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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 Strategic Income VCT Portfolio Class II Shares
(Exact name of registrant as specified in charter)
60 State Street, Boston, MA 02109
(Address of principal executive offices) (ZIP code)
Joseph P. Barri, Hale and Dorr LLP, 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: June 30
Date of reporting period: January 1, 2003 through June 30, 2003
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.
<Page>
[PIONEER INVESTMENTS(R) LOGO]
PIONEER VARIABLE CONTRACTS TRUST
PIONEER STRATEGIC INCOME VCT PORTFOLIO -- CLASS II SHARES
SEMIANNUAL REPORT
JUNE 30, 2003
<Page>
PIONEER VARIABLE CONTRACTS TRUST
TABLE OF CONTENTS
<Table>
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 2
Portfolio Management Discussion 3
Schedule of Investments 4
Financial Statements 13
Notes to Financial Statements 17
</Table>
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
PORTFOLIO AND PERFORMANCE UPDATE 6/30/03
[CHART]
PORTFOLIO DIVERSIFICATION
(As a percentage of total investment portfolio)
<Table>
Corporate Bonds 51.50%
Foreign Government Bonds 15.00%
Convertible Corporate Bonds 14.10%
U.S. Government Agency Obligations 11.30%
Municipal Bonds 2.70%
Temporary Cash Investment 2.50%
Asset-Backed Securities 1.50%
Supranational Bonds 0.80%
Sovereign Issues 0.60%
</Table>
[CHART]
QUALITY DISTRIBUTION
(As a percentage of debt holdings)
<Table>
0-1 years 1.40%
1-3 years 18.80%
3-4 years 19.90%
4-6 years 31.60%
6-8 years 20.00%
8+ years 8.30%
</Table>
FIVE LARGEST HOLDINGS
(As a percentage of debt holdings)
<Table>
1. Government of France, 3.0%, 7/25/09 2.43%
2. Government of Canada, 5.25%, 6/1/12 1.98
3. Government of Canada, 6.0%, 6/1/11 1.80
4. U.S. Treasury Notes, 3.5%, 1/15/11 1.74
5. Government of Sweden I/L, 3.5%, 12/1/15 1.53
</Table>
Holdings will vary for other periods.
PRICES AND DISTRIBUTIONS--CLASS II SHARES
<Table>
<Caption>
6/30/03 5/1/03
Net Asset Value per Share $ 10.69 $ 10.41
</Table>
<Table>
<Caption>
DISTRIBUTIONS PER SHARE SHORT-TERM LONG-TERM
(5/1/03 - 6/30/03) DIVIDENDS CAPITAL GAINS CAPITAL GAINS
$ 0.1087 $ - $ -
</Table>
PERFORMANCE OF A $10,000 INVESTMENT--CLASS II SHARES
The following chart shows the change in value of an investment made in PIONEER
STRATEGIC INCOME VCT PORTFOLIO at net asset value, compared to that of the
Lehman Brothers U.S. Universal Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
<Table>
<Caption>
PIONEER STRATEGIC LEHMAN BROTHERS
INCOME VCT PORTFOLIO* U.S. UNIVERSAL INDEX+
7/31/1999 $ 10,000 $ 10,000
12/31/1999 $ 10,060 $ 10,136
$ 10,488 $ 11,234
12/31/2001 $ 11,184 $ 12,144
$ 12,352 $ 13,338
6/30/2003 $ 14,204 $ 13,999
</Table>
+ Index comparison begins July 31, 1999. The Lehman Brothers U.S. Universal
Index is the union of the U.S. Aggregate Index, the U.S. 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. You cannot invest directly in the Index.
CUMULATIVE TOTAL RETURNS+
(As of June 30, 2003)
NET ASSET VALUE*
<Table>
Life-of-Class 9.37%
1 Year 21.46%
</Table>
All total returns shown assume reinvestment of distributions at net asset value.
+ The performance of Class II shares for the period prior to the commencement
of operations of Class II shares on 5/1/03 is based on the performance of
Class I shares, reduced to reflect the higher distribution fees of Class I
shares.
* Portfolio performance does not reflect any variable contract fees, expenses
or sales charges. If they had been included, performance would have been
lower. See the pages that comprise the inside cover of this report for
performance net of any contract fees, expenses or sales charges.
Past performance does not guarantee future results. Returns and principal values
fluctuate so that your investment, when redeemed, may be worth more or less than
its original cost. The performance table and graph do not reflect the deduction
of taxes that a shareowner would pay on distributions or the redemption of
shares.
2
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
PORTFOLIO MANAGEMENT DISCUSSION 6/30/03
Healthy returns in most of the sectors the Portfolio invested in led to
exceptionally strong performance by Pioneer Strategic Income VCT Portfolio
during the six months ended June 30, 2003. In the following interview, Kenneth
J. Taubes discusses the factors that influenced the Portfolio's performance
during the period. Mr. Taubes, head of Pioneer's fixed income group, oversees
the team responsible for the daily management of the Portfolio.
Q: HOW DID THE PORTFOLIO PERFORM DURING THE SIX MONTHS ENDED JUNE 30, 2003?
A: Performance was excellent. During the six-month period, the Portfolio's Class
II shares had a total return of 15.00% at net asset value, while the Lehman
Brothers U.S. Universal Bond Index returned 4.95%.
While these returns showed the value of diversification and good security
selection, it is important also to note that they occurred during an unusual
period in which virtually all classes of bonds in which we invest posted
strong performance. The Portfolio's most recent returns may not be
sustainable in the future.
Q: WHAT WERE THE PRINCIPAL FACTORS THAT INFLUENCED PERFORMANCE?
A: The Portfolio was ideally positioned to benefit from the strong recoveries in
domestic investment-grade and high-yield corporate bonds as well as by the
vigorous performance of foreign bonds in both developed and emerging markets.
In the United States, the investment environment for corporate securities -
in which the Portfolio was heavily invested - improved significantly. While
falling interest rates tended to support the performance of bonds in general,
corporates also benefited from a change in attitudes about the economy and
the prospects for an economic recovery. Influenced by declining default
rates, investors began to see less risk in corporate debt. In addition, they
correctly anticipated that the Federal Reserve would make further cuts in
short-term rates, easing the flow of money into the economy. Moreover,
evidence began accumulating that the business sector had begun to stabilize.
Many corporations had cut their overhead expenses, repaired their balance
sheets and refinanced their debt to take advantage of lower interest rates.
The weakening of the U.S. dollar on international currency exchanges also
tended to help corporations, especially those selling products overseas and
those competing domestically against imported goods. Lower-rated corporate
bonds, which had performed poorly during the previous two years, had the
strongest performance. The Merrill Lynch High Yield Master Index, for
example, rose by more than 17% during the six months, while the Merrill Lynch
Investment Grade Corporate Index delivered a total return of about 7.5%. By
comparison, the 30-year Treasury returned 5.80%, and the five-year Treasury
had a return of 3.5%.
At the end of the fiscal period on June 30, 2003, 46% of Portfolio assets
were invested in domestic high-yield bonds, and another 14% were invested in
investment-grade corporates.
Emerging market debt performed as well as domestic high-yield bonds, also
contributing to the performance of the Portfolio, which had 14% of assets
invested in high-yielding, emerging market debt on June 30, 2003. Many
developing nations appeared to stabilize during the period, while their
economies benefited from rising prices of commodities such as oil and copper.
