151,672 | |
135,426(a) | Bellemeade Re, Ltd., Series 2020-4A, Class M2B, 5.224% (1 Month USD LIBOR + 360 bps), | |
6/25/30 (144A) | 134,817 | |
340,000(a) | Bellemeade Re, Ltd., Series 2021-3A, Class M2, 4.076% (SOFR30A + 315 bps), 9/25/31 (144A) | 303,178 |
150,000(a) | Bellemeade Re, Ltd., Series 2022-1, Class M1C, 4.626% (SOFR30A + 370 bps), 1/26/32 (144A) | 143,321 |
450,000(c) | BINOM Securitization Trust, Series 2022-RPL1, Class M2, 3.00%, 2/25/61 (144A) | 407,758 |
100,000(c) | Bunker Hill Loan Depositary Trust, Series 2020-1, Class A3, 3.253%, 2/25/55 (144A) | 96,842 |
200,000(c) | Cascade Funding Mortgage Trust, Series 2021-HB6, Class M3, 3.735%, 6/25/36 (144A) | 183,438 |
200,000 | Cascade MH Asset Trust, Series 2021-MH1, Class M1, 2.992%, 2/25/46 (144A) | 163,272 |
100,000 | Cascade MH Asset Trust, Series 2021-MH1, Class M2, 3.693%, 2/25/46 (144A) | 82,458 |
300,000(c) | CFMT LLC, Series 2021-HB5, Class M3, 2.91%, 2/25/31 (144A) | 281,735 |
180,000(c) | CIM Trust, Series 2020-R2, Class M3, 3.00%, 10/25/59 (144A) | 150,075 |
241,851(c) | CIM Trust, Series 2021-J1, Class B1, 2.659%, 3/25/51 (144A) | 197,431 |
291,042(c) | CIM Trust, Series 2021-J2, Class B1, 2.675%, 4/25/51 (144A) | 262,779 |
97,908(c) | CIM Trust, Series 2022-R2, Class A1, 3.75%, 12/25/61 (144A) | 95,046 |
400,000(c) | Citigroup Mortgage Loan Trust, Series 2018-RP3, Class M3, 3.25%, 3/25/61 (144A) | 342,074 |
97,481(c) | Citigroup Mortgage Loan Trust, Series 2021-INV1, Class B1W, 2.706%, 5/25/51 (144A) | 79,828 |
The accompanying notes are an integral part of these financial statements. 11
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS — (continued) | ||
55,764(a) | Connecticut Avenue Securities Trust, Series 2019-R01, Class 2M2, 4.074% (1 Month USD LIBOR + | |
245 bps), 7/25/31 (144A) | $ 55,420 | |
12,148(a) | Connecticut Avenue Securities Trust, Series 2019-R03, Class 1M2, 3.774% (1 Month USD LIBOR + | |
215 bps), 9/25/31 (144A) | 12,126 | |
18,132(a) | Connecticut Avenue Securities Trust, Series 2019-R06, Class 2M2, 3.724% (1 Month USD LIBOR + | |
210 bps), 9/25/39 (144A) | 18,066 | |
44,462(a) | Connecticut Avenue Securities Trust, Series 2019-R07, Class 1M2, 3.724% (1 Month USD LIBOR + | |
210 bps), 10/25/39 (144A) | 44,136 | |
42,681(a) | Connecticut Avenue Securities Trust, Series 2020-R02, Class 2M2, 3.624% (1 Month USD LIBOR + | |
200 bps), 1/25/40 (144A) | 42,041 | |
390,000(a) | Connecticut Avenue Securities Trust, Series 2022-R02, Class 2M2, 3.926% (SOFR30A + | |
300 bps), 1/25/42 (144A) | 359,513 | |
200,000(c) | CSMC Trust, Series 2021-RPL2, Class M1, 2.75%, 1/25/60 (144A) | 167,718 |
150,000(c) | CSMC Trust, Series 2021-RPL2, Class M2, 3.25%, 1/25/60 (144A) | 123,791 |
65,384(a) | Eagle Re, Ltd., Series 2018-1, Class M1, 3.324% (1 Month USD LIBOR + 170 bps), 11/25/28 (144A) | 65,123 |
228,595(a) | Eagle Re, Ltd., Series 2019-1, Class M1B, 3.424% (1 Month USD LIBOR + 180 bps), 4/25/29 (144A) | 226,589 |
107,764(a) | Eagle Re, Ltd., Series 2020-2, Class M2, 7.224% (1 Month USD LIBOR + 560 bps), 10/25/30 (144A) | 107,793 |
150,000(a) | Eagle Re, Ltd., Series 2021-2, Class M1C, 4.376% (SOFR30A + 345 bps), 4/25/34 (144A) | 141,116 |
1,520 | Fannie Mae REMICS, Series 2009-36, Class HX, 4.50%, 6/25/29 | 1,529 |
550,000 | Fannie Mae REMICS, Series 2013-61, Class BY, 3.00%, 6/25/43 | 497,925 |
89,994(d) | Fannie Mae REMICS, Series 2020-83, Class EI, 4.00%, 11/25/50 | 18,177 |
13,749 | Federal Home Loan Mortgage Corp. REMICS, Series 2944, Class OH, 5.50%, 3/15/35 | 14,706 |
208,172(a)(d) | Federal Home Loan Mortgage Corp. REMICS, Series 4091, Class SH, 5.226% (1 Month USD LIBOR + | |
655 bps), 8/15/42 | 31,918 | |
98,439(d) | Federal Home Loan Mortgage Corp. REMICS, Series 4999, Class QI, 4.00%, 5/25/50 | 19,415 |
206,965(d) | Federal Home Loan Mortgage Corp. REMICS, Series 5018, Class EI, 4.00%, 10/25/50 | 41,514 |
130,924(d) | Federal Home Loan Mortgage Corp. REMICS, Series 5067, Class GI, 4.00%, 12/25/50 | 26,835 |
444,347(c) | Flagstar Mortgage Trust, Series 2021-3INV, Class A16, 2.50%, 6/25/51 (144A) | 370,016 |
248,522(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA3, Class B1, 6.724% (1 Month USD LIBOR + | |
510 bps), 6/25/50 (144A) | 253,165 | |
280,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B1, 7.624% (1 Month USD LIBOR + | |
600 bps), 8/25/50 (144A) | 291,584 | |
5,547(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class M2, 5.374% (1 Month USD LIBOR + | |
375 bps), 8/25/50 (144A) | 5,541 | |
150,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class B1, 5.726% (SOFR30A + | |
480 bps), 10/25/50 (144A) | 151,638 | |
108,361(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class M2, 3.726% (SOFR30A + | |
280 bps), 10/25/50 (144A) | 108,530 | |
110,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B2, 6.576% (SOFR30A + | |
565 bps), 12/25/50 (144A) | 93,236 | |
130,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-HQA4, Class B1, 6.874% (1 Month USD LIBOR + | |
525 bps), 9/25/50 (144A) | 129,682 | |
35,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B1, 3.576% (SOFR30A + | |
265 bps), 1/25/51 (144A) | 28,261 | |
245,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B2, 5.676% (SOFR30A + | |
475 bps), 1/25/51 (144A) | 189,883 | |
40,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA5, Class B1, 3.976% (SOFR30A + | |
305 bps), 1/25/34 (144A) | 34,331 | |
140,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-HQA1, Class B2, 5.926% (SOFR30A + | |
500 bps), 8/25/33 (144A) | 107,427 |
12 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS — (continued) | ||
350,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-HQA4, Class B1, 4.676% (SOFR30A + | |
375 bps), 12/25/41 (144A) | $ 288,915 | |
100,000(a) | Freddie Mac Stacr Remic Trust, Series 2022-DNA1, Class B1, 4.326% (SOFR30A + | |
340 bps), 1/25/42 (144A) | 84,266 | |
170,000(a) | Freddie Mac Stacr Remic Trust, Series 2022-DNA3, Class M1B, 3.826% (SOFR30A + | |
290 bps), 4/25/42 (144A) | 159,805 | |
55,000(a) | Freddie Mac Stacr Remic Trust, Series 2022-HQA1, Class M1B, 4.426% (SOFR30A + | |
350 bps), 3/25/42 (144A) | 52,521 | |
160,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B2, 8.326% | |
(SOFR30A + 740 bps), 11/25/50 (144A) | 151,698 | |
130,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2021-DNA7, Class B1, 4.576% | |
(SOFR30A + 365 bps), 11/25/41 (144A) | 111,202 | |
550,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2022-DNA2, Class M2, 4.676% | |
(SOFR30A + 375 bps), 2/25/42 (144A) | 493,781 | |
76,048(c) | FWD Securitization Trust, Series 2019-INV1, Class A1, 2.81%, 6/25/49 (144A) | 74,340 |
5,444 | Government National Mortgage Association, Series 2005-61, Class UZ, 5.25%, 8/16/35 | 5,487 |
1,661 | Government National Mortgage Association, Series 2012-130, Class PA, 3.00%, 4/20/41 | 1,658 |
501,740(d) | Government National Mortgage Association, Series 2019-159, Class CI, 3.50%, 12/20/49 | 87,802 |
454,766(a)(d) | Government National Mortgage Association, Series 2020-9, Class SA, 1.755% (1 Month USD | |
LIBOR + 335 bps), 1/20/50 | 20,642 | |
165,000(c) | GS Mortgage-Backed Securities Corp. Trust, Series 2022-PJ4, Class A33, 3.00%, 9/25/52 (144A) | 127,128 |
305,529(c) | GS Mortgage-Backed Securities Corp. Trust, Series 2022-PJ4, Class A34, 2.50%, 9/25/52 (144A) | 255,869 |
107,564(c) | GS Mortgage-Backed Securities Trust, Series 2020-NQM1, Class A3, 2.352%, 9/27/60 (144A) | 103,364 |
395,488(c) | GS Mortgage-Backed Securities Trust, Series 2021-GR3, Class B2, 3.393%, 4/25/52 (144A) | 325,607 |
261,473(c) | GS Mortgage-Backed Securities Trust, Series 2022-MM1, Class A4, 2.50%, 7/25/52 (144A) | 219,087 |
347,220(c) | GS Mortgage-Backed Securities Trust, Series 2022-PJ1, Class A4, 2.50%, 5/28/52 (144A) | 290,316 |
68,968(a) | Home Re, Ltd., Series 2019-1, Class M1, 3.274% (1 Month USD LIBOR + 165 bps), 5/25/29 (144A) | 68,793 |
150,000(a) | Home Re, Ltd., Series 2020-1, Class M1C, 5.774% (1 Month USD LIBOR + 415 bps), 10/25/30 (144A) | 150,400 |
150,000(a) | Home Re, Ltd., Series 2020-1, Class M2, 6.874% (1 Month USD LIBOR + 525 bps), 10/25/30 (144A) | 151,837 |
225,000(a) | Home Re, Ltd., Series 2021-1, Class M2, 4.474% (1 Month USD LIBOR + 285 bps), 7/25/33 (144A) | 203,100 |
130,000(c) | Homeward Opportunities Fund I Trust, Series 2020-2, Class A3, 3.196%, 5/25/65 (144A) | 126,293 |
100,000(c) | Homeward Opportunities Fund I Trust, Series 2020-2, Class M1, 3.897%, 5/25/65 (144A) | 97,234 |
170,007(c) | Hundred Acre Wood Trust, Series 2021-INV1, Class B1, 3.227%, 7/25/51 (144A) | 141,491 |
478,579(c) | Hundred Acre Wood Trust, Series 2021-INV3, Class A3, 2.50%, 10/25/51 (144A) | 409,802 |
100,000(c) | Imperial Fund Mortgage Trust, Series 2021-NQM2, Class B1, 3.295%, 9/25/56 (144A) | 76,383 |
100,000(c) | Imperial Fund Mortgage Trust, Series 2021-NQM2, Class M1, 2.489%, 9/25/56 (144A) | 78,245 |
450,000 | IMS Ecuadorian Mortgage Trust, Series 2021-1, Class GA, 3.40%, 8/18/43 (144A) | 427,500 |
239,949(c) | JP Morgan Mortgage Trust, Series 2019-HYB1, Class B3, 3.61%, 10/25/49 (144A) | 236,100 |
147,695(c) | JP Morgan Mortgage Trust, Series 2021-12, Class B1, 3.171%, 2/25/52 (144A) | 124,477 |
133,130(c) | JP Morgan Mortgage Trust, Series 2021-13, Class B1, 3.145%, 4/25/52 (144A) | 111,672 |
503,914(c) | JP Morgan Mortgage Trust, Series 2021-14, Class B1, 3.163%, 5/25/52 (144A) | 423,136 |
483,959(c) | JP Morgan Mortgage Trust, Series 2021-7, Class A3, 2.50%, 11/25/51 (144A) | 413,256 |
243,626(c) | JP Morgan Mortgage Trust, Series 2021-INV1, Class B1, 2.991%, 10/25/51 (144A) | 198,849 |
447,670(c) | JP Morgan Mortgage Trust, Series 2021-INV2, Class A2, 2.50%, 12/25/51 (144A) | 381,796 |
156,608(c) | JP Morgan Mortgage Trust, Series 2021-INV6, Class A5A, 2.50%, 4/25/52 (144A) | 132,473 |
297,801(c) | JP Morgan Mortgage Trust, Series 2022-2, Class B1, 3.136%, 8/25/52 (144A) | 245,857 |
238,706(c) | JP Morgan Mortgage Trust, Series 2022-3, Class B2, 3.12%, 8/25/52 (144A) | 192,749 |
The accompanying notes are an integral part of these financial statements. 13
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS — (continued) | ||
215,000(c) | JP Morgan Mortgage Trust, Series 2022-4, Class A5, 3.00%, 10/25/52 (144A) | $ 164,143 |
402,687(c) | JP Morgan Mortgage Trust, Series 2022-5, Class A9A, 2.50%, 9/25/52 (144A) | 337,376 |
124,760(c) | JP Morgan Mortgage Trust, Series 2022-6, Class B2, 3.308%, 11/25/52 (144A) | 95,376 |
344,684(c) | JP Morgan Mortgage Trust, Series 2022-INV1, Class A15, 3.00%, 3/25/52 (144A) | 299,754 |
198,275(c) | JP Morgan Mortgage Trust, Series 2022-INV1, Class B2, 3.301%, 3/25/52 (144A) | 154,486 |
275,000(c) | JP Morgan Mortgage Trust, Series 2022-LTV1, Class M1, 3.528%, 7/25/52 (144A) | 212,733 |
194,901(c) | JP Mortgage Trust, Series 2021-INV1, Class B2, 2.991%, 10/25/51 (144A) | 150,704 |
17,228(a) | La Hipotecaria Panamanian Mortgage Trust, Series 2010-1GA, Class A, 2.75% (Panamanian Mortgage | |
Reference Rate - 300 bps), 9/8/39 (144A) | 16,862 | |
183,831(a) | LSTAR Securities Investment, Ltd., Series 2019-3, Class A1, 4.562% (1 Month USD LIBOR + 350 bps), | |
4/1/24 (144A) | 183,147 | |
455,353(c) | Mello Mortgage Capital Acceptance, Series 2021-INV2, Class A15, 2.50%, 8/25/51 (144A) | 380,347 |
339,539(c) | Mello Mortgage Capital Acceptance, Series 2021-MTG1, Class B1, 2.651%, 4/25/51 (144A) | 264,223 |
292,199(c) | Mello Mortgage Capital Acceptance, Series 2021-MTG2, Class B1, 2.678%, 6/25/51 (144A) | 236,242 |
198,349(c) | Mello Mortgage Capital Acceptance, Series 2022-INV1, Class B1, 3.331%, 3/25/52 (144A) | 164,270 |
101,729(c) | MFA Trust, Series 2020-NQM1, Class A3, 2.30%, 8/25/49 (144A) | 98,644 |
472,887(c) | Mill City Mortgage Loan Trust, Series 2018-4, Class A1B, 3.495%, 4/25/66 (144A) | 459,020 |
400,000(c) | Mill City Mortgage Loan Trust, Series 2019-GS2, Class M3, 3.25%, 8/25/59 (144A) | 350,282 |
349,060(c) | Morgan Stanley Residential Mortgage Loan Trust, Series 2021-1, Class B2, 2.952%, 3/25/51 (144A) | 266,361 |
77,661(c) | New Residential Mortgage Loan Trust, Series 2019-NQM4, Class A1, 2.492%, 9/25/59 (144A) | 75,144 |
200,000 | NYMT Loan Trust, Series 2022-CP1, Class M1, 3.214%, 7/25/61 (144A) | 179,305 |
72,615(a) | Oaktown Re V, Ltd., Series 2020-2A, Class M1B, 5.224% (1 Month USD LIBOR + 360 bps), 10/25/30 (144A) | 72,473 |
150,000(a) | Oaktown Re V, Ltd., Series 2020-2A, Class M2, 6.874% (1 Month USD LIBOR + 525 bps), 10/25/30 (144A) | 152,522 |
149,700(c) | Onslow Bay Mortgage Loan Trust, Series 2022-INV4, Class A2, 3.00%, 6/25/52 (144A) | 132,987 |
339,679(c) | PRMI Securitization Trust, Series 2021-1, Class B1, 2.479%, 4/25/51 (144A) | 261,380 |
270,115(c) | Provident Funding Mortgage Trust, Series 2021-1, Class A5, 2.50%, 4/25/51 (144A) | 225,755 |
195,676(c) | Provident Funding Mortgage Trust, Series 2021-J1, Class B1, 2.638%, 10/25/51 (144A) | 160,698 |
7,458(a) | Radnor Re, Ltd., Series 2018-1, Class M1, 3.024% (1 Month USD LIBOR + 140 bps), 3/25/28 (144A) | 7,458 |
197,944(a) | Radnor Re, Ltd., Series 2019-1, Class M1B, 3.574% (1 Month USD LIBOR + 195 bps), 2/25/29 (144A) | 197,228 |
370,000(a) | Radnor Re, Ltd., Series 2020-1, Class M1C, 3.374% (1 Month USD LIBOR + 175 bps), 1/25/30 (144A) | 351,241 |
345,212(c) | Rate Mortgage Trust, Series 2021-HB1, Class B2, 2.708%, 12/25/51 (144A) | 265,235 |
147,257(c) | Rate Mortgage Trust, Series 2021-J3, Class B2, 2.712%, 10/25/51 (144A) | 115,377 |
390,729(c) | RCKT Mortgage Trust, Series 2021-2, Class B1A, 2.565%, 6/25/51 (144A) | 314,074 |
342,425(c) | RCKT Mortgage Trust, Series 2021-3, Class A25, 2.50%, 7/25/51 (144A) | 287,063 |
491,604(c) | RCKT Mortgage Trust, Series 2021-4, Class B1A, 3.012%, 9/25/51 (144A) | 405,723 |
400,000(c) | RCKT Mortgage Trust, Series 2022-3, Class A17, 3.00%, 5/25/52 (144A) | 307,098 |
174,354(c) | RCKT Mortgage Trust, Series 2022-3, Class B1A, 3.194%, 5/25/52 (144A) | 145,478 |
99,718(c) | RCKT Mortgage Trust, Series 2022-4, Class A21, 4.00%, 6/25/52 (144A) | 92,563 |
100,000(c) | RMF Buyout Issuance Trust, Series 2022-HB1, Class M3, 4.50%, 4/25/32 (144A) | 91,121 |
83,718(c) | RMF Proprietary Issuance Trust, Series 2019-1, Class A, 2.75%, 10/25/63 (144A) | 81,943 |
231,322(c) | RMF Proprietary Issuance Trust, Series 2021-2, Class A, 2.125%, 9/25/61 (144A) | 205,670 |
275,000(c) | Saluda Grade Alternative Mortgage Trust, Series 2022-SEQ2, Class A3, 4.50%, 2/25/52 (144A) | 264,442 |
10,288(c) | Sequoia Mortgage Trust, Series 2018-CH3, Class A1, 4.50%, 8/25/48 (144A) | 10,224 |
150,000(c) | Sequoia Mortgage Trust, Series 2022-1, Class A7, 2.50%, 2/25/52 (144A) | 110,899 |
380,000(a) | STACR Trust, Series 2018-HRP2, Class B1, 5.824% (1 Month USD LIBOR + 420 bps), 2/25/47 (144A) | 371,092 |
80,000(a) | STACR Trust, Series 2018-HRP2, Class M3, 4.024% (1 Month USD LIBOR + 240 bps), 2/25/47 (144A) | 78,654 |
14 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS — (continued) | ||
300,000(c) | Towd Point Mortgage Trust, Series 2019-4, Class M2B, 3.25%, 10/25/59 (144A) | $ 250,324 |
381,813(c) | Towd Point Mortgage Trust, Series 2021-R1, Class A1, 2.918%, 11/30/60 (144A) | 347,840 |
73,472(a) | Traingle Re, Ltd., Series 2020-1, Class M1C, 6.124% (1 Month USD LIBOR + 450 bps), 10/25/30 (144A) | 73,608 |
150,000(a) | Traingle Re, Ltd., Series 2020-1, Class M2, 7.224% (1 Month USD LIBOR + 560 bps), 10/25/30 (144A) | 152,274 |
380,724(a) | Traingle Re, Ltd., Series 2021-1, Class M1C, 5.024% (1 Month USD LIBOR + 340 bps), 8/25/33 (144A) | 380,411 |
173,262(c) | UWM Mortgage Trust, Series 2021-INV5, Class B1, 3.245%, 1/25/52 (144A) | 143,150 |
179,278(c) | Visio Trust, Series 2019-2, Class A1, 2.722%, 11/25/54 (144A) | 171,907 |
100,000(c) | Wells Fargo Mortgage Backed Securities Trust, Series 2022-2, Class A5, 3.00%, 12/25/51 (144A) | 76,928 |
345,000(c) | Wells Fargo Mortgage Backed Securities Trust, Series 2022-2, Class A6, 2.50%, 12/25/51 (144A) | 247,439 |
299,492(c) | Wells Fargo Mortgage Backed Securities Trust, Series 2022-INV1, Class B2, 3.446%, 3/25/52 (144A) | 231,813 |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | ||
(Cost $29,314,379) | $ 26,225,832 | |
COMMERCIAL MORTGAGE-BACKED SECURITIES — 8.4% of Net Assets | ||
150,000(a) | AREIT Trust, Series 2022-CRE6, Class D, 3.621% (SOFR30A + 285 bps), 1/16/37 (144A) | $ 140,647 |
410,000 | BANK, Series 2017-BNK7, Class AS, 3.748%, 9/15/60 | 389,399 |
154,178(b) | Bayview Commercial Asset Trust, Series 2007-2A, Class IO, 0.000%, 7/25/37 (144A) | — |
250,000(a) | Beast Mortgage Trust, Series 2021-1818, Class A, 2.374% (1 Month USD LIBOR + 105 bps), 3/15/36 (144A) | 241,389 |
125,000 | Benchmark Mortgage Trust, Series 2018-B5, Class A3, 3.944%, 7/15/51 | 121,838 |
250,000 | Benchmark Mortgage Trust, Series 2018-B8, Class A4, 3.963%, 1/15/52 | 244,850 |
200,000(c) | Benchmark Mortgage Trust, Series 2020-IG3, Class B, 3.389%, 9/15/48 (144A) | 172,583 |
100,000(c) | Benchmark Mortgage Trust, Series 2022-B34, Class AM, 3.961%, 4/15/55 | 93,660 |
500,000(c) | BX Commercial Mortgage Trust, Series 2021-VIV5, Class A, 2.843%, 3/9/44 (144A) | 433,400 |
300,000(a) | BX Commercial Mortgage Trust, Series 2021-VOLT, Class F, 3.724% (1 Month USD LIBOR + 240 bps), | |
9/15/36 (144A) | 279,104 | |
400,000 | BX Trust, Series 2019-OC11, Class A, 3.202%, 12/9/41 (144A) | 358,086 |
975,000(a) | BX Trust, Series 2021-ARIA, Class D, 3.219% (1 Month USD LIBOR + 190 bps), 10/15/36 (144A) | 907,680 |
80,000(c) | CCUBS Commercial Mortgage Trust, Series 2017-C1, Class AS, 3.907%, 11/15/50 | 75,169 |
136,313 | CFCRE Commercial Mortgage Trust, Series 2016-C3, Class A2, 3.597%, 1/10/48 | 133,136 |
148,876(a) | CHC Commercial Mortgage Trust, Series 2019-CHC, Class D, 3.374% (1 Month USD LIBOR + 205 bps), | |
6/15/34 (144A) | 142,564 | |
250,000(c) | Citigroup Commercial Mortgage Trust, Series 2014-GC25, Class B, 4.345%, 10/10/47 | 245,633 |
125,000(c) | Citigroup Commercial Mortgage Trust, Series 2015-GC33, Class B, 4.727%, 9/10/58 | 121,278 |
50,000 | Citigroup Commercial Mortgage Trust, Series 2016-P5, Class D, 3.00%, 10/10/49 (144A) | 39,801 |
150,000 | Citigroup Commercial Mortgage Trust, Series 2017-C4, Class A4, 3.471%, 10/12/50 | 143,292 |
100,000(c) | Citigroup Commercial Mortgage Trust, Series 2018-B2, Class AS, 4.179%, 3/10/51 | 97,472 |
314,347 | Citigroup Commercial Mortgage Trust, Series 2018-C5, Class A3, 3.963%, 6/10/51 | 306,224 |
500,000 | Citigroup Commercial Mortgage Trust, Series 2020-GC46, Class A5, 2.717%, 2/15/53 | 446,102 |
245,748(a) | Cold Storage Trust, Series 2020-ICE5, Class D, 3.424% (1 Month USD LIBOR + 210 bps), 11/15/37 (144A) | 238,340 |
127,741 | COMM Mortgage Trust, Series 2012-CR3, Class A3, 2.822%, 10/15/45 | 127,574 |
238,711 | COMM Mortgage Trust, Series 2014-UBS3, Class A3, 3.546%, 6/10/47 | 233,858 |
150,000 | COMM Mortgage Trust, Series 2014-UBS4, Class A4, 3.42%, 8/10/47 | 147,557 |
175,000(c) | COMM Mortgage Trust, Series 2015-DC1, Class B, 4.035%, 2/10/48 | 169,003 |
180,885 | COMM Mortgage Trust, Series 2016-CR28, Class AHR, 3.651%, 2/10/49 | 177,283 |
250,000(a) | Credit Suisse Mortgage Capital Certificates, Series 2019-ICE4, Class E, 3.474% (1 Month USD LIBOR + | |
215 bps), 5/15/36 (144A) | 239,928 |
The accompanying notes are an integral part of these financial statements. 15
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
COMMERCIAL MORTGAGE-BACKED SECURITIES — (continued) | ||
225,000(a) | Freddie Mac Multifamily Structured Credit Risk, Series 2021-MN3, Class M2, 4.926% (SOFR30A + | |
400 bps), 11/25/51 (144A) | $ 194,125 | |
150,000(c) | FREMF Mortgage Trust, Series 2017-KW03, Class B, 4.203%, 7/25/27 (144A) | 143,496 |
181,001(a) | FREMF Mortgage Trust, Series 2018-KSW4, Class B, 3.57% (1 Month USD LIBOR + 245 bps), 10/25/28 | 172,651 |
100,000(c) | FREMF Mortgage Trust, Series 2019-K88, Class C, 4.528%, 2/25/52 (144A) | 95,246 |
134,133(a) | FREMF Mortgage Trust, Series 2019-KF64, Class B, 3.42% (1 Month USD LIBOR + 230 bps), 6/25/26 (144A) | 132,177 |
323,945(a) | FREMF Mortgage Trust, Series 2019-KF66, Class B, 3.52% (1 Month USD LIBOR + 240 bps), 7/25/29 (144A) | 316,770 |
123,379(c) | FRESB Mortgage Trust, Series 2018-SB52, Class A7F, 3.39%, 6/25/25 | 122,382 |
698,825(c) | Government National Mortgage Association, Series 2017-21, Class IO, 0.652%, 10/16/58 | 27,908 |
150,000(a) | GS Mortgage Securities Corporation Trust, Series 2021-IP, Class D, 3.424% (1 Month USD LIBOR + | |
210 bps), 10/15/36 (144A) | 139,883 | |
200,000 | GS Mortgage Securities Trust, Series 2015-GC28, Class A5, 3.396%, 2/10/48 | 196,550 |
323,000 | ILPT Trust, Series 2019-SURF, Class A, 4.145%, 2/11/41 (144A) | 311,941 |
170,000 | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2016-JP3, Class AS, 3.144%, 8/15/49 | 160,271 |
450,000 | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2016-JP4, Class A3, 3.393%, 12/15/49 | 429,540 |
200,000(c) | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2018-BCON, Class C, 3.881%, | |
1/5/31 (144A) | 197,746 | |
250,000 | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2018-WPT, Class AFX, 4.248%, | |
7/5/33 (144A) | 247,878 | |
150,000(c) | JPMDB Commercial Mortgage Securities Trust, Series 2016-C2, Class B, 3.99%, 6/15/49 | 134,765 |
100,000(c) | JPMDB Commercial Mortgage Securities Trust, Series 2016-C4, Class D, 3.197%, 12/15/49 (144A) | 76,520 |
250,000 | JPMDB Commercial Mortgage Securities Trust, Series 2018-C8, Class A4, 4.211%, 6/15/51 | 247,492 |
1,600,000(c) | JPMDB Commercial Mortgage Securities Trust, Series 2018-C8, Class XB, 0.179%, 6/15/51 | 10,625 |
225,000 | Key Commercial Mortgage Securities Trust, Series 2019-S2, Class A3, 3.469%, 6/15/52 (144A) | 208,921 |
500,000(a) | Med Trust, Series 2021-MDLN, Class E, 4.475% (1 Month USD LIBOR + 315 bps), 11/15/38 (144A) | 471,128 |
225,000(a) | Med Trust, Series 2021-MDLN, Class F, 5.325% (1 Month USD LIBOR + 400 bps), 11/15/38 (144A) | 210,379 |
60,000(c) | Morgan Stanley Bank of America Merrill Lynch Trust, Series 2015-C21, Class C, 4.267%, 3/15/48 | 49,715 |
250,000(c) | Morgan Stanley Capital I Trust, Series 2018-MP, Class A, 4.419%, 7/11/40 (144A) | 240,926 |
9,582(a) | Multifamily Connecticut Avenue Securities Trust, Series 2019-01, Class M7, 3.324% (1 Month USD | |
LIBOR + 170 bps), 10/15/49 (144A) | 9,381 | |
85,000 | Palisades Center Trust, Series 2016-PLSD, Class A, 2.713%, 4/13/33 (144A) | 80,565 |
225,000(a) | Ready Capital Mortgage Financing LLC, Series 2021-FL7, Class D, 4.574% (1 Month USD LIBOR + | |
295 bps), 11/25/36 (144A) | 207,538 | |
210,000(a) | Ready Capital Mortgage Financing LLC, Series 2022-FL8, Class D, 4.648% (SOFR30A + 370 bps), | |
1/25/37 (144A) | 197,374 | |
550,000 | SLG Office Trust, Series 2021-OVA, Class E, 2.851%, 7/15/41 (144A) | 426,623 |
615,000(a) | Taubman Centers Commercial Mortgage Trust, Series 2022-DPM, Class B, 4.211% (1 Month Term | |
SOFR + 293 bps), 5/15/37 (144A) | 593,220 | |
226,934 | Wells Fargo Commercial Mortgage Trust, Series 2016-C32, Class A3, 3.294%, 1/15/59 | 220,680 |
186,396 | Wells Fargo Commercial Mortgage Trust, Series 2016-LC24, Class A3, 2.684%, 10/15/49 | 177,002 |
135,000(c) | Wells Fargo Commercial Mortgage Trust, Series 2018-C43, Class A4, 4.012%, 3/15/51 | 133,171 |
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | ||
(Cost $14,160,750) | $ 13,051,439 | |
CORPORATE BONDS — 29.6% of Net Assets | ||
Advertising — 0.4% | ||
407,000 | Interpublic Group of Cos., Inc., 4.75%, 3/30/30 | $ 400,232 |
255,000 | Stagwell Global LLC, 5.625%, 8/15/29 (144A) | 204,900 |
Total Advertising | $ 605,132 |
16 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Aerospace & Defense — 0.9% | ||
774,000 | Boeing Co., 3.75%, 2/1/50 | $ 543,176 |
480,000 | Boeing Co., 3.90%, 5/1/49 | 342,337 |
125,000 | Boeing Co., 5.805%, 5/1/50 | 115,671 |
405,000 | Teledyne Technologies, Inc., 2.25%, 4/1/28 | 351,966 |
Total Aerospace & Defense | $ 1,353,150 | |
Airlines — 0.4% | ||
20,000 | Air Canada, 3.875%, 8/15/26 (144A) | $ 16,918 |
217,512 | Air Canada 2017-1 Class AA Pass Through Trust, 3.30%, 1/15/30 (144A) | 198,009 |
45,000 | American Airlines 2021-1 Class B Pass Through Trust, 3.95%, 7/11/30 | 37,598 |
85,000 | Delta Air Lines, Inc./SkyMiles IP, Ltd., 4.75%, 10/20/28 (144A) | 80,404 |
144,223 | JetBlue 2019-1 Class AA Pass Through Trust, 2.75%, 5/15/32 | 125,030 |
55,012 | JetBlue 2020-1 Class A Pass Through Trust, 4.00%, 11/15/32 | 51,202 |
80,510 | United Airlines 2020-1 Class B Pass Through Trust, 4.875%, 1/15/26 | 76,515 |
50,000 | United Airlines, Inc., 4.375%, 4/15/26 (144A) | 44,625 |
50,000 | United Airlines, Inc., 4.625%, 4/15/29 (144A) | 42,094 |
Total Airlines | $ 672,395 | |
Auto Manufacturers — 0.4% | ||
200,000 | Ford Motor Credit Co. LLC, 3.625%, 6/17/31 | $ 155,000 |
225,000 | Ford Motor Credit Co. LLC, 5.584%, 3/18/24 | 223,875 |
216,000 | General Motors Co., 6.60%, 4/1/36 | 219,252 |
Total Auto Manufacturers | $ 598,127 | |
Auto Parts & Equipment — 0.1% | ||
105,000 | Dana, Inc., 4.25%, 9/1/30 | $ 81,501 |
Total Auto Parts & Equipment | $ 81,501 | |
Banks — 8.2% | ||
600,000(c) | ABN AMRO Bank NV, 2.47% (1 Year CMT Index + 110 bps), 12/13/29 (144A) | $ 512,381 |
200,000(c) | ABN AMRO Bank NV, 3.324% (5 Year CMT Index + 190 bps), 3/13/37 (144A) | 160,859 |
535,000(c) | AIB Group Plc, 4.263% (3 Month USD LIBOR + 187 bps), 4/10/25 (144A) | 525,052 |
200,000 | Banco do Brasil SA, 3.25%, 9/30/26 (144A) | 180,750 |
318,000 | Banco Santander Chile, 2.70%, 1/10/25 (144A) | 304,199 |
200,000(c) | Banco Santander SA, 1.722% (1 Year CMT Index + 90 bps), 9/14/27 | 173,822 |
600,000(c) | Banco Santander SA, 3.225% (1 Year CMT Index + 160 bps), 11/22/32 | 475,863 |
375,000(c) | Bank of America Corp., 2.572% (SOFR + 121 bps), 10/20/32 | 310,176 |
663,000(c) | Bank of America Corp., 2.884% (3 Month USD LIBOR + 119 bps), 10/22/30 | 580,276 |
590,000(c) | Bank of Nova Scotia, 4.588% (5 Year CMT Index + 205 bps), 5/4/37 | 543,895 |
255,000(c) | BNP Paribas SA, 2.159% (SOFR + 122 bps), 9/15/29 (144A) | 213,746 |
390,000(c) | BPCE SA, 3.116% (SOFR + 173 bps), 10/19/32 (144A) | 315,121 |
200,000 | BPCE SA, 4.875%, 4/1/26 (144A) | 196,451 |
250,000(c) | Citigroup, Inc., 2.52% (SOFR + 118 bps), 11/3/32 | 203,443 |
185,000(c) | Citigroup, Inc., 4.91% (SOFR + 209 bps), 5/24/33 | 182,661 |
400,000(c)(e) | Credit Suisse Group AG, 7.125% (5 Year USD Swap Rate + 511 bps) | 398,772 |
235,000(c) | Goldman Sachs Group, Inc., 2.65% (SOFR + 126 bps), 10/21/32 | 194,110 |
286,000(c) | Goldman Sachs Group, Inc., 3.272% (3 Month USD LIBOR + 120 bps), 9/29/25 | 278,132 |
215,000(c) | Goldman Sachs Group, Inc., 4.223% (3 Month USD LIBOR + 130 bps), 5/1/29 | 207,526 |
150,000 | HSBC Bank Plc, 7.65%, 5/1/25 | 160,358 |
The accompanying notes are an integral part of these financial statements. 17
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Banks — (continued) | ||
355,000(c) | HSBC Holdings Plc, 2.206% (SOFR + 129 bps), 8/17/29 | $ 299,010 |
375,000(c) | HSBC Holdings Plc, 2.871% (SOFR + 141 bps), 11/22/32 | 307,720 |
200,000(c) | ING Groep NV, 4.252% (SOFR + 207 bps), 3/28/33 | 187,211 |
635,000(c)(e) | ING Groep NV, 4.25% (5 Year CMT Index + 286 bps) | 433,006 |
305,000(c) | JPMorgan Chase & Co., 2.545% (SOFR + 118 bps), 11/8/32 | 253,195 |
90,000(c) | JPMorgan Chase & Co., 4.586% (SOFR + 180 bps), 4/26/33 | 88,709 |
400,000 | Lloyds Banking Group Plc, 4.65%, 3/24/26 | 392,397 |
335,000(c) | Macquarie Group, Ltd., 2.691% (SOFR + 144 bps), 6/23/32 (144A) | 270,207 |
195,000(c) | Macquarie Group, Ltd., 2.871% (SOFR + 153 bps), 1/14/33 (144A) | 159,512 |
305,000(c) | Morgan Stanley, 5.297% (SOFR + 262 bps), 4/20/37 | 296,143 |
645,000(c)(e) | Nordea Bank Abp, 3.75% (5 Year CMT Index + 260 bps) (144A) | 475,047 |
210,000(c) | Santander Holdings USA, Inc., 2.49% (SOFR + 125 bps), 1/6/28 | 185,601 |
200,000(c) | Societe Generale SA, 4.027% (1 Year CMT Index + 190 bps), 1/21/43 (144A) | 141,848 |
200,000(c)(e) | Societe Generale SA, 5.375% (5 Year CMT Index + 451 bps) (144A) | 155,000 |
225,000(c) | Societe Generale SA, 6.221% (1 Year CMT Index + 320 bps), 6/15/33 (144A) | 215,301 |
575,000(c) | Standard Chartered Plc, 3.603% (1 Year CMT Index + 190 bps), 1/12/33 (144A) | 471,753 |
70,000(c) | State Street Corp., 4.421% (SOFR + 161 bps), 5/13/33 | 69,185 |
280,000 | Toronto-Dominion Bank, 4.456%, 6/8/32 | 277,710 |
415,000(c) | UBS Group AG, 2.746% (1 Year CMT Index + 110 bps), 2/11/33 (144A) | 338,715 |
700,000(c) | UniCredit S.p.A., 2.569% (1 Year CMT Index + 230 bps), 9/22/26 (144A) | 626,814 |
240,000(c) | UniCredit S.p.A., 5.459% (5 Year CMT Index + 475 bps), 6/30/35 (144A) | 194,378 |
200,000(c) | UniCredit S.p.A., 7.296% (5 Year USD 1100 Run ICE Swap Rate + 491 bps), 4/2/34 (144A) | 184,120 |
595,000(c) | US Bancorp, 2.491% (5 Year CMT Index + 95 bps), 11/3/36 | 486,189 |
Total Banks | $ 12,626,364 | |
Beverages — 0.3% | ||
404,000 | Anheuser-Busch InBev Worldwide, Inc., 5.55%, 1/23/49 | $ 414,987 |
Total Beverages | $ 414,987 | |
Biotechnology — 0.3% | ||
82,000 | Bio-Rad Laboratories, Inc., 3.70%, 3/15/32 | $ 73,070 |
175,000 | CSL Finance Plc, 4.25%, 4/27/32 (144A) | 171,578 |
200,000 | Grifols Escrow Issuer SA, 4.75%, 10/15/28 (144A) | 173,500 |
Total Biotechnology | $ 418,148 | |
Building Materials — 0.3% | ||
180,000 | Builders FirstSource, Inc., 6.375%, 6/15/32 (144A) | $ 160,650 |
150,000 | Fortune Brands Home & Security, Inc., 4.50%, 3/25/52 | 116,554 |
20,000 | MIWD Holdco II LLC/MIWD Finance Corp., 5.50%, 2/1/30 (144A) | 16,095 |
190,000 | Standard Industries, Inc., 4.375%, 7/15/30 (144A) | 149,863 |
10,000 | Summit Materials LLC/Summit Materials Finance Corp., 5.25%, 1/15/29 (144A) | 8,725 |
Total Building Materials | $ 451,887 | |
Chemicals — 0.8% | ||
565,000 | Albemarle Corp., 5.65%, 6/1/52 | $ 568,190 |
75,000 | Ingevity Corp., 3.875%, 11/1/28 (144A) | 62,812 |
103,000 | NOVA Chemicals Corp., 5.25%, 6/1/27 (144A) | 88,343 |
341,000 | Olin Corp., 5.00%, 2/1/30 | 294,522 |
35,000 | Olin Corp., 5.625%, 8/1/29 | 31,194 |
200,000 | Tronox, Inc., 4.625%, 3/15/29 (144A) | 160,958 |
Total Chemicals | $ 1,206,019 |
18 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Commercial Services — 0.5% | ||
123,000 | Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.625%, 7/15/26 (144A) | $ 112,587 |
115,000 | CoreLogic, Inc., 4.50%, 5/1/28 (144A) | 88,550 |
220,000 | Garda World Security Corp., 4.625%, 2/15/27 (144A) | 189,200 |
180,000 | Prime Security Services Borrower LLC/Prime Finance, Inc., 6.25%, 1/15/28 (144A) | 150,344 |
200,000 | Sotheby’s, 7.375%, 10/15/27 (144A) | 185,313 |
Total Commercial Services | $ 725,994 | |
Cosmetics/Personal Care — 0.1% | ||
120,000 | Edgewell Personal Care Co., 5.50%, 6/1/28 (144A) | $ 109,188 |
Total Cosmetics/Personal Care | $ 109,188 | |
Diversified Financial Services — 2.1% | ||
225,000 | AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.30%, 1/30/32 | $ 179,810 |
265,000 | Air Lease Corp., 2.10%, 9/1/28 | 212,835 |
165,000 | Air Lease Corp., 2.875%, 1/15/32 | 128,944 |
215,000 | Air Lease Corp., 3.125%, 12/1/30 | 176,222 |
395,000 | Ally Financial, Inc., 4.75%, 6/9/27 | 379,859 |
30,000 | Avolon Holdings Funding, Ltd., 3.95%, 7/1/24 (144A) | 28,747 |
225,000 | B3 SA - Brasil Bolsa Balcao, 4.125%, 9/20/31 (144A) | 183,937 |
289,000 | Bread Financial Holdings, Inc., 7.00%, 1/15/26 (144A) | 275,966 |
310,000(c) | Capital One Financial Corp., 5.268% (SOFR + 237 bps), 5/10/33 | 305,219 |
485,000 | Nomura Holdings, Inc., 2.999%, 1/22/32 | 395,023 |
225,000 | Nomura Holdings, Inc., 5.605%, 7/6/29 | 225,576 |
140,000 | OneMain Finance Corp., 3.50%, 1/15/27 | 112,000 |
404,000 | OneMain Finance Corp., 4.00%, 9/15/30 | 299,085 |
100,000(a) | OWS Cre Funding I LLC, 6.613% (1 Month USD LIBOR + 490 bps), 9/1/23 (144A) | 98,644 |
283,000 | United Wholesale Mortgage LLC, 5.50%, 4/15/29 (144A) | 216,673 |
Total Diversified Financial Services | $ 3,218,540 | |
Electric — 1.5% | ||
280,000 | AES Corp., 2.45%, 1/15/31 | $ 225,784 |
100,000 | AES Corp., 3.95%, 7/15/30 (144A) | 90,170 |
210,000(c) | Algonquin Power & Utilities Corp., 4.75% (5 Year CMT Index + 325 bps), 1/18/82 | 174,296 |
699,000 | Calpine Corp., 3.75%, 3/1/31 (144A) | 565,072 |
35,000 | Clearway Energy Operating LLC, 3.75%, 1/15/32 (144A) | 27,653 |
290,000 | NRG Energy, Inc., 2.45%, 12/2/27 (144A) | 249,348 |
255,000 | NRG Energy, Inc., 3.875%, 2/15/32 (144A) | 202,542 |
40,000 | Pattern Energy Operations LP/Pattern Energy Operations, Inc., 4.50%, 8/15/28 (144A) | 35,040 |
255,000 | Puget Energy, Inc., 2.379%, 6/15/28 | 223,336 |
240,000 | Puget Energy, Inc., 4.10%, 6/15/30 | 223,614 |
55,000 | Puget Energy, Inc., 4.224%, 3/15/32 | 50,845 |
284,000 | Vistra Operations Co. LLC, 3.70%, 1/30/27 (144A) | 261,773 |
55,000 | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | 46,015 |
Total Electric | $ 2,375,488 | |
Electrical Components & Equipments — 0.0%† | ||
65,000 | Energizer Holdings, Inc., 6.50%, 12/31/27 (144A) | $ 56,956 |
Total Electrical Components & Equipments | $ 56,956 | |
Electronics — 0.0%† | ||
70,000 | Atkore, Inc., 4.25%, 6/1/31 (144A) | $ 58,100 |
Total Electronics | $ 58,100 |
The accompanying notes are an integral part of these financial statements. 19
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Energy-Alternate Sources — 0.2% | ||
266,075 | Adani Renewable Energy RJ, Ltd./Kodangal Solar Parks Pvt, Ltd./Wardha Solar Maharash, | |
4.625%, 10/15/39 (144A) | $ 197,694 | |
37,338 | Alta Wind Holdings LLC, 7.00%, 6/30/35 (144A) | 38,906 |
Total Energy-Alternate Sources | $ 236,600 | |
Engineering & Construction — 0.1% | ||
133,000 | Dycom Industries, Inc., 4.50%, 4/15/29 (144A) | $ 116,281 |
105,000 | TopBuild Corp., 4.125%, 2/15/32 (144A) | 80,638 |
Total Engineering & Construction | $ 196,919 | |
Entertainment — 0.2% | ||
400,000 | Resorts World Las Vegas LLC/RWLV Capital, Inc., 4.625%, 4/16/29 (144A) | $ 325,835 |
Total Entertainment | $ 325,835 | |
Food — 0.7% | ||
75,000 | Albertsons Cos., Inc./Safeway, Inc./New Albertsons LP/Albertsons LLC, 4.875%, 2/15/30 (144A) | $ 64,338 |
120,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 3.00%, 2/2/29 (144A) | 101,364 |
110,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 3.00%, 5/15/32 (144A) | 84,476 |
210,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 5.75%, 4/1/33 (144A) | 199,981 |
235,000 | Minerva Luxembourg SA, 4.375%, 3/18/31 (144A) | 187,911 |
60,000 | Pilgrim’s Pride Corp., 5.875%, 9/30/27 (144A) | 57,450 |
220,000 | Smithfield Foods, Inc., 2.625%, 9/13/31 (144A) | 174,198 |
200,000 | Smithfield Foods, Inc., 3.00%, 10/15/30 (144A) | 166,223 |
21,000 | Smithfield Foods, Inc., 5.20%, 4/1/29 (144A) | 20,668 |
Total Food | $ 1,056,609 | |
Forest Products & Paper — 0.0%† | ||
80,000 | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | $ 68,987 |
Total Forest Products & Paper | $ 68,987 | |
Gas — 0.2% | ||
110,000 | Boston Gas Co., 3.15%, 8/1/27 (144A) | $ 102,331 |
174,162 | Nakilat, Inc., 6.267%, 12/31/33 (144A) | 189,175 |
Total Gas | $ 291,506 | |
Hand/Machine Tools — 0.1% | ||
125,000 | Kennametal, Inc., 2.80%, 3/1/31 | $ 101,420 |
Total Hand/Machine Tools | $ 101,420 | |
Healthcare-Products — 0.2% | ||
77,000 | Edwards Lifesciences Corp., 4.30%, 6/15/28 | $ 75,165 |
348,000 | Smith & Nephew Plc, 2.032%, 10/14/30 | 277,617 |
Total Healthcare-Products | $ 352,782 | |
Healthcare-Services — 0.4% | ||
140,000 | Elevance Health, Inc., 4.55%, 5/15/52 | $ 133,681 |
525,000 | Fresenius Medical Care US Finance III, Inc., 2.375%, 2/16/31 (144A) | 416,140 |
80,000 | Tenet Healthcare Corp., 6.125%, 6/15/30 (144A) | 75,402 |
Total Healthcare-Services | $ 625,223 |
20 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Insurance — 1.6% | ||
57,000 | Aon Corp./Aon Global Holdings Plc, 2.60%, 12/2/31 | $ 47,922 |
90,000 | AXA SA, 8.60%, 12/15/30 | 105,519 |
470,000 | CNO Global Funding, 2.65%, 1/6/29 (144A) | 410,346 |
100,000(c) | Farmers Exchange Capital III, 5.454% (3 Month USD LIBOR + 345 bps), 10/15/54 (144A) | 98,855 |
340,000(c) | Farmers Insurance Exchange, 4.747% (3 Month USD LIBOR + 323 bps), 11/1/57 (144A) | 307,564 |
645,000 | Liberty Mutual Insurance Co., 7.697%, 10/15/97 (144A) | 780,745 |
475,000 | Nationwide Mutual Insurance Co., 4.35%, 4/30/50 (144A) | 402,370 |
355,000(c) | Nippon Life Insurance Co., 2.90% (5 Year CMT Index + 260 bps), 9/16/51 (144A) | 287,883 |
86,000 | Primerica, Inc., 2.80%, 11/19/31 | 72,167 |
26,000 | Teachers Insurance & Annuity Association of America, 6.85%, 12/16/39 (144A) | 30,705 |
Total Insurance | $ 2,544,076 | |
Iron & Steel — 0.1% | ||
75,000 | Cleveland-Cliffs, Inc., 4.875%, 3/1/31 (144A) | $ 66,125 |
95,000 | Commercial Metals Co., 4.375%, 3/15/32 | 77,812 |
35,000 | Mineral Resources, Ltd., 8.00%, 11/1/27 (144A) | 34,269 |
40,000 | Mineral Resources, Ltd., 8.50%, 5/1/30 (144A) | 39,400 |
Total Iron & Steel | $ 217,606 | |
Lodging — 0.5% | ||
520,000 | Marriott International, Inc., 3.50%, 10/15/32 | $ 449,858 |
100,000 | Marriott International, Inc., 4.625%, 6/15/30 | 96,089 |
220,000 | Sands China, Ltd., 4.875%, 6/18/30 | 159,751 |
Total Lodging | $ 705,698 | |
Machinery-Construction & Mining — 0.1% | ||
205,000 | Weir Group Plc, 2.20%, 5/13/26 (144A) | $ 180,446 |
Total Machinery-Construction & Mining | $ 180,446 | |
Media — 0.3% | ||
40,000 | CCO Holdings LLC/CCO Holdings Capital Corp., 4.50%, 6/1/33 (144A) | $ 31,600 |
275,000 | CCO Holdings LLC/CCO Holdings Capital Corp., 4.75%, 3/1/30 (144A) | 235,421 |
135,000 | Charter Communications Operating LLC/Charter Communications Operating Capital, 4.40%, 4/1/33 | 120,709 |
200,000 | CSC Holdings LLC, 4.625%, 12/1/30 (144A) | 134,000 |
33,000 | Diamond Sports Group LLC/Diamond Sports Finance Co., 6.625%, 8/15/27 (144A) | 3,960 |
Total Media | $ 525,690 | |
Mining — 0.6% | ||
220,000 | Anglo American Capital Plc, 2.25%, 3/17/28 (144A) | $ 190,324 |
200,000 | Anglo American Capital Plc, 4.75%, 3/16/52 (144A) | 172,794 |
335,000 | AngloGold Ashanti Holdings Plc, 3.75%, 10/1/30 | 275,795 |
266,000 | FMG Resources August 2006 Pty, Ltd., 4.375%, 4/1/31 (144A) | 215,737 |
40,000 | FMG Resources August 2006 Pty, Ltd., 6.125%, 4/15/32 (144A) | 36,000 |
65,000 | Novelis Corp., 3.875%, 8/15/31 (144A) | 49,839 |
Total Mining | $ 940,489 | |
Miscellaneous Manufacturing — 0.3% | ||
450,000 | GE Capital Funding LLC, 4.55%, 5/15/32 | $ 435,239 |
Total Miscellaneous Manufacturing | $ 435,239 |
The accompanying notes are an integral part of these financial statements. 21
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Multi-National — 0.2% | ||
200,000 | African Export-Import Bank, 3.994%, 9/21/29 (144A) | $ 171,816 |
230,000 | Banque Ouest Africaine de Developpement, 4.70%, 10/22/31 (144A) | 190,900 |
Total Multi-National | $ 362,716 | |
Oil & Gas — 0.9% | ||
640,000 | Lundin Energy Finance BV, 3.10%, 7/15/31 (144A) | $ 530,876 |
125,000 | Petroleos Mexicanos, 6.70%, 2/16/32 | 95,312 |
450,000 | Phillips 66 Co., 3.75%, 3/1/28 (144A) | 428,457 |
312,000 | Valero Energy Corp., 6.625%, 6/15/37 | 340,136 |
Total Oil & Gas | $ 1,394,781 | |
Pharmaceuticals — 0.5% | ||
60,000 | AdaptHealth LLC, 5.125%, 3/1/30 (144A) | $ 50,574 |
166,000 | Bausch Health Americas, Inc., 9.25%, 4/1/26 (144A) | 118,690 |
286,000 | Teva Pharmaceutical Finance Netherlands III BV, 3.15%, 10/1/26 | 234,520 |
200,000 | Teva Pharmaceutical Finance Netherlands III BV, 5.125%, 5/9/29 | 164,750 |
200,000 | Teva Pharmaceutical Finance Netherlands III BV, 7.125%, 1/31/25 | 194,976 |
Total Pharmaceuticals | $ 763,510 | |
Pipelines — 1.9% | ||
75,000 | Boardwalk Pipelines LP, 3.60%, 9/1/32 | $ 63,591 |
170,000 | DCP Midstream Operating LP, 5.375%, 7/15/25 | 165,325 |
84,000 | DCP Midstream Operating LP, 5.60%, 4/1/44 | 67,882 |
40,000 | Energy Transfer LP, 4.15%, 9/15/29 | 36,692 |
479,000 | Energy Transfer LP, 4.95%, 5/15/28 | 468,985 |
224,000 | Energy Transfer LP, 5.35%, 5/15/45 | 195,944 |
140,000 | Energy Transfer LP, 6.00%, 6/15/48 | 132,210 |
477,000(c)(e) | Energy Transfer LP, 7.125% (5 Year CMT Index + 531 bps) | 409,338 |
20,000 | EnLink Midstream LLC, 5.375%, 6/1/29 | 17,502 |
280,000 | EnLink Midstream Partners LP, 5.45%, 6/1/47 | 198,167 |
134,000 | EnLink Midstream Partners LP, 5.60%, 4/1/44 | 94,853 |
53,000 | Hess Midstream Operations LP, 5.50%, 10/15/30 (144A) | 47,567 |
340,000 | MPLX LP, 4.25%, 12/1/27 | 328,608 |
230,000 | MPLX LP, 4.95%, 3/14/52 | 201,043 |
230,000 | NGPL PipeCo LLC, 3.25%, 7/15/31 (144A) | 192,138 |
89,000 | Williams Cos., Inc., 7.75%, 6/15/31 | 104,471 |
250,000 | Williams Cos., Inc., 7.50%, 1/15/31 | 287,826 |
Total Pipelines | $ 3,012,142 | |
Real Estate — 0.1% | ||
175,000 | Kennedy-Wilson, Inc., 4.75%, 2/1/30 | $ 136,938 |
Total Real Estate | $ 136,938 | |
REITs — 1.5% | ||
25,000 | Alexandria Real Estate Equities, Inc., 3.95%, 1/15/27 | $ 24,657 |
130,000 | Corporate Office Properties LP, 2.00%, 1/15/29 | 104,992 |
195,000 | Corporate Office Properties LP, 2.75%, 4/15/31 | 158,014 |
140,000 | Corporate Office Properties LP, 2.90%, 12/1/33 | 108,729 |
64,000 | GLP Capital LP/GLP Financing II, Inc., 3.25%, 1/15/32 | 51,343 |
164,000 | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | 141,040 |
22 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
REITs — (continued) | ||
255,000 | Healthcare Trust of America Holdings LP, 3.10%, 2/15/30 | $ 220,166 |
63,000 | Highwoods Realty LP, 2.60%, 2/1/31 | 51,873 |
290,000 | Highwoods Realty LP, 3.625%, 1/15/23 | 290,209 |
105,000 | Highwoods Realty LP, 4.125%, 3/15/28 | 100,518 |
193,000 | Iron Mountain, Inc., 4.50%, 2/15/31 (144A) | 157,709 |
38,000 | iStar, Inc., 4.25%, 8/1/25 | 35,055 |
285,000 | LXP Industrial Trust, 2.375%, 10/1/31 | 220,986 |
165,000 | LXP Industrial Trust, 2.70%, 9/15/30 | 135,767 |
235,000 | SBA Tower Trust, 3.869%, 10/8/24 (144A) | 231,459 |
120,000 | Sun Communities Operating LP, 2.30%, 11/1/28 | 102,844 |
180,000 | UDR, Inc., 4.40%, 1/26/29 | 178,015 |
Total REITs | $ 2,313,376 | |
Retail — 0.7% | ||
55,000 | AutoNation, Inc., 1.95%, 8/1/28 | $ 45,843 |
55,000 | AutoNation, Inc., 2.40%, 8/1/31 | 42,546 |
245,000 | AutoNation, Inc., 3.85%, 3/1/32 | 211,684 |
125,000 | AutoNation, Inc., 4.75%, 6/1/30 | 117,853 |
27,000 | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | 21,957 |
375,000 | Dollar Tree, Inc., 2.65%, 12/1/31 | 309,882 |
