OMB APPROVAL
OMB Number: 3235-0570
Expires: September 30, 2007
Estimated average burden
hours per response.....19.4
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)
Dorothy E. Bourassa, Pioneer Investment 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
Date of reporting period: January 1, 2006 through June 30, 2006
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.
ITEM 1. REPORTS TO SHAREOWNERS.
[LOGO] PIONEER
Investments(R)
PIONEER
VARIABLE
CONTRACTS
TRUST
Pioneer Variable Contracts Trust -- Class I Shares
Pioneer Emerging Markets VCT Portfolio
Pioneer Europe VCT Portfolio
Pioneer International Value VCT Portfolio
Pioneer Small Cap Value VCT Portfolio
Pioneer Mid Cap Value VCT Portfolio
Pioneer Growth Shares VCT Portfolio
Pioneer Real Estate Shares VCT Portfolio
Pioneer Fund VCT Portfolio
Pioneer Equity Income VCT Portfolio
Pioneer Balanced VCT Portfolio
Pioneer High Yield VCT Portfolio
Pioneer Strategic Income VCT Portfolio
Pioneer America Income VCT Portfolio
Pioneer Money Market VCT Portfolio
SEMIANNUAL REPORT
June 30, 2006
Allmerica Financial Life
Insurance and Annuity Company
PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Table of Contents
Letter to Shareowners 1
Comparing Ongoing Portfolio Expenses 2
Pioneer Emerging Markets VCT Portfolio
Portfolio and Performance Update 4
Portfolio Management Discussion 5
Pioneer Europe VCT Portfolio
Portfolio and Performance Update 6
Portfolio Management Discussion 7
Pioneer International Value VCT Portfolio
Portfolio and Performance Update 8
Portfolio Management Discussion 9
Pioneer Small Cap Value VCT Portfolio
Portfolio and Performance Update 10
Portfolio Management Discussion 11
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 13
Portfolio Management Discussion 14
Pioneer Growth Shares VCT Portfolio
Portfolio and Performance Update 15
Portfolio Management Discussion 16
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 17
Portfolio Management Discussion 18
Pioneer Fund VCT Portfolio
Portfolio and Performance Update 19
Portfolio Management Discussion 20
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 22
Portfolio Management Discussion 23
Pioneer Balanced VCT Portfolio
Portfolio and Performance Update 25
Portfolio Management Discussion 26
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 28
Portfolio Management Discussion 29
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 30
Portfolio Management Discussion 31
Pioneer America Income VCT Portfolio
Portfolio and Performance Update 33
Portfolio Management Discussion 34
Pioneer Money Market VCT Portfolio
Portfolio and Performance Update 36
Schedules of Investments
Pioneer Emerging Markets VCT Portfolio 37
Pioneer Europe VCT Portfolio 41
Pioneer International Value VCT Portfolio 43
Pioneer Small Cap Value VCT Portfolio 47
Pioneer Mid Cap Value VCT Portfolio 51
Pioneer Growth Shares VCT Portfolio 54
Pioneer Real Estate Shares VCT Portfolio 56
Pioneer Fund VCT Portfolio 57
Pioneer Equity Income VCT Portfolio 61
Pioneer Balanced VCT Portfolio 64
Pioneer High Yield VCT Portfolio 72
Pioneer Strategic Income VCT Portfolio 78
Pioneer America Income VCT Portfolio 89
Pioneer Money Market VCT Portfolio 94
Financial Statements 96
Notes to Financial Statements 120
PIONEER VARIABLE CONTRACTS TRUST
================================================================================
LETTER TO SHAREOWNERS 6/30/06
================================================================================
Dear Shareowner,
We know from the history of the capital markets that sudden shifts in investor
sentiment can occur with little warning, based on an assortment of events. We
believe such a shift in sentiment is occurring in reaction to the possibility
that U.S. economic growth may slow in the second half of 2006.
While U.S. markets fell in late May and early June, the economic events of the
six- and 12-month periods ending June 30, 2006, have actually been characterized
by continued low inflation at home and strong growth prospects abroad with
rising commodity and stock prices.
According to the International Monetary Fund, international economic growth in
2004-5 was the fastest of any two-year period in more than 30 years, and 2006
growth is projected to match the healthy growth of 2005. The growth has been
broad-based, with Europe, Japan, and emerging market economies all showing
strength. The result has been rising prices across a broad range of commodities,
increasing corporate profits, and higher interest rates.
The U.S. bond markets' concern has been that strong economic growth would spark
inflation - we have already seen commodity prices rise, and U.S. labor costs are
threatening to increase, since we are close to full employment. This may also be
a reason why public sentiment is becoming uneasy.
Despite strong first quarter economic growth, the U.S. economy for the second
half of the year may slow in reaction to past increases in interest rates and
energy costs. Thus far the only sign of such a slowdown has been a cooling
housing market. Yet many observers believe a slower growing economy could be
welcomed by the markets.
The U.S. Federal Reserve has continued its program of measured short-term
interest rate increases. However, the Fed Chairman, Ben Bernanke, indicated that
inflation may moderate, which would permit the Fed to stop raising interest
rates. Such action could have positive effects for both consumers and investors
over the intermediate-to-longer term. By restraining inflation, the Fed may also
limit upward pressure on longer-maturity bond yields and downward pressure on
stocks' price/earnings ratios.
In summary, we think security market valuations remain reasonable, and yet there
are no guarantees in investing. The unpredictability reinforces the importance
of Pioneer's message that investors should remain diversified, take a long-term
view, and base investment decisions on economic and market fundamentals, rather
than on emotion. Our investment philosophy and approach continue to be based on
the use of fundamental research to identify a range of opportunities that offer
an attractive balance of risk and reward to help shareowners work toward their
long-term goals.
Respectfully,
/s/ OSBERT M. HOOD
Osbert M. Hood
President
Pioneer Investment Management, Inc.
Any information in this shareholder report regarding market or economic trends
or the factors influencing the Portfolios' historical or future performance are
statements of the opinion of portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
1
PIONEER VARIABLE CONTRACTS TRUST
================================================================================
COMPARING ONGOING PORTFOLIO EXPENSES
================================================================================
As a beneficial owner of one or more Portfolios, you incur two types of costs:
(1) transactions costs, including sales charges (loads) at the time of purchase
and redemption fees upon redemption of your shares, and (2) ongoing costs
including management fees and other Portfolio expenses.
The examples below are based on an investment of $1,000 at the beginning of the
period and held for the entire period (January 1, 2006 - June 30, 2006). These
examples are intended to help you understand your ongoing costs (in dollars), of
investing in a Portfolio and to compare these costs to investing in other
variable annuity portfolios.
Actual Expenses
The first line of the table below for each Portfolio provides information about
the actual account values and actual expenses. You may use the information in
the line, together with amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line for a Portfolio under the heading entitled
"Expenses Paid During Period" to estimate the expenses you paid on your account
during the period.
Hypothetical Example for Comparison Purposes
The second line of the table below for each Portfolio 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 each Portfolio. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other variable annuities.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs. Therefore, the
second line of the table 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.
Class I Shares
-----------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
1/1/06 6/30/06 (1/1/06 - 6/30/06)
- --------------------------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio
Actual $ 1,000.00 $ 1,091.40 $ 8.14
Hypothetical $ 1,000.00 $ 1,017.01 $ 7.85
Pioneer Europe VCT Portfolio
Actual $ 1,000.00 $ 1,124.10 $ 8.06
Hypothetical $ 1,000.00 $ 1,017.21 $ 7.65
Pioneer International Value VCT Portfolio
Actual $ 1,000.00 $ 1,079.90 $ 7.43
Hypothetical $ 1,000.00 $ 1,017.65 $ 7.20
Pioneer Small Cap Value VCT Portfolio
Actual $ 1,000.00 $ 1,054.30 $ 4.99
Hypothetical $ 1,000.00 $ 1,019.93 $ 4.91
Pioneer Mid Cap Value VCT Portfolio
Actual $ 1,000.00 $ 1,011.80 $ 3.58
Hypothetical $ 1,000.00 $ 1,021.17 $ 3.60
Pioneer Growth Shares VCT Portfolio
Actual $ 1,000.00 $ 972.90 $ 4.89
Hypothetical $ 1,000.00 $ 1,019.84 $ 5.01
Pioneer Real Estate Shares VCT Portfolio
Actual $ 1,000.00 $ 1,148.30 $ 4.74
Hypothetical $ 1,000.00 $ 1,020.38 $ 4.46
2
PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Class I Shares
-----------------------------------------------------
Beginning Ending
Account Account Expenses Paid
Value Value During Period
1/1/06 6/30/06 (1/1/06 - 6/30/06)
- -----------------------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio
Actual $ 1,000.00 $ 1,051.10 $ 3.56
Hypothetical $ 1,000.00 $ 1,021.32 $ 3.51
Pioneer Equity Income VCT Portfolio
Actual $ 1,000.00 $ 1,086.20 $ 3.57
Hypothetical $ 1,000.00 $ 1,021.37 $ 3.46
Pioneer Balanced VCT Portfolio
Actual $ 1,000.00 $ 1,001.30 $ 4.42
Hypothetical $ 1,000.00 $ 1,020.38 $ 4.46
Pioneer High Yield VCT Portfolio
Actual $ 1,000.00 $ 1,015.20 $ 3.70
Hypothetical $ 1,000.00 $ 1,021.12 $ 3.71
Pioneer Strategic Income VCT Portfolio
Actual $ 1,000.00 $ 1,011.60 $ 4.34
Hypothetical $ 1,000.00 $ 1,020.48 $ 4.36
Pioneer America Income VCT Portfolio
Actual $ 1,000.00 $ 989.70 $ 3.70
Hypothetical $ 1,000.00 $ 1,021.08 $ 3.76
Pioneer Money Market VCT Portfolio
Actual $ 1,000.00 $ 1,020.50 $ 3.06
Hypothetical $ 1,000.00 $ 1,021.77 $ 3.06
Expenses are equal to the annualized expense ratio of a Portfolio's Class I
shares (as indicated in the table below), multiplied by 181/365 (to reflect the
one-half year period.)
Annualized
Expense Ratio
- ------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio 1.57%
Pioneer Europe VCT Portfolio 1.53%
Pioneer International Value VCT Portfolio 1.44%
Pioneer Small Cap Value VCT Portfolio 0.98%
Pioneer Mid Cap Value VCT Portfolio 0.72%
Pioneer Growth Shares VCT Portfolio 1.00%
Pioneer Real Estate Shares VCT Portfolio 0.89%
Pioneer Fund VCT Portfolio 0.70%
Pioneer Equity Income VCT Portfolio 0.69%
Pioneer Balanced VCT Portfolio 0.89%
Pioneer High Yield VCT Portfolio 0.74%
Pioneer Strategic Income VCT Portfolio 0.87%
Pioneer America Income VCT Portfolio 0.75%
Pioneer Money Market VCT Portfolio 0.61%
3
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
International Common Stocks 59.5%
Depositary Receipts for International Stocks 27.1%
U.S. Common Stocks 7.7%
Temporary Cash Investment 3.2%
International Preferred Stocks 2.5%
Geographical Distribution Portfolio
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
South Korea 18.1%
Brazil 16.9%
South Africa 11.7%
Russia 9.6%
Taiwan 8.1%
People's Republic of China 7.0%
India 3.7%
Israel 3.7%
Mexico 3.4%
Turkey 2.6%
Hong Kong 1.6%
Philippines 1.5%
Malaysia 1.5%
Thailand 1.5%
Indonesia 1.5%
Peru 1.2%
Argentina 1.1%
Other (individually less than 1%) 5.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Petrobras Brasileiro
(A.D.R.) 4.43%
2. Gazprom (A.D.R.) 3.31
3. Lukoil Holding (A.D.R.) 2.27
4. Kookmin Bank (A.D.R.) 1.88
5. Teva Pharmaceutical
Industries, Ltd. 1.84
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $27.54 $28.09
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.1586 $ - $2.7694
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Emerging Markets VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) Emerging Markets Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer
Emerging Markets MSCI Emerging
VCT Portfolio Markets Index
- ------------------------------------------
10/98 10,000 10,000
14,120 14,930
6/00 17,323 16,344
11,777 12,124
6/02 12,194 12,282
13,062 13,137
6/04 17,019 17,539
22,451 23,659
6/06 32,057 32,154
The Morgan Stanley Capital International (MSCI) Emerging Markets Index measures
the performance of emerging market stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 16.41%
(10/30/98)
5 Years 22.17%
1 Year 42.78%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
In the following interview, Christopher Smart, Pioneer Emerging Market VCT
Portfolio's portfolio manager, discusses the factors that influenced performance
during the six months ended June 30, 2006.
Q. How did emerging markets equities perform during the Portfolio's semiannual
reporting period?
A. The performance of the emerging markets was essentially flat over the full
six months, masking a high level of volatility in the asset class. Returns
were very strong in the first four months of the period, during which
emerging markets stocks remained supported by improving fundamentals and
investors' robust appetite for risk. In May and June, however, the investment
backdrop shifted rapidly once it became apparent that rising inflation might
force the U.S. Federal Reserve to increase interest rates more than had been
expected. The possibility of reduced liquidity and a slower U.S. economy
prompted many investors to take profits in the emerging markets, leading to a
sharp downturn. While this drop may have been unexpected for many investors,
a pullback was inevitable given the strong recent performance of the asset
class.
Q. How did the Portfolio perform?
A. For the six months ended June 30, 2006, Class I shares rose 9.14% at net
asset value. We are pleased to report that the Portfolio outpaced both the
7.33% return of the Morgan Stanley Capital International (MSCI) Emerging
Markets Index and the 7.09% average return of the 32 portfolios in Lipper's
Emerging Markets Funds category.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What factors helped and hurt performance?
A. From a broader standpoint, we believe a key factor behind the Portfolio's
strong relative performance is our disciplined approach to investing. We
combine top-down country analysis - which is designed to identify the most
attractive markets within the asset class - with bottom-up fundamental
research that seeks to find companies that are undervalued relative to their
growth prospects.
In terms of specific contributors to performance during the past six months,
the Portfolio's return was helped by its above-benchmark weighting in Brazil,
where we benefited from rising consumer spending through holdings in
companies such as the supermarket chain Lojas Renner. Also helping
performance was the Portfolio's higher weighting in South Africa relative to
the benchmark. We have sought to take advantage of two important trends in
the country: the growing middle class and rising government spending on
infrastructure projects. With respect to the former, we benefited from
holdings in Ellerines, a furniture company, and Standard Bank, which has
benefited from rapid growth in the demand for loans and savings vehicles.
The Portfolio's positions in South Korea and Russia also boosted performance.
Two Korean stocks were among the Portfolio's leading contributors during the
period: the shipbuilding companies Samsung Heavy Industries and Hyundai Heavy
Industries. In Russia, rising energy prices boosted shares of the gas giant
Gazprom, which has become one of the largest listed companies in the world.
The Portfolio's holdings in Turkey, which underperformed the broader market
by a wide margin, weighed on performance. We remain cautiously optimistic on
Turkey, however, since we believe valuations remain reasonable and the
country's growth story is intact. The Portfolio also was hurt by
below-benchmark weighting in Taiwan, which performed well behind a
surprisingly strong rebound in the domestic economy. We did not foresee this
recovery taking place as soon as it did and were, therefore, not fully
positioned to take advantage of the rally in Taiwanese equities.
Q. What is your broad view regarding the emerging markets?
A. We believe the long-term investment story remains very positive despite the
recent downturn. Government finances continue to improve, and corporations
are adopting increasingly shareholder-friendly management practices.
Additionally, the rate of economic growth in the emerging markets is stronger
than that of the industrialized nations - at about 6.5% versus 2.5% - yet
valuations are less expensive. It should also be noted that the emerging
markets asset class makes up just 7% of the total global stock market
capitalization despite having 40% of its gross domestic product and 60% of
its population. With these factors forming the investment backdrop, we
believe the foundation is in place for continued long-term performance of
emerging markets equities.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
5
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
International Common Stocks 94.7%
International Preferred Stocks 2.9%
U.S. Common Stocks 2.4%
Geographical Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
United Kingdom 34.2%
France 18.5%
Switzerland 11.6%
Germany 11.4%
Ireland 5.6%
Netherlands 4.1%
Sweden 4.0%
Spain 3.1%
Italy 3.0%
Panama 2.4%
Norway 2.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 5.43%
2. Royal Bank of Scotland Group Plc 5.18
3. BNP Paribas SA 4.89
4. CS Group 4.29
5. TNT NV 4.14
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $12.75 $11.42
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.0843 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley
Capital International (MSCI) Europe Index. Portfolio returns are based on net
asset value and do not reflect any applicable insurance fees or surrender
charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer
Europe MSCI Europe
VCT Portfolio Index
- ------------------------------------------
10/98 10,000 10,000
10,426 10,748
6/00 13,341 12,405
8,883 9,750
6/02 8,179 9,028
7,589 8,594
6/04 9,393 11,120
10,827 13,056
6/06 13,339 16,364
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 3.83%
(10/30/98)
5 Years 8.47%
1 Year 23.20%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
6
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
Despite a volatile second quarter as investors reacted to increased concerns
over inflation and interest rates, European stocks posted strong positive
returns over the first half of 2006, supported by solid company earnings
growth, ongoing merger and acquisition activity and an improving economic
backdrop. In the discussion below, Andrew Arbuthnott, who is responsible for
the day-to-day management of the Europe VCT Portfolio, discusses the factors
that influenced the Portfolio's performance over the period.