Both emerging market bonds and investment-grade foreign bonds gained as the
U.S. dollar declined against most foreign currencies during the period. The
Portfolio's holdings in securities denominated in the euro, the Canadian and
Australian dollars and the Danish and Swedish kroners also did exceptionally
well. On June 30, 2003, 18% of Portfolio assets were invested in
international investment-grade debt.
Q: WHY DID THE U.S. DOLLAR CONTINUE TO WEAKEN?
A: A significant change has taken place in the way in which the United States
finances its current account and trade deficits with foreign countries.
Foreign investors attracted to appreciating U.S. stock prices were
responsible for financing a major portion of the deficit during the bull
market of the 1990s. However, when U.S. stock prices started to fall, foreign
investors looked for alternatives. Fixed-income assets became more attractive
than equities, and investors focused on the differences in the yields of
different types of securities. Markets in countries such as Australia and
Canada offered these investors significantly higher yields than were
available in the United States, where money market yields were falling to
40-year lows. As private money migrated out of the United States in search of
the best available yields, the value of the U.S. currency continued to fall.
Q: WHAT INDIVIDUAL INVESTMENTS HAD THE MOST INFLUENCE ON PORTFOLIO PERFORMANCE?
A: We had strong performance from several telecommunications company bonds as
the industry started to recover from its brutal slump. Bonds of Rogers
Cantel, a Canadian wireless company, appreciated, as did the securities of
CMS Panhandle, a pipeline company whose bonds were upgraded from high yield
to investment grade following a merger announcement. Other individual
holdings that supported performance included bonds of Affymetrix, a
biotechnology company that produces DNA chip sets that help researchers
analyze genetic information, and Veeco Instruments, which produces equipment
used in the production of semiconductors.
Q: WHAT IS YOUR INVESTMENT OUTLOOK?
A: The performance of the past six months has been extraordinarily good and is
not likely to be repeated. The U.S. dollar may start stabilizing against
foreign currencies, while the performance of domestic, high-yield securities
may level off. There, total return may more closely resemble underlying bond
yields. In addition, interest rates may be close to their lows, with the
possibility that rates may begin to rise once the economy picks up,
undermining the performance of high-grade bonds in particular.
In the absence of any unanticipated events, we think that the domestic
economy should strengthen as the effects of the tax cuts and monetary
stimulus take hold. Corporate bonds should continue to outperform government
securities. We intend to keep emphasizing corporate debt, while reducing our
exposure to the possibility of rising interest rates by shortening
maturities.
THE PRECEEDING INFORMATION IS THE OPINION OF FUND MANAGEMENT. PAST
PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT
MARKET FORECASTS DISCUSSED WILL BE REALIZED.
[SIDENOTE]
The Portfolio's investment adviser, Pioneer Investment Management, Inc., reduced
its management fee and certain other expenses; otherwise, returns would have
been lower.
International investing may involve special risks, including differences in
accounting and currency as well as economic and political instability.
3
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
SCHEDULE OF INVESTMENTS 6/30/03 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
CONVERTIBLE CORPORATE BONDS - 14.1%
MATERIALS - 0.6%
DIVERSIFIED METALS & MINING - 0.6%
$ 118,000 BBB-/Baa3 Inco Ltd., 7.75%, 3/15/16 $ 119,180
-----------
TOTAL MATERIALS $ 119,180
-----------
AUTOMOBILES & COMPONENTS - 0.6%
AUTO PARTS & EQUIPMENT - 0.6%
115,000 B/B3 Tower Automotive Inc., 5.0%, 8/1/04 $ 110,975
-----------
TOTAL AUTOMOBILES & COMPONENTS $ 110,975
-----------
CONSUMER DURABLES & APPAREL - 0.9%
LEISURE PRODUCTS - 0.9%
200,000 BBB-/NR Aristocrat Leisure, Ltd., 5.0%, 5/31/06 $ 176,050
-----------
TOTAL CONSUMER DURABLES & APPAREL $ 176,050
-----------
FOOD, BEVERAGE & TOBACCO - 0.8%
AGRICULTURAL PRODUCTS - 0.8%
130,000 NR/NR Royal Numico NV, 1.5%, 9/22/04 $ 160,028
-----------
TOTAL FOOD, BEVERAGE & TOBACCO $ 160,028
-----------
PHARMACEUTICALS & BIOTECHNOLOGY - 3.3%
BIOTECHNOLOGY - 3.3%
175,000 NR/NR Affymetrix Inc., 5.0%, 10/1/06 $ 174,125
150,000 NR/NR CV Therapeutics, 4.75%, 3/7/07 141,750
90,000 CCC/NR Human Genome, 3.75%, 3/15/07 74,250
100,000 NR/NR Invitrogen Corp., 2.25%, 12/15/06 92,500
170,000 NR/NR Vertex Pharmaceuticals Inc., 5.0%, 9/19/07 142,163
-----------
TOTAL PHARMACEUTICALS & BIOTECHNOLOGY $ 624,788
-----------
SOFTWARE & SERVICES - 0.8%
DATA PROCESSING & OUTSOURCED SERVICES - 0.8%
160,000 NR/NR Checkfree Holdings Corp., 6.5%, 12/1/06 $ 162,800
-----------
TOTAL SOFTWARE & SERVICES $ 162,800
-----------
TECHNOLOGY HARDWARE & EQUIPMENT - 2.7%
COMMUNICATIONS EQUIPMENT - 0.5%
110,000 B+/Ba3 Commscope Inc., 4.0%, 12/15/06 $ 99,550
-----------
COMPUTER STORAGE & PERIPHERALS - 0.6%
110,000 B+/B2 Quantum Corp., 7.0%, 8/1/04 $ 110,825
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.9%
185,000 NR/NR Veeco Instruments, 4.125%, 12/21/08 $ 169,275
-----------
ELECTRONIC MANUFACTURING SERVICES - 0.7%