295,000 | Lowe’s Cos., Inc., 3.75%, 4/1/32 | 274,461 |
Total Retail | $ 1,024,226 | |
Semiconductors — 0.6% | ||
35,000 | Broadcom, Inc., 3.137%, 11/15/35 (144A) | $ 26,780 |
475,000 | Broadcom, Inc., 3.187%, 11/15/36 (144A) | 362,462 |
130,000 | Broadcom, Inc., 4.15%, 4/15/32 (144A) | 117,813 |
100,000 | Broadcom, Inc., 4.30%, 11/15/32 | 91,084 |
313,000 | Skyworks Solutions, Inc., 3.00%, 6/1/31 | 257,768 |
Total Semiconductors | $ 855,907 | |
Software — 0.5% | ||
485,000 | Autodesk, Inc., 2.40%, 12/15/31 | $ 397,123 |
459,000 | Broadridge Financial Solutions, Inc., 2.60%, 5/1/31 | 383,851 |
Total Software | $ 780,974 | |
Telecommunications — 0.7% | ||
255,000 | Altice France SA, 5.50%, 1/15/28 (144A) | $ 202,088 |
70,000 | Level 3 Financing, Inc., 4.625%, 9/15/27 (144A) | 59,675 |
40,000 | Lumen Technologies, Inc., 4.00%, 2/15/27 (144A) | 33,875 |
315,000 | Motorola Solutions, Inc., 2.30%, 11/15/30 | 247,099 |
150,000 | Motorola Solutions, Inc., 5.60%, 6/1/32 | 151,298 |
198,000 | Plantronics, Inc., 4.75%, 3/1/29 (144A) | 197,010 |
145,000 | T-Mobile USA, Inc., 2.55%, 2/15/31 | 122,332 |
175,000 | T-Mobile USA, Inc., 2.70%, 3/15/32 (144A) | 147,250 |
Total Telecommunications | $ 1,160,627 | |
Trucking & Leasing — 0.1% | ||
225,000 | Penske Truck Leasing Co. LP/PTL Finance Corp., 4.40%, 7/1/27 (144A) | $ 220,878 |
Total Trucking & Leasing | $ 220,878 | |
TOTAL CORPORATE BONDS | ||
(Cost $53,245,291) | $ 45,803,176 |
The accompanying notes are an integral part of these financial statements. 23
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
CONVERTIBLE PREFERRED STOCKS — 1.5% of Net Assets | ||
Banks — 1.5% | ||
267(e) | Bank of America Corp., 7.25% | $ 321,602 |
1,667(e) | Wells Fargo & Co., 7.50% | 2,026,255 |
Total Banks | $ 2,347,857 | |
TOTAL CONVERTIBLE PREFERRED STOCKS | ||
(Cost $2,678,008) | $ 2,347,857 | |
Principal | ||
Amount | ||
USD ($) | ||
MUNICIPAL BONDS — 0.8% of Net Assets(f) | ||
Arizona — 0.1% | ||
90,000 | Maricopa County Industrial Development Authority, Banner Health, Series 2019F, 3.00%, 1/1/49 | $ 70,404 |
Total Arizona | $ 70,404 | |
California — 0.1% | ||
95,000 | California Health Facilities Financing Authority, Cedars-Sinai Health System, Series A, 3.00%, 8/15/51 | $ 73,653 |
45,000 | Regents of the University of California, Medical Center Pooled Revenue, Series P, 4.00%, 5/15/53 | 43,321 |
Total California | $ 116,974 | |
Florida — 0.0%† | ||
70,000 | South Broward Hospital District, South Broward Hospital District Obligated Group, Series A, | |
2.50%, 5/1/47 | $ 48,948 | |
Total Florida | $ 48,948 | |
Georgia — 0.0%† | ||
40,000 | Gainesville & Hall County Hospital Authority, Northeast Georgia Health System, Inc. Project, | |
Series A, 3.00%, 2/15/51 | $ 30,355 | |
Total Georgia | $ 30,355 | |
Massachusetts — 0.0%† | ||
75,000(g) | Commonwealth of Massachusetts, Series B, 3.00%, 4/1/47 | $ 60,732 |
Total Massachusetts | $ 60,732 | |
Missouri — 0.0%† | ||
20,000 | Health & Educational Facilities Authority of the State of Missouri, BJC Health System, Series A, | |
3.00%, 7/1/38 | $ 17,256 | |
Total Missouri | $ 17,256 | |
Nebraska — 0.1% | ||
35,000(g) | Lancaster County School District 001, 2.00%, 1/15/43 | $ 24,400 |
135,000 | University of Nebraska Facilities Corp., Green Bond, Series B, 3.00%, 7/15/54 | 103,800 |
Total Nebraska | $ 128,200 | |
New Jersey — 0.1% | ||
45,000 | New Jersey Health Care Facilities Financing Authority, Atlanticare Health System Obligated | |
Group Issue, 3.00%, 7/1/46 | $ 36,390 | |
100,000 | New Jersey Health Care Facilities Financing Authority, RWJ Barnabas Health Obligated Group | |
Issue, 3.00%, 7/1/51 | 79,341 | |
Total New Jersey | $ 115,731 | |
New York — 0.0%† | ||
75,000 | New York State Thruway Authority, Series A-1, 3.00%, 3/15/50 | $ 57,781 |
Total New York | $ 57,781 |
24 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
North Carolina — 0.1% | ||
70,000 | City of Charlotte Airport Revenue, Charlotte Douglas International Airport Revenue, | |
Series A, 4.00%, 7/1/47 | $ 69,371 | |
Total North Carolina | $ 69,371 | |
Oregon — 0.0%† | ||
65,000 | Oregon Health & Science University, Green Bond, Series A, 3.00%, 7/1/51 | $ 50,789 |
Total Oregon | $ 50,789 | |
Pennsylvania — 0.1% | ||
140,000 | Montgomery County Higher Education and Health Authority, Thomas Jefferson University, | |
Series B, 4.00%, 5/1/56 | $ 124,631 | |
30,000 | Pennsylvania Turnpike Commission, Series C, 3.00%, 12/1/51 | 23,222 |
Total Pennsylvania | $ 147,853 | |
Tennessee — 0.0%† | ||
10,000 | City of Memphis TN Water Revenue, Memphis Light, Gas and Water Division, 3.00%, 12/1/45 | $ 8,267 |
Total Tennessee | $ 8,267 | |
Texas — 0.1% | ||
130,000 | Harris County Cultural Education Facilities Finance Corp., Texas Children’s Hospital, 3.00%, 10/1/51 | $ 103,065 |
45,000 | Texas Water Development Board, State Revolving Fund, 3.00%, 8/1/40 | 40,324 |
Total Texas | $ 143,389 | |
Virginia — 0.1% | ||
30,000 | Hampton Roads Transportation Accountability Commission, Series A, 4.00%, 7/1/57 | $ 28,379 |
55,000 | Roanoke Economic Development Authority, Carilion Clinic Obligated Group, 3.00%, 7/1/45 | 44,487 |
25,000 | Rockingham County Economic Development Authority, Sentara RMH Medical Center, Series A, | |
3.00%, 11/1/46 | 19,794 | |
95,000 | Virginia College Building Authority, Series C, 3.00%, 9/1/51 | 75,750 |
50,000 | Virginia Commonwealth Transportation Board, Transportation Capital Projects, 4.00%, 5/15/32 | 51,015 |
Total Virginia | $ 219,425 | |
TOTAL MUNICIPAL BONDS | ||
(Cost $1,260,656) | $ 1,285,475 | |
Face | ||
Amount | ||
USD ($) | ||
INSURANCE-LINKED SECURITIES — 0.0%† of Net Assets# | ||
Reinsurance Sidecars — 0.0%† | ||
Multiperil – Worldwide — 0.0%† | ||
25,723(h)(i)+ | Lorenz Re 2019, 6/30/23 | $ 2,984 |
Total Reinsurance Sidecars | $ 2,984 | |
TOTAL INSURANCE-LINKED SECURITIES | ||
(Cost $8,066) | $ 2,984 | |
Principal | ||
Amount | ||
USD ($) | ||
FOREIGN GOVERNMENT BOND — 0.2% of Net Assets | ||
Mexico — 0.2% | ||
475,000 | Mexico Government International Bond, 4.600%, 2/10/48 | $ 370,989 |
Total Mexico | $ 370,989 | |
TOTAL FOREIGN GOVERNMENT BOND | ||
(Cost $439,261) | $ 370,989 |
The accompanying notes are an integral part of these financial statements. 25
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — 50.4% of Net Assets | ||
958,512 | Fannie Mae, 1.500%, 11/1/41 | $ 823,243 |
585,095 | Fannie Mae, 1.500%, 1/1/42 | 502,470 |
389,576 | Fannie Mae, 1.500%, 1/1/42 | 334,618 |
490,406 | Fannie Mae, 1.500%, 2/1/42 | 421,273 |
196,922 | Fannie Mae, 1.500%, 3/1/42 | 169,133 |
649,614 | Fannie Mae, 2.000%, 12/1/41 | 582,007 |
494,764 | Fannie Mae, 2.000%, 4/1/42 | 443,283 |
335,806 | Fannie Mae, 2.000%, 11/1/51 | 294,196 |
7,000,000 | Fannie Mae, 2.000%, 7/1/52 (TBA) | 6,087,676 |
11,058 | Fannie Mae, 2.500%, 7/1/30 | 10,862 |
10,138 | Fannie Mae, 2.500%, 7/1/30 | 9,958 |
17,923 | Fannie Mae, 2.500%, 7/1/30 | 17,605 |
35,646 | Fannie Mae, 2.500%, 2/1/43 | 32,521 |
7,810 | Fannie Mae, 2.500%, 2/1/43 | 7,068 |
6,495 | Fannie Mae, 2.500%, 3/1/43 | 5,926 |
6,906 | Fannie Mae, 2.500%, 8/1/43 | 6,303 |
17,922 | Fannie Mae, 2.500%, 4/1/45 | 16,292 |
22,468 | Fannie Mae, 2.500%, 4/1/45 | 20,423 |
8,694 | Fannie Mae, 2.500%, 4/1/45 | 7,902 |
16,357 | Fannie Mae, 2.500%, 4/1/45 | 14,872 |
6,850 | Fannie Mae, 2.500%, 4/1/45 | 6,226 |
9,211 | Fannie Mae, 2.500%, 4/1/45 | 8,373 |
22,319 | Fannie Mae, 2.500%, 4/1/45 | 20,291 |
19,960 | Fannie Mae, 2.500%, 8/1/45 | 18,104 |
654,978 | Fannie Mae, 2.500%, 10/1/51 | 591,249 |
966,138 | Fannie Mae, 2.500%, 12/1/51 | 874,478 |
973,887 | Fannie Mae, 2.500%, 1/1/52 | 882,099 |
8,000,000 | Fannie Mae, 2.500%, 7/1/52 (TBA) | 7,208,125 |
7,427 | Fannie Mae, 3.000%, 3/1/29 | 7,409 |
38,534 | Fannie Mae, 3.000%, 10/1/30 | 38,439 |
20,816 | Fannie Mae, 3.000%, 8/1/42 | 19,927 |
189,170 | Fannie Mae, 3.000%, 8/1/42 | 181,109 |
47,524 | Fannie Mae, 3.000%, 9/1/42 | 45,502 |
85,879 | Fannie Mae, 3.000%, 11/1/42 | 82,213 |
38,656 | Fannie Mae, 3.000%, 12/1/42 | 37,006 |
40,975 | Fannie Mae, 3.000%, 4/1/43 | 39,197 |
39,231 | Fannie Mae, 3.000%, 5/1/43 | 37,544 |
81,241 | Fannie Mae, 3.000%, 5/1/43 | 77,722 |
10,828 | Fannie Mae, 3.000%, 5/1/43 | 10,367 |
15,976 | Fannie Mae, 3.000%, 8/1/43 | 15,242 |
12,727 | Fannie Mae, 3.000%, 9/1/43 | 12,162 |
14,474 | Fannie Mae, 3.000%, 3/1/45 | 13,811 |
17,567 | Fannie Mae, 3.000%, 4/1/45 | 16,739 |
99,869 | Fannie Mae, 3.000%, 6/1/45 | 95,179 |
95,047 | Fannie Mae, 3.000%, 3/1/47 | 90,205 |
144,586 | Fannie Mae, 3.000%, 4/1/50 | 137,625 |
26 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
97,595 | Fannie Mae, 3.000%, 8/1/50 | $ 92,982 |
342,491 | Fannie Mae, 3.000%, 11/1/50 | 326,010 |
479,555 | Fannie Mae, 3.000%, 1/1/52 | 451,494 |
199,023 | Fannie Mae, 3.000%, 3/1/52 | 186,009 |
638,997 | Fannie Mae, 3.000%, 3/1/52 | 605,068 |
464,377 | Fannie Mae, 3.000%, 4/1/52 | 436,692 |
2,000,000 | Fannie Mae, 3.000%, 7/1/52 (TBA) | 1,864,961 |
1,000,000 | Fannie Mae, 3.500%, 7/1/37 (TBA) | 994,727 |
8,781 | Fannie Mae, 3.500%, 11/1/40 | 8,654 |
5,887 | Fannie Mae, 3.500%, 10/1/41 | 5,809 |
63,094 | Fannie Mae, 3.500%, 6/1/42 | 62,097 |
25,108 | Fannie Mae, 3.500%, 7/1/42 | 24,663 |
26,177 | Fannie Mae, 3.500%, 8/1/42 | 25,765 |
24,045 | Fannie Mae, 3.500%, 8/1/42 | 23,665 |
50,794 | Fannie Mae, 3.500%, 5/1/44 | 49,994 |
26,658 | Fannie Mae, 3.500%, 12/1/44 | 26,227 |
127,805 | Fannie Mae, 3.500%, 2/1/45 | 126,116 |
65,371 | Fannie Mae, 3.500%, 6/1/45 | 64,154 |
117,596 | Fannie Mae, 3.500%, 8/1/45 | 116,449 |
129,204 | Fannie Mae, 3.500%, 9/1/45 | 126,521 |
29,548 | Fannie Mae, 3.500%, 9/1/45 | 28,907 |
22,437 | Fannie Mae, 3.500%, 9/1/45 | 22,141 |
151,146 | Fannie Mae, 3.500%, 11/1/45 | 149,672 |
35,358 | Fannie Mae, 3.500%, 5/1/46 | 34,627 |
6,762 | Fannie Mae, 3.500%, 10/1/46 | 6,622 |
132,716 | Fannie Mae, 3.500%, 1/1/47 | 129,974 |
102,319 | Fannie Mae, 3.500%, 1/1/47 | 100,201 |
104,294 | Fannie Mae, 3.500%, 12/1/47 | 102,143 |
56,214 | Fannie Mae, 3.500%, 7/1/51 | 54,619 |
29,555 | Fannie Mae, 3.500%, 8/1/51 | 28,505 |
37,959 | Fannie Mae, 3.500%, 9/1/51 | 36,631 |
31,856 | Fannie Mae, 3.500%, 2/1/52 | 30,741 |
23,903 | Fannie Mae, 3.500%, 2/1/52 | 23,052 |
54,812 | Fannie Mae, 3.500%, 4/1/52 | 52,862 |
29,917 | Fannie Mae, 3.500%, 4/1/52 | 28,886 |
48,340 | Fannie Mae, 3.500%, 4/1/52 | 46,663 |
43,865 | Fannie Mae, 3.500%, 4/1/52 | 42,302 |
107,544 | Fannie Mae, 3.500%, 4/1/52 | 103,764 |
273,788 | Fannie Mae, 3.500%, 4/1/52 | 264,633 |
296,994 | Fannie Mae, 3.500%, 5/1/52 | 287,012 |
1,000,000 | Fannie Mae, 3.500%, 7/1/52 (TBA) | 963,164 |
108,317 | Fannie Mae, 4.000%, 10/1/40 | 109,682 |
13,162 | Fannie Mae, 4.000%, 12/1/40 | 13,328 |
1,943 | Fannie Mae, 4.000%, 11/1/41 | 1,963 |
2,616 | Fannie Mae, 4.000%, 12/1/41 | 2,644 |
71,032 | Fannie Mae, 4.000%, 1/1/42 | 71,922 |
The accompanying notes are an integral part of these financial statements. 27
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
22,312 | Fannie Mae, 4.000%, 1/1/42 | $ 22,592 |
1,555 | Fannie Mae, 4.000%, 1/1/42 | 1,575 |
17,970 | Fannie Mae, 4.000%, 2/1/42 | 18,195 |
22,342 | Fannie Mae, 4.000%, 4/1/42 | 22,622 |
47,184 | Fannie Mae, 4.000%, 5/1/42 | 47,777 |
65,250 | Fannie Mae, 4.000%, 7/1/42 | 66,069 |
145,747 | Fannie Mae, 4.000%, 8/1/42 | 148,241 |
47,042 | Fannie Mae, 4.000%, 8/1/43 | 47,431 |
44,599 | Fannie Mae, 4.000%, 11/1/43 | 44,968 |
5,045 | Fannie Mae, 4.000%, 4/1/46 | 5,065 |
33,381 | Fannie Mae, 4.000%, 7/1/46 | 33,613 |
57,092 | Fannie Mae, 4.000%, 7/1/46 | 57,347 |
33,428 | Fannie Mae, 4.000%, 8/1/46 | 33,661 |
8,224 | Fannie Mae, 4.000%, 11/1/46 | 8,260 |
17,431 | Fannie Mae, 4.000%, 11/1/46 | 17,571 |
41,590 | Fannie Mae, 4.000%, 4/1/47 | 41,847 |
39,721 | Fannie Mae, 4.000%, 4/1/47 | 39,973 |
18,968 | Fannie Mae, 4.000%, 6/1/47 | 19,071 |
10,072 | Fannie Mae, 4.000%, 6/1/47 | 10,099 |
16,891 | Fannie Mae, 4.000%, 6/1/47 | 16,996 |
25,339 | Fannie Mae, 4.000%, 6/1/47 | 25,441 |
11,744 | Fannie Mae, 4.000%, 7/1/47 | 11,793 |
29,524 | Fannie Mae, 4.000%, 7/1/47 | 29,658 |
52,375 | Fannie Mae, 4.000%, 12/1/47 | 52,455 |
27,072 | Fannie Mae, 4.000%, 8/1/48 | 27,091 |
11,708 | Fannie Mae, 4.000%, 7/1/50 | 11,619 |
78,008 | Fannie Mae, 4.000%, 11/1/50 | 77,268 |
30,325 | Fannie Mae, 4.000%, 12/1/50 | 29,995 |
15,465 | Fannie Mae, 4.000%, 1/1/51 | 15,295 |
19,892 | Fannie Mae, 4.000%, 2/1/51 | 19,673 |
22,059 | Fannie Mae, 4.000%, 4/1/51 | 21,820 |
53,837 | Fannie Mae, 4.000%, 6/1/51 | 53,235 |
10,785 | Fannie Mae, 4.000%, 7/1/51 | 10,720 |
57,555 | Fannie Mae, 4.000%, 7/1/51 | 57,103 |
133,208 | Fannie Mae, 4.000%, 7/1/51 | 131,674 |
192,027 | Fannie Mae, 4.000%, 8/1/51 | 189,813 |
13,227 | Fannie Mae, 4.500%, 11/1/40 | 13,633 |
2,208 | Fannie Mae, 4.500%, 4/1/41 | 2,282 |
114,223 | Fannie Mae, 4.500%, 5/1/41 | 117,734 |
100,537 | Fannie Mae, 4.500%, 5/1/41 | 103,898 |
44,395 | Fannie Mae, 4.500%, 5/1/41 | 45,883 |
222,910 | Fannie Mae, 4.500%, 6/1/44 | 230,209 |
82,440 | Fannie Mae, 4.500%, 5/1/49 | 84,389 |
56,771 | Fannie Mae, 4.500%, 4/1/50 | 58,108 |
4,000,000 | Fannie Mae, 4.500%, 7/1/52 (TBA) | 4,020,469 |
31,168 | Fannie Mae, 5.000%, 5/1/31 | 32,173 |
28 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
2,695 | Fannie Mae, 5.000%, 6/1/40 | $ 2,839 |
1,492 | Fannie Mae, 5.000%, 7/1/40 | 1,560 |
2,000,000 | Fannie Mae, 5.000%, 7/1/52 (TBA) | 2,042,891 |
2,755 | Fannie Mae, 5.500%, 9/1/33 | 2,921 |
3,395 | Fannie Mae, 5.500%, 12/1/34 | 3,564 |
11,368 | Fannie Mae, 5.500%, 10/1/35 | 12,145 |
2,159 | Fannie Mae, 6.000%, 9/1/29 | 2,311 |
515 | Fannie Mae, 6.000%, 10/1/32 | 542 |
2,133 | Fannie Mae, 6.000%, 11/1/32 | 2,245 |
5,702 | Fannie Mae, 6.000%, 11/1/32 | 5,998 |
7,006 | Fannie Mae, 6.000%, 4/1/33 | 7,441 |
2,476 | Fannie Mae, 6.000%, 5/1/33 | 2,606 |
3,637 | Fannie Mae, 6.000%, 6/1/33 | 3,827 |
10,338 | Fannie Mae, 6.000%, 7/1/34 | 11,005 |
1,505 | Fannie Mae, 6.000%, 9/1/34 | 1,595 |
424 | Fannie Mae, 6.000%, 7/1/38 | 446 |
593 | Fannie Mae, 6.500%, 4/1/29 | 657 |
1,224 | Fannie Mae, 6.500%, 1/1/32 | 1,286 |
787 | Fannie Mae, 6.500%, 2/1/32 | 841 |
1,421 | Fannie Mae, 6.500%, 3/1/32 | 1,495 |
2,411 | Fannie Mae, 6.500%, 4/1/32 | 2,531 |
1,483 | Fannie Mae, 6.500%, 8/1/32 | 1,573 |
872 | Fannie Mae, 6.500%, 8/1/32 | 917 |
16,654 | Fannie Mae, 6.500%, 7/1/34 | 17,802 |
495 | Fannie Mae, 7.000%, 11/1/29 | 496 |
410 | Fannie Mae, 7.000%, 9/1/30 | 411 |
320 | Fannie Mae, 7.000%, 7/1/31 | 324 |
1,243 | Fannie Mae, 7.000%, 1/1/32 | 1,358 |
290 | Fannie Mae, 7.500%, 2/1/31 | 315 |
2,057 | Fannie Mae, 8.000%, 10/1/30 | 2,241 |
483,730 | Federal Home Loan Mortgage Corp., 1.500%, 12/1/41 | 415,296 |
98,214 | Federal Home Loan Mortgage Corp., 1.500%, 1/1/42 | 84,320 |
98,213 | Federal Home Loan Mortgage Corp., 1.500%, 1/1/42 | 84,319 |
484,580 | Federal Home Loan Mortgage Corp., 1.500%, 1/1/42 | 416,025 |
194,940 | Federal Home Loan Mortgage Corp., 1.500%, 2/1/42 | 167,363 |
292,799 | Federal Home Loan Mortgage Corp., 1.500%, 2/1/42 | 251,379 |
98,263 | Federal Home Loan Mortgage Corp., 1.500%, 3/1/42 | 84,362 |
1,000,839 | Federal Home Loan Mortgage Corp., 2.500%, 5/1/51 | 903,928 |
282,307 | Federal Home Loan Mortgage Corp., 2.500%, 8/1/51 | 254,883 |
18,691 | Federal Home Loan Mortgage Corp., 3.000%, 10/1/29 | 18,662 |
10,013 | Federal Home Loan Mortgage Corp., 3.000%, 9/1/42 | 9,594 |
16,447 | Federal Home Loan Mortgage Corp., 3.000%, 9/1/42 | 15,760 |
87,893 | Federal Home Loan Mortgage Corp., 3.000%, 11/1/42 | 84,222 |
20,676 | Federal Home Loan Mortgage Corp., 3.000%, 1/1/43 | 19,806 |
56,767 | Federal Home Loan Mortgage Corp., 3.000%, 2/1/43 | 54,342 |
34,759 | Federal Home Loan Mortgage Corp., 3.000%, 2/1/43 | 33,307 |
The accompanying notes are an integral part of these financial statements. 29
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
30,502 | Federal Home Loan Mortgage Corp., 3.000%, 4/1/43 | $ 29,218 |
85,829 | Federal Home Loan Mortgage Corp., 3.000%, 4/1/43 | 82,181 |
33,142 | Federal Home Loan Mortgage Corp., 3.000%, 5/1/43 | 31,726 |
71,882 | Federal Home Loan Mortgage Corp., 3.000%, 6/1/46 | 68,314 |
27,998 | Federal Home Loan Mortgage Corp., 3.000%, 12/1/46 | 26,602 |
23,262 | Federal Home Loan Mortgage Corp., 3.000%, 12/1/46 | 22,084 |
99,536 | Federal Home Loan Mortgage Corp., 3.000%, 3/1/52 | 93,028 |
195,645 | Federal Home Loan Mortgage Corp., 3.000%, 3/1/52 | 182,686 |
456,957 | Federal Home Loan Mortgage Corp., 3.000%, 3/1/52 | 427,966 |
21,354 | Federal Home Loan Mortgage Corp., 3.500%, 7/1/29 | 21,404 |
6,378 | Federal Home Loan Mortgage Corp., 3.500%, 10/1/40 | 6,291 |
21,396 | Federal Home Loan Mortgage Corp., 3.500%, 5/1/42 | 21,078 |
19,207 | Federal Home Loan Mortgage Corp., 3.500%, 10/1/42 | 18,921 |
23,736 | Federal Home Loan Mortgage Corp., 3.500%, 10/1/42 | 23,383 |
95,966 | Federal Home Loan Mortgage Corp., 3.500%, 6/1/45 | 94,380 |
82,035 | Federal Home Loan Mortgage Corp., 3.500%, 10/1/45 | 80,543 |
140,547 | Federal Home Loan Mortgage Corp., 3.500%, 11/1/45 | 137,762 |
96,721 | Federal Home Loan Mortgage Corp., 3.500%, 7/1/46 | 95,530 |
149,287 | Federal Home Loan Mortgage Corp., 3.500%, 8/1/46 | 147,067 |
127,234 | Federal Home Loan Mortgage Corp., 3.500%, 8/1/46 | 125,360 |
171,636 | Federal Home Loan Mortgage Corp., 3.500%, 12/1/46 | 168,232 |
9,221 | Federal Home Loan Mortgage Corp., 3.500%, 6/1/47 | 9,024 |
116,677 | Federal Home Loan Mortgage Corp., 3.500%, 4/1/52 | 112,983 |
89,733 | Federal Home Loan Mortgage Corp., 3.500%, 4/1/52 | 86,598 |
33,876 | Federal Home Loan Mortgage Corp., 3.500%, 4/1/52 | 32,730 |
100,420 | Federal Home Loan Mortgage Corp., 4.000%, 11/1/41 | 101,773 |
65,790 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/42 | 66,680 |
9,323 | Federal Home Loan Mortgage Corp., 4.000%, 5/1/46 | 9,385 |
35,987 | Federal Home Loan Mortgage Corp., 4.000%, 6/1/46 | 36,274 |
43,293 | Federal Home Loan Mortgage Corp., 4.000%, 7/1/46 | 43,691 |
39,858 | Federal Home Loan Mortgage Corp., 4.000%, 8/1/46 | 40,078 |
11,971 | Federal Home Loan Mortgage Corp., 4.000%, 3/1/47 | 12,037 |
56,449 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 56,723 |
111,125 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 111,790 |
66,827 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 67,332 |
30,905 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 31,084 |
20,379 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 20,498 |
54,927 | Federal Home Loan Mortgage Corp., 4.000%, 5/1/47 | 55,252 |
11,340 | Federal Home Loan Mortgage Corp., 4.000%, 6/1/47 | 11,398 |
14,911 | Federal Home Loan Mortgage Corp., 4.000%, 7/1/47 | 14,996 |
46,759 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/47 | 46,884 |
26,332 | Federal Home Loan Mortgage Corp., 4.000%, 12/1/48 | 26,325 |
39,170 | Federal Home Loan Mortgage Corp., 4.000%, 12/1/48 | 39,153 |
12,917 | Federal Home Loan Mortgage Corp., 4.000%, 6/1/50 | 12,839 |
12,817 | Federal Home Loan Mortgage Corp., 4.000%, 2/1/51 | 12,722 |
30 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
37,046 | Federal Home Loan Mortgage Corp., 4.000%, 9/1/51 | $ 36,771 |
86,247 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/51 | 85,273 |
13,676 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/51 | 13,535 |
18,348 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/51 | 18,204 |
118,161 | Federal Home Loan Mortgage Corp., 4.500%, 7/1/49 | 119,210 |
169,880 | Federal Home Loan Mortgage Corp., 4.500%, 8/1/49 | 171,390 |
1,859 | Federal Home Loan Mortgage Corp., 5.000%, 9/1/38 | 1,960 |
2,044 | Federal Home Loan Mortgage Corp., 5.000%, 10/1/38 | 2,155 |
4,260 | Federal Home Loan Mortgage Corp., 5.000%, 5/1/39 | 4,492 |
10,480 | Federal Home Loan Mortgage Corp., 5.000%, 12/1/39 | 11,050 |
5,368 | Federal Home Loan Mortgage Corp., 5.500%, 9/1/33 | 5,762 |
6,879 | Federal Home Loan Mortgage Corp., 5.500%, 6/1/41 | 7,400 |
1,321 | Federal Home Loan Mortgage Corp., 6.000%, 11/1/32 | 1,391 |
2,348 | Federal Home Loan Mortgage Corp., 6.000%, 12/1/32 | 2,494 |
4,621 | Federal Home Loan Mortgage Corp., 6.000%, 2/1/33 | 5,049 |
2,605 | Federal Home Loan Mortgage Corp., 6.000%, 1/1/34 | 2,759 |
512 | Federal Home Loan Mortgage Corp., 6.000%, 12/1/36 | 546 |
1,365 | Federal Home Loan Mortgage Corp., 6.500%, 1/1/29 | 1,444 |
638 | Federal Home Loan Mortgage Corp., 6.500%, 4/1/31 | 685 |
3,138 | Federal Home Loan Mortgage Corp., 6.500%, 10/1/31 | 3,298 |
807 | Federal Home Loan Mortgage Corp., 6.500%, 2/1/32 | 857 |
4,835 | Federal Home Loan Mortgage Corp., 6.500%, 4/1/32 | 5,211 |
2,054 | Federal Home Loan Mortgage Corp., 6.500%, 7/1/32 | 2,197 |
674 | Federal Home Loan Mortgage Corp., 7.000%, 2/1/31 | 729 |
1,056 | Federal Home Loan Mortgage Corp., 7.000%, 4/1/32 | 1,135 |
935 | Federal Home Loan Mortgage Corp., 7.500%, 8/1/31 | 1,000 |
2,615,000 | Government National Mortgage Association, 2.500%, 7/20/52 (TBA) | 2,397,322 |
1,800,000 | Government National Mortgage Association, 3.000%, 7/20/52 (TBA) | 1,698,152 |
489,000 | Government National Mortgage Association, 4.000%, 7/20/52 (TBA) | 487,415 |
1,000,000 | Government National Mortgage Association, 4.500%, 7/20/52 (TBA) | 1,015,625 |
100,912 | Government National Mortgage Association I, 3.500%, 11/15/41 | 100,898 |
34,933 | Government National Mortgage Association I, 3.500%, 8/15/42 | 34,928 |
11,675 | Government National Mortgage Association I, 3.500%, 10/15/42 | 11,673 |
37,151 | Government National Mortgage Association I, 3.500%, 1/15/45 | 37,146 |
26,286 | Government National Mortgage Association I, 3.500%, 8/15/46 | 25,851 |
38,454 | Government National Mortgage Association I, 4.000%, 1/15/25 | 40,218 |
54,006 | Government National Mortgage Association I, 4.000%, 8/15/43 | 55,404 |
203,427 | Government National Mortgage Association I, 4.000%, 3/15/44 | 205,929 |
13,390 | Government National Mortgage Association I, 4.000%, 9/15/44 | 13,668 |
27,566 | Government National Mortgage Association I, 4.000%, 4/15/45 | 28,136 |
44,013 | Government National Mortgage Association I, 4.000%, 6/15/45 | 45,132 |
4,629 | Government National Mortgage Association I, 4.000%, 7/15/45 | 4,747 |
6,738 | Government National Mortgage Association I, 4.000%, 8/15/45 | 6,846 |
28,346 | Government National Mortgage Association I, 4.500%, 5/15/39 | 29,601 |
875 | Government National Mortgage Association I, 4.500%, 8/15/41 | 904 |
The accompanying notes are an integral part of these financial statements. 31
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
4,076 | Government National Mortgage Association I, 5.500%, 3/15/33 | $ 4,270 |
5,287 | Government National Mortgage Association I, 5.500%, 7/15/33 | 5,734 |
14,157 | Government National Mortgage Association I, 5.500%, 8/15/33 | 15,437 |
7,797 | Government National Mortgage Association I, 5.500%, 10/15/34 | 8,227 |
4,043 | Government National Mortgage Association I, 6.000%, 4/15/28 | 4,377 |
3,781 | Government National Mortgage Association I, 6.000%, 2/15/29 | 3,989 |
5,249 | Government National Mortgage Association I, 6.000%, 9/15/32 | 5,616 |
1,207 | Government National Mortgage Association I, 6.000%, 10/15/32 | 1,272 |
12,326 | Government National Mortgage Association I, 6.000%, 11/15/32 | 13,017 |
5,427 | Government National Mortgage Association I, 6.000%, 11/15/32 | 5,796 |
3,374 | Government National Mortgage Association I, 6.000%, 1/15/33 | 3,736 |
8,835 | Government National Mortgage Association I, 6.000%, 12/15/33 | 9,412 |
4,855 | Government National Mortgage Association I, 6.000%, 8/15/34 | 5,336 |
7,391 | Government National Mortgage Association I, 6.000%, 8/15/34 | 7,786 |
626 | Government National Mortgage Association I, 6.500%, 3/15/26 | 658 |
779 | Government National Mortgage Association I, 6.500%, 6/15/28 | 819 |
1,836 | Government National Mortgage Association I, 6.500%, 6/15/28 | 1,948 |
136 | Government National Mortgage Association I, 6.500%, 2/15/29 | 143 |
5,314 | Government National Mortgage Association I, 6.500%, 5/15/29 | 5,644 |
1,919 | Government National Mortgage Association I, 6.500%, 5/15/29 | 2,049 |
7,767 | Government National Mortgage Association I, 6.500%, 7/15/31 | 8,163 |
2,634 | Government National Mortgage Association I, 6.500%, 9/15/31 | 2,768 |
4,943 | Government National Mortgage Association I, 6.500%, 10/15/31 | 5,195 |
2,001 | Government National Mortgage Association I, 6.500%, 12/15/31 | 2,103 |
1,025 | Government National Mortgage Association I, 6.500%, 12/15/31 | 1,077 |
838 | Government National Mortgage Association I, 6.500%, 4/15/32 | 881 |
293 | Government National Mortgage Association I, 6.500%, 4/15/32 | 308 |
610 | Government National Mortgage Association I, 6.500%, 6/15/32 | 641 |
1,195 | Government National Mortgage Association I, 6.500%, 6/15/32 | 1,256 |
2,836 | Government National Mortgage Association I, 6.500%, 7/15/32 | 2,981 |
9,534 | Government National Mortgage Association I, 6.500%, 12/15/32 | 10,318 |
9,524 | Government National Mortgage Association I, 7.000%, 7/15/26 | 9,672 |
801 | Government National Mortgage Association I, 7.000%, 9/15/27 | 808 |
10,114 | Government National Mortgage Association I, 7.000%, 2/15/28 | 10,294 |
2,218 | Government National Mortgage Association I, 7.000%, 11/15/28 | 2,304 |
1,718 | Government National Mortgage Association I, 7.000%, 1/15/29 | 1,800 |
1,319 | Government National Mortgage Association I, 7.000%, 6/15/29 | 1,331 |
300 | Government National Mortgage Association I, 7.000%, 7/15/29 | 302 |
1,287 | Government National Mortgage Association I, 7.000%, 7/15/29 | 1,335 |
519 | Government National Mortgage Association I, 7.000%, 12/15/30 | 524 |
1,334 | Government National Mortgage Association I, 7.000%, 2/15/31 | 1,346 |
1,445 | Government National Mortgage Association I, 7.000%, 8/15/31 | 1,576 |
2,056 | Government National Mortgage Association I, 7.000%, 5/15/32 | 2,061 |
13 | Government National Mortgage Association I, 7.500%, 10/15/22 | 13 |
1,408 | Government National Mortgage Association I, 7.500%, 10/15/29 | 1,429 |
3,054 | Government National Mortgage Association II, 3.500%, 3/20/45 | 2,997 |
4,779 | Government National Mortgage Association II, 3.500%, 4/20/45 | 4,728 |
32 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — (continued) | ||
16,646 | Government National Mortgage Association II, 3.500%, 4/20/45 | $ 16,444 |
7,811 | Government National Mortgage Association II, 3.500%, 4/20/45 | 7,717 |
37,814 | Government National Mortgage Association II, 3.500%, 1/20/46 | 37,412 |
19,157 | Government National Mortgage Association II, 3.500%, 3/20/46 | 18,953 |
71,346 | Government National Mortgage Association II, 3.500%, 11/20/46 | 69,912 |
9,358 | Government National Mortgage Association II, 4.000%, 8/20/39 | 9,524 |
11,448 | Government National Mortgage Association II, 4.000%, 7/20/42 | 11,651 |
142,712 | Government National Mortgage Association II, 4.000%, 7/20/44 | 144,024 |
14,063 | Government National Mortgage Association II, 4.000%, 9/20/44 | 14,192 |
15,237 | Government National Mortgage Association II, 4.000%, 3/20/46 | 15,246 |
44,725 | Government National Mortgage Association II, 4.000%, 10/20/46 | 45,136 |
36,850 | Government National Mortgage Association II, 4.000%, 2/20/48 | 37,056 |
45,660 | Government National Mortgage Association II, 4.000%, 4/20/48 | 45,913 |
4,227 | Government National Mortgage Association II, 4.500%, 9/20/41 | 4,426 |
24,455 | Government National Mortgage Association II, 4.500%, 5/20/43 | 25,594 |
75,466 | Government National Mortgage Association II, 4.500%, 1/20/44 | 79,697 |
49,621 | Government National Mortgage Association II, 4.500%, 9/20/44 | 51,556 |
19,289 | Government National Mortgage Association II, 4.500%, 10/20/44 | 20,220 |
38,659 | Government National Mortgage Association II, 4.500%, 11/20/44 | 40,566 |
101,721 | Government National Mortgage Association II, 4.500%, 2/20/48 | 104,902 |
5,418 | Government National Mortgage Association II, 6.000%, 11/20/33 | 5,884 |
992 | Government National Mortgage Association II, 6.500%, 8/20/28 | 1,044 |
1,621 | Government National Mortgage Association II, 6.500%, 12/20/28 | 1,705 |
1,022 | Government National Mortgage Association II, 6.500%, 9/20/31 | 1,105 |
949 | Government National Mortgage Association II, 7.000%, 5/20/26 | 981 |
3,258 | Government National Mortgage Association II, 7.000%, 2/20/29 | 3,443 |
530 | Government National Mortgage Association II, 7.000%, 1/20/31 | 570 |
245 | Government National Mortgage Association II, 7.500%, 8/20/27 | 259 |
68 | Government National Mortgage Association II, 8.000%, 8/20/25 | 70 |
13,300,000(j) | U.S. Treasury Bills, 7/5/22 | 13,298,278 |
7,200,000(j) | U.S. Treasury Bills, 7/7/22 | 7,199,116 |
4,500,000(j) | U.S. Treasury Bills, 7/12/22 | 4,498,625 |
2,300,000(j) | U.S. Treasury Bills, 7/19/22 | 2,298,780 |
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS | ||
(Cost $78,773,075) | $ 77,939,921 | |
Shares | ||
SHORT TERM INVESTMENTS — 2.2% of Net Assets | ||
Open-End Fund — 2.2% | ||
3,480,620(k) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 3,480,620 |
$ 3,480,620 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $3,480,620) | $ 3,480,620 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 116.9% | ||
(Cost $194,550,309) | $181,034,681 |
The accompanying notes are an integral part of these financial statements. 33
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Change | |||||
in Net | |||||
Net | Unrealized | ||||
Dividend | Realized | Appreciation | |||
Income | Gain (Loss) | (Depreciation) | Value | ||
AFFILIATED ISSUER — 1.8% | |||||
CLOSED-END FUND — 1.8% of Net Assets | |||||
327,907(l) | Pioneer ILS Interval Fund | $— | $— | $49,186 | $ 2,747,859 |
TOTAL CLOSED-END FUND | |||||
(Cost $3,317,382) | $ 2,747,859 | ||||
TOTAL INVESTMENTS IN AFFILIATED ISSUER — 1.8% | |||||
(Cost $3,317,382) | $ 2,747,859 | ||||
OTHER ASSETS AND LIABILITIES — (18.7)% | $ (28,973,696) | ||||
NET ASSETS — 100.0% | $154,808,844 |
(TBA) | To Be Announced” Securities. |
bps | Basis Points. |
CMT | Constant Maturity Treasury Index. |
FREMF | Freddie Mac Multifamily Fixed-Rate Mortgage Loans. |
FRESB | Freddie Mac Multifamily Small Balance Certificates. |
ICE | Intercontinental Exchange. |
LIBOR | London Interbank Offered Rate. |
REIT | Real Estate Investment Trust. |
REMICS | Real Estate Mortgage Investment Conduits. |
SOFR | Secured Overnight Financing Rate. |
SOFR30A | Secured Overnight Financing Rate 30 Day Average. |
(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, 2022, the value of these securities amounted to $62,425,581, or 40.3% of net assets. |
(a) | Floating rate note. Coupon rate, reference index and spread shown at June 30, 2022. |
(b) | 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, 2022. |
(c) | The interest rate is subject to change periodically. The interest rate and/or reference index and spread shown at June 30, 2022. |
(d) | Security represents the interest-only portion payments on a pool of underlying mortgages or mortgage-backed securities. |
(e) | Security is perpetual in nature and has no stated maturity date. |
(f) | Consists of Revenue Bonds unless otherwise indicated. |
(g) | Represents a General Obligation Bond. |
(h) | Non-income producing security. |
(i) | Issued as preference shares. |
(j) | Security issued with a zero coupon. Income is recognized through accretion of discount. |
(k) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
(l) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by the Amundi Asset Management US, Inc. (the “Adviser”). |
* | Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically re-determined 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 or SOFR, (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, 2022. |
† | Amount rounds to less than 0.1%. |
+ | Security is valued using significant unobservable inputs to determine its value. |
# | Securities are restricted as to resale. |
Restricted Securities | Acquisition date | Cost | Value |
Lorenz Re 2019 | 7/10/2019 | $8,066 | $2,984 |
% of Net assets | 0.0%† | ||
† Amount rounds to less than 0.1%. |
34 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
FUTURES CONTRACTS
FIXED INCOME INDEX FUTURES CONTRACTS
Number of | Expiration | Notional | Market | Unrealized | |
Contracts Long | Description | Date | Amount | Value | (Depreciation) |
12 | U.S. 2 Year Note (CBT) | 9/30/22 | $ 2,534,497 | $ 2,520,188 | $ (14,309) |
184 | U.S. 5 Year Note (CBT) | 9/30/22 | 20,847,280 | 20,654,000 | (193,280) |
67 | U.S. Ultra Bond (CBT) | 9/21/22 | 10,542,517 | 10,341,031 | (201,486) |
$33,924,294 | $33,515,219 | $(409,075) |
Unrealized | |||||
Number of | Expiration | Notional | Market | Appreciation | |
Contracts Short | Description | Date | Amount | Value | (Depreciation) |
97 | U.S. 10 Year Note (CBT) | 9/21/22 | $(11,630,981) | $(11,497,531) | $ 133,450 |
61 | U.S. 10 Year Ultra Bond (CBT) | 9/21/22 | (7,884,462) | (7,769,875) | 114,587 |
4 | U.S. Long Bond (CBT) | 9/21/22 | (537,929) | (554,500) | (16,571) |
$(20,053,372) | $(19,821,906) | $ 231,466 | |||
TOTAL FUTURES CONTRACTS | $ 13,870,922 | $ 13,693,313 | $(177,609) |
SWAP CONTRACTS
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACTS – BUY PROTECTION
Notional | Pay/ | Annual | Expiration | Premiums | Unrealized | Market | |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | Paid | Appreciation | Value |
19,305,000 | Markit CDX North America | ||||||
High Yield Series 38 | Pay | 5.00% | 6/20/27 | $360,450 | $170,652 | $531,102 | |
TOTAL CENTRALLY CLEARED CREDIT DEFAULT | |||||||
SWAP CONTRACTS – BUY PROTECTION | $360,450 | $170,652 | $531,102 | ||||
TOTAL SWAP CONTRACTS | $360,450 | $170,652 | $531,102 |
(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) Pays quarterly.
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022 were as follows:
Purchases | Sales | |
Long-Term U.S. Government Securities | $ — | $ 6,889,337 |
Other Long-Term Securities | $46,338,188 | $33,474,954 |
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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized depreciation on investments based on cost for federal tax purposes of $197,332,667 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 1,668,099 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (14,864,733) |
Net unrealized depreciation | $(13,196,634) |
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. 35
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
The following is a summary of the inputs used as of June 30, 2022, in valuing the Portfolio’s investments:
Level 1 | Level 2 | Level 3 | Total | |
Senior Secured Floating Rate Loan Interests | $ — | $ 1,047,279 | $ — | $ 1,047,279 |
Asset Backed Securities | — | 9,479,109 | — | 9,479,109 |
Collateralized Mortgage Obligations | — | 26,225,832 | — | 26,225,832 |
Commercial Mortgage-Backed Securities | — | 13,051,439 | — | 13,051,439 |
Corporate Bonds | — | 45,803,176 | — | 45,803,176 |
Convertible Preferred Stocks | 2,347,857 | — | — | 2,347,857 |
Municipal Bonds | — | 1,285,475 | — | 1,285,475 |
Insurance-Linked Securities | ||||
Reinsurance Sidecars | ||||
Multiperil – Worldwide | — | — | 2,984 | 2,984 |
Foreign Government Bond | — | 370,989 | — | 370,989 |
U.S. Government and Agency Obligations | — | 77,939,921 | — | 77,939,921 |
Open-End Fund | 3,480,620 | — | — | 3,480,620 |
Affiliated Closed-End Fund | — | 2,747,859 | — | 2,747,859 |
Total Investments in Securities | $5,828,477 | $177,951,079 | $2,984 | $183,782,540 |
Other Financial Instruments | ||||
Net unrealized depreciation on futures contracts | $ (177,609) | $ — | $ — | $ (177,609) |
Swap contracts, at value | — | 531,102 | — | 531,102 |
Total Other Financial Instruments | $ (177,609) | $ 531,102 | $ — | $ 353,493 |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
Insurance- | |
Linked | |
Securities | |
Balance as of 12/31/21 | $ 844 |
Realized gain (loss)(1) | (9,548) |
Changed in unrealized appreciation (depreciation)(2) | 11,713 |
Accrued discounts/premiums | (25) |
Purchases | — |
Sales | — |
Transfers in to Level 3* | — |
Transfers out of Level 3* | — |
Balance as of 6/30/22 | $ 2,984 |
(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. |
* | Transfers are calculated on the beginning of period value. For the six months ended June 30, 2022, 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, 2022: $2,165
36 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $194,550,309) | $ 181,034,681 |
Investments in affiliated issuers, at value (cost $3,317,382) | 2,747,859 |
Cash | 279,581 |
Futures collateral | 938,047 |
Swaps collateral | 635,318 |
Variation margin for futures contracts | 123,062 |
Variation margin for centrally cleared swap contracts | 42,838 |
Swap contracts, at value (net premiums paid $360,450) | 531,102 |
Receivables — | |
Investment securities sold | 13,909,298 |
Portfolio shares sold | 787 |
Dividends | 4,839 |
Interest | 773,824 |
Other assets | 320 |
Total assets | $ 201,021,556 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 46,028,046 |
Portfolio shares repurchased | 112,759 |
Trustees' fees | 303 |
Due to affiliates | 12,725 |
Accrued expenses | 58,879 |
Total liabilities | $ 46,212,712 |
NET ASSETS: | |
Paid-in capital | $ 173,601,251 |
Distributable earnings (loss) | (18,792,407) |
Net assets | $ 154,808,844 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $27,190,218/2,786,459 shares) | $ 9.76 |
Class ll (based on $127,618,626/13,049,575 shares) | $ 9.78 |
The accompanying notes are an integral part of these financial statements. 37
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Interest from unaffiliated issuers (net of foreign taxes withheld $970) | $ 2,146,961 | |
Dividends from unaffiliated issuers | 72,191 | |
Total Investment Income | $ 2,219,152 | |
EXPENSES: | ||
Management fees | $ 332,100 | |
Administrative expenses | 20,827 | |
Distribution fees | ||
Class ll | 171,257 | |
Custodian fees | 4,760 | |
Professional fees | 38,624 | |
Printing expense | 10,926 | |
Pricing fees | 7,153 | |
Trustees' fees | 4,274 | |
Miscellaneous | 958 | |
Total expenses | $ 590,879 | |
Less fees waived and expenses reimbursed by the Adviser | (23,668) | |
Net expenses | $ 567,211 | |
Net investment income | $ 1,651,941 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ (4,225,602) | |
Futures contracts | (2,149,037) | |
Swap contracts | 1,517,654 | |
Other assets and liabilities denominated in foreign currencies | (15,082) | $ (4,872,067) |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(16,086,627) | |
Investments in affiliated issuers | 49,186 | |
Futures contracts | (252,291) | |
Swap contracts | 189,763 | |
Other assets and liabilities denominated in foreign currencies | 7,966 | $ (16,092,003) |
Net realized and unrealized gain (loss) on investments | $ (20,964,070) | |
Net decrease in net assets resulting from operations | $ (19,312,129) |
38 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 1,651,941 | $ 3,601,523 |
Net realized gain (loss) on investments | (4,872,067) | 3,457,641 |
Change in net unrealized appreciation (depreciation) on investments | (16,092,003) | (6,697,940) |
Net increase (decrease) in net assets resulting from operations | $ (19,312,129) | $ 361,225 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($0.31 and $0.55 per share, respectively) | $ (859,248) | $ (1,918,872) |
Class ll ($0.30 and $0.52 per share, respectively) | (3,884,378) | (6,563,394) |
Total distributions to shareowners | $ (4,743,626) | $ (8,482,266) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 6,792,827 | $ 38,130,218 |
Reinvestment of distributions | 4,743,626 | 8,475,289 |
Cost of shares repurchased | (16,123,269) | (42,720,862) |
Net increase (decrease) in net assets resulting from Portfolio | ||
share transactions | $ (4,586,816) | $ 3,884,645 |
Net decrease in net assets | $ (28,642,571) | $ (4,236,396) |
NET ASSETS: | ||
Beginning of period | $ 183,451,415 | $187,687,811 |
End of period | $ 154,808,844 | $183,451,415 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class l | ||||
Shares sold | 174,673 | $ 1,835,299 | 973,464 | $ 11,323,635 |
Reinvestment of distributions | 87,117 | 859,248 | 168,551 | 1,918,872 |
Less shares repurchased | (410,784) | (4,383,204) | (2,205,541) | (25,454,016) |
Net decrease | (148,994) | $ (1,688,657) | (1,063,526) | $(12,211,509) |
Class ll | ||||
Shares sold | 466,244 | $ 4,957,528 | 2,327,587 | $ 26,806,583 |
Reinvestment of distributions | 393,972 | 3,884,378 | 574,784 | 6,556,417 |
Less shares repurchased | (1,120,400) | (11,740,065) | (1,504,575) | (17,266,846) |
Net increase (decrease) | (260,184) | $ (2,898,159) | 1,397,796 | $ 16,096,154 |
The accompanying notes are an integral part of these financial statements. 39
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 11.27 | $ 11.78 | $11.17 | $10.56 | $11.04 | $ 10.96 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.11 | 0.24 | 0.30 | 0.33 | 0.33 | 0.29 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.31) | (0.20) | 0.65 | 0.64 | (0.42) | 0.14 |
Net increase (decrease) from | ||||||
investment operations | $ (1.20) | $ 0.04 | $ 0.95 | $ 0.97 | $ (0.09) | $ 0.43 |
Distributions to shareowners: | ||||||
Net investment income | (0.10) | (0.25) | (0.34) | (0.36) | (0.36) | (0.31) |
Net realized gain | (0.21) | (0.30) | — | — | (0.03) | (0.04) |
Total distributions | $ (0.31) | $ (0.55) | $ 0.34) | $(0.36) | $ (0.39) | $ (0.35) |
Net increase (decrease) in net asset value | $ (1.51) | (0.51) | 0.61 | 0.61 | (0.48) | $ 0.08 |
Net asset value, end of period | $ 9.76 | $ 11.27 | $11.78 | $11.17 | $10.56 | $ 11.04 |
Total return(b) | (10.62)%(c) | 0.38% | 8.70% | 9.27% | (0.84)% | 4.01% |
Ratio of net expenses to average net assets | 0.48%(d) | 0.57% | 0.59% | 0.59% | 0.61% | 0.61% |
Ratio of net investment income (loss) to average | ||||||
net assets | 2.19%(d) | 2.12% | 2.68% | 3.03% | 3.07% | 2.59% |
Portfolio turnover rate | 31%(c) | 61% | 59% | 48% | 44% | 42% |
Net assets, end of period (in thousands) | $27,190 | $33,091 | $47,089 | $49,115 | $46,125 | $49,672 |
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 | 0.51%(d) | 0.60% | 0.62% | 0.62% | 0.64% | 0.61% |
Net investment income (loss) to average | ||||||
net assets | 2.16%(d) | 2.09% | 2.65% | 3.00% | 3.04% | 2.59% |
(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.