Q. How did the Portfolio perform?
A. For the six months ended June 30, 2006, Class I shares returned 12.41% at
net asset value. In comparison, the Portfolio's benchmark, the Morgan
Stanley Capital International (MSCI) Europe Index, posted a return of
13.58% while the 137 International Core funds in the Lipper peer group
generated an average return of 8.95%. European equity returns for the
period were strong relative to U.S. domestic equity indices. In addition,
with Portfolio holdings denominated in euros, returns for the Portfolio and
the Index reflect the positive impact for U.S. investors of the U.S.
dollar's decline over the period versus the euro.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Would you review the Portfolio's overall approach?
A. The Portfolio takes a focused approach to investing, holding around 30
stocks that reflect our strongest investment ideas. We believe this focus
helps to maximize the benefits of our bottom-up stock selection process
while at the same time giving us the ability to construct a diversified,
multi-cap portfolio. Despite the Portfolio's relatively high degree of
focus, we expect its overall level of volatility to remain broadly
comparable to that of its benchmark due to the consistent application of
our rigorous investment process. The goal is to invest in those securities
with strong upside potential and - critically - limited downside risk.
Q. What positions most influenced the Portfolio's relative performance?
A. Among positive contributors, a position in French supermarket group
Carrefour strongly outperformed during the period amid improving sales
volumes at its stores. We decided to take profits in this holding late in
the second quarter of 2006, reinvesting in other stocks where we believed
more upside potential remained. Holdings in the materials sector
contributed positively to performance, in particular Lafarge, a French
building materials company. Lafarge advanced on the strength of
better-than-expected full year results and its management team's
restructuring and cost control plans. Other key holdings in the materials
sector such as St.Gobain and Rio Tinto also outperformed, with the latter
benefiting from exceptional increases in commodity metal prices during the
first half of 2006. We saw a strong contribution from our holdings in the
automotive sector where positions in Porsche and Continental rose sharply.
On the negative side of the ledger, Portfolio returns were held back by
weakness in the share price of Carnival Corporation, a cruise ship operator,
as renewed strength in the price of oil and slower bookings on Caribbean
routes eroded the company's profits. We continue to believe that, as the
global market leader in the cruise industry, Carnival is well positioned to
be a key beneficiary from this area's attractive long-term growth potential,
and we used this period of weakness to add to the Portfolio's position.
Investments in Repsol YPF, a Spanish oil company, held back performance, as
the company unexpectedly lowered its oil reserves in the first quarter. In
addition, the Bolivian government's nationalization of oil assets dented
investor sentiment toward Repsol YPF in the second quarter, although the
financial impact of this move on the company was minimal.
Q. What is your outlook?
A. In our view, European equity market weakness in the second quarter was
driven by technical factors, such as investors adjusting their portfolios
ahead of potential interest rate rises, rather than deteriorating
underlying fundamentals. We believe European equities continue to trade at
attractive levels in absolute terms and also look well supported relative
to bonds. In general, company fundamentals remain healthy and management
teams continue to look to enhance shareholder value through acquisitions,
restructuring, and returning excess cash through dividends or share
buybacks. While investor sentiment has been improving, we do expect
volatility to remain a significant factor in equity markets over the coming
months, as uncertainties linger over future inflation and interest rates.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is susceptible to adverse
economic, political or regulatory developments affecting those countries. The
Portfolio invests in a limited number of securities and, as a result, the
Portfolio's performance may be more volatile than the performance of other
portfolios holding more securities. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
7
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
International Common Stocks 83.4%
Depositary Receipts for International Stocks 11.1%
Temporary Cash Investment 2.6%
U.S. Common Stocks 2.0%
International Preferred Stocks 0.9%
Geographical Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Japan 30.2%
France 11.5%
United Kingdom 11.3%
Switzerland 7.9%
Germany 6.6%
Brazil 4.7%
South Korea 4.0%
Russia 3.4%
Australia 2.4%
Singapore 2.2%
People's Republic of China 2.0%
Spain 1.9%
Sweden 1.8%
United States 1.5%
Turkey 1.3%
Italy 1.0%
Austria 1.0%
Other (individually less than 1%) 5.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. BNP Paribas SA 2.31%
2. Royal Bank of Scotland Group Plc 2.25
3. Total SA 2.13
4. CS Group 2.11
5. Toyota Motor Co. 2.01
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $14.73 $13.71
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.0713 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
International Value VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index.
Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer MSCI All Country
International Value World (ex. U.S.)
VCT Portfolio Index
6/96 10,000 10,000
11,724 11,414
6/98 10,877 11,572
10,960 12,675
6/00 13,888 14,969
9,569 11,406
6/02 8,823 10,474
8,072 10,035
6/04 10,226 13,297
11,280 15,551
6/06 14,637 19,967
The Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.)
Index measures the performance of developed and emerging market stock markets.
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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 3.88%
5 Years 8.87%
1 Year 29.76%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
8
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
International stocks rallied considerably during the first half of the
Portfolio's fiscal year - despite a retreat this spring, when global
inflationary concerns sparked a more cautionary undercurrent and a general
flight to quality. Lead portfolio manager Christopher Smart discusses these
developments in the following interview.
Q. How did the Portfolio perform during the first half of fiscal 2006?
A. For the six months ended June 30, 2006, Class I shares rose 7.99% at net
asset value. Three factors - an emphasis on emerging markets, stock
selection in Japan and financial stocks in Europe - contributed to this
return. Despite these successes, however, the Portfolio lagged the 9.99%
return of the Morgan Stanley Capital International (MSCI) All Country World
(ex. U.S.) Index and the 8.95% average return for the 137 International
Large-Cap Core funds in its Lipper category for the same period.
We attribute this relative underperformance in part to the disappointing
performance of two stocks in the telecom sector. Wireless provider Vodafone
Group and telecommunications provider France Telecom encountered some
headwinds during the fiscal year. Vodafone's stock fell in response to the
company's announcement in November 2005 that it was facing substantially new
competition in Europe. We believe the competition, combined with the
difficulties that Vodafone is experiencing with the restructuring of its
subsidiary in Japan, will generate much slower growth in the next few years.
Consequently, we sold the entire position. Investments in France Telecom also
fell during the year, but we believe the company's prospects are more
attractive longer term and retained the stock in the Portfolio.
Spanish oil giant Repsol also detracted from performance, as it was forced to
reduce the estimated size of its oil reserves in Argentina and Bolivia.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. The Portfolio's exposure to key emerging markets helped performance. Could
you mention some of those holdings?
A. Certainly. The Portfolio's positions in South Korea and Russia were strong
contributors to performance. We remain positive on the Korean market, based
on our confidence in the continued health of both the consumer and export
sectors. Two Korean shipbuilding companies stood out during the period -
Daewoo Heavy Industries & Machinery and Hyundai Heavy Industries, which are
benefiting from trade and globalization trends. In Russia, rising energy
prices boosted shares of Lukoil and the natural gas giant Gazprom, which
has become one of the largest listed companies in the world.
Q. Europe is experiencing new signs of growth. Are the Portfolio's European
investments benefiting?
A. With the exception of the telecommunications sector, holdings across Europe
fared well - particularly in the financial services sector. Societe
Generale is focused on lowering costs to improve its profit margins. In
addition, this diversified bank is expanding financial services businesses
outside of France to increase its market share. Credit Suisse, which is
domiciled in Switzerland, has initiated substantial internal restructuring
and cost reductions that may contribute to its future profitability and
growth prospects.
Q. Are you concerned that the market's reversal this spring could be signaling
a shift in investor sentiment, or do you see it a temporary correction?
A. We do not anticipate a wholesale shift in investor sentiment at this time.
High oil and commodity prices are understandably causing concerns for
investors, but global growth remains solid and is supported by strong
economic numbers. The correction appears to reflect a general reduction in
risk appetite rather than a response to specific fundamental deterioration.
As long as global inflationary pressures remain tame, we are upbeat about
growth prospects worldwide. In Japan, domestic forces, including rising wages
and climbing property values, are driving the recovery there. Europe may face
some headwinds if the Central Bank tightens significantly, but consumers
appear optimistic. New signs of growth in Germany suggest that the rest of
the continent may see economic improvement. And in emerging markets,
increasing prosperity and rising consumer demand are driving economic growth.
We'll be keeping a sharp eye on valuations to ensure that stock prices remain
reasonable relative to earnings prospects, but we still believe that the
long-term outlook for international markets remains bright.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is susceptible to adverse
economic, political or regulatory developments affecting those countries. At
times, the Portfolio's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
9
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 81.6%
Temporary Cash Investment 14.3%
Exchange Traded Fund 0.7%
Preferred Stocks 0.4%
International Common Stocks 3.0%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 24.8%
Information Technology 20.4%
Industrials 17.1%
Energy 10.2%
Health Care 9.0%
Consumer Discretionary 7.3%
Consumer Staples 3.8%
Materials 3.1%
Utilities 2.6%
Telecommunication Services 1.7%
Five Largest Holdings
(As a percentage of equity holdings)
1. Insight Enterprises, Inc. 1.93%
2. Apollo Investment Corp. 1.92
3. Assured Guaranty, Ltd. 1.84
4. Pacer International, Inc. 1.69
5. Alaska Communications Systems Group, Inc. 1.67
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $16.51 $16.19
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.0213 $0.1027 $0.4162
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Cap Value VCT Portfolio at net asset value, compared to that of the
Russell 2000 Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell
Small Cap Value 2000
VCT Portfolio Index
- -----------------------------------------------
11/01 10,000 10,000
11,061 10,118
10,078 9,952
6/04 13,133 13,273
14,858 14,526
6/06 17,159 16,644
The Russell 2000 Index measures the performance of U.S. small-cap stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
Life-of-Class 13.01%
(11/8/01)
1 Year 15.49%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
10
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
In the following discussion, portfolio managers David Adams and John McPherson
review the economic background and describe some of the decisions that
contributed to the performance of Pioneer Small Cap Value VCT Portfolio over
the six months ended June 30, 2006.
Q. How did the Portfolio perform over this period?
A. For the six months ended June 30, 2006, Class I shares of the Portfolio
returned 5.43% at net asset value. These results were behind the 8.21%
return on the Russell 2000 Index, the Fund's benchmark. The Portfolio's 39
Lipper Small-Cap Value peers returned 8.09% over the six months.
The first four months of the year were characterized by strong performance
from the lower-quality, more speculative names that comprise the Russell 2000
Index. Our more conservative style leads us to invest in higher-quality
issues with strong fundamentals and this focus contributed to the Portfolio's
underperformance versus the benchmark.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Please describe the investment background over the past year and how it
affected small-cap stocks.
A. An extended surge in the nation's growth rate fueled strong equity markets
through most of the period. But the economy's strength also raised fears of
inflation, dampening hopes for an end to the Federal Reserve Board's long
campaign of interest rate hikes. Burdensome energy costs and geopolitical
tensions centering on Iran, combined with rising interest rates and soaring
commodity prices, cut the rally short, setting off a sharp downtrend
beginning in mid-May.
Q. Which of your investment decisions had the most favorable impact on results?
A. Although we were slightly underweight among health-care issues, successful
stock selection enabled us to outperform the benchmark comfortably in this
sector. In the consumer discretionary sector, our slightly underweight
stance also aided results. The Portfolio outperformed among industrials as
well, the Russell 2000 Index's best- performing sector.
Only three of the Portfolio's industry sectors showed declines over the past
six months; any underperformance was relative to the benchmark sector. For
example, information technology was slightly down, lagging benchmark returns.
Energy showed net positive results, but still trailed the benchmark as the
result of selling which trimmed gains in several issues that had been rising
for several quarters. We have been pruning energy holdings as valuations
bumped into the upper parameters set by our value-based approach. We are
still overweight in this volatile sector, but by a smaller margin than in the
last few years.
Aspen Technology, the Portfolio's strongest contributor during the period,
moved higher as new management aggressively put the corporate house in order.
Aspen's design and process management software is widely used in the
petrochemical and refining industries. Internal issues at Aspen had left
customers wary of committing to new products, but a revamped infrastructure
and other changes have begun to boost sales.
Flowserve, which fabricates high-tolerance valves and pipes for the harsh
conditions found in refineries, also contributed. Initiatives by new
management to address financial and operational issues coincided with growth
in Flowserve's markets, including new petrochemical facilities in China and
elsewhere. Sharply higher metals prices, the result of the global boom in
commodities, drove up shares of Carpenter Technology, a leading metals
processor. We sold a large portion of the Portfolio's position to lock in
profits. We also took profits in Piper Jaffray, a regional brokerage firm
that recently bounced back after a period of disappointment. Amerigroup, an
HMO focused on Medicaid patients, rebounded sharply after a sell-off last
fall, thanks to improved earnings expectations.
Q. Which of your choices held back results?
A. North Sea supply boat operator Gulfmark Offshore disappointed during this
period following an extended upward run. Demand for Gulfmark's boats is
strong and the North Sea drilling outlook remains favorable over the longer
term. However, the energy group was the target of profit-takers amid
concerns about slackening global energy demand.
We have been bullish on natural gas price trends in North America for some
time. That thesis aided Portfolio returns considerably over the past three
years, but hurt results this year as the relatively mild winter caused demand
to weaken and prices to slide. In particular, Southwestern Energy, Swift
Energy and Forest Oil, all long-time holdings, started to drop in February as
a result of the weakening pricing environment. However, we believe that, over
time, supply/demand imbalances will cause gas prices to rebound, which we
think may benefit the Portfolio's holdings.
A Word About Risk:
Investments in small companies may offer the potential for higher returns, but
are also subject to greater short-term price fluctuations than larger, more
established companies. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
11
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued)
================================================================================
Casualty insurer Quanta Capital Holdings fell when ratings service AM Best
withdrew its favorable rating, curtailing Quanta's ability to write new
business. We are awaiting an announcement from the company regarding its
strategy for the eventual "run-off" of the company's book of business.
Run-off is an industry term used to describe when a company lets its existing
book of insurance contracts lapse without writing new contracts.
Avid Technology, a leader in the digitization of film and other media,
slumped amid difficulties integrating Pinnacle Software, its first consumer
acquisition, into the company. Until acquiring Pinnacle, Avid had worked
exclusively in professional markets. Based on recent reports from the
company, we are retaining our holdings. Symmetricom is the leading provider
of precision atomic clocks used to send voice and data on telecom networks as
well as in defense and space applications. Shares declined when what we
believe to be a short-term cutback in government business diluted the benefit
of increased sales to telecom companies.
Q. What is your outlook for the economy and how have you positioned the
Portfolio?
A. We believe stocks in general should hold up well over the next several
months, although returns are likely to be subdued and volatile. Underlying
business fundamentals remain strong, and we believe the economy, though
perhaps moderating in its growth rate, is healthy. The imponderables are
macroeconomic forces that include geopolitical tensions, higher inflation
driven by energy costs, and rising interest rates. As always, we remain
disciplined and sensitive to valuations, both in terms of current holdings
and possible new commitments.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 94.7%
Temporary Cash Investment 4.5%
Depositary Receipts for International Stocks 0.8%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 23.9%
Information Technology 12.4%
Consumer Discretionary 12.0%
Utilities 10.3%
Industrials 10.2%
Materials 9.3%
Consumer Staples 9.2%
Health Care 7.4%
Energy 5.1%
Telecommunication Services 0.2%
Five Largest Holdings
(As a percentage of equity holdings)
1. Safeway, Inc. 2.54%
2. Xerox Corp. 2.39
3. CIGNA Corp. 2.33
4. W.W. Grainger, Inc. 2.29
5. NCR Corp. 2.24
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $18.26 $25.00
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.2648 $1.8961 $4.7000
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Mid Cap Value VCT Portfolio at net asset value, 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 FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell
Mid Cap Value Midcap Value
VCT Portfolio Index
- ------------------------------------------
6/96 10,000 10,000
11,489 12,797
6/98 13,475 16,092
13,908 16,997
6/00 13,757 15,653
17,218 19,398
6/02 16,657 19,771
17,026 19,645
6/04 22,514 25,698
26,345 31,299
6/06 27,570 35,760
The Russell Midcap Value Index 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. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 10.67%
5 Years 9.87%
1 Year 4.65%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
13
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
The domestic stock market produced generally modest, but positive, returns over
the first six months of 2006. A vibrant rally in the early months faded in May,
as investors grew concerned about the direction of the nation's monetary
policy. Worries intensified when Ben Bernanke, the new chairman of the Federal
Reserve Board, appeared to hint that the central bank might raise short-term
interest rates more than had been anticipated. This raised concerns among many
investors that the Fed could move too aggressively in fighting inflation and
controlling growth. As a consequence, stock prices fell hard beginning in May
and continued to slump through most of June. In the following discussion, Rod
Wright, leader of the team that manages Pioneer Mid Cap Value VCT Portfolio,
provides an update on the Portfolio, his investment strategies and the economic
environment during the six months.