150,000 B+/Ba3 SCI Systems Inc., 3.0%, 3/15/07 $ 131,625
-----------
TOTAL TECHNOLOGY HARDWARE & EQUIPMENT $ 511,275
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
4
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
SEMICONDUCTORS - 4.4%
SEMICONDUCTOR EQUIPMENT - 3.6%
$ 175,000 B-/NR Advanced Energy Industries, Inc., 5.25%, 11/15/06 $ 157,500
100,000 NR/NR Axcelis Technology, 4.25%, 1/15/07 88,625
170,000 NR/NR Brooks Automation, 4.75%, 6/1/08 143,650
140,000 NR/NR Emcore Corp., 5.0%, 5/15/06 90,650
50,000 B-/NR FEI Company, 5.5%, 8/15/08 49,688
170,000 B/NR LAM Research (LRCX), 4.0%, 6/1/06 165,112
-----------
$ 695,225
-----------
SEMICONDUCTORS - 0.8%
130,000 CCC+/NR Conexant Systems Inc., 4.0%, 2/1/07 $ 102,050
70,000 NR/NR Triquint Semiconductor, 4.0%, 3/1/07 57,924
-----------
$ 159,974
-----------
TOTAL SEMICONDUCTORS $ 855,199
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $2,493,482) $ 2,720,295
-----------
ASSET BACKED SECURITIES - 1.5%
BANKS - 1.3%
DIVERSIFIED BANKS - 1.3%
DKK 826,637 AA-/Aa2 Nykredit, 5.0%, 10/1/19 $ 130,249
DKK 696,655 AA/Aa2 Nykredit, 5.0%, 10/1/35 105,615
DKK 48,997 AA-/Aa2 Nykredit, 6.0%, 10/1/32 7,781
-----------
TOTAL BANKS $ 243,645
-----------
DIVERSIFIED FINANCIALS - 0.2%
CONSUMER FINANCE - 0.2%
DKK 217,539 AA+/Aa1 RealKredit Danmark, 7.0%, 10/1/32 $ 35,203
-----------
TOTAL DIVERSIFIED FINANCIALS $ 35,203
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $221,047) $ 278,848
-----------
CORPORATE BONDS - 51.5%
ENERGY - 3.3%
OIL & GAS DRILLING - 0.9%
275,000,000 BBB-/Baa2 Petroleos Mexicanos, 7.375%, 8/13/07 $ 173,657
-----------
OIL & GAS EQUIPMENT & SERVICES - 1.2%
150,000 BB/Ba2 Key Energy Services Inc., 6.375%, 5/1/13 $ 152,250
76,000 B+/B3 Transmontaigne Inc., 9.125%, 6/1/10 80,085
-----------
$ 232,335
-----------
OIL & GAS EXPLORATION & PRODUCTION - 0.8%
80,000 B/B2 Compton Petroleum Corp., 9.9%, 5/15/09 $ 88,000
50,000 B/B2 Nuevo Energy Co., 9.375%, 10/1/10 53,875
13,000 B/B2 Nuevo Energy Co., 9.5%, 6/1/08 13,634
-----------
$ 155,509
-----------
OIL & GAS REFINING MARKETING & TRANSPORTATION - 0.4%
75,000 B/B3 Tesoro Petroleum Corp., 9.625%, 11/1/08 $ 69,375
-----------
TOTAL ENERGY $ 630,876
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
5
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
MATERIALS - 12.4%
COMMODITY CHEMICALS - 2.0%
$ 100,000 BB/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 88,000
25,000 BB/Ba3 Lyondell Petrochemical Co., 9.875%, 5/1/07 24,500
105,000 BBB-/Ba1 Methanex Corp., 7.75%, 8/15/05 110,250
75,000 BB+/Ba2 Nova Chemicals Corp., 7.0%, 5/15/06 79,125
75,000 BB+/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 79,875
-----------
$ 381,750
-----------
DIVERSIFIED CHEMICALS - 0.7%
EURO 130,000 B-/Caa1 Huntsman ICI Chemicals LLC, 10.125%, 7/1/09 $ 139,089
-----------
DIVERSIFIED METALS & MINING - 2.3%
140,000 B-/B2 Freeport-McMoran Copper & Gold Inc., 7.5%, $ 156,450
100,000 BBB/Ba1 Kennametal Inc., 7.2%, 6/15/12 109,444
150,000 BBB-/Baa3 Phelps Dodge Corp., 8.75%, 6/1/11 176,358
-----------
$ 442,252
-----------
FERTILIZERS & AGRICULTURAL CHEMICALS - 0.3%
45,000 B+/Ba3 Scott's Corp., 8.625%, 1/15/09 $ 48,150
-----------
METAL & GLASS CONTAINERS - 1.8%
75,000 BB/Ba3 Ball Corp., 6.875%, 12/15/12 $ 79,500
100,000 B+/B1 Crown Euro Holdings SA, 10.25%, 3/1/11 (144A) 121,948
130,000 B+/B2 Greif Brothers Corp., 8.875%, 8/1/12 139,750
-----------
$ 341,198
-----------
PAPER PACKAGING - 1.6%
150,000 B/B3 Constar International, 11.0%, 12/1/12 $ 162,000
80,000 B+/B2 Graphic Pack, 8.625%, 2/15/12 81,600
10,000 B/B2 Stone Container Corp., 9.75%, 2/1/11 10,950
50,000 B/B2 Stone Container Corp., 8.375%, 7/1/12 53,625
-----------
$ 308,175
-----------
PAPER PRODUCTS - 0.5%
100,000 B+/B2 FiberMark Inc., 10.75%, 4/15/11 $ 100,000
-----------
PRECIOUS METALS & MINERALS - 0.4%
75,000 A-/A2 Codelco Inc., 6.375%, 11/30/12 (144A) $ 82,601
-----------
SPECIALTY CHEMICALS - 2.8%
100,000 BBB-/Baa3 Ferro Corp., 7.125%, 4/1/28 $ 92,941
150,000 BB-/B2 Polyone Corp., 8.875%, 5/1/12 133,500
140,000 BB/Ba2 Rhodia SA, 8.0%, 6/1/10 169,921
135,000 B-/B3 United Industries Co., 9.875%, 4/1/09 (144A) 142,425
-----------
$ 538,787
-----------
TOTAL MATERIALS $ 2,382,002
-----------
CAPITAL GOODS - 5.6%
AEROSPACE & DEFENSE - 1.3%
100,000 CCC+/Caa2 Hexcel Corp., 9.75%, 1/15/09 $ 99,500
150,000 BB-/Ba3 L-3 Communications Corp., 6.125%, 7/15/13 151,500
-----------
$ 251,000
-----------
BUILDING PRODUCTS - 0.5%
90,000 B/B2 NCI Building Systems, Inc., 9.25%, 5/1/09 $ 96,300
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
6
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS - 0.8%
$ 75,000 BB+/Ba2 Cummins Inc., 7.125%, 3/1/28 $ 67,125
80,000 B+/B3 NMHG Holding Co., 10.0%, 5/15/09 88,000
-----------
$ 155,125
-----------
INDUSTRIAL MACHINERY - 3.0%
175,000 B+/B2 JLG Industries Inc., 8.375%, 6/15/12 $ 159,250
125,000 B+/B2 Manitowoc Co., Inc., 10.5%, 8/1/12 (144A) 138,750
125,000 BB+/Ba3 SPX Corp., 7.5%, 1/1/13 135,313
125,000 BBB-/Baa3 Timken Co., 5.75%, 2/15/10 131,601
-----------
$ 564,914
-----------
TOTAL CAPITAL GOODS $ 1,067,339
-----------
COMMERCIAL SERVICES & SUPPLIES - 0.7%
ENVIRONMENTAL SERVICES - 0.4%
75,000 B-/B3 IESI Corp., 10.25%, 6/15/12 $ 79,500
-----------
OFFICE SERVICES & SUPPLIES - 0.3%
50,000 BB-/B1 Moore North American Finance, 7.875%, 1/15/11 $ 52,125