40 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 11.30 | $ 11.80 | $ 11.19 | $ 10.59 | $ 11.07 | $ 10.99 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.10 | 0.21 | 0.28 | 0.31 | 0.30 | 0.26 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.32) | (0.19) | 0.65 | 0.62 | (0.42) | 0.15 |
Net increase (decrease) from | ||||||
investment operations | $ (1.22) | $ 0.02 | $ 0.93 | $ 0.93 | $ (0.12) | $ 0.41 |
Distributions to shareowners: | ||||||
Net investment income | (0.09) | (0.22) | (0.32) | (0.33) | (0.33) | (0.29) |
Net realized gain | (0.21) | (0.30) | — | — | ( 0.03) | (0.04) |
Total distributions | $ (0.30) | $ (0.52) | $ (0.32) | $ (0.33) | $ (0.36) | $(0.33) |
Net increase (decrease) in net asset value | $(1.52) | $(0.50) | $ 0.61 | $0.60 | $(0.48) | 0.08 |
Net asset value, end of period | 9.78 | 11.30 | $ 11.80 | 11.19 | 10.59 | 11.07 |
Total return(b) | (10.79)%(c) | 0.22% | 8.42% | 8.90% | (1.08)% | 3.74% |
Ratio of net expenses to average net assets | 0.73%(d) | 0.82% | 0.84% | 0.84% | 0.86% | 0.86% |
Ratio of net investment income (loss) to average | ||||||
net assets | 1.95%(d) | 1.86% | 2.43% | 2.79% | 2.83% | 2.35% |
Portfolio turnover rate | 31%(c) | 61% | 59% | 48% | 44% | 42% |
Net assets, end of period (in thousands) | $127,619 | $150,361 | $140,599 | $ 140,895 | $125,865 | $122,239 |
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 | 0.76%(d) | 0.85% | 0.87% | 0.87% | 0.89% | 0.86% |
Net investment income (loss) to average | ||||||
net assets | 1.92%(d) | 1.83% | 2.40% | 2.76% | 2.80% | 2.35% |
(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. 41
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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, 2023. 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 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 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.
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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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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, 2022, 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 valuation 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.
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.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
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, 2021, 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.
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $5,459,488 |
Long-term capital gains | 3,022,778 |
Total | $8,482,266 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 424,601 |
Undistributed long-term capital gains | 3,062,893 |
Net unrealized appreciation | 1,775,854 |
Total | $5,263,348 |
The differences between book-basis and tax-basis net 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.
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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 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio's assets can decline as can the value of the Portfolio's distributions.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
Withholding and other non-U.S. taxes may decrease the Portfolio's return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, with respect to the issuer’s capacity to pay interest and repay principal., as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 with respect to the issuer’s capacity to pay interest and repay principal. These securities involve greater risk of loss, are subject to greater price volatility, and may be less liquid and more difficult to value, 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) or SOFR (Secured Overnight Financing Rate). ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Markets are developing in response to these new rates, but questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic value transfer at the time of transition remain a significant concern. The effect of any changes to - or discontinuation of - LIBOR on the Portfolio will vary depending on, among other things, existing fallback provisions in individual contracts and whether, how, and when industry participants develop and widely adopt new reference rates and fallbacks for both legacy and new products and instruments. In March, 2022, the U.S. federal government enacted legislation to establish a process for replacing LIBOR in existing contracts that do not already provide for the use of a clearly defined or practicable replacement benchmark rate as described in the legislation. Generally speaking, for contracts that do not contain a fallback provision as described in the legislation, a benchmark replacement recommended by the Federal Reserve Board will effectively automatically replace the USD LIBOR benchmark in the contract after June 30, 2023. The recommended benchmark replacement will be based on the Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York, including any recommended spread adjustment and benchmark replacement conforming changes. The process of transitioning from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that rely on LIBOR. The transition may also result in a reduction in the value of certain LIBOR-based investments held by the Portfolio or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses for the Portfolio. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could occur at any time.
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 the Portfolio’s
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custodian and accounting agent, and 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.
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, 2022 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, 2022, is listed in the Schedule of Investments.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
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, 2022, 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, 2022, was $18,478,893. Open futures contracts outstanding at June 30, 2022, 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 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.
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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, 2022, 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, 2022, was $(538,790). Open credit default swap contracts at June 30, 2022, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees payable under the Portfolio's Investment Management Agreement with the Adviser 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, 2022, 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.
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, 2022, the Adviser waived $23,668 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 taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, such as litigation) 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, 2023. 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, 2022, 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 $10,127 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $4,274 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $303.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $2,598 in distribution fees payable to the Distributor at June 30, 2022.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
6. 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, 2022, the Portfolio had no unfunded loan commitments outstanding.
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, 2022, 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 | $ — | $531,102 | $ — | $ — | $ — |
Total Value | $ — | $531,102 | $ — | $ — | $ — |
Liabilities | |||||
Net unrealized depreciation | |||||
on futures contracts | $177,609 | $ — | $ — | $ — | $ — |
Total Value | $177,609 | $ — | $ — | $ — | $ — |
50
Pioneer Bond VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2022 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 | $(2,149,037) | $ — | $ — | $ — | $ — |
Swap contracts | — | 1,517,654 | — | — | — |
Total Value | $(2,149,037) | $1,517,654 | $ — | $ — | $ — |
Change in Net Unrealized | |||||
Appreciation | |||||
(Depreciation) on | |||||
Futures contracts | $ (252,291) | $ — | $ — | $ — | $ — |
Swap contracts | — | 189,763 | — | — | — |
Total Value | $ (252,291) | $ 189,763 | $ — | $ — | $ — |
8. Affiliated Issuers
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, 2022, the value of the Portfolio’s investment in affiliated issuers was $2,747,859, which represents 1.8% of the Portfolio’s net assets.
Transactions in affiliated issuers by the Portfolio for the six months ended June 30, 2022 were as follows:
Change in | Net Realized | Dividends | |||||
Net Unrealized | Gain/(Loss) | Received and | |||||
Appreciation/ | From | Reinvested | Shares | ||||
Value at | (Depreciation) | Investments | from | held at | Value at | ||
Name of the | December 31, | Purchases | from Investments in | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2021 | Costs | Affiliated Issuers | Issuers | Affiliated Issuers | 2022 | 2022 |
Pioneer ILS | |||||||
Interval Fund | $2,698,673 | $ — | $49,186 | $ — | $ — | 327,907 | $2,747,859 |
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 Bond 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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.
52
Pioneer Variable Contracts Trust | Trustees |
Officers | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) Inc. |
53
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.
19617-16-0822
Pioneer Variable Contracts Trust
Pioneer Equity Income
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22 |
Sector Distribution
(As a percentage of total investments)*
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | Verizon Communications, Inc. | 2.18% |
2. | Sun Life Financial, Inc. | 2.15 |
3. | JPMorgan Chase & Co. | 2.10 |
4. | Pfizer, Inc. | 2.05 |
5. | Eli Lilly & Co. | 1.81 |
* | Excludes short-term 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 6/30/22
Prices and Distributions
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class I | $14.40 | $19.21 |
Class II | $14.70 | $19.55 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 – 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.1400 | $ — | $2.0963 |
Class II | $0.1200 | $ — | $2.0963 |
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 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.
Average Annual Total Returns
(As of June 30, 2022)
Russell 1000 | |||
Class I | Class II | Value Index | |
10 Years | 10.34% | 10.07% | 10.50% |
5 Years | 6.66% | 6.41% | 7.17% |
1 Year | -5.15% | -5.34% | -6.82% |
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.
2
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 |
(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 Equity Income VCT Portfolio
Based on actual returns from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 868.60 | $ 867.90 |
Expenses Paid During Period* | $ 3.57 | $ 4.72 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.77% and 1.02% 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 Equity Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,020.98 | $1,019.74 |
Expenses Paid During Period* | $ 3.86 | $ 5.11 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.77% and 1.02% 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 Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
In the following interview, Sammi Truong and John A. Carey discuss 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, 2022. 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 Ms. 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, 2022? |
A: | Pioneer Equity Income VCT Portfolio’s Class I shares returned -13.14% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -13.21%, while the Portfolio’s benchmark, the Russell 1000 Value Index (the Russell Index), returned -12.86%. |
Q: | How would you describe the market for equities during the six-month period ended June 30, 2022, particularly for the types of equities deemed appropriate for the Portfolio? |
A: | This was a tumultuous six-month period, with the US equity market posting a decline of 20%, the worst six-months return to start a calendar year since 1970, as measured by the Standard & Poor’s 500 Index (the S&P 500). Soaring inflation, supply chain constraints, and geopolitical tensions combined to pressure the outlook for the global economy over the six-month period. The emergence of more virulent Omicron variants of the COVID-19 virus continued to wreak havoc on the global supply chains. The US saw its third wave of infections, which delayed the economic reopening story and created further labor shortages, thus fueling wage growth. China also saw the number of COVID-19 infections rise and, with its “zero-COVID” policy, the government put the City of Shanghai in lockdown for over two months, which dented consumption and caused further constraints on manufacturing and trade. |
Russia’s invasion of Ukraine during the late winter further exacerbated inflationary pressures and increased the risk of an economic slowdown. Given the importance of Russia and Ukraine in the export markets for wheat, fertilizer, oil, and gas, the detrimental effects of the war and the coordinated sanctions placed on Russia by the US and some European nations led to a spike in a number of commodity prices. In fact, US inflation data reached a level not seen in the last 40 years, and consumer confidence declined.
In order to combat persistent inflation, the US Federal Reserve (Fed) increased the federal funds rate target range three times in the first half of the calendar year, with more aggressive hikes expected to follow. The Fed’s actions led value stocks to outperform growth stocks for the six-month period, as measured by the Portfolio’s benchmark, the Russell Index, and the Russell 1000 Growth Index, which returned -12.86% and -20.94%, respectively. Growth stocks have typically been more susceptible to increases in the Fed’s discount rate, given the higher price-to-earnings ratios of growth-oriented
* | Note to shareholders: Mr. Hunnewell retired from Amundi US on July 31, 2022, and is no longer a manager on the Portfolio. |
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.
4
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
companies, as well as their greater dependence on future earnings growth. (The price-to-earnings, or P/E ratio, measures the price of a stock divided by the company’s earnings per share.)
In the uncertain economic environment, investors gravitated towards higher-quality names and showed a preference for dividend-paying** stocks.
Q: | Could you please discuss the main factors affecting the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2022, and any investments or strategies significantly helping or hurting benchmark-relative returns? |
A: | During the period, sector allocation was a modest positive contributor to the Portfolio’s relative returns versus its benchmark, the Russell Index. The Portfolio’s overweight to the strong-performing energy sector and underweight to the poor-performing financials sector aided relative performance for the period. Those positives were partially offset by the Portfolio’s overweight to the poor-performing information technology sector, and underweight to the outperforming health care sector. |
Individual holdings that were negative attributors to the Portfolio’s benchmark-relative returns during the period included Gorman-Rupp, a provider of industrial pumps, saw its margins pressured by rising input costs, which the company has not been able fully to pass through to customers, and so the position detracted from the Portfolio’s benchmark-relative performance. Alexandria Real Estate, a real estate investment trust, saw its share price decline over the period on concerns that increased interest rates will put a crimp in biotech funding, and in turn will have a negative effect on demand for the company’s life science laboratory spaces. The Portfolio’s positions in ExxonMobil (energy) and Johnson & Johnson (pharmaceutical) represented underweight allocations versus the benchmark, and so they were negative relative performance attributors over the six-month period.
Individual stocks that were positive attributors to the Portfolio’s benchmark-relative performance during the period included refiners Marathon Petroleum and Valero Energy, the performance of which benefited from low global inventories of refined products as well as their input cost advantage over European refiners, which faced a spike in the natural-gas prices. Eli Lilly, in health care, was also among the best relative performers for the Portfolio during the six-month period, as the company received approval for a drug that could treat both Type-2 diabetes and obesity. Reliance Steel & Aluminum, in materials, a beneficiary of commodity-price inflation, was another positive attributor to the Portfolio’s relative returns.
Q: | Could you highlight some of the more notable changes you made to the Portfolio during the six-month period ended June 30, 2022? |
A: | Over the six-month period, we added 12 positions to the Portfolio, and exited 13 positions. In health care, where we were active, we exited Gilead Sciences, Quest Diagnostics, and Merck KGaA, and initiated positions in Baxter and |
** Dividends are not guaranteed.
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
Cardinal Health. Gilead Sciences experienced pipeline setbacks that we believe could limit the company’s growth potential. Quest Diagnostics, we thought, was fully valued, as increased availability of COVID-19 rapid tests could temper demand for the company’s profitable molecular lab tests. Merck KGaA, in our view, has more limited growth potential as benefits for its bioprocessing business driven by COVID-19 wane. Baxter recently acquired a manufacturer of health-care equipment and devices, and we see opportunities for cost synergies from the acquisition to potentially improve margins. With regard to Cardinal Health, we view the company as undervalued, with opportunities to recapture some of its costs through negotiation of contracts.
In information technology, we exited the Portfolio’s position in Accenture, due to growth durability concerns, and added three names in the sector: International Business Machines (IBM), which has been undergoing a transformation that we think could lead to an improved growth profile; and Microchip Technology and National Instruments, both of which, we think, have opportunities to potentially profit from strong semiconductor demand.
We reduced the Portfolio’s weighting in energy during the period, exiting positions in Marathon Petroleum, Valero Energy, and Schlumberger, given what we saw as their full valuations.
In industrials, we traded out of Caterpillar, Leidos Holdings, Honeywell, and Fastenal, where we saw less potential for growth, and established a Portfolio position in Raytheon Technologies. We believe Raytheon Technologies could benefit from a recovery in the commercial aerospace segment.
Q: | Did the Portfolio have any derivatives exposure during the six-month period ended June 30, 2022? |
A: | No, the Portfolio held no derivatives during the period. |
Q: | What is your outlook for equities heading into the second half of the Portfolio’s fiscal year? |
A: | Geopolitical and macroeconomic risks remain elevated as the conflict between Russia and Ukraine drags on, contributing significantly to inflationary pressures, and a more aggressive response from the Fed with regard to tightening of monetary policy. We believe that the Fed’s achieving a “soft landing” for the US economy will be difficult and that the risks of a recession in late 2022 or 2023 have increased. |
After more than a decade of low interest rates and inflation following the 2008/2009 global financial crisis, we anticipate a shift to a higher-interest-rate and inflationary environment. That could contribute to a sustained resurgence of the value segment within equities, similar to what we experienced in the latter part of 2020 through the first five months of 2021. In addition, we expect that a rising-rate environment could have a negative influence on stocks of mega-cap growth companies, as higher interest rates have tended to increase the cost of capital for companies in the growth
6
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
segment. (Cost of capital represents a calculation of the minimum return a company would need to justify a capital-budgeting project, such as building a new factory.)
In addition, we continue to believe that the global economy should gradually recover, and that the scarcity premium (or increases in valuations based on limited supply) for shares of companies that have been able to demonstrate solid revenues and margins during times of lackluster economic growth in the years following the global financial crisis may diminish. That, in turn, could further contribute to a market rotation into value stocks.
Looking at a rising-rate environment going forward, we believe our focus on investing the Portfolio in what we consider to be quality value companies may be rewarded as we move deeper into 2022. Typically, investors have tended to rotate from low-quality into high-quality stocks in the months following the first interest-rate hikes. Given where we are in the current cycle, we think we may be entering a phase where shares of higher-quality companies could benefit, and those are the types of companies in which we seek to invest the Portfolio. Additionally, as market participants have become more focused on assets featuring higher yields in a rising-rate environment, we believe dividend-paying companies may become more attractive to investors, due to the return on capital that dividends represent; that factor could provide a tailwind for the Portfolio’s performance as 2022 progresses.
We have positioned the Portfolio with overweight exposures versus the Russell Index to those cyclical sectors that we believe could do well during an economic recovery, including materials and consumer discretionary. Albeit at a slight underweight relative to the benchmark, the Portfolio’s largest absolute sector weight is in financials as of period-end, as we believe companies in that sector, such as lenders, could benefit from higher interest rates.
To balance the cyclical positioning, given the uncertain trajectory of the economic recovery, the Portfolio also has exposure to some of the traditionally more defensive areas of the market, such as consumer staples and health care. Lastly, we have maintained the Portfolio’s benchmark-relative underweight allocation to the interest-rate-sensitive utilities sector, due to the prospect of rising rates.
7
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (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,
armed conflict including Russia's
military invasion of Ukraine, sanctions
against Russia, other nations or
individuals or companies and possible
countermeasures, 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.
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.
8
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) |
Shares | Value | |
UNAFFILIATED ISSUERS — 99.7% | ||
COMMON STOCKS — 99.5% of Net Assets | ||
Aerospace & Defense — 1.4% | ||
14,242 | Raytheon Technologies Corp. | $ 1,368,799 |
Total Aerospace & Defense | $ 1,368,799 | |
Air Freight & Logistics — 0.7% | ||
6,687 | CH Robinson Worldwide, Inc. | $ 677,861 |
Total Air Freight & Logistics | $ 677,861 | |
Auto Components — 1.0% | ||
29,080 | BorgWarner, Inc. | $ 970,400 |
Total Auto Components | $ 970,400 | |
Automobiles — 1.1% | ||
52,095 | Ford Motor Co. | $ 579,817 |
20,267 | Honda Motor Co., Ltd. (A.D.R.) | 489,448 |
Total Automobiles | $ 1,069,265 | |
Banks — 6.9% | ||
49,789 | Bank of America Corp. | $ 1,549,931 |
9,568 | Citizens Financial Group, Inc. | 341,482 |
17,738 | JPMorgan Chase & Co. | 1,997,476 |
8,267 | M&T Bank Corp. | 1,317,677 |
8,658 | PNC Financial Services Group, Inc. | 1,365,973 |
Total Banks | $ 6,572,539 | |
Capital Markets — 6.4% | ||
15,887 | Bank of New York Mellon Corp. | $ 662,647 |
21,835 | Charles Schwab Corp. | 1,379,535 |
6,193 | Morgan Stanley | 471,039 |
11,783 | Northern Trust Corp. | 1,136,824 |
11,022 | Raymond James Financial, Inc. | 985,477 |
10,838 | State Street Corp. | 668,163 |
6,841 | T Rowe Price Group, Inc. | 777,206 |
Total Capital Markets | $ 6,080,891 | |
Chemicals — 1.5% | ||
8,426 | Celanese Corp. | $ 990,982 |
7,604 | Corteva, Inc. | 411,680 |
Total Chemicals | $ 1,402,662 | |
Commercial Services & Supplies — 0.8% | ||
5,922 | MSA Safety, Inc. | $ 716,977 |
Total Commercial Services & Supplies | $ 716,977 | |
Containers & Packaging — 0.4% | ||
19,610 | Graphic Packaging Holding Co. | $ 402,005 |
Total Containers & Packaging | $ 402,005 | |
Diversified Telecommunication Services — 3.7% | ||
44,685 | AT&T, Inc. | $ 936,598 |
11,602 | BCE, Inc. | 570,586 |
40,913 | Verizon Communications, Inc. | 2,076,335 |
Total Diversified Telecommunication Services | $ 3,583,519 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Electric Utilities — 2.8% | ||
2,909 | American Electric Power Co., Inc. | $ 279,089 |
14,755 | Eversource Energy | 1,246,355 |
15,295 | NextEra Energy, Inc. | 1,184,751 |
Total Electric Utilities | $ 2,710,195 | |
Electrical Equipment — 0.8% | ||
10,104 | Emerson Electric Co. | $ 803,672 |
Total Electrical Equipment | $ 803,672 | |
Electronic Equipment, Instruments & Components — 2.2% | ||
2,747 | CDW Corp. | $ 432,817 |
12,031 | Corning, Inc. | 379,097 |
9,661 | National Instruments Corp. | 301,713 |
9,040 | TE Connectivity, Ltd. | 1,022,876 |
Total Electronic Equipment, Instruments & Components | $ 2,136,503 | |
Energy Equipment & Services — 0.6% | ||
20,940 | Baker Hughes Co. | $ 604,538 |
Total Energy Equipment & Services | $ 604,538 | |
Equity Real Estate Investment Trusts (REITs) — 5.5% | ||
11,805 | Alexandria Real Estate Equities, Inc. | $ 1,712,079 |
8,351 | Camden Property Trust | 1,123,042 |
2,805 | Crown Castle International Corp. | 472,306 |
3,605 | Digital Realty Trust, Inc. | 468,037 |
10,517 | Duke Realty Corp. | 577,909 |
19,029 | Healthcare Realty Trust, Inc. | 517,589 |
3,598 | Prologis, Inc. | 423,305 |
Total Equity Real Estate Investment Trusts (REITs) | $ 5,294,267 | |
Food Products — 5.0% | ||
10,134 | Campbell Soup Co. | $ 486,939 |
2,575 | Hershey Co. | 554,037 |
5,307 | John B Sanfilippo & Son, Inc. | 384,704 |
14,530 | McCormick & Co., Inc., Class VTG | 1,209,623 |
21,894 | Mondelez International, Inc., Class A | 1,359,398 |
6,820 | Nestle S.A. (A.D.R.) | 793,780 |
Total Food Products | $ 4,788,481 | |
Health Care Equipment & Supplies — 2.7% | ||
13,767 | Abbott Laboratories | $ 1,495,785 |
16,549 | Baxter International, Inc. | 1,062,942 |
Total Health Care Equipment & Supplies | $ 2,558,727 | |
Health Care Providers & Services — 5.7% | ||
8,040 | AmerisourceBergen Corp. | $ 1,137,499 |
9,853 | Cardinal Health, Inc. | 515,016 |
12,680 | CVS Health Corp. | 1,174,929 |
3,098 | Elevance Health, Inc. | 1,495,033 |
2,415 | Humana, Inc. | 1,130,389 |
Total Health Care Providers & Services | $ 5,452,866 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Household Durables — 0.4% | ||
3,848 | Garmin, Ltd. | $ 378,066 |
Total Household Durables | $ 378,066 | |
Household Products — 1.8% | ||
4,342 | Clorox Co. | $ 612,135 |
7,912 | Procter & Gamble Co. | 1,137,667 |
Total Household Products | $ 1,749,802 | |
Insurance — 5.7% | ||
8,325 | Chubb, Ltd. | $ 1,636,529 |
10,401 | First American Financial Corp. | 550,421 |
25,729 | Lincoln National Corp. | 1,203,345 |
44,782 | Sun Life Financial, Inc. | 2,051,463 |
Total Insurance | $ 5,441,758 | |
IT Services — 3.8% | ||
3,376 | Automatic Data Processing, Inc. | $ 709,095 |
3,116 | Broadridge Financial Solutions, Inc. | 444,186 |
7,229 | Cognizant Technology Solutions Corp., Class A | 487,885 |
4,167 | Fidelity National Information Services, Inc. | 381,989 |
5,534 | International Business Machines Corp. | 781,345 |
7,099 | Paychex, Inc. | 808,363 |
Total IT Services | $ 3,612,863 | |
Machinery — 4.7% | ||
55,794 | Gorman-Rupp Co. | $ 1,578,970 |
2,187 | Illinois Tool Works, Inc. | 398,581 |
6,258 | Oshkosh Corp. | 514,032 |
15,948 | PACCAR, Inc. | 1,313,159 |
12,443 | Timken Co. | 660,101 |
Total Machinery | $ 4,464,843 | |
Media — 3.8% | ||
36,250 | Comcast Corp., Class A | $ 1,422,450 |
32,994 | Interpublic Group of Cos., Inc. | 908,325 |
13,574 | Omnicom Group, Inc. | 863,442 |
18,847 | Paramount Global, Class B | 465,144 |
Total Media | $ 3,659,361 | |
Metals & Mining — 5.4% | ||
6,407 | Kaiser Aluminum Corp. | $ 506,730 |
14,719 | Materion Corp. | 1,085,232 |
22,030 | Newmont Corp. | 1,314,530 |
8,828 | Nucor Corp. | 921,731 |
8,027 | Reliance Steel & Aluminum Co. | 1,363,466 |
Total Metals & Mining | $ 5,191,689 | |
Multiline Retail — 2.0% | ||
3,585 | Dollar General Corp. | $ 879,902 |
6,321 | Kohl’s Corp. | 225,597 |
5,360 | Target Corp. | 756,993 |
Total Multiline Retail | $ 1,862,492 |
The accompanying notes are an integral part of these financial statements. 11
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Multi-Utilities — 0.8% | ||
11,138 | CMS Energy Corp. | $ 751,815 |
Total Multi-Utilities | $ 751,815 | |
Oil, Gas & Consumable Fuels — 3.9% | ||
11,333 | Chevron Corp. | $ 1,640,792 |
4,662 | ConocoPhillips | 418,694 |
11,414 | Exxon Mobil Corp. | 977,495 |
8,108 | Phillips 66 | 664,775 |
Total Oil, Gas & Consumable Fuels | $ 3,701,756 | |
Pharmaceuticals — 7.8% | ||
12,809 | AstraZeneca Plc (A.D.R.) | $ 846,291 |
5,306 | Eli Lilly & Co. | 1,720,364 |
6,500 | Johnson & Johnson | 1,153,815 |
12,953 | Novo Nordisk AS (A.D.R.) | 1,443,353 |
10,751 | Organon & Co. | 362,846 |
37,280 | Pfizer, Inc. | 1,954,590 |
Total Pharmaceuticals | $ 7,481,259 | |
Road & Rail — 1.0% | ||
4,302 | Norfolk Southern Corp. | $ 977,802 |
Total Road & Rail | $ 977,802 | |
Semiconductors & Semiconductor Equipment — 5.3% | ||
8,643 | Analog Devices, Inc. | $ 1,262,656 |
2,862 | CMC Materials, Inc. | 499,390 |
3,823 | KLA Corp. | 1,219,843 |
6,238 | Microchip Technology, Inc. | 362,303 |
4,381 | QUALCOMM, Inc. | 559,629 |
7,285 | Texas Instruments, Inc. | 1,119,340 |
Total Semiconductors & Semiconductor Equipment | $ 5,023,161 | |
Specialty Retail — 0.3% | ||
5,522 | TJX Cos., Inc. | $ 308,404 |
Total Specialty Retail | $ 308,404 | |
Technology Hardware, Storage & Peripherals — 0.5% | ||
37,737 | Hewlett Packard Enterprise Co. | $ 500,393 |
Total Technology Hardware, Storage & Peripherals | $ 500,393 | |
Textiles, Apparel & Luxury Goods — 1.4% | ||
12,642 | Carter’s, Inc. | $ 891,008 |
10,598 | VF Corp. | 468,114 |
Total Textiles, Apparel & Luxury Goods | $ 1,359,122 | |
Trading Companies & Distributors — 1.0% | ||
8,668 | Ferguson Plc | $ 959,634 |
Total Trading Companies & Distributors | $ 959,634 | |
Water Utilities — 0.7% | ||
13,754 | Essential Utilities, Inc. | $ 630,621 |
Total Water Utilities | $ 630,621 | |
TOTAL COMMON STOCKS | ||
(Cost $75,752,736) | $ 95,249,008 |
12 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
SHORT TERM INVESTMENTS — 0.2% of Net Assets | ||
Open-End Fund — 0.2% | ||
190,343(a) | Dreyfus Government Cash Management, | |
Institutional Shares, 1.35% | $ 190,343 | |
$ 190,343 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $190,343) | $ 190,343 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 99.7% | ||
(Cost $75,943,079) | $ 95,439,351 | |
OTHER ASSETS AND LIABILITIES — 0.3% | $ 299,879 | |
NET ASSETS — 100.0% | $95,739,230 |
(A.D.R.) | American Depositary Receipts. |
(a) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $19,188,851 and $28,764,878, 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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized appreciation on investments based on cost for federal tax purposes of $76,250,155 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 23,111,388 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (3,922,192) |
Net unrealized appreciation | $ 19,189,196 |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Common Stocks | $95,249,008 | $ — | $ — | $ 95,249,008 |
Open-End Fund | 190,343 | — | — | 190,343 |
Total Investments in Securities | $95,439,351 | $ — | $ — | $ 95,439,351 |
During the six months ended June 30, 2022, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements. 13
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $75,943,079) | $ 95,439,351 |
Cash | 2,809 |
Receivables — | |
Investment securities sold | 628,500 |
Portfolio shares sold | 38,477 |
Dividends | 191,769 |
Interest | 370 |
Other assets | 194 |
Total assets | $ 96,301,470 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 486,083 |
Portfolio shares repurchased | 18,835 |
Trustees' fees | 17 |
Professional fees | 29,518 |
Due to affiliates | 9,463 |
Accrued expenses | 18,324 |
Total liabilities | $ 562,240 |
NET ASSETS: | |
Paid-in capital | $ 68,980,011 |
Distributable earnings | 26,759,219 |
Net assets | $ 95,739,230 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $68,750,399/4,773,398 shares) | $ 14.40 |
Class ll (based on $26,988,831/1,836,146 shares) | $ 14.70 |
14
The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Dividends from unaffiliated issuers (net of foreign taxes withheld $23,078) | $ 1,317,404 | |
Interest from unaffiliated issuers | 982 | |
Total Investment Income | $ 1,318,386 | |
EXPENSES: | ||
Management fees | $ 361,298 | |
Administrative expenses | 14,451 | |
Distribution fees | ||
Class ll | 39,422 | |
Custodian fees | 1,979 | |
Professional fees | 30,191 | |
Printing expense | 16,293 | |
Trustees' fees | 3,398 | |
Miscellaneous | 1,018 | |
Total expenses | $ 468,050 | |
Net investment income | $ 850,336 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ 7,458,704 | |
Other assets and liabilities denominated in foreign currencies | 699 | $ 7,459,403 |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(23,493,524) | |
Other assets and liabilities denominated in foreign currencies | (6,148) | $(23,499,672) |
Net realized and unrealized gain (loss) on investments | $(16,040,269) | |
Net decrease in net assets resulting from operations | $(15,189,933) |
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 | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 850,336 | $ 1,815,401 |
Net realized gain (loss) on investments | 7,459,403 | 14,936,293 |
Change in net unrealized appreciation (depreciation) on investments | (23,499,672) | 9,903,174 |
Net increase (decrease) in net assets resulting from operations | $ (15,189,933) | $ 26,654,868 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($2.24 and $0.26 per share, respectively) | $ (9,304,597) | $ (1,252,526) |
Class ll ($2.22 and $0.22 per share, respectively) | (3,573,378) | (426,200) |
Total distributions to shareowners | $ (12,877,975) | $ (1,678,726) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 7,410,386 | $ 14,070,208 |
Reinvestment of distributions | 12,877,975 | 1,678,726 |
Cost of shares repurchased | (17,786,052) | (29,756,794) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | $ 2,502,309 | $(14,007,860) |
Net increase (decrease) in net assets | $ (25,565,599) | $ 10,968,282 |
NET ASSETS: | ||
Beginning of period | $ 121,304,829 | $110,336,547 |
End of period | $ 95,739,230 | $121,304,829 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class I | ||||
Shares sold | 46,190 | $ 842,062 | 390,444 | $ 7,032,766 |
Reinvestment of distributions | 657,714 | 9,304,597 | 70,457 | 1,252,526 |
Less shares repurchased | (462,815) | (8,389,113) | (802,604) | (14,249,916) |
Net increase (decrease) | 241,089 | $ 1,757,546 | (341,703) | $ (5,964,624) |
Class ll | ||||
Shares sold | 346,566 | $ 6,568,324 | 393,381 | $ 7,037,442 |
Reinvestment of distributions | 247,765 | 3,573,378 | 23,629 | 426,200 |
Less shares repurchased | (510,607) | (9,396,939) | (863,747) | (15,506,878) |
Net increase (decrease) | 83,724 | $ 744,763 | (446,737) | $ (8,043,236) |
16 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 19.21 | $ 15.51 | $ 16.65 | $ 23.41 | $ 32.49 | $ 31.25 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.14 | 0.28 | 0.28 | 0.42 | 0.81 | 0.60 |
Net realized and unrealized gain (loss) | ||||||
on investments | (2.71) | 3.68 | (0.46) | 4.45 | (2.99) | 3.91 |
Net increase (decrease) from investment operations | $ (2.57) | $ 3.96 | $ (0.18) | $ 4.87 | $ (2.18) | $ 4.51 |
Distributions to shareowners: | ||||||
Net investment income | (0.14) | (0.26) | (0.39) | (0.56) | (0.70) | (0.55) |
Net realized gain | (2.10) | — | (0.57) | (11.07) | (6.20) | (2.72) |
Total distributions | $ (2.24) | $ (0.26) | $ (0.96) | $ (11.63) | $ (6.90) | $ (3.27) |
Net increase (decrease) in net asset value | $ (4.81) | $3.70 | $(1.14) | $ (6.76) | $(9.08) | $1.24 |
Net asset value, end of period | $ 14.40 | $19.21 | $15.51 | $ 16.65 | $23.41 | $32.49 |
Total return(b) | (13.14)%(c) | 25.70% | (0.04)% | 25.56% | (8.59)%(d) | 15.46% |
Ratio of net expenses to average net assets | 0.77%(e) | 0.80% | 0.80% | 0.79% | 0.79% | 0.71% |
Ratio of net investment income (loss) to average | ||||||
net assets | 1.60%(e) | 1.59% | 1.95% | 2.18% | 2.82% | 1.90% |
Portfolio turnover rate | 17%(c) | 28% | 14% | 21% | 28% | 33% |
Net assets, end of period (in thousands) | $68,750 | $87,047 | $75,613 | $89,623 | $ 82,212 | $105,198 |
(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) 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 | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 19.55 | $ 15.79 | $ 16.92 | $ 23.62 | $ 32.70 | $ 31.43 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.12 | 0.24 | 0.25 | 0.38 | 0.50 | 0.52 |
Net realized and unrealized gain (loss) | ||||||
on investments | (2.75) | 3.74 | (0.46) | 4.49 | (2.75) | 3.94 |
Net increase (decrease) from investment operations | $ (2.63) | $ 3.98 | $ (0.21) | $ 4.87 | $ (2.25) | $ 4.46 |
Distributions to shareowners: | ||||||
Net investment income | (0.12) | (0.22) | (0.35) | (0.50) | (0.63) | (0.47) |
Net realized gain | (2.10) | — | (0.57) | (11.07) | (6.20) | (2.72) |
Total distributions | $ (2.22) | $ (0.22) | $ (0.92) | $ (11.57) | $ (6.83) | $ (3.19) |
Net increase (decrease) in net asset value | $ (4.85) | $3.76 | $(1.13) | $(6.70) | $(9.08) | $1.27 |
Net asset value, end of period | $ 14.70 | $19.55 | $15.79 | $16.92 | $23.62 | $32.70 |
Total return(b) | (13.21)%(c) | 25.33% | (0.26)% | 25.23% | (8.77)%(d) | 15.18% |
Ratio of net expenses to average net assets | 1.02%(e) | 1.05% | 1.05% | 1.04% | 0.98% | 0.97% |
Ratio of net investment income (loss) to average | ||||||
net assets | 1.35%(e) | 1.35% | 1.70% | 1.93% | 1.61% | 1.65% |
Portfolio turnover rate | 17%(c) | 28% | 14% | 21% | 28% | 33% |
Net assets, end of period (in thousands) | $26,989 | $34,258 | $34,723 | $38,908 | $ 33,569 | $247,973 |
(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 (8.81)%.
(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.
18
The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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.
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 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
19
Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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, 2022, 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 broker valuation 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, 2021, 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 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 Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $ 1,678,726 |
Total | $ 1,678,726 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 66,366 |
Undistributed long-term capital gains | 12,078,041 |
Net unrealized appreciation | 42,682,720 |
Total | $54,827,127 |
The difference between book-basis and tax-basis net unrealized appreciation is attributable to the tax deferral of losses on wash sales and REITs.
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 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio's assets can decline as can the value of the Portfolio's distributions.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
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Pioneer Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 the Portfolio’s custodian and accounting agent, and 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.
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 Equity Income VCT Portfolio | Pioneer Variable Contracts Trust |
2. Management Agreement
The Adviser manages the Portfolio. Management fees payable under the Portfolio's Investment Management Agreement with the Adviser 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, 2022, 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 $8,901 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $3,398 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $17.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $562 in distribution fees payable to the Distributor at June 30, 2022.
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Pioneer Equity 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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 | Trustees |
Lisa M. Jones, President and Chief Executive Officer | Thomas J. Perna, Chairman |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | John E. Baumgardner, Jr. |
Accounting Officer | Diane Durnin |
Christopher J. Kelley, Secretary and Chief Legal Officer | Benjamin M. Friedman |
Lisa M. Jones | |
Investment Adviser and Administrator | Craig C. MacKay |
Amundi Asset Management US, Inc. | Lorraine H. Monchak |
Marguerite A. Piret | |
Custodian and Sub-Administrator | Fred J. Ricciardi |
Bank of New York Mellon Corporation | Kenneth J. Taubes |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) 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.
19610-16-0822
Pioneer Variable Contracts Trust
Pioneer Select Mid Cap Growth
VCT Portfolio
Class I Shares
Semiannual Report | June 30, 2022
Pioneer Variable Contracts Trust
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 Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22 |
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | Synopsys, Inc. | 2.85% |
2. | MSCI, Inc. | 2.38 |
3. | Clarivate Plc | 2.22 |
4. | Generac Holdings, Inc. | 2.09 |
5. | Palo Networks, Inc. | 2.06 |
* | Excludes short-term 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 6/30/22
Prices and Distributions
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class I | $18.04 | $34.90 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 – 6/30/22) | Income | Capital Gains | Capital Gains |
Class l | $ — | $0.2502 | $4.9043 |
Performance of a $10,000 Investment
The 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, 2022)
Russell Midcap | ||
Class I | Growth Index | |
10 Years | 10.30% | 11.50% |
5 Years | 7.75% | 8.88% |
1 Year | -34.42% | -29.57% |
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 Select Mid Cap Growth 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 Select Mid Cap Growth VCT Portfolio
Based on actual returns from January 1, 2022 through June 30, 2022.
Share Class | I |
Beginning Account Value on 1/1/22 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 670.80 |
Expenses Paid During Period* | $ 3.56 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.86% 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, 2022 through June 30, 2022.
Share Class | I |
Beginning Account Value on 1/1/22 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,020.53 |
Expenses Paid During Period* | $ 4.31 |
* Expenses are equal to the Portfolio’s annualized expense ratio of 0.86% 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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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
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, 2022. Mr. Winston, a senior vice president at Amundi Asset Management US, Inc. (Amundi US) and lead portfolio manager of the Portfolio, is responsible for the day-to-day management of the Portfolio, along with Shaji John, a senior vice president and a portfolio manager at Amundi US, and David Sobell, a senior vice president and portfolio manager at Amundi US.
Q: | How did the Portfolio perform during the six-month period ended June 30, 2022? |
A: | Pioneer Select Mid Cap Growth VCT Portfolio’s Class I shares returned -32.92% at net asset value during the six-month period ended June 30, 2022, while the Portfolio’s benchmark, the Russell Midcap Growth Index (the Russell Index), returned -31.00%. |
Q: | How would you describe the investment environment for equity investors during the six-month period ended June 30, 2022? |
A: | The US equity market suffered a significant decline during the six-month period, and gave back much of the gain it had registered in 2021. Inflationary pressures, which had been evident since early last year, intensified following Russia’s invasion of Ukraine in February. The US Federal Reserve (Fed) responded by ending its pandemic-era quantitative easing (bond purchase) program, and then began hiking interest rates aggressively. The Fed raised the target range for its benchmark federal funds rate by 25 basis points (bps) in March, and followed with increases of 50 bps and 75 bps in May and June, respectively. (A basis point is equal to 1/100th of a percentage point.) In combination, those events fueled investors’ concerns that both economic growth and corporate profits could slow in the second half of the year. |
Mid-cap growth stocks, as measured by the Portfolio’s benchmark, the Russell Index, finished the period deeply in negative territory, returning -31.00%, significantly underperforming mid-cap value stocks, which returned -16.23%, as measured by the Russell Midcap Value Index. Growth stocks have typically been more susceptible to increases in the Fed’s discount rate, given the higher price-to-earnings ratios of growth-oriented companies, as well as their greater dependence on future earnings growth. (The price-to-earnings, or P/E ratio, measures the price of a stock divided by the company’s earnings per share.) In contrast, value-segment companies have typically featured higher current cash flows.
In broad-market terms, the worst-performing sectors over the six-month period were communication services, consumer discretionary, and information technology, all of which declined by at least 27% (with the first two sectors declining by more than 30%). Value stocks, meanwhile, benefited from the larger relative weightings of value-oriented companies in market segments that performed well during the period, including resources firms, and stocks of companies in defensive sectors such as utilities and consumer staples. Energy stocks were the best overall performers during the six-month period, driven higher by rising commodity prices, particularly crude oil.
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 Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2022? |
A: | The Portfolio underperformed its benchmark during the period. We would anticipate the Portfolio’s lagging the market when investors have favored cyclical growth companies over secular growth companies. For the six-month period ended June 30, 2022, the cyclically sensitive sectors of the Russell Index, such as energy, industrials, and materials outperformed, as did the companies represented in the more-cyclical Russell Midcap Value Index. |
Weak stock selection results were a key detractor from the Portfolio’s benchmark-relative returns over the six-month period. Negative selection comparisons within health care, industrials, and information technology offset positive relative performance produced by strong selection within the consumer discretionary sector. In addition, despite the Portfolio’s overweight to the better-performing consumer staples sector, allocation results for the six-month period were neutral versus the Russell Index, due to headwinds from the Portfolio’s marginal underweight to energy stocks, which, as noted earlier, have been the best performers in the market for the first six months of 2022.
At the individual security level, holdings within the Portfolio that detracted from the benchmark-relative performance during the six-month period included Twilio and EPAM Systems. In addition, lack of exposure to Russell Index component Pioneer Natural Resources, which performed well over the period, had a negative effect on relative results.
Twilio is a cloud-based communication-platform-as-a-service offering application programming interfaces, or APIs, and prebuilt solution applications aimed at improving customer engagement. Through its APIs, Twilio’s platform allows developers to integrate messaging, voice, and video functionality into business applications. Twilio’s shares underperformed during the six-month period, due to: 1) worries about the company’s ability to sustain organic growth, post-pandemic; 2) margin pressures from Twilio’s investments in international growth and new product development; and 3) the market’s sudden aversion to investing in unprofitable companies. We have retained the Portfolio’s position in Twilio, as we continue to believe the company could be a leader in the potentially large market of embedding customer engagement capabilities into applications. We also believe that Twilio’s business model may become profitable over time, as the company potentially develops the ability to scale its investments. However, we do acknowledge that the ultimate profitability of Twilio’s business model may be lower than we initially believed, and so we did trim the Portfolio’s position during the period to reflect the increased uncertainty. EPAM Systems is an IT services firm that specializes in custom software development and platform engineering. The company primarily serves some of the largest public companies in the world, operates across most major industries, and uses a global delivery model. Approximately 60% of the company’s global delivery workforce is collectively located in three countries - Belarus, Ukraine, and Russia. EPAM’s shares declined significantly over the six-month period due to the onset of the Russia/Ukraine conflict, as investors became fearful of potential business-interruption risks as
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
well as the potential inability of EPAM’s employees to deliver services. We trimmed the Portfolio’s position during the period, but have maintained some exposure to EPAM as of period-end.
On the positive side, individual Portfolio positions that benefited benchmark-relative returns during the six-month period included Occidental Petroleum, Cactus, and Molina Healthcare.
Occidental Petroleum is one of the world’s largest independent oil and gas companies. The company also operates a chemicals segment called OxyChem. Occidental’s shares rose in the second quarter as the company reported its fifth consecutive quarter of record free cash flows, while also announcing earnings for OxyChem that represented a 30-year high. We believe Occidental’s high-quality assets and integrated business model could ultimately support a return to the company's historical premium valuation versus its exploration-and-production peers. Cactus sells and rents a range of wellhead and pressure-control equipment used in the drilling, completion, and production of conventional and unconventional wells. The share price rose over the six-month period as the company delivered strong financial results and benefited from market-share gains, and from higher rental margins and profits during a period that saw increased demand for energy wellhead equipment and management. Molina Healthcare is a US health insurer that primarily serves lower-income Americans enrolled in government programs, including Medicaid, the ACA (Affordable Care Act) marketplace, and Medicare Advantage. Molina’s share price increased during the six-month period as the company delivered solid financial results and provided guidance for 2022 that came in above most analyst expectations. Molina has continued to benefit from higher margins and geographical expansion as the company has been building its position in the market for higher-acuity-care management. We continue to believe Molina could possibly see further upside in earnings estimates, based on our assessment of the sustainability of the company’s margins on exchanges, additional cost-savings upside, and the potential for greater membership growth across the Medicaid, Medicare, and ACA marketplace segments.
Q: | Did the Portfolio have any exposure to derivative securities during the six-month period ended June 30, 2022? |
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: | Nagging labor shortages and supply-chain bottlenecks driven by the COVID-19 situation in combination with the ongoing Russia/Ukraine conflict, as well as continued COVID-related lockdowns in China, have created a situation where inflation has been stubbornly high and “sticky.” We believe continued labor and material shortages as well as broken supply chains could continue to drive high rates of inflation across the globe. That, in turn, could make the Fed’s job of combating inflation even harder. We believe there is a risk that the Fed may not be successful in “threading the needle” to combat inflation, without choking off economic growth at the same time. |
6
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Given concerns about slowing economic growth, we believe that investors may come to favor owning stocks of well-positioned, secular growth companies with reasonable valuations that are not highly dependent on positive macroeconomic conditions in order to flourish; that have demonstrated a knack for innovation; and that have exhibited resilient business models and sustainable growth characteristics. Those characteristics typify the types of equities that we seek to hold in the Portfolio.
With regard to positioning at the end of the six-month period, the Portfolio’s weightings in the communication services and information technology sectors have decreased, while we increased exposure to the energy and real estate sectors during the second quarter. The largest overweight allocations in the Portfolio versus the Russell Index were in the consumer staples, utilities, and energy sectors, while the largest benchmark-relative underweights were in the consumer discretionary, information technology, and financial sectors.
Over time, we expect to see a return to a market environment that favors investments in companies with above average earnings growth. In such an environment, we are confident that we will be able to identify attractive mid-cap growth companies with reasonable valuations across all areas of the growth segment.
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, armed conflict including Russia’s military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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.