Q. How did the Portfolio perform?
A. The Portfolio had disappointing results. Class I shares had a total return
of 1.18%, at net asset value, over the six months ended June 30, 2006.
During that time, the Standard & Poor's 500 Index, which broadly reflects
the overall market, returned 2.71%, while the benchmark Russell Midcap
Value Index rose 7.02%. The Portfolio's 62 Mid-Cap Value Lipper peers
returned 3.81% over the same six months.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were the principal factors influencing performance?
A. The Portfolio's underperformance relative to the market benchmarks was
related to several factors. Our emphasis on higher-quality companies with
strong fundamentals did not help in a period when lower-quality value
stocks tended to do well. We generally avoid lower-quality companies that
are asset-intensive, have low operating profit margins and whose businesses
are highly cyclical. In particular, our underweighting of real estate
investments trusts (REITs), utility stocks, and steel and mining companies
held back results when in fact these types of stocks performed relatively
well.
Performance also was held back by some underperforming holdings. These
included Expedia, the on-line travel service, which changed its business
model as it made heavy investments in system upgrades, and Boston Scientific,
the producer of cardiac devices whose stock fell because of concerns that it
was paying too much in acquiring Guidant, another cardiac device corporation.
We have liquidated the position in Expedia, but have retained the investment
in Boston Scientific because of the company's longer-term prospects.
Q. What were some of the investments that contributed positively to performance
during the six months?
A. Our investment in Tellabs had a major positive influence on results. This
long-term holding had been an earlier disappointment, but its stock
appreciated sharply during the six months on the expectations that the
communications industry would be making significant new capital
expenditures. We sold the position on strength, taking profits. Deere, the
manufacturer of farm and heavy construction equipment, was another
significant performer, as rising commodity prices encouraged farmers to
invest in new equipment. Two energy holdings also did particularly well:
Weatherford International, which provides oil field services to exploration
and production companies; and Questar, a gas utility that also is involved
in gas and oil exploration and production. Another holding that performed
well was H.J. Heinz, the well-known food company.
Q. What is your investment outlook?
A. While we are encouraged about the health of the general economy, we are more
cautious about the stock market. Leading economic indicators, including
rising interest rates and high energy costs, indicate that some slowing in
the rate of economic growth may occur. In this environment, we will
maintain our focus on company-by-company stock selection, emphasizing
fundamental research. We intend to continue to invest in high-quality
companies with strong balance sheets and high profitability.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
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. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
14
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 89.3%
Depositary Receipts for International Stocks 5.9%
Temporary Cash Investment 4.8%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Information Technology 30.5%
Health Care 23.4%
Industrials 11.9%
Consumer Discretionary 11.8%
Consumer Staples 10.5%
Financials 5.4%
Utilities 2.8%
Energy 1.9%
Materials 1.8%
Five Largest Holdings
(As a percentage of equity holdings)
1. Microsoft Corp. 5.22%
2. Cisco Systems, Inc. 4.16
3. Altria Group, Inc. 4.10
4. Amgen, Inc. 4.00
5. Boston Scientific Corp. 4.00
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $13.00 $13.39
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.0272 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Growth Shares VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell 1000
Growth Shares Growth
VCT Portfolio Index
- ----------------------------------------------
10/97 10,000 10,000
12,574 12,690
14,970 16,150
6/00 14,576 20,294
12,281 12,953
6/02 8,155 9,522
8,083 9,802
6/04 8,883 11,554
9,359 11,749
6/06 9,638 12,467
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
Life-of-Class -0.42%
(10/31/97)
5 Years -4.73%
1 Year 2.98%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
15
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
The domestic stock market produced modest returns over the first half of 2006.
The stock market began the year with a strong rally, but the bull market faded
in May and June as investors focused more on the possibility that rising
interest rates might stall the economy. As they have done in the two previous
years, value stocks tended to outperform growth, and highly cyclical companies,
including those with exposures to commodities, outperformed traditional growth
companies. In the following interview, Christopher M. Galizio and Stephen A.
Balter, co-managers of Growth Shares VCT Portfolio, discuss the markets and the
factors that influenced performance over the six months.
Q. How did the Fund perform during the six months ended June 30, 2006?
A. Pioneer Growth Shares VCT Portfolio, Class I, had a total return of -2.71%
for the six months, at net asset value. During the same period, the Russell
1000 Growth Index produced a total return of -0.93%, while the average
return of the 199 funds in Lipper's Large-Cap Growth variable annuity fund
category was -2.44%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were your principal strategies, and how did they influence performance?
A. The Portfolio was positioned to benefit from a growth environment, with an
emphasis on those companies, including health care companies and
information technology corporations, that were likely beneficiaries of
long-term trends. While, we thought - and we continue to believe - that the
best investment values can be found in those areas, the emphasis hurt
results during the six months, when cyclical companies in sectors such as
materials and industrials tended to lead the market.
We have favored health care because of the opportunities created as the large
baby boomer generation ages and requires more health care services and
products, including medical devices as well as pharmaceuticals. These
companies have underperformed recently, however, and have begun to offer very
attractive prices. We favored information technology corporations because of
the growth of the Internet and demand for more complex files, including
video, which generates more demand for hardware, such as switches, routers
and other devices. Companies such as Cisco Systems and F5 Networks are
potential beneficiaries of this multi-year trend.
As we increased the exposure to those areas, we reduced positions in energy
and materials, both of which looked very expensive. However, these decisions
did not help results for the six months, as energy and materials continued to
gain, while health care and information technology continued to underperform.
Q. What were some of the individual investments that most affected results for
the six months?
A. Two of the most significant detractors were health care companies, Boston
Scientific and Teva Pharmaceuticals. Each declined for a company-specific
reason. Boston Scientific, a leading producer of devices used in cardiac
therapies, won a bidding war against Johnson & Johnson and acquired another
cardiac device company, Guidant. Investors generally believed Boston
Scientific overpaid for Guidant. We tend to agree with that opinion, but we
think that the combination of Boston Scientific and Guidant will be a
powerful company with excellent prospects over the longer term.
Several holdings had positive impacts on results. One was TXU, the
Texas-based utility, which lowered its costs by placing greater emphasis on
coal-fired plants at the same time it received favorable regulatory rulings
regarding rate structures. Cisco Systems contributed as its routers remained
in strong demand from Internet activity, while pharmacy chain CVS
successfully integrated two acquisitions into its operations and exceeded
earnings expectations.
Q. What is your investment outlook?
A. At the midpoint of 2006, the financial markets are encountering a number of
challenges that are worsened by rising geopolitical tensions. The economy
appears to be slowing, primarily as a result of hikes in interest rates,
but also because of rising energy and commodity prices. In this
environment, stock prices are likely to move unevenly, and individual stock
selection will be important in influencing 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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
16
================================================================================
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 84.1%
Temporary Cash Investment 15.9%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Office 20.0%
Apartment 19.5%
Regional Mall 13.3%
Industrial 13.2%
Shopping Center 12.8%
Hotel 8.9%
Self Storage 4.9%
Diversified 4.6%
Triple-Net Lease 1.4%
Health Care 1.1%
Manufactured Homes 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Simon DeBartolo Group, Inc. 7.24%
2. Boston Properties, Inc. 5.49
3. ProLogis Trust 5.29
4. AvalonBay Communities, Inc. 4.88
5. Equity Residential Property Trust 4.78
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $28.06 $26.13
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.3800 $ - $1.4942
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Wilshire Real
Real Estate Shares Estate Securities
VCT Portfolio Index
- -------------------------------------------------
6/96 10,000 10,000
13,702 13,355
6/98 14,698 14,223
13,328 13,244
6/00 13,947 13,834
16,679 17,231
6/02 19,096 19,603
19,546 20,182
6/04 25,195 26,073
34,027 35,100
6/06 42,100 42,769
The Wilshire Real Estate Securities Index is a market-capitalization weighted
measure of the performance of real estate investment trusts (equity and hybrid)
and real estate operating companies. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 15.46%
5 Years 20.34%
1 Year 23.72%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
17
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
Real estate investments enjoyed strong performance during the six months ended
June 30, 2006 - the first half of the Portfolio's fiscal year. Investments in
the apartment and office sectors proved particularly rewarding, as portfolio
manager Matthew Troxell of AEW Capital management, L.P., the Portfolio's
Sub-Advisor, explains in the following interview.
Q. How well did the Portfolio perform during the six months ended June 30,
2006?
A. The Portfolio posted strong performance, both on an absolute basis and
relative to its benchmark and peer group. For the first half of fiscal
2006, Class I shares generated a return of 14.83% at net asset value. In
comparison, the Wilshire Real Estate Securities Index returned 14.08% for
the same six-month period. The average return for the 52 real estate funds
in the Portfolio's Lipper category was 13.19%. We think effective stock
selection and the Portfolio's greater-than-benchmark weighting in the
apartment sector contributed to these results.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What is contributing to the rally in the apartment sector?
A. The sector's outlook has improved, as many of the negative factors that had
overshadowed this group of stocks and depressed investor demand have
dissipated. With the return of higher interest rates, renting has become a
more attractive option relative to buying a home. In addition, property
values appear to have leveled off or even declined in some markets -
thereby discouraging potential homebuyers who might have been drawn to the
rising equity value offered by owning a home.
On the other hand, the growth in supply of apartments has remained in check,
in part due to the escalating cost of new construction. Also, during the last
few years, many apartments were converted into condominiums to meet the high
demand for home ownership, reducing the supply of apartments in the face of
today's rising demand in some markets. This is benefiting the bottom line of
the apartment real estate investment trust (REIT) operators, since landlords
are better able to maintain full occupancy. With stronger demand, landlords
have greater pricing power and are able to push through rent increases.
Investments in Camden Properties outperformed dramatically for the six months
ended June 30. We have a high level of confidence in the management team at
this REIT, which is embracing technological innovations to improve efficiency
and maximize revenue. The company also owns high-quality properties, which
they manage very effectively in our opinion.
Q. Did office REITs also experience a resurgence?
A. Yes, and for similar reasons, albeit with somewhat of a lag to the
multifamily sector. With the U.S. economy prospering and job growth
expanding, demand for office space is increasing occupancy as existing
tenants expand their businesses or new tenants arrive. The increased demand
has allowed landlords to raise rents. Highwoods Properties rose
dramatically in the final weeks of the reporting period in response to an
unsolicited offer for the company at a value substantially higher than the
trading price. While the offer was rejected by the board, we think it
corroborated the inherent value that we'd seen in the stock for some time.
One of the Portfolio's holdings, Equity Office Properties, also was a
stronger performer for the semiannual period. However, we'd limited the
Portfolio's exposure to this REIT, because we had concerns about the ability
of the company to participate in the nascent office recovery. Our decision
was a drawback, however, since it performed well.
Q. Is the mall sector still benefiting from the economic recovery?
A. Yes, but to a lesser degree than apartment or office REITs, because regional
malls and shopping centers have enjoyed strong outperformance relative to
other property types for some time. Two holdings produced contrasting
results and contributed to weaker, albeit positive, results during the
reporting period. Mills Corp. turned in disappointing performance, because
of questions surrounding the company's financial reporting and a proposed
large-scale project in New Jersey. In contrast, Taubman Centers delivered
strong performance, and its considerable weighting in the Portfolio
magnified this result.
Q. What is your outlook for balance of the fiscal year?
A. We think that the fundamentals across most property types should continue to
improve for the foreseeable future - although to varying degrees since
their respective lease terms make them respond differently to the economic
recovery. Our research-driven investment approach will be critical to
determining which companies offer the most attractive value and are in the
best position to capitalize on the positive fundamentals within their
industries.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
A Word About Risk:
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
18
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 92.7%
Depositary Receipts for International Stocks 3.7%
Temporary Cash Investment 2.2%
International Common Stocks 1.4%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 18.4%
Industrials 14.1%
Consumer Discretionary 13.0%
Information Technology 12.8%
Health Care 12.5%
Consumer Staples 10.7%
Energy 7.9%
Materials 5.2%
Telecommunication Services 4.4%
Utilities 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. Norfolk Southern Corp. 2.41%
2. Chevron Corp. 2.27
3. McGraw-Hill Co., Inc. 1.93
4. Wells Fargo & Co. 1.92
5. T. Rowe Price Associates, Inc. 1.92
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $22.50 $21.55
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.1500 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Fund VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer
Fund S&P 500
VCT Portfolio Index
10/97 10,000 10,000
11,964 12,528
14,728 15,378
6/00 16,018 16,493
14,760 14,049
6/02 12,688 11,523
12,067 11,552
6/04 14,220 13,758
15,399 14,627
6/06 17,303 15,889
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
Life-of-Class 6.53%
(10/31/97)
5 Years 3.23%
1 Year 12.36%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
19
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
In the following discussion, portfolio manager John Carey discusses the
performance of Pioneer Fund VCT Portfolio, as well as the investment
environment over the six-month period ended June 30, 2006.
Q. Please discuss the stock market of the last six months and the investment
results of Pioneer Fund VCT Portfolio.
A. Stocks showed modest gains in the first half of 2006. For the six months
ended June 30, 2006, Pioneer Fund VCT Portfolio achieved a total return of
5.11% at net asset value, versus 2.71% for the Standard & Poor's 500, our
benchmark index. The Portfolio's 222 Lipper Large-Cap Core peers returned
1.25% over the same period. Gains across the board had been significantly
greater through the first week of May, but an ensuing correction pared them
back.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
As we write, the market remains shaky. In our 2005 annual management
discussion, we stated that our outlook on 2006 was cautious, and that view
has been borne out by events. Despite good earnings reports from companies
and strong economic data, investors appear to be focusing on what comes next.
A common expectation is that the combination of higher interest rates,
record-high oil prices, and a slowing housing market will restrain consumer
spending, which in turn will lead, eventually, to reduced industrial
production and capital spending. Adding to the worries are the troubling
international events in the Middle East, the Far East, Latin America, and
Africa. Without enumerating all of the risks in the present world situation,
suffice it to say that together they weigh heavily on near-term economic and
market forecasts.
Only a year ago, investors appeared almost oblivious to risk as they bid up
the prices of low-quality debt issues and emerging-markets stocks to levels
that seemed not to factor in risk at all. Now the pendulum is swinging the
other way, as investors seek safety and stability. It should be noted,
however, that there is no altogether "safe haven" in the capital markets.
Even U.S. Treasuries fluctuate in market price with changes in interest
rates, and even the bluest of the blue chip companies will occasionally have
their earnings shortfalls.
Q. Which stocks contributed to the outperformance of Pioneer Fund VCT Portfolio
during the period? Were there also some weak spots in the Portfolio?
A. Our outperformance can be largely explained by our good stock selection in a
number of key market sectors: industrials, information technology,
materials, financials, consumer staples, telecommunications services, and
health care. Detracting from performance were stock selections in consumer
discretionary and energy. Our largest positive contributors were: Inco and
Rio Tinto in materials; Norfolk Southern, Deere, Caterpillar, and PACCAR in
industrials; BellSouth in telecommunications services; and Canon in
information technology. Both Inco and BellSouth were recipients of
take-over bids. Among detractors, our long-term holding John Wiley & Sons
was caught in the general downward move of media stocks; Barr
Pharmaceuticals, St. Jude Medical, and Biomet each had some particular
ailments, though none that appeared terminal; and Target fell in sympathy
with other large retailers at a time of investor concern about consumer
spending. As usual, there were also some poor performers in the S&P 500
that we managed to avoid, and some strong performers that we likewise
missed. On the whole, however, it was a good period for us with respect to
our investment positioning.
Q. What changes did you make in the Portfolio over the past two quarters?
A. We did a bit of spring cleaning in the portfolio, liquidating twelve
holdings and adding only three. We took advantage of the ebullient market
for metals and mining stocks to realize gains in BHP Billiton, Newmont
Mining, and Allegheny Technologies. We sold Keyspan after the company
received a premium take-over bid from an English company. Our other sales
reflected either our disappointment with the progress being made by the
company or our judgment that we had more attractive alternatives. Those
sales included PPG Industries, MeadWestvaco, Gap, Home Depot, Stryker,
Ameriprise Financial, ACE, and Axis Capital Holdings.
New entries were Lockheed Martin, Zimmer Holdings, and MetLife. Lockheed
Martin is a leading aerospace and defense manufacturer. The company has made
impressive progress in improving its profit margins, and it has a good order
book looking out into next year and potentially beyond. Zimmer Holdings is a
leader in orthopedic implants, namely artificial hips and knees. The implant
industry has been under a cloud due to government investigations of sales
practices, but we concluded that the price of Zimmer stock took that into
account and that growth prospects for the company were otherwise attractive.
MetLife, finally, is a large life and group-health insurer. Its recent
acquisition of Travelers Life and Annuity greatly expanded its international
business, bringing longer-term opportunities to enhance profit growth.