-----------
TOTAL COMMERCIAL SERVICES & SUPPLIES $ 131,625
----------
TRANSPORTATION - 1.8%
AIR FREIGHT & COURIERS - 0.8%
130,000 BB-/B1 Petroleum Helicopter, 9.375%, 5/1/09 $ 145,763
-----------
AIRLINES - 0.2%
50,000 B-/Caa1 Northwest Airlines, Inc., 8.52%, 4/7/04 $ 39,500
-----------
TRANSPORTATION - 0.8%
150,000 B+/B1 TFM SA De CV, 11.75%, 6/15/09 $ 153,000
-----------
TOTAL TRANSPORTATION $ 338,263
-----------
AUTOMOBILES & COMPONENTS - 1.3%
AUTO PARTS & EQUIPMENT - 0.7%
140,000 B+/B2 Intermet Corp., 9.75%, 6/15/09 $ 134,400
-----------
AUTOMOBILE MANUFACTURERS - 0.6%
35,000 BBB/A3 Ford Motor Credit Co., 5.8%, 1/12/09 $ 34,785
75,000 BBB/A2 General Motors Acceptance Corp., 8.0%, 11/1/31 73,587
-----------
$ 108,372
-----------
TOTAL AUTOMOBILES & COMPONENTS $ 242,772
-----------
CONSUMER DURABLES & APPAREL - 0.6%
HOMEBUILDING - 0.6%
100,000 BB/Ba2 Beazer Homes USA, 8.375%, 4/15/12 $ 110,750
-----------
TOTAL CONSUMER DURABLES & APPAREL $ 110,750
-----------
HOTELS RESTAURANTS & LEISURE - 2.5%
HOTELS, RESORTS & CRUISE LINES - 1.8%
100,000 BBB-/Ba1 Hilton Hotels, 7.625%, 12/01/12 $ 109,500
125,000 B/B2 John Q Hamons Hotels, 8.875%, 5/15/12 131,250
100,000 BB+/Ba1 Starwood Hotels & Resorts, 7.875%, 5/1/12 109,500
-----------
$ 350,250
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
7
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
LEISURE FACILITIES - 0.7%
$ 125,000 B/B2 Premier Parks, Inc., 9.75%, 6/15/07 $ 123,750
-----------
TOTAL HOTELS, RESTAURANTS & LEISURE $ 474,000
-----------
MEDIA - 1.6%
BROADCASTING & CABLE TV - 0.3%
50,000 BB+/Ba1 British Sky Broadcasting, 8.2%, 7/15/09 $ 59,250
-----------
MOVIES & ENTERTAINMENT - 0.4%
75,000 BBB+/Baa1 AOL Time Warner, Inc., 6.875%, 5/1/12 $ 85,621
-----------
PUBLISHING - 0.9%
80,000 BBB-/Baa3 News America Holdings, 8.5%, 2/23/25 $ 99,886
75,000 NR/B2 Quebecor Media Inc., 13.75%, 7/15/11 62,250
-----------
$ 162,136
-----------
TOTAL MEDIA $ 307,007
-----------
RETAILING - 2.4%
DEPARTMENT STORES - 0.4%
90,000 BB+/Ba3 JC Penney Co., 7.625%, 3/1/97 $ 80,550
-----------
DISTRIBUTORS - 0.5%
105,000 B-/B3 Wesco Distribution Inc., 9.125%, 6/1/08 $ 97,913
-----------
GENERAL MERCHANDISE STORES - 0.6%
100,000 B+/B2 Central Garden & Pet Co., 9.125%, 2/1/13 $ 106,500
-----------
SPECIALTY STORES - 0.9%
170,000 B+/B2 Grupo Elektra SA, 12.0%, 4/1/08 (144A) $ 170,850
-----------
TOTAL RETAILING $ 455,813
-----------
FOOD, BEVERAGE & TOBACCO - 0.9%
SOFT DRINKS - 0.9%
160,000 BBB/Baa3 CIA Brasileira de Bebida, 10.5%, 12/15/11 $ 177,600
-----------
TOTAL FOOD, BEVERAGE & TOBACCO $ 177,600
-----------
HEALTH CARE EQUIPMENT & SERVICES - 2.1%
HEALTH CARE DISTRIBUTORS - 1.1%
60,000 BB+/Ba2 Omnicare Inc., 6.125%, 6/1/13 $ 61,200
125,000 B+/B3 Pacificare Health Systems, 10.75%, 6/1/09 143,438
-----------
$ 204,638
-----------
HEALTH CARE EQUIPMENT - 0.3%
40,000 BBB/Baa3 Beckman Instruments, Inc., 7.05%, 6/1/26 $ 46,567
-----------
HEALTH CARE FACILITIES - 0.7%
35,000 BBB-/Ba1 Columbia HCA Healthcare Corp., 7.25%, 5/20/08 $ 38,609
100,000 BBB-/Ba1 HCA Inc., 6.3%, 10/1/12 102,236
-----------
$ 140,845
-----------
TOTAL HEALTH CARE EQUIPMENT & SERVICES $ 392,050
-----------
PHARMACEUTICALS & BIOTECHNOLOGY - 0.8%
PHARMACEUTICALS - 0.8%
150,000 B+/B3 Alpharma Inc., 8.625%, 5/1/11 $ 157,500
-----------
TOTAL PHARMACEUTICALS & BIOTECHNOLOGY $ 157,500
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
8
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
BANKS - 0.1%
DIVERSIFIED BANKS - 0.1%
$ 15,000 BBB/A2 Skandinaviska Enskilda Bank, 8.125%, 9/6/49 (144A) $ 17,284
-----------
TOTAL BANKS $ 17,284
-----------
DIVERSIFIED FINANCIALS - 1.8%
CONSUMER FINANCE - 0.4%
70,000 BBB-/Baa2 Capital One Bank, 6.875%, 2/1/06 $ 75,113
-----------
DIVERSIFIED FINANCIAL SERVICES - 0.9%
175,000 BBB-/Baa2 PF Export REC Master Trust, 6.436%, 6/1/15 $ 177,188
-----------
SPECIALIZED FINANCE - 0.5%
80,000 BBB-/Baa3 GATX Financial Corp., 8.875%, 6/1/09 $ 85,957
-----------
TOTAL DIVERSIFIED FINANCIALS $ 338,258
-----------
INSURANCE - 1.0%
MULTI-LINE INSURANCE - 1.0%
210,000 BB-/B1 Allmerica Financial Corp., 7.625%, 10/15/25 $ 186,900
-----------
TOTAL INSURANCE $ 186,900
-----------
REAL ESTATE - 4.4%
REAL ESTATE MANAGEMENT & DEVELOPMENT - 1.0%
185,000 BB-/Ba3 Forest City Enterprises, 8.5%, 3/15/08 $ 194,019
-----------
REAL ESTATE INVESTMENT TRUSTS - 3.4%
140,000 B-/B3 BF Saul Real Estate Investment Trust, 9.75%, 4/1/08 $ 140,000
15,000 BBB-/Baa3 Colonial Realty Senior Note, 7.0%, 7/14/07 16,697
155,000 B+/Ba3 Crescent Real Estate, 9.25%, 4/15/09 167,137
90,000 BBB-/Ba1 Health Care Real Estate Investment Trust, Inc., 7.5%, 8/15/07 96,163
40,000 BBB-/Ba1 Health Care Real Estate Investment Trust, Inc., 8.0%, 9/12/12 43,028
30,000 BBB/Baa2 Mack-Cali Realty Corp., 7.25%, 3/15/09 35,199
150,000 B-/B1 Meristar Hospitality Operation Finance Corp., 10.5%, 6/15/09 (144A) 153,375
-----------
$ 651,599
-----------
TOTAL REAL ESTATE $ 845,618
-----------
TECHNOLOGY HARDWARE & EQUIPMENT - 3.5%
COMMUNICATIONS EQUIPMENt - 0.4%
100,000 B-/Caa1 Lucent Technologies Inc., 5.5%, 11/15/08 $ 84,250
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.6%
120,000 B-/Ba3 Vestel Electronics Finance, 11.5%, 5/14/07 (144A) $ 118,500
-----------
ELECTRONIC MANUFACTURING SERVICES - 0.3%
50,000 BB-/Ba2 Sanmina-Sci Corp., 10.375%, 1/15/10 $ 55,750
-----------