The market price of securities may fluctuate when interest rates change. 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 market securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
7
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) |
Shares | Value | |
UNAFFILIATED ISSUERS — 99.8% | ||
COMMON STOCKS — 99.7% of Net Assets | ||
Aerospace & Defense — 1.4% | ||
5,553 | Huntington Ingalls Industries, Inc. | $ 1,209,555 |
Total Aerospace & Defense | $ 1,209,555 | |
Air Freight & Logistics — 0.9% | ||
8,218 | CH Robinson Worldwide, Inc. | $ 833,059 |
Total Air Freight & Logistics | $ 833,059 | |
Banks — 0.3% | ||
4,298(a) | Metropolitan Bank Holding Corp. | $ 298,367 |
Total Banks | $ 298,367 | |
Beverages — 0.9% | ||
12,156(a) | Celsius Holdings, Inc. | $ 793,301 |
Total Beverages | $ 793,301 | |
Biotechnology — 2.9% | ||
8,857(a) | Alnylam Pharmaceuticals, Inc. | $ 1,291,793 |
10,786(a) | Fate Therapeutics, Inc. | 267,277 |
20,548(a) | Natera, Inc. | 728,221 |
17,647(a) | Replimune Group, Inc. | 308,470 |
Total Biotechnology | $ 2,595,761 | |
Building Products — 0.6% | ||
7,216 | Johnson Controls International Plc | $ 345,502 |
3,703(a) | Trex Co., Inc. | 201,517 |
Total Building Products | $ 547,019 | |
Capital Markets — 3.4% | ||
5,103 | MSCI, Inc. | $ 2,103,201 |
13,620 | Tradeweb Markets, Inc., Class A | 929,565 |
Total Capital Markets | $ 3,032,766 | |
Chemicals — 1.6% | ||
7,003 | Cabot Corp. | $ 446,721 |
3,526 | Scotts Miracle-Gro Co. | 278,519 |
845 | Sherwin-Williams Co. | 189,204 |
6,067 | Sociedad Quimica y Minera de Chile S.A. (A.D.R.) | 506,777 |
Total Chemicals | $ 1,421,221 | |
Communications Equipment — 1.5% | ||
6,490 | Motorola Solutions, Inc. | $ 1,360,304 |
Total Communications Equipment | $ 1,360,304 | |
Containers & Packaging — 0.3% | ||
2,330 | Crown Holdings, Inc. | $ 214,756 |
Total Containers & Packaging | $ 214,756 | |
Distributors — 0.5% | ||
1,243 | Pool Corp. | $ 436,579 |
Total Distributors | $ 436,579 | |
Diversified Consumer Services — 0.7% | ||
9,316 | Service Corp. International | $ 643,922 |
Total Diversified Consumer Services | $ 643,922 |
8 The accompanying notes are an integral part of these financial statements.
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Electrical Equipment — 3.1% | ||
8,770(a) | Generac Holdings, Inc. | $ 1,846,787 |
2,110 | Rockwell Automation, Inc. | 420,544 |
20,254(a) | Sunrun, Inc. | 473,133 |
Total Electrical Equipment | $ 2,740,464 | |
Electronic Equipment, Instruments & Components — 4.3% | ||
27,238 | Amphenol Corp., Class A | $ 1,753,582 |
5,691 | CDW Corp. | 896,674 |
47,883(a) | Flex, Ltd. | 692,867 |
14,256 | National Instruments Corp. | 445,215 |
Total Electronic Equipment, Instruments & Components | $ 3,788,338 | |
Energy Equipment & Services — 0.8% | ||
17,680 | Cactus, Inc., Class A | $ 711,974 |
Total Energy Equipment & Services | $ 711,974 | |
Entertainment — 0.8% | ||
5,989(a) | Live Nation Entertainment, Inc. | $ 494,572 |
2,423(a) | Spotify Technology S.A. | 227,350 |
Total Entertainment | $ 721,922 | |
Equity Real Estate Investment Trusts (REITs) — 1.9% | ||
17,396 | Americold Realty Trust, Inc. | $ 522,576 |
4,604 | Duke Realty Corp. | 252,990 |
2,853 | SBA Communications Corp. | 913,102 |
Total Equity Real Estate Investment Trusts (REITs) | $ 1,688,668 | |
Food & Staples Retailing — 0.5% | ||
6,420(a) | BJ’s Wholesale Club Holdings, Inc. | $ 400,094 |
Total Food & Staples Retailing | $ 400,094 | |
Food Products — 1.3% | ||
4,172 | Hershey Co. | $ 897,648 |
13,867(a) | Nomad Foods, Ltd. | 277,201 |
Total Food Products | $ 1,174,849 | |
Gas Utilities — 0.4% | ||
5,646 | National Fuel Gas Co. | $ 372,918 |
Total Gas Utilities | $ 372,918 | |
Health Care Equipment & Supplies — 5.6% | ||
10,704(a) | Dexcom, Inc. | $ 797,769 |
380(a) | IDEXX Laboratories, Inc. | 133,277 |
4,787(a) | Insulet Corp. | 1,043,279 |
2,759(a) | Penumbra, Inc. | 343,551 |
6,853 | ResMed, Inc. | 1,436,594 |
3,266(a) | Shockwave Medical, Inc. | 624,361 |
2,230 | Teleflex, Inc. | 548,246 |
Total Health Care Equipment & Supplies | $ 4,927,077 | |
Health Care Providers & Services — 3.1% | ||
5,204(a) | Amedisys, Inc. | $ 547,044 |
5,593 | AmerisourceBergen Corp. | 791,298 |
5,036(a) | Molina Healthcare, Inc. | 1,408,116 |
Total Health Care Providers & Services | $ 2,746,458 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Health Care Technology — 1.2% | ||
5,497(a) | Veeva Systems, Inc., Class A | $ 1,088,626 |
Total Health Care Technology | $ 1,088,626 | |
Hotels, Restaurants & Leisure — 5.0% | ||
18,904(a) | Brinker International, Inc. | $ 416,455 |
1,103(a) | Chipotle Mexican Grill, Inc. | 1,441,908 |
5,213(a) | Expedia Group, Inc. | 494,349 |
6,987 | Papa John’s International, Inc. | 583,554 |
7,922(a) | Planet Fitness, Inc., Class A | 538,775 |
32,013 | Wendy’s Co. | 604,405 |
5,305 | Wyndham Hotels & Resorts, Inc. | 348,645 |
Total Hotels, Restaurants & Leisure | $ 4,428,091 | |
Household Durables — 0.4% | ||
2,274(a) | TopBuild Corp. | $ 380,122 |
Total Household Durables | $ 380,122 | |
Insurance — 1.1% | ||
5,758 | Arthur J Gallagher & Co. | $ 938,784 |
Total Insurance | $ 938,784 | |
Interactive Media & Services — 1.1% | ||
4,601(a) | IAC/InterActive Corp. | $ 349,538 |
9,183(a) | Match Group, Inc. | 639,963 |
Total Interactive Media & Services | $ 989,501 | |
IT Services — 4.7% | ||
6,896(a) | Cloudflare, Inc., Class A | $ 301,700 |
1,718(a) | EPAM Systems, Inc. | 506,432 |
28,477 | Genpact, Ltd. | 1,206,286 |
2,084(a) | MongoDB, Inc. | 540,798 |
2,309(a) | Snowflake, Inc., Class A | 321,089 |
15,352 | SS&C Technologies Holdings, Inc. | 891,491 |
4,715(a) | Twilio, Inc., Class A | 395,164 |
Total IT Services | $ 4,162,960 | |
Life Sciences Tools & Services — 4.9% | ||
13,712 | Agilent Technologies, Inc. | $ 1,628,574 |
13,915 | Bruker Corp. | 873,306 |
3,867(a) | Charles River Laboratories International Inc | 827,422 |
4,562(a) | IQVIA Holdings, Inc. | 989,908 |
377(a) | Pacific Biosciences of California, Inc. | 1,666 |
Total Life Sciences Tools & Services | $ 4,320,876 | |
Machinery — 1.1% | ||
3,919(a) | Middleby Corp. | $ 491,286 |
5,341 | Oshkosh Corp. | 438,710 |
Total Machinery | $ 929,996 | |
Marine — 1.0% | ||
14,620(a) | Kirby Corp. | $ 889,481 |
Total Marine | $ 889,481 | |
Media — 0.8% | ||
4,404 | Nexstar Media Group, Inc., Class A | $ 717,324 |
Total Media | $ 717,324 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Metals & Mining — 0.5% | ||
16,115 | Freeport-McMoRan, Inc. | $ 471,525 |
Total Metals & Mining | $ 471,525 | |
Multiline Retail — 0.7% | ||
2,498 | Dollar General Corp. | $ 613,109 |
Total Multiline Retail | $ 613,109 | |
Oil, Gas & Consumable Fuels — 3.4% | ||
13,946 | APA Corp. | $ 486,715 |
36,731(a) | Comstock Resources, Inc. | 443,711 |
25,561 | EQT Corp. | 879,298 |
20,587 | Occidental Petroleum Corp. | 1,212,163 |
Total Oil, Gas & Consumable Fuels | $ 3,021,887 | |
Personal Products — 0.3% | ||
18,242(a) | Olaplex Holdings, Inc. | $ 257,030 |
Total Personal Products | $ 257,030 | |
Professional Services — 5.2% | ||
141,552(a) | Clarivate Plc | $ 1,961,911 |
13,020 | Thomson Reuters Corp. | 1,356,814 |
7,549 | Verisk Analytics, Inc. | 1,306,656 |
Total Professional Services | $ 4,625,381 | |
Real Estate Management & Development — 0.6% | ||
7,559(a) | CBRE Group, Inc., Class A | $ 556,418 |
Total Real Estate Management & Development | $ 556,418 | |
Road & Rail — 0.5% | ||
5,133 | TFI International, Inc. | $ 412,077 |
Total Road & Rail | $ 412,077 | |
Semiconductors & Semiconductor Equipment — 5.8% | ||
10,643(a) | Advanced Micro Devices, Inc. | $ 813,870 |
4,170(a) | Enphase Energy, Inc. | 814,151 |
1,213 | Lam Research Corp. | 516,920 |
12,317 | Marvell Technology, Inc. | 536,159 |
16,827 | Micron Technology, Inc. | 930,197 |
5,467 | MKS Instruments, Inc. | 561,078 |
3,581(a) | SolarEdge Technologies, Inc. | 980,048 |
Total Semiconductors & Semiconductor Equipment | $ 5,152,423 | |
Software — 15.8% | ||
3,580(a) | Atlassian Corp. Plc, Class A | $ 670,892 |
2,346(a) | Bill.com Holdings, Inc. | 257,919 |
7,818(a) | Crowdstrike Holdings, Inc., Class A | 1,317,802 |
7,183(a) | Datadog, Inc., Class A | 684,109 |
20,480(a) | Fortinet, Inc. | 1,158,759 |
1,082(a) | HubSpot, Inc. | 325,303 |
24,686 | NortonLifeLock, Inc. | 542,105 |
3,694(a) | Palo Networks, Inc. | 1,824,614 |
3,701(a) | Paycom Software, Inc. | 1,036,724 |
1,977(a) | ServiceNow, Inc. | 940,103 |
8,019(a) | Splunk, Inc. | 709,361 |
8,313(a) | Synopsys, Inc. | 2,524,658 |
10,210(a) | Tenable Holdings, Inc. | 463,636 |
The accompanying notes are an integral part of these financial statements. 11
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Software — (continued) | ||
13,915(a) | Trade Desk, Inc., Class A | $ 582,899 |
12,897(a) | Zendesk, Inc. | 955,281 |
Total Software | $13,994,165 | |
Specialty Retail — 4.5% | ||
1,183 | Advance Auto Parts, Inc. | $ 204,766 |
843(a) | AutoZone, Inc. | 1,811,708 |
5,722(a) | Floor & Decor Holdings, Inc., Class A | 360,257 |
6,101 | Ross Stores, Inc. | 428,473 |
2,295 | Tractor Supply Co. | 444,886 |
1,508(a) | Ulta Beauty, Inc. | 581,304 |
6,882(a) | Victoria’s Secret & Co. | 192,490 |
Total Specialty Retail | $ 4,023,884 | |
Technology Hardware, Storage & Peripherals — 0.2% | ||
7,763(a) | Pure Storage, Inc., Class A | $ 199,587 |
Total Technology Hardware, Storage & Peripherals | $ 199,587 | |
Textiles, Apparel & Luxury Goods — 2.2% | ||
4,505(a) | Lululemon Athletica, Inc. | $ 1,228,108 |
19,895(a) | Skechers USA, Inc., Class A | 707,864 |
Total Textiles, Apparel & Luxury Goods | $ 1,935,972 | |
Trading Companies & Distributors — 1.9% | ||
3,661 | WW Grainger, Inc. | $ 1,663,668 |
Total Trading Companies & Distributors | $ 1,663,668 | |
TOTAL COMMON STOCKS | ||
(Cost $78,323,586) | $ 88,432,259 | |
SHORT TERM INVESTMENTS — 0.1% of Net Assets | ||
Open-End Fund — 0.1% | ||
69,435(b) | Dreyfus Government Cash Management, | |
Institutional Shares, 1.35% | $ 69,435 | |
$ 69,435 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $69,435) | $ 69,435 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 99.8% | ||
(Cost $78,393,021) | $ 88,501,694 | |
OTHER ASSETS AND LIABILITIES — 0.2% | $ 136,571 | |
NET ASSETS — 100.0% | $ 88,638,265 |
(A.D.R.) | American Depositary Receipts. |
(a) | Non-income producing security. |
(b) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $54,159,101 and $61,372,326, 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, 2022, the Portfolio did not engage in any cross trade activity.
12 The accompanying notes are an integral part of these financial statements.
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
At June 30, 2022, the net unrealized appreciation on investments based on cost for federal tax purposes of $79,223,902 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $17,518,838 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (8,241,046) |
Net unrealized appreciation | $ 9,277,792 |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Common Stocks | $88,432,259 | $ — | $ — | $88,432,259 |
Open-End Fund | 69,435 | — | — | 69,435 |
Total Investments in Securities | $88,501,694 | $ — | $ — | $88,501,694 |
During the six months ended June 30, 2022, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements. 13
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $78,393,021) | $ 88,501,694 |
Cash | 34,247 |
Receivables — | |
Investment securities sold | 406,506 |
Portfolio shares sold | 43,008 |
Dividends | 32,751 |
Interest | 412 |
Other assets | 21,125 |
Total assets | $ 89,039,743 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 294,871 |
Portfolio shares repurchased | 37,778 |
Trustees' fees | 200 |
Professional fees | 34,456 |
Printing expense | 22,373 |
Due to affiliates | 8,437 |
Accrued expenses | 3,363 |
Total liabilities | $ 401,478 |
NET ASSETS: | |
Paid-in capital | $ 82,244,859 |
Distributable earnings | 6,393,406 |
Net assets | $ 88,638,265 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $88,638,265/4,913,130 shares) | $ 18.04 |
14 The accompanying notes are an integral part of these financial statements.
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Dividends from unaffiliated issuers (net of foreign taxes withheld $6,695) | $ 286,942 | |
Interest from unaffiliated issuers | 1,124 | |
Total Investment Income | $ 288,066 | |
EXPENSES: | ||
Management fees | $ 403,374 | |
Administrative expenses | 13,705 | |
Custodian fees | 4,598 | |
Professional fees | 36,433 | |
Printing expense | 3,911 | |
Trustees’ fees | 4,104 | |
Insurance expense | 1 | |
Miscellaneous | 1,207 | |
Total expenses | $ 467,333 | |
Net investment loss | $ (179,267) | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $(2,704,537) | |
Other assets and liabilities denominated in foreign currencies | (19) | $ (2,704,556) |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(42,338,259) | |
Net realized and unrealized gain (loss) on investments | $(45,042,815) | |
Net decrease in net assets resulting from operations | $(45,222,082) |
The accompanying notes are an integral part of these financial statements. 15
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | Year | |
6/30/22 | Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ (179,267) | $ (946,893) |
Net realized gain (loss) on investments | (2,704,556) | 20,541,175 |
Change in net unrealized appreciation (depreciation) on investments | (42,338,259) | (7,587,355) |
Net increase (decrease) in net assets resulting from operations | $ (45,222,082) | $ 12,006,927 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($5.15 and $5.56 per share, respectively) | $ (19,540,646) | $(20,921,742) |
Total distributions to shareowners | $ (19,540,646) | $(20,921,742) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 1,208,236 | $ 3,992,164 |
Reinvestment of distributions | 19,540,646 | 20,921,742 |
Cost of shares repurchased | (8,240,695) | (28,526,223) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | $ 12,508,187 | $ (3,612,317) |
Net decrease in net assets | $ (52,254,541) | $(12,527,132) |
NET ASSETS: | ||
Beginning of period | $ 140,892,806 | $153,419,938 |
End of period | $ 88,638,265 | $140,892,806 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class I | ||||
Shares sold | 44,399 | $ 1,208,236 | 107,390 | $ 3,992,164 |
Reinvestment of distributions | 1,128,865 | 19,540,646 | 608,898 | 20,921,742 |
Less shares repurchased | (297,393) | (8,240,695) | (768,368) | (28,526,223) |
Net increase (decrease) | 875,871 | $ 12,508,187 | (52,080) | $ (3,612,317) |
16 The accompanying notes are an integral part of these financial statements.
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 34.90 | $ 37.52 | $ 29.12 | $ 24.82 | $ 30.23 | $ 23.56 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | (0.04) | (0.23) | (0.15) | (0.09) | (0.10) | (0.05) |
Net realized and unrealized gain (loss) | ||||||
on investments | (11.67) | 3.17 | 10.76 | 8.13 | (1.22) | 7.07 |
Net increase (decrease) from | ||||||
investment operations | $ (11.71) | $ 2.94 | $ 10.61 | $ 8.04 | $ (1.32) | $ 7.02 |
Distributions to shareowners: | ||||||
Net investment income | — | — | — | — | — | (0.02) |
Net realized gain | (5.15) | (5.56) | (2.21) | (3.74) | (4.09) | (0.33) |
Total distributions | $ (5.15) | $ (5.56) | $ (2.21) | $ (3.74) | $ (4.09) | $ (0.35) |
Net increase (decrease) in net asset value | $ (16.86) | $(2.62) | $ 8.40 | $ 4.30 | $ (5.41) | $ 6.67 |
Net asset value, end of period | $18.04 | $34.90 | $37.52 | $29.12 | $24.82 | $30.23 |
Total return(b) | (32.92)%(c) | 8.07% | 39.17% | 33.08% | (6.48)% | 30.03% |
Ratio of net expenses to average net assets | 0.86%(d) | 0.89% | 0.89% | 0.88% | 0.90% | 0.88% |
Ratio of net investment income (loss) to | ||||||
average net assets | (0.33)%(d) | (0.62)% | (0.49)% | (0.30)% | (0.33)% | (0.20)% |
Portfolio turnover rate | 48%(c) | 41% | 82% | 58% | 83% | 85% |
Net assets, end of period (in thousands) | $ 88,638 | $140,893 | $153,420 | $125,592 | $105,450 | $123,007 |
(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. 17
Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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. 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.
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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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.
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 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
At June 30, 2022, 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 valuation 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, 2021, 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.
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $ 1,333,501 |
Long-term capital gains | 19,588,241 |
Total | $20,921,742 |
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 948,261 |
Undistributed long-term capital gains | 18,591,822 |
Net unrealized appreciation | 51,616,051 |
Total | $ 71,156,134 |
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, armed conflict including Russia’s military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio’s assets can decline as can the value of the Portfolio’s distributions.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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.
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.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 the Portfolio’s custodian and accounting agent, and 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.
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 payable under the Portfolio’s Investment Management Agreement with the Adviser 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, 2022, the effective management fee was equivalent to 0.74% (annualized) of the Portfolio’s average daily net assets.
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Pioneer Select Mid Cap Growth VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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 $8,437 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $4,104 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $200.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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 | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) Inc. |
29
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.
19616-16-0822
Pioneer Variable Contracts Trust
Pioneer High Yield
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22
Portfolio Diversification
(As a percentage of total investments)*
† | Amount rounds to less than 0.1%. |
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | Pioneer ILS Interval Fund (i) | 2.02% |
2. | Scotts Miracle-Gro Co., | |
4.000%, 4/1/31 | 1.40 | |
3. | Seaspan Corp., 5.500%, | |
8/1/29 (144A) | 1.29 | |
4. | Cleveland-Cliffs, Inc., 6.750%, | |
3/15/26 (144A) | 1.16 | |
5. | Dealer Tire LLC/DT Issuer LLC, | |
8.000%, 2/1/28 (144A) | 1.12 |
* | Excludes short-term 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. |
(i) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. |
Performance Update 6/30/22
Prices and Distributions
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class I | $7.91 | $9.34 |
Class II | $7.80 | $9.21 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 - 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.2130 | $ — | $ — |
Class II | $0.1991 | $ — | $ — |
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 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 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 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.
Average Annual Total Returns | ||||
(As of June 30, 2022) | ||||
ICE BofA | ||||
ICE BofA | All-Convertibles | |||
U.S. High | Speculative | |||
Class I | Class II | Yield Index | Quality Index | |
10 Years | 4.07% | 3.72% | 4.41% | 14.87% |
5 Years | 1.26% | 0.90% | 1.95% | 19.76% |
1 Year | -11.89% | -12.13% | -12.66% | -21.03% |
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 High Yield 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 High Yield VCT Portfolio
Based on actual returns from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value (after expenses) on 6/30/22 | $ 868.00 | $ 866.90 |
Expenses Paid During Period* | $ 4.17 | $ 5.32 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.90% and 1.15% 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 High Yield VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value (after expenses) on 6/30/22 | $1,020.33 | $1,019.09 |
Expenses Paid During Period* | $ 4.51 | $ 5.76 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 0.90% and 1.15% 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 High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
In the following interview, Andrew Feltus, Ken Monaghan, and Matt Shulkin discuss the factors that influenced the performance of Pioneer High Yield VCT Portfolio during the six-month period ended June 30, 2022. Mr. Feltus, Managing Director, Co-Director of High Yield, 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 Mr. Monaghan, Managing Director, Co-Director of High Yield, and a portfolio manager at Amundi US, and Mr. Shulkin, a senior vice president and a portfolio manager at Amundi US.
Q: | How did the Portfolio perform during the six-month period ended June 30, 2022? |
A: | Pioneer High Yield VCT Portfolio’s Class I shares returned -13.20% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -13.31%. 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 -14.04% and -21.49%, respectively. |
Q. | Could you describe the market environment for high-yield bonds during the six-month period ended June 30, 2022? |
A: | The first quarter of 2022 saw negative market sentiment driven by increased geopolitical tensions, a worsening growth/inflation mix arising from a spike in commodity prices, and the prospect of rising interest rates. In combination, those factors contributed to losses across most fixed-income asset classes. Russia’s invasion of Ukraine in late February, together with US and European sanctions on Russia, led to a spike in energy, metals, and food prices, which added to downside risk to real economic growth and to upside risk to inflation. In addition, another round of lockdowns in China in the wake of increasing COVID-19 infection rates exacerbated supply chain disruptions and raised concerns about further risks to global economic growth. |
At its mid-March meeting, the Federal Open Market Committee (FOMC) raised the federal funds rate target range by a quarter-point, to 0.25% - 0.50%, and indicated that further increases in the benchmark overnight lending rate would follow rapidly. The Fed also formally ended its pandemic-era quantitative easing program and signaled it would soon begin reducing its holdings of Treasury securities and agency mortgage-backed securities (MBS) by reinvesting only part of the proceeds from maturing securities. The Fed went on to implement hikes of 50 basis points and 75 basis points (bps) in May and June, respectively, bringing the federal funds target up to a range of 1.50% to 1.75%, its highest level since before the onset of the pandemic in March of 2020. (A basis point is equal to 1/100th of a percentage point.) For the six-month period ended June 30, 2022, the 10-year Treasury yield rose from 1.52% to 2.98%.
In that environment featuring tightening credit conditions and recession fears, riskier assets, including high-yield corporate bonds, performed poorly.
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 High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Q: | Can you review your principal strategies in managing the Portfolio during the six-month period ended June 30, 2022, and the degree to which they contributed to or detracted from benchmark-relative returns? |
A: | Positive contributions from security selection led to the Portfolio’s favorable benchmark-relative performance during the period, while allocations by rating tier detracted from relative returns. |
In other areas aside from rating tiers, allocation results at the sector level were positive, and aided the Portfolio’s relative performance. The Portfolio’s positioning within energy, capital goods, health care, and retail were positive contributors to relative results. Off-benchmark exposures to cash, insurance-linked securities (ILS), convertible securities, and term loans also contributed, as did a short-risk position in index-based credit-default-swaps. Meanwhile, sector exposures that weighed on the Portfolio’s relative performance included media, basic industry, technology and electronics, and utilities.
With regard to individual securities, positive contributors to the Portfolio’s benchmark-relative returns included positions in AAG, a Canadian car dealer, and Bausch Health, a manufacturer of eye and gastrointestinal care products. With respect to Bausch, the Portfolio had an underweight position to the issuer versus the benchmark, which benefited relative performance as the bond sold off during the period.
Individual holdings that detracted from the Portfolio’s relative performance included positions in Cornerstone Building Products, a building products manufacturer focused on exteriors, which has been going through a leveraged buyout, and Diebold Nixdorf, an ATM manufacturer. Diebold experienced logistics issues during the period, which resulted in weak quarterly earnings.
The Portfolio’s allocations to index-based credit-default-swaps and cash aided relative performance during the period. We generally use the credit-default-swap index contracts as part of our efforts to help manage the overall market exposure of the Portfolio. We purchased the index-based high-yield credit-default swaps with the aim of providing the Portfolio with a measure of protection as high-yield spreads narrowed to near pre-COVID-19 levels early in the period. (Credit spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities.) We held cash in the Portfolio to help ensure adequate liquidity. Exposure to ILS, or securities issued by property-and-casualty insurers to help mitigate the risk of elevated payouts on natural disaster claims, also contributed positively to relative returns. We believe ILS may provide the Portfolio with an added element of diversification*, in addition to potential incremental income.
* Diversification does not assure a profit nor protect against loss.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
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, 2022? |
A: | During the six-month period, more defensive Portfolio positioning offset rising yields. As a result, the Portfolio’s monthly distribution** rate declined slightly over the first three months of the period, before stabilizing and remaining flat over the final three months. However, due to the higher yields available in the market (due to lower prices), over time, we anticipate redeploying the Portfolio’s investments into higher-yielding opportunities, which could be beneficial for the distribution rate. |
Q: | Did the Portfolio have any exposure to derivatives during the six-month period ended June 30, 2022? If so, did the derivatives have a material effect on the Portfolio’s performance? |
A: | As discussed earlier, 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. During the six-month period, short-risk positions in credit default swap indices were used in an effort to help reduce market risk (relative to the benchmark) generated by security holdings. (A short bond position is a type of hedge against the possibility of falling bond prices.) The Portfolio also had some exposure to index futures during the six-month period. The derivatives strategy, overall, had a positive effect on the Portfolio’s performance over the six-month period. |
Q. | What is your assessment of the current climate for high-yield investing? |
A: | We are of two minds in our outlook. On one hand, fundamental credit conditions, in our view, are very strong. While we recognize that financial reporting is backward looking, we think the financial resources currently available to companies may put them in a strong position. Cash holdings are high, interest coverage has returned to all-time highs after falling at the beginning of the pandemic, and most companies have continued to generate strong free cash flow. We believe all of those factors combine to help mitigate default risk. More importantly, we do not see any sector as overbuilt or overinvested, or even overleveraged, which may also reduce default risk. Likewise, the market sell-off has pushed prices down and yields up; in other words, the market has been expecting a fair amount of bad news. |
On the other hand, inflation has remained firm, and we believe it will be very difficult for the Fed to achieve a “soft landing” for the economy. With that said, we also believe a severe recession is more likely to have ties to a Fed policy mistake, or an unforeseen global crisis. Fed Chair Powell and others
** Distributions are not guaranteed.
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Pioneer High Yield 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate) or SOFR (Secured Overnight Financing Rate). Plans are underway to phase out the use of LIBOR. There remains uncertainty regarding the nature of any replacement rate and the impact of the transition from LIBOR on the Portfolio, issuers of instruments in which the Portfolio invests, and financial markets generally.
Investments in high-yield or lower rated securities are subject to greater-than-average price volatility, illiquidity and possibility of default.
The market price of securities may fluctuate when interest rates change. 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 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 pre-payments.
The Portfolio may use derivatives, such as options, futures, inverse floating rate obligations, swaps, and others, 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.
The Portfolio may invest in common stocks or other equity investments, whose market price can fluctuate.
have indicated that they intend to keep tightening monetary policy until reported inflation numbers come down. However, with current inflation readings well above target and the federal funds rate still below neutral, the Fed will have to continue to increase rates, tighten financial conditions, and potentially raise unemployment. We put a higher probability on a mild recession than on the Fed achieving a “soft landing.” We believe current high-yield-spread pricing anticipates a mild recession; and although our analysts have uncovered some signs of slowing economic growth, they believe most issuers appear to be in relatively good condition. Therefore, we believe a steep recession with elevated high-yield default rates to be an unlikely scenario.
In the short term, we have positioned the Portfolio to be more defensive, keeping risk below the benchmark’s risk levels. While we believe the strong financial condition of companies could lead to mild default rates (relative to history), in the short term, rising defaults would put pressure on high-yield spreads. Likewise, our analysts have focused on investment opportunities that appear to have less default risk, and that they believe the market has mispriced.
The positive news, in our view, is the market cycle is advanced and the market is already pricing in a normal credit cycle; therefore, in the medium term, we think performance could return to “normal” levels. Likewise, falling prices have created opportunities for our analysts to identify potential new investments. At the right price, we believe even defaulted securities may eventually produce attractive returns, and so while the Portfolio’s short-term positioning is defensive, we have been preparing for the next step in the credit cycle, and will be prepared when macroeconomic pressure turns in our favor.
Please refer to the Schedule of Investments on pages 8 to 18 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 6/30/22 (unaudited) |
Principal | ||
Amount | ||
USD ($) | Value | |
UNAFFILIATED ISSUERS — 96.5% | ||
SENIOR SECURED FLOATING RATE LOAN INTERESTS — 2.8% of Net Assets*(a) | ||
Airlines — 0.4% | ||
95,000 | LATAM Airlines Group SA, Tranche A Facility, 8.234% (Term SOFR + 750 bps), 8/8/22 | $ 95,990 |
Total Airlines | $ 95,990 | |
Auto Parts & Equipment — 0.6% | ||
159,636 | First Brands Group LLC, First Lien 2021 Term Loan, 6.287% (Term SOFR + 500 bps), 3/30/27 | $ 151,255 |
Total Auto Parts & Equipment | $ 151,255 | |
Gambling (Non-Hotel) — 0.6% | ||
162,809 | Enterprise Development Authority, Term Loan B, 5.916% (LIBOR + 425 bps), 2/28/28 | $ 157,467 |
Total Gambling (Non-Hotel) | $ 157,467 | |
Human Resources — 0.4% | ||
134,955 | Team Health Holdings, Inc., Extended Term Loan, 6.775% (Term SOFR + 525 bps), 3/2/27 | $ 114,880 |
Total Human Resources | $ 114,880 | |
Medical-Hospitals — 0.1% | ||
24,687 | Surgery Center Holdings, Inc., 2021 New Term Loan, 4.95% (LIBOR + 375 bps), 8/31/26 | $ 23,060 |
Total Medical-Hospitals | $ 23,060 | |
Metal Processors & Fabrication — 0.4% | ||
129,025 | Grinding Media, Inc. (Molycop, Ltd.), First Lien Initial Term Loan, 4.796% (LIBOR + 400 bps), 10/12/28 | $ 118,058 |
Total Metal Processors & Fabrication | $ 118,058 | |
Telecommunication Equipment — 0.3% | ||
95,399 | Commscope, Inc., Initial Term Loan, 4.916% (LIBOR + 325 bps), 4/6/26 | $ 86,177 |
Total Telecommunication Equipment | $ 86,177 | |
TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | ||
(Cost $782,168) | $ 746,887 | |
Shares | ||
COMMON STOCK — 0.3% of Net Assets | ||
Airlines — 0.3% | ||
6,730 | Grupo Aeromexico SAB de CV | $ 72,777 |
Total Airlines | $ 72,777 | |
TOTAL COMMON STOCK | ||
(Cost $110,000) | $ 72,777 | |
Principal | ||
Amount | ||
USD ($) | ||
COMMERCIAL MORTGAGE-BACKED SECURITY — 0.4% of Net Assets | ||
100,000(a) | Med Trust, Series 2021-MDLN, Class G, 6.575% (1 Month USD LIBOR + 525 bps), 11/15/38 (144A) | $ 90,031 |
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITY | ||
(Cost $100,000) | $ 90,031 | |
CONVERTIBLE CORPORATE BONDS — 4.0% of Net Assets | ||
Airlines — 1.1% | ||
92,000 | Air Canada, 4.00%, 7/1/25 | $ 100,232 |
219,000 | Spirit Airlines, Inc., 1.00%, 5/15/26 | 197,428 |
Total Airlines | $ 297,660 |
8 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Biotechnology — 0.5% | ||
55,000 | Insmed, Inc., 0.75%, 6/1/28 | $ 45,760 |
81,000 | Insmed, Inc., 1.75%, 1/15/25 | 75,290 |
Total Biotechnology | $ 121,050 | |
Commercial Services — 0.0%† | ||
935 | Macquarie Infrastructure Holdings LLC, 2.00%, 10/1/23 | $ 925 |
Total Commercial Services | $ 925 | |
Energy-Alternate Sources — 0.3% | ||
94,000(b) | Enphase Energy, Inc., 3/1/28 | $ 93,295 |
Total Energy-Alternate Sources | $ 93,295 | |
Entertainment — 0.6% | ||
140,000(b) | DraftKings Holdings, Inc., 3/15/28 | $ 85,820 |
99,000 | IMAX Corp., 0.50%, 4/1/26 | 87,813 |
Total Entertainment | $ 173,633 | |
Internet — 0.0%† | ||
10,000 | Perficient, Inc., 0.125%, 11/15/26 (144A) | $ 8,095 |
Total Internet | $ 8,095 | |
Pharmaceuticals — 0.7% | ||
130,000 | Revance Therapeutics, Inc., 1.75%, 2/15/27 | $ 105,138 |
136,000 | Tricida, Inc., 3.50%, 5/15/27 | 70,584 |
Total Pharmaceuticals | $ 175,722 | |
Software — 0.8% | ||
82,000 | Bentley Systems, Inc., 0.375%, 7/1/27 (144A) | $ 63,550 |
60,000 | Jamf Holding Corp., 0.125%, 9/1/26 (144A) | 50,730 |
105,000 | Verint Systems, Inc., 0.25%, 4/15/26 | 95,812 |
Total Software | $ 210,092 | |
TOTAL CONVERTIBLE CORPORATE BONDS | ||
(Cost $1,295,777) | $ 1,080,472 | |
CORPORATE BONDS — 85.6% of Net Assets | ||
Advertising — 2.7% | ||
180,000 | Clear Channel Outdoor Holdings, Inc., 7.50%, 6/1/29 (144A) | $ 129,155 |
110,000 | Clear Channel Outdoor Holdings, Inc., 7.75%, 4/15/28 (144A) | 79,871 |
70,000 | Outfront Media Capital LLC/Outfront Media Capital Corp., 4.25%, 1/15/29 (144A) | 55,763 |
60,000 | Outfront Media Capital LLC/Outfront Media Capital Corp., 6.25%, 6/15/25 (144A) | 57,309 |
260,000 | Stagwell Global LLC, 5.625%, 8/15/29 (144A) | 208,918 |
200,000 | Summer BC Bidco B LLC, 5.50%, 10/31/26 (144A) | 179,130 |
Total Advertising | $ 710,146 | |
Aerospace & Defense — 1.0% | ||
327,000 | Bombardier, Inc., 7.125%, 6/15/26 (144A) | $ 266,505 |
Total Aerospace & Defense | $ 266,505 | |
Airlines — 0.5% | ||
35,000 | American Airlines 2021-1 Class B Pass Through Trust, 3.95%, 7/11/30 | $ 29,243 |
70,000 | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.50%, 4/20/26 (144A) | 64,315 |
55,000 | American Airlines, Inc./AAdvantage Loyalty IP, Ltd., 5.75%, 4/20/29 (144A) | 47,078 |
Total Airlines | $ 140,636 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Auto Manufacturers — 2.9% | ||
295,000 | Ford Motor Credit Co. LLC, 4.00%, 11/13/30 | $ 239,025 |
300,000 | Ford Motor Credit Co. LLC, 4.134%, 8/4/25 | 284,156 |
254,000 | JB Poindexter & Co., Inc., 7.125%, 4/15/26 (144A) | 243,840 |
Total Auto Manufacturers | $ 767,021 | |
Auto Parts & Equipment — 1.1% | ||
331,000 | Dealer Tire LLC/DT Issuer LLC, 8.00%, 2/1/28 (144A) | $ 285,951 |
Total Auto Parts & Equipment | $ 285,951 | |
Banks — 0.6% | ||
15,000 | Freedom Mortgage Corp., 6.625%, 1/15/27 (144A) | $ 11,117 |
69,000 | Freedom Mortgage Corp., 8.125%, 11/15/24 (144A) | 59,524 |
118,000 | Freedom Mortgage Corp., 8.25%, 4/15/25 (144A) | 99,319 |
Total Banks | $ 169,960 | |
Biotechnology — 0.7% | ||
220,000 | Grifols Escrow Issuer SA, 4.75%, 10/15/28 (144A) | $ 190,850 |
Total Biotechnology | $ 190,850 | |
Building Materials — 1.8% | ||
165,000 | Builders FirstSource, Inc., 4.25%, 2/1/32 (144A) | $ 125,593 |
70,000 | Builders FirstSource, Inc., 6.375%, 6/15/32 (144A) | 62,475 |
255,000 | Cornerstone Building Brands, Inc., 6.125%, 1/15/29 (144A) | 163,969 |
79,000 | Koppers, Inc., 6.00%, 2/15/25 (144A) | 73,364 |
85,000 | Oscar AcquisitionCo LLC/Oscar Finance, Inc., 9.50%, 4/15/30 (144A) | 67,374 |
Total Building Materials | $ 492,775 | |
Chemicals — 2.3% | ||
155,000 | LSF11 A5 HoldCo LLC, 6.625%, 10/15/29 (144A) | $ 130,588 |
304,000 | Mativ, Inc., 6.875%, 10/1/26 (144A) | 270,560 |
171,000 | Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc., 5.125%, 4/1/29 (144A) | 123,029 |
127,000 | Tronox, Inc., 4.625%, 3/15/29 (144A) | 102,208 |
Total Chemicals | $ 626,385 | |
Commercial Services — 4.5% | ||
215,000 | Allied Universal Holdco LLC/Allied Universal Finance Corp., 9.75%, 7/15/27 (144A) | $ 181,944 |
130,000 | APX Group, Inc., 5.75%, 7/15/29 (144A) | 100,502 |
105,000 | APX Group, Inc., 6.75%, 2/15/27 (144A) | 98,428 |
140,000 | Brink’s Co., 5.50%, 7/15/25 (144A) | 134,730 |
206,000 | Garda World Security Corp., 9.50%, 11/1/27 (144A) | 188,411 |
105,000 | NESCO Holdings II, Inc., 5.50%, 4/15/29 (144A) | 87,938 |
60,000 | Nielsen Finance LLC/Nielsen Finance Co., 4.50%, 7/15/29 (144A) | 54,126 |
60,000 | Nielsen Finance LLC/Nielsen Finance Co., 4.75%, 7/15/31 (144A) | 54,075 |
155,000 | PECF USS Intermediate Holding III Corp., 8.00%, 11/15/29 (144A) | 122,837 |
120,000 | Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 4/15/26 (144A) | 111,900 |
80,000 | Sotheby’s, 7.375%, 10/15/27 (144A) | 74,125 |
Total Commercial Services | $ 1,209,016 | |
Computers — 1.8% | ||
195,000 | Diebold Nixdorf, Inc., 8.50%, 4/15/24 | $ 101,400 |
308,000 | KBR, Inc., 4.75%, 9/30/28 (144A) | 271,810 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Computers (continued) | ||
90,000 | NCR Corp., 5.00%, 10/1/28 (144A) | $ 76,202 |
45,000 | NCR Corp., 5.25%, 10/1/30 (144A) | 38,812 |
Total Computers | $ 488,224 | |
Diversified Financial Services — 4.0% | ||
165,765(c) | Avation Capital SA, 8.25% (9.00% PIK or 8.25% Cash), 10/31/26 (144A) | $ 131,466 |
145,000 | Bread Financial Holdings, Inc., 4.75%, 12/15/24 (144A) | 132,820 |
209,392(c) | Global Aircraft Leasing Co., Ltd., 6.50% (7.25% PIK or 6.50% Cash), 9/15/24 (144A) | 158,614 |
237,000 | Provident Funding Associates LP/PFG Finance Corp., 6.375%, 6/15/25 (144A) | 213,300 |
108,000 | United Wholesale Mortgage LLC, 5.50%, 4/15/29 (144A) | 82,688 |
170,000 | United Wholesale Mortgage LLC, 5.75%, 6/15/27 (144A) | 135,682 |
245,000 | VistaJet Malta Finance Plc/XO Management Holding, Inc., 7.875%, 5/1/27 (144A) | 216,213 |
Total Diversified Financial Services | $ 1,070,783 | |
Electric — 3.5% | ||
235,000 | Calpine Corp., 5.00%, 2/1/31 (144A) | $ 190,350 |
105,000 | Clearway Energy Operating LLC, 3.75%, 2/15/31 (144A) | 84,653 |
65,000 | Clearway Energy Operating LLC, 3.75%, 1/15/32 (144A) | 51,356 |
179,000 | Leeward Renewable Energy Operations LLC, 4.25%, 7/1/29 (144A) | 142,732 |
60,000 | NRG Energy, Inc., 3.375%, 2/15/29 (144A) | 48,385 |
325,000 | NRG Energy, Inc., 3.625%, 2/15/31 (144A) | 254,797 |
182,000 | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | 152,267 |
Total Electric | $ 924,540 | |
Electrical Components & Equipments — 0.9% | ||
112,000 | Energizer Holdings, Inc., 4.75%, 6/15/28 (144A) | $ 88,897 |
55,000 | Energizer Holdings, Inc., 6.50%, 12/31/27 (144A) | 48,194 |
90,000 | WESCO Distribution, Inc., 7.125%, 6/15/25 (144A) | 89,478 |
Total Electrical Components & Equipments | $ 226,569 | |
Engineering & Construction — 1.6% | ||
263,034 | Artera Services LLC, 9.033%, 12/4/25 (144A) | $ 211,953 |
200,000 | Promontoria Holding 264 BV, 7.875%, 3/1/27 (144A) | 184,689 |
50,000 | TopBuild Corp., 4.125%, 2/15/32 (144A) | 38,399 |
Total Engineering & Construction | $ 435,041 | |
Entertainment — 3.1% | ||
125,000 | CDI Escrow Issuer, Inc., 5.75%, 4/1/30 (144A) | $ 115,036 |
145,000 | Lions Gate Capital Holdings LLC, 5.50%, 4/15/29 (144A) | 112,639 |
200,000 | Mohegan Gaming & Entertainment, 8.00%, 2/1/26 (144A) | 167,822 |
65,000 | Scientific Games Holdings LP/Scientific Games US FinCo, Inc., 6.625%, 3/1/30 (144A) | 55,250 |
100,000 | Scientific Games International, Inc., 7.00%, 5/15/28 (144A) | 94,470 |
100,000 | Scientific Games International, Inc., 7.25%, 11/15/29 (144A) | 94,600 |
220,000 | SeaWorld Parks & Entertainment, Inc., 5.25%, 8/15/29 (144A) | 186,162 |
Total Entertainment | $ 825,979 | |
Environmental Control — 0.5% | ||
55,000 | GFL Environmental, Inc., 4.00%, 8/1/28 (144A) | $ 45,375 |
89,000 | Tervita Corp., 11.00%, 12/1/25 (144A) | 96,787 |
Total Environmental Control | $ 142,162 |
The accompanying notes are an integral part of these financial statements. 11
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Food — 0.8% | ||
50,000 | US Foods, Inc., 4.625%, 6/1/30 (144A) | $ 42,583 |
205,000 | US Foods, Inc., 4.75%, 2/15/29 (144A) | 179,209 |
Total Food | $ 221,792 | |
Forest Products & Paper — 1.6% | ||
96,000 | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | $ 82,784 |
173,000 | Mercer International, Inc., 5.125%, 2/1/29 | 148,780 |
218,000 | Sylvamo Corp., 7.00%, 9/1/29 (144A) | 200,846 |
Total Forest Products & Paper | $ 432,410 | |
Healthcare-Services — 2.5% | ||
65,000 | Legacy LifePoint Health LLC, 6.75%, 4/15/25 (144A) | $ 62,647 |
75,000 | LifePoint Health, Inc., 5.375%, 1/15/29 (144A) | 55,638 |
22,000 | RegionalCare Hospital Partners Holdings Inc./LifePoint Health, Inc., 9.75%, 12/1/26 (144A) | 21,556 |
57,000 | Surgery Center Holdings, Inc., 6.75%, 7/1/25 (144A) | 52,243 |
237,000 | Surgery Center Holdings, Inc., 10.00%, 4/15/27 (144A) | 229,569 |
60,000 | Tenet Healthcare Corp., 6.125%, 6/15/30 (144A) | 56,551 |
145,000 | US Acute Care Solutions LLC, 6.375%, 3/1/26 (144A) | 129,850 |
146,000 | US Renal Care, Inc., 10.625%, 7/15/27 (144A) | 51,465 |
Total Healthcare-Services | $ 659,519 | |
Home Builders — 0.6% | ||
89,000 | KB Home, 4.00%, 6/15/31 | $ 68,174 |
125,000 | M/I Homes, Inc., 3.95%, 2/15/30 | 93,887 |
Total Home Builders | $ 162,061 | |
Household Products/Wares — 0.1% | ||
12,000 | Spectrum Brands, Inc., 5.75%, 7/15/25 | $ 11,849 |
Total Household Products/Wares | $ 11,849 | |
Housewares — 1.3% | ||
476,000 | Scotts Miracle-Gro Co., 4.00%, 4/1/31 | $ 355,810 |
Total Housewares | $ 355,810 | |
Internet — 1.3% | ||
155,000 | Cogent Communications Group, Inc., 7.00%, 6/15/27 (144A) | $ 148,060 |
215,000 | Twitter, Inc., 5.00%, 3/1/30 (144A) | 203,981 |
Total Internet | $ 352,041 | |
Iron & Steel — 2.8% | ||
160,000 | Carpenter Technology Corp., 7.625%, 3/15/30 | $ 146,927 |
297,000 | Cleveland-Cliffs, Inc., 6.75%, 3/15/26 (144A) | 294,772 |
70,000 | Mineral Resources, Ltd., 8.00%, 11/1/27 (144A) | 68,538 |
75,000 | Mineral Resources, Ltd., 8.50%, 5/1/30 (144A) | 73,875 |
215,000 | TMS International Corp., 6.25%, 4/15/29 (144A) | 155,641 |
Total Iron & Steel | $ 739,753 | |
Leisure Time — 1.7% | ||
63,000 | Carnival Corp., 7.625%, 3/1/26 (144A) | $ 48,668 |
140,000 | NCL Corp., Ltd., 5.875%, 3/15/26 (144A) | 109,489 |
65,000 | NCL Corp., Ltd., 7.75%, 2/15/29 (144A) | 49,725 |
80,000 | Royal Caribbean Cruises, Ltd., 5.50%, 4/1/28 (144A) | 55,600 |
30,000 | Royal Caribbean Cruises, Ltd., 9.125%, 6/15/23 (144A) | 29,628 |
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
Leisure Time (continued) | ||
43,000 | Royal Caribbean Cruises, Ltd., 11.50%, 6/1/25 (144A) | $ 44,183 |
69,000 | Viking Cruises, Ltd., 6.25%, 5/15/25 (144A) | 58,132 |
80,000 | Viking Ocean Cruises Ship VII, Ltd., 5.625%, 2/15/29 (144A) | 63,080 |
Total Leisure Time | $ 458,505 | |
Lodging — 0.7% | ||
135,000 | Hilton Grand Vacations Borrower Escrow LLC/Hilton Grand | |
Vacations Borrower Esc, 5.00%, 6/1/29 (144A) | $ 109,350 | |
90,000 | Travel + Leisure Co., 6.625%, 7/31/26 (144A) | 85,446 |
Total Lodging | $ 194,796 | |
Media — 3.9% | ||
269,000 | CCO Holdings LLC/CCO Holdings Capital Corp., 4.50%, 6/1/33 (144A) | $ 212,510 |
243,000 | CSC Holdings LLC, 5.00%, 11/15/31 (144A) | 163,789 |
106,000 | Gray Television, Inc., 5.875%, 7/15/26 (144A) | 99,091 |
177,000 | McGraw-Hill Education, Inc., 8.00%, 8/1/29 (144A) | 143,370 |
80,000 | News Corp., 3.875%, 5/15/29 (144A) | 69,077 |
30,000 | News Corp., 5.125%, 2/15/32 (144A) | 26,565 |
230,000 | Sinclair Television Group, Inc., 5.50%, 3/1/30 (144A) | 169,318 |
5,000 | Univision Communications, Inc., 7.375%, 6/30/30 (144A) | 4,909 |
200,000 | VZ Secured Financing BV, 5.00%, 1/15/32 (144A) | 166,000 |
Total Media | $ 1,054,629 | |
Metal Fabricate/Hardware — 0.2% | ||
75,000 | Park-Ohio Industries, Inc., 6.625%, 4/15/27 | $ 59,250 |
Total Metal Fabricate/Hardware | $ 59,250 | |
Mining — 1.3% | ||
109,000 | Coeur Mining, Inc., 5.125%, 2/15/29 (144A) | $ 75,508 |
194,000 | Eldorado Gold Corp., 6.25%, 9/1/29 (144A) | 158,300 |
125,000 | FMG Resources August 2006 Pty, Ltd., 6.125%, 4/15/32 (144A) | 112,500 |
Total Mining | $ 346,308 | |
Oil & Gas — 10.2% | ||
151,000 | Aethon United BR LP/Aethon United Finance Corp., 8.25%, 2/15/26 (144A) | $ 146,848 |
270,000 | Baytex Energy Corp., 8.75%, 4/1/27 (144A) | 270,675 |
50,000 | Hilcorp Energy I LP/Hilcorp Finance Co., 6.00%, 4/15/30 (144A) | 43,500 |
50,000 | Hilcorp Energy I LP/Hilcorp Finance Co., 6.25%, 4/15/32 (144A) | 43,202 |
200,000 | Kosmos Energy, Ltd., 7.75%, 5/1/27 (144A) | 171,045 |
25,000 | MEG Energy Corp., 7.125%, 2/1/27 (144A) | 25,040 |
30,000 | Nabors Industries, Inc., 7.375%, 5/15/27 (144A) | 28,500 |
100,000 | Nabors Industries, Ltd., 7.50%, 1/15/28 (144A) | 86,000 |
219,000 | Neptune Energy Bondco Plc, 6.625%, 5/15/25 (144A) | 210,240 |
177,000 | Occidental Petroleum Corp., 4.40%, 4/15/46 | 143,106 |
230,000 | Parkland Corp., 4.625%, 5/1/30 (144A) | 186,583 |
34,000 | Precision Drilling Corp., 6.875%, 1/15/29 (144A) | 30,430 |
105,000 | Shelf Drilling Holdings, Ltd., 8.875%, 11/15/24 (144A) | 101,325 |
70,000 | Southwestern Energy Co., 4.75%, 2/1/32 | 59,651 |
185,000 | Southwestern Energy Co., 5.375%, 2/1/29 | 171,606 |
310,000 | Strathcona Resources, Ltd., 6.875%, 8/1/26 (144A) | 282,100 |
235,000 | Tap Rock Resources LLC, 7.00%, 10/1/26 (144A) | 221,883 |
202,531 | Transocean Sentry, Ltd., 5.375%, 5/15/23 (144A) | 190,379 |
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Principal | ||
Amount | ||
USD ($) | Value | |
Oil & Gas (continued) | ||
200,000 | Tullow Oil Plc, 10.25%, 5/15/26 (144A) | $ 191,000 |
150,000 | Vermilion Energy, Inc., 6.875%, 5/1/30 (144A) | 134,250 |
Total Oil & Gas | $ 2,737,363 | |
Oil & Gas Services — 0.3% | ||
89,000 | Exterran Energy Solutions LP/EES Finance Corp., 8.125%, 5/1/25 | $ 84,327 |
Total Oil & Gas Services | $ 84,327 | |
Packaging & Containers — 1.7% | ||
220,000 | OI European Group BV, 4.75%, 2/15/30 (144A) | $ 184,250 |
105,000 | Sealed Air Corp., 5.00%, 4/15/29 (144A) | 98,175 |
210,000 | TriMas Corp., 4.125%, 4/15/29 (144A) | 179,271 |
Total Packaging & Containers | $ 461,696 | |
Pharmaceuticals — 2.7% | ||
95,000 | AdaptHealth LLC, 5.125%, 3/1/30 (144A) | $ 80,076 |
80,000 | Bausch Health Cos., Inc., 5.50%, 11/1/25 (144A) | 70,263 |
195,000 | Owens & Minor, Inc., 6.625%, 4/1/30 (144A) | 177,690 |
110,000 | P&L Development LLC/PLD Finance Corp., 7.75%, 11/15/25 (144A) | 77,006 |
102,000 | Par Pharmaceutical, Inc., 7.50%, 4/1/27 (144A) | 77,520 |
305,000 | Teva Pharmaceutical Finance Netherlands III BV, 5.125%, 5/9/29 | 251,244 |
Total Pharmaceuticals | $ 733,799 | |
Pipelines — 4.2% | ||
146,000 | CQP Holdco LP/BIP-V Chinook Holdco LLC, 5.50%, 6/15/31 (144A) | $ 123,867 |
165,000 | Delek Logistics Partners LP/Delek Logistics Finance Corp., 6.75%, 5/15/25 | 153,863 |
115,000 | Delek Logistics Partners LP/Delek Logistics Finance Corp., 7.125%, 6/1/28 (144A) | 103,500 |
5,000 | EnLink Midstream LLC, 5.375%, 6/1/29 | 4,375 |
40,000 | EnLink Midstream Partners LP, 5.05%, 4/1/45 | 27,050 |
116,000 | EnLink Midstream Partners LP, 5.60%, 4/1/44 | 82,111 |
201,000 | Genesis Energy LP/Genesis Energy Finance Corp., 8.00%, 1/15/27 | 177,885 |
200,000 | Golar LNG, Ltd., 7.00%, 10/20/25 (144A) | 184,000 |
273,000 | Harvest Midstream I LP, 7.50%, 9/1/28 (144A) | 256,410 |
Total Pipelines | $ 1,113,061 | |
Real Estate — 0.6% | ||
220,000 | Realogy Group LLC/Realogy Co-Issuer Corp., 5.25%, 4/15/30 (144A) | $ 162,800 |
Total Real Estate | $ 162,800 | |
REITs — 2.5% | ||
200,000 | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | $ 172,000 |
105,000 | iStar, Inc., 4.25%, 8/1/25 | 96,862 |
195,000 | iStar, Inc., 4.75%, 10/1/24 | 183,600 |
36,000 | Starwood Property Trust, Inc., 3.75%, 12/31/24 (144A) | 32,760 |
100,000 | Uniti Group LP/Uniti Fiber Holdings, Inc./CSL Capital LLC, 6.00%, 1/15/30 (144A) | 69,598 |
140,000 | Uniti Group LP/Uniti Group Finance, Inc./CSL Capital LLC, 6.50%, 2/15/29 (144A) | 102,550 |
Total REITs | $ 657,370 | |
Retail — 3.1% | ||
150,000 | AAG FH LP/AAG FH Finco, Inc., 9.75%, 7/15/24 (144A) | $ 148,500 |
60,000 | Bath & Body Works, Inc., 6.625%, 10/1/30 (144A) | 51,320 |
135,000 | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | 109,785 |
14 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | |||
Amount | |||
USD ($) | Value | ||
Retail (continued) | |||
35,000 | Gap, Inc., 3.625%, 10/1/29 (144A) | $ 24,577 | |
35,000 | Gap, Inc., 3.875%, 10/1/31 (144A) | 24,412 | |
105,000 | Group 1 Automotive, Inc., 4.00%, 8/15/28 (144A) | 87,729 | |
270,000 | LCM Investments Holdings II LLC, 4.875%, 5/1/29 (144A) | 205,497 | |
93,000 | Party City Holdings, Inc., 8.75%, 2/15/26 (144A) | 62,542 | |
35,000 | SRS Distribution, Inc., 6.125%, 7/1/29 (144A) | 27,596 | |
91,000 | Staples, Inc., 7.50%, 4/15/26 (144A) | 76,622 | |
Total Retail | $ 818,580 | ||
Software — 1.2% | |||
270,000 | Minerva Merger Sub, Inc., 6.50%, 2/15/30 (144A) | $ 224,100 | |
150,000 | Rackspace Technology Global, Inc., 5.375%, 12/1/28 (144A) | 97,071 | |
Total Software | $ 321,171 | ||
Telecommunications — 3.6% | |||
260,000 | Altice France SA, 5.125%, 7/15/29 (144A) | $ 196,300 | |
115,000 | CommScope, Inc., 4.75%, 9/1/29 (144A) | 92,770 | |
63,000 | CommScope, Inc., 8.25%, 3/1/27 (144A) | 49,802 | |
200,000 | LogMeIn, Inc., 5.50%, 9/1/27 (144A) | 139,253 | |
80,000 | Lumen Technologies, Inc., 4.00%, 2/15/27 (144A) | 67,751 | |
135,000 | Maxar Technologies, Inc., 7.75%, 6/15/27 (144A) | 134,380 | |
135,000 | Plantronics, Inc., 4.75%, 3/1/29 (144A) | 134,325 | |
185,000 | Windstream Escrow LLC/Windstream Escrow Finance Corp., 7.75%, 8/15/28 (144A) | 148,925 | |
Total Telecommunications | $ 963,506 | ||
Transportation — 2.9% | |||
295,000 | Carriage Purchaser, Inc., 7.875%, 10/15/29 (144A) | $ 219,224 | |
410,000 | Seaspan Corp., 5.50%, 8/1/29 (144A) | 327,231 | |
250,000 | Western Global Airlines LLC, 10.375%, 8/15/25 (144A) | 240,637 | |
Total Transportation | $ 787,092 | ||
Trucking & Leasing — 0.3% | |||
85,000 | Fortress Transportation and Infrastructure Investors LLC, 9.75%, 8/1/27 (144A) | $ 83,148 | |
Total Trucking & Leasing | $ 83,148 | ||
TOTAL CORPORATE BONDS | |||
(Cost $27,157,721) | $ 22,945,179 | ||
Shares | |||
RIGHTS/WARRANTS — 0.0%† of Net Assets | |||
Aerospace & Defense — 0.0%† | |||
6,300(d)(e)+^ | Avation Plc, 1/1/59 | $ | — |
Total Aerospace & Defense | $ — | ||
Health Care Providers & Services — 0.0%† | |||
80(e)(f)+^ | Option Care Health, Inc., 6/30/25 | $ | 253 |
80(e)(f)+^ | Option Care Health, Inc., 6/30/25 | 210 | |
Total Health Care Providers & Services | $ 463 | ||
RIGHTS/WARRANTS | |||
(Cost $—) | $ 463 |
The accompanying notes are an integral part of these financial statements. 15
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Face | |||||
Amount | |||||
USD ($) | Value | ||||
INSURANCE-LINKED SECURITIES — 0.0%† of Net Assets# | |||||
Reinsurance Sidecars — 0.0%† | |||||
Multiperil – Worldwide — 0.0%† | |||||
25,723(e)(g)+ | Lorenz Re 2019, 6/30/23 | $ 2,984 | |||
Total Reinsurance Sidecars | $ 2,984 | ||||
TOTAL INSURANCE-LINKED SECURITIES | |||||
(Cost $8,066) | $ 2,984 | ||||
Shares | |||||
SHORT TERM INVESTMENTS — 3.4% of Net Assets | |||||
Open-End Fund — 3.4% | |||||
911,414(h) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 911,414 | |||
$ 911,414 | |||||
TOTAL SHORT TERM INVESTMENTS | |||||
(Cost $911,414) | $ 911,414 | ||||
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 96.5% | |||||
(Cost $30,365,146) | $ 25,850,207 | ||||
Change | |||||
in Net | |||||
Net | Unrealized | ||||
Dividend | Realized | Appreciation | |||
Income | Gain (Loss) | (Depreciation) | |||
AFFILIATED ISSUER — 1.9% | |||||
CLOSED-END FUND — 1.9% of Net Assets | |||||
61,212(i) | Pioneer ILS Interval Fund | $— | $— | $9,182 | $ 512,959 |
TOTAL CLOSED-END FUND | |||||
(Cost $646,050) | $ 512,959 | ||||
TOTAL INVESTMENTS IN AFFILIATED ISSUER — 1.9% | |||||
(Cost $646,050) | $ 512,959 | ||||
OTHER ASSETS AND LIABILITIES — 1.6% | $ 432,423 | ||||
NET ASSETS — 100.0% | $ 26,795,589 |
bps | Basis Points. |
LIBOR | London Interbank Offered Rate. |
REIT | Real Estate Investment Trust. |
SOFR | 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, 2022, the value of these securities amounted to $20,183,404, or 75.3% of net assets. |
(a) | Floating rate note. Coupon rate, reference index and spread shown at June 30, 2022. |
(b) | Security issued with a zero coupon. Income is recognized through accretion of discount. |
(c) | Payment-in-kind (PIK) security which may pay interest in the form of additional principal amount. |
(d) | Avation Plc warrants are exercisable into 6,300 shares. |
(e) | Non-income producing security. |
(f) | Option Care Health, Inc. warrants are exercisable into 160 shares. |
(g) | Issued as preference shares. |
(h) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
16 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
(i) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
* | Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically re-determined 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 or SOFR, (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, 2022. |
† | Amount rounds to less than 0.1%. |
+ | Security is valued using significant unobservable inputs to determine its value. |
^ | Security is valued using fair value methods (other than prices supplied by independent pricing services or broker dealers). |
# | Securities are restricted as to resale. |
Acquisition | |||
Restricted Securities | date | Cost | Value |
Lorenz Re 2019 | 7/10/2019 | $8,066 | $2,984 |
% of Net assets | 0.0%† |
† Amount rounds to less than 0.1%.