A Word About Risk:
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
20
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Q. What is your outlook for the remainder of the year?
A. Looking ahead, we can see a slower economy and less robust corporate
earnings. As always, there are those who say "it's different this time" and
that there is no reason why the economy should not continue growing
steadily. However, the business cycle takes an inexorable course, and
downturns are actually essential in keeping the economy growing in the long
term. During downturns, the good businesses are separated from the bad, the
sound loans from the unsound, and the strong managements from the weak.
Downturns also renew the investor base by providing opportunities to get
solid value at discounted prices. People who had not wanted to step in and
buy when prices were high will often buy aggressively when prices fall. We
are not, mind you, predicting any particular starting point for the coming
downturn, and there could still be some strength in the market before it
happens. But we are thinking that it is already time to be positioning
oneself appropriately, in stocks of resilient, well managed, and
financially solid companies. Of course, those are characteristics we always
emphasize in our stock selection, but now we shall be putting double weight
on them. Thank you as ever for your support.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
21
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 93.3%
Temporary Cash Investment 6.2%
Convertible Preferred Stocks 0.5%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Financials 27.9%
Utilities 15.9%
Industrials 9.9%
Consumer Staples 9.7%
Telecommunication Services 9.5%
Consumer Discretionary 8.8%
Health Care 7.0%
Energy 5.9%
Materials 4.5%
Information Technology 0.9%
Five Largest Holdings
(As a percentage of equity holdings)
1. PACCAR, Inc. 3.43%
2. Washington Mutual, Inc. 3.09
3. T. Rowe Price Associates, Inc. 2.87
4. Questar Corp. 2.76
5. Merck & Co., Inc. 2.57
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $22.41 $21.25
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.2800 $ - $0.3749
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Income VCT Portfolio at net asset value, compared to that of the Russell
1000 Value Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Russell 1000
Equity Income Value
VCT Portfolio Index
6/96 10,000 10,000
13,095 13,319
6/98 16,796 17,159
19,570 19,967
6/00 18,382 18,187
20,322 20,066
6/02 18,615 18,270
17,929 18,083
6/04 21,126 21,905
24,117 24,985
6/06 27,161 28,007
The Russell 1000 Value Index measures the performance of large-cap U.S. value
stocks. Index returns assume reinvestment of dividends and, unlike Portfolio
returns, do not reflect any fees, expenses or sales charges. Portfolio returns
are based on net asset value and do not reflect any annuity-related costs. You
cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 10.51%
5 Years 5.97%
1 Year 12.62%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
22
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
In the following discussion, portfolio manager John Carey discusses the
performance of Pioneer Equity Income VCT Portfolio, as well as the investment
environment over the six-month period ended June 30, 2006.
Q. How did the Portfolio perform relative to its benchmark, the Russell 1000
Value Index?
A. Pioneer Equity Income VCT Portfolio recorded a total return of 8.62% at net
asset value for the six months ended June 30, 2006. By comparison, the
Russell 1000 Value Index, an unmanaged index of stocks, rose 6.56%. The
average return for the 59 portfolios in the Lipper Equity Income
variable-account category was 5.23%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
While the stock market was positive for the first half as a whole, it began
showing signs of stress in the second half of May and continues to be shaky
as we write this letter. Investor concerns about inflation and interest
rates, high oil and other commodity prices, the slowdown in housing, and the
unsettled international situation, particularly in the Middle East, have
started to weigh heavily on the market. For the moment, corporate earnings
remain strong, but investors are apparently worrying about what may lie ahead
if the economy stalls.
Q. What were the reasons for the outperformance of the portfolio versus its
benchmark?
A. The portfolio benefited from good stock selection in a number of sectors,
principally financials, health care, industrials, and consumer staples.
Individual stocks that contributed importantly to performance were PACCAR,
BellSouth, Campbell Soup, Whitney Holding, H. J. Heinz, Roanoke Electric
Steel, and Gorman-Rupp. BellSouth and Roanoke Electric Steel both received
premium take-over bids. H. J. Heinz attracted the attention of some
aggressive private investors intent on getting more value from the company.
Whitney Holding, a bank based in New Orleans, continued its post-Katrina
hurricane recovery. PACCAR, Campbell Soup, and Gorman-Rupp all showed
strong business results.
On the negative side, our underweight in the strong energy sector and weak
stock selection in consumer discretionary hurt results. We had scaled back
our energy exposure due to our view that oil and natural-gas prices would
moderate. That has certainly been the case with natural gas, which has come
down considerably in price, but it has not been true of oil, which continues
to sell at near record prices. With respect to consumer discretionary, we had
three stocks that underperformed. Cedar Fair sold off following its
acquisition of another large amusement-park operator and the anticipation of
near-term dilution of earnings. We are retaining our position, however,
because we think that the acquisition will ultimately work out well for the
company. McGraw-Hill was soft because of a legislative push in Washington,
D.C., to facilitate more competition in the credit-rating industry, where
McGraw-Hill's highly profitable Standard & Poor's is a leader. Finally,
Tupperware traded down due to a disappointing first quarter, marked by higher
expenses.
Q. Did you make changes to the portfolio during the past six months? If so,
please describe.
A. We were busy in the first half, adding seven positions and selling fourteen.
We are excluding from those totals our receipt of shares in Lincoln
National in exchange for our shares of Jefferson Pilot following the merger
of those two life insurance companies. The seven new names were: Mine
Safety Appliances, expert in industrial safety equipment including
respiratory gear; Kellogg, leading breakfast cereal maker; J. M. Smucker,
successful producer of jams and jellies, toppings and peanut butter;
Regions Financial, Alabama-based retail and commercial bank; Liberty
Property Trust, a real-estate investment trust (REIT) specializing in
suburban office and industrial properties; and AGL Resources and Duke
Energy, utilities operating generally in the southern part of the United
States. All of the additions are dividend-paying companies with valuations
we found attractive.
Among liquidations from the portfolio, we sold Keyspan after it accepted a
premium-priced take-over bid from an English firm. We also sold Roanoke
Electric Steel in the wake of its acceptance of a take-over bid. Likewise,
Albertson's. We took advantage of the strong investor interest in materials
and other cyclical stocks to realize substantial percentage gains on Vulcan
Materials, Nucor, and Burlington Northern. We took big gains as well on our
sales of Becton Dickinson and Johnson & Johnson. Other sales were of
companies with which we were fundamentally less confident or which seemed
less compelling than other stocks in the portfolio. Those sales included PPG
Industries, MeadWestvaco, Coca Cola, Comerica, Citigroup, and Sara Lee.
A Word About Risk:
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
23
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued)
================================================================================
Q. What is your outlook for the remainder of the year?
A. Looking ahead, we anticipate a slower economy and less robust corporate
earnings. As always, there are those who say "it's different this time" and
that there is no reason why the economy should not continue growing
steadily. However, the business cycle takes an inexorable course, and
downturns are actually essential in keeping the economy growing in the long
term. During downturns, the good businesses are separated from the bad, the
sound loans from the unsound, and the strong managements from the weak.
Downturns also renew the investor base by providing opportunities to get
solid value at discounted prices. People who had not wanted to step in and
buy when prices were high will often buy aggressively when prices fall. We
are not, mind you, predicting any particular starting point for the coming
downturn, and there could still be some strength in the market before it
happens. But we are thinking that it is already time to be positioning
oneself appropriately, in stocks of resilient, well managed, and
financially solid companies. Of course, those are characteristics we always
emphasize in our stock selection, but now we shall be putting double weight
on them. Thank you as ever for your support.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
24
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of long-term holdings)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Common Stocks 60.7%
U.S. Government Agency Obligations 23.6%
U.S. Corporate Bonds 10.1%
Temporary Cash Investment 2.6%
Depositary Receipts for International Stocks 1.2%
Collateralized Mortgage Obligations 1.0%
Asset Backed Securities 0.8%
Sector Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
Government Obligations 24.5%
Financials 14.5%
Information Technology 12.0%
Consumer Staples 11.2%
Health Care 9.1%
Consumer Discretionary 8.6%
Industrials 7.7%
Energy 5.8%
Materials 5.0%
Telecommunication Services 1.1%
Utilities 0.5%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Berkshire Hathaway, Inc.
(Class B) 3.60%
2. PepsiCo, Inc. 3.34
3. CVS Corp. 3.30
4. First Data Corp. 3.29
5. Microsoft Corp. 3.10
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 14.59 $ 14.71
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.1400 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Balanced VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio
returns are based on net asset value and do not reflect any applicable
insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Lehman Brothers
Balanced S&P 500 Aggregate Bond
VCT Portfolio Index Index
6/96 10,000 10,000 10,000
11,966 13,468 10,815
6/98 13,605 17,532 11,955
13,508 21,520 12,331
6/00 13,829 23,081 12,894
14,297 19,660 14,342
6/02 12,922 16,126 15,579
13,593 16,165 17,200
6/04 14,822 19,253 17,255
15,249 20,469 18,428
6/06 15,880 22,234 18,280
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. The Lehman Brothers Aggregate Bond Index is a
measure of the U.S. bond market. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 4.73%
5 Years 2.12%
1 Year 4.14%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
25
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
The economy grew at a healthy pace during the first six months of 2006,
although some early signs emerged to indicate the rate of economic growth might
be slowing. Stocks generally delivered modest returns over the six months,
despite slumping in May and June on worries that the Federal Reserve might
raise interest rates further than had been anticipated and hold back economic
growth. Small- and mid-cap stocks continued to outperform large-caps, and
benchmarks for value stocks recorded higher gains than growth stock indexes. In
the fixed income market, interest rates across the yield curve - among
securities of all maturities - rose, and bond prices generally declined.
Shorter-duration strategies tended to produce better returns than long-duration
strategies, especially in high-grade securities. High-yield, below-investment
grade bonds outperformed higher-quality securities early in the year, but
slumped along with stocks in the final two months. In the following interview,
Timothy Mulrenan, who is responsible for the equity portfolio of Pioneer
Balanced VCT Portfolio, and Richard Schlanger, who is responsible for the
Portfolio's fixed-income management, discuss the factors that influenced the
Portfolio's performance over the six months ending June 30, 2006.
Q. How did the Portfolio perform during the first half of 2006?
A. Class I shares of Pioneer Balanced VCT Portfolio had a total return of 0.13%
at net asset value, during the six months ending June 30, 2006. Over the
same time period, the S&P 500 Index and the Lehman Brothers Aggregate Bond
Index returned 2.71% and -0.72%, respectively. During the same six months,
the average return of 114 funds in Lipper's Mixed-Asset Target Allocation
Growth Variable Annuity category was 2.14%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were the Portfolio's principal investment strategies during the six
months?
A. We maintained a slight overweighting in equities, which comprised about 63%
of assets on June 30, 2006, compared to a typical allocation of 60%. Within
the equity portfolio, we maintained our focus on large-cap, consistent
growth companies. This emphasis, however, did not help performance as value
stocks and small-company stocks outperformed the stable growth companies
that we believed offered the most attractive relative values.
We made no major sector changes among our equity investments, although we
modestly reduced our overweight in energy companies. While we still are
impressed by the long-term prospects for the energy sector, we thought
near-term growth may begin to slow. We were overweighted in consumer staples
and, to a lesser extent, in information technology and health care. We were
underweighted in financials, especially banks, because of the vulnerability
of their earnings margins as the difference between interest rates of
short-term and long-term securities flattens. Moreover, we believe some banks
may need to add to their reserves against loan losses.
We added to our information technology positions when we invested in Corning,
a leader in producing flat-screen panels for televisions and computer
monitors. In media, we sold shares of CBS because of concerns that growth in
traditional media would slow. At the same time, we invested in cable company
Comcast. We also reduced our position in the U.K.-based Vodafone, a major
telecommunications service provider, because of our concerns about
competitive pressure in Europe.
We made no significant changes in our fixed income strategy during the six
months, although duration - or sensitivity to interest rate changes -
increased somewhat, partly because of the natural lengthening of duration in
mortgage securities as mortgage prepayment rates declined. The portfolio's
duration was 4.88 years on June 30, 2006. We invested opportunistically,
buying bonds of Sevan Marine, a Norwegian oil field services company, partly
because we favored the prospects of the Norwegian currency, the krone. We
also invested in collateralized mortgage obligations. As we did this, we sold
bonds of Bausch & Lomb, the eye products company, and of Sunsage, a Korean
auto parts company. We also slightly upgraded the overall credit quality of
the portfolio. On June 30, average credit quality was AA- with 69.6% of fixed
income assets invested in AAA or the equivalent, while just 9.7% of fixed
income assets were invested in high-yield corporates.
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages.
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 associated with falling interest rates. Investing
in foreign and/or emerging markets securities involves risks relating to
interest rates, currency exchange rates, economic, and political conditions.
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. At times, the Portfolio's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
26
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Q. What types of equity investments most influenced performance?
A. Among our stock positions, pharmacy chain CVS was a particularly strong
performer. The company's sales and profit growth exceeded expectations as
the company continued to execute its strategy of buying underperforming
assets and increasing their profitability. Cable company Comcast, in which
we invested when its stock price was low, succeeded in taking more market
share of household expenditures by offering television, Internet and
telephone service.
Several information technology investments also helped, including Cisco,
Hewlett-Packard and First Data, all of which gained while other tech stocks
were declining. The Portfolio's performance was helped because we had very
limited exposure to the poor-performing semiconductor industry.
Several health-care investments held back results, including biotechnology
leader Amgen and generic pharmaceutical manufacturer Teva. Investors were
concerned about a patent dispute over rights to an anemia drug in which Amgen
is involved, while Teva declined after reporting disappointing earnings. We
have retained both positions. Also detracting from performance was Wrigley,
which lowered its earnings forecasts because of investments in new marketing
initiatives. We also continue to hold the position in Wrigley, which has a
very attractive franchise.
Q. What types of fixed income investments most influenced performance?
A. Our relatively short maturity helped in a rising interest rate environment,
as did the quality emphasis. In addition, our overweights in mortgage
securities helped support results during the period.
Holding back results were our positions in some long-duration assets, which
were vulnerable to price losses as long-term interest rates rose. We had no
major credit problems.
Q. What is your investment outlook?
A. We anticipate that economic growth will slow in the coming months. The U.S.
Federal Reserve Board probably is near the end of its cycle of
interest-rate hikes, but other major central banks may continue to raise
rates. One consequence could be a further weakening of the U.S. dollar
versus other currencies. One positive for fixed income markets is that
there still is a lot of liquidity in world markets, which should guard
against any dramatic increase in long-term interest rates. Returns of
between 5% and 51/2% are still very attractive to foreign investors.
We expect continued volatility in the domestic equity market over the next
several months against a backdrop of a slowing economy, high energy prices,
high interest rates and the current slowdown in residential real estate. As a
consequence, we believe investors' expectations for corporate profit growth
probably needs to be softened. Offsetting these negative influences, however,
is the widespread expectation that the Federal Reserve will stop raising
interest rates soon. In addition, stock price increases over the past two
years have not kept pace with increases in profits. As a consequence, current
stock prices, as reflected in price/earnings ratios, are reasonable and may
provide some downside protection in a volatile environment. The stock market
over the past two years has not distinguished between cyclical profits and
consistent profits. As a result, we believe that higher-quality growth stocks
of companies with good earnings, high returns on equity and high reinvestment
rates should perform well. We believe that these companies are trading at
valuations that we do not believe reflect their potential.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
27
PIONEER VARIABLE CONTRACTS TRUST
Pioneer High Yield VCT Portfolio
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Corporate Bonds 73.3%
U.S. Common Stocks 14.1%
Convertible Corporate Bonds 7.2%
Convertible Preferred Stocks 2.0%
U.S. Preferred Stocks 1.8%
Temporary Cash Investment 1.6%
Maturity Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
0-1 years 1.8%
1-3 years 16.5%
3-4 years 20.4%
4-6 years 49.8%
6-8 years 8.1%
8+ years 3.4%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Mueller Industries, Inc.,
6.0%, 11/1/14 4.20%
2. DRS Technologies, Inc.,
6.875%, 11/1/13 3.70
3. Wesco Distribution, Inc.,
7.5%, 10/15/17 (144A) 3.37
4. Forest City Enterprises,
7.625%, 6/1/15 3.33
5. Allegheny Energy Supply,
7.8%, 3/15/11 3.29
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $10.58 $10.88
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.3111 $0.0731 $0.0801
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch
(ML) High Yield Master II Index and of the ML Index of Convertible Bonds
(Speculative Quality). Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer ML High Yield ML Convertible Bonds
High Yield Master II (Speculative Quality)
VCT Portfolio Index Index
5/00 10,000 10,000 10,000
10,692 10,193 10,511
11,854 10,099 8,075
6/02 12,499 9,658 7,378
14,804 11,803 9,201
6/04 16,254 13,006 11,096
17,393 14,387 11,243
6/06 18,131 15,064 12,329
Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a
commonly accepted measure of the performance of high yield securities. The ML
Index of Convertible Bonds (speculative quality) is a commonly accepted measure
of the performance of speculative grade convertible bond securities. Index
returns assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in any
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
Life-of-Class 9.78%
(5/1/00)
5 Years 8.87%
1 Year 4.24%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
28
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
During the six months ended June 30, 2006, sustained economic growth helped
high-yield bonds provide positive returns driven by healthy interest income.