OFFICE ELECTRONICS - 0.5%
120,000 B-/B3 Xerox Corp., 8.0%, 2/1/27 $ 101,400
-----------
TECHNOLOGY DISTRIBUTORS - 1.7%
200,000 BBB-/Baa3 Arrow Electronics Inc., 6.875%, 7/1/13 $ 198,077
110,000 BB-/Ba2 Ingram Micro Inc., 9.875%, 8/15/08 (144A) 118,800
-----------
$ 316,877
-----------
TOTAL TECHNOLOGY HARDWARE & EQUIPMENT $ 676,777
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
9
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
SEMICONDUCTORS - 0.1%
$ 20,000 B/B2 Fairchild Semiconductor, 10.5%, 2/1/09 $ 22,500
-----------
TOTAL SEMICONDUCTORS $ 22,500
-----------
TELECOMMUNICATION SERVICES - 2.7%
INTEGRATED TELECOMMUNICATIONS SERVICES - 0.6%
25,000 BB-/Ba3 PTC International Finance II, 10.875%, 5/1/08 $ 32,177
75,000 B-/B3 TSI Telecommunication Services, 12.75%, 2/1/09 74,250
-----------
$ 106,427
-----------
WIRELESS TELECOMMUNICATIONS SERVICES - 2.1%
75,000 B+/Ba3 Mobile Telesystems Finance, 10.95%, 12/21/04 $ 79,500
105,000 BB-/B1 PTC International Finance, 11.25%, 12/1/09 134,870
240,000 BB+/Ba3 Rogers Cantel, Inc., 10.5%, 6/1/06 189,435
-----------
$ 403,805
-----------
TOTAL TELECOMMUNICATION SERVICES $ 510,232
-----------
UTILITIES - 1.9%
ELECTRIC UTILITIES - 1.6%
150,000 BBB/Ba2 CMS Panhandle, 6.5%, 7/15/09 $ 165,750
25,000 BBB-/Baa3 Great Lakes Power Inc., 8.3%, 3/1/05 26,874
50,000 BBB+/Baa1 Public Services Co. of Colorado, 7.875%, 10/1/12 (144A) 62,947
50,000 BBB-/Baa3 Xcel Energy Inc., 7.0%, 12/1/10 57,182
-----------
$ 312,753
-----------
MULTI-UTILITIES & UNREGULATED POWER - 0.3%
50,000 B+/B1 Northwest Pipeline Corp., 8.125%, 3/1/10 $ 53,750
-----------
TOTAL UTILITIES $ 366,503
-----------
TOTAL CORPORATE BONDS
(Cost $9,104,123) $ 9,831,669
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 11.3%
GOVERNMENT - 11.3%
85,451 AAA/Aaa Federal Home Loan Mortgage, 6.0%, 1/1/33 to 2/1/33 $ 88,599
99,283 AAA/Aaa Federal National Mortgage Association, 6.0%, 12/1/31 to 11/1/32 103,217
300,000 AAA/Aaa Federal National Mortgage Association, 6.375%, 8/15/07 211,964
75,046 AAA/Aaa Federal National Mortgage Association, 6.5%, 7/1/31 to 2/1/32 78,262
7,527 AAA/Aaa Federal National Mortgage Association, 7.0%, 9/1/29 7,931
1,039 AAA/Aaa Federal National Mortgage Association, 7.5%, 6/1/30 1,104
100,000 AAA/Aaa Government National Mortgage Association, 5.0%, TBA 102,406
175,000 AAA/Aaa Government National Mortgage Association, 6.5%, TBA 183,750
74,592 AAA/Aaa Government National Mortgage Association, 5.5%, 4/15/33 77,832
219,531 AAA/Aaa Government National Mortgage Association, 6.0%, 3/15/33 230,234
409,202 AAA/Aaa Government National Mortgage Association, 6.5%, 3/15/29 to 3/15/32 429,856
78,757 AAA/Aaa Government National Mortgage Association, 7.0%, 5/15/23 to 3/15/31 83,438
65,000 AAA/Aaa U.S. Treasury Bond, 3.0%, 7/15/12 73,290
115,000 AAA/Aaa U.S. Treasury Bond, 5.75%, 8/15/10 134,608
25,000 AAA/Aaa U.S. Treasury Bond, 6.25%, 5/15/30 31,123
270,000 AAA/Aaa U.S. Treasury Notes, 3.5%, 1/15/11 $ 324,490
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(Cost $2,050,376) $ 2,162,104
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
10
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
FOREIGN GOVERNMENT BONDS - 15.0%
$ 150,000 AAA/Aaa Australian Government I/L, 4.0%, 8/20/15 $ 141,619
210,000,000 B+/B2 Banco Nac De Desen Econo, 8.0%, 4/28/10 102,296
475,000 AAA/Aaa Government of Canada, 5.25%, 6/1/12 370,721
410,000 AAA/Aaa Government of Canada, 6.0%, 6/1/11 335,667
100,000 BB-/B1 Federal Republic of Brazil, 11.0%, 1/11/12 99,500
EURO 343,000 AAA/Aaa Government of France, 3.0%, 7/25/09 454,603
1,930,000 TSY/Tsy Government of Sweden I/L, 3.5%, 12/1/15 286,392
850,000 TSY/Aaa Government of Sweden, 8.0%, 8/15/07 124,842
332,000 AA/Aa2 Province of Ontario, 5.5%, 4/23/13 225,776
150,000 A-/Baa1 Republic of Chile, 5.5%, 1/15/13 158,700
205,000 BB/Ba2 Republic of Columbia, 11.375%, 1/31/08 265,440
50,000 BBB/Baa2 Republic of South Africa, 5.25%, 5/16/13 55,423
145,000 BB/Ba2 Russia Regs., 5.0%, 3/31/30 140,650
180,000 BBB-/Baa3 United Mexican States, 8.25%, 2/24/09 121,115
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $2,297,720) $ 2,882,744
-----------
SUPERNATIONAL BONDS - 0.8%
INSURANCE - 0.9%
NZD 258,000 AAA/Aaa International Finance Corp., 6.75%, 7/15/09 $ 161,128
-----------
TOTAL INSURANCE $ 161,128
-----------
TOTAL SUPERNATIONAL BONDS
(Cost $113,297) $ 161,128
-----------
SOVEREIGN ISSUES - 0.6%
GOVERNMENT
75,000 BB-/Ba2 Dominican Republic, 9.04%, 1/23/13 $ 67,875
50,000 BB-/Ba3 Republic of Peru, 9.875%, 2/6/15 54,875
-----------
TOTAL GOVERNMENT $ 122,750
-----------
TOTAL SOVEREIGN ISSUES
(Cost $126,415) $ 122,750
-----------
RIGHTS/WARRANTS - 0.0%
MATERIALS - 0.0%
PAPER PRODUCTS - 0.0%
25 Asia Pulp & Paper, 3/15/05 (144A)* $ --
-----------
TOTAL MATERIALS $ --
-----------
TOTAL RIGHTS/WARRANTS
(Cost $0) $ --
-----------
MUNICIPAL BONDS - 2.7%
GOVERNMENT - 2.7%
200,000 A/A2 California State Municipal Bond, 5.25%, 2/1/28 $ 204,550
140,000 BB-/Caa2 Chicago Illinois O' Hare International Airport, 6.45%, 5/1/18 98,028
175,000 B/Caa2 New Jersey Economic Development Authority, 7.0%, 11/15/30 145,665
100,000 NR/NR Wayne Charter County, 6.75%, 12/1/15 72,730
-----------
TOTAL GOVERNMENT $ 520,973
-----------
TOTAL MUNICIPAL BONDS
(Cost $509,830) $ 520,973
-----------
</Table>
The accompanying notes are an integral part of these financial statements.