FUTURES CONTRACTS | |||||
FIXED INCOME INDEX FUTURES CONTRACTS | |||||
Number of | Unrealized | ||||
Contracts Long | Description | Expiration Date | Notional Amount | Market Value | (Depreciation) |
1 | U.S. 5 Year Note (CBT) | 9/30/22 | $ 113,300 | $112,250 | $(1,050) |
TOTAL FUTURES CONTRACTS | $ 113,300 | $112,250 | $(1,050) |
SWAP CONTRACTS | |||||||
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACTS – BUY PROTECTION | |||||||
Notional | Pay/ | Annual | Expiration | Premiums | Unrealized | Market | |
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | Paid | Appreciation | Value |
2,613,600 | Markit CDX North America | Pay | 5.00% | 6/20/27 | $66,251 | $5,652 | $71,903 |
High Yield Index Series 38 | |||||||
TOTAL CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACTS – BUY PROTECTION | $66,251 | $5,652 | $71,903 | ||||
TOTAL SWAP CONTRACTS | $66,251 | $5,652 | $71,903 |
(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) | Pays quarterly. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $4,538,220 and $13,168,293, respectively.
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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized depreciation on investments based on cost for federal tax purposes of $30,866,841 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 56,209 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (4,489,031) |
Net unrealized depreciation | $(4,432,822) |
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. 17
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
The following is a summary of the inputs used as of June 30, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Senior Secured Floating Rate Loan Interests | $ — | $ 746,887 | $ — | $ 746,887 |
Common Stock | 72,777 | — | — | 72,777 |
Commercial Mortgage-Backed Security | — | 90,031 | — | 90,031 |
Convertible Corporate Bonds | — | 1,080,472 | — | 1,080,472 |
Corporate Bonds | — | 22,945,179 | — | 22,945,179 |
Rights/Warrants | — | — | 463 | 463 |
Insurance-Linked Securities | ||||
Reinsurance Sidecars | — | — | 2,984 | 2,984 |
Open-End Fund | 911,414 | — | — | 911,414 |
Affiliated Closed-End Fund | — | 512,959 | — | 512,959 |
Total Investments in Securities | $984,191 | $ 25,375,528 | $3,447 | $ 26,363,166 |
Other Financial Instruments | ||||
Net unrealized depreciation on futures contracts | $ (1,050) | $ — | $ — | $ (1,050) |
Swap contracts, at value | — | 71,903 | — | 71,903 |
Total Other Financial Instruments | $ (1,050) | $ 71,903 | $ — | $ 70,853 |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
Insurance- | |||
Rights/ | Linked | ||
Warrants | Securities | Total | |
Balance as of 12/31/21 | $ — | $ 844 | $ 844 |
Realized gain (loss)(1) | — | (9,548) | (9,548) |
Changed in unrealized appreciation (depreciation)(2) | (11) | 11,713 | 11,702 |
Accrued discounts/premiums | — | (25) | (25) |
Purchases | — | — | — |
Sales | — | — | — |
Transfers in to Level 3* | 474 | — | 474 |
Transfers out of Level 3* | — | — | — |
Balance as of 6/30/22 | $ 463 | $2,984 | $ 3,447 |
(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. |
* | Transfers are calculated on the beginning of period values. During the six months ended June 30, 2022, 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, 2022: $2,154
18 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $30,365,146) | $ 25,850,207 |
Investments in affiliated issuers, at value (cost $646,050) | 512,959 |
Futures collateral | 5,125 |
Swaps collateral | 86,013 |
Variation margin for futures contracts | 703 |
Variation margin for centrally cleared swap contracts | 5,800 |
Swap contracts, at value (net premiums paid $66,251) | 71,903 |
Receivables — | |
Portfolio shares sold | 216 |
Interest | 456,674 |
Due from the Adviser | 158 |
Other assets | 118 |
Total assets | $ 26,989,876 |
LIABILITIES: | |
Overdraft due to custodian | $ 5,798 |
Payables — | |
Portfolio shares repurchased | 125,873 |
Professional fees | 37,003 |
Printing expense | 22,850 |
Due to affiliates | 2,172 |
Accrued expenses | 591 |
Total liabilities | $ 194,287 |
NET ASSETS: | |
Paid-in capital | $ 32,256,837 |
Distributable earnings (loss) | (5,461,248) |
Net assets | $ 26,795,589 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $21,638,097/2,735,502 shares) | $ 7.91 |
Class ll (based on $5,157,492/661,297 shares) | $ 7.80 |
The accompanying notes are an integral part of these financial statements. 19
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Interest from unaffiliated issuers | $ 945,294 | |
Total Investment Income | $ 945,294 | |
EXPENSES: | ||
Management fees | $ 105,803 | |
Administrative expenses | 5,720 | |
Distribution fees | ||
Class ll | 8,755 | |
Custodian fees | 1,352 | |
Professional fees | 39,161 | |
Printing expense | 24,309 | |
Pricing fees | 1,592 | |
Trustees' fees | 4,117 | |
Miscellaneous | 558 | |
Total expenses | $ 191,367 | |
Less fees waived and expenses reimbursed by the Adviser | (36,114) | |
Net expenses | $ 155,253 | |
Net investment income | $ 790,041 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ (440,005) | |
Futures contracts | (6,442) | |
Swap contracts | 179,274 | $ (267,173) |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(5,009,176) | |
Investments in affiliated issuers | 9,182 | |
Futures contracts | (1,594) | |
Swap contracts | 16,938 | $ (4,984,650) |
Net realized and unrealized gain (loss) on investments | $ (5,251,823) | |
Net decrease in net assets resulting from operations | $ (4,461,782) |
20 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 790,041 | $ 1,998,307 |
Net realized gain (loss) on investments | (267,173) | 1,578,134 |
Change in net unrealized appreciation (depreciation) on investments | (4,984,650) | (1,111,940) |
Net increase (decrease) in net assets resulting from operations | $ (4,461,782) | $ 2,464,501 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($0.21 and $0.48 per share, respectively) | $ (627,226) | $ (1,727,107) |
Class ll ($0.20 and $0.45 per share, respectively) | (160,840) | (504,482) |
Total distributions to shareowners | $ (788,066) | $ (2,231,589) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 2,995,650 | $ 27,625,348 |
Reinvestment of distributions | 787,650 | 2,231,589 |
Cost of shares repurchased | (15,132,577) | (29,037,853) |
Net increase (decrease) in net assets resulting from Portfolio share transactions | $(11,349,277) | $ 819,084 |
Net increase (decrease) in net assets | $(16,599,125) | $ 1,051,996 |
NET ASSETS: | ||
Beginning of period | $ 43,394,714 | $ 42,342,718 |
End of period | $ 26,795,589 | $ 43,394,714 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class l | ||||
Shares sold | 110,340 | $ 985,046 | 484,759 | $ 4,539,716 |
Reinvestment of distributions | 72,545 | 627,226 | 184,884 | 1,727,107 |
Less shares repurchased | (471,554) | (4,067,170) | (1,326,776) | (12,427,261) |
Net decrease | (288,669) | $ (2,454,898) | (657,133) | $ (6,160,438) |
Class ll | ||||
Shares sold | 231,215 | $ 2,010,620 | 2,501,984 | $ 23,085,632 |
Reinvestment of distributions | 18,691 | 160,408 | 54,876 | 504,482 |
Less shares repurchased | (1,235,474) | (11,065,407) | (1,796,723) | (16,610,592) |
Net increase (decrease) | (985,568) | $ (8,894,379) | 760,137 | $ 6,979,522 |
The accompanying notes are an integral part of these financial statements.
21
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 9.34 | $ 9.29 | $ 9.58 | $ 8.79 | $ 9.53 | $ 9.31 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.21 | 0.43 | 0.46 | 0.47 | 0.44 | 0.43 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.43) | 0.10 | (0.27) | 0.78 | (0.74) | 0.22 |
Net increase (decrease) from investment operations | $ (1.22) | $ 0.53 | $ 0.19 | $ 1.25 | $ (0.30) | $ 0.65 |
Distributions to shareowners: | ||||||
Net investment income | (0.21) | (0.48) | (0.48) | (0.46) | (0.44) | (0.43) |
Total distributions | $ (0.21) | $ (0.48) | $ (0.48) | $ (0.46) | $ (0.44) | $ (0.43) |
Net increase (decrease) in net asset value | $(1.43) | $0.05 | $(0.29) | $0.79 | $(0.74) | $0.22 |
Net asset value, end of period | $7.91 | $9.34 | $9.29 | $9.58 | $8.79 | $9.53 |
Total return(b) | (13.20)%(c) | 5.82% | 2.37% | 14.44% | (3.30)% | 7.14% |
Ratio of net expenses to average net assets | 0.90%(d) | 0.90% | 1.02% | 1.03% | 1.03% | 0.91% |
Ratio of net investment income (loss) to average | ||||||
net assets | 4.93%(d) | 4.60% | 5.15% | 5.03% | 4.76% | 4.57% |
Portfolio turnover rate | 14%(c) | 99% | 90% | 66% | 45% | 44% |
Net assets, end of period (in thousands) | $21,638 | $28,234 | $34,218 | $35,652 | $33,476 | $42,728 |
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 | 1.12%(d) | 1.12% | 1.10% | 1.07% | 1.07% | 0.91% |
Net investment income (loss) to average | ||||||
net assets | 4.71%(d) | 4.38% | 5.07% | 4.99% | 4.72% | 4.57% |
(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.
22
The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 9.21 | $ 9.16 | $ 9.47 | $ 8.68 | $ 9.45 | $ 9.23 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.20 | 0.40 | 0.42 | 0.44 | 0.41 | 0.41 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.41) | 0.10 | (0.28) | 0.78 | (0.77) | 0.22 |
Net increase (decrease) from investment operations | $ (1.21) | $ 0.50 | $ 0.14 | $ 1.22 | $ (0.36) | $ 0.63 |
Distributions to shareowners: | ||||||
Net investment income | (0.20) | (0.45) | (0.45) | (0.43) | (0.41) | (0.41) |
Total distributions | $ (0.20) | $ (0.45) | $ (0.45) | $ (0.43) | $ (0.41) | $ (0.41) |
Net increase (decrease) in net asset value | (1.41) | 0.05 | $ (0.31) | 0.79 | $ (0.77) | 0.22 |
Net asset value, end of period | 7.80 | 9.21 | $ 9.16 | 9.47 | $ 8.68 | 9.45 |
Total return(b) | (13.31)%(c) | 5.56% | 1.87% | 14.28% | (3.94)% | 6.89%(d) |
Ratio of net expenses to average net assets | 1.15%(e) | 1.15% | 1.26% | 1.28% | 1.28% | 1.16% |
Ratio of net investment income (loss) to average | ||||||
net assets | 4.56%(e) | 4.29% | 4.81% | 4.79% | 4.50% | 4.31% |
Portfolio turnover rate | 14%(c) | 99% | 90% | 66% | 45% | 44% |
Net assets, end of period (in thousands) | $ 5,157 | $15,161 | $ 8,125 | $11,642 | $ 8,085 | $11,594 |
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 | 1.37%(e) | 1.37% | 1.33% | 1.32% | 1.32% | 1.16% |
Net investment income (loss) to average | ||||||
net assets | 4.34%(e) | 4.07% | 4.74% | 4.74% | 4.45% | 4.31% |
(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.
23
Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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, 2023. 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 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.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Loan interests are valued 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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, 2022, three 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 industry valuation model) representing less than 0.0% of net assets. The value of these fair valued securities was $463.
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.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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, 2021, 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.
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $2,231,589 |
Total | $2,231,589 |
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 144,437 |
Capital loss carryforward | (707,101) |
Net unrealized appreciation | 351,264 |
Total | $(211,400) |
The difference between book basis and tax basis unrealized appreciation is attributable to the tax deferral of losses on wash sales and the mark to market of 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 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 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio's assets can decline as can the value of the Portfolio's distributions.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted.
These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 with respect to the issuer’s capacity to pay interest and repay principal. These securities involve greater risk of loss, are subject to greater price volatility, and may be less liquid and more difficult to value, 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) or SOFR (Secured Overnight Financing Rate). ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Markets are developing in response to these new rates, but questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic value transfer at the time of transition remain a significant concern. The effect of any changes to - or discontinuation of - LIBOR on the Portfolio will vary depending on, among other things, existing fallback provisions in individual contracts and whether, how, and when industry participants develop and widely adopt new reference rates and fallbacks for both legacy and new products and instruments. In March 2022, the U.S. federal government enacted legislation to establish a process for replacing LIBOR in existing contracts that do not already provide for the use of a clearly defined or practicable replacement benchmark rate as described in the legislation. Generally speaking, for contracts that do not contain a fallback provision as described in the legislation, a benchmark replacement recommended by the Federal Reserve Board will effectively automatically replace the USD LIBOR benchmark in the contract after June 30, 2023. The recommended benchmark replacement will be based on the SOFR
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
published by the Federal Reserve Bank of New York, including any recommended spread adjustment and benchmark replacement conforming changes. The process of transitioning from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that rely on LIBOR. The transition may also result in a reduction in the value of certain LIBOR-based investments held by the Portfolio or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses for the Portfolio. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could occur at any time.
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 the Portfolio’s custodian and accounting agent, and 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.
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, 2022 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.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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, 2022, 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, 2022, 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, 2022, was $115,971. Open futures contracts outstanding at June 30, 2022, 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 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.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2022, 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, 2022, was $(69,518). Open credit default swap contracts at June 30, 2022, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees payable under the Portfolio's Investment Management Agreement with the Adviser 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, 2022, the effective management fee (excluding waivers and/or assumption of expenses and 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, 2022, the Adviser waived $4,418 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 taxes, brokerage commissions, acquired fund fees and expenses and extraordinary expenses, such as litigation) 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. These expense limitation are in effect through May 1, 2023. 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, 2022, 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 $2,065 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $4,117 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $0.
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $107 in distribution fees payable to the Distributor at June 30, 2022.
6. 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, 2022, 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 | $ — | $ 71,903 | $ — | $ — | $ — |
Total Value | $ — | $ 71,903 | $ — | $ — | $ — |
Liabilities | |||||
Net unrealized | |||||
depreciation on | |||||
futures contracts | $1,050 | $ — | $ — | $ — | $ — |
Total Value | $1,050 | $ — | $ — | $ — | $ — |
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Pioneer High Yield VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2022 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 | $(6,442) | $ — | $ — | $ — | $ — |
Swap contracts | — | 179,274 | — | — | — |
Total Value | $(6,442) | $179,274 | $ — | $ — | $ — |
Change in Net | |||||
Unrealized Appreciation | |||||
(Depreciation) on: | |||||
Futures contracts | $(1,594) | $ — | $ — | $ — | $ — |
Swap contracts | — | 16,938 | — | — | — |
Total Value | $(1,594) | $ 16,938 | $ — | $ — | $ — |
7. 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, 2022, the Portfolio had the following unfunded loan commitment outstanding:
Unrealized | ||||
Appreciation | ||||
Loan | Principal | Cost | Value | (Depreciation) |
Project Watson | $409,200 | $409,200 | $409,200 | $ — |
8. Affiliated Issuers
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, 2022, the value of the Portfolio’s investment in affiliated issuers was $512,959, which represents 1.9% of the Portfolio’s net assets.
Transactions in affiliated issuers by the Portfolio for the six months ended June 30, 2022 were as follows:
Change in | Net Realized | ||||||
Net Unrealized | Gain/(Loss) | Dividends | |||||
Appreciation/ | From | Received and | Shares | ||||
Value at | (Depreciation) | Investments | Reinvested from | held at | Value at | ||
Name of the | December 31, | Purchases | from Investments | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2021 | Costs | in Affiliated Issuers | Issuers | Affiliated Issuers | 2022 | 2022 |
Pioneer ILS | |||||||
Interval Fund | $503,777 | $— | $9,182 | $— | $— | 61,212 | $512,959 |
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 High Yield 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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 | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) 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.
19622-16-0822
Pioneer Variable Contracts Trust
Pioneer Mid Cap Value
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22 |
Sector Distribution
(As a percentage of total investments)*
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | CenterPoint Energy, Inc. | 3.04% |
2. | Public Service Enterprise | |
Group, Inc. | 2.96 | |
3. | M&T Bank Corp. | 2.89 |
4. | Exelon Corp. | 2.71 |
5. | Pioneer Natural Resources Co. | 2.59 |
* | Excludes short term 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 6/30/22
Prices and Distributions
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class I | $10.40 | $23.08 |
Class II | $10.28 | $22.78 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 – 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.4525 | $3.0465 | $5.7039 |
Class ll | $0.2961 | $3.0465 | $5.7039 |
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.
The Russell Midcap Value Index is an unmanaged index that measures the performance of U.S. mid-cap 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.
Average Annual Total Returns | |||
(As of June 30, 2022) | |||
Russell Midcap | |||
Class I | Class II | Value Index | |
10 Years | 8.96% | 8.69% | 10.62% |
5 Years | 5.25% | 4.99% | 6.27% |
1 Year | -6.77% | -6.98% | -10.00% |
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.
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.
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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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 855.60 | $ 854.70 |
Expenses Paid During Period* | $ 3.40 | $ 4.55 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.74% and 0.99% 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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,021.12 | $1,019.89 |
Expenses Paid During Period* | $ 3.71 | $ 4.96 |
* | Expenses are equal to the Portfolio’s annualized expense ratio of 0.74% and 0.99% 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 6/30/22 |
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, 2022. 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, 2022? |
A: | Pioneer Mid Cap Value VCT Portfolio’s Class I shares returned -14.44% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -14.53%, while the Portfolio’s benchmark, the Russell Midcap Value Index (the Russell Index), returned -16.23%. |
Q: | How would you describe the investment environment for equity investors during the six-month period ended June 30, 2022? |
A: | The US equity market suffered a significant decline during the six-month period, and gave back much of the gain it had registered in 2021. Inflationary pressures, which had been evident since early last year, intensified following Russia’s invasion of Ukraine in February. The US Federal Reserve (Fed) responded by ending its quantitative easing (bond purchase) program, which had been enacted at the onset of the COVID-19 pandemic to help bolster the market and stimulate the economy, and then began hiking interest rates aggressively. The Fed raised the target range for its benchmark federal funds rate by 25 basis points (bps) in March, then followed with increases of 50 bps and 75 bps in May and June, respectively. (A basis point is equal to 1/100th of a percentage point.) In combination, those events fueled investors’ concerns that both economic growth and corporate profits could slow in the second half of the year. |
Mid-cap value stocks, while performing poorly in absolute terms, held up well versus mid-cap growth stocks over the six-month period. Mid-cap value, as measured by the Portfolio’s benchmark, the Russell Index, returned -16.23% for the period, while mid-cap growth stocks, as measured by the Russell Midcap Growth Index, returned -31.00%. Rising interest rates have tended to reduce the value of future corporate earnings when discounted back to today’s dollars, making for a particularly challenging environment for growth stocks, given that the cash-flow streams of such companies are weighted further in the future. In contrast, value-segment companies have typically featured higher current cash flows. Value stocks also benefited from the larger relative weightings of value companies in market segments that performed well during the period, including resources firms, and stocks of companies in defensive sectors such as utilities and consumer staples.
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 |
Q: | How did you position the Portfolio during the six-month period ended June 30, 2022, and how did the positioning affect performance relative to the benchmark? |
A: | We generally seek to own two types of stocks in the Portfolio. First, we prefer stocks of companies with valuations that we feel do not fully capture positive attributes, such as high-quality assets, high returns on capital, or stable earnings. Second, we look for stocks of companies that are trading at discounts due to a lack of current profits, but where we see catalysts for a profit recovery in the intermediate term. |
Our search for companies in the latter category led us to shift the Portfolio to an overweight to the energy sector versus the Russell Index in 2021. At the time, many energy stocks were priced as though the underlying companies would destroy value in perpetuity, but we believed the combination of constrained supplies and improving management practices - namely, a focus on shareholder returns rather than production growth – could set the stage for a return to profitability. That scenario played out during the period, and the Portfolio’s benchmark-relative returns benefited from the modest overweight to energy as well as from holdings in strong performers such as Marathon Petroleum and Schlumberger.
The utilities sector was an area of strength for the Portfolio versus the benchmark during the six-month period. We had added exposure to the sector throughout 2021, based on the view that it was home to many companies that featured stable returns, but whose stocks had fallen out of favor amid investors’ embrace of faster-growing, more richly valued areas of the market. We sought to take advantage of the resulting valuation discount by initiating Portfolio investments in Exelon and CenterPoint Energy. Both stocks posted gains in the first half of the year, even as the broader market moved lower, and aided the Portfolio’s relative performance.
The materials sector was another source of positive benchmark-relative results during the period, thanks to strong returns for several mining stocks in the Portfolio. A position in Graphic Packaging Holding also boosted relative results. We believed the stock was undervalued, given the company’s return to positive (albeit modest) growth, as well as its role as a low-cost producer in a consolidating industry. The shares indeed rose closer to their intrinsic value in the first half of the year, and aided the Portfolio’s performance.
On the other hand, the Portfolio lost some ground versus the benchmark through its positioning in the consumer discretionary sector. A number of holdings that we had anticipated would benefit from a post-pandemic reopening – including Expedia, Hilton Worldwide, and Darden Restaurants –lagged during the period as consumer spending came under pressure from rising inflation. In addition, the reopening proved bumpier than expected in some parts of the world. Lennar, one of the largest US homebuilders, also underperformed and detracted from the Portfolio’s benchmark-relative returns
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Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
as investors grew concerned about the potential effects of higher interest rates on housing prices and affordability. LKQ, a provider of aftermarket auto parts, was another Portfolio laggard of note. LKQ’s share price fell sharply during the first three months of the period, due to concerns about declining auto sales. The price recovered, somewhat, in the second quarter, but not enough to prevent the stock from detracting from the Portfolio’s relative returns.
The real estate sector was an additional source of benchmark-relative weakness for the Portfolio. Within real estate, benchmark-relative returns lagged due to holdings of companies with “longer duration” cash flows; in other words, cash flows weighted further in the future. Stocks with that characteristic generally underperformed during the six-month period and pressured the Portfolio’s holdings in the real estate sector.
Q: | Did the Portfolio have any exposure to derivative securities during the six-month period ended June 30, 2022? |
A: | The Portfolio had no exposure to derivatives exposure during the period. |
Q: | What is your investment outlook, and how have you positioned the Portfolio? |
A: | We continue to see a wide range of opportunities in the mid-cap value category. The financials sector is a particularly interesting area to us, since it includes regional banks. Therefore, we believe the sector could be in a better position to capitalize on rising interest rates than large-cap financial firms, where a higher percentage of revenues derive from capital-markets activity (which makes them more sensitive to financial-market performance). In addition, the mid-cap value category is home to a wide range of companies that we think could benefit from higher inflation, including those in the energy and materials sectors. We also feel that mid-cap value stocks offer a more attractive landscape for individual stock selection than the large-cap value segment. Finally, the mid-cap value category has continued to offer compelling valuations compared to the broader market, in our view, even after the category’s outperformance over the past 12 to 18 months. Taken together, we believe those factors indicate that the mid-cap value area remains fertile ground for bottom-up investors. |
We remain committed to investing the Portfolio in shares of companies with strong balance sheets and what we view as 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. We continue to believe our investment strategy for the Portfolio could be well-suited for the economic and market conditions that could prevail during the remainder of the year and beyond.
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Pioneer Mid Cap Value 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,
armed conflict including Russia’s
military invasion of Ukraine, sanctions
against Russia, other nations or
individuals or companies and possible
countermeasures, 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.
The market price of securities may
fluctuate when interest rates change.
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.
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 6/30/22 (unaudited) |
Shares | Value | |
UNAFFILIATED ISSUERS — 99.3% | ||
COMMON STOCKS — 98.1% of Net Assets | ||
Auto Components — 1.2% | ||
9,468 | Lear Corp. | $ 1,191,927 |
Total Auto Components | $ 1,191,927 | |
Banks — 12.0% | ||
57,617 | Citizens Financial Group, Inc. | $ 2,056,351 |
10,435 | First Republic Bank | 1,504,727 |
18,249 | M&T Bank Corp. | 2,908,708 |
28,011 | Popular, Inc. | 2,154,886 |
88,661 | Regions Financial Corp. | 1,662,394 |
40,615 | Zions Bancorp N.A. | 2,067,303 |
Total Banks | $ 12,354,369 | |
Beverages — 1.5% | ||
28,077 | Molson Coors Beverage Co., Class B | $ 1,530,477 |
Total Beverages | $ 1,530,477 | |
Building Products — 1.2% | ||
9,876 | Trane Technologies Plc | $ 1,282,596 |
Total Building Products | $ 1,282,596 | |
Capital Markets — 1.8% | ||
29,456 | State Street Corp. | $ 1,815,962 |
Total Capital Markets | $ 1,815,962 | |
Chemicals — 1.0% | ||
22,251 | Mosaic Co. | $ 1,050,915 |
Total Chemicals | $ 1,050,915 | |
Communications Equipment — 1.4% | ||
7,000 | Motorola Solutions, Inc. | $ 1,467,200 |
Total Communications Equipment | $ 1,467,200 | |
Consumer Finance — 1.0% | ||
10,806 | Discover Financial Services | $ 1,022,032 |
Total Consumer Finance | $ 1,022,032 | |
Containers & Packaging — 4.1% | ||
102,180 | Graphic Packaging Holding Co. | $ 2,094,690 |
36,191 | Sealed Air Corp. | 2,088,945 |
Total Containers & Packaging | $ 4,183,635 | |
Electric Utilities — 2.7% | ||
60,175 | Exelon Corp. | $ 2,727,131 |
Total Electric Utilities | $ 2,727,131 | |
Electrical Equipment — 3.4% | ||
12,913 | Eaton Corp. Plc | $ 1,626,909 |
23,793 | Emerson Electric Co. | 1,892,495 |
Total Electrical Equipment | $ 3,519,404 |
8 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Electronic Equipment, Instruments & Components — 2.8% | ||
7,679 | CDW Corp. | $ 1,209,903 |
6,010(a) | Keysight Technologies, Inc. | 828,479 |
26,839 | National Instruments Corp. | 838,182 |
Total Electronic Equipment, Instruments & Components | $ 2,876,564 | |
Energy Equipment & Services — 1.4% | ||
49,207 | Baker Hughes Co. | $ 1,420,606 |
Total Energy Equipment & Services | $ 1,420,606 | |
Equity Real Estate Investment Trusts (REITs) — 10.3% | ||
2,988 | AvalonBay Communities, Inc. | $ 580,419 |
6,298 | Camden Property Trust | 846,955 |
8,907 | Extra Space Storage, Inc. | 1,515,259 |
16,631 | First Industrial Realty Trust, Inc. | 789,640 |
23,703 | Gaming and Leisure Properties, Inc. | 1,087,020 |
32,064 | Host Hotels & Resorts, Inc. | 502,763 |
82,444 | Kimco Realty Corp. | 1,629,918 |
2,792 | SBA Communications Corp. | 893,580 |
19,246 | Ventas, Inc. | 989,822 |
20,433 | Welltower, Inc. | 1,682,657 |
Total Equity Real Estate Investment Trusts (REITs) | $ 10,518,033 | |
Food Products — 0.9% | ||
44,231(a) | Hostess Brands, Inc. | $ 938,140 |
Total Food Products | $ 938,140 | |
Health Care Equipment & Supplies — 2.6% | ||
5,490 | STERIS Plc | $ 1,131,763 |
14,728 | Zimmer Biomet Holdings, Inc. | 1,547,324 |
Total Health Care Equipment & Supplies | $ 2,679,087 | |
Health Care Providers & Services — 2.1% | ||
40,311 | Cardinal Health, Inc. | $ 2,107,056 |
Total Health Care Providers & Services | $ 2,107,056 | |
Hotels, Restaurants & Leisure — 5.0% | ||
16,203 | Darden Restaurants, Inc. | $ 1,832,883 |
16,171(a) | Expedia Group, Inc. | 1,533,496 |
15,926 | Hilton Worldwide Holdings, Inc. | 1,774,794 |
Total Hotels, Restaurants & Leisure | $ 5,141,173 | |
Household Durables — 1.5% | ||
21,206 | Lennar Corp., Class A | $ 1,496,507 |
Total Household Durables | $ 1,496,507 | |
Insurance — 5.8% | ||
32,294 | Aflac, Inc. | $ 1,786,827 |
38,792 | Hartford Financial Services Group, Inc. | 2,538,161 |
71,168 | Old Republic International Corp. | 1,591,316 |
Total Insurance | $ 5,916,304 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Life Sciences Tools & Services — 1.5% | ||
21,149(a) | Syneos Health, Inc. | $ 1,515,960 |
Total Life Sciences Tools & Services | $ 1,515,960 | |
Machinery — 4.9% | ||
14,870 | AGCO Corp. | $ 1,467,669 |
44,475 | Ingersoll Rand, Inc. | 1,871,508 |
20,338 | PACCAR, Inc. | 1,674,631 |
Total Machinery | $ 5,013,808 | |
Media — 1.6% | ||
13,718 | Interpublic Group of Cos., Inc. | $ 377,657 |
33,846(a) | Liberty Media Corp.-Liberty SiriusXM | 1,220,148 |
Total Media | $ 1,597,805 | |
Metals & Mining — 2.6% | ||
12,606 | Reliance Steel & Aluminum Co. | $ 2,141,255 |
18,300 | Teck Resources, Ltd., Class B | 559,578 |
Total Metals & Mining | $ 2,700,833 | |
Multi-Utilities — 5.9% | ||
103,412 | CenterPoint Energy, Inc. | $ 3,058,927 |
47,068 | Public Service Enterprise Group, Inc. | 2,978,463 |
Total Multi-Utilities | $ 6,037,390 | |
Oil, Gas & Consumable Fuels — 5.7% | ||
12,874 | Chord Energy Corp. | $ 1,566,122 |
63,743 | Coterra Energy, Inc. | 1,643,932 |
11,653 | Pioneer Natural Resources Co. | 2,599,551 |
Total Oil, Gas & Consumable Fuels | $ 5,809,605 | |
Pharmaceuticals — 1.0% | ||
31,836 | Organon & Co. | $ 1,074,465 |
Total Pharmaceuticals | $ 1,074,465 | |
Real Estate Management & Development — 0.7% | ||
9,303(a) | CBRE Group, Inc., Class A | $ 684,794 |
Total Real Estate Management & Development | $ 684,794 | |
Road & Rail — 1.3% | ||
8,754 | JB Hunt Transport Services, Inc. | $ 1,378,492 |
Total Road & Rail | $ 1,378,492 | |
Semiconductors & Semiconductor Equipment — 1.0% | ||
9,900 | MKS Instruments, Inc. | $ 1,016,037 |
Total Semiconductors & Semiconductor Equipment | $ 1,016,037 | |
Software — 0.9% | ||
12,908 | Dolby Laboratories, Inc., Class A | $ 923,696 |
Total Software | $ 923,696 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Specialty Retail — 3.9% | ||
3,505(a) | O’Reilly Automotive, Inc. | $ 2,214,319 |
25,410 | Ross Stores, Inc. | 1,784,544 |
Total Specialty Retail | $ 3,998,863 | |
Technology Hardware, Storage & Peripherals — 1.3% | ||
104,031 | Hewlett Packard Enterprise Co. | $ 1,379,451 |
Total Technology Hardware, Storage & Peripherals | $ 1,379,451 | |
Textiles, Apparel & Luxury Goods — 1.0% | ||
11,869 | Ralph Lauren Corp. | $ 1,064,056 |
Total Textiles, Apparel & Luxury Goods | $ 1,064,056 | |
Trading Companies & Distributors — 1.1% | ||
26,880(a) | AerCap Holdings NV | $ 1,100,467 |
Total Trading Companies & Distributors | $ 1,100,467 | |
TOTAL COMMON STOCKS | ||
(Cost $96,606,777) | $100,534,840 | |
SHORT TERM INVESTMENTS — 1.2% of Net Assets | ||
Open-End Fund — 1.2% | ||
1,265,350(b) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 1,265,350 |
$ 1,265,350 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $1,265,350) | $ 1,265,350 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 99.3% | ||
(Cost $97,872,127) | $101,800,190 | |
OTHER ASSETS AND LIABILITIES — 0.7% | $ 732,999 | |
NET ASSETS — 100.0% | $102,533,189 |
(a) | Non-income producing security. |
(b) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $44,917,214 and $50,646,802, 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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized appreciation on investments based on cost for federal tax purposes of $97,900,423 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $11,706,672 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (7,806,905) |
Net unrealized appreciation | $ 3,899,767 |
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 6/30/22 (unaudited) (continued) |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Common Stocks | $100,534,840 | $ — | $ — | $100,534,840 |
Open-End Fund | 1,265,350 | — | — | 1,265,350 |
Total Investments in Securities | $101,800,190 | $— | $— | $101,800,190 |
During the six months ended June 30, 2022, there were no transfers in or out of Level 3.
12 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $97,872,127) | $ 101,800,190 |
Foreign currencies, at value (cost $12,227) | 12,190 |
Receivables — | |
Investment securities sold | 1,459,127 |
Portfolio shares sold | 98,384 |
Dividends | 143,662 |
Interest | 1,283 |
Other assets | 191 |
Total assets | $ 103,515,027 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 896,795 |
Portfolio shares repurchased | 39,554 |
Due to affiliates | 12,057 |
Accrued expenses | 33,432 |
Total liabilities | $ 981,838 |
NET ASSETS: | |
Paid-in capital | $ 86,755,050 |
Distributable earnings | 15,778,139 |
Net assets | $ 102,533,189 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $31,560,655/3,035,258 shares) | $ 10.40 |
Class ll (based on $70,972,534/6,906,116 shares) | $ 10.28 |
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 6/30/22 | ||
INVESTMENT INCOME: | ||
Dividends from unaffiliated issuers (net of foreign taxes withheld $3,378) | $ 1,329,283 | |
Interest from unaffiliated issuers | 1,432 | |
Total Investment Income | $ 1,330,715 | |
EXPENSES: | ||
Management fees | $ 388,457 | |
Administrative expenses | 15,393 | |
Distribution fees | ||
Class ll | 104,534 | |
Custodian fees | 880 | |
Professional fees | 25,270 | |
Printing expense | 8,002 | |
Trustees’ fees | 3,808 | |
Miscellaneous | 395 | |
Total expenses | $ 546,739 | |
Net investment income | $ 783,976 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ 11,084,790 | |
Other assets and liabilities denominated in foreign currencies | 10,838 | $ 11,095,628 |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $ (29,699,673) | |
Other assets and liabilities denominated in foreign currencies | (34) | $(29,699,707) |
Net realized and unrealized gain (loss) on investments | $(18,604,079) | |
Net decrease in net assets resulting from operations | $(17,820,103) |
14 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 783,976 | $ 1,960,312 |
Net realized gain (loss) on investments | 11,095,628 | 93,986,078 |
Change in net unrealized appreciation (depreciation) on investments | (29,699,707) | (23,799,250) |
Net increase (decrease) in net assets resulting from operations | $ (17,820,103) | $ 72,147,140 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($9.20 and $0.20 per share, respectively) | $ (14,720,475) | $ (351,985) |
Class ll ($9.05 and $0.16 per share, respectively) | (33,173,156) | (1,889,458) |
Total distributions to shareowners | $ (47,893,631) | $ (2,241,443) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 8,427,410 | $ 14,596,528 |
Reinvestment of distributions | 47,893,631 | 2,241,443 |
Cost of shares repurchased | (17,117,777) | (65,289,704) |
In-kind redemptions | — | (175,368,797) |
Net increase (decrease) in net assets resulting from Portfolio | ||
share transactions | $ 39,203,264 | $(223,820,530) |
Net decrease in net assets | $ (26,510,470) | $(153,914,833) |
NET ASSETS: | ||
Beginning of period | $ 129,043,659 | $ 282,958,492 |
End of period | $ 102,533,189 | $ 129,043,659 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class l | ||||
Shares sold | 38,123 | $ 772,260 | 80,940 | $ 1,696,730 |
Reinvestment of distributions | 1,437,546 | 14,720,475 | 16,753 | 351,985 |
Less shares repurchased | (102,629) | (2,189,277) | (271,723) | (5,650,499) |
Net increase (decrease) | 1,373,040 | $ 13,303,458 | (174,030) | $ (3,601,784) |
Class ll | ||||
Shares sold | 367,333 | $ 7,655,150 | 608,309 | $ 12,899,798 |
Reinvestment of distributions | 3,277,980 | 33,173,156 | 91,014 | 1,889,458 |
Less shares repurchased | (720,584) | (14,928,500) | (2,864,283) | (59,639,205) |
In-kind redemptions | — | — | (7,946,026) | (175,368,797) |
Net increase (decrease) | 2,924,729 | $ 25,899,806 | (10,110,986) | $(220,218,746) |
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 | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 23.08 | $ 17.97 | $ 18.46 | $ 15.53 | $ 21.11 | $ 20.49 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.15 | 0.21 | 0.17 | 0.20 | 0.23 | 0.13 |
Net realized and unrealized gain (loss) | ||||||
on investments | (3.63) | 5.10 | 0.07 | 4.11 | (4.01) | 2.36 |
Net increase (decrease) from | ||||||
investment operations | $ (3.48) | $ 5.31 | $ 0.24 | $ 4.31 | $ 3.78 | $ 2.49 |
Distributions to shareowners: | ||||||
Net investment income | (0.45) | (0.20) | (0.20) | (0.24) | (0.14) | (0.18) |
Net realized gain | (8.75) | — | (0.53) | (1.14) | (1.66) | (1.69) |
Total distributions | $ (9.20) | $ (0.20) | $ (0.73) | $ (1.38) | $ (1.80) | $ (1.87) |
Net increase (decrease) in net asset value | $ (12.68) | $ 5.11 | $ (0.49) | $ 2.93 | $ (5.58) | $ 0.62 |
Net asset value, end of period | $ 10.40 | $ 23.08 | $ 17.97 | $ 18.46 | $ 15.53 | $ 21.11 |
Total return(b) | (14.44)%(c) | 29.67% | 2.14% | 28.44% | (19.34)% | 13.17% |
Ratio of net expenses to average net assets | 0.74%(d) | 0.75% | 0.74% | 0.73% | 0.73% | 0.71% |
Ratio of net investment income (loss) to | ||||||
average net assets | 1.50%(d) | 1.01% | 1.10% | 1.14% | 1.19% | 0.64% |
Portfolio turnover rate | 38%(c) | 60% | 88% | 93% | 81% | 61% |
Net assets, end of period (in thousands) | $31,561 | $38,358 | $32,989 | $37,384 | $33,506 | $48,082 |
(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.
16 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 22.78 | $ 17.74 | $ 18.23 | $ 15.35 | $ 20.87 | $ 20.28 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.13 | 0.14 | 0.13 | 0.15 | 0.18 | 0.08 |
Net realized and unrealized gain (loss) | ||||||
on investments | (3.58) | 5.06 | 0.06 | 4.06 | (3.95) | 2.33 |
Net increase (decrease) from | ||||||
investment operations | $ (3.45) | $ 5.20 | $ 0.19 | $ 4.21 | $ (3.77) | $ 2.41 |
Distributions to shareowners: | ||||||
Net investment income | (0.30) | (0.16) | (0.15) | (0.19) | (0.09) | (0.13) |
Net realized gain | (8.75) | — | (0.53) | (1.14) | (1.66) | (1.69) |
Total distributions | $ (9.05) | $ (0.16) | $ (0.68) | $ (1.33) | $ (1.75) | $ (1.82) |
Net increase (decrease) in net asset value | $ (12.50) | $ 5.04 | $ (0.49) | $2.88 | $(5.52) | $0.59 |
Net asset value, end of period | $10.28 | $22.78 | $17.74 | $18.23 | $15.35 | $20.87 |
Total return(b) | (14.53)%(c) | 29.37% | 1.87% | 28.08% | (19.49)% | 12.87% |
Ratio of net expenses to average net assets | 0.99%(d) | 0.98% | 0.99% | 0.98% | 0.98% | 0.96% |
Ratio of net investment income (loss) to | ||||||
average net assets | 1.23%(d) | 0.69% | 0.85% | 0.89% | 0.95% | 0.39% |
Portfolio turnover rate | 38%(c) | 60% | 88% | 93% | 81% | 61% |
Net assets, end of period (in thousands) | $70,973 | $90,686 | $249,969 | $247,058 | $223,863 | $298,671 |
(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. 17
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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.
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 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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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, 2022, 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 broker valuation 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, 2021, 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 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 Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $2,241,443 |
Total | $2,241,443 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $17,853,206 |
Undistributed long-term capital gains | 30,039,228 |
Net unrealized appreciation | 33,599,439 |
Total | $81,491,873 |
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 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 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.
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, armed conflict including Russia’s military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio’s assets can decline as can the value of the Portfolio’s distributions.
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.
20
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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’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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
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.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 the Portfolio’s custodian and accounting agent, and 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
21
Pioneer Mid Cap Value VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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.
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 payable under the Portfolio’s Investment Management Agreement with the Adviser 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, 2022, 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 $10,575 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $3,808 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had no payable for Trustees’ fees on its Statement of Assets and Liabilities.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $1,482 in distribution fees payable to the Distributor at June 30, 2022.
22
Pioneer Mid Cap Value 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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 | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) Inc. |
29
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.
19609-16-0822
Pioneer Variable Contracts Trust
Pioneer Fund
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 |
Portfolio Update 6/30/22
Sector Distribution
(As a percentage of total investments)*
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | Alphabet, Inc. | 7.77% |
2. | Microsoft Corp. | 5.79 |
3. | Apple, Inc. | 4.80 |
4. | Analog Devices, Inc. | 4.79 |
5. | Schlumberger, Ltd. | 3.87 |
* | Excludes short term 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 6/30/22
Prices and Distributions
Net Asset Value per Share | 6/30/22 | 12/31/21 |
Class I | $13.04 | $19.80 |
Class II | $13.17 | $19.97 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 - 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.0300 | $1.0505 | $1.6765 |
Class II | $0.0100 | $1.0505 | $1.6765 |
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 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.
Average Annual Total Returns
(As of June 30, 2022)
Class I | Class II | S&P 500 Index | |
10 Years | 13.11% | 12.82% | 12.96% |
5 Years | 12.92% | 12.64% | 11.31% |
1 Year | -12.91% | -13.16% | -10.62% |
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.
2
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 |
(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 Fund VCT Portfolio
Based on actual returns from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 800.20 | $ 799.00 |
Expenses Paid During Period* | $ 3.35 | $ 4.46 |
* | Expenses are equal to the Portfolio’s annualized net 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 Fund VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the period from January 1, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,021.08 | $1,019.84 |
Expenses Paid During Period* | $ 3.76 | $ 5.01 |
* | Expenses are equal to the Portfolio’s annualized net 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). |
3
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
In the following discussion, Jeff Kripke discusses the market environment during the six-month period ended June 30, 2022, 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 a portfolio manager at Amundi US, Craig Sterling, Managing Director, Director of Core Equity and Head 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, 2022? |
A: | Pioneer Fund VCT Portfolio’s Class I shares returned -19.98% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -20.10%, while the Portfolio’s benchmark, the Standard & Poor’s 500 Index (the S&P 500), returned -19.96%. |
Q: | How would you describe the market for equities during the six-month period ended June 30, 2022? |
A: | This was a tumultuous six-month period, with the US equity market posting a decline of 20%, the worst six-month return to start a calendar year since 1970, as measured by the Portfolio’s benchmark, the S&P 500. Soaring inflation, supply chain constraints, and geopolitical tensions combined to pressure the outlook for the global economy over the six-month period. The emergence of more virulent Omicron variants of the COVID-19 virus continued to wreak havoc on the global supply chains, and China saw a rise in the number of COVID-19 infections, and, with its “zero-COVID” policy, the government put the City of Shanghai in lockdown for over two months, which dented consumption and caused further constraints on manufacturing and trade. |
Russia’s invasion of Ukraine during the late winter further exacerbated inflationary pressures and increased the risk of an economic slowdown. Given the importance of Russia and Ukraine in the export markets for wheat, fertilizer, oil, and gas, the detrimental effects of the war and the coordinated sanctions placed on Russia by the US and some European nations led to a spike in a number of commodity prices. In fact, US inflation data reached a level not seen in the last 40 years, and consumer confidence declined.
Equities have struggled as the Federal Reserve (Fed) has aggressively raised interest rates to combat persistent inflation, which, as noted above, reached levels not seen since 1981 during the second quarter. Consumer confidence, as measured by the University of Michigan, also weakened. The University’s sentiment indicator dropped to 50 in June, the lowest reading since 1952. Declining consumer sentiment further heightened investors’ concerns over slowing economic growth in the world’s largest economy, as consumer spending has historically accounted for a majority of the US gross domestic product (GDP).
Within the S&P 500, 10 of 11 sectors turned in negative performance during the six-month period, with consumer discretionary and communication services, both down by more than 30%, and information technology (-27%) the worst performers. Energy was the only sector to show a positive return,
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.
4
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
gaining 32% for the first six months of 2022, as commodity prices have risen significantly, driven by concerns over inadequate oil supplies globally in the wake of Russia’s invasion of Ukraine. Despite generating negative performance for the period, utilities, down by less than 1%, consumer staples (-6%), and health care (-8%) held up better than most other sectors within the S&P 500.
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, 2022? |
A: | The Portfolio performed essentially in line with the S&P 500 during the six-month period. With regard to sector allocation, the Portfolio’s underweight to consumer discretionary and an overweight to energy slightly benefited benchmark-relative returns, while lack of exposure to the stronger-performing utilities sector, and an overweight to the underperforming communication services sector slightly detracted. A significant headwind for the Portfolio’s relative returns for the year to date has been the outperformance of stocks with low price-to-earnings (P/E) ratios. The Portfolio was underweight relative to the benchmark in those stocks because they do not meet our competitive, financial, and ESG investment criteria. (P/E Ratio reflects the price of a stock divided by its earnings per share.) The Portfolio’s overall security selection results made a slight, positive contribution to relative performance during the six-month period. |
With regard to individual positions, Portfolio holdings that aided benchmark-relative returns for the period included Schlumberger and Coca-Cola. Schlumberger is a leading oilfield services company. The shares made a significant, positive contribution to the Portfolio’s relative performance during the six-month period, as oil prices remained high due to tight supply and geopolitical tensions. Schlumberger is a dominant firm in the oilfield services space and is widely regarded as a technology leader, allowing the company to attain premium pricing and maintain a competitive edge. We believe Schlumberger emerged from the recent down cycle for energy firms as a leaner, less capital-intensive company, which could lead to a more sustainable business over the long-term. The company also plays a critical role in addressing climate change by helping oil and gas companies improve operational efficiency while reducing or avoiding emissions and lowering water usage. Schlumberger is making investments in businesses that support clean energy, carbon capture services, and geothermal energy. The Portfolio’s position in Coca-Cola also contributed to positive relative results during the six-month period, as the company announced quarterly revenues and earnings that exceeded investor expectations in the second quarter. In addition, the company’s management maintained its full-year guidance, despite headwinds and uncertainties related to macroeconomic factors such as the conflict in Ukraine and the COVID-19-related lockdowns in China. We believe that Coca-Cola could continue benefiting from the economic reopening. However, we also view the company as having strong defensive qualities, which could allow it to better manage cost pressures from rising prices as compared with Coca-Cola’s counterparts.
5
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
Individual positions that detracted from the Portfolio’s benchmark-relative performance during the six-month period included Live Nation Entertainment and Elanco Animal Health. Live Nation is one of the world’s largest producers of live entertainment. The share price fell during the period despite the company’s reporting generally strong second-quarter results, as investors were concerned about the effects of inflation and labor shortages on the summer event season. Longer-term, we believe the company could benefit from a secular shift in consumer spending towards experiences, including both live and digital concerts. Elanco Animal Health, an animal health provider, was another key detractor from the Portfolio’s benchmark-relative returns during the six-month period. Elanco’s share price declined after the company issued guidance that was below expectations, due to the effects of foreign exchange rates and the Ukraine-Russia conflict on its results. We have retained the Portfolio’s position in the stock because we believe the company could generate additional sales from the launch of new products, and from additional indications on its existing products. The company also appears to be on track with its cost reduction program, which could contribute to improved profitability.
Q: | Did the Portfolio have any exposure to derivative securities during the six-month period ended June 30, 2022? |
A: | No, the Portfolio had no exposure to derivatives during the 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 ESG investment criteria in managing the Portfolio, but since May of 2019, the prospectus has included specific ESG-related guidelines that we apply when assembling the Portfolio's investments. We use specific screening criteria to exclude investments from the Portfolio in 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 and 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 a new fiscal year? |
A: | We anticipate continued market volatility as the Fed raises interest rates, inflation concerns persist, and the Russia-Ukraine situation continues to unfold. We believe maintaining balanced Portfolio exposures to what we view as quality cyclical stocks, as well as to reasonably priced growth stocks, is the best investment approach in the current environment. By comparison, we believe equities of hyper-growth, unprofitable companies could be vulnerable |
6
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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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
to valuation compression if interest rates continue to rise. We also think low-quality, distressed-value stocks may underperform, especially shares of companies with excessive debt loads.
With this outlook in mind, we have increased the Portfolio’s exposure to what we view as defensive stocks, mainly in health care, while reducing allocations to banks and mega-cap technology stocks, though we have added to some positions in what we view as high-quality technology stocks, as we believe valuations became more attractive in the second quarter. We have also selectively increased the Portfolio’s allocations to materials - with a preference for companies that we believe could benefit from the trend towards the electrification of more machinery and other components - and to energy, especially oilfield services, as we think valuations in the sector have remained attractive.
As of the end of June, the Portfolio’s biggest overweights relative to the benchmark were in materials, communication services, and energy. While the communication services sector has been one of the worst-performing sectors in the S&P 500 for the first six months of 2022, we believe there is a favorable risk-reward profile for investing in the sector, given long-term secular drivers such as artificial intelligence, as well as attractive valuations. The Portfolio’s biggest underweights versus the S&P 500 as of quarter-end are in the economically sensitive consumer (both staples and discretionary) and financials sectors. The Portfolio also continues to have zero exposure to real estate and utilities, sectors that have tended to be more sensitive to changes in interest rates.
Please refer to the Schedule of Investments on pages 8 to 10 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.
7
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) |
Shares | Value | |
UNAFFILIATED ISSUERS — 100.1% | ||
COMMON STOCKS — 99.1% of Net Assets | ||
Air Freight & Logistics — 3.1% | ||
21,004 | United Parcel Service, Inc., Class B | $ 3,834,070 |
Total Air Freight & Logistics | $ 3,834,070 | |
Banks — 5.1% | ||
94,251 | Citizens Financial Group, Inc. | $ 3,363,818 |
62,373 | Truist Financial Corp. | 2,958,351 |
Total Banks | $ 6,322,169 | |
Beverages — 1.5% | ||
29,593 | Coca-Cola Co. | $ 1,861,696 |
Total Beverages | $ 1,861,696 | |
Biotechnology — 2.6% | ||
3,782(a) | Regeneron Pharmaceuticals, Inc. | $ 2,235,654 |
3,395(a) | Vertex Pharmaceuticals, Inc. | 956,677 |
Total Biotechnology | $ 3,192,331 | |
Capital Markets — 2.0% | ||
12,102 | CME Group, Inc. | $ 2,477,279 |
Total Capital Markets | $ 2,477,279 | |
Chemicals — 3.5% | ||
36,550 | International Flavors & Fragrances, Inc. | $ 4,353,836 |
Total Chemicals | $ 4,353,836 | |
Construction Materials — 2.3% | ||
9,596 | Martin Marietta Materials, Inc. | $ 2,871,507 |
Total Construction Materials | $ 2,871,507 | |
Electrical Equipment — 0.7% | ||
4,196 | Rockwell Automation, Inc. | $ 836,305 |
Total Electrical Equipment | $ 836,305 | |
Energy Equipment & Services — 3.8% | ||
132,400 | Schlumberger, Ltd. | $ 4,734,624 |
Total Energy Equipment & Services | $ 4,734,624 | |
Entertainment — 5.4% | ||
21,969 | Electronic Arts, Inc. | $ 2,672,529 |
31,505(a) | Live Nation Entertainment, Inc. | 2,601,683 |
3,514(a) | Netflix, Inc. | 614,493 |
8,738(a) | Walt Disney Co. | 824,867 |
Total Entertainment | $ 6,713,572 | |
Food & Staples Retailing — 1.8% | ||
4,699 | Costco Wholesale Corp. | $ 2,252,137 |
Total Food & Staples Retailing | $ 2,252,137 | |
Health Care Equipment & Supplies — 1.0% | ||
14,197 | Medtronic Plc | $ 1,274,181 |
Total Health Care Equipment & Supplies | $ 1,274,181 | |
Health Care Providers & Services — 2.6% | ||
6,352 | UnitedHealth Group, Inc. | $ 3,262,578 |
Total Health Care Providers & Services | $ 3,262,578 |
8 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
Hotels, Restaurants & Leisure — 3.2% | ||
1,347(a) | Booking Holdings, Inc. | $ 2,355,889 |
23,076(a) | Planet Fitness, Inc., Class A | 1,569,399 |
Total Hotels, Restaurants & Leisure | $ 3,925,288 | |
Interactive Media & Services — 7.7% | ||
4,357(a) | Alphabet, Inc., Class A | $ 9,495,036 |
Total Interactive Media & Services | $ 9,495,036 | |
Internet & Direct Marketing Retail — 2.1% | ||
24,051(a) | Amazon.com, Inc. | $ 2,554,457 |
Total Internet & Direct Marketing Retail | $ 2,554,457 | |
IT Services — 5.3% | ||
11,238(a) | Akamai Technologies, Inc. | $ 1,026,366 |
2,939 | Mastercard, Inc., Class A | 927,196 |
23,137 | Visa, Inc., Class A | 4,555,444 |
Total IT Services | $ 6,509,006 | |
Life Sciences Tools & Services — 3.9% | ||
10,021 | Danaher Corp. | $ 2,540,524 |
4,180 | Thermo Fisher Scientific, Inc. | 2,270,910 |
Total Life Sciences Tools & Services | $ 4,811,434 | |
Machinery — 2.4% | ||
16,839 | Caterpillar, Inc. | $ 3,010,140 |
Total Machinery | $ 3,010,140 | |
Metals & Mining — 2.0% | ||
82,362 | Freeport-McMoRan, Inc. | $ 2,409,912 |
Total Metals & Mining | $ 2,409,912 | |
Oil, Gas & Consumable Fuels — 3.3% | ||
36,604 | EOG Resources, Inc. | $ 4,042,546 |
Total Oil, Gas & Consumable Fuels | $ 4,042,546 | |
Personal Products — 1.0% | ||
4,809 | Estee Lauder Cos., Inc., Class A | $ 1,224,708 |
Total Personal Products | $ 1,224,708 | |
Pharmaceuticals — 5.3% | ||
168,768(a) | Elanco Animal Health, Inc. | $ 3,312,916 |
9,820 | Eli Lilly & Co. | 3,183,938 |
Total Pharmaceuticals | $ 6,496,854 | |
Road & Rail — 2.6% | ||
14,929 | Union Pacific Corp. | $ 3,184,057 |
Total Road & Rail | $ 3,184,057 | |
Semiconductors & Semiconductor Equipment — 10.5% | ||
40,063 | Analog Devices, Inc. | $ 5,852,804 |
6,624 | KLA Corp. | 2,113,586 |
6,154 | Lam Research Corp. | 2,622,527 |
15,384 | NVIDIA Corp. | 2,332,060 |
Total Semiconductors & Semiconductor Equipment | $ 12,920,977 | |
Software — 7.4% | ||
5,552(a) | Adobe, Inc. | $ 2,032,365 |
27,560 | Microsoft Corp. | 7,078,235 |
Total Software | $ 9,110,600 |
The accompanying notes are an integral part of these financial statements. 9
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued) |
Shares | Value | |
Specialty Retail — 0.9% | ||
4,179 | Home Depot, Inc. | $ 1,146,174 |
Total Specialty Retail | $ 1,146,174 | |
Technology Hardware, Storage & Peripherals — 4.8% | ||
42,894 | Apple, Inc. | $ 5,864,468 |
Total Technology Hardware, Storage & Peripherals | $ 5,864,468 | |
Textiles, Apparel & Luxury Goods — 1.3% | ||
15,343 | NIKE, Inc., Class B | $ 1,568,055 |
Total Textiles, Apparel & Luxury Goods | $ 1,568,055 | |
TOTAL COMMON STOCKS | ||
(Cost $99,329,173) | $122,259,997 | |
SHORT TERM INVESTMENTS — 1.0% of Net Assets | ||
Open-End Fund — 1.0% | ||
1,153,688(b) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 1,153,688 |
$ 1,153,688 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $1,153,688) | $ 1,153,688 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 100.1% | ||
(Cost $100,482,861) | $123,413,685 | |
OTHER ASSETS AND LIABILITIES — (0.1)% | $ (65,590) | |
NET ASSETS — 100.0% | $123,348,095 |
(a) | Non-income producing security. |
(b) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $43,658,254 and $47,515,208, 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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized appreciation on investments based on cost for federal tax purposes of $101,070,452 was as follows:
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $29,585,297 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (7,242,064) |
Net unrealized appreciation | $22,343,233 |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Common Stocks | $122,259,997 | $ — | $ — | $122,259,997 |
Open-End Fund | 1,153,688 | — | — | 1,153,688 |
Total Investments in Securities | $123,413,685 | $— | $— | $123,413,685 |
During the six months ended June 30, 2022, there were no transfers in or out of Level 3.