Below, Portfolio Manager Margaret Patel describes the high-yield market and
explains why the Portfolio underperformed its benchmark.
Q. How did the Portfolio perform?
A. During the six months ended June 30, 2006, the Portfolio's Class I shares
had a total return based on net asset value of 1.52%. By comparison, the
Merrill Lynch High Yield Master II Index returned 3.07%, and the average
return for the 103 Lipper Variable Annuity High Current Yield Funds was
2.39%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What factors drove the high-yield market during the past six months?
A. Positive economic fundamentals and low default rates helped high-yield bonds
post generally positive returns during the period, driven largely by coupon
income. However, these returns were muted due to price declines, as yields
moved higher in reaction to rising Treasury rates. (Bond prices and yields
move in opposite directions.) Treasury yields increased because the Federal
Reserve Board continued its program of gradually withdrawing liquidity from
the marketplace through a steady program of short-term interest rate hikes.
Overall, two areas of the high-yield market outperformed: lower-quality
CCC-rated issues and bonds in the automotive sector.
Q. Why did the Portfolio lag the Merrill Lynch High Yield Master II Index?
A. Because of our credit-quality positioning. We continued to emphasize the
higher-quality segments of the high-yield market, because we felt that the
extra yield offered by lower-quality bonds did not adequately compensate
the Portfolio for the greater level of risk of potential future
bankruptcies or erosion in credit quality inherent in lower-quality issues.
During the period, lower-quality CCC-rated bonds significantly outperformed
higher-quality securities, leading to our underperformance. Our decision
generally to avoid the automotive sector also held back relative returns,
as bonds from this group offered strong relative performance.
Q. Which investments performed best during the period? Which disappointed?
A. One of the Portfolio's top performers was a company that was acquired,
leading to the substantial appreciation of its price. Hotel real estate
investment trust (REIT) MeriStar Hospitality was bought by private equity
firm The Blackstone Group, with our holdings of the company's common stock
purchased at a premium. The convertible bonds of Coeur D'Alene Mines rose
due to gains in silver prices.
On the down side, the common stock of PDL BioPharma declined due to
lower-than-expected royalty revenues from its leading products. Convertible
securities issued by Lyondell, listed in the Portfolio's holdings as
Millennium Chemical, depreciated along with the underlying stock price
because of concerns about slowing end demand, softer prices, and the negative
impact of a lead paint suit. Advertising agency Interpublic Group declined as
investors became impatient with the pace of the company's reorganization as
well as slow growth in its advertising businesses. Finally, Canadian paper
and forest products manufacturer Abitibi Consolidated fell because the
strength of the Canadian dollar increased its costs and due to concerns about
declining demand for newsprint.
Q. What is your outlook?
A. We expect the fundamentals of the U.S. economy to remain strong, with growth
in U.S. gross domestic product near its long-term trend rate of about 3%
per year. We also anticipate that default rates should remain low (compared
to historical averages) because of the strong economy and ample liquidity
in the markets, which has made access to capital to even the most marginal
of borrowers rather easy. In terms of the Portfolio, we feel it is best to
maintain a relatively high credit quality, as lower-rated securities
historically have proved more vulnerable during economic slowdowns. We also
have moved some assets into equities to gain exposure to a wider range of
industries and because, in some cases, they offer greater capital
appreciation potential than bonds, whose prices would decline should rates
continue to rise.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. 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 underlying securities and their inability to meet
their debt obligations. Prepayment risk is the chance that mortgage-backed
bonds will be paid off early if falling interest rates prompt homeowners to
refinance their mortgages. 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 associated with falling
interest rates. At times, the Portfolio's investments may represent industries
or industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
29
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Government Securities 49.9%
U.S. Corporate Bonds 36.6%
Foreign Government Bonds 6.3%
Asset Backed Securities 3.5%
Temporary Cash Investment 1.6%
Municipal Bonds 1.2%
Collateralized Mortgage Obligations 0.6%
Convertible Corporate Bonds 0.3%
Maturity Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
0-1 year 5.1%
1-3 years 12.5%
3-4 years 13.9%
4-6 years 43.5%
6-8 years 14.9%
8+ years 10.1%
Five Largest Holdings
(As a percentage of long-term holdings)
1. U.S. Treasury Bonds,
5.25%, 11/15/28 3.75%
2. U.S. Treasury Strip,
0.0%, 11/15/13 2.22
3. U.S. Treasury Inflation
Protected Security,
3.5%, 1/15/11 2.09
4. U.S. Treasury Notes,
5.0%, 2/15/11 2.01
5. U.S. Treasury Inflation
Protected Security,
1.875%, 7/15/15 1.98
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $10.52 $10.76
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.3117 $0.0270 $0.0254
================================================================================
Performance of a $10,000 Investment
================================================================================
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.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer
Strategic Income Lehman U.S.
VCT Portfolio Universal Index
7/99 10,000 10,000
10,180 10,520
10,913 11,652
6/02 11,780 12,551
14,225 13,995
6/04 15,152 14,137
16,929 15,186
6/06 17,306 15,146
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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
Life-of-Class 8.24%
(7/29/99)
5 Years 9.66%
1 Year 2.22%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
30
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
Against a backdrop of strong economic growth throughout the globe, inflation
concerns grew steadily during the first six months of 2006. With dramatic
increases in commodity prices - most notably in energy prices - fears built
that inflationary pressures would start to spread throughout the general
economy. Given these concerns, the U.S. Federal Reserve Board continued to
raise short-term interest rates to relieve inflationary pressures and control
economic growth. The Fed raised its Fed funds rate four successive times over
the six months, from 4.25% to 5.25%. As the Fed acted, rates across the yield
curve - among securities of all maturities - also rose, and bond prices
generally declined. While lower-rated bonds tended to outperform early in the
period, worries grew in the final two months that the Fed might become too
aggressive and stall the global economic resurgence. As a result,
lower-quality, higher-yielding bonds - most notably emerging market debt -
suffered price declines in the final two months of the period. In the following
interview, Kenneth J. Taubes discusses the factors that influenced Pioneer
Strategic Income VCT Portfolio's performance during the six months ended June
30, 2006. Mr. Taubes, Director 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, 2006?
A. Pioneer Strategic Income VCT Portfolio, Class I shares, had a total return
of 1.16% for the six months at net asset value. During the same six months,
the benchmark Lehman Brothers U.S. Universal Index fell by 0.46%. The
average return of the 52 portfolios in the Lipper General Bond variable
annuity fund category was 0.09%. The Portfolio also continued to deliver a
competitive yield. On June 30, 2006, the Portfolio's 30-day SEC yield was
4.98%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What was the investment environment during the six-months?
A. The global fixed-income markets operated in a challenging environment during
the first six months of the year. Among the primary factors influencing
investors were the persistent actions of the U.S. Federal Reserve Board and
other central banks to control economic growth and rein in inflationary
pressures by raising short-term interest rates. Early in the period, the
healthy economic and corporate profit growth resulted in continued good
performance by lower-rated bonds, including emerging market debt and
domestic high-yield bonds. The U.S. Treasury market was relatively stable.
That environment abruptly changed in the second quarter of this year, when
investors grew increasingly risk averse because of concerns that the Fed
and other central banks might raise rates too far and cause an economic
slowdown. After the Federal Reserve raised the Fed funds rate to 5.00% on
May 10 (the rate subsequently would be raised again, to 5.25% in late
June), Treasury securities declined as longer-term interest rates rose.
High yield bonds and commodities-exposed emerging market debt performed
worse, as investors sought to lower their risk profiles. In this
environment, the U.S. dollar lost value against most major currencies.
Q. What were your principal strategies during the period, and how did they
influence performance?
A. Throughout the six months, we upgraded overall credit quality. Relative to
competitive funds, we were significantly underweighted in emerging market
debt over the entire period. While this deemphasis initially detracted from
results early in 2006, it was a significant help as the period progressed.
As domestic high-yield bonds rallied in the first quarter, we sold into
strength, reducing our high-yield exposure. Taking profits in high yield
holdings also proved helpful as volatility increased in the second quarter
and high-yield bonds slumped. Average credit quality of the Portfolio was a
solid A on June 30, 2006, up from A- six months earlier and from BBB 12
months earlier. On June 30, 2006, 55% of the Portfolio's assets were
invested in U.S. Treasury and government agency securities, while 19% were
invested in U.S. high yield bonds and just 13.6% were invested in emerging
market debt.
As interest rates rose, we gradually increased the Portfolio's duration - or
sensitivity to interest changes - to take advantage of the improving values
in longer-maturity securities. Within our Treasury holdings, we had a
greater-than-benchmark weighting in Treasury Inflation Protected Securities
(TIPS) for most of the period. Those securities, which tend to do well in
rising-interest rate environments, outperformed straight Treasuries and
contributed to performance results. The Portfolio's effective duration on
June 30, 2006, was 5.07 years, compared to 4.72 years six months earlier.
The Portfolio also had an above-usual foreign currency exposure, at 11.4% of
assets on June 30, which helped results as the U.S. dollar lost relative
value. The euro, Norwegian krone and Swedish krona all gained more than 5%
against the dollar, while the Canadian dollar and the Japanese yen also were
strong.
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages.
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 associated with falling interest rates. The
securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie
Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio
may invest in mortgage-backed securities, which during times of fluctuating
interest rates may increase or decrease more than other fixed-income
securities. Mortgage-Backed securities are also subject to pre-payments.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. Investing in foreign and/or emerging markets
securities involves risks relating to interest rates, currency exchange rates,
economic, and political conditions. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
31
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06 (continued)
================================================================================
Q. What individual investments had the greatest impact on results?
A. Several high-yield issuers bought back their bonds - or tendered their debt
- resulting in profits for the Portfolio. These issues included Stone
Energy, an oil and gas exploration company that was acquired; Resolution
Performance, a chemical company; J. Ray McDermott, an oil field services
firm; and Indo Coal, an Indonesian corporation that was acquired.
Among high-yield investments that detracted from results were bonds of two
forest product companies, Ainsworth Lumber and Abitibi-Consolidated, a global
paper products company. Securities issued by Bowater, a newsprint producer,
also held back results, as did our positions in two Kazakh banks.
Q. What is your investment outlook?
A. By the midpoint of 2006, we have modestly increased duration - or
interest-rate sensitivity - to an essentially neutral position relative to
the Portfolio's benchmark. We anticipate increasing duration in the second
half of the year when we have seen clear signs that the Federal Reserve
Board has been successful in slowing the pace of economic growth and
moderating inflationary pressures. By late June, we had only seen
persuasive evidence of slowing in the housing sector. We anticipate keeping
the Portfolio's credit quality relatively high, as we believe the Fed's
actions have limited the potential for price appreciation in lower-rated,
high-yield bonds. Among investment-grade securities, we prefer mortgage
securities to corporate bonds, which offer little yield advantage for their
added credit risk.
In this environment, we believe it makes sense to position the Portfolio
conservatively while being well diversified to take advantage of
opportunities throughout the fixed-income markets.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
32
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO UPDATE 6/30/06
================================================================================
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
U.S. Government Agency Obligations 97.7%
Collateralized Mortgage Obligations 1.7%
U.S. Corporate Bonds 0.6%
Maturity Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED BY A PIE CHART IN THE ORIGINAL REPORT]
0-1 year 2.6%
1-3 years 10.7%
3-4 years 33.5%
4-6 years 30.0%
6-8 years 13.8%
8+ years 9.4%
Five Largest Holdings
(As a percentage of long-term holdings)
1. U.S. Treasury Inflation
Protected Security,
3.375%, 1/15/12 7.91%
2. U.S. Treasury Notes,
6.25%, 8/15/23 5.68
3. U.S. Treasury Bond,
5.125%, 5/15/16 4.64
4. U.S. Treasury Notes,
6.5%, 2/15/10 3.54
5. U.S. Treasury Notes,
6.375%, 8/15/27 3.28
The Portfolio is actively managed, and current holdings may be different.
================================================================================
PERFORMANCE UPDATE 6/30/06
================================================================================
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $9.51 $9.84
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.2290 $ - $ -
================================================================================
Performance of a $10,000 Investment
================================================================================
The following chart shows the change in value of an investment made in Pioneer
America Income VCT Portfolio at net asset value, compared to that of the Lehman
Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers
Government Bond Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED BY A LINE CHART IN THE ORIGINAL REPORT]
Pioneer Lehman Brothers Lehman Brothers
America Income Government Bond Fixed-Rate Mortgage-Backed
VCT Portfolio Index Index
6/96 10,000 10,000 10,000
10,607 10,740 10,910
6/98 11,597 11,948 11,884
11,839 12,312 12,360
6/00 12,331 12,929 12,982
13,570 14,264 14,447
6/02 14,696 15,521 15,744
15,850 17,281 16,645
6/04 15,860 17,047 17,016
16,694 18,180 18,060
6/06 16,535 17,968 18,131
The Lehman Brothers Government Bond Index measures the performance of the U.S.
government bond market. The Lehman Brothers Fixed-Rate Mortgage- Backed Index
measures the performance of the government and mortgage securities markets.
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 any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 5.16%
5 Years 4.03%
1 Year -0.95%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
33
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
================================================================================
During a period of solid economic growth and steadily rising interest rates,
yields on Treasury securities rose, and shareholders in Pioneer America Income
Trust VCT Portfolio earned a relatively high level of income during the first
half of 2006. In the interview below, Richard Schlanger, a member of Pioneer's
fixed-income team, discusses the factors that affected the fixed-income market
and the Trust over the semiannual period.
Q. How did the Trust perform during the period?
A. For the six months ended June 30, 2006, Class I shares of Pioneer America
Income Trust VCT Portfolio produced a total return of -1.03% at net asset
value. For the same period, the Trust underperformed its benchmark, the
Lehman Brothers Government Bond Index, which returned -0.89%, and the
Lehman Brothers Fixed-Rate Mortgage-Backed Index which returned -0.06%. The
Trust surpassed the average -1.25% return generated by the 65 funds in the
U.S. Government Underlying Funds category of Lipper Inc., an independent
monitor of mutual fund performance. At the end of the period, the Trust's
30-day SEC yield was 4.38%. The Trust had 227 issues, and the average
credit quality of the Portfolio was AAA.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What was the investment environment like during the six months?
A. In a period of relatively strong economic growth and higher prices for
commodities, concerns about the prospect of accelerating inflation
dominated the fixed-income markets. At the Federal Reserve, Ben Bernanke
became chairman in early February. When Mr. Bernanke took office, the
Federal funds target rate was 4.50%. In the first five months of his
chairmanship, the Federal funds rate rose to 5.25%, with the latest
increase occurring on June 29. (The Federal funds rate is the rate banks
charge for overnight loans. Since June 2004, the Federal Reserve has raised
interest rates 17 times, taking the Federal funds rate from a 40-year low
of 1% to the current 5.25%.) In the most recent six-month period, yields
across the maturity spectrum moved higher in a parallel fashion.
Q. How did you manage the Trust in this environment?
A. As higher interest rates boosted mortgage rates, we became concerned about
the duration (sensitivity to interest-rate changes) of our mortgage
holdings because as interest rates go up, mortgage duration tends to
lengthen when refinancing and prepayment activity slows. To limit this
drift in duration, we trimmed our mortgage position from 55% to about 52%
of net assets. Instead, we chose to concentrate on longer-term Treasury
securities. We thought that if the Federal Reserve went too far in raising
rates, economic growth would slow, and the central bank would have to
reverse course and begin lowering rates. If this were to occur, we believed
the Treasury market would rally, and longer-term Treasuries would
outperform their short-term counterparts. As conditions warranted, we
opportunistically added to or sold holdings in Treasury Inflation Protected
Securities (TIPS). TIPS are securities whose principal is tied to the
consumer price index. When inflation accelerates, the principal on TIPS
increases in value. At the end of the six-month period, 52.1% of the
Portfolio was in mortgage pass-through securities issued by the Government
National Mortgage Association (Ginnie Mae); 46.4% was in Treasury Issues,
TIPS and agency securities issued by the Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie
Mac), the Federal Home Loan Bank, and the Federal Farm Credit Bank.
Q. What contributed to performance?
A. The shorter-duration assets aided returns as interest rates went up. Returns
on longer-term, fixed-rate Treasuries were negative; however, our positions
in TIPS and agency securities contributed to performance. Mortgage holdings
also did well, with mortgages issued by Fannie Mae and Freddie Mac
outperforming those issued by Ginnie Mae.
Q. What detracted from performance?
A. Because the Federal Reserve was determined to fight inflation by raising
interest rates, long-duration assets vastly underperformed short-duration
assets. As a result, the Portfolio's longer-duration assets were the
biggest detractor from performance. For the six months, five-year and
10-year Treasuries returned -1.35% and -3.90%, respectively. We view the
underperformance of longer-duration assets as a relatively short-term
event, because we believe that once the Federal Reserve stops raising
interest rates, securities with longer durations have the potential to
outperform.