11
<Page>
<Table>
<Caption>
PRINCIPAL
AMOUNT S&P/MOODY'S
USD ($) RATINGS VALUE
TEMPORARY CASH INVESTMENT - 2.5%
SECURITIES LENDING COLLATERAL - 2.5%
$ 477,740 Securities Lending Investment Fund, 1.21% $ 477,740
------------
TOTAL TEMPORARY CASH INVESTMENT $ 477,740
------------
(Cost $477,740) $ 477,740
------------
507,973,023 TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $17,394,030) $ 19,158,251
============
</Table>
* Non-income producing security.
(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, 2003, the value of these securities amounted to $1,127,480 or 6.0% of
total net assets.
Note: The Porfolio's investments in mortgage-backed securites of the Government
Mortgage Association (GNMA) and the Federal National Mortgage Association
(FNMA) are interests in separate pools of mortgages. All separate
investments in the issuer which have the same coupon rate have been
aggregated for the purpose of presentation in the schedule of
investments.
Note: Principal amounts are denominated in U.S. dollars unless otherwise noted.
DKK Danish Kroner
NZD New Zealand Dollar
EURO Euro
TBA (To Be Assigned) Securities are purchased on a forward commitment basis
with an Approximate (generally plus or minus 2.5%) principal amount and
no definite Maturity date period. The actual principal amount and
maturity date will be Determined upon settlement when the specific
mortgage pools are assigned.
The accompanying notes are an integral part of these financial statements.
12
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
5/1/03
TO
6/30/03
CLASS II (a) (UNAUDITED)
Net asset value, beginning of period $ 10.41
-----------
Increase (decrease) from investment operations:
Net investment income $ 0.11
Net realized and unrealized gain (loss) on investments
and foreign currency transactions 0.28
-----------
Net increase (decrease) from investment operations $ 0.39
Distributions to shareowners:
Net investment income (0.11)
Net realized gain -
-----------
Net increase (decrease) in net asset value $ 0.28
-----------
Net asset value, end of period $ 10.69
===========
Total return* 15.00%
Ratio of net expenses to average net assets+ 1.69%**
Ratio of net investment income to average net assets+ 7.38%**
Portfolio turnover rate 55%**
Net assets, end of period (in thousands) $ 374
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 1.69%**
Net investment income (loss) 7.38%**
Ratios with waiver of management fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
Net expenses 1.69%**
Net investment income 7.38%**
</Table>
(a) Class II shares were first publicly offered May 1, 2003.
* Assumes initial investment at net asset value at the beginning of the
period, reinvestment of all distributions and the complete redemption of the
investment at net asset value at the end of the period.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
The accompanying notes are an integral part of these financial statements.
13
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
BALANCE SHEET 6/30/03 (UNAUDITED)
<Table>
<Caption>
PIONEER
STRATEGIC
INCOME
VCT PORTFOLIO
ASSETS:
Investment in securities, at value (including securities loaned of $467,095
(cost $17,394,030) $ 19,158,251
Cash 228,746
Cash held as collateral for futures contracts -
Foreign currencies, at value 204,448
Receivables -
Investment securities sold 92,600
Fund shares sold 78,896
Variation margin -
Dividends, interest and foreign taxes withheld 314,998
Forward foreign currency settlement contracts, net
Forward foreign currency portfolio hedge contracts, open-net 16,325
Due from Pioneer Investment Management, Inc. -
Other 491
-------------
Total assets $ 20,094,755
-------------
LIABILITIES:
Payables -
Investment securities purchased $ 812,437
Fund shares repurchased 38,196
Dividends 3,024
Upon return for securities loaned 477,740
Variation margin -
Forward foreign currency settlement contracts, net -
Forward foreign currency portfolio hedge contracts, -
Due to bank -
Due to affiliates 13,856
Accrued expenses 15,556
Other -
-------------
Total liabilities $ 1,360,809
-------------
NET ASSETS:
Paid-in capital $ 16,666,969
Accumulated net investment income (loss) 65,701
Accumulated undistributed net realized gain (loss) 219,177
Net unrealized gain (loss) on:
Investments 1,764,221
Futures contracts -
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 17,878
-------------
Total net assets $ 18,733,946
-------------
NET ASSET VALUE PER SHARE:
CLASS I:
(Unlimited number of shares authorized)
Net assets $ 18,360,299
Shares outstanding 1,716,031
-------------
Net asset value per share $ 10.70
CLASS II:
(Unlimited number of shares authorized)
Net assets $ 373,647
Shares outstanding 34,940
-------------
Net asset value per share $ 10.69
</Table>
The accompanying notes are an integral part of these financial statements.
14
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
STATEMENT OF OPERATIONS (UNAUDITED)
<Table>
<Caption>
PIONEER
STRATEGIC INCOME
VCT PORTFOLIO
SIX MONTHS
ENDED
6/30/03
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $0) $ 303
Interest (net of foreign taxes withheld of $0) 644,542
Income on securities loaned, net 1,059
Other -
----------------
Total investment income $ 645,904
----------------
EXPENSES:
Management fees $ 53,748
Transfer agent fees 599
Distribution fees (Class II) 21
Administrative fees 18,596
Custodian fees 9,381
Professional fees 12,935
Printing 4,100
Fees and expenses of nonaffiliated trustees 361
Miscellaneous 4,680
----------------
Total expenses $ 104,421
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (2,197)
Less fees paid indirectly -
----------------
Net expenses $ 102,224
----------------
Net investment income (loss) $ 543,680
----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, FUTURES CONTRACTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 371,983
Futures contracts -
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (74,178)
----------------
$ 297,805
----------------
Change in net unrealized gain or loss from:
Investments $ 1,342,209
Futures contracts -
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 40,842
----------------
$ 1,383,051
----------------
Net gain (loss) on investments, futures contracts
and foreign currency transactions $ 1,680,856
================
Net increase (decrease) in net assets resulting
from operations $ 2,224,536
================
</Table>
The accompanying notes are an integral part of these financial statements.
15
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO PIONEER VARIABLE CONTRACTS TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
PIONEER STRATEGIC INCOME
VCT PORTFOLIO
SIX MONTHS
ENDED YEAR
6/30/03 ENDED
(UNAUDITED) 12/31/02
FROM OPERATIONS:
Net investment income (loss) $ 543,680 $ 713,959
Net realized gain (loss) on investments 297,805 138,737
Change in net unrealized gain or loss
on investments, futures contracts and
foreign currency transactions 1,383,051 332,245
--------------- ---------------
Net increase (decrease) in net assets
resulting from operations $ 2,224,536 $ 1,184,941
--------------- ---------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (530,696) $ (692,603)
Class II (616) -
Net realized gain
Class I - -
Class II - -
Tax return of capital
Class I - -
Class II - -
--------------- ---------------
Total distributions to shareowners $ (531,312) $ (692,603)
--------------- ---------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 20,833,658 $ 10,603,630
Reinvestment of distributions 514,597 660,491
Cost of shares repurchased (18,999,907) (4,543,210)
--------------- ---------------
Net increase (decrease) in net assets
resulting from fund share transactions $ 2,348,348 $ 6,720,911
--------------- ---------------
Net increase (decrease) in net assets $ 4,041,572 $ 7,213,249
--------------- ---------------
NET ASSETS:
Beginning of period $ 14,692,374 $ 7,479,125
--------------- ---------------
End of period $ 18,733,946 $ 14,692,374
=============== ===============
Accumulated undistributed/(distributions
in excess of) net investment income (loss) $ 65,701 $ 53,333
=============== ===============
</Table>
The accompanying notes are an integral part of these financial statements.