10 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $100,482,861) | $ 123,413,685 |
Receivables — | |
Investment securities sold | 713,851 |
Portfolio shares sold | 12,479 |
Dividends | 100,856 |
Interest | 1,275 |
Other assets | 3 |
Total assets | $ 124,242,149 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $ 802,039 |
Portfolio shares repurchased | 31,300 |
Trustees' fees | 230 |
Professional fees | 31,054 |
Due to affiliates | 12,461 |
Accrued expenses | 16,970 |
Total liabilities | $ 894,054 |
NET ASSETS: | |
Paid-in capital | $ 97,040,279 |
Distributable earnings | 26,307,816 |
Net assets | $ 123,348,095 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $101,911,647/7,816,958 shares) | $ 13.04 |
Class ll (based on $21,436,448/1,627,523 shares) | $ 13.17 |
The accompanying notes are an integral part of these financial statements. 11
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Dividends from unaffiliated issuers | $ 838,263 | |
Interest from unaffiliated issuers | 3,363 | |
Total Investment Income | $ 841,626 | |
EXPENSES: | ||
Management fees | $ 462,693 | |
Administrative expenses | 17,979 | |
Distribution fees | ||
Class ll | 30,469 | |
Custodian fees | 2,764 | |
Professional fees | 34,725 | |
Printing expense | 12,082 | |
Trustees’ fees | 4,641 | |
Miscellaneous | 1,045 | |
Total expenses | $ 566,398 | |
Net investment income | $ 275,228 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ 3,836,683 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(35,570,624) | |
Other assets and liabilities denominated in foreign currencies | (634) | $(35,571,258) |
Net realized and unrealized gain (loss) on investments | $(31,734,575) | |
Net decrease in net assets resulting from operations | $(31,459,347) |
12 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 275,228 | $ 359,031 |
Net realized gain (loss) on investments | 3,836,683 | 21,275,624 |
Change in net unrealized appreciation (depreciation) on investments | (35,571,258) | 14,626,360 |
Net increase (decrease) in net assets resulting from operations | $ (31,459,347) | $ 36,261,015 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class l ($2.76 and $1.57 per share, respectively) | $ (17,841,421) | $(10,344,714) |
Class ll ($2.74 and $1.53 per share, respectively) | (3,665,199) | (1,983,925) |
Total distributions to shareowners | $ (21,506,620) | $(12,328,639) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 5,921,164 | $ 13,694,036 |
Reinvestment of distributions | 21,506,620 | 12,328,639 |
Cost of shares repurchased | (10,091,477) | (25,539,895) |
Net increase in net assets resulting from Portfolio share transactions | $ 17,336,307 | $ 482,780 |
Net increase (decrease) in net assets | $ (35,629,660) | $ 24,415,156 |
NET ASSETS: | ||
Beginning of period | $ 158,977,755 | $134,562,599 |
End of period | $ 123,348,095 | $158,977,755 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class l | ||||
Shares sold | 89,877 | $ 1,585,693 | 268,243 | $ 5,052,659 |
Reinvestment of distributions | 1,391,146 | 17,841,421 | 579,267 | 10,344,714 |
Less shares repurchased | (388,213) | (6,867,543) | (1,039,551) | (19,121,469) |
Net increase (decrease) | 1,092,810 | $12,559,571 | (192,041) | $ (3,724,096) |
Class ll | ||||
Shares sold | 231,612 | $ 4,335,471 | 460,082 | $ 8,641,377 |
Reinvestment of distributions | 283,246 | 3,665,199 | 110,287 | 1,983,925 |
Less shares repurchased | (179,851) | (3,223,934) | (348,203) | (6,418,426) |
Net increase | 335,007 | $ 4,776,736 | 222,166 | $ 4,206,876 |
The accompanying notes are an integral part of these financial statements. 13
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 19.80 | $ 16.83 | $ 14.95 | $ 13.52 | $ 18.29 | $ 17.72 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.04 | 0.05 | 0.11 | 0.16 | 0.18 | 0.21 |
Net realized and unrealized gain (loss) | ||||||
on investments | (4.04) | 4.49 | 3.19 | 3.83 | (0.24) | 3.31 |
Net increase (decrease) from | ||||||
investment operations | $ (4.00) | $ 4.54 | $ 3.30 | $ 3.99 | $ (0.06) | $ 3.52 |
Distributions to shareowners: | ||||||
Net investment income | (0.03) | (0.06) | (0.11) | (0.15) | (0.19) | (0.21) |
Net realized gain | (2.73) | (1.51) | (1.31) | (2.41) | (4.52) | (2.74) |
Total distributions | $ (2.76) | $ (1.57) | $ (1.42) | $ (2.56) | $ (4.71) | $ (2.95) |
Net increase (decrease) in net asset value | $(6.76) | $2.97 | $1.88 | $1.43 | $(4.77) | $0.57 |
Net asset value, end of period | $13.04 | $19.80 | $16.83 | $14.95 | $13.52 | $18.29 |
Total return(b) | (19.98)%(c) | 27.98% | 24.28% | 31.33% | (1.51)%(d) | 21.72% |
Ratio of net expenses to average net assets | 0.75%(e) | 0.79% | 0.79% | 0.82% | 0.82% | 0.77% |
Ratio of net investment income (loss) to | ||||||
average net assets | 0.43%(e) | 0.28% | 0.77% | 1.08% | 1.12% | 1.16% |
Portfolio turnover rate | 31%(c) | 87% | 91% | 70% | 58% | 59% |
Net assets, end of period (in thousands) | $101,912 | $133,162 | $116,401 | $99,853 | $84,375 | $101,056 |
(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.
14 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 19.97 | $ 16.97 | $ 15.06 | $ 13.60 | $ 18.35 | $ 17.78 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.02 | 0.01 | 0.08 | 0.12 | 0.14 | 0.16 |
Net realized and unrealized gain (loss) | ||||||
on investments | (4.08) | 4.52 | 3.21 | 3.86 | (0.24) | 3.32 |
Net increase (decrease) from | ||||||
investment operations | $ (4.06) | $ 4.53 | $ 3.29 | $ 3.98 | $ (0.10) | $ 3.48 |
Distributions to shareowners: | ||||||
Net investment income | (0.01) | (0.02) | (0.07) | (0.11) | (0.13) | (0.17) |
Net realized gain | (2.73) | (1.51) | (1.31) | (2.41) | (4.52) | (2.74) |
Total distributions | $ (2.74) | $ (1.53) | $ (1.38) | $ (2.52) | $ (4.65) | $ (2.91) |
Net increase (decrease) in net asset value | $ (6.80) | $ 3.00 | $ 1.91 | $ 1.46 | $ (4.75) | $ 0.57 |
Net asset value, end of period | $ 13.17 | $ 19.97 | $ 16.97 | $ 15.06 | $ 13.60 | $ 18.35 |
Total return(b) | (20.10)%(c) | 27.65% | 23.96% | 31.03% | (1.74)%(d) | 21.36% |
Ratio of net expenses to average net assets | 1.00%(e) | 1.04% | 1.04% | 1.07% | 1.07% | 1.02% |
Ratio of net investment income (loss) to | ||||||
average net assets | 0.19%(e) | 0.03% | 0.50% | 0.83% | 0.88% | 0.91% |
Portfolio turnover rate | 31%(c) | 87% | 91% | 70% | 58% | 59% |
Net assets, end of period (in thousands) | $21,436 | $25,816 | $18,162 | $13,638 | $11,237 | $13,060 |
(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 (1.78)%. |
(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 |
Notes to Financial Statements 6/30/22 (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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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.
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.
16
Pioneer Fund 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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, 2022, 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 valuation 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, 2021, 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.
17
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $ 2,776,642 |
Long-term capital gains | 9,551,997 |
Total | $ 12,328,639 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 8,266,928 |
Undistributed long-term capital gains | 13,092,998 |
Net unrealized appreciation | 57,913,857 |
Total | $ 79,273,783 |
The differences between book-basis and tax-basis net unrealized appreciation are 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 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio's assets can decline as can the value of the Portfolio's distributions.
18
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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’s investments in foreign markets and countries with limited developing markets may subject the Fund to a greater degree of risk than investments in a developed market. These risks include disruptive political or economic conditions, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non- U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
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.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
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 the Portfolio’s custodian and accounting agent, and 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
19
Pioneer Fund VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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.
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 payable under the Portfolio's Investment Management Agreement with the Adviser 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, 2022, 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 $12,013 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $4,641 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $230.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $448 in distribution fees payable to the Distributor at June 30, 2022.
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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. (the “Adviser”) 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, 2021 through December 31, 2021 (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 | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) Inc. |
29
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.
19611-16-0822
Pioneer Variable Contracts Trust
Pioneer Real Estate Shares
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Update 6/30/22 |
Sector Distribution
(As a percentage of total investments)*
5 Largest Holdings | ||
(As a percentage of total investments)* | ||
1. | Prologis, Inc. | 9.30% |
2. | Welltower, Inc. | 5.30 |
3. | Realty Income Corp. | 5.19 |
4. | Public Storage | 5.06 |
5. | Extra Space Storage, Inc. | 5.04 |
* | Excludes short-term 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 6/30/22
Prices and Distributions
6/30/22 | 12/31/21 | |
Class I | $7.33 | $10.65 |
Class II | $7.37 | $10.69 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/22 - 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.0600 | $ — | $0.5398 |
Class II | $0.0400 | $ — | $0.5398 |
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.
The MSCI U.S. REIT Index is an unmanaged, widely used index comprising a broad representation of the most actively traded real estate trusts, and is designed to be a measure of real estate equity performance. 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, 2022)
MSCI U.S. | |||
Class I | Class II | REIT Index | |
10 Years | 6.16% | 5.90% | 7.32% |
5 Years | 3.44% | 3.18% | 5.30% |
1 Year | -10.25% | -10.37% | -6.41% |
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 Shares 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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 746.50 | $ 745.70 |
Expenses Paid During Period* | $ 5.54 | $ 6.62 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 1.28% and 1.53% 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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,018.45 | $1,017.21 |
Expenses Paid During Period* | $ 6.41 | $ 7.65 |
* | Expenses are equal to the Portfolio’s annualized net expense ratio of 1.28% and 1.53% 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 Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 |
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, 2022. 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, 2022? |
A: | Pioneer Real Estate Shares VCT Portfolio’s Class I shares returned -25.35% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -25.43%, while the Portfolio’s benchmark, the Morgan Stanley Capital International (MSCI) US Real Estate Investment Trust (REIT) Index1, returned -20.32%. |
Q: | How would you describe the market environment for REIT investors during the six-month period ended June 30, 2022? |
A: | All 11 sectors within the MSCI US REIT Index posted negative returns for the six-month period. The market sell-off was widespread across riskier assets, including equities. The Standard & Poor’s 500 Index, a broad measure of US equity-market performance, was down by nearly 20% for the six-month period ended June 30, 2022. The return represented the US stock market’s worst first-half performance in a calendar year in more than 50 years. |
REITs encountered an increasingly complex and unfriendly market environment during the period. Faced with the highest inflation rates in 40 years, the US Federal Reserve (Fed) moved away from its highly accommodative monetary policy stance and undertook an aggressive approach to tighten policy in an effort to tackle persistent inflation. The Fed raised the target range for its benchmark federal funds rate by 25 basis points (bps) in March, and followed with increases of 50 bps and 75 bps in May and June, respectively. (A basis point is equal to 1/100th of a percentage point.) The degree of the rate hikes raised concerns among investors about the Fed’s ability to cool inflation without tipping the US economy into recession. With fears about a recession increasing, credit spreads widened. (Credit spreads are commonly defined as the differences in yield between Treasuries and fixed-income securities with similar maturities.) Fixed-income credit spreads are often viewed as a barometer of economic health, with widening spreads reflecting deteriorating conditions, and narrowing spreads reflecting improving conditions.
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. |
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 Shares VCT Portfolio | Pioneer Variable Contracts Trust |
The ongoing Russia/Ukraine war added to investors’ concerns during the six-month period. The conflict has heightened existing supply chain challenges and led to a spike in commodity prices, particularly the price of oil. The renewal of lockdown conditions in China in response to rising COVID-19 cases also dampened market sentiment.
As an asset class, REITs faced idiosyncratic challenges over the first six months of 2022. Historically, investors have often turned to REITs as a hedge against inflation, due to the ability of most subsectors to pass along higher costs to their tenants. However, during the second quarter of 2022, recession worries led to fears of rising unemployment and to questions about the ability of tenants to meet their rent obligations. Additionally, REITs are a capital-intensive business, and investors began worrying that higher interest rates could weigh on earnings.
Q: | Which of your investments or strategies detracted from the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2022? |
A: | The Portfolio is invested in what we view as high-quality REITs with growth potential. For much of the first quarter of 2022, those types of REITS underperformed lower-quality REITs that we had considered to be structurally challenged and too risky to hold in the Portfolio. We have avoided the temptation to move out of higher-quality REITs that were experiencing selling pressure, believing it was a temporary market phenomenon that did not reflect the true fundamentals of the underlying companies. As such, the Portfolio’s high-quality focus proved to be a headwind to benchmark-relative returns when lower-quality REITs strongly outperformed in early 2022. |
Sector allocation decisions also proved to be a headwind for benchmark-relative performance during the six-month period. Overweight Portfolio positions in the struggling industrial, residential, and storage REIT sectors, and underweight positions in the relatively better-performing office, retail, and hotel REIT sectors detracted from benchmark-relative results for the period.
Individual Portfolio positions that were key detractors from benchmark-relative performance during the period were EastGroup Properties (EGP) and Mid-American Apartment Communities (MAA). The Portfolio’s investment in EGP, a medium-sized warehouse industrial REIT, struggled due to falling demand from the economically-sensitive small business market that the company serves. MAA focuses on the housing rental markets in the southeastern and southwestern US. During the latest six-month period, MAA’s shares sold off due to concerns about slower growth. We continue to hold both positions in the Portfolio, and remain confident in their long-term prospects.
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Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued) |
Q: | Which of your investments or strategies aided the Portfolio’s benchmark-relative performance during the six-month period ended June 30, 2022? |
A: | Key positive contributors to the Portfolio’s benchmark-relative returns during the six-month period included positions in Agere and Gaming & Leisure Properties (GLPI). Agere is a high-quality strip-mall REIT. Agere’s biggest tenants are pharmacies CVS and Walgreens, which act as anchor stores that attract foot traffic to the strip malls. Agere has seen solid rent and earnings growth rates, and investors have been taking note. |
GLPI is a REIT that owns casino properties leased to gaming companies. GLPI has been a beneficiary of the lifting of pandemic-related restrictions. GLPI’s management holds long-term leases with its tenants, which has provided visibility and stability of earnings. Finally, on top of its rent leases, GLPI has shared in the earnings growth of its casino operators during profitable years.
We continue to hold both REITs in the Portfolio, and recently added to the positions due to weakness during the market sell-offs.
Q: | Did the Portfolio have exposure to any derivative securities during the six-month period ended June 30, 2022? |
A: | The Portfolio had no exposure to derivative investments during the six-month period. |
Q: | What is your outlook as we head into the second half of 2022? |
A: | Our current outlook is cautious, given an investment environment featuring myriad uncertainties and a range of possible outcomes. High inflation, slowing economic momentum, and the risk of new COVID-19 outbreaks are concerning. Furthermore, as we noted earlier, REITs are a capital-intensive business, making them more vulnerable to sharply rising interest rates. As we continue to monitor macroeconomic data, we are mindful that the REIT asset class, in general, is in better financial shape from a debt-leverage perspective than it was in previous, similar economic environments. |
We have taken steps to try to insulate the Portfolio from inflationary pressures, and have increased its exposure to REITs we consider to be more defensive. At period-end, the Portfolio was overweight to industrial, apartment, and self-storage REITs versus the MSCI US REIT Index, and underweight to office and health care REITs.
We continue to look for situations where we believe the market has underestimated a company’s net-operating-income (NOI) growth rates, and/or the duration of that growth. Conversely, we have continued to avoid companies where we believe the market has overestimated future growth potential.
Quality remains an overriding consideration in every investment decision we make. We believe higher-caliber, well-managed REITs could be in the best position to display solid growth when new opportunities emerge. Those types of REITs, in our view, are also more likely to receive greater consideration from lenders during times when construction financing is limited.
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Pioneer Real Estate Shares 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,
armed conflict including Russia’s
military invasion of Ukraine, sanctions
against Russia, other nations or
individuals or companies and possible
countermeasures, 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 may invest in fewer than
40 securities and, as a result, its
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.
The market price of securities may
fluctuate when interest rates change.
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.
Please refer to the Schedule of Investments on pages 8 to 9 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 Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) |
Shares | Value | |
UNAFFILIATED ISSUERS — 100.2% | ||
COMMON STOCKS — 94.8% of Net Assets | ||
Equity Real Estate Investment Trusts (REITs) — 94.8% | ||
6,659 | Agree Realty Corp. | $ 480,314 |
33,113 | Apple Hospitality REIT, Inc. | 485,768 |
29,834 | Brixmor Property Group, Inc. | 602,945 |
4,840 | Camden Property Trust | 650,883 |
6,516 | Corporate Office Properties Trust | 170,654 |
3,775 | EastGroup Properties, Inc. | 582,596 |
5,130 | EPR Properties | 240,751 |
13,512(a) | Equity Commonwealth | 371,985 |
5,416 | Equity LifeStyle Properties, Inc. | 381,666 |
5,431 | Extra Space Storage, Inc. | 923,922 |
14,557 | Farmland Partners, Inc. | 200,887 |
13,711 | Gaming and Leisure Properties, Inc. | 628,787 |
5,380 | Gladstone Land Corp. | 119,221 |
19,202 | Independence Realty Trust, Inc. | 398,057 |
13,068 | Invitation Homes, Inc. | 464,959 |
8,011 | Iron Mountain, Inc. | 390,056 |
36,139 | Kimco Realty Corp. | 714,468 |
3,235 | Life Storage, Inc. | 361,220 |
4,827 | Mid-America Apartment Communities, Inc. | 843,132 |
15,453 | National Storage Affiliates Trust | 773,732 |
7,530 | NexPoint Residential Trust, Inc. | 470,700 |
14,502 | Prologis, Inc. | 1,706,160 |
2,966 | Public Storage | 927,379 |
13,953 | Realty Income Corp. | 952,432 |
13,751 | Rexford Industrial Realty, Inc. | 791,920 |
2,096(a) | Ryman Hospitality Properties, Inc. | 159,359 |
5,318 | Saul Centers, Inc. | 250,531 |
1,077 | SBA Communications Corp. | 344,694 |
2,079 | Sun Communities, Inc. | 331,309 |
16,444 | UDR, Inc. | 757,082 |
11,150 | Ventas, Inc. | 573,445 |
11,804 | Welltower, Inc. | 972,059 |
3,812 | WP Carey, Inc. | 315,862 |
Total Equity Real Estate Investment Trusts (REITs) | $18,338,935 | |
TOTAL COMMON STOCKS | ||
(Cost $16,040,811) | $18,338,935 |
8 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | |
SHORT TERM INVESTMENTS — 5.4% of Net Assets | ||
Open-End Fund — 5.4% | ||
1,046,767(b) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 1,046,767 |
$ 1,046,767 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $1,046,767) | $ 1,046,767 | |
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 100.2% | ||
(Cost $17,087,578) | $19,385,702 | |
OTHER ASSETS AND LIABILITIES — (0.2)% | $ (44,695) | |
NET ASSETS — 100.0% | $19,341,007 |
(a) | Non-income producing security. |
(b) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022, aggregated $17,522,326 and $20,114,021, 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, 2022, the Portfolio did not engage in any cross trade activity.
At June 30, 2022, the net unrealized appreciation on investments based on cost for federal tax purposes of $17,123,006 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 3,085,965 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (823,269) |
Net unrealized appreciation | $ 2,262,696 |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | |
Common Stocks | $18,338,935 | $ — | $ — | $ 18,338,935 |
Open-End Fund | 1,046,767 | — | — | 1,046,767 |
Total Investments in Securities | $19,385,702 | $ — | $ — | $ 19,385,702 |
During the six months ended June 30, 2022, there were no transfers in or out of Level 3.
The accompanying notes are an integral part of these financial statements. 9
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited) |
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $17,087,578) | $19,385,702 |
Receivables — | |
Portfolio shares sold | 18,008 |
Dividends | 42,869 |
Interest | 882 |
Other assets | 508 |
Total assets | $19,447,969 |
LIABILITIES: | |
Payables — | |
Portfolio shares repurchased | $ 56,048 |
Professional fees | 32,151 |
Printing expense | 12,460 |
Due to affiliates | 1,988 |
Accrued expenses | 4,315 |
Total liabilities | $ 106,962 |
NET ASSETS: | |
Paid-in capital | $16,505,717 |
Distributable earnings | 2,835,290 |
Net assets | $19,341,007 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class I (based on $5,342,489/728,627 shares) | $ 7.33 |
Class II (based on $13,998,518/1,899,408 shares) | $ 7.37 |
10 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited) |
FOR THE SIX MONTHS ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Dividends from unaffiliated issuers | $ 279,244 | |
Interest from unaffiliated issuers | 1,509 | |
Total Investment Income | $ 280,753 | |
EXPENSES: | ||
Management fees | $ 92,555 | |
Administrative expenses | 4,491 | |
Distribution fees | ||
Class II | 20,971 | |
Custodian fees | 127 | |
Professional fees | 37,597 | |
Printing expense | 9,123 | |
Trustees' fees | 3,840 | |
Miscellaneous | 101 | |
Total expenses | $ 168,805 | |
Net investment income | $ 111,948 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $ 574,302 | |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers | $(7,519,924) | |
Net realized and unrealized gain (loss) on investments | $(6,945,622) | |
Net decrease in net assets resulting from operations | $(6,833,674) |
The accompanying notes are an integral part of these financial statements. 11
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Statements of Changes in Net Assets |
Six Months | ||
Ended | ||
6/30/22 | Year Ended | |
(unaudited) | 12/31/21 | |
FROM OPERATIONS: | ||
Net investment income (loss) | $ 111,948 | $ 71,618 |
Net realized gain (loss) on investments | 574,302 | 4,153,400 |
Change in net unrealized appreciation (depreciation) on investments | (7,519,924) | 4,292,421 |
Net increase (decrease) in net assets resulting from operations | $ (6,833,674) | $ 8,517,439 |
DISTRIBUTIONS TO SHAREOWNERS: | ||
Class I ($0.60 and $0.10 per share, respectively) | $ (406,256) | $ (71,428) |
Class II ($0.58 and $0.09 per share, respectively) | (1,029,060) | (183,859) |
Total distributions to shareowners | $ (1,435,316) | $ (255,287) |
FROM PORTFOLIO SHARE TRANSACTIONS: | ||
Net proceeds from sales of shares | $ 753,498 | $ 1,865,535 |
Reinvestment of distributions | 1,435,316 | 255,287 |
Cost of shares repurchased | (2,647,503) | (4,721,070) |
Net decrease in net assets resulting from Portfolio share transactions | $ (458,689) | $ (2,600,248) |
Net increase (decrease) in net assets | $ (8,727,679) | $ 5,661,904 |
NET ASSETS: | ||
Beginning of period | $ 28,068,686 | $ 22,406,782 |
End of period | $ 19,341,007 | $ 28,068,686 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class I | ||||
Shares sold | 26,474 | $ 247,188 | 46,759 | $ 423,803 |
Reinvestment of distributions | 57,161 | 406,256 | 7,612 | 71,428 |
Less shares repurchased | (62,194) | (574,277) | (118,656) | (1,054,900) |
Net increase (decrease) | 21,441 | $ 79,167 | (64,285) | $ (559,669) |
Class II | ||||
Shares sold | 57,653 | $ 506,310 | 154,473 | $ 1,441,732 |
Reinvestment of distributions | 144,587 | 1,029,060 | 19,660 | 183,859 |
Less shares repurchased | (224,989) | (2,073,226) | (406,146) | (3,666,170) |
Net decrease | (22,749) | $ (537,856) | (232,013) | $(2,040,579) |
12 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 10.65 | $ 7.63 | $11.35 | $12.55 | $15.40 | $16.37 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.05 | 0.04 | 0.06 | 0.16 | 0.25 | 0.26 |
Net realized and unrealized gain (loss) | ||||||
on investments | (2.77) | 3.08 | (1.15) | 3.16 | (1.26) | 0.28 |
Net increase (decrease) from investment | ||||||
operations | $ (2.72) | $ 3.12 | $ (1.09) | $ 3.32 | $ (1.01) | $ 0.54 |
Distributions to shareowners: | ||||||
Net investment income | (0.06) | (0.03) | (0.06) | (0.19) | (0.25) | (0.26) |
Net realized gain | (0.54) | (0.07) | (2.48) | (4.33) | 1.59 | (1.25) |
Tax return of capital | — | — | (0.09) | — | — | — |
Total distributions | $ (0.60) | $ (0.10) | $ (2.63) | $ (4.52) | $ (1.84) | $(1.51) |
Net increase (decrease) in net asset value | $ (3.32) | $ 3.02 | $ (3.72) | $ (1.20) | $ (2.85) | $(0.97) |
Net asset value, end of period | $ 7.33 | $10.65 | $7.63 | $11.35 | $12.55 | $15.40 |
Total return(b) | (25.35)%(c) | 41.05% | (7.34)% | 28.16% | (7.24)% | 3.50% |
Ratio of net expenses to average net assets | 1.28%(d) | 1.35% | 1.46% | 1.33% | 1.37% | 1.12% |
Ratio of net investment income (loss) to | ||||||
average net assets | 1.15%(d) | 0.49% | 0.77% | 1.29% | 1.76% | 1.63% |
Portfolio turnover rate | 76%(c) | 106% | 155% | 125% | 154% | 8% |
Net assets, end of period (in thousands) | $ 5,342 | $7,530 | $5,885 | $6,910 | $6,210 | $7,824 |
(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. 13
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights (continued) |
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 10.69 | $ 7.67 | $ 11.40 | $ 12.58 | $ 15.44 | $ 16.40 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.04 | 0.02 | 0.04 | 0.13 | 0.21 | 0.22 |
Net realized and unrealized gain (loss) | ||||||
on investments | (2.78) | 3.09 | (1.16) | 3.17 | (1.27) | 0.29 |
Net increase (decrease) from investment | ||||||
operations | $ (2.74) | $ 3.11 | $ (1.12) | $ 3.30 | $ (1.06) | $ 0.51 |
Distributions to shareowners: | ||||||
Net investment income | (0.04) | (0.02) | (0.04) | (0.15) | (0.21) | (0.22) |
Net realized gain | (0.54) | (0.07) | (2.48) | (4.33) | (1.59) | (1.25) |
Tax return of capital | — | — | (0.09) | — | — | — |
Total distributions | $ (0.58) | $ (0.09) | $ (2.61) | $ (4.48) | $ (1.80) | $ (1.47) |
Net increase (decrease) in net asset value | $ (3.32) | $ 3.02 | $ (3.73) | $ (1.18) | $ (2.86) | $ (0.96) |
Net asset value, end of period | $7.37 | $ 10.69 | $7.67 | $ 11.40 | $ 12.58 | $ 15.44 |
Total return(b) | (25.43)%(c) | 40.75% | (7.62)% | 27.91% | (7.54)% | 3.30% |
Ratio of net expenses to average net assets | 1.53%(d) | 1.60% | 1.71% | 1.58% | 1.62% | 1.37% |
Ratio of net investment income (loss) to | ||||||
average net assets | 0.90%(d) | 0.22% | 0.51% | 1.04% | 1.51% | 1.37% |
Portfolio turnover rate | 76%(c) | 106% | 155% | 125% | 154% | 8% |
Net assets, end of period (in thousands) | $13,999 | $20,539 | $16,522 | $20,167 | $18,393 | $23,592 |
(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.
14 The accompanying notes are an integral part of these financial statements.
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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 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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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 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.
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 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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
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, 2022, 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 valuation 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, 2021, 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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Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $ 68,929 |
Long-term capital gains | 186,358 |
Total | $255,287 |
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed long-term capital gains | $ 1,321,660 |
Net unrealized appreciation | 9,782,620 |
Total | $11,104,280 |
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 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 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, armed conflict including Russia’s military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio’s assets can decline as can the value of the Portfolio’s distributions.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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
17
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued) |
and liquidity of the Portfolio’s investments. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law, and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio’s return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
Because the Portfolio invests 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 the Portfolio’s custodian and accounting agent, and 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
18
Pioneer Real Estate Shares VCT Portfolio | Pioneer Variable Contracts Trust |
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.
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 payable under the Portfolio’s Investment Management Agreement with the Adviser 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, 2022, the effective management fee was equivalent to 0.80% (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 $1,697 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $3,840 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $0.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $291 in distribution fees payable to the Distributor at June 30, 2022.
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Pioneer Real Estate Shares 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. (the “Adviser”) 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, 2021 through December 31, 2021 (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.
20
Pioneer Variable Contracts Trust | Trustees |
Officers | Thomas J. Perna, Chairman |
Lisa M. Jones, President and Chief Executive Officer | John E. Baumgardner, Jr. |
Anthony J. Koenig, Jr., Treasurer and Chief Financial and | Diane Durnin |
Accounting Officer | Benjamin M. Friedman |
Christopher J. Kelley, Secretary and Chief Legal Officer | Lisa M. Jones |
Craig C. MacKay | |
Investment Adviser and Administrator | Lorraine H. Monchak |
Amundi Asset Management US, Inc. | Marguerite A. Piret |
Fred J. Ricciardi | |
Custodian and Sub-Administrator | Kenneth J. Taubes |
Bank of New York Mellon Corporation | |
Principal Underwriter | |
Amundi Distributor US, Inc. | |
Legal Counsel | |
Morgan, Lewis & Bockius LLP | |
Transfer Agent | |
BNY Mellon Investment Servicing (US) Inc. |
21
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.
19614-16-0822
Pioneer Variable Contracts Trust
Pioneer Strategic Income
VCT Portfolio
Class I and II Shares
Semiannual Report | June 30, 2022
Please refer to your contract prospectus to determine the applicable share class offered under your contract.
Pioneer Variable Contracts Trust
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 |
Performance Update 6/30/22 | |||
Prices and Distributions | |||
Net Asset Value per Share | 6/30/22 | 12/31/21 | |
Class I | $8.84 | $10.44 | |
Class II | $8.82 | $10.43 |
Net | |||
Distributions per Share | Investment | Short-Term | Long-Term |
(1/1/21 – 6/30/22) | Income | Capital Gains | Capital Gains |
Class I | $0.1420 | $0.0600 | $0.2911 |
Class II | $0.1293 | $0.0600 | $0.2911 |
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 Strategic Income VCT Portfolio at net asset value during the periods shown, compared to that of the Bloomberg 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 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.
Average Annual Total Returns | |||
(As of June 30, 2022) | |||
Bloomberg U.S. | |||
Class I | Class II | Universal Index | |
10 Years | 2.78% | 2.52% | 1.83% |
5 Years | 1.51% | 1.25% | 0.94% |
1 Year | -10.21% | -10.46% | -10.89% |
All total returns shown assume reinvestment of distributions at net asset value. |
5 Largest Holdings
(As a percentage of total investments)*
1. | U.S. Treasury Bills, 7/5/22 | 7.04% |
2. | U.S. Treasury Bills, 7/12/22 | 6.31 |
3. | Fannie Mae, 2.500%, 7/1/52 (TBA) | 4.37 |
4. | Fannie Mae, 4.500%, 7/1/52 (TBA) | 2.22 |
5. | United States Treasury Notes, | |
3.250%, 6/30/27 | 2.21 |
* | Excludes short term 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. |
(p) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. |
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
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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $ 893.50 | $ 891.20 |
Expenses Paid During Period* | $ 3.52 | $ 4.69 |
* | Expenses are equal to the Portfolio’s annualized net 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, 2022 through June 30, 2022.
Share Class | I | II |
Beginning Account Value on 1/1/22 | $1,000.00 | $1,000.00 |
Ending Account Value on 6/30/22 | $1,021.08 | $1,019.84 |
Expenses Paid During Period* | $ 3.76 | $ 5.01 |
* | Expenses are equal to the Portfolio’s annualized net 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 6/30/22
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, 2022. Mr. Scott, a senior vice president, Deputy Director of Multi-Sector Fixed Income, and a 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 Managing Director and 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, 2022? |
A: | Pioneer Strategic Income VCT Portfolio’s Class I shares returned -10.65% at net asset value during the six-month period ended June 30, 2022, and Class II shares returned -10.88%, while the Portfolio’s benchmark, the Bloomberg US Universal Index (the Bloomberg Index), returned -10.93%. |
Q: | How would you describe the investment environment in the fixed-income markets during the six-month period ended June 30, 2022? |
A: | The first quarter of 2022 saw negative market sentiment driven by increased geopolitical tensions, a worsening growth/inflation mix arising from a spike in commodity prices, and the prospect of rising interest rates. In combination, those factors contributed to losses across most fixed-income asset classes. Russia’s invasion of Ukraine in late February, together with US and European sanctions on Russia, led to a spike in energy, metals, and food prices, which added to downside risk to real economic growth and to upside risk to inflation. In addition, another round of lockdowns in China in the wake of increasing COVID-19 infection rates exacerbated supply chain disruptions and raised concerns about further risks to global economic growth. |
Accelerating inflation forced the Federal Reserve to raise rates, even as growth slowed. At its mid-March meeting, the Federal Open Market Committee (FOMC) raised the federal funds rate target range by a quarter-point, to 0.25%-0.50%, and indicated that further increases in the benchmark overnight lending rate would follow rapidly. The Fed also formally ended its pandemic-era quantitative easing program and signaled it would soon begin reducing its holdings of Treasury securities and agency mortgage-backed securities (MBS) by reinvesting only part of the proceeds from maturing securities. The Fed went on to implement hikes of 50 basis points and 75 basis points (bps) in May and June, respectively, bringing the federal funds target up to a range of 1.50% to 1.75%, its highest level since before the onset of the pandemic in March of 2020. (A basis point is equal to 1/100th of a percentage point.) For the six-month period ended June 30, 2022, the 10-year Treasury yield rose from 1.52% to 2.98%.
Rising Treasury yields weighed on bond market returns for the period. Risk-oriented assets, in particular, performed poorly against the backdrop of tightening credit conditions and recession fears, falling in price even more than would be expected from rising US Treasury rates. The investment-grade corporate bond market, as gauged by the Bloomberg US Aggregate Bond Index, posted a return of -10.35%. Within the investment-grade market,
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
corporate bonds were the biggest laggards, returning -14.39% for the period, while securitized assets and Treasuries were also well into negative territory. Below-investment-grade, high-yield corporate bonds performed comparably, returning -14.19% (according to the Bloomberg US Corporate Bond Index and Bloomberg US Corporate High Yield Index, respectively).
Q: | What factors influenced the Portfolio’s performance relative to the Bloomberg Index during the six-month period ended June 30, 2022? |
A: | As a multisector fixed-income strategy, we have managed the Portfolio with the aim of delivering competitive 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, and securitized assets, 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. |
The Portfolio’s short-duration positioning versus the benchmark aided relative performance during the period, as US Treasury yields as well as European rates moved higher. (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.) In addition, positioning along the yield curve proved additive to relative returns, as the Portfolio was underweight versus the Bloomberg Index to longer maturities, which felt the biggest negative effects of rising interest rates.
The Portfolio’s sector allocation results weighed on benchmark-relative returns during the period, most notably overweights to corporate bonds and MBS versus the Bloomberg Index, as credit sectors, including investment-grade corporate bonds, underperformed Treasuries. In addition, the Portfolio’s allocation to non-agency MBS had a negative effect on relative results. In particular, exposure to subordinated bank securities also detracted from relative returns, due to long spread durations (or sensitivity to changes in credit spreads; credit spreads are commonly defined as the differences in yield between Treasuries and other types of fixed-income securities with similar maturities).
The negative impact of the Portfolio’s underweight to Treasuries was partially offset by holdings of high-yield, index-based credit-default-swap positions, which we utilized as part of our efforts to reduce credit risk. Those positions contributed positively to the Portfolio’s relative performance as credit spreads widened, particularly over the second half of the six-month period.
* | Diversification does not assure a profit nor protect against loss. |
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Portfolio Management Discussion 6/30/22 (continued)
Overall security selection results were essentially a neutral factor in the Portfolio’s relative performance for the period. With regard to security selection within agency MBS, an overweight to higher-coupon issues that have featured less prepayment sensitivity modestly benefited relative returns.
Within the Portfolio’s corporate exposures, the lower quality of holdings (versus the Bloomberg Index) within industrials and financials detracted from relative returns. The Portfolio was overweight to “BBB” rated and high-yield issues within those sectors during a six-month period that saw credit spreads widen notably. Within industrials, exposure to commodity- and aviation-related issues constrained relative results. In financials, the Portfolio’s relative performance struggled, due to the underperformance of holdings of subordinated-debt issues, and the debt of an aircraft-leasing firm.
With regard to currency positioning, the Portfolio’s non-US dollar (USD) exposures had a negative effect on relative returns, as the USD appreciated versus a basket of other major currencies during the six-month period.
Q: | Did the Portfolio have any investments in derivative securities during the six-month period ended June 30, 2022? If so, did the derivatives have any material impact on performance? |
A: | Yes, the Portfolio had investments in multiple types of derivatives, including Treasury futures, index-based 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 effect on the Portfolio’s relative results for the period. As noted earlier, we invested the Portfolio in high-yield, index-based credit-default-swaps during the period, which aided relative returns. The Portfolio’s exposure to currency forwards and options was a technique used in seeking to manage the risks associated with investing in non-USD currencies. The Portfolio’s non-USD currency allocation detracted from relative performance, as the USD appreciated against most currencies, but the forwards helped reduce the size of the loss. |
Q: | What factors affected the Portfolio’s yield, or distributions** to shareholders, during the six-month period ended June 30, 2022? |
A: | The Portfolio’s monthly distribution rate declined over the first three months of the period, as spreads narrowed for credit-oriented areas of the market during that timeframe. The distribution rate stabilized over the second half of the period as Treasury yields rose and credit spreads widened. |
Q: | What is your investment outlook, and how is the Portfolio positioned heading into the second half of its fiscal year? |
A: | The financial media has framed the question as: “Is the economy headed for recession?” In our view, the focus on “recession, or not,” is too simplistic. We believe it is better to consider the full range of possible outcomes. First, with the Fed apparently determined to slow the economy in order to control inflation, the best-case scenario, in our view, is a “soft landing.” Even in that scenario, economic growth could be relatively slow and the unemployment rate could rise. Secondly, historically there has usually been a significant difference between the investment implications of a mild recession and a severe recession. We believe some characteristics of the current economic |
** | Distributions are not guaranteed. |
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Pioneer Strategic Income 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, or adverse investor sentiment. These conditions may continue, recur, worsen or spread.
The Portfolio’s investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate) or SOFR (Secured Overnight Financing Rate). Plans are underway to phase out the use of LIBOR. There remains uncertainty regarding the nature of any replacement rate and the impact of the transition from LIBOR on the Portfolio, issuers of instruments in which the Portfolio invests, and financial markets generally.
Investments in high-yield or lower rated securities are subject to greater-than-average price volatility, illiquidity and possibility of default.
The market price of securities may fluctuate when interest rates change. 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 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 securities issued by U.S. Government-sponsored entities (e.g., 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 pre-payments.
Investing in foreign and/or emerging markets securities involves risks relating to interest rates, currency exchange rates, economic, and political conditions.
environment increase the likelihood of a mild recession: household and business balance sheets are mostly strong, and risks in the financial system appear to be manageable. At present, we believe that a meaningful economic slowdown has been priced into the market, as spreads have widened significantly from previous, tighter levels.
A severe recession, in our view, is more likely to have ties to a Fed policy mistake, or an unforeseen global crisis. Fed Chair Powell and others have indicated that they intend to keep tightening policy until reported inflation numbers come down. However, the Fed has rarely been able to achieve the “soft landing” scenario. After being too slow to tighten policy as the economy recovered from the COVID-19-driven recession, the Fed now seems at risk of making another mistake by perhaps being too late to respond to weaker economic conditions, or not being able to respond due to inflation pressures. We suspect this is mostly a communications problem, and that the FOMC could take a more forward-looking approach in setting the level of the federal funds target range once it has raised rates to neutral. However, with current inflation readings well above target and the federal funds rate still below neutral, we believe the Fed wants to communicate a simple and forceful message to keep inflation expectations from becoming unanchored. While inflation expectations remain firmly grounded, in our view, it will still be difficult for the Fed to reduce inflation without an increase in unemployment.
For the next few months, at least, we expect FOMC members to continue to say they will do whatever it takes to bring down inflation. In that scenario, we believe growing “hard landing” concerns among investors favor adding to the Portfolio’s duration and being very selective with regard to credit exposures.
Please refer to the Schedule of Investments on pages 8 to 29 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 Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited)
Principal | ||
Amount | ||
USD ($) | Value | |
UNAFFILIATED ISSUERS — 114.5% | ||
SENIOR SECURED FLOATING RATE LOAN INTERESTS — 1.1% of Net Assets*(a) | ||
Airlines — 0.1% | ||
40,000 | LATAM Airlines Group SA, Tranche A Facility, 8.234% (Term SOFR + 750 bps), 8/8/22 | $ 40,417 |
Total Airlines | $ 40,417 | |
Chemicals-Diversified — 0.1% | ||
19,950 | LSF11 A5 HoldCo LLC, Term Loan, 5.14% (SOFR + 350 bps), 10/15/28 | $ 18,722 |
Total Chemicals-Diversified | $ 18,722 | |
Electronic Composition — 0.0%† | ||
12,229 | Energy Acquisition LP, First Lien Initial Term Loan, 4.25% (LIBOR + 425 bps), 6/26/25 | $ 11,159 |
Total Electronic Composition | $ 11,159 | |
Finance-Special Purpose Banks — 0.2% | ||
73,337 | Bank of Industry, Ltd., Facility, 7.745% (LIBOR + 600 bps), 12/11/23 | $ 73,661 |
Total Finance-Special Purpose Banks | $ 73,661 | |
Medical-Wholesale Drug Distribution — 0.1% | ||
34,913 | Owens & Minor, Inc., Term B-1 Loan, 5.375% (Term SOFR + 375 bps), 3/29/29 | $ 34,694 |
Total Medical-Wholesale Drug Distribution | $ 34,694 | |
Metal Processors & Fabrication — 0.1% | ||
39,700 | Grinding Media, Inc. (Molycop, Ltd.), First Lien Initial Term Loan, 4.796% (LIBOR + | |
400 bps), 10/12/28 | $ 36,325 | |
Total Metal Processors & Fabrication | $ 36,325 | |
Oil-Field Services — 0.2% | ||
51,713 | ProFrac Holdings II, LLC, Term Loan, 10.007% (Term SOFR + 850 bps), 3/4/25 | $ 50,937 |
Total Oil-Field Services | $ 50,937 | |
Recreational Centers — 0.0%† | ||
15,560 | Fitness International LLC, Term B Loan, 4.916% (LIBOR + 325 bps), 4/18/25 | $ 13,907 |
Total Recreational Centers | $ 13,907 | |
Rental Auto & Equipment — 0.0%† | ||
14,925 | PECF USS Intermediate Holding III Corp., Initial Term Loan, 5.916% (LIBOR + 425 bps), 12/15/28 | $ 13,533 |
Total Rental Auto & Equipment | $ 13,533 | |
Retail — 0.0%† | ||
9,749 | Staples, Inc., 2019 Refinancing New Term B-2 Loan, 5.786% (LIBOR + 450 bps), 9/12/24 | $ 8,865 |
Total Retail | $ 8,865 | |
Retail-Restaurants — 0.2% | ||
69,426 | 1011778 B.C. Unlimited Liability Co., Term B-4 Loan, 3.416% (LIBOR + 175 bps), 11/19/26 | $ 66,441 |
Total Retail-Restaurants | $ 66,441 | |
Schools — 0.1% | ||
35,192 | KUEHG Corp. (fka KC MergerSub, Inc.), Term B-3 Loan, 6.00% (LIBOR + 375 bps), 2/21/25 | $ 32,883 |
Total Schools | $ 32,883 | |
TOTAL SENIOR SECURED FLOATING RATE LOAN INTERESTS | ||
(Cost $410,592) | $ 401,544 | |
Shares | ||
COMMON STOCKS — 0.0%† of Net Assets | ||
Airlines — 0.0%† | ||
1,529(b) | Grupo Aeromexico SAB de CV | $ 16,534 |
Total Airlines | $ 16,534 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Shares | Value | ||
Household Durables — 0.0%† | |||
15,463(b) | Desarrolladora Homex SAB de CV | $ 29 | |
Total Household Durables | $ 29 | ||
Paper & Forest Products — 0.0%† | |||
1,032(b) | Emerald Plantation Holdings, Ltd. | $ 12 | |
Total Paper & Forest Products | $ 12 | ||
TOTAL COMMON STOCKS | |||
(Cost $30,517) | $ 16,575 | ||
Principal | |||
Amount | |||
USD ($) | |||
ASSET BACKED SECURITIES — 2.9% of Net Assets | |||
100,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2021-FL3, Class D, 3.524% (1 Month USD | ||
LIBOR + 220 bps), 8/15/34 (144A) | $ 92,125 | ||
100,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2021-FL4, Class D, 4.224% (1 Month USD | ||
LIBOR + 290 bps), 11/15/36 (144A) | 95,506 | ||
100,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2021-FL4, Class E, 4.724% (1 Month USD | ||
LIBOR + 340 bps), 11/15/36 (144A) | 92,491 | ||
100,000(a) | Arbor Realty Commercial Real Estate Notes, Ltd., Series 2022-FL2, Class D, 5.629% (1 Month Term | ||
SOFR + 435 bps), 5/15/37 (144A) | 97,101 | ||
100,000 | Cologix Canadian Issuer LP, Series 2022-1CAN, Class A2, 4.94%, 1/25/52 (144A) | 72,533 | |
19,056(c) | Equifirst Mortgage Loan Trust, Series 2003-1, Class IF1, 4.01%, 12/25/32 | 17,910 | |
37,030 | Icon Brand Holdings LLC, Series 2013-1A, Class A2, 4.352%, 1/25/43 (144A) | 11,110 | |
100,000(a) | KREF Ltd., Series 2021-FL2, Class C, 3.523% (1 Month USD LIBOR + 200 bps), 2/15/39 (144A) | 93,767 | |
100,000(a) | KREF Ltd., Series 2021-FL2, Class E, 4.373% (1 Month USD LIBOR + 285 bps), 2/15/39 (144A) | 95,050 | |
100,000(d) | PEAR LLC, Series 2021-1, Class B, 0.000%, 1/15/34 (144A) | 70,933 | |
15,128 | Small Business Lending Trust, Series 2019-A, Class C, 4.31%, 7/15/26 (144A) | 15,124 | |
100,000 | VFI ABS LLC, Series 2022-1A, Class D, 6.68%, 11/26/29 (144A) | 95,819 | |
222,128 | Westgate Resorts LLC, Series 2022-1A, Class D, 3.838%, 8/20/36 (144A) | 209,296 | |
TOTAL ASSET BACKED SECURITIES | |||
(Cost $1,149,247) | $ 1,058,765 | ||
COLLATERALIZED MORTGAGE OBLIGATIONS — 15.0% of Net Assets | |||
100,000(e) | Bayview MSR Opportunity Master Fund Trust, Series 2021-2, Class A8, 2.50%, 6/25/51 (144A) | $ 72,866 | |
150,000(a) | Bellemeade Re, Ltd., Series 2021-3A, Class M2, 4.076% (SOFR30A + 315 bps), 9/25/31 (144A) | 133,755 | |
100,000(e) | BINOM Securitization Trust, Series 2022-RPL1, Class M3, 3.00%, 2/25/61 (144A) | 89,175 | |
100,000 | Cascade MH Asset Trust, Series 2021-MH1, Class B1, 4.573%, 2/25/46 (144A) | 83,936 | |
97,014(e) | CIM Trust, Series 2021-J2, Class B3, 2.675%, 4/25/51 (144A) | 82,444 | |
98,037(e) | Citigroup Mortgage Loan Trust, Series 2021-INV2, Class B1W, 2.987%, 5/25/51 (144A) | 82,730 | |
30,000(a) | Connecticut Avenue Securities Trust, Series 2020-SBT1, Class 1M2, 5.274% (1 Month USD | ||
LIBOR + 365 bps), 2/25/40 (144A) | 28,705 | ||
50,000(a) | Connecticut Avenue Securities Trust, Series 2020-SBT1, Class 2M2, 5.274% (1 Month USD | ||
LIBOR + 365 bps), 2/25/40 (144A) | 47,701 | ||
220,000(a) | Connecticut Avenue Securities Trust, Series 2022-R02, Class 2B1, 5.426% (SOFR30A + | ||
450 bps), 1/25/42 (144A) | 192,849 | ||
150,000(a) | Eagle Re, Ltd., Series 2019-1, Class B1, 6.124% (1 Month USD LIBOR + 450 bps), 4/25/29 (144A) | 146,050 | |
150,000(a) | Eagle Re, Ltd., Series 2020-2, Class B1, 8.624% (1 Month USD LIBOR + 700 bps), 10/25/30 (144A) | 151,562 | |
150,000(a) | Eagle Re, Ltd., Series 2021-2, Class M2, 5.176% (SOFR30A + 425 bps), 4/25/34 (144A) | 140,230 | |
40,000(a) | Fannie Mae Connecticut Avenue Securities, Series 2018-C03, Class 1B1, 5.374% (1 Month | ||
USD LIBOR + 375 bps), 10/25/30 | 39,103 | ||
63,056(a) | Fannie Mae Connecticut Avenue Securities, Series 2018-C06, Class 1M2, 3.624% (1 Month | ||
USD LIBOR + 200 bps), 3/25/31 | 62,359 | ||
1,520 | Fannie Mae REMICS, Series 2009-36, Class HX, 4.50%, 6/25/29 | 1,529 |
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 6/30/22 (unaudited) (continued)
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS (continued) | ||
97,365(a)(f) | Federal Home Loan Mortgage Corp. REMICS, Series 4087, Class SB, 4.706% (1 Month USD | |
LIBOR + 603 bps), 7/15/42 | $ 14,011 | |
51,784(a)(f) | Federal Home Loan Mortgage Corp. REMICS, Series 4091, Class SH, 5.226% (1 Month USD | |
LIBOR + 655 bps), 8/15/42 | 7,940 | |
49,220(f) | Federal Home Loan Mortgage Corp. REMICS, Series 4999, Class QI, 4.00%, 5/25/50 | 9,708 |
52,249(f) | Federal Home Loan Mortgage Corp. REMICS, Series 5018, Class EI, 4.00%, 10/25/50 | 10,480 |
65,462(f) | Federal Home Loan Mortgage Corp. REMICS, Series 5067, Class GI, 4.00%, 12/25/50 | 13,417 |
30,365(a)(f) | Federal National Mortgage Association REMICS, Series 2012-14, Class SP, 4.926% (1 Month USD | |
LIBOR + 655 bps), 8/25/41 | 3,275 | |
19,627(a)(f) | Federal National Mortgage Association REMICS, Series 2018-43, Class SM, 4.576% (1 Month USD | |
LIBOR + 620 bps), 6/25/48 | 2,453 | |
24,881(a)(f) | Federal National Mortgage Association REMICS, Series 2019-33, Class S, 4.426% (1 Month USD | |
LIBOR + 605 bps), 7/25/49 | 2,120 | |
22,139(a)(f) | Federal National Mortgage Association REMICS, Series 2019-41, Class PS, 4.426% (1 Month USD | |
LIBOR + 605 bps), 8/25/49 | 3,134 | |
21,550(a)(f) | Federal National Mortgage Association REMICS, Series 2019-41, Class SM, 4.426% (1 Month USD | |
LIBOR + 605 bps), 8/25/49 | 3,042 | |
10,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA2, Class B1, 4.124% (1 Month USD LIBOR + | |
250 bps), 2/25/50 (144A) | 8,555 | |
71,006(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA3, Class B1, 6.724% (1 Month USD LIBOR + | |
510 bps), 6/25/50 (144A) | 72,333 | |
70,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B1, 7.624% (1 Month USD LIBOR + | |
600 bps), 8/25/50 (144A) | 72,896 | |
40,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA4, Class B2, 11.624% (1 Month USD LIBOR + | |
1,000 bps), 8/25/50 (144A) | 46,685 | |
40,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA5, Class B2, 12.426% (SOFR30A + 1,150 | |
bps), 10/25/50 (144A) | 46,915 | |
50,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B1, 3.926% (SOFR30A + 300 | |
bps), 12/25/50 (144A) | 41,798 | |
50,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-DNA6, Class B2, 6.576% (SOFR30A + 565 | |
bps), 12/25/50 (144A) | 42,380 | |
23,968(a) | Freddie Mac Stacr Remic Trust, Series 2020-HQA2, Class M2, 4.724% (1 Month USD LIBOR + | |
310 bps), 3/25/50 (144A) | 23,774 | |
30,000(a) | Freddie Mac Stacr Remic Trust, Series 2020-HQA3, Class B2, 11.624% (1 Month USD LIBOR + | |
1,000 bps), 7/25/50 (144A) | 34,299 | |
100,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B1, 3.576% (SOFR30A + 265 bps), | |
1/25/51 (144A) | 80,746 | |
70,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA1, Class B2, 5.676% (SOFR30A + 475 bps), | |
1/25/51 (144A) | 54,252 | |
80,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-DNA5, Class B1, 3.976% (SOFR30A + 305 bps), | |
1/25/34 (144A) | 68,662 | |
70,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-HQA1, Class B2, 5.926% (SOFR30A + 500 bps), | |
8/25/33 (144A) | 53,713 | |
180,000(a) | Freddie Mac Stacr Remic Trust, Series 2021-HQA4, Class B1, 4.676% (SOFR30A + 375 bps), | |
12/25/41 (144A) | 148,585 | |
100,000(a) | Freddie Mac Stacr Remic Trust, Series 2022-DNA3, Class M2, 5.276% (SOFR30A + 435 bps), | |
4/25/42 (144A) | 90,805 | |
25,000(a) | Freddie Mac Stacr Remic Trust, Series 2022-HQA1, Class M2, 6.176% (SOFR30A + 525 bps), | |
3/25/42 (144A) | 23,261 | |
150,000(a) | Freddie Mac Stacr Trust, Series 2018-HQA2, Class B1, 5.874% (1 Month USD LIBOR + 425 bps), | |
10/25/48 (144A) | 148,227 |
The accompanying notes are an integral part of these financial statements.