A Word About Risk:
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. Prepayment
risk is the chance that mortgage-backed bonds will be paid off early if falling
interest rates prompt homeowners to refinance their mortgages. 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 associated with falling interest rates. 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.
Government guarantees apply to the underlying securities only and not to the
prices and yields of the Portfolio. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
34
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Q. What is your outlook?
A. We believe that rising interest rates and oil prices have begun to affect
the mortgage market and consumer spending. We have seen a shift away from
adjustable-rate mortgages to fixed-rate mortgages and a decline in
refinance activity as mortgage rates have risen. If these trends continue,
economic growth is likely to slow, and the Federal Reserve may take a
breather from raising interest rates. The Portfolio is positioned to take
advantage of this type of environment. Should rates stabilize or decline,
we believe the Portfolio's intermediate-term and longer-term holdings could
outperform.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any other
purposes. Past performance is no guarantee of future results, and there is no
guarantee that market forecasts discussed will be realized.
35
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
PORTFOLIO AND PERFORMANCE UPDATE 6/30/06
================================================================================
Short-term interest rates continued to rise throughout the first six months of
2006 as the U.S. Federal Reserve Board hiked the key Fed Funds rate four
successive times in an effort to reduce inflationary pressures produced by
solid economic growth. As a consequence, the yields of money market and
short-term fixed income assets rose through the half year, leading to higher
yields for money market investors. Pioneer Money Market Portfolio primarily
invests in high-quality money market instruments issued by the U.S. government,
corporations, and national and international banks. All issues have the highest
ratings from the two nationally recognized ratings organizations: A1 by
Standard & Poor's Investors Services and P1 by Moody's Investor Services.
(Ratings apply to underlying securities, not Portfolio shares.)
In the following discussion, Seth Roman reviews the investment environment and
the strategies that affected Pioneer Money Market VCT Portfolio over the six
months ended June 30, 2006. Mr. Roman is a member of Pioneer's Fixed Income
Group, which is responsible for the daily management of the Portfolio.
Q. How did the Portfolio perform?
A. Class I shares of Pioneer Money Market VCT Portfolio had a total return of
2.05%, at net asset value, for the six months ended June 30, 2006. During
the same half-year, the average return of the 110 funds in Lipper's
Variable Annuity Money Market Fund category was also 2.05%. The Portfolio's
net asset value remained stable at $1.00 throughout the 12 months.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were your principal strategies and how did they affect Portfolio
performance for the six months?
A. The Federal Reserve Board's actions in hiking the Fed Funds rate from 4.25%
to 5.25% in four successive actions over the six months had an immediate
impact on yields of short-term investments. Given the Fed's actions, and
the fact that there was very little incremental yield available by
extending maturity, we kept the average maturity of the Portfolio's
holdings within the 30-to-35 day range. This enabled the Portfolio quickly
to capture the higher yields as they became available with each rate hike.
To keep the Portfolio's overall duration short, we focused primarily on
investing in securities with maturities of 60 to 90 days. With the effect of
the natural roll-down as older holdings reached their maturity dates, the
overall average maturity of Portfolio investments remained in the targeted
30-to-35 day range. The short maturity also enabled the Portfolio to provide
shareholders with a high degree of liquidity.
Q. What is your investment outlook?
A. While the national economy remains fairly firm, markets expect that the
Federal Reserve will end its tightening cycle quite soon. We believe that
any future Fed action will continue to be "data dependent" and will focus
on upcoming economic and inflation reports. Thus, we will seek
opportunities that position the portfolio to take advantage of any upward
moves in short-term yields. These include longer-term securities with
better than projected return profiles. As always, we intend to invest only
in very high-quality securities.
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $1.00 $1.00
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.020 $ - $ -
A Word About Risk:
Although the Portfolio seeks to preserve the value of your investment at $1.00
per share, it is possible to lose money by investing in the Portfolio.
Portfolio shares are not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other government agency.
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
================================================================================
Net Asset Value
================================================================================
10 Years 3.39%
5 Years 1.62%
1 Year 3.57%
All total returns shown assume reinvestment of distributions at net asset value.
* Portfolio performance does not reflect any variable contract fees, expenses
or sales charges. If they had been included, performance would have been
lower.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
36
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
PREFERRED STOCKS - 3.2%
Materials - 0.6%
Steel - 0.6%
15,990 Cia Vale Do Rio Doce* $ 325,724
-----------
Total Materials $ 325,724
-----------
Media - 0.9%
Broadcasting & Cable TV - 0.9%
893,700 Net Servicos de Comunicacao SA* $ 482,992
-----------
Total Media $ 482,992
-----------
Banks - 1.1%
Diversified Banks - 1.1%
21,330 Banco Itau Holding Financeira $ 621,702
-----------
Total Banks $ 621,702
-----------
Telecommunication Services - 0.6%
Integrated Telecommunication Services - 0.6%
27,701 Tele Norte Leste Participacoes (A.D.R.)(a) $ 353,188
-----------
Total Telecommunication Services $ 353,188
-----------
TOTAL PREFERRED STOCKS
(Cost $1,119,971) $ 1,783,606
-----------
COMMON STOCKS - 96.3%
Energy - 20.7%
Integrated Oil & Gas - 16.6%
755,600 China Petroleum & Chemical $ 432,779
44,100 Gazprom (A.D.R.)* 1,859,918
15,300 Lukoil Holding (A.D.R.) 1,278,315
2,900 Mol Magyar Olaj* 298,519
31,200 Petrobras Brasileiro (A.D.R.) 2,491,008
710,400 PetroChina Co., Ltd. 766,170
45,000 PTT Public Co., Ltd.* 266,789
14,600 Repsol SA (A.D.R.) 409,676
23,600 Sasol, Ltd. (A.D.R.)* 911,904
9,100 Surgutneftegaz (A.D.R.)*(a) 664,300
-----------
$ 9,379,378
-----------
Oil & Gas Equipment & Services - 1.1%
15,200 TelecomAsia Corp. Public Co., Ltd.* $ 615,448
-----------
Oil & Gas Exploration & Production - 1.2%
852,700 Cnooc, Ltd.* $ 684,496
26,600 Reliance Natural Resources, Ltd.* 11,499
-----------
$ 695,995
-----------
Oil & Gas Refining & Marketing - 1.8%
26,000 Polski Koncern Naftowy Orlen SA $ 432,319
12,300 Reliance Industries, Ltd. (144A)* 570,720
-----------
$ 1,003,039
-----------
Total Energy $11,693,860
-----------
Shares Value
Materials - 11.4%
Construction Materials - 1.9%
2,460 Asia Cement Co., Ltd.* $ 96,071
884,900 PT Indocement Tunggal Prakarsa Tbk* 400,662
91,400 Siam Cement Co., Ltd. 553,775
-----------
$ 1,050,508
-----------
Diversified Metals & Mining - 2.7%
833,900 Aneka Tambang Tbk* $ 417,730
8,400 Freeport-McMoRan Copper & Gold, Inc.
(Class B)(a) 465,444
5,100 Norilsk Nickel* 663,000
-----------
$ 1,546,174
-----------
Gold - 2.9%
13,500 Anglogold Ashanti, Ltd. (A.D.R.) (a) $ 649,620
50,200 IAMGOLD Corp.* 446,780
1,123,100 Zijin Mining Group Co., Ltd.* 566,467
-----------
$ 1,662,867
-----------
Precious Metals & Minerals - 2.3%
5,700 Anglo American Platinum Corp., Ltd. $ 598,361
25,200 Compania de Minas Buenaventura SA* 687,456
-----------
$ 1,285,817
-----------
Steel - 1.6%
42,700 Companhia Vale do Rio Doce (A.D.R.) $ 878,766
-----------
Total Materials $ 6,424,132
-----------
Capital Goods - 12.8%
Aerospace & Defense - 0.9%
18,200 Elbit Systems, Ltd. $ 486,581
-----------
Construction & Engineering - 4.0%
124,500 Aveng, Ltd. $ 377,552
865,320 Continental Engineering Corp. 500,152
162,117 Empressa ICA Sociedad Controladora
SA de CV* 457,917
7,700 GS Engineering & Construction Corp.* 496,998
13,240 Kyeryong Construction Industrial Co., Ltd.* 419,982
-----------
$ 2,252,601
-----------
Construction, Farm Machinery &
Heavy Trucks - 4.8%
27,000 Daewoo Heavy Industries &
Machinery, Ltd.* $ 791,883
8,930 Hyundai Heavy Industries* 1,003,200
41,200 Samsung Heavy Industries Co., Ltd.* 948,063
-----------
$ 2,743,146
-----------
Industrial Conglomerates - 2.1%
24,200 Barloworld* $ 406,267
55,000 Keppel Corp.* 510,738
92,153 KOC Holding AS* 273,999
-----------
$ 1,191,004
-----------
The accompanying notes are an integral part of these financial statements. 37
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Industrial Machinery - 1.0%
32,500 Doosan Heavy Industries &
Construction Co.* $ 538,325
-----------
Total Capital Goods $ 7,211,657
-----------
Transportation - 2.5%
Airlines - 0.8%
13,400 Gol-Linhas Aereas Inteligentes SA* $ 476,604
-----------
Marine - 1.7%
807,300 China Shipping Development Co., Ltd.* $ 586,221
165,800 Malaysia International Shipping Bhd. 347,145
-----------
$ 933,366
-----------
Total Transportation $ 1,409,970
-----------
Automobiles & Components - 1.7%
Automobile Manufacturers - 1.7%
11,100 Hyundai Motor Co., Ltd.* $ 946,678
-----------
Total Automobiles & Components $ 946,678
-----------
Consumer Durables & Apparel - 2.0%
Homebuilding - 0.8%
28,720 Cyrela Brazil Realty SA $ 475,593
-----------
Household Appliances - 0.5%
49,340 Arcelik AS* $ 282,178
-----------
Housewares & Specialties - 0.7%
17,000 Woongjin Coway Co., Ltd.* $ 371,578
-----------
Total Consumer Durables & Apparel $ 1,129,349
-----------
Consumer Services - 0.9%
Hotels, Resorts & Cruise Lines - 0.9%
19,400 Indian Hotels Co. Ltd.* $ 484,941
-----------
Total Consumer Services $ 484,941
-----------
Media - 2.6%
Broadcasting & Cable TV - 2.1%
29,088 Grupo Televisa SA (A.D.R.)* $ 561,689
102,800 Television Broadcasts, Ltd. 636,204
-----------
$ 1,197,893
-----------
Publishing - 0.5%
133,716 Hurriyet Gazetecilik ve Matbaacilik AS* $ 272,680
-----------
Total Media $ 1,470,573
-----------
Retailing - 3.3%
Apparel Retail - 1.0%
61,800 Edgars Consolidated Stores, Ltd.* $ 250,044
112,400 Truworths International, Ltd. 337,624
-----------
$ 587,668
-----------
Department Stores - 1.7%
5,800 Hyundai Department Store Co., Ltd.* $ 449,747
10,000 Lojas Renner SA* 537,900
-----------
$ 987,647
-----------
Shares Value
Homefurnishing Retail - 0.6%
35,400 Ellerine Holdings, Ltd. $ 318,348
-----------
Total Retailing $ 1,893,663
-----------
Food & Drug Retailing - 2.0%
Food Retail - 0.7%
185,000 President Chain Store Corp. $ 406,444
-----------
Hypermarkets & Supercenters - 1.3%
12,200 Brasil Distr Pao Acu (A.D.R.)* $ 379,908
48,500 Massmart Holdings, Ltd. 318,666
-----------
$ 698,574
-----------
Total Food & Drug Retailing $ 1,105,018
-----------
Food, Beverage & Tobacco - 3.4%
Packaged Foods & Meats - 1.9%
5,080 CJ Corp.* $ 558,126
25,200 Tiger Brands, Ltd.* 506,839
-----------
$ 1,064,965
-----------
Soft Drinks - 1.5%
10,400 Fomento Economico Mexicano SA de CV* $ 870,688
-----------
Total Food, Beverage & Tobacco $ 1,935,653
-----------
Household & Personal Products - 1.6%
Personal Products - 1.6%
44,650 Natura Cosmeticos SA* $ 462,401
14,200 Oriflame Cosmetics SA* 471,439
-----------
$ 933,840
-----------
Total Household &
Personal Products $ 933,840
-----------
Pharmaceuticals & Biotechnology - 1.8%
Pharmaceuticals - 1.8%
32,700 Teva Pharmaceutical Industries, Ltd. $ 1,032,993
-----------
Total Pharmaceuticals &
Biotechnology $ 1,032,993
-----------
Banks - 10.7%
Diversified Banks - 10.3%
20,332 Banco Bradesco SA(a) $ 632,122
23,200 Banco do Brasil SA 535,607
124,200 Bank Hapoalim, Ltd. 535,476
295,400 Bumiputra-Commerce Holdings Bhd.* 477,277
13,110 Hana Financial Holdings* 618,450
12,700 Kookmin Bank (A.D.R.)* 1,054,862
13,100 Shinhan Financial Group Co., Ltd.* 617,610
44,549 Standard Bank Group, Ltd. 477,765
13,600 State Bank of India 216,104
44,325 Turkiye Is Bankasi (Isbank)* 217,241
6,262 Uniao de Bancos Brasileiros SA
(Unibanco) (G.D.R.) (144A) 415,734
-----------
$ 5,798,248
-----------
38 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Thrifts & Mortgage Finance - 0.4%
21,900 Banco De Oro (G.D.R.) (144A)* $ 256,033
-----------
Total Banks $ 6,054,281
-----------
Diversified Financials - 2.4%
Investment Banking & Brokerage - 0.9%
9,600 Samsung Securities Co., Ltd.* $ 515,121
-----------
Diversified Financial Services - 1.5%
213,406 FirstRand, Ltd.* $ 512,248
388,000 Fubon Group 335,351
26,600 Reliance Capital Ventures* 14,383
-----------
$ 861,982
-----------
Total Diversified Financials $ 1,377,103
-----------
Insurance - 5.1%
Life & Health Insurance - 3.6%
32,600 Cathay Financial Holding Co., Ltd.,
(144A) (G.D.R.) $ 702,204
309,800 China Life Insurance Co., Ltd.* 490,098
134,500 Ping An Insurance Company of China, Ltd.* 410,010
226,590 Sanlam, Ltd.* 458,499
-----------
$ 2,060,811
-----------
Property & Casualty Insurance - 1.5%
141,734 Aksigorta AS* $ 390,754
3,200 Samsung Fire & Marine Insurance* 428,267
-----------
$ 819,021
-----------
Total Insurance $ 2,879,832
-----------
Real Estate - 0.6%
Real Estate Management &
Development - 0.6%
1,456,600 Ayala Land, Inc.* $ 315,109
-----------
Total Real Estate $ 315,109
-----------
Software & Services - 1.1%
IT Consulting & Other Services - 1.1%
9,532 Infosys Technologies, Ltd. $ 643,003
-----------
Total Software & Services $ 643,003
-----------
Technology Hardware & Equipment - 3.2%
Computer Hardware - 1.0%
125,240 ACER Sertek, Inc. $ 219,858
212,900 Quanta Computer, Inc. 341,434
-----------
$ 561,292
-----------
Computer Storage & Peripherals - 1.0%
84,000 Asustek Computer, Inc. $ 205,918
297,800 LITE-ON IT Corp. 348,674
-----------
$ 554,592
-----------
Shares Value
Electronic Manufacturing Services - 1.2%
109,358 Hon Hai Precision Industry $ 673,453
-----------
Total Technology Hardware &
Equipment $ 1,789,337
-----------
Semiconductors - 0.7%
Semiconductors - 0.7%
229,383 Taiwan Semiconductor Manufacturing Co. $ 413,003
-----------
Total Semiconductors $ 413,003
-----------
Telecommunication Services - 4.7%
Integrated Telecommunication Services - 1.2%
13,000 Brasil Telecom Participacoes SA* $ 423,410
7,700 Philippine Long Distance Telephone Co. 266,290
-----------
$ 689,700
-----------
Wireless Telecommunication Services - 3.5%
14,600 Mobile Telesystems (A.D.R.) $ 429,824
64,600 MTN Group, Ltd.* 477,448
26,600 Reliance Communication Ventures, Ltd.* 145,122
416,000 Taiwan Mobile Co., Ltd 414,093
10,800 Vimpel-Communications (A.D.R.)* 494,856
-----------
$ 1,961,343
-----------
Total Telecommunication Services $ 2,651,043
-----------
Utilities - 1.1%
Electric Utilities - 0.0%
26,600 Reliance Energy Ventures, Ltd.* $ 19,609
-----------
Gas Utilities - 1.1%
627,100 Panva Gas Holdings, Ltd.* $ 286,975
3,300 Samchully Co., Ltd.* 338,177
-----------
$ 625,152
-----------
Total Utilities $ 644,761
-----------
TOTAL COMMON STOCKS
(Cost $38,430,727) $54,439,799
-----------
TEMPORARY CASH INVESTMENT - 3.2%
Security Lending Collateral - 3.2%
1,829,705 Securities Lending Investment
Fund, 5.16% $ 1,829,705
-----------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $1,829,705) $ 1,829,705
-----------
TOTAL INVESTMENT IN
SECURITIES - 102.7%
(Cost $41,380,403)(b) $58,053,110
-----------
OTHER ASSETS
AND LIABILITIES - (2.7)% $(1,512,067)
-----------
TOTAL NET ASSETS - 100.0% $56,541,043
===========
The accompanying notes are an integral part of these financial statements. 39
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
(A.D.R.) American Depositary Receipt.