16
<Page>
PIONEER STRATEGIC INCOME VCT PORTFOLIO
NOTES TO FINANCIAL STATEMENTS 6/30/03 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Pioneer Variable Contracts Trust (the Trust) is a Delaware business trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of sixteen separate portfolios
(collectively, the Portfolios, individually the Portfolio) as follows:
PORTFOLIOS:
Pioneer Emerging Markets VCT Portfolio
(Emerging Markets Portfolio)
Pioneer Europe VCT Portfolio
(Europe Portfolio)
Pioneer International Value VCT Portfolio
(International Value Portfolio)
Pioneer Small Cap Value VCT Portfolio
(Small Cap Value Portfolio)
Pioneer Small Company VCT Portfolio
(Small Company Portfolio
Pioneer Mid Cap Value VCT Portfolio
(Mid-Cap Value Portfolio)
Pioneer Growth Shares VCT Portfolio
(Growth Shares Portfolio)
Pioneer Real Estate Shares VCT Portfolio
(Real Estate Shares Portfolio)
Pioneer Fund VCT Portfolio
(Fund Portfolio)
Pioneer Equity Income VCT Portfolio
(Equity-Income Portfolio)
Pioneer Balanced VCT Portfolio
(Balanced Portfolio)
Pioneer High Yield VCT Portfolio
(High Yield Portfolio)
Pioneer Strategic Income VCT Portfolio
(Strategic Income Portfolio)
Pioneer America Income VCT Portfolio
(America Income Portfolio)
Pioneer Money Market VCT Portfolio
(Money Market Portfolio)
Pioneer Value VCT Portfolio
(Value Portfolio) (Class II only)
Portfolio shares may be purchased by insurance companies for the purpose of
funding variable annuity or variable life insurance contracts, and may also be
purchased by qualified pension and retirement plans.
The investment objective of Strategic Income Portfolio is to produce a high
level of current income.
The Trust's financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America that
require the management of the Trust to, among other things, make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting years. Actual results could differ from those estimates. The following
is a summary of significant accounting policies consistently followed by the
Trust, which are in conformity with those generally accepted in the investment
company industry:
A. SECURITY VALUATION
Security transactions are recorded as of trade date. Net asset values for the
portfolios are computed once daily, on each day the New York Stock Exchange
is open, as of the close of regular trading on the Exchange. In computing the
net asset values, securities are valued at the last sale price on the
principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
Trading in foreign equity securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange. The value of
such securities used in computing the net asset value of the Portfolio's
shares, based on the last sale price on the principal exchange where they
traded, are determined as of such times.
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 is informed 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, net of
unrecoverable foreign taxes withheld at the applicable country rates. All
discounts/premiums are accreted/amortized for financial reporting purposes.
Temporary cash investments are valued at amortized cost.
Fixed income securities are valued at prices supplied by independent pricing
services, which consider such factors as Treasury spreads, yields, maturities
and ratings. Valuations may be supplemented by dealers and other sources, as
required. Securities for which market quotations are not readily available
are valued at their fair values as determined by, or under the direction of,
the Board of Trustees.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
B. FOREIGN CURRENCY TRANSLATION
The books and records of the Portfolio are maintained in U.S. dollars.
Amounts denominated in foreign
17
<Page>
currencies are translated into U.S. dollars using current exchange rates.
Net realized gains and losses on foreign currency transactions represent, the
net realized gains and losses on foreign currency contracts, disposition of
foreign currencies, and the difference between the amount of income accrued
and the U.S. dollar actually received. Further, the effects of changes in
foreign currency exchange rates on investments are not segregated in the
statement of operations from the effects of changes in market price of those
securities but are included with the net realized and unrealized gain or loss
on investments.
C. FORWARD FOREIGN CURRENCY CONTRACTS
The Portfolio enters into forward foreign currency contracts (contracts) for
the purchase or sale of a specific foreign currency at a fixed price on a
future date as a hedge or cross-hedge against either specific investment
transactions (settlement hedges) or portfolio positions (portfolio hedges).
All contracts are marked to market daily at the applicable exchange rates,
and any resulting unrealized gains or losses are recorded in the Portfolios'
financial statements. The Portfolio records realized gains and losses at the
time a portfolio hedge 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 9).
D. TAXES
It is the Trust's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
The characterization of distributions to shareowners for financial reporting
purposes is determined in accordance with income tax rules. Therefore, the
source of each Portfolio's distributions may be shown in the accompanying
financial statements as either from or in excess of net investment income or
net realized gain on investment transactions, or from paid-in capital,
depending on the type of book/tax differences that may exist.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2002, Strategic Income VCT Portfolio had a capital
loss carryforward of $77,621, which will expire between 2007 and 2010 if not
utilized.
The Portfolio elected to defer $25,962 in currency losses recognized between
November 1, 2002 and December 31, 2002 to its fiscal year ending December 31,
2003.
18
<Page>
The following chart shows the components of distributable earnings
(accumulated losses) as of December 31, 2002 and the distributions paid
during the year ended December 31, 2002 on a tax basis as of December 31,
2002. The tax character of current year distributions will be determined at
the end of the current fiscal year. These amounts do not include the capital
loss carryforward detailed above.
<Table>
<Caption>
PIONEER
STRATEGIC INCOME
VCT PORTFOLIO
2002
- ---------------------------------------------------------------
DISTRIBUTIONS PAID FROM:
Ordinary Income $ 692,603
Long- Term capital gain -
-----------------
$ 692,603
Return of Capital -
-----------------
Total distributions $ 692,603
-----------------
DISTRIBUTABLE EARNINGS
(ACCUMULATED LOSSES):
Undistributed ordinary income $ 60,267
Undistributed long-term gain -
Unrealized appreciation/depreciation 428,028
-----------------
Total $ 488,295
=================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, returns of capital on REITs, and the recognition of unrealized
gains or losses on certain futures contracts.
E. PORTFOLIO SHARES
The Portfolio records sales and repurchases of its shares as of trade date.
Certain insurance companies paid Pioneer Funds Distributor, Inc. (PFD), the
principal underwriter for the Trust and a wholly owned indirect subsidiary of
UniCredito Italiano S.p.A. (UniCredito Italiano), $30,371 in commissions on
the sale of portfolio shares for the six months ended June 30, 2003. All
Dividends are paid on a monthly basis. Short-term capital gain distributions,
if any, may be declared with the daily dividends. Dividends and distributions
to shareowners are recorded on the ex-dividend date.
F. SECURITY LENDING
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolios' custodian acting as the
lending agent. When entering into a loan, the Portfolio receives collateral
which is maintained by the custodian and earns income in the form of
negotiated lenders' fees. The Portfolio also continues to receive interest or
dividends on the securities loaned, and gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
account of the Portfolio. The loans are secured by collateral of at least
102%, at all times, of the fair value of the securities loaned. The fair
value of the collateral will be adjusted daily to reflect any price
fluctuation in the value of the loaned securities. The value of loaned
securities and cash collateral at year end are disclosed on the balance
sheet. The Trust invests cash collateral in the Securities Lending Investment
Fund which is managed by Brown Brothers Harriman & Co., the Trust's
custodian.
G. REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from counterparties, is required to be at least equal to or in
excess of the value of the repurchase agreement at the time of purchase. The
collateral for all repurchase agreements is held in safekeeping in the
customer-only account of the Portfolio's custodian, or subcustodian. The
Trust's investment adviser, Pioneer Investment Management, Inc. (PIM), is
responsible for determining that the value of the collateral remains at least
equal to the repurchase price.
2. MANAGEMENT AGREEMENT
PIM manages the Portfolio, and is a wholly owned indirect subsidiary of
UniCredito Italiano. Management fees are calculated daily at the following
annual rate of 0.65% of the Portfolios' average daily net assets.
PIM has agreed not to impose all or portion of its management fee and to assume
other operating expenses of the Trust to the extent necessary to limit Class I
expenses to 1.25% of the average daily net assets attributable to Class I
shares; the portion of the Trust-wide expenses attributable to Class II shares
will be reduced only to the extent that such expenses are reduced for Class I
shares.
In addition, under the management and administration agreement, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolio. At June 30, 2003, 13,716 was payable to PIM
related to management fees, administrative fees and certain other services.
3. TRANSFER AGENT
Pioneer Investment Management Shareholder Services, Inc. (PIMSS), a wholly owned
indirect subsidiary of UniCredito Italiano provides substantially all transfer
agent and shareowner services to the Trust at negotiated rates. Included in due
to affiliates is $119 in transfer agent fees payable to PIMSS at June 30, 2003.
4. DISTRIBUTION PLANS
The Portfolio has adopted a plan of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plan, the Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares. Included in due to affiliates is $21
payable to PFD at June 30, 2003.
19
<Page>
5. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
At June 30, 2003, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
<Table>
<Caption>
GROSS GROSS NET APPRECIATION/
TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio $ 17,395,037 $ 1,860,130 $ (96,916) $ 1,763,214
</Table>
6. PORTFOLIO TRANSACTIONS
The cost of purchases and the proceeds from sales of investments other than U.S.
Government obligations and temporary cash investments for the six months ended
June 30, 2003, were $5,909,159 and $3,433,726, respectively. The cost of
purchases and proceeds from sales of U.S. Government obligations for the six
months ended June 30, 2003, were $909,550 and $1,043,975, respectively.
7. CAPITAL SHARES
At June 30, 2003, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows:
<Table>
<Caption>
STRATEGIC INCOME PORTFOLIO 03 SHARES 03 AMOUNT 02 SHARES 02 AMOUNT
- ----------------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 2,125,581 $ 20,459,698 1,135,309 $ 10,603,630
Reinvestment of distributions 50,012 513,986 70,392 660,491
Shares repurchased (1,979,558) (18,999,891) (487,032) (4,543,210)
-------------------------------------------------------------------
Net decrease 196,035 $ 1,973,792 718,669 $ 6,720,911
===================================================================
CLASS II:
Shares sold 34,885 $ 373,961 - $ -
Reinvestment of distributions 57 611 - -
Shares repurchased (1) (16) - -
-------------------------------------------------------------------
Net increase 34,940 $ 374,556 - $ -
===================================================================
</Table>
8. FORWARD FOREIGN CURRENCY CONTRACTS
At June 30, 2003, certain Portfolios had entered into various contracts that
obligate the Portfolios to deliver currencies at specified future dates. At the
maturity of a contract, the Portfolios must make delivery of the foreign
currency. Alternatively, prior to the settlement date of a portfolio hedge, the
Portfolio may close out such contracts by entering into an offsetting hedge
contract.
As of June 30, 2003, the Portfolios' open portfolio hedges were as follows.
<Table>
<Caption>
IN NET
CONTRACTS TO EXCHANGE SETTLEMENT UNREALIZED
PORTFOLIO DELIVER FOR DATE VALUE GAIN (LOSS)
- -------------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio EURO (830,000) $ (970,198) 7/14/03 $ (954,446) $ 15,752
Strategic Income Portfolio EURO 160,000 $ 183,336 7/14/03 $ 183,909 $ 573
</Table>
The Portfolio had no outstanding forward currency settlement contracts as of
June 30, 2003.
20
<Page>
THIS PAGE FOR YOUR NOTES.
21
<Page>
[PIONEER INVESTMENTS(R) LOGO]
PIONEER VARIABLE CONTRACTS TRUST
OFFICERS
JOHN F. COGAN, JR., PRESIDENT
OSBERT M. HOOD, EXECUTIVE VICE PRESIDENT*
VINCENT NAVE, TREASURER
JOSEPH P. BARRI, SECRETARY
TRUSTEES
JOHN F. COGAN, JR., CHAIRMAN
MARY K. BUSH
RICHARD H. EGDAHL, M.D.
MARGARET B.W. GRAHAM
OSBERT M. HOOD*
STEPHEN K. WEST
JOHN WINTHROP
INVESTMENT ADVISER
PIONEER INVESTMENT MANAGEMENT, INC.
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
PRINCIPAL UNDERWRITER
PIONEER FUNDS DISTRIBUTOR, INC.
LEGAL COUNSEL
HALE AND DORR LLP
SHAREOWNER SERVICES AND TRANSFER AGENT
PIONEER INVESTMENT MANAGEMENT SHAREHOLDER SERVICES, INC.
*MR. HOOD WAS ELECTED TRUSTEE AND EXECUTIVE VICE PRESIDENT ON JUNE 3, 2003.
DANIEL T. GERACI RESIGNED AS TRUSTEE AND EXECUTIVE VICE PRESIDENT OF THE FUND ON
APRIL 30, 2003.
THIS REPORT MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS, WHICH INCLUDES MORE
INFORMATION ABOUT CHARGES AND EXPENSES. PLEASE READ THE PROSPECTUS CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
13972-00-0803
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.
Not applicable for semiannual reports; to be answered on annual submissions
after July 15, 2003.
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.
(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)).
(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 for semiannual reports; to be answered on annual submissions
after July 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption AUDIT FEES, the aggregate fees billed for each
of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years.
(b) Disclose, under the caption AUDIT-RELATED FEES, the aggregate fees billed in
each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
(c) Disclose, under the caption TAX FEES, the aggregate fees billed in each of
the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. Registrants shall
describe the nature of the services comprising the fees disclosed under this
category.
(d) Disclose, under the caption ALL OTHER FEES, the aggregate fees billed in
each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
(e) (1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) If greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent employees.
(g) Disclose the aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant for each of
the last two fiscal years of the registrant.
(h) Disclose whether the registrant's audit committee of the board of trustees
has considered whether the provision of non-audit services that were rendered to
the registrant's 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.
Not applicable for semiannual reports; to be answered on annual submissions
after December 15, 2003.
ITEMS 5-6. [RESERVED]
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.
Not applicable to open-end management investment companies.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's certifying officers have determined that the registrant's
disclosure controls and procedures are effective based on our evaluation of
these controls and procedures as of a date within 90 days prior to the filing
date of this report.
(b) There were no significant changes in the registrants internal controls
or in other factors that could significantly affect these controls subsequent
to the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
ITEM 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
Not applicable.
(b) A separate certification for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the Act
(17 CFR 270.30a-2).
Filed herewith.
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 Strategic Income VCT Portfolio Class II Shares
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 25, 2003
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/ John F. Cogan, Jr.
John F. Cogan, Jr., President
Date August 25, 2003
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 25, 2003
* Print the name and title of each signing officer under his or her signature.