10
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS (continued) | ||
60,000(a) | Freddie Mac Stacr Trust, Series 2019-HRP1, Class B1, 5.674% (1 Month USD LIBOR + 405 bps), | |
2/25/49 (144A) | $ 54,726 | |
70,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B1, | |
4.926% (SOFR30A + 400 bps), 11/25/50 (144A) | 65,923 | |
80,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2020-HQA5, Class B2, | |
8.326% (SOFR30A + 740 bps), 11/25/50 (144A) | 75,849 | |
45,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2021-DNA2, Class B1, | |
4.326% (SOFR30A + 340 bps), 8/25/33 (144A) | 39,033 | |
220,000(a) | Freddie Mac Structured Agency Credit Risk Debt Notes, Series 2022-DNA2, Class B1, | |
5.676% (SOFR30A + 475 bps), 2/25/42 (144A) | 193,616 | |
13,250 | Government National Mortgage Association, Series 2009-83, Class EB, 4.50%, 9/20/39 | 13,794 |
1,661 | Government National Mortgage Association, Series 2012-130, Class PA, 3.00%, 4/20/41 | 1,658 |
108,827(f) | Government National Mortgage Association, Series 2019-110, Class PI, 3.50%, 9/20/49 | 13,583 |
173,540(a)(f) | Government National Mortgage Association, Series 2019-117, Class SB, 1.825% (1 Month | |
USD LIBOR + 342 bps), 9/20/49 | 8,282 | |
172,120(a)(f) | Government National Mortgage Association, Series 2019-121, Class SA, 1.755% (1 Month | |
USD LIBOR + 335 bps), 10/20/49 | 9,453 | |
257,723(f) | Government National Mortgage Association, Series 2019-128, Class IB, 3.50%, 10/20/49 | 43,042 |
261,066(f) | Government National Mortgage Association, Series 2019-128, Class ID, 3.50%, 10/20/49 | 32,952 |
125,435(f) | Government National Mortgage Association, Series 2019-159, Class CI, 3.50%, 12/20/49 | 21,950 |
75,716(a)(f) | Government National Mortgage Association, Series 2019-90, Class SA, 1.705% (1 Month | |
USD LIBOR + 330 bps), 7/20/49 | 2,611 | |
146,076(a)(f) | Government National Mortgage Association, Series 2020-9, Class SA, 1.755% (1 Month | |
USD LIBOR + 335 bps), 1/20/50 | 6,631 | |
100,000(e) | GS Mortgage-Backed Securities Corp. Trust, Series 2022-PJ4, Class A33, 3.00%, 9/25/52 (144A) | 77,047 |
98,872(e) | GS Mortgage-Backed Securities Trust, Series 2021-GR3, Class B2, 3.393%, 4/25/52 (144A) | 81,402 |
98,723(e) | GS Mortgage-Backed Securities Trust, Series 2022-PJ1, Class B3, 2.836%, 5/28/52 (144A) | 76,299 |
97,147(e) | Hundred Acre Wood Trust, Series 2021-INV1, Class B2, 3.227%, 7/25/51 (144A) | 76,020 |
97,515(e) | JP Morgan Mortgage Trust, Series 2021-7, Class B3, 2.82%, 11/25/51 (144A) | 73,210 |
146,558(e) | JP Morgan Mortgage Trust, Series 2021-8, Class B3, 2.869%, 12/25/51 (144A) | 110,169 |
97,450(e) | JP Morgan Mortgage Trust, Series 2021-INV1, Class B3, 2.991%, 10/25/51 (144A) | 74,339 |
89,490(e) | JP Morgan Mortgage Trust, Series 2021-INV6, Class A5A, 2.50%, 4/25/52 (144A) | 75,699 |
99,461(e) | JP Morgan Mortgage Trust, Series 2022-3, Class B3, 3.12%, 8/25/52 (144A) | 78,221 |
100,000(e) | JP Morgan Mortgage Trust, Series 2022-4, Class A5, 3.00%, 10/25/52 (144A) | 76,346 |
99,808(e) | JP Morgan Mortgage Trust, Series 2022-6, Class B3, 3.308%, 11/25/52 (144A) | 75,642 |
99,137(e) | JP Morgan Mortgage Trust, Series 2022-INV1, Class B3, 3.301%, 3/25/52 (144A) | 73,662 |
100,000(e) | JP Morgan Mortgage Trust, Series 2022-LTV1, Class M1, 3.528%, 7/25/52 (144A) | 77,358 |
69,811(a) | JPMorgan Chase Bank NA - JPMWM, Series 2021-CL1, Class M3, 2.726% (SOFR30A + 180 bps), | |
3/25/51 (144A) | 65,702 | |
99,527(e) | Mello Mortgage Capital Acceptance, Series 2022-INV2, Class B3, 3.538%, 4/25/52 (144A) | 75,380 |
100,000(e) | MFA Trust, Series 2021-RPL1, Class M2, 2.855%, 7/25/60 (144A) | 81,787 |
96,844(e) | Oceanview Mortgage Trust, Series 2021-1, Class B2, 2.728%, 5/25/51 (144A) | 73,976 |
97,838(e) | Provident Funding Mortgage Trust, Series 2021-J1, Class B3, 2.638%, 10/25/51 (144A) | 76,165 |
98,632(e) | Rate Mortgage Trust, Series 2021-HB1, Class B2, 2.708%, 12/25/51 (144A) | 75,781 |
97,354(e) | Rate Mortgage Trust, Series 2021-J1, Class B2, 2.707%, 7/25/51 (144A) | 76,844 |
99,631(e) | RCKT Mortgage Trust, Series 2022-3, Class B3, 3.194%, 5/25/52 (144A) | 74,709 |
100,000(e) | Sequoia Mortgage Trust, Series 2022-1, Class A7, 2.50%, 2/25/52 (144A) | 73,933 |
100,000(e) | Towd Point Mortgage Trust, Series 2017-1, Class B3, 3.768%, 10/25/56 (144A) | 88,067 |
100,000(e) | Towd Point Mortgage Trust, Series 2017-3, Class B3, 3.803%, 7/25/57 (144A) | 90,081 |
150,000(e) | Towd Point Mortgage Trust, Series 2019-4, Class M2B, 3.25%, 10/25/59 (144A) | 125,162 |
The accompanying notes are an integral part of these financial statements.
11
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | ||
Amount | ||
USD ($) | Value | |
COLLATERALIZED MORTGAGE OBLIGATIONS (continued) | ||
95,453(e) | Towd Point Mortgage Trust, Series 2021-R1, Class A1, 2.918%, 11/30/60 (144A) | $ 86,960 |
110,000(a) | Traingle Re, Ltd., Series 2021-1, Class M2, 5.524% (1 Month USD LIBOR + 390 bps), | |
8/25/33 (144A) | 108,770 | |
100,000(e) | Wells Fargo Mortgage Backed Securities Trust, Series 2022-2, Class A6, 2.50%, | |
12/25/51 (144A) | 71,722 | |
99,831(e) | Wells Fargo Mortgage Backed Securities Trust, Series 2022-INV1, Class B3, 3.446%, | |
3/25/52 (144A) | 74,596 | |
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS | ||
(Cost $6,407,020) | $ 5,410,612 | |
COMMERCIAL MORTGAGE-BACKED SECURITIES — 10.6% of Net Assets | ||
100,000(a) | AREIT Trust, Series 2022-CRE6, Class D, 3.621% (SOFR30A + 285 bps), 1/16/37 (144A) | $ 93,764 |
25,000(a) | BAMLL Commercial Mortgage Securities Trust, Series 2021-JACX, Class E, 5.074% (1 | |
Month USD LIBOR + 375 bps), 9/15/38 (144A) | 23,626 | |
40,000 | Benchmark Mortgage Trust, Series 2018-B5, Class A3, 3.944%, 7/15/51 | 38,988 |
100,000(e) | Benchmark Mortgage Trust, Series 2020-IG3, Class B, 3.389%, 9/15/48 (144A) | 86,291 |
100,000(a) | BX Commercial Mortgage Trust, Series 2021-VOLT, Class F, 3.724% (1 Month USD LIBOR + | |
240 bps), 9/15/36 (144A) | 93,035 | |
100,000(a) | BX Commercial Mortgage Trust, Series 2021-VOLT, Class G, 4.174% (1 Month USD LIBOR + | |
285 bps), 9/15/36 (144A) | 92,020 | |
300,000(a) | BX Trust, Series 2021-ARIA, Class E, 3.569% (1 Month USD LIBOR + 224 bps), 10/15/36 (144A) | 279,663 |
38,947 | CFCRE Commercial Mortgage Trust, Series 2016-C3, Class A2, 3.597%, 1/10/48 | 38,039 |
99,250(a) | CHC Commercial Mortgage Trust, Series 2019-CHC, Class E, 3.674% (1 Month USD LIBOR + | |
235 bps), 6/15/34 (144A) | 93,865 | |
150,000 | Citigroup Commercial Mortgage Trust, Series 2018-B2, Class A3, 3.744%, 3/10/51 | 145,714 |
65,000(a) | CLNY Trust, Series 2019-IKPR, Class E, 4.045% (1 Month USD LIBOR + 272 bps), 11/15/38 (144A) | 59,777 |
98,299(a) | Cold Storage Trust, Series 2020-ICE5, Class D, 3.424% (1 Month USD LIBOR + 210 bps), | |
11/15/37 (144A) | 95,336 | |
100,000(e) | COMM Mortgage Trust, Series 2015-CR24, Class D, 3.463%, 8/10/48 | 86,423 |
75,000(e) | COMM Mortgage Trust, Series 2015-DC1, Class B, 4.035%, 2/10/48 | 72,430 |
100,000(e) | CSAIL Commercial Mortgage Trust, Series 2015-C1, Class C, 4.402%, 4/15/50 | 88,348 |
25,000(e) | CSAIL Commercial Mortgage Trust, Series 2015-C4, Class D, 3.711%, 11/15/48 | 22,154 |
100,000(e) | Fontainebleau Miami Beach Trust, Series 2019-FBLU, Class D, 4.095%, 12/10/36 (144A) | 95,793 |
75,000(a) | Freddie Mac Multifamily Structured Credit Risk, Series 2021-MN3, Class M2, 4.926% | |
(SOFR30A + 400 bps), 11/25/51 (144A) | 64,708 | |
49,000(e) | FREMF Mortgage Trust, Series 2017-KW02, Class B, 3.922%, 12/25/26 (144A) | 46,004 |
50,000(e) | FREMF Mortgage Trust, Series 2017-KW03, Class B, 4.203%, 7/25/27 (144A) | 47,832 |
75,000(e) | FREMF Mortgage Trust, Series 2018-KHG1, Class B, 3.812%, 12/25/27 (144A) | 69,739 |
25,000(e) | FREMF Mortgage Trust, Series 2018-KW07, Class B, 4.222%, 10/25/31 (144A) | 23,622 |
75,000(e) | FREMF Mortgage Trust, Series 2019-K88, Class C, 4.528%, 2/25/52 (144A) | 71,435 |
62,806(e) | FREMF Mortgage Trust, Series 2019-KJ24, Class B, 7.60%, 10/25/27 (144A) | 59,125 |
50,000(e) | FREMF Mortgage Trust, Series 2020-K106, Class B, 3.708%, 3/25/53 (144A) | 45,960 |
50,000(e) | FREMF Trust, Series 2018-KW04, Class B, 4.047%, 9/25/28 (144A) | 46,132 |
75,000(a) | Great Wolf Trust, Series 2019-WOLF, Class E, 4.056% (1 Month USD LIBOR + 273 bps), 12/15/36 (144A) | 69,720 |
100,000(a) | GS Mortgage Securities Corp. Trust, Series 2020-DUNE, Class E, 3.824% (1 Month USD | |
LIBOR + 250 bps), 12/15/36 (144A) | 94,725 | |
100,000(a) | GS Mortgage Securities Corp. Trust, Series 2020-DUNE, Class G, 5.324% (1 Month USD | |
LIBOR + 400 bps), 12/15/36 (144A) | 92,407 |
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) | ||
100,000(a) | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2019-BKWD, Class E, | |
3.924% (1 Month USD LIBOR + 260 bps), 9/15/29 (144A) | $ 94,541 | |
100,000(e) | JP Morgan Chase Commercial Mortgage Securities Trust, Series 2020-LOOP, Class F, | |
3.861%, 12/5/38 (144A) | 59,276 | |
50,000 | Key Commercial Mortgage Securities Trust, Series 2019-S2, Class A3, 3.469%, 6/15/52 (144A) | 46,427 |
325,000(a) | Med Trust, Series 2021-MDLN, Class F, 5.325% (1 Month USD LIBOR + 400 bps), 11/15/38 (144A) | 303,880 |
100,000 | Morgan Stanley Capital I Trust, Series 2014-150E, Class AS, 4.012%, 9/9/32 (144A) | 95,632 |
25,000 | Morgan Stanley Capital I Trust, Series 2016-UBS9, Class D, 3.00%, 3/15/49 (144A) | 21,004 |
100,000(e) | Morgan Stanley Capital I Trust, Series 2018-MP, Class A, 4.419%, 7/11/40 (144A) | 96,370 |
100,000(a) | Multifamily Connecticut Avenue Securities Trust, Series 2019-01, Class M10, 4.874% (1 Month USD | |
LIBOR + 325 bps), 10/15/49 (144A) | 92,868 | |
40,000 | Palisades Center Trust, Series 2016-PLSD, Class A, 2.713%, 4/13/33 (144A) | 37,913 |
100,000(e) | RBS Commercial Funding, Inc. Trust, Series 2013-SMV, Class E, 3.704%, 3/11/31 (144A) | 92,000 |
50,000(a) | Ready Capital Mortgage Financing LLC, Series 2021-FL7, Class D, 4.574% (1 Month USD | |
LIBOR + 295 bps), 11/25/36 (144A) | 46,120 | |
55,000(a) | Ready Capital Mortgage Financing LLC, Series 2022-FL8, Class D, 4.648% (SOFR30A + 370 bps), | |
1/25/37 (144A) | 51,693 | |
25,000(a) | Ready Capital Mortgage Financing LLC, Series 2022-FL8, Class E, 5.198% (SOFR30A + 425 bps), | |
1/25/37 (144A) | 23,546 | |
100,000(e) | Ready Capital Mortgage Trust, Series 2019-5, Class E, 5.495%, 2/25/52 (144A) | 89,196 |
100,000 | SLG Office Trust, Series 2021-OVA, Class E, 2.851%, 7/15/41 (144A) | 77,568 |
150,000 | SLG Office Trust, Series 2021-OVA, Class F, 2.851%, 7/15/41 (144A) | 111,202 |
100,000(e) | Soho Trust, Series 2021-SOHO, Class A, 2.786%, 8/10/38 (144A) | 86,484 |
145,000(a) | Taubman Centers Commercial Mortgage Trust, Series 2022-DPM, Class B, 4.211% (1 Month | |
Term SOFR + 293 bps), 5/15/37 (144A) | 139,865 | |
1,000,000(e) | UBS Commercial Mortgage Trust, Series 2018-C9, Class XB, 0.439%, 3/15/51 | 19,422 |
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | ||
(Cost $4,164,801) | $ 3,821,682 | |
CONVERTIBLE CORPORATE BONDS — 0.7% of Net Assets | ||
Airlines — 0.1% | ||
51,000 | Spirit Airlines, Inc., 1.00%, 5/15/26 | $ 45,977 |
Total Airlines | $ 45,977 | |
Biotechnology — 0.1% | ||
35,000 | Insmed, Inc., 1.75%, 1/15/25 | $ 32,533 |
Total Biotechnology | $ 32,533 | |
Entertainment — 0.2% | ||
122,000(d) | DraftKings Holdings, Inc., 3/15/28 | $ 74,786 |
15,000 | IMAX Corp., 0.50%, 4/1/26 | 13,305 |
Total Entertainment | $ 88,091 | |
Pharmaceuticals — 0.1% | ||
75,000 | Tricida, Inc., 3.50%, 5/15/27 | $ 38,925 |
Total Pharmaceuticals | $ 38,925 | |
Software — 0.2% | ||
22,000 | Bentley Systems, Inc., 0.375%, 7/1/27 (144A) | $ 17,050 |
47,000 | Verint Systems, Inc., 0.25%, 4/15/26 | 42,887 |
Total Software | $ 59,937 | |
TOTAL CONVERTIBLE CORPORATE BONDS | ||
(Cost $347,086) | $ 265,463 |
The accompanying notes are an integral part of these financial statements.
13
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | |||
Amount | |||
USD ($) | Value | ||
CORPORATE BONDS — 28.4% of Net Assets | |||
Advertising — 0.2% | |||
106,000 | Stagwell Global LLC, 5.625%, 8/15/29 (144A) | $ 85,174 | |
Total Advertising | $ 85,174 | ||
Aerospace & Defense — 0.9% | |||
237,000 | Boeing Co., 3.75%, 2/1/50 | $ 166,321 | |
165,000 | Boeing Co., 5.805%, 5/1/50 | 152,686 | |
Total Aerospace & Defense | $ 319,007 | ||
Airlines — 0.9% | |||
20,000 | Air Canada, 3.875%, 8/15/26 (144A) | $ 16,918 | |
15,000 | American Airlines 2021-1 Class B Pass Through Trust, 3.95%, 7/11/30 | 12,533 | |
110,000 | Gol Finance SA, 8.00%, 6/30/26 (144A) | 73,150 | |
200,000 | Grupo Aeromexico SAB de CV, 8.50%, 3/17/27 (144A) | 192,324 | |
18,939 | JetBlue 2020-1 Class A Pass Through Trust, 4.00%, 11/15/32 | 17,627 | |
10,000 | United Airlines, Inc., 4.375%, 4/15/26 (144A) | 8,925 | |
10,000 | United Airlines, Inc., 4.625%, 4/15/29 (144A) | 8,419 | |
Total Airlines | $ 329,896 | ||
Auto Manufacturers — 0.9% | |||
135,000 | Ford Motor Co., 4.346%, 12/8/26 | $ 125,098 | |
42,000 | Ford Motor Co., 5.291%, 12/8/46 | 32,210 | |
200,000 | Ford Motor Credit Co. LLC, 3.815%, 11/2/27 | 170,000 | |
Total Auto Manufacturers | $ 327,308 | ||
Auto Parts & Equipment — 0.1% | |||
40,000 | Dana, Inc., 4.25%, 9/1/30 | $ 31,048 | |
Total Auto Parts & Equipment | $ 31,048 | ||
Banks — 6.2% | |||
200,000(e) | ABN AMRO Bank NV, 3.324% (5 Year CMT Index + 190 bps), 3/13/37 (144A) | $ 160,859 | |
ARS | 500,000(a) | Banco de la Ciudad de Buenos Aires, 53.534% (BADLARPP + 399 bps), 12/5/22 | 1,513 |
200,000(e) | Banco Santander SA, 3.225% (1 Year CMT Index + 160 bps), 11/22/32 | 158,621 | |
250,000(e) | BPCE SA, 3.116% (SOFR + 173 bps), 10/19/32 (144A) | 202,001 | |
25,000 | Freedom Mortgage Corp., 6.625%, 1/15/27 (144A) | 18,529 | |
25,000 | Freedom Mortgage Corp., 8.25%, 4/15/25 (144A) | 21,042 | |
220,000(e)(g) | ING Groep NV, 4.25% (5 Year CMT Index + 286 bps) | 150,018 | |
200,000(e) | Intesa Sanpaolo S.p.A., 4.198% (1 Year CMT Index + 260 bps), 6/1/32 (144A) | 146,849 | |
100,000(e) | Macquarie Group, Ltd., 2.871% (SOFR + 153 bps), 1/14/33 (144A) | 81,801 | |
100,000(e) | Morgan Stanley, 5.297% (SOFR + 262 bps), 4/20/37 | 97,096 | |
235,000(e)(g) | Nordea Bank Abp, 3.75% (5 Year CMT Index + 260 bps) (144A) | 173,079 | |
200,000(e) | Societe Generale SA, 4.027% (1 Year CMT Index + 190 bps), 1/21/43 (144A) | 141,848 | |
205,000(e) | Standard Chartered Plc, 3.603% (1 Year CMT Index + 190 bps), 1/12/33 (144A) | 168,190 | |
EUR | 283,675(c)(g) | Stichting AK Rabobank Certificaten, 6.50% | 288,227 |
90,000 | Toronto-Dominion Bank, 4.456%, 6/8/32 | 89,264 | |
200,000(e) | UniCredit S.p.A., 5.459% (5 Year CMT Index + 475 bps), 6/30/35 (144A) | 161,982 | |
200,000(e) | UniCredit S.p.A., 7.296% (5 Year USD 1100 Run ICE Swap Rate + 491 bps), 4/2/34 (144A) | 184,120 | |
Total Banks | $ 2,245,039 | ||
Beverages — 0.1% | |||
50,000 | Central American Bottling Corp./CBC Bottling Holdco SL/Beliv Holdco SL, 5.25%, | ||
4/27/29 (144A) | $ 43,507 | ||
Total Beverages | $ 43,507 |
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 | |
Biotechnology — 0.1% | ||
30,000 | Bio-Rad Laboratories, Inc., 3.70%, 3/15/32 | $ 26,733 |
Total Biotechnology | $ 26,733 | |
Building Materials — 0.8% | ||
70,000 | Builders FirstSource, Inc., 6.375%, 6/15/32 (144A) | $ 62,475 |
50,000 | Fortune Brands Home & Security, Inc., 4.50%, 3/25/52 | 38,851 |
10,000 | MIWD Holdco II LLC/MIWD Finance Corp., 5.50%, 2/1/30 (144A) | 8,048 |
15,000 | Oscar AcquisitionCo LLC/Oscar Finance, Inc., 9.50%, 4/15/30 (144A) | 11,889 |
93,000 | Standard Industries, Inc., 4.375%, 7/15/30 (144A) | 73,354 |
110,000 | Summit Materials LLC/Summit Materials Finance Corp., 5.25%, 1/15/29 (144A) | 95,975 |
Total Building Materials | $ 290,592 | |
Chemicals — 0.6% | ||
89,000 | Olin Corp., 5.00%, 2/1/30 | $ 76,869 |
10,000 | Olin Corp., 5.625%, 8/1/29 | 8,913 |
50,000 | Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc., 5.125%, 4/1/29 (144A) | 35,973 |
105,000 | Tronox, Inc., 4.625%, 3/15/29 (144A) | 84,503 |
Total Chemicals | $ 206,258 | |
Commercial Services — 0.9% | ||
45,000 | Allied Universal Holdco LLC/Allied Universal Finance Corp., 6.625%, 7/15/26 (144A) | $ 41,190 |
55,000 | CoreLogic, Inc., 4.50%, 5/1/28 (144A) | 42,350 |
35,000 | Garda World Security Corp., 4.625%, 2/15/27 (144A) | 30,100 |
39,000 | Garda World Security Corp., 6.00%, 6/1/29 (144A) | 29,981 |
24,000 | Garda World Security Corp., 9.50%, 11/1/27 (144A) | 21,951 |
15,000 | Nielsen Finance LLC/Nielsen Finance Co., 4.50%, 7/15/29 (144A) | 13,532 |
15,000 | Nielsen Finance LLC/Nielsen Finance Co., 4.75%, 7/15/31 (144A) | 13,519 |
35,000 | Prime Security Services Borrower LLC/Prime Finance, Inc., 5.75%, 4/15/26 (144A) | 32,638 |
104,000 | Prime Security Services Borrower LLC/Prime Finance, Inc., 6.25%, 1/15/28 (144A) | 86,865 |
Total Commercial Services | $ 312,126 | |
Computers — 0.2% | ||
40,000 | KBR, Inc., 4.75%, 9/30/28 (144A) | $ 35,300 |
25,000 | NCR Corp., 5.00%, 10/1/28 (144A) | 21,167 |
10,000 | NCR Corp., 5.25%, 10/1/30 (144A) | 8,625 |
Total Computers | $ 65,092 | |
Cosmetics/Personal Care — 0.1% | ||
55,000 | Edgewell Personal Care Co., 5.50%, 6/1/28 (144A) | $ 50,045 |
Total Cosmetics/Personal Care | $ 50,045 | |
Diversified Financial Services — 2.4% | ||
150,000 | AerCap Ireland Capital DAC/AerCap Global Aviation Trust, 3.30%, 1/30/32 | $ 119,873 |
150,000 | Air Lease Corp., 2.875%, 1/15/32 | 117,222 |
70,000 | Air Lease Corp., 3.125%, 12/1/30 | 57,375 |
87,000 | Bread Financial Holdings, Inc., 7.00%, 1/15/26 (144A) | 83,076 |
155,702(h) | Global Aircraft Leasing Co., Ltd., 6.50% (7.25% PIK or 6.50% Cash), 9/15/24 (144A) | 117,944 |
55,000 | OneMain Finance Corp., 3.50%, 1/15/27 | 44,000 |
130,000 | OneMain Finance Corp., 4.00%, 9/15/30 | 96,240 |
100,000(a) | OWS Cre Funding I LLC, 6.613% (1 Month USD LIBOR + 490 bps), 9/1/23 (144A) | 98,644 |
84,000 | United Wholesale Mortgage LLC, 5.50%, 4/15/29 (144A) | 64,313 |
The accompanying notes are an integral part of these financial statements.
15
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | |||
Amount | |||
USD ($) | Value | ||
Diversified Financial Services (continued) | |||
75,000 | VistaJet Malta Finance Plc/XO Management Holding, Inc., 6.375%, 2/1/30 (144A) | $ 60,000 | |
15,000 | VistaJet Malta Finance Plc/XO Management Holding, Inc., 7.875%, 5/1/27 (144A) | 13,237 | |
Total Diversified Financial Services | $ 871,924 | ||
Electric — 1.8% | |||
75,000(e) | Algonquin Power & Utilities Corp., 4.75% (5 Year CMT Index + 325 bps), 1/18/82 | $ 62,249 | |
226,000 | Calpine Corp., 3.75%, 3/1/31 (144A) | 182,698 | |
15,000 | Calpine Corp., 4.625%, 2/1/29 (144A) | 12,484 | |
15,000 | Calpine Corp., 5.00%, 2/1/31 (144A) | 12,150 | |
10,000 | Clearway Energy Operating LLC, 3.75%, 1/15/32 (144A) | 7,901 | |
20,000 | NRG Energy, Inc., 3.625%, 2/15/31 (144A) | 15,680 | |
90,000 | NRG Energy, Inc., 3.875%, 2/15/32 (144A) | 71,486 | |
200,000 | NRG Energy, Inc., 4.45%, 6/15/29 (144A) | 179,382 | |
90,000 | Vistra Operations Co. LLC, 3.70%, 1/30/27 (144A) | 82,956 | |
21,000 | Vistra Operations Co. LLC, 4.375%, 5/1/29 (144A) | 17,569 | |
Total Electric | $ 644,555 | ||
Electrical Components & Equipments — 0.2% | |||
EUR | 100,000 | Energizer Gamma Acquisition BV, 3.50%, 6/30/29 (144A) | $ 74,389 |
Total Electrical Components & Equipments | $ 74,389 | ||
Electronics — 0.1% | |||
25,000 | Atkore, Inc., 4.25%, 6/1/31 (144A) | $ 20,750 | |
Total Electronics | $ 20,750 | ||
Energy-Alternate Sources — 0.1% | |||
37,337 | Alta Wind Holdings LLC, 7.00%, 6/30/35 (144A) | $ 38,906 | |
Total Energy-Alternate Sources | $ 38,906 | ||
Engineering & Construction — 0.3% | |||
75,000 | Artera Services LLC, 9.033%, 12/4/25 (144A) | $ 60,435 | |
50,000 | Dycom Industries, Inc., 4.50%, 4/15/29 (144A) | 43,715 | |
Total Engineering & Construction | $ 104,150 | ||
Entertainment — 0.6% | |||
200,000 | Resorts World Las Vegas LLC/RWLV Capital, Inc., 4.625%, 4/16/29 (144A) | $ 162,918 | |
25,000 | Scientific Games Holdings LP/Scientific Games US FinCo, Inc., 6.625%, 3/1/30 (144A) | 21,250 | |
15,000 | Scientific Games International, Inc., 7.00%, 5/15/28 (144A) | 14,170 | |
15,000 | Scientific Games International, Inc., 7.25%, 11/15/29 (144A) | 14,190 | |
Total Entertainment | $ 212,528 | ||
Food — 0.3% | |||
25,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 3.00%, 5/15/32 (144A) | $ 19,199 | |
20,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 5.50%, 1/15/30 (144A) | 18,966 | |
85,000 | JBS USA LUX SA/JBS USA Food Co./JBS USA Finance, Inc., 5.75%, 4/1/33 (144A) | 80,944 | |
Total Food | $ 119,109 | ||
Forest Products & Paper — 0.1% | |||
22,000 | Clearwater Paper Corp., 4.75%, 8/15/28 (144A) | $ 18,971 | |
Total Forest Products & Paper | $ 18,971 | ||
Healthcare-Services — 0.1% | |||
30,000 | Tenet Healthcare Corp., 6.125%, 6/15/30 (144A) | $ 28,276 | |
31,000 | US Renal Care, Inc., 10.625%, 7/15/27 (144A) | 10,927 | |
Total Healthcare-Services | $ 39,203 |
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 | ||
Home Builders — 0.0%† | |||
8,000 | M/I Homes, Inc., 3.95%, 2/15/30 | $ 6,009 | |
Total Home Builders | $ 6,009 | ||
Insurance — 0.6% | |||
19,000 | Aon Corp./Aon Global Holdings Plc, 2.60%, 12/2/31 | $ 15,974 | |
120,000(e) | Farmers Insurance Exchange, 4.747% (3 Month USD LIBOR + 323 bps), 11/1/57 (144A) | 108,552 | |
85,000 | Liberty Mutual Group, Inc., 5.50%, 6/15/52 (144A) | 81,075 | |
Total Insurance | $ 205,601 | ||
Iron & Steel — 0.2% | |||
40,000 | Commercial Metals Co., 4.375%, 3/15/32 | $ 32,763 | |
15,000 | Mineral Resources, Ltd., 8.00%, 11/1/27 (144A) | 14,687 | |
15,000 | Mineral Resources, Ltd., 8.50%, 5/1/30 (144A) | 14,775 | |
40,000 | TMS International Corp., 6.25%, 4/15/29 (144A) | 28,956 | |
Total Iron & Steel | $ 91,181 | ||
Leisure Time — 0.3% | |||
15,000 | Carnival Corp., 7.625%, 3/1/26 (144A) | $ 11,587 | |
10,000 | NCL Finance, Ltd., 6.125%, 3/15/28 (144A) | 7,275 | |
5,000 | Viking Ocean Cruises Ship VII, Ltd., 5.625%, 2/15/29 (144A) | 3,943 | |
94,000 | VOC Escrow, Ltd., 5.00%, 2/15/28 (144A) | 75,530 | |
Total Leisure Time | $ 98,335 | ||
Lodging — 0.1% | |||
30,000 | Hilton Grand Vacations Borrower Escrow LLC/Hilton Grand Vacations Borrower Esc, | ||
5.00%, 6/1/29 (144A) | $ 24,300 | ||
Total Lodging | $ 24,300 | ||
Media — 0.8% | |||
10,000 | CCO Holdings LLC/CCO Holdings Capital Corp., 4.50%, 6/1/33 (144A) | $ 7,900 | |
125,000 | CCO Holdings LLC/CCO Holdings Capital Corp., 4.75%, 3/1/30 (144A) | 107,009 | |
200,000 | CSC Holdings LLC, 5.50%, 4/15/27 (144A) | 179,000 | |
19,000 | Diamond Sports Group LLC/Diamond Sports Finance Co., 6.625%, 8/15/27 (144A) | 2,280 | |
Total Media | $ 296,189 | ||
Metal Fabricate/Hardware — 0.1% | |||
57,000 | Park-Ohio Industries, Inc., 6.625%, 4/15/27 | $ 45,030 | |
Total Metal Fabricate/Hardware | $ 45,030 | ||
Mining — 0.7% | |||
115,000 | Coeur Mining, Inc., 5.125%, 2/15/29 (144A) | $ 79,665 | |
85,000 | FMG Resources August 2006 Pty, Ltd., 4.375%, 4/1/31 (144A) | 68,938 | |
20,000 | FMG Resources August 2006 Pty, Ltd., 6.125%, 4/15/32 (144A) | 18,000 | |
107,000 | IAMGOLD Corp., 5.75%, 10/15/28 (144A) | 71,390 | |
Total Mining | $ 237,993 | ||
Miscellaneous Manufacturing — 0.0%† | |||
14,000 | Amsted Industries, Inc., 5.625%, 7/1/27 (144A) | $ 13,160 | |
Total Miscellaneous Manufacturing | $ 13,160 | ||
Multi-National — 1.3% | |||
200,000 | African Export-Import Bank, 3.994%, 9/21/29 (144A) | $ 171,816 | |
IDR | 1,997,800,000 | European Bank for Reconstruction & Development, 6.45%, 12/13/22 | 134,881 |
IDR | 980,000,000 | Inter-American Development Bank, 7.875%, 3/14/23 | 66,881 |
KZT | 49,000,000 | International Finance Corp., 7.50%, 2/3/23 | 101,505 |
Total Multi-National | $ 475,083 |
The accompanying notes are an integral part of these financial statements.
17
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | |||
Amount | |||
USD ($) | Value | ||
Oil & Gas — 0.7% | |||
90,000 | Occidental Petroleum Corp., 4.40%, 4/15/46 | $ 72,766 | |
40,000 | Petroleos Mexicanos, 6.70%, 2/16/32 | 30,500 | |
22,000 | Shelf Drilling Holdings, Ltd., 8.875%, 11/15/24 (144A) | 21,230 | |
45,000 | Vermilion Energy, Inc., 6.875%, 5/1/30 (144A) | 40,275 | |
130,000 | YPF SA, 6.95%, 7/21/27 (144A) | 73,775 | |
Total Oil & Gas | $ 238,546 | ||
Pharmaceuticals — 0.8% | |||
25,000 | AdaptHealth LLC, 5.125%, 3/1/30 (144A) | $ 21,073 | |
7,000 | Bausch Health Americas, Inc., 8.50%, 1/31/27 (144A) | 4,909 | |
15,000 | Bausch Health Cos., Inc., 5.00%, 1/30/28 (144A) | 7,987 | |
31,000 | Par Pharmaceutical, Inc., 7.50%, 4/1/27 (144A) | 23,560 | |
EUR | 100,000 | Teva Pharmaceutical Finance Netherlands II BV, 4.375%, 5/9/30 | 83,250 |
187,000 | Teva Pharmaceutical Finance Netherlands III BV, 3.15%, 10/1/26 | 153,340 | |
Total Pharmaceuticals | $ 294,119 | ||
Pipelines — 1.5% | |||
13,000 | DCP Midstream Operating LP, 5.60%, 4/1/44 | $ 10,506 | |
35,000 | Energy Transfer LP, 6.00%, 6/15/48 | 33,052 | |
19,000 | Energy Transfer LP, 6.10%, 2/15/42 | 17,743 | |
10,000 | Energy Transfer LP, 6.125%, 12/15/45 | 9,581 | |
21,000 | Energy Transfer LP, 6.50%, 2/1/42 | 21,016 | |
15,000(e)(g) | Energy Transfer LP, 6.625% (3 Month USD LIBOR + 416 bps) | 11,015 | |
353,000(e)(g) | Energy Transfer LP, 7.125% (5 Year CMT Index + 531 bps) | 302,927 | |
4,000 | EnLink Midstream LLC, 5.375%, 6/1/29 | 3,500 | |
9,000 | EnLink Midstream Partners LP, 5.05%, 4/1/45 | 6,086 | |
135,000 | EnLink Midstream Partners LP, 5.45%, 6/1/47 | 95,545 | |
34,000 | EnLink Midstream Partners LP, 5.60%, 4/1/44 | 24,067 | |
29,000 | Hess Midstream Operations LP, 5.50%, 10/15/30 (144A) | 26,028 | |
Total Pipelines | $ 561,066 | ||
Real Estate — 0.3% | |||
EUR | 100,000 | ADLER Real Estate AG, 3.00%, 4/27/26 | $ 69,104 |
60,000 | Kennedy-Wilson, Inc., 4.75%, 2/1/30 | 46,950 | |
Total Real Estate | $ 116,054 | ||
REITs — 0.7% | |||
21,000 | GLP Capital LP/GLP Financing II, Inc., 3.25%, 1/15/32 | $ 16,847 | |
65,000 | HAT Holdings I LLC/HAT Holdings II LLC, 3.375%, 6/15/26 (144A) | 55,900 | |
18,000 | iStar, Inc., 4.25%, 8/1/25 | 16,605 | |
150,000 | SBA Tower Trust, 3.869%, 10/8/24 (144A) | 147,740 | |
30,000 | Uniti Group LP/Uniti Group Finance, Inc./CSL Capital LLC, 6.50%, 2/15/29 (144A) | 21,975 | |
Total REITs | $ 259,067 | ||
Retail — 0.3% | |||
15,000 | Asbury Automotive Group, Inc., 4.50%, 3/1/28 | $ 13,013 | |
15,000 | Asbury Automotive Group, Inc., 4.75%, 3/1/30 | 12,334 | |
9,000 | Beacon Roofing Supply, Inc., 4.125%, 5/15/29 (144A) | 7,319 | |
35,000 | LCM Investments Holdings II LLC, 4.875%, 5/1/29 (144A) | 26,638 | |
27,000 | Patrick Industries, Inc., 4.75%, 5/1/29 (144A) | 20,094 | |
35,000 | Penske Automotive Group, Inc., 3.75%, 6/15/29 | 29,214 | |
Total Retail | $ 108,612 |
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 | ||
Semiconductors — 0.2% | |||
65,000 | Broadcom, Inc., 4.15%, 4/15/32 (144A) | $ 58,907 | |
Total Semiconductors | $ 58,907 | ||
Software — 0.1% | |||
60,000 | Minerva Merger Sub, Inc., 6.50%, 2/15/30 (144A) | $ 49,800 | |
Total Software | $ 49,800 | ||
Telecommunications — 1.5% | |||
50,000 | CommScope Technologies LLC, 5.00%, 3/15/27 (144A) | $ 36,924 | |
165,000 | Level 3 Financing, Inc., 3.75%, 7/15/29 (144A) | 127,579 | |
41,000 | Level 3 Financing, Inc., 4.625%, 9/15/27 (144A) | 34,952 | |
45,000 | LogMeIn, Inc., 5.50%, 9/1/27 (144A) | 31,332 | |
EUR | 100,000 | Lorca Telecom Bondco SA, 4.00%, 9/18/27 (144A) | 87,474 |
25,000 | Lumen Technologies, Inc., 4.00%, 2/15/27 (144A) | 21,172 | |
45,000 | Lumen Technologies, Inc., 4.50%, 1/15/29 (144A) | 33,498 | |
11,700 | Millicom International Cellular SA, 6.25%, 3/25/29 (144A) | 10,216 | |
116,000 | Plantronics, Inc., 4.75%, 3/1/29 (144A) | 115,420 | |
35,000 | Windstream Escrow LLC/Windstream Escrow Finance Corp., 7.75%, 8/15/28 (144A) | 28,175 | |
Total Telecommunications | $ 526,742 | ||
Transportation — 0.2% | |||
32,000 | Seaspan Corp., 5.50%, 8/1/29 (144A) | $ 25,540 | |
60,000 | Western Global Airlines LLC, 10.375%, 8/15/25 (144A) | 57,753 | |
Total Transportation | $ 83,293 | ||
TOTAL CORPORATE BONDS | |||
(Cost $12,527,979) | $10,265,397 | ||
Shares | |||
CONVERTIBLE PREFERRED STOCKS — 2.2% of Net Assets | |||
Banks — 2.2% | |||
69(g) | Bank of America Corp., 7.25% | $ 83,111 | |
571(g) | Wells Fargo & Co., 7.50% | 694,056 | |
Total Banks | $ 777,167 | ||
TOTAL CONVERTIBLE PREFERRED STOCKS | |||
(Cost $862,511) | $ 777,167 | ||
Principal | |||
Amount | |||
USD ($) | |||
MUNICIPAL BONDS — 0.8% of Net Assets(i) | |||
Arizona — 0.1% | |||
20,000 | Maricopa County Industrial Development Authority, Banner Health, Series 2019F, 3.00%, 1/1/49 | $ 15,645 | |
Total Arizona | $ 15,645 | ||
California — 0.1% | |||
20,000 | California Health Facilities Financing Authority, Cedars-Sinai Health System, Series A, | ||
3.00%, 8/15/51 | $ 15,506 | ||
10,000 | Regents of the University of California, Medical Center Pooled Revenue, Series P, 4.00%, 5/15/53 | 9,627 | |
Total California | $ 25,133 | ||
Florida — 0.0%† | |||
15,000 | South Broward Hospital District, South Broward Hospital District Obligated Group, | ||
Series A, 2.50%, 5/1/47 | $ 10,489 | ||
Total Florida | $ 10,489 |
The accompanying notes are an integral part of these financial statements.
19
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | ||
Amount | ||
USD ($) | Value | |
Georgia — 0.0%† | ||
10,000 | Gainesville & Hall County Hospital Authority, Northeast Georgia Health System, Inc. | |
Project, Series A, 3.00%, 2/15/51 | $ 7,589 | |
Total Georgia | $ 7,589 | |
Massachusetts — 0.0%† | ||
15,000(j) | Commonwealth of Massachusetts, Series B, 3.00%, 4/1/47 | $ 12,146 |
Total Massachusetts | $ 12,146 | |
Missouri — 0.0%† | ||
5,000 | Health & Educational Facilities Authority of the State of Missouri, BJC Health | |
System, Series A, 3.00%, 7/1/38 | $ 4,314 | |
Total Missouri | $ 4,314 | |
Nebraska — 0.1% | ||
10,000(j) | Lancaster County School District 001, 2.00%, 1/15/43 | $ 6,971 |
30,000 | University of Nebraska Facilities Corp., Green Bond, Series B, 3.00%, 7/15/54 | 23,067 |
Total Nebraska | $ 30,038 | |
New Jersey — 0.1% | ||
10,000 | New Jersey Health Care Facilities Financing Authority, Atlanticare Health System | |
Obligated Group Issue, 3.00%, 7/1/46 | $ 8,087 | |
25,000 | New Jersey Health Care Facilities Financing Authority, RWJ Barnabas Health Obligated | |
Group Issue, 3.00%, 7/1/51 | 19,835 | |
Total New Jersey | $ 27,922 | |
New York — 0.1% | ||
20,000 | New York State Thruway Authority, Series A-1, 3.00%, 3/15/50 | $ 15,408 |
Total New York | $ 15,408 | |
North Carolina — 0.0%† | ||
15,000 | City of Charlotte Airport Revenue, Charlotte Douglas International Airport Revenue, | |
Series A, 4.00%, 7/1/47 | $ 14,865 | |
Total North Carolina | $ 14,865 | |
Oregon — 0.0%† | ||
15,000 | Oregon Health & Science University, Green Bond, Series A, 3.00%, 7/1/51 | $ 11,721 |
Total Oregon | $ 11,721 | |
Pennsylvania — 0.1% | ||
35,000 | Montgomery County Higher Education and Health Authority, Thomas Jefferson University, | |
Series B, 4.00%, 5/1/56 | $ 31,158 | |
5,000 | Pennsylvania Turnpike Commission, Series C, 3.00%, 12/1/51 | 3,870 |
Total Pennsylvania | $ 35,028 | |
Texas — 0.1% | ||
30,000 | Harris County Cultural Education Facilities Finance Corp., Texas Children’s Hospital, | |
3.00%, 10/1/51 | $ 23,784 | |
10,000 | Texas Water Development Board, State Revolving Fund, 3.00%, 8/1/40 | 8,961 |
Total Texas | $ 32,745 |
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 | ||
Virginia — 0.1% | |||
5,000 | Hampton Roads Transportation Accountability Commission, Series A, 4.00%, 7/1/57 | $ 4,730 | |
15,000 | Roanoke Economic Development Authority, Carilion Clinic Obligated Group, 3.00%, 7/1/45 | 12,133 | |
5,000 | Rockingham County Economic Development Authority, Sentara RMH Medical Center, Series A, | ||
3.00%, 11/1/46 | 3,959 | ||
25,000 | Virginia College Building Authority, Series C, 3.00%, 9/1/51 | 19,934 | |
Total Virginia | $ 40,756 | ||
TOTAL MUNICIPAL BONDS | |||
(Cost $277,784) | $ 283,799 | ||
Face | |||
Amount | |||
USD ($) | |||
INSURANCE-LINKED SECURITIES — 0.0%† of Net Assets# | |||
Reinsurance Sidecars — 0.0%† | |||
Multiperil – Worldwide — 0.0%† | |||
20,578(b)(k)+ | Lorenz Re 2019, 6/30/23 | $ 2,387 | |
Total Reinsurance Sidecars | $ 2,387 | ||
TOTAL INSURANCE-LINKED SECURITIES | |||
(Cost $6,453) | $ 2,387 | ||
Principal | |||
Amount | |||
USD ($) | |||
FOREIGN GOVERNMENT BONDS — 3.7% of Net Assets | |||
Argentina — 0.7% | |||
6,500 | Argentine Republic Government International Bond, 1.000%, 7/9/29 | $ 1,478 | |
145,500(c) | Argentine Republic Government International Bond, 1.500%, 7/9/35 | 31,337 | |
250,000 | Ciudad Autonoma De Buenos Aires, 7.500%, 6/1/27 (144A) | 213,750 | |
Total Argentina | $ 246,565 | ||
Egypt — 0.3% | |||
EGP | 1,754,000 | Egypt Government Bond, 15.700%, 11/7/27 | $ 90,957 |
Total Egypt | $ 90,957 | ||
Guatemala — 0.2% | |||
70,000 | Republic of Guatemala, 3.700%, 10/7/33 (144A) | $ 53,749 | |
Total Guatemala | $ 53,749 | ||
Indonesia — 0.3% | |||
IDR | 1,784,000,000 | Indonesia Treasury Bond, 6.125%, 5/15/28 | $ 116,997 |
Total Indonesia | $ 116,997 | ||
Ivory Coast — 0.4% | |||
EUR | 100,000 | Ivory Coast Government International Bond, 4.875%, 1/30/32 (144A) | $ 75,148 |
EUR | 100,000 | Ivory Coast Government International Bond, 5.875%, 10/17/31 (144A) | 81,824 |
Total Ivory Coast | $ 156,972 | ||
Mexico — 0.7% | |||
MXN | 5,490,000 | Mexican Bonos, 8.500%, 5/31/29 | $ 264,946 |
Total Mexico | $ 264,946 | ||
Nigeria — 0.4% | |||
200,000 | Nigeria Government International Bond, 8.375%, 3/24/29 (144A) | $ 151,750 | |
Total Nigeria | $ 151,750 |
The accompanying notes are an integral part of these financial statements.
21
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Principal | |||
Amount | |||
USD ($) | Value | ||
Serbia — 0.2% | |||
EUR | 100,000 | Serbia International Bond, 2.050%, 9/23/36 (144A) | $ 61,371 |
Total Serbia | $ 61,371 | ||
South Africa — 0.5% | |||
ZAR | 3,800,000 | Republic of South Africa Government Bond, 8.250%, 3/31/32 | $ 195,434 |
Total South Africa | $ 195,434 | ||
TOTAL FOREIGN GOVERNMENT BONDS | |||
(Cost $1,704,713) | $ 1,338,741 | ||
U.S. GOVERNMENT AND AGENCY OBLIGATIONS — 46.1% of Net Assets | |||
335,479 | Fannie Mae, 1.500%, 11/1/41 | $ 288,135 | |
97,516 | Fannie Mae, 1.500%, 1/1/42 | 83,745 | |
97,394 | Fannie Mae, 1.500%, 1/1/42 | 83,655 | |
98,081 | Fannie Mae, 1.500%, 2/1/42 | 84,255 | |
130,116 | Fannie Mae, 2.000%, 12/1/41 | 116,574 | |
197,906 | Fannie Mae, 2.000%, 4/1/42 | 177,313 | |
66,774 | Fannie Mae, 2.000%, 11/1/51 | 58,500 | |
1,000,000 | Fannie Mae, 2.000%, 7/1/52 (TBA) | 869,668 | |
93,568 | Fannie Mae, 2.500%, 10/1/51 | 84,464 | |
96,614 | Fannie Mae, 2.500%, 12/1/51 | 87,448 | |
97,389 | Fannie Mae, 2.500%, 1/1/52 | 88,210 | |
2,000,000 | Fannie Mae, 2.500%, 7/1/52 (TBA) | 1,802,031 | |
15,764 | Fannie Mae, 3.000%, 10/1/30 | 15,725 | |
33,032 | Fannie Mae, 3.000%, 5/1/43 | 31,601 | |
864 | Fannie Mae, 3.000%, 5/1/46 | 815 | |
958 | Fannie Mae, 3.000%, 10/1/46 | 912 | |
469 | Fannie Mae, 3.000%, 1/1/47 | 446 | |
2,445 | Fannie Mae, 3.000%, 7/1/49 | 2,311 | |
85,623 | Fannie Mae, 3.000%, 11/1/50 | 81,503 | |
143,573 | Fannie Mae, 3.000%, 1/1/52 | 135,172 | |
191,305 | Fannie Mae, 3.000%, 3/1/52 | 181,147 | |
138,916 | Fannie Mae, 3.000%, 4/1/52 | 130,634 | |
400,000 | Fannie Mae, 3.000%, 7/1/52 (TBA) | 372,992 | |
21,087 | Fannie Mae, 3.500%, 6/1/45 | 20,695 | |
38,761 | Fannie Mae, 3.500%, 9/1/45 | 37,956 | |
6,762 | Fannie Mae, 3.500%, 10/1/46 | 6,622 | |
41,574 | Fannie Mae, 3.500%, 1/1/47 | 40,715 | |
20,851 | Fannie Mae, 3.500%, 1/1/47 | 20,390 | |
99,577 | Fannie Mae, 3.500%, 4/1/52 | 96,078 | |
197,681 | Fannie Mae, 3.500%, 4/1/52 | 191,071 | |
98,998 | Fannie Mae, 3.500%, 5/1/52 | 95,671 | |
100,000 | Fannie Mae, 3.500%, 7/1/52 (TBA) | 96,316 | |
100,000 | Fannie Mae, 4.000%, 7/1/37 (TBA) | 100,922 | |
31,593 | Fannie Mae, 4.000%, 10/1/40 | 31,991 | |
4,387 | Fannie Mae, 4.000%, 12/1/40 | 4,443 | |
13,805 | Fannie Mae, 4.000%, 11/1/43 | 13,919 | |
19,361 | Fannie Mae, 4.000%, 11/1/43 | 19,520 | |
11,645 | Fannie Mae, 4.000%, 4/1/47 | 11,717 | |
11,916 | Fannie Mae, 4.000%, 4/1/47 | 11,992 |
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) | ||
6,323 | Fannie Mae, 4.000%, 6/1/47 | $ 6,357 |
8,436 | Fannie Mae, 4.000%, 7/1/47 | 8,474 |
19,007 | Fannie Mae, 4.000%, 11/1/50 | 18,827 |
13,331 | Fannie Mae, 4.000%, 6/1/51 | 13,182 |
14,241 | Fannie Mae, 4.000%, 7/1/51 | 14,129 |
31,970 | Fannie Mae, 4.000%, 7/1/51 | 31,602 |
46,802 | Fannie Mae, 4.000%, 8/1/51 | 46,263 |
300,000 | Fannie Mae, 4.000%, 7/1/52 (TBA) | 296,180 |
23,180 | Fannie Mae, 4.500%, 11/1/40 | 23,891 |
14,155 | Fannie Mae, 4.500%, 5/1/41 | 14,629 |
30,418 | Fannie Mae, 4.500%, 6/1/44 | 31,414 |
55,546 | Fannie Mae, 4.500%, 5/1/49 | 56,859 |
77,507 | Fannie Mae, 4.500%, 4/1/50 | 79,332 |
910,000 | Fannie Mae, 4.500%, 7/1/52 (TBA) | 914,657 |
12,318 | Fannie Mae, 5.000%, 4/1/30 | 12,716 |
11,339 | Fannie Mae, 5.000%, 1/1/39 | 11,780 |
2,695 | Fannie Mae, 5.000%, 6/1/40 | 2,839 |
400,000 | Fannie Mae, 5.000%, 7/1/52 (TBA) | 408,578 |
200,000 | Fannie Mae, 5.000%, 8/1/52 (TBA) | 203,660 |
75 | Fannie Mae, 6.000%, 3/1/32 | 82 |
96,746 | Federal Home Loan Mortgage Corp., 1.500%, 12/1/41 | 83,059 |
96,916 | Federal Home Loan Mortgage Corp., 1.500%, 1/1/42 | 83,205 |
97,600 | Federal Home Loan Mortgage Corp., 1.500%, 2/1/42 | 83,793 |
298,480 | Federal Home Loan Mortgage Corp., 2.500%, 5/1/51 | 269,579 |
94,102 | Federal Home Loan Mortgage Corp., 2.500%, 8/1/51 | 84,961 |
11,215 | Federal Home Loan Mortgage Corp., 3.000%, 10/1/29 | 11,197 |
9,333 | Federal Home Loan Mortgage Corp., 3.000%, 12/1/46 | 8,867 |
27,669 | Federal Home Loan Mortgage Corp., 3.000%, 2/1/47 | 26,468 |
29,372 | Federal Home Loan Mortgage Corp., 3.000%, 2/1/47 | 27,829 |
1,375 | Federal Home Loan Mortgage Corp., 3.000%, 11/1/47 | 1,305 |
99,536 | Federal Home Loan Mortgage Corp., 3.000%, 3/1/52 | 93,028 |
136,790 | Federal Home Loan Mortgage Corp., 3.000%, 3/1/52 | 128,111 |
23,263 | Federal Home Loan Mortgage Corp., 3.500%, 11/1/45 | 22,802 |
28,658 | Federal Home Loan Mortgage Corp., 3.500%, 7/1/46 | 28,305 |
98,048 | Federal Home Loan Mortgage Corp., 3.500%, 4/1/52 | 94,943 |
19,441 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 19,588 |
9,157 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 9,210 |
5,994 | Federal Home Loan Mortgage Corp., 4.000%, 4/1/47 | 6,029 |
9,532 | Federal Home Loan Mortgage Corp., 4.000%, 12/1/48 | 9,528 |
20,797 | Federal Home Loan Mortgage Corp., 4.000%, 10/1/51 | 20,562 |
115 | Federal Home Loan Mortgage Corp., 5.000%, 5/1/34 | 121 |
559 | Federal Home Loan Mortgage Corp., 5.000%, 6/1/35 | 572 |
2,478 | Federal Home Loan Mortgage Corp., 5.000%, 10/1/38 | 2,612 |
9,497 | Federal Home Loan Mortgage Corp., 5.000%, 11/1/39 | 9,984 |
5,159 | Federal Home Loan Mortgage Corp., 5.500%, 6/1/41 | 5,550 |
400,000 | Government National Mortgage Association, 2.500%, 7/20/52 (TBA) | 366,703 |
300,000 | Government National Mortgage Association, 3.000%, 7/20/52 (TBA) | 283,025 |
102,000 | Government National Mortgage Association, 3.500%, 7/20/52 (TBA) | 99,255 |
The accompanying notes are an integral part of these financial statements.