(G.D.R.) Global Depositary Receipt.
* 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, 2006, the value of these securities amounted to $1,944,691 or 3.4%
of total net assets.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
13,350 Anglogold Ashanti, Ltd. (A.D.R.) $ 642,402
2,829 Banco Bradesco SA 87,954
8,316 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 460,790
8,639 Surgutneftegaz (A.D.R.) * 630,647
1,543 Tele Norte Leste Participacoes
(A.D.R.) 19,673
----------
Total $1,841,466
==========
(b) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
South Korea 18.1%
Brazil 16.9
South Africa 11.7
Russia 9.6
Taiwan 8.1
People's Republic of China 7.0
India 3.7
Israel 3.7
Mexico 3.4
Turkey 2.6
Hong Kong 1.6
Philippines 1.5
Malaysia 1.5
Thailand 1.5
Indonesia 1.5
Peru 1.2
Argentina 1.1
Other (individually less than 1%) 5.3
-----
100.0%
=====
40 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
PREFERRED STOCK - 2.9%
Automobiles & Components - 2.9%
Automobile Manufacturers - 2.9%
601 Porsche AG* $ 579,712
-----------
TOTAL PREFERRED STOCK
(Cost $384,137) $ 579,712
-----------
COMMON STOCKS - 95.7%
Energy - 11.4%
Integrated Oil & Gas - 11.4%
92,816 BP Amoco Plc $ 1,074,177
20,168 Eni SpA* 592,511
21,728 Repsol SA 613,977
-----------
$ 2,280,665
-----------
Total Energy $ 2,280,665
-----------
Materials - 7.6%
Construction Materials - 5.4%
21,189 CRH Plc $ 687,712
3,081 Lafarge Br* 386,161
-----------
$ 1,073,873
-----------
Diversified Metals & Mining - 2.2%
8,503 Rio Tinto Plc $ 445,835
-----------
Total Materials $ 1,519,708
-----------
Capital Goods - 7.7%
Building Products - 2.9%
8,064 Compagnie de Saint Gobain* $ 575,280
-----------
Industrial Conglomerates - 2.6%
6,139 Siemens $ 533,937
-----------
Trading Companies & Distributors - 2.2%
20,233 Wolseley* $ 444,485
-----------
Total Capital Goods $ 1,553,702
-----------
Transportation - 4.1%
Air Freight & Couriers - 4.1%
22,922 TNT NV $ 820,291
-----------
Total Transportation $ 820,291
-----------
Automobiles & Components - 7.4%
Automobile Manufacturers - 2.1%
6,723 PSA Peugeot* $ 417,529
-----------
Tires & Rubber - 5.3%
8,850 Compagnie Generale des
Etablissements Michelin* $ 530,758
5,301 Continental AG* 540,526
-----------
$ 1,071,284
-----------
Total Automobiles & Components $ 1,488,813
-----------
Shares Value
Consumer Durables & Apparel - 7.1%
Apparel, Accessories & Luxury Goods - 3.0%
12,484 Adidas-Salomon AG* $ 599,897
-----------
Homebuilding - 4.1%
21,596 Persimmon Plc. $ 491,915
38,793 Wimpey (George) Plc* 325,662
-----------
$ 817,577
-----------
Total Consumer Durables & Apparel $ 1,417,474
-----------
Consumer Services - 2.4%
Hotels, Resorts & Cruise Lines - 2.4%
11,547 Carnival Corp. $ 481,972
-----------
Total Consumer Services $ 481,972
-----------
Media - 3.3%
Advertising - 3.3%
54,988 WPP Group Plc $ 662,778
-----------
Total Media $ 662,778
-----------
Retailing - 1.7%
Department Stores - 1.7%
11,321 Next Plc $ 342,379
-----------
Total Retailing $ 342,379
-----------
Food & Drug Retailing - 2.7%
Drug Retail - 1.5%
21,694 Boots Group Plc $ 307,580
-----------
Hypermarkets & Supercenters - 1.2%
4,016 Carrefour Supermarch* $ 235,045
-----------
Total Food & Drug Retailing $ 542,625
-----------
Pharmaceuticals & Biotechnology - 8.5%
Pharmaceuticals - 8.5%
10,691 Astrazeneca Plc $ 639,900
4,787 Roche Holdings AG 790,000
19,449 Shire PLC* 285,583
-----------
$ 1,715,483
-----------
Total Pharmaceuticals &
Biotechnology $ 1,715,483
-----------
Banks - 21.1%
Diversified Banks - 21.1%
17,413 Allied Irish Banks Plc $ 418,736
63,745 Barclays Plc 724,904
10,136 BNP Paribas SA* 968,348
32,910 Dnb Nor Asa* 407,774
31,220 Royal Bank of Scotland Group Plc 1,026,484
11,376 Skand Enkilda Banken* 270,459
2,893 Societe Generale* 424,482
-----------
$ 4,241,187
-----------
Total Banks $ 4,241,187
-----------
The accompanying notes are an integral part of these financial statements. 41
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Diversified Financials - 7.5%
Diversified Capital Markets - 7.5%
15,233 CS Group* $ 850,279
6,087 UBS AG* 665,248
-----------
$ 1,515,527
-----------
Total Diversified Financials $ 1,515,527
-----------
Technology Hardware & Equipment - 2.6%
Communications Equipment - 2.6%
157,002 Ericsson LM* $ 518,677
-----------
Total Technology Hardware &
Equipment $ 518,677
-----------
Telecommunication Services - 0.6%
Integrated Telecommunication Services - 0.6%
5,536 France Telecom SA* $ 118,802
-----------
Total Telecommunication Services $ 118,802
-----------
TOTAL COMMON STOCKS
(Cost $15,714,456) $19,220,083
-----------
TOTAL INVESTMENT IN
SECURITIES - 98.6%
(Cost $16,098,593)(a) $19,799,795
-----------
OTHER ASSETS
AND LIABILITIES - 1.4% $ 275,050
-----------
TOTAL NET ASSETS - 100.0% $20,074,845
===========
* Non-income producing security.
(a) Distributions of investments by country of issue (excluding temporary
cash investments), as a percentage of total investment in equity
securities, is as follows:
United Kingdom 34.2%
France 18.5
Switzerland 11.6
Germany 11.4
Ireland 5.6
Netherlands 4.1
Sweden 4.0
Spain 3.1
Italy 3.0
Panama 2.4
Norway 2.1
-----
100.0%
=====
42 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
PREFERRED STOCK - 0.9%
Utilities - 0.9%
Multi-Utilities - 0.9%
3,360 RWE AG - Non-Voting $ 252,525
-----------
TOTAL PREFERRED STOCK
(Cost $203,729) $ 252,525
-----------
COMMON STOCKS - 97.2%
Energy - 9.9%
Integrated Oil & Gas - 8.0%
7,875 Gazprom - Reg S, (A.D.R.)* $ 332,128
3,930 Lukoil Holding (A.D.R.) 328,352
4,020 Petrobras Brasileiro (A.D.R.) 320,957
18,950 Repsol SA 535,478
5,000 Statoil ASA* 142,302
8,980 Total SA* 588,753
-----------
$ 2,247,970
-----------
Oil & Gas Equipment & Services - 1.1%
3,500 Saipem S.p.A.* $ 79,452
4,080 Technip* 225,444
-----------
$ 304,896
-----------
Oil & Gas Exploration & Production - 0.8%
299,630 CNOOC, Ltd.* $ 240,525
-----------
Total Energy $ 2,793,391
-----------
Materials - 8.9%
Construction Materials - 2.0%
3,720 CRH Plc $ 121,777
4,310 Holcim, Ltd.* 330,330
900 Lafarge Br* 112,803
-----------
$ 564,910
-----------
Diversified Metals & Mining - 3.1%
16,722 Broken Hill Proprietary Co., Ltd. $ 360,335
5,140 Freeport-McMoRan Copper & Gold, Inc.
(Class B)(b) 284,807
4,650 Rio Tinto Plc 243,812
-----------
$ 888,954
-----------
Specialty Chemicals - 0.9%
4,500 Shin-Etsu Chemical Co., Ltd. $ 245,738
-----------
Steel - 2.9%
15,380 Companhia Vale do Rio Doce (A.D.R.) $ 316,520
25,600 Hitachi Metals, Ltd.* 253,081
5,800 JFE Holdings, Inc.* 246,269
-----------
$ 815,870
-----------
Total Materials $ 2,515,472
-----------
Shares Value
Capital Goods - 11.2%
Building Products - 1.1%
4,270 Compagnie de Saint Gobain* $ 304,618
-----------
Construction & Farm Machinery &
Heavy Trucks - 3.1%
11,770 Daewoo Heavy Industries &
Machinery, Ltd.* $ 345,202
2,380 Hyundai Heavy Industries* 267,370
12,800 Komatsu, Ltd.* 256,352
-----------
$ 868,924
-----------
Electrical Component & Equipment - 0.4%
1,100 Schneider Electric SA* $ 114,619
-----------
Heavy Electrical Equipment - 1.7%
59,000 Mitsubishi Electric Corp.* $ 474,742
-----------
Industrial Conglomerates - 2.8%
33,000 Keppel Corp* $ 306,443
61,711 KOC Holding AS* 183,487
3,560 Siemens 309,630
-----------
$ 799,560
-----------
Industrial Machinery - 1.1%
8,900 AB SKF* $ 139,855
14,220 Nabtesco Corp.* 160,157
-----------
$ 300,012
-----------
Trading Companies & Distributors - 1.0%
21,000 Sumitomo Corp.* $ 278,211
-----------
Total Capital Goods $ 3,140,686
-----------
Commercial Services & Supplies - 0.3%
Office Services & Supplies - 0.3%
6,200 Buhrmann NV* $ 89,644
-----------
Total Commercial
Services & Supplies $ 89,644
-----------
Transportation - 2.4%
Air Freight & Couriers - 0.8%
700 Panalpina Welttransport Holding AG* $ 65,053
4,820 TNT NV 172,489
-----------
$ 237,542
-----------
Railroads - 1.6%
60 East Japan Railway Co.* $ 446,891
-----------
Total Transportation $ 684,433
-----------
Automobiles & Components - 4.5%
Auto Parts & Equipment - 0.9%
8,120 Denso Corp.* $ 266,498
-----------
The accompanying notes are an integral part of these financial statements. 43
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Automobile Manufacturers - 3.0%
3,260 Hyundai Motor Co., Ltd.* $ 278,033
10,600 Toyota Motor Co. 554,409
-----------
$ 832,442
-----------
Tires & Rubber - 0.6%
1,660 Continental AG* $ 169,265
-----------
Total Automobiles & Components $ 1,268,205
-----------
Consumer Durables & Apparel - 3.3%
Apparel, Accessories & Luxury Goods - 0.4%
2,300 Adidas-Salomon AG* $ 110,523
-----------
Consumer Electronics - 1.5%
9,800 Sony Corp.* $ 431,856
-----------
Footwear - 0.2%
140 Puma AG Rudolf Dassler Sport* $ 54,300
-----------
Homebuilding - 0.4%
5,350 Persimmon Plc. $ 121,863
-----------
Leisure Products - 0.8%
5,800 Sega Sammy Holdings, Inc.* $ 214,461
-----------
Total Consumer Durables & Apparel $ 933,003
-----------
Consumer Services - 0.4%
Hotels, Resorts & Cruise Lines - 0.4%
2,370 Carnival Corp. $ 98,924
-----------
Total Consumer Services $ 98,924
-----------
Media - 1.5%
Broadcasting & Cable TV - 0.8%
230 Jupiter Telecommunications Co., Ltd.* $ 159,392
6,100 Mediaset S.p.A* 71,816
-----------
$ 231,208
-----------
Movies & Entertainment - 0.7%
5,700 Vivendi SA* $ 199,381
-----------
Total Media $ 430,589
-----------
Retailing - 1.5%
Apparel Retail - 0.8%
74,800 Truworths International, Ltd. $ 224,682
-----------
Department Stores - 0.7%
15,140 Takashimaya Co., Ltd.* $ 190,719
-----------
Total Retailing $ 415,401
-----------
Food & Drug Retailing - 2.4%
Drug Retail - 0.3%
6,900 Boots Group Plc $ 97,829
-----------
Shares Value
Hypermarkets & Supercenters - 2.1%
13,200 Aeon Co., Ltd.* $ 289,230
4,100 Brasil Distr Pao Acu (A.D.R.)* 127,674
2,770 Carrefour Supermarch* 162,120
-----------
$ 579,024
-----------
Total Food & Drug Retailing $ 676,853
-----------
Food, Beverage & Tobacco - 3.0%
Brewers - 0.6%
9,700 South African Breweries Plc* $ 174,079
-----------
Packaged Foods & Meats - 1.1%
1,020 Nestle SA (Registered Shares)* $ 319,798
-----------
Soft Drinks - 0.5%
1,600 Fomento Economico Mexicano
SA de C.V.* $ 133,952
-----------
Tobacco - 0.8%
8,300 British American Tobacco Plc $ 208,973
-----------
Total Food, Beverage & Tobacco $ 836,802
-----------
Household & Personal Products - 0.3%
Household Products - 0.3%
2,000 Reckitt Benckiser Plc $ 74,514
-----------
Total Household &
Personal Products $ 74,514
-----------
Health Care Equipment & Services - 0.8%
Health Care Equipment - 0.5%
1,160 Synthes, Inc.* $ 139,657
-----------
Health Care Services - 0.3%
700 Fresenius Medical Care AG* $ 80,371
-----------
Total Health Care
Equipment & Services $ 220,028
-----------
Pharmaceuticals & Biotechnology - 7.4%
Pharmaceuticals - 7.4%
12,300 Astellas Pharma, Inc. $ 452,422
7,672 Astrazeneca Plc 459,200
14,000 Daiichi Sankyo Co., Ltd.* 384,878
3,028 Roche Holdings AG 499,712
4,340 Shire Pharmaceuticals Group Plc (A.D.R.) 191,958
1,640 UCB SA* 88,643
-----------
$ 2,076,813
-----------
Total Pharmaceuticals &
Biotechnology $ 2,076,813
-----------
44 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Banks - 15.8%
Diversified Banks - 15.8%
39,325 Barclays Plc $ 447,201
6,670 BNP Paribas SA* 637,222
8,850 Commonwealth Bank of Australia 291,867
5,700 Depfa Bank Plc* 94,744
25,200 Development Bank of Singapore, Ltd. 287,692
2,700 Kookmin Bank (A.D.R.)* 224,262
34 Mitsubishi UFJ Financial Group, Inc.* 475,627
18,910 Royal Bank of Scotland Group Plc 621,743
3,229 Societe Generale* 473,782
41 Sumitomo Mitsui Financial Group, Inc.* 435,056
37,210 Turkiye Is Bankasi (Isbank)* 182,371
4,090 Uniao de Bancos Brasileiros SA
(Unibanco) (G.D.R.) (144A) 271,535
-----------
$ 4,443,102
-----------
Total Banks $ 4,443,102
-----------
Diversified Financials - 4.3%
Asset Management & Custody
Banks - 0.9%
1,940 Julius Baer Holding* $ 168,015
1,970 Man Group Plc 92,685
-----------
$ 260,700
-----------
Diversified Capital Markets - 2.8%
10,410 CS Group* $ 581,068
1,800 Deutsche Bank AG* 202,097
-----------
$ 783,165
-----------
Investment Banking & Brokerage - 0.6%
12,000 Nikko Cordinal Corp.*(b) $ 154,383
-----------
Total Diversified Financials $ 1,198,248
-----------
Insurance - 4.4%
Life & Health Insurance - 1.1%
4,820 China Life Insurance Co. (A.D.R.)*(b) $ 305,106
-----------
Multi-Line Insurance - 2.3%
16,900 Aviva Plc $ 239,292
5,770 AXA* 188,874
1,020 Zurich Financial Services* 223,042
-----------
$ 651,208
-----------
Property & Casualty Insurance - 1.0%
21,840 Mitsui Sumitomo Insurance Co.* $ 273,481
-----------
Total Insurance $ 1,229,795
-----------
Real Estate - 1.5%
Real Estate Management & Development - 1.5%
18,700 Mitsui Fudosan Co $ 408,238
-----------
Total Real Estate $ 408,238
-----------
Shares Value
Software & Services - 0.5%
Application Software - 0.5%
630 Sap AG* $ 132,677
-----------
Total Software & Services $ 132,677
-----------
Technology Hardware & Equipment - 3.6%
Communications Equipment - 1.2%
104,050 Ericsson LM Tel Sur B* $ 343,743
-----------
Electronic Equipment & Instruments - 1.1%
1,200 Keyence Corp.* $ 306,789
-----------
Office Electronics - 1.3%
7,650 Canon, Inc. $ 374,047
-----------
Total Technology
Hardware & Equipment $ 1,024,579
-----------
Semiconductors - 1.6%
Semiconductor Equipment - 0.7%
2,800 Tokyo Electron, Ltd. $ 196,675
-----------
Semiconductors - 0.9%
20,570 Hon Hai Precision Industry (G.D.R.) $ 248,475
-----------
Total Semiconductors $ 445,150
-----------
Telecommunication Services - 4.6%
Alternative Carriers - 0.9%
2,700 Fastweb* $ 117,180
23,100 Inmarsat Plc* 146,110
-----------
$ 263,290
-----------
Integrated Telecommunication Services - 2.7%
7,700 Brasil Telecom Participacoes SA* $ 250,789
8,400 France Telecom SA* 180,264
11,880 Telekom Austria AG* 264,126
10,430 Telekomunikacja Polska SA* 65,508
-----------
$ 760,687
-----------
Wireless Telecommunication Services - 1.0%
9,320 Mobile Telesystems (A.D.R.) $ 274,381
-----------
Total Telecommunication Services $ 1,298,358
-----------
Utilities - 3.3%
Electric Utilities - 1.8%
4,433 E.On AG* $ 509,405
-----------
Gas Utilities - 1.5%
86,000 Tokyo Gas Co., Ltd. $ 404,964
-----------
Total Utilities $ 914,369
-----------
TOTAL COMMON STOCKS
(Cost $23,129,164) $27,349,274
-----------
The accompanying notes are an integral part of these financial statements. 45
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
TEMPORARY CASH INVESTMENT - 2.6%
Security Lending Collateral - 2.6%
743,621 Securities Lending Investment Fund, 5.2% $ 743,621
-----------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $743,621) $ 743,621
-----------
TOTAL INVESTMENT IN
SECURITIES - 100.7%
(Cost $24,076,514)(a) $28,345,420
-----------
OTHER ASSETS AND
LIABILITIES - (0.7)% $ (221,874)
-----------
TOTAL NET ASSETS - 100.0% $28,123,546
===========
* Non-income producing security
(A.D.R.) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
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, 2006, the value of these securities amounted to $271,535 or 1.0% of
net assets.