23
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Principal | ||
Amount | ||
USD ($) | Value | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (continued) | ||
100,000 | Government National Mortgage Association, 4.500%, 7/20/52 (TBA) | $ 101,562 |
3,592 | Government National Mortgage Association I, 3.500%, 10/15/42 | 3,592 |
468 | Government National Mortgage Association I, 4.000%, 12/15/41 | 473 |
95,775 | Government National Mortgage Association I, 4.000%, 4/15/42 | 97,023 |
54,006 | Government National Mortgage Association I, 4.000%, 8/15/43 | 55,404 |
4,097 | Government National Mortgage Association I, 4.000%, 3/15/44 | 4,182 |
8,927 | Government National Mortgage Association I, 4.000%, 9/15/44 | 9,112 |
7,802 | Government National Mortgage Association I, 4.000%, 4/15/45 | 7,963 |
14,671 | Government National Mortgage Association I, 4.000%, 6/15/45 | 15,044 |
2,392 | Government National Mortgage Association I, 4.500%, 9/15/33 | 2,483 |
5,951 | Government National Mortgage Association I, 4.500%, 4/15/35 | 6,138 |
11,045 | Government National Mortgage Association I, 4.500%, 1/15/40 | 11,531 |
33,951 | Government National Mortgage Association I, 4.500%, 3/15/40 | 35,184 |
6,880 | Government National Mortgage Association I, 4.500%, 9/15/40 | 7,190 |
8,351 | Government National Mortgage Association I, 4.500%, 7/15/41 | 8,688 |
2,346 | Government National Mortgage Association I, 5.000%, 4/15/35 | 2,479 |
2,011 | Government National Mortgage Association I, 5.500%, 1/15/34 | 2,179 |
2,569 | Government National Mortgage Association I, 5.500%, 4/15/34 | 2,787 |
816 | Government National Mortgage Association I, 5.500%, 7/15/34 | 885 |
3,730 | Government National Mortgage Association I, 5.500%, 6/15/35 | 3,903 |
328 | Government National Mortgage Association I, 6.000%, 2/15/33 | 360 |
546 | Government National Mortgage Association I, 6.000%, 3/15/33 | 604 |
510 | Government National Mortgage Association I, 6.000%, 3/15/33 | 539 |
678 | Government National Mortgage Association I, 6.000%, 6/15/33 | 730 |
783 | Government National Mortgage Association I, 6.000%, 7/15/33 | 846 |
685 | Government National Mortgage Association I, 6.000%, 7/15/33 | 725 |
553 | Government National Mortgage Association I, 6.000%, 9/15/33 | 583 |
99 | Government National Mortgage Association I, 6.000%, 9/15/33 | 104 |
748 | Government National Mortgage Association I, 6.000%, 10/15/33 | 799 |
232 | Government National Mortgage Association I, 6.500%, 3/15/29 | 244 |
840 | Government National Mortgage Association I, 6.500%, 1/15/30 | 883 |
169 | Government National Mortgage Association I, 6.500%, 2/15/32 | 181 |
152 | Government National Mortgage Association I, 6.500%, 3/15/32 | 163 |
293 | Government National Mortgage Association I, 6.500%, 11/15/32 | 318 |
31 | Government National Mortgage Association I, 7.000%, 3/15/31 | 31 |
4,779 | Government National Mortgage Association II, 3.500%, 4/20/45 | 4,728 |
8,323 | Government National Mortgage Association II, 3.500%, 4/20/45 | 8,222 |
9,578 | Government National Mortgage Association II, 3.500%, 3/20/46 | 9,476 |
14,063 | Government National Mortgage Association II, 4.000%, 9/20/44 | 14,192 |
18,330 | Government National Mortgage Association II, 4.000%, 10/20/46 | 18,499 |
16,488 | Government National Mortgage Association II, 4.000%, 1/20/47 | 16,631 |
12,283 | Government National Mortgage Association II, 4.000%, 2/20/48 | 12,352 |
15,220 | Government National Mortgage Association II, 4.000%, 4/20/48 | 15,304 |
4,932 | Government National Mortgage Association II, 4.500%, 9/20/41 | 5,164 |
12,694 | Government National Mortgage Association II, 4.500%, 9/20/44 | 13,189 |
5,645 | Government National Mortgage Association II, 4.500%, 10/20/44 | 5,918 |
11,895 | Government National Mortgage Association II, 4.500%, 11/20/44 | 12,482 |
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) | ||
1,549 | Government National Mortgage Association II, 5.500%, 3/20/34 | $ 1,673 |
2,492 | Government National Mortgage Association II, 6.000%, 11/20/33 | 2,706 |
2,900,000(d) | U.S. Treasury Bills, 7/5/22 | 2,899,625 |
2,600,000(d) | U.S. Treasury Bills, 7/12/22 | 2,599,206 |
100,000(d) | U.S. Treasury Bills, 7/19/22 | 99,947 |
900,000 | United States Treasury Notes, 3.250%, 6/30/27 | 910,195 |
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS | ||
(Cost $16,838,148) | $16,687,337 | |
Shares | ||
SHORT TERM INVESTMENTS — 2.9% of Net Assets | ||
Open-End Fund — 2.9% | ||
1,048,904(l) | Dreyfus Government Cash Management, Institutional Shares, 1.35% | $ 1,048,904 |
$ 1,048,904 | ||
TOTAL SHORT TERM INVESTMENTS | ||
(Cost $1,048,904) | $ 1,048,904 |
Number of | Strike | Expiration | ||||
Contracts | Description | Counterparty | Amount | Price | Date | |
OVER THE COUNTER (OTC) CALL OPTION PURCHASED — 0.0%† | ||||||
3,182(m)^ | Desarrolladora Homex | Bank of New York | MXN — | MXN 0.01(n) | 10/23/22 | $ — |
SAB de CV | Mellon Corp. | |||||
3,182(o)^ | Desarrolladora Homex | Bank of New York | MXN — | MXN 0.01(n) | 10/23/22 | — |
SAB de CV | Mellon Corp. | |||||
TOTAL OVER THE COUNTER (OTC) CALL OPTION PURCHASED | ||||||
(Premiums paid $ 0) | $ — | |||||
OVER THE COUNTER (OTC) CURRENCY PUT OPTION PURCHASED — 0.1% | ||||||
375,000 | Put EUR Call USD | Bank of America NA | EUR 5,763 | EUR 1.15 | 10/19/22 | $ 33,498 |
TOTAL OVER THE COUNTER (OTC) CURRENCY PUT OPTION PURCHASED | ||||||
(Premiums paid $ 5,763) | $ 33,498 | |||||
TOTAL OPTIONS PURCHASED | ||||||
(Premiums paid $ 5,763) | $ 33,498 | |||||
TOTAL INVESTMENTS IN UNAFFILIATED ISSUERS — 114.5% | ||||||
(Cost $45,781,518) | $41,411,871 |
Change | |||||
in Net | |||||
Net | Unrealized | ||||
Dividend | Realized | Appreciation | |||
Shares | Income | Gain (Loss) | (Depreciation) | ||
AFFILIATED ISSUER — 2.3% | |||||
CLOSED-END FUND — 2.3% of Net Assets | |||||
99,051(p) | Pioneer ILS Interval Fund | $— | $— | $14,858 | $ 830,047 |
TOTAL CLOSED-END FUND | |||||
(Cost $1,014,650) | $ 830,047 | ||||
TOTAL INVESTMENTS IN AFFILIATED ISSUER — 2.3% | |||||
(Cost $1,014,650) | $ 830,047 |
The accompanying notes are an integral part of these financial statements.
25
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
Number of | Strike | Expiration | |||
Contracts | Description | Counterparty Amount | Price | Date | Value |
OVER THE COUNTER (OTC) CURRENCY CALL OPTION WRITTEN — (0.0%)† | |||||
375,000 | Call EUR Put USD | Bank of America NA EUR 5,763 | EUR 1.20 | 10/19/22 | $ (25) |
TOTAL OVER THE COUNTER (OTC) CURRENCY CALL OPTION WRITTEN | |||||
(Premiums received $(5,763)) | $ (25) | ||||
OTHER ASSETS AND LIABILITIES — (16.8)% | $ (6,077,289) | ||||
NET ASSETS — 100.0% | $36,164,604 |
(TBA) | “To Be Announced” Securities. |
BADLARPP | Argentine Deposit Rate Badlar Private Banks 30 – 35 Days. |
bps | Basis Points. |
CMT | Constant Maturity Treasury Index. |
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. |
SOFR | Secured Overnight Financing Rate. |
SOFR30A | Secured Overnight Financing Rate 30 Day Average. |
(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, 2022, the value of these securities amounted to $16,732,552, or 46.3% of net assets. |
(a) | Floating rate note. Coupon rate, reference index and spread shown at June 30, 2022. |
(b) | Non-income producing security. |
(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, 2022. |
(d) | Security issued with a zero coupon. Income is recognized through accretion of discount. |
(e) | The interest rate is subject to change periodically. The interest rate and/or reference index and spread shown at June 30, 2022. |
(f) | Security represents the interest-only portion payments on a pool of underlying mortgages or mortgage-backed securities. |
(g) | Security is perpetual in nature and has no stated maturity date. |
(h) | Payment-in-kind (PIK) security which may pay interest in the form of additional principal amount. |
(i) | Consists of Revenue Bonds unless otherwise indicated. |
(j) | Represents a General Obligation Bond. |
(k) | Issued as preference shares. |
(l) | Rate periodically changes. Rate disclosed is the 7-day yield at June 30, 2022. |
(m) | Option does not become effective until underlying company’s outstanding common shares reach a market capitalization of MXN 12.5 Billion. |
(n) | Strike price is 1 Mexican Peso (MXN). |
(o) | Option does not become effective until underlying company’s outstanding common shares reach a market capitalization of MXN 14.5 Billion. |
(p) | Pioneer ILS Interval Fund is an affiliated closed-end fund managed by Amundi Asset Management US, Inc. (the “Adviser”). |
* | Senior secured floating rate loan interests in which the Portfolio invests generally pay interest at rates that are periodically re-determined 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 or SOFR, (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, 2022. |
† | Amount rounds to less than 0.1%. |
+ | Security is valued using significant unobservable inputs to determine its value. |
^ | Security is valued using fair value methods (other than prices supplied by independent pricing services or broker dealers). |
# | Securities are restricted as to resale. |
Restricted Securities | Acquisition date | Cost | Value |
Lorenz Re 2019 | 7/10/2019 | $6,453 | $2,387 |
% 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) |
EUR | 350,000 | USD | 371,223 | Bank of America NA | 7/27/22 | $ (3,791) |
SGD | 280,000 | USD | 204,619 | Bank of America NA | 9/2/22 | (3,021) |
USD | 634,742 | EUR | 588,000 | Bank of America NA | 8/26/22 | 16,051 |
EUR | 15,000 | USD | 15,853 | Bank of New York Mellon Corp. | 7/27/22 | (106) |
EUR | 188,304 | CZK | 4,820,000 | Brown Brothers Harriman & Co. | 7/11/22 | (6,372) |
USD | 79,051 | EUR | 75,000 | Brown Brothers Harriman & Co. | 9/23/22 | (26) |
AUD | 305,000 | NZD | 335,832 | Citibank NA | 9/28/22 | 1,167 |
INR | 16,400,000 | USD | 212,325 | Citibank NA | 7/28/22 | (5,225) |
KRW | 258,250,000 | USD | 203,682 | Citibank NA | 9/1/22 | (3,059) |
USD | 332,885 | IDR | 4,950,000,000 | Citibank NA | 9/22/22 | 2,903 |
CZK | 4,820,000 | EUR | 194,425 | Goldman Sachs & Co. | 7/11/22 | (47) |
PEN | 740,000 | USD | 194,629 | Goldman Sachs & Co. | 8/25/22 | (2,503) |
PLN | 1,240,000 | EUR | 263,563 | Goldman Sachs & Co. | 8/25/22 | (2,786) |
PLN | 900,000 | USD | 207,660 | Goldman Sachs & Co. | 8/26/22 | (8,445) |
USD | 218,328 | ZAR | 3,495,000 | Goldman Sachs & Co. | 9/23/22 | 5,358 |
AUD | 597,000 | USD | 423,036 | HSBC Bank USA NA | 8/26/22 | (10,756) |
NOK | 2,245,000 | EUR | 234,013 | HSBC Bank USA NA | 7/11/22 | (17,443) |
NOK | 1,145,000 | USD | 123,592 | HSBC Bank USA NA | 8/3/22 | (7,268) |
EGP | 800,000 | USD | 40,506 | JPMorgan Chase Bank NA | 8/25/22 | 682 |
EUR | 15,000 | USD | 15,885 | JPMorgan Chase Bank NA | 7/27/22 | (138) |
USD | 8,923 | KZT | 4,200,000 | JPMorgan Chase Bank NA | 7/28/22 | 110 |
EUR | 1,305,000 | USD | 1,393,965 | State Street Bank & Trust Co. | 7/27/22 | (23,968) |
MXN | 1,865,000 | USD | 92,767 | State Street Bank & Trust Co. | 7/22/22 | (394) |
USD | 367,703 | MXN | 7,600,000 | State Street Bank & Trust Co. | 7/22/22 | (8,725) |
USD | 398,733 | EUR | 370,000 | State Street Bank & Trust Co. | 7/27/22 | 10,305 |
USD | 76,774 | CAD | 100,000 | State Street Bank & Trust Co. | 8/12/22 | (916) |
USD | 712,441 | EUR | 670,000 | State Street Bank & Trust Co. | 9/23/22 | 6,025 |
TOTAL FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | $ (62,388) |
FUTURES CONTRACTS
FIXED INCOME INDEX FUTURES CONTRACTS
Number of | Expiration | Notional | Market | Unrealized | |
Contracts Long | Description | Date | Amount | Value | (Depreciation) |
7 | U.S. 5 Year Note (CBT) | 9/30/22 | $ 793,100 | $ 785,750 | $ (7,350) |
13 | U.S. Ultra Bond (CBT) | 9/21/22 | 2,042,333 | 2,006,469 | (35,864) |
$2,835,433 | $2,792,219 | $(43,214) |
Unrealized | |||||
Number of | Expiration | Notional | Market | Appreciation | |
Contracts Short | Description | Date | Amount | Value | (Depreciation) |
6 | Euro-Bund | 9/8/22 | $ (955,277) | $ (935,484) | $ 19,793 |
1 | U.S. 2 Year Note (CBT) | 9/30/22 | (211,196) | (210,016) | 1,180 |
4 | U.S. 10 Year Note (CBT) | 9/21/22 | (480,309) | (474,125) | 6,184 |
14 | U.S. 10 Year Ultra Bond (CBT) | 9/21/22 | (1,807,379) | (1,783,250) | 24,129 |
1 | U.S. Long Bond (CBT) | 9/21/22 | (132,262) | (138,625) | (6,363) |
$(3,586,423) | $(3,541,500) | $ 44,923 | |||
TOTAL FUTURES CONTRACTS | $ (750,990) | $ (749,281) | $ 1,709 |
The accompanying notes are an integral part of these financial statements.
27
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Schedule of Investments 6/30/22 (unaudited) (continued)
SWAP CONTRACTS | ||||||||
CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACTS – BUY PROTECTION | ||||||||
Notional | Pay/ | Annual | Expiration | Premiums | Unrealized | Market | ||
Amount ($)(1) | Reference Obligation/Index | Receive(2) | Fixed Rate | Date | (Received) | Appreciation | Value | |
2,772,000 | Markit CDX North America | Pay | 5.00% | 6/20/27 | $(34,131) | $110,007 | $ 75,876 | |
High Yield Series 38 | ||||||||
TOTAL CENTRALLY CLEARED CREDIT DEFAULT SWAP CONTRACTS - BUY PROTECTION | $(34,131) | $110,007 | $ 75,876 | |||||
OVER THE COUNTER (OTC) CREDIT DEFAULT SWAP CONTRACTS – SELL PROTECTION | ||||||||
Premiums | Unrealized | |||||||
Notional | Reference | Pay/ | Annual | Expiration | Paid/ | Appreciation | Market | |
Amount ($)(1) | Counterparty | Obligation/Index | Receive(3) | Fixed Rate | Date | (Received) | (Depreciation) | Value |
70,000 | JPMorgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | $ (2,216) | $ (7,385) | $ (9,601) |
Bank NA | Holdings, Inc. | |||||||
15,000 | JPMorgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (505) | (1,552) | (2,057) |
Bank NA | Holdings, Inc. | |||||||
25,000 | JPMorgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (815) | (2,614) | (3,429) |
Bank NA | Holdings, Inc. | |||||||
45,000 | JPMorgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (1,655) | (4,517) | (6,172) |
Bank NA | Holdings, Inc. | |||||||
25,000 | JPMorgan Chase | United Airlines | Receive | 5.00% | 12/20/25 | (1,104) | (2,325) | (3,429) |
Bank NA | Holdings, Inc. | |||||||
25,000 | JPMorgan Chase | Delta Air Lines, Inc. | Receive | 5.00% | 12/20/26 | 2,377 | (2,860) | (483) |
Bank NA | ||||||||
TOTAL OVER THE COUNTER (OTC) CREDIT DEFAULT SWAP CONTRACTS – SELL PROTECTION | $ (3,918) | $(21,253) | $(25,171) | |||||
TOTAL SWAP CONTRACTS | $(38,049) | $ 88,754 | $ 50,705 |
(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) | Pays quarterly. |
(3) | Receives quarterly. |
Principal amounts are denominated in U.S. dollars (“USD”) unless otherwise noted.
ARS — | Argentine Peso | |
AUD — | Australia Dollar | |
CAD — | Canada Dollar | |
CZK — | Czech Republic Koruna | |
EGP — | Egypt Pound | |
EUR — | Euro | |
IDR | — | Indonesian Rupiah |
INR | — | Indian Rupee |
KRW — | Korean Won | |
KZT | — | Kazakhstan Tenge |
MXN — | Mexican Peso | |
NOK — | Norwegian Krone | |
NZD — | New Zealand Dollar | |
PEN — | Peru Nuevo Sol | |
PLN | — | Poland Zloty |
SGD — | Singapore Dollar | |
USD — | United States Dollar | |
ZAR — | South Africa Rand |
Purchases and sales of securities (excluding short-term investments) for the six months ended June 30, 2022 were as follows:
Purchases | Sales | |
Long-Term U.S. Government Securities | $ 909,492 | $3,662,842 |
Other Long-Term Securities | $11,424,238 | $7,579,893 |
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, 2022, 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 Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
At June 30, 2022, the net unrealized depreciation on investments based on cost for federal tax purposes of $47,195,795 was as follows: | |
Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost | $ 358,162 |
Aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value | (5,322,038) |
Net unrealized depreciation | $(4,963,876) |
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, 2022, in valuing the Portfolio's investments:
Level 1 | Level 2 | Level 3 | Total | ||
Senior Secured Floating Rate Loan Interests | $ — | $ 401,544 | $ — | $ 401,544 | |
Common Stocks | 16,575 | — | — | 16,575 | |
Asset Backed Securities | — | 1,058,765 | — | 1,058,765 | |
Collateralized Mortgage Obligations | — | 5,410,612 | — | 5,410,612 | |
Commercial Mortgage-Backed Securities | — | 3,821,682 | — | 3,821,682 | |
Convertible Corporate Bonds | — | 265,463 | — | 265,463 | |
Corporate Bonds | — | 10,265,397 | — | 10,265,397 | |
Convertible Preferred Stocks | 777,167 | — | — | 777,167 | |
Municipal Bonds | — | 283,799 | — | 283,799 | |
Insurance-Linked Securities | |||||
Reinsurance Sidecars | — | — | 2,387 | 2,387 | |
Foreign Government Bonds | — | 1,338,741 | — | 1,338,741 | |
U.S. Government and Agency Obligations | — | 16,687,337 | — | 16,687,337 | |
Open-End Fund | 1,048,904 | — | — | 1,048,904 | |
Over The Counter (OTC) Call Option Purchased | — | —* | — | —* | |
Over The Counter (OTC) Currency Put Option Purchased | — | 33,498 | — | 33,498 | |
Affiliated Closed-End Fund | — | 830,047 | — | 830,047 | |
Total Investments in Securities | $1,842,646 | $ 40,396,885 | $2,387 | $ 42,241,918 | |
Other Financial Instruments | |||||
Over The Counter (OTC) Currency Call Option Written | $ — | $ (25) | $ — | $ (25) | |
Net unrealized depreciation on forward foreign currency exchange contracts | — | (62,388) | — | (62,388) | |
Net unrealized appreciation on futures contracts | 1,709 | — | — | 1,709 | |
Swap contracts, at value | — | 50,705 | — | 50,705 | |
Total Other Financial Instruments | $ 1,709 | $ (11,708) | $ — | $ (9,999) | |
* Securities valued at $0. |
The following is a reconciliation of assets valued using significant unobservable inputs (Level 3):
Insurance- | |||
Linked | |||
Securities | Warrants | Total | |
Balance as of 12/31/21 | $ 675 | $ 1,120 | $ 1,795 |
Realized gain (loss)(1) | — | 1,120 | 1,120 |
Changed in unrealized appreciation (depreciation)(2) | 1,732 | (1,120) | 612 |
Accrued discounts/premiums | (20) | — | (20) |
Purchases | — | — | — |
Sales | — | (1,120) | (1,120) |
Transfers in to Level 3* | — | — | — |
Transfers out of Level 3* | — | — | — |
Balance as of 6/30/22 | $2,387 | $ — | $ 2,387 |
(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. |
* | Transfers are calculated on the beginning of period values. During the six months ended June 30, 2022, 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, 2022: | $1,732 |
The accompanying notes are an integral part of these financial statements.
29
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Assets and Liabilities 6/30/22 (unaudited)
ASSETS: | |
Investments in unaffiliated issuers, at value (cost $45,781,518) | $41,411,871 |
Investments in affiliated issuers, at value (cost $1,014,650) | 830,047 |
Cash | 275,807 |
Foreign currencies, at value (cost $138,402) | 128,371 |
Futures collateral | 447,466 |
Swaps collateral | 91,225 |
Variation margin for futures contracts | 5,890 |
Variation margin for centrally cleared swap contracts | 6,151 |
Swap contracts, at value (net premiums received $38,049) | 50,705 |
Receivables — | |
Investment securities sold | 3,192,608 |
Portfolio shares sold | 7,902 |
Dividends | 1,251 |
Interest | 227,024 |
Due from the Adviser | 720 |
Total assets | $46,677,038 |
LIABILITIES: | |
Payables — | |
Investment securities purchased | $10,248,984 |
Portfolio shares repurchased | 112,704 |
Trustees’ fees | 41 |
Written options outstanding (net premiums received $5,763) | 25 |
Net unrealized depreciation on forward foreign currency exchange contracts | 62,388 |
Reserve for repatriation taxes | 1,857 |
Due to affiliates | 3,243 |
Accrued expenses | 83,192 |
Total liabilities | $10,512,434 |
NET ASSETS: | |
Paid-in capital | $41,483,307 |
Distributable earnings (loss) | (5,318,703) |
Net assets | $36,164,604 |
NET ASSET VALUE PER SHARE: | |
No par value (unlimited number of shares authorized) | |
Class l (based on $4,778,047/540,800 shares) | $ 8.84 |
Class ll (based on $31,386,557/3,559,042 shares) | $ 8.82 |
The accompanying notes are an integral part of these financial statements.
30
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Statement of Operations (unaudited)
FOR THE SIX MONTH ENDED 6/30/22 | ||
INVESTMENT INCOME: | ||
Interest from unaffiliated issuers (net of foreign taxes withheld $1,878) | $ 701,858 | |
Dividends from unaffiliated issuers | 23,914 | |
Total Investment Income | $ 725,772 | |
EXPENSES: | ||
Management fees | $ 130,146 | |
Administrative expenses | 6,568 | |
Distribution fees | ||
Class ll | 43,489 | |
Custodian fees | 18,525 | |
Professional fees | 60,264 | |
Printing expense | 7,240 | |
Pricing fees | 6,611 | |
Trustees' fees | 3,981 | |
Insurance expense | 5 | |
Miscellaneous | 522 | |
Total expenses | $ 277,351 | |
Less fees waived and expenses reimbursed by the Adviser | (83,692) | |
Net expenses | $ 193,659 | |
Net investment income | $ 532,113 | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | ||
Net realized gain (loss) on: | ||
Investments in unaffiliated issuers | $(1,000,828) | |
Forward foreign currency exchange contracts | 39,110 | |
Futures contracts | 119,917 | |
Swap contracts | 136,751 | |
Written option | 6,193 | |
Other assets and liabilities denominated in foreign currencies | 13,426 | $ (685,431) |
Change in net unrealized appreciation (depreciation) on: | ||
Investments in unaffiliated issuers (net of foreign capital gains tax of $1,995) | $(4,440,545) | |
Investments in affiliated issuers | 14,858 | |
Forward foreign currency exchange contracts | (30,767) | |
Futures contracts | (90,808) | |
Swap contracts | 62,634 | |
Written options | (3,564) | |
Other assets and liabilities denominated in foreign currencies | (2,416) | $(4,490,608) |
Net realized and unrealized gain (loss) on investments | $(5,176,039) | |
Net decrease in net assets resulting from operations | $(4,643,926) |
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 | ||||
6/30/22 | Year Ended | |||
(unaudited) | 12/31/21 | |||
FROM OPERATIONS: | ||||
Net investment income (loss) | $ 532,113 | $ 1,089,453 | ||
Net realized gain (loss) on investments | (685,431) | 1,517,523 | ||
Change in net unrealized appreciation (depreciation) on investments | (4,490,608) | (1,832,504) | ||
Net increase (decrease) in net assets resulting from operations | $ (4,643,926) | $ 774,472 | ||
DISTRIBUTIONS TO SHAREOWNERS: | ||||
Class l ($0.49 and $0.45 per share, respectively) | $ (260,449) | $ (273,606) | ||
Class ll ($0.48 and $0.42 per share, respectively) | (1,654,708) | (1,525,635) | ||
Total distributions to shareowners | $ (1,915,157) | $ (1,799,241) | ||
FROM PORTFOLIO SHARE TRANSACTIONS: | ||||
Net proceeds from sales of shares | $ 6,639,190 | $ 10,583,986 | ||
Reinvestment of distributions | 1,915,157 | 1,796,676 | ||
Cost of shares repurchased | (10,509,728) | (11,486,467) | ||
Net increase (decrease) in net assets resulting from Portfolio share transactions | $ (1,955,381) | $ 894,195 | ||
Net decrease in net assets | $ (8,514,464) | $ (130,574) | ||
NET ASSETS: | ||||
Beginning of period | $ 44,679,068 | $ 44,809,642 | ||
End of period | $ 36,164,604 | $ 44,679,068 |
Six Months | Six Months | |||
Ended | Ended | |||
6/30/22 | 6/30/22 | Year Ended | Year Ended | |
Shares | Amount | 12/31/21 | 12/31/21 | |
(unaudited) | (unaudited) | Shares | Amount | |
Class l | ||||
Shares sold | 9,051 | $ 85,874 | 60,649 | $ 637,287 |
Reinvestment of distributions | 28,777 | 260,449 | 25,937 | 273,126 |
Less shares repurchased | (63,105) | (617,559) | (133,505) | (1,400,037) |
Net decrease | (25,277) | $ (271,236) | (46,919) | $ (489,624) |
Class ll | ||||
Shares sold | 653,899 | $ 6,553,316 | 945,668 | $ 9,946,699 |
Reinvestment of distributions | 183,439 | 1,654,708 | 144,957 | 1,523,550 |
Less shares repurchased | (996,556) | (9,892,169) | (957,584) | (10,086,430) |
Net increase (decrease) | (159,218) | $(1,684,145) | 133,041 | $ 1,383,819 |
The accompanying notes are an integral part of these financial statements.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Financial Highlights
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class I | ||||||
Net asset value, beginning of period | $ 10.44 | $ 10.69 | $ 10.32 | $ 9.71 | $ 10.28 | $ 10.16 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.14 | 0.28 | 0.34 | 0.34 | 0.34 | 0.35 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.25) | (0.08) | 0.42 | 0.61 | (0.52) | 0.15 |
Net increase (decrease) from investment operations | $ (1.11) | $ 0.20 | $ 0.76 | $ 0.95 | $ (0.18) | $ 0.50 |
Distributions to shareowners: | ||||||
Net investment income | (0.14) | (0.35) | (0.36) | (0.34) | (0.28) | (0.37) |
Net realized gain | (0.35) | (0.10) | (0.03) | — | (0.07) | (0.01) |
Tax return of capital | — | — | — | — | (0.04) | — |
Total distributions | $ (0.49) | $ (0.45) | $ (0.39) | $ (0.34) | $ (0.39) | $ (0.38) |
Net increase (decrease) in net asset value | $ (1.60) | $ (0.25) | $ 0.37 | $ 0.61 | $ (0.57) | $ 0.12 |
Net asset value, end of period | $ 8.84 | $ 10.44 | $ 10.69 | $ 10.32 | $ 9.71 | $ 10.28 |
Total return(b) | (10.65)%(c) | 1.89% | 7.63% | 9.89% | (1.78)% | 4.99%(d) |
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 | 2.88%(e) | 2.66% | 3.38% | 3.38% | 3.41% | 3.43% |
Portfolio turnover rate | 35%(c) | 65% | 62% | 62% | 37% | 48% |
Net assets, end of period (in thousands) | $ 4,778 | $ 5,913 | $ 6,552 | $ 5,962 | $10,296 | $10,886 |
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) | 1.21% | 1.31% | 1.33% | 1.32% | 1.18% |
Net investment income (loss) to average net assets | 2.46%(e) | 2.20% | 2.82% | 2.80% | 2.84% | 3.00% |
(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 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 |
Financial Highlights (continued)
Six Months | ||||||
Ended | ||||||
6/30/22 | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | |
(unaudited) | 12/31/21 | 12/31/20 | 12/31/19 | 12/31/18 | 12/31/17 | |
Class II | ||||||
Net asset value, beginning of period | $ 10.43 | $ 10.67 | $ 10.30 | $ 9.70 | $ 10.26 | $ 10.14 |
Increase (decrease) from investment operations: | ||||||
Net investment income (loss)(a) | 0.13 | 0.25 | 0.32 | 0.32 | 0.31 | 0.33 |
Net realized and unrealized gain (loss) | ||||||
on investments | (1.26) | (0.07) | 0.41 | 0.59 | (0.50) | 0.14 |
Net increase (decrease) from investment operations | $ (1.13) | $ 0.18 | $ 0.73 | $ 0.91 | $ (0.19) | $ 0.47 |
Distributions to shareowners: | ||||||
Net investment income | (0.13) | (0.32) | (0.33) | (0.31) | (0.26) | (0.34) |
Net realized gain | (0.35) | (0.10) | (0.03) | — | (0.07) | (0.01) |
Tax return of capital | — | — | — | — | (0.04) | — |
Total distributions | $ (0.48) | $ (0.42) | $ (0.36) | $ (0.31) | $ (0.37) | $ (0.35) |
Net increase (decrease) in net asset value | $ (1.61) | $ (0.24) | $ 0.37 | $ 0.60 | $ (0.56) | $ 0.12 |
Net asset value, end of period | $ 8.82 | $ 10.43 | $ 10.67 | $ 10.30 | $ 9.70 | $ 10.26 |
Total return(b) | (10.88)%(c) | 1.73% | 7.37% | 9.52% | (1.93)% | 4.74% |
Ratio of net expenses to average net assets | 1.00%(d) | 1.00% | 0.99% | 1.00% | 1.00% | 1.00% |
Ratio of net investment income (loss) to average | ||||||
net assets | 2.62%(d) | 2.40% | 3.11% | 3.16% | 3.16% | 3.18% |
Portfolio turnover rate | 35%(c) | 65% | 62% | 62% | 37% | 48% |
Net assets, end of period (in thousands) | $31,387 | $38,767 | $38,258 | $36,647 | $32,664 | $35,585 |
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%(d) | 1.46% | 1.55% | 1.59% | 1.57% | 1.43% |
Net investment income (loss) to average net assets | 2.20%(d) | 1.94% | 2.55% | 2.57% | 2.59% | 2.75% |
(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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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (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 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”). Amundi Distributor US, Inc., an affiliate of the Adviser, serves as the Portfolio’s distributor (the “Distributor”).
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, 2023. 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 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 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.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued)
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.
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. The Adviser’s fair valuation team is responsible for monitoring developments that may impact fair valued securities.
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, 2022, 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 industry broker valuation model) representing 0.0% 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.
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Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2021, 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.
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, 2021, 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.
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, 2021 was as follows:
2021 | |
Distributions paid from: | |
Ordinary income | $1,375,479 |
Long-term capital gains | 423,762 |
Total | $1,799,241 |
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
The following shows the components of distributable earnings (losses) on a federal income tax basis at December 31, 2021:
2021 | |
Distributable earnings/(losses): | |
Undistributed ordinary income | $ 234,216 |
Undistributed long-term capital gains | 1,137,201 |
Net unrealized depreciation | (131,037) |
Total | $ 1,240,380 |
The differences between book-basis and tax-basis net unrealized depreciation 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 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 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, armed conflict including Russia's military invasion of Ukraine, sanctions against Russia, other nations or individuals or companies and possible countermeasures, 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. Interest rates are very low, which means there is more risk that they may go up. The U.S. Federal Reserve has recently started to raise certain interest rates. 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. Rates of inflation have recently risen. The value of assets or income from an investment may be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Portfolio's assets can decline as can the value of the Portfolio's distributions.
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 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 with respect to the issuer's capacity to pay interest and repay principal. These securities involve greater risk of loss, are subject to greater price volatility, and may be less liquid and more difficult to value, especially during periods of economic uncertainty or change, than higher rated debt securities.
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, military conflicts and sanctions, terrorism, sustained economic downturns, financial instability, less liquid trading markets, extreme price volatility, currency risks, reduction of government or central bank support, inadequate accounting standards, tariffs, tax disputes or other tax burdens, nationalization or expropriation of assets, and the
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imposition of adverse governmental laws, arbitrary application of laws and regulations or lack of rule of law and investment and repatriation restrictions. Lack of information and less market regulation also may affect the value of these securities. Withholding and other non-U.S. taxes may decrease the Portfolio's return. Non-U.S. issuers may be located in parts of the world that have historically been prone to natural disasters. Investing in depositary receipts is subject to many of the same risks as investing directly in non-U.S. issuers. Depositary receipts may involve higher expenses and may trade at a discount (or premium) to the underlying security.
The global pandemic of the novel coronavirus respiratory disease designated COVID-19 has resulted in 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 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. Following Russia’s recent invasion of Ukraine, Russian securities have lost all, or nearly all, their market value. Other securities or markets could be similarly affected by past or future geopolitical or other events or conditions.
Governments and central banks, including the U.S. Federal Reserve, 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 consequences of high public debt, including its future impact on the economy and securities markets, may not be known for some time.
Russia launched a large-scale invasion of Ukraine on February 24, 2022. In response to the military action by Russia, various countries, including the U.S., the United Kingdom, and European Union issued broad-ranging economic sanctions against Russia and Belarus and certain companies and individuals. Since then, Russian securities have lost all, or nearly all, their market value, and many other issuers, securities and markets have been adversely affected. The United States and other countries may impose sanctions on other countries, companies and individuals in light of Russia’s military invasion. The extent and duration of the military action or future escalation of such hostilities, the extent and impact of existing and future sanctions, market disruptions and volatility, and the result of any diplomatic negotiations cannot be predicted. These and any related events could have a significant impact on the value and liquidity of certain Portfolio investments, on Portfolio performance and the value of an investment in the Portfolio, particularly with respect to securities and commodities, such as oil, natural gas and food commodities, as well as other sectors with exposure to Russian issuers or issuers in other countries affected by the invasion, and are likely to have collateral impacts on market sectors globally.
The Portfolio's investments, payment obligations and financing terms may be based on floating rates, such as LIBOR (London Interbank Offered Rate) or SOFR (Secured Overnight Financing Rate). ICE Benchmark Administration, the administrator of LIBOR, ceased publication of most LIBOR settings on a representative basis at the end of 2021 and is expected to cease publication of a majority of U.S. dollar LIBOR settings on a representative basis after June 30, 2023. In addition, global regulators have announced that, with limited exceptions, no new LIBOR-based contracts should be entered into after 2021. Actions by regulators have resulted in the establishment of alternative reference rates to LIBOR in most major currencies. Markets are developing in response to these new rates, but questions around liquidity in these rates and how to appropriately adjust these rates to eliminate any economic value transfer at the time of transition remain a significant concern. The effect of any changes to - or discontinuation of - LIBOR on the Portfolio will vary depending on, among other things, existing fallback provisions in individual contracts and whether, how, and when industry participants develop and widely adopt new reference rates and fallbacks for both legacy and new products and instruments. In March 2022, the U.S. federal government enacted legislation to establish a process for replacing LIBOR in existing contracts that do not already provide for the use of a clearly defined or practicable replacement benchmark rate as described in the legislation. Generally speaking, for contracts that do not contain a fallback provision as described in the legislation, a benchmark replacement recommended by the Federal Reserve Board will effectively automatically replace the USD LIBOR benchmark in the contract after June 30, 2023. The recommended benchmark replacement will be based on the SOFR published by the Federal Reserve Bank of New York, including any recommended spread adjustment and benchmark replacement conforming changes. The process of transitioning from LIBOR may involve, among other things, increased volatility or illiquidity in markets for instruments that rely on LIBOR. The transition may also result in a reduction in the value of certain LIBOR based investments held by the Portfolio or reduce the effectiveness of related transactions such as hedges. Any such effects of the transition away from LIBOR, as well as other unforeseen effects, could result in losses for the Portfolio. Because the usefulness of LIBOR as a benchmark may deteriorate during the transition period, these effects could occur at any time.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
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 the Portfolio’s custodian and accounting agent, and 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.
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, 2022 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.
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Additionally, the Fund 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, 2022, 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, 2022, was $21,440. Open purchased options at June 30, 2022, are listed in the Schedule of Investments.
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, 2022, was $(1,181). Open written options contracts at June 30, 2022, are listed in the Schedule of Investments.
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, 2022, 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, 2022, was $4,465,888 and $4,136,501 for buys and sells, respectively. Open forward foreign currency exchange contracts outstanding at June 30, 2022, 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.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
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, 2022, 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, 2022, was $(1,468,039). Open futures contracts outstanding at June 30, 2022, are listed in the Schedule of Investments.
M. 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
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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, 2022, 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, 2022, was $111,816. Open credit default swap contracts at June 30, 2022, are listed in the Schedule of Investments.
2. Management Agreement
The Adviser manages the Portfolio. Management fees payable under the Portfolio's Investment Management Agreement with the Adviser 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, 2022, 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, 2022, the Adviser waived $7,149 in management fees with respect to the Portfolio, which is reflected on the Statement of Operations as a fee waiver.
The Adviser has contractually agreed to limit ordinary operating expenses (ordinary operating expenses means all portfolio expenses other than taxes, brokerage commissions, acquired fund expenses and extraordinary expenses, such as litigation) 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, 2023. 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, 2022, 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 $2,608 in management fees, administrative costs and certain other reimbursements payable to the Adviser at June 30, 2022.
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, 2022, the Portfolio paid $3,981 in Trustees’ compensation, which is reflected on the Statement of Operations as Trustees’ fees. At June 30, 2022, the Portfolio had a payable for Trustees’ fees on its Statement of Assets and Liabilities of $41.
4. Transfer Agent
BNY Mellon Investment Servicing (US) 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 $635 in distribution fees payable to the Distributor at June 30, 2022.
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.
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Notes to Financial Statements 6/30/22 (unaudited) (continued)
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, 2022.
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) |
Bank of America NA | $ 49,549 | $ (6,837) | $ — | $ — | $ 42,712 |
Bank of New York Mellon Corp. | —* | —* | — | — | —* |
Brown Brothers Harriman & Co. | — | — | — | — | — |
Citibank NA | 4,070 | (4,070) | — | — | — |
Goldman Sachs & Co. | 5,358 | (5,358) | — | — | — |
HSBC Bank USA NA | — | — | — | — | — |
JPMorgan Chase Bank NA | 792 | (792) | — | — | — |
State Street Bank & Trust Co. | 16,330 | (16,330) | — | — | — |
Total | $ 76,099 | $(33,387) | $ — | $ — | $ 42,712 |
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) |
Bank of America NA | $ 6,837 | $ (6,837) | $ — | $ — | $ — |
Bank of New York Mellon Corp. | 106 | —* | — | — | 106 |
Brown Brothers | |||||
Harriman & Co. | 6,398 | — | — | — | 6,398 |
Citibank NA | 8,284 | (4,070) | — | — | 4,214 |
Goldman Sachs & Co. | 13,781 | (5,358) | — | — | 8,423 |
HSBC Bank USA NA | 35,467 | — | — | — | 35,467 |
JPMorgan Chase Bank NA | 21,391 | (792) | — | — | 20,599 |
State Street Bank & Trust Co. | 34,003 | (16,330) | — | — | 17,673 |
Total | $126,267 | $(33,387) | $ — | $ — | $ 92,880 |
* | Includes securities that are valued at $0. |
(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. |
44
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
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, 2022, 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 futures contracts | $1,709 | $ — | $ — | $ — | $ — | |
Options purchased* | — | — | 33,498 | —** | — | |
Swap contracts, at value | — | 50,705 | — | — | — | |
Total Value | $1,709 | $50,705 | $33,498 | $ —** | $ — | |
Liabilities | ||||||
Net unrealized depreciation | ||||||
on forward foreign | ||||||
currency exchange | ||||||
contracts | $ — | $ — | $62,388 | $ — | $ — | |
Call options written | — | — | 25 | — | — | |
Total Value | $ — | $ — | $62,413 | $— | $ — |
* | 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. |
** | Securities valued at $0. |
45
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
Notes to Financial Statements 6/30/22 (unaudited) (continued)
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, 2022 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 | $ 119,917 | $ — | $ — | $ — | $ — |
Forward foreign currency | |||||
exchange contracts | — | — | 39,110 | — | — |
Options purchased* | — | — | (6,193) | — | — |
Options written | — | — | 6,193 | — | — |
Swap contracts | — | 136,751 | — | — | — |
Total Value | $ 119,917 | $ 136,751 | $ 39,110 | $ — | $ — |
Change in Net | |||||
Unrealized Appreciation | |||||
(Depreciation) on | |||||
Futures contracts | $ (90,808) | $ — | $ — | $ — | $ — |
Forward foreign currency | |||||
exchange contracts | — | — | (30,767) | — | — |
Options purchased** | — | — | 23,526 | — | — |
Options written | — | — | (3,564) | — | — |
Swap contracts | — | 62,634 | — | — | — |
Total Value | $ (90,808) | $ 62,634 | $(10,805) | $ — | $ — |
* | 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. |
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, 2022, the Portfolio had the following unfunded loan commitment outstanding:
Unrealized | ||||
Appreciation | ||||
Loan | Principal | Cost | Value | (Depreciation) |
Project Watson | $92,400 | $92,400 | $92,400 | $ — |
46
Pioneer Strategic Income VCT Portfolio | Pioneer Variable Contracts Trust |
9. Affiliated Issuers
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, 2022, the value of the Portfolio’s investment in affiliated issuers was $830,047, which represents 2.3% of the Portfolio’s net assets.
Transactions in affiliated issuers by the Portfolio for the six months ended June 30, 2022 were as follows:
Change in | Net Realized | ||||||
Net Unrealized | gain/(Loss) | Dividends | |||||
Appreciation/ | From | Received and | Shares | ||||
Value at | (Depreciation) | Investments | Reinvested from | held at | Value at | ||
Name of the | December 31, | Purchases | from Investments | in Affiliated | Investments in | June 30, | June 30, |
Affiliated Issuer | 2021 | Costs | in Affiliated Issuers | Issuers | Affiliated Issuers | 2022 | 2022 |
Pioneer ILS | |||||||
Interval Fund | $815,189 | $— | $14,858 | $— | $— | 99,051 | $830,047 |
Annual and semi-annual reports for the underlying Pioneer funds are available on the funds’ web page(s) at www.amundi.com/us.
47
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. (the “Adviser”) 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, 2021 through December 31, 2021 (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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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.
19636-16-0822
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;
(3) Compliance with applicable governmental laws, rules, and regulations;
(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.
(f) The registrant must:
(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.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(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.
PIONEER FUNDS
APPROVAL OF AUDIT, AUDIT-RELATED, TAX AND OTHER SERVICES
PROVIDED BY THE INDEPENDENT AUDITOR
SECTION I - POLICY PURPOSE AND APPLICABILITY
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.
SECTION II - POLICY | |||
SERVICE CATEGORY | SERVICE CATEGORY DESCRIPTION | SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES | |
I. AUDIT SERVICES | Services that are directly | o Accounting research assistance | |
related to performing the | o SEC consultation, registration | ||
independent audit of the Funds | statements, and reporting | ||
o Tax accrual related matters | |||
o Implementation of new accounting standards | |||
o Compliance letters (e.g. rating agency letters) | |||
o Regulatory reviews and assistance | |||
regarding financial matters | |||
o Semi-annual reviews (if requested) | |||
o Comfort letters for closed end offerings | |||
II. AUDIT-RELATED | Services which are not | o AICPA attest and agreed-upon procedures | |
SERVICES | prohibited under Rule | o Technology control assessments | |
210.2-01(C)(4) (the “Rule”) | o Financial reporting control assessments | ||
and are related extensions of | o Enterprise security architecture | ||
the audit services support the | assessment | ||
audit, or use the knowledge/expertise | |||
gained from the audit procedures as a | |||
foundation to complete the project. | |||
In most cases, if the Audit-Related | |||
Services are not performed by the | |||
Audit firm, the scope of the Audit | |||
Services would likely increase. | |||
The Services are typically well-defined | |||
and governed by accounting | |||
professional standards (AICPA, | |||
SEC, etc.) | |||
AUDIT COMMITTEE APPROVAL POLICY | AUDIT COMMITTEE REPORTING POLICY | ||
o “One-time” pre-approval | o A summary of all such | ||
for the audit period for all | services and related fees | ||
pre-approved specific service | reported at each regularly | ||
subcategories. Approval of the | scheduled Audit Committee | ||
independent auditors as | meeting. | ||
auditors for a Fund shall | |||
constitute pre approval for | |||
these services. | |||
o “One-time” pre-approval | o A summary of all such | ||
for the fund fiscal year within | services and related fees | ||
a specified dollar limit | (including comparison to | ||
for all pre-approved | specified dollar limits) | ||
specific service subcategories | reported quarterly. | ||
o Specific approval is | |||
needed to exceed the | |||
pre-approved dollar limit for | |||
these services (see general | |||
Audit Committee approval policy | |||
below for details on obtaining | |||
specific approvals) | |||
o Specific approval is | |||
needed to use the Fund’s | |||
auditors for Audit-Related | |||
Services not denoted as | |||
“pre-approved”, or | |||
to add a specific service | |||
subcategory as “pre-approved” | |||
SECTION III - POLICY DETAIL, CONTINUED
SERVICE CATEGORY | SERVICE CATEGORY DESCRIPTION | SPECIFIC PRE-APPROVED SERVICE |
SUBCATEGORIES | ||
III. TAX SERVICES | Services which are not | o Tax planning and support |
prohibited by the Rule, | o Tax controversy assistance | |
if an officer of the Fund | o Tax compliance, tax returns, excise | |
determines that using the | tax returns and support | |
Fund’s auditor to provide | o Tax opinions | |
these services creates | ||
significant synergy in | ||
the form of efficiency, | ||
minimized disruption, or | ||
the ability to maintain a | ||
desired level of | ||
confidentiality. |
AUDIT COMMITTEE APPROVAL POLICY | AUDIT COMMITTEE REPORTING POLICY |
o “One-time” pre-approval | o A summary of |
for the fund fiscal year | all such services and |
within a specified dollar limit | related fees |
(including comparison | |
to specified dollar | |
limits) reported | |
quarterly. | |
o Specific approval is | |
needed to exceed the | |
pre-approved dollar limits for | |
these services (see general | |
Audit Committee approval policy | |
below for details on obtaining | |
specific approvals) | |
o Specific approval is | |
needed to use the Fund’s | |
auditors for tax services not | |
denoted as pre-approved, or to | |
add a specific service subcategory as | |
“pre-approved” |
SECTION III - POLICY DETAIL, CONTINUED
SERVICE CATEGORY | SERVICE CATEGORY DESCRIPTION | SPECIFIC PRE-APPROVED SERVICE |
SUBCATEGORIES | ||
IV. OTHER SERVICES | Services which are not | o Business Risk Management support |
prohibited by the Rule, | o Other control and regulatory | |
A. SYNERGISTIC, | if an officer of the Fund | compliance projects |
UNIQUE QUALIFICATIONS | determines that using the | |
Fund’s auditor to provide | ||
these services creates | ||
significant synergy in | ||
the form of efficiency, | ||
minimized disruption, | ||
the ability to maintain a | ||
desired level of | ||
confidentiality, or where | ||
the Fund’s auditors | ||
posses unique or superior | ||
qualifications to provide | ||
these services, resulting | ||
in superior value and | ||
results for the Fund. |
AUDIT COMMITTEE APPROVAL POLICY | AUDIT COMMITTEE REPORTING POLICY |
o “One-time” pre-approval | o A summary of |
for the fund fiscal year within | all such services and |
a specified dollar limit | related fees |
(including comparison | |
to specified dollar | |
limits) reported | |
quarterly. | |
o Specific approval is | |
needed to exceed the | |
pre-approved dollar limits for | |
these services (see general | |
Audit Committee approval policy | |
below for details on obtaining | |
specific approvals) | |
o Specific approval is | |
needed to use the Fund’s | |
auditors for “Synergistic” or | |
“Unique Qualifications” Other | |
Services not denoted as | |
pre-approved to the left, or to | |
add a specific service | |
subcategory as “pre-approved” |
SECTION III - POLICY DETAIL, CONTINUED
SERVICE CATEGORY | SERVICE CATEGORY DESCRIPTION | SPECIFIC PROHIBITED SERVICE |
SUBCATEGORIES | ||
PROHIBITED SERVICES | Services which result | 1. Bookkeeping or other services |
in the auditors losing | related to the accounting records or | |
independence status | financial statements of the audit | |
under the Rule. | client* | |
2. Financial information systems design | ||
and implementation* | ||
3. Appraisal or valuation services, | ||
fairness* opinions, or | ||
contribution-in-kind reports | ||
4. Actuarial services (i.e., setting | ||
actuarial reserves versus actuarial | ||
audit work)* | ||
5. Internal audit outsourcing services* | ||
6. Management functions or human | ||
resources | ||
7. Broker or dealer, investment | ||
advisor, or investment banking services | ||
8. Legal services and expert services | ||
unrelated to the audit | ||
9. Any other service that the Public | ||
Company Accounting Oversight Board | ||
determines, by regulation, is | ||
impermissible |
AUDIT COMMITTEE APPROVAL POLICY | AUDIT COMMITTEE REPORTING POLICY |
o These services are not to be | o A summary of all |
performed with the exception of the(*) | services and related |
services that may be permitted | fees reported at each |
if they would not be subject to audit | regularly scheduled |
procedures at the audit client (as | Audit Committee meeting |
defined in rule 2-01(f)(4)) level | will serve as continual |
the firm providing the service. | confirmation that has |
not provided any | |
restricted services. |
GENERAL AUDIT COMMITTEE APPROVAL 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.
Non-Audit Services
N/A
(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.
N/A
(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.
N/A
(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.
N/A
(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.
N/A
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.
Included in Item 1
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.
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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.
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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).
N/A
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 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 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:
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(1) Gross income from securities lending activities;
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(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;
N/A
(3) The aggregate fees/compensation disclosed pursuant to paragraph (2); and
N/A
(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.
N/A
(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.
N/A
ITEM 13. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
SIGNATURES
[See General Instruction F]
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.
(Registrant) Pioneer Variable Contracts Trust
By (Signature and Title)* /s/ Lisa M. Jones
Lisa M. Jones, President and Chief Executive Officer
Date September 6, 2022
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
Date September 6, 2022
By (Signature and Title)* /s/ Anthony J. Koenig, Jr.
Anthony J. Koenig, Jr., Managing Director, Chief Operations Officer & Treasurer of the Funds
Date September 6, 2022
* Print the name and title of each signing officer under his or her signature.