(a) Distributions of investments by country of issue, as percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
Japan 30.2%
France 11.5
United Kingdom 11.3
Germany 6.6
Switzerland 7.9
Brazil 4.7
South Korea 4.0
Russia 3.4
Australia 2.4
Singapore 2.2
People's Republic of China 2.0
Spain 1.9
Sweden 1.8
United States 1.5
Turkey 1.3
Italy 1.0
Austria 1.0
Other (individually less than 1%) 5.3
-----
100.0%
=====
(b) At June 30, 2006, the following securities were out on loan:
Shares Security Value
11,000 Nikko Cordinal Corp.* $145,974
4,764 China Life Insurance Co. (A.D.R.)* 301,561
5,089 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 281,981
--------
Total $729,516
========
46 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
PREFERRED STOCKS - 0.4%
Insurance - 0.4%
Multi-Line Insurance - 0.4%
18,640 Quanta Capital Holdings,
10.25%, 12/1/49 $ 347,822
-----------
Total Insurance $ 347,822
-----------
TOTAL PREFERRED STOCKS
(Cost $466,000) $ 347,822
-----------
COMMON STOCKS - 90.3%
Energy - 9.4%
Coal & Consumable Fuels - 1.0%
24,687 Massey Energy Co.(a) $ 888,732
-----------
Integrated Oil & Gas - 1.0%
11,175 CNX Gas Corp.* $ 335,250
19,914 CNX Gas Corp. (144A)* 597,420
-----------
$ 932,670
-----------
Oil & Gas Drilling - 0.8%
15,617 Bronco Drilling Co., Inc.* $ 326,239
5,974 Todco 244,038
3,532 Unit Corp.* 200,935
-----------
$ 771,212
-----------
Oil & Gas Equipment & Services - 3.5%
39,235 Dresser-Rand Group, Inc.* $ 921,238
44,028 Gulfmark Offshore, Inc.* 1,137,243
74,311 Key Energy Services, Inc.* 1,133,243
-----------
$ 3,191,724
-----------
Oil & Gas Exploration & Production - 2.9%
18,726 Forest Oil Corp.* $ 620,954
10,917 Penn Virginia Corp. 762,880
32,107 Riata Energy, Inc. (144A)* 593,980
2,175 Rosetta Resources, Inc.*(a) 36,149
12,658 Rosetta Resources, Inc. (144A)* 210,376
13,890 Southwestern Energy Co.* 432,812
-----------
$ 2,657,151
-----------
Oil & Gas Storage & Transportation - 0.2%
6,859 Arlington Tankers, Ltd. $ 155,562
-----------
Total Energy $ 8,597,051
-----------
Materials - 2.9%
Gold - 1.7%
82,876 Cambior, Inc.*(a) $ 222,936
18,153 Glamis Gold, Ltd.* 687,273
71,819 IAMGOLD Corp.* 639,189
-----------
$ 1,549,398
-----------
Paper Products - 0.4%
61,740 Domtar, Inc. $ 381,553
-----------
Shares Value
Specialty Chemicals - 0.3%
23,401 Chemtura Corp. $ 218,565
-----------
Steel - 0.5%
1,961 Carpenter Technology $ 226,496
20,843 NN, Inc. 257,411
-----------
$ 483,907
-----------
Total Materials $ 2,633,423
-----------
Capital Goods - 7.3%
Building Products - 0.1%
5,397 Goodman Global, Inc.* $ 81,926
-----------
Construction & Engineering - 0.5%
20,241 Insituform Technologies, Inc.* $ 463,316
-----------
Construction, Farm Machinery &
Heavy Trucks - 3.4%
39,361 Commercial Vehicle Group, Inc.* $ 813,985
39,452 Federal Signal Corp. 597,303
3,071 Joy Global, Inc. 159,968
2,531 Nacco Industries, Inc. 347,785
32,101 Wabtec Corp. 1,200,577
-----------
$ 3,119,618
-----------
Electrical Component & Equipment - 2.3%
53,700 C&D Technologies, Inc. $ 403,824
105,167 Graftech International, Ltd.* 609,969
173,224 Power-One, Inc.* 1,143,278
-----------
$ 2,157,071
-----------
Industrial Machinery - 0.7%
7,900 Basin Water, Inc.*(a) $ 79,158
9,147 Flowserve Corp.* 520,464
-----------
$ 599,622
-----------
Trading Companies & Distributors - 0.3%
12,867 Applied Industrial Technologies, Inc. $ 312,797
-----------
Total Capital Goods $ 6,734,350
-----------
Commercial Services & Supplies - 3.2%
Diversified Commercial Services - 1.3%
23,998 Cornell Companies, Inc.* $ 368,609
3,670 Corrections Corporation of America* 194,290
18,684 School Specialty, Inc.* 595,085
-----------
$ 1,157,984
-----------
Human Resource & Employment Services - 1.9%
24,649 Korn/Ferry International* $ 482,874
38,330 On Assignment, Inc.* 352,253
26,638 Watson Wyatt Worldwide, Inc. 936,059
-----------
$ 1,771,186
-----------
Total Commercial
Services & Supplies $ 2,929,170
-----------
The accompanying notes are an integral part of these financial statements. 47
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Transportation - 5.1%
Air Freight & Couriers - 2.1%
12,351 Forward Air Corp. $ 503,056
43,544 Pacer International, Inc. 1,418,664
-----------
$ 1,921,720
-----------
Marine - 1.0%
4,569 Dryships, Inc.(a) $ 49,300
24,826 Excel Maritime Carriers, Ltd.*(a) 256,949
12,232 Genco Shipping & Trading, Ltd. 212,348
45,905 Quintana Maritime, Ltd.(a) 376,421
-----------
$ 895,018
-----------
Railroads - 1.1%
29,891 Genesee & Wyoming, Inc.* $ 1,059,935
-----------
Trucking - 0.9%
11,590 Dollar Thrifty Automotive Group* $ 522,361
8,501 Universal Truckload Services, Inc.* 290,139
-----------
$ 812,500
-----------
Total Transportation $ 4,689,173
-----------
Automobiles & Components - 0.8%
Tires & Rubber - 0.8%
70,050 Cooper Tire & Rubber*(a) $ 780,357
-----------
Total Automobiles & Components $ 780,357
-----------
Consumer Durables & Apparel - 1.1%
Housewares & Specialties - 1.1%
31,841 Jarden Corp.* $ 969,558
-----------
Total Consumer Durables & Apparel $ 969,558
-----------
Consumer Services - 1.5%
Casinos & Gaming - 0.5%
28,243 Bally Technologies, Inc.*(a) $ 465,162
-----------
Restaurants - 1.0%
19,375 AFC Enterprises, Inc.*(a) $ 247,031
37,277 O'Charley's, Inc.* 633,709
-----------
$ 880,740
-----------
Total Consumer Services $ 1,345,902
-----------
Retailing - 3.3%
Apparel Retail - 1.0%
28,049 Stage Stores, Inc.* $ 925,617
-----------
Computer & Electronics Retail - 0.3%
37,715 Tweeter Home Entertainment Group, Inc.* $ 267,777
-----------
General Merchandise Stores - 0.5%
35,527 Fred's, Inc. $ 474,285
-----------
Internet Retail - 0.4%
66,104 1-800-FLOWERS.COM, Inc.* $ 381,420
-----------
Shares Value
Specialty Stores - 1.1%
64,781 Hancock Fabrics, Inc.(a) $ 216,369
101,898 Rent-Way, Inc.* 752,007
-----------
$ 968,376
-----------
Total Retailing $ 3,017,475
-----------
Food, Beverage & Tobacco - 1.1%
Agricultural Products - 0.4%
20,007 Fresh Del Monte Produce, Inc.*(a) $ 345,521
-----------
Packaged Foods & Meats - 0.7%
43,912 B & G Foods, Inc. $ 711,814
-----------
Total Food, Beverage & Tobacco $ 1,057,335
-----------
Household & Personal Products - 2.3%
Personal Products - 2.3%
13,795 Herbalife, Ltd.* $ 550,421
87,412 Nu Skin Enterprises, Inc. 1,298,068
29,736 Reliv' International, Inc.* 293,792
-----------
$ 2,142,281
-----------
Total Household &
Personal Products $ 2,142,281
-----------
Health Care Equipment & Services - 8.0%
Health Care Equipment - 1.1%
21,618 Analogic Corp.* $ 1,007,615
-----------
Health Care Facilities - 0.7%
9,950 Lifepoint Hospitals, Inc.* $ 319,694
1 Sunrise Senior Living, Inc.* 28
7,765 Triad Hospitals, Inc.* 307,339
-----------
$ 627,061
-----------
Health Care Services - 4.0%
15,497 Chemed Corp. $ 845,051
69,362 Cross Country Healthcares, Inc.* 1,261,695
18,008 Pediatrix Medical Group, Inc.* 815,762
27,349 Providence Service Corp.* 744,713
-----------
$ 3,667,221
-----------
Health Care Supplies - 0.9%
61,120 Merit Medical Systems, Inc.* $ 841,011
-----------
Managed Health Care - 1.3%
40,150 AMERIGROUP Corp.* $ 1,246,256
-----------
Total Health Care
Equipment & Services $ 7,389,164
-----------
Pharmaceuticals & Biotechnology - 0.2%
Biotechnology - 0.1%
5,625 Cubist Pharmaceuticals, Inc.* $ 141,638
-----------
Pharmaceuticals - 0.1%
5,100 Connetics Corp.* $ 59,976
-----------
Total Pharmaceuticals &
Biotechnology $ 201,614
-----------
48 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Banks - 5.5%
Regional Banks - 4.5%
15,483 Alliance Bankshares Corp.* $ 253,916
21,650 Cadence Financial Corp.* 482,146
45,965 Cardinal Financial Corp. 534,113
11,445 City National Corp. 744,955
3,209 Signature Bank* 103,907
36,508 Southwest Bancorp, Inc.* 930,954
31,768 Sterling Bancshares, Inc. 595,650
21,509 Texas Capital Bancshares, Inc.* 501,160
-----------
$ 4,146,801
-----------
Thrifts & Mortgage Finance - 1.0%
35,388 BankAtlantic Bancorp, Inc. $ 525,158
19,304 Provident Financial Services, Inc. 346,507
-----------
$ 871,665
-----------
Total Banks $ 5,018,466
-----------
Diversified Financials - 6.3%
Asset Management & Custody Banks - 1.8%
87,183 Apollo Investment Corp. $ 1,611,142
-----------
Consumer Finance - 2.7%
37,268 Advanta Corp. $ 1,285,442
23,736 Cash America International, Inc. 759,552
7,322 The First Marblehead Corp. 416,915
-----------
$ 2,461,909
-----------
Investment Banking & Brokerage - 1.1%
18,905 A.G. Edwards, Inc. $ 1,045,825
-----------
Multi-Sector Holding - 0.6%
38,750 Compass Diversified Trust* $ 552,963
-----------
Specialized Finance - 0.1%
4,026 Nasdaq Stock Market, Inc.* $ 120,377
-----------
Total Diversified Financials $ 5,792,216
-----------
Insurance - 5.9%
Life & Health Insurance - 0.4%
33,818 American Equity Investment Life
Holding*(a) $ 360,500
-----------
Multi-Line Insurance - 0.4%
131,214 Quanta Capital Holdings* $ 339,844
-----------
Property & Casualty Insurance - 2.1%
61,034 Assured Guaranty, Ltd. $ 1,548,433
1,236 National Interstate Corp. 33,520
7,428 Selective Insurance Group, Inc. 415,002
-----------
$ 1,996,955
-----------
Shares Value
Reinsurance - 3.0%
43,325 IPC Holdings, Ltd. $ 1,068,395
20,466 Max Re Capital, Ltd. 446,977
22,588 Platinum Underwriter Holdings, Ltd. 632,012
47,217 Ram Holdings, Ltd.* 593,518
-----------
$ 2,740,902
-----------
Total Insurance $ 5,438,201
-----------
Real Estate - 3.8%
Mortgage Real Estate Investment Trusts - 2.2%
40,535 Annaly Mortgage Management, Inc. $ 519,253
107,041 Deerfield Triarc Capital Corp. 1,389,392
10,900 Hanover Capital Mortgage Holdings, Inc. 57,225
-----------
$ 1,965,870
-----------
Office Real Estate Investment Trusts - 1.4%
43,195 BioMed Property Trust, Inc. $ 1,293,258
-----------
Retail Real Estate Investment Trusts - 0.2%
19,736 Feldman Mall Properties, Inc. $ 216,307
-----------
Total Real Estate $ 3,475,435
-----------
Software & Services - 7.6%
Application Software - 4.8%
106,102 Aspen Technology, Inc.* $ 1,392,058
46,449 Bottomline Technologies, Inc.* 378,095
27,241 Corel Corp.* 328,526
51,213 Sonic Solutions*(a) 845,015
23,429 SPSS, Inc.* 753,008
95,989 TIBCO Software, Inc.* 676,722
-----------
$ 4,373,424
-----------
IT Consulting & Other Services - 0.9%
45,493 Gartner Group, Inc.* $ 646,001
14,955 NCI, Inc.* 195,911
-----------
$ 841,912
-----------
Systems Software - 1.9%
127,328 Borland Software Corp.* $ 672,292
34,805 Internet Security Systems, Inc.* 656,074
20,672 Sybase, Inc.* 401,037
-----------
$ 1,729,403
-----------
Total Software & Services $ 6,944,739
-----------
Technology Hardware & Equipment - 10.1%
Communications Equipment - 3.3%
28,658 Black Box Corp. $ 1,098,461
39,724 Dycom Industries, Inc.* 845,724
150,883 Symmetricom, Inc.* 1,066,743
-----------
$ 3,010,928
-----------
Computer Hardware - 1.9%
39,061 Avid Technology, Inc.*(a) $ 1,301,903
186,936 Concurrent Computer Corp.* 487,903
-----------
$ 1,789,806
-----------
The accompanying notes are an integral part of these financial statements. 49
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Computer Storage & Peripherals - 0.3%
14,214 Electronics for Imaging, Inc.* $ 296,788
-----------
Electronic Equipment & Instruments - 1.5%
4,344 Electro Scientific Industrials* $ 78,149
20,990 Planar Systems, Inc.* 252,720
47,162 Technitrol, Inc. 1,091,800
-----------
$ 1,422,669
-----------
Electronic Manufacturing Services - 1.3%
36,389 Mercury Computer Systems, Inc.* $ 560,027
69,225 Smart Modular Technologies (WWH), Inc.* 607,796
-----------
$ 1,167,823
-----------
Technology Distributors - 1.8%
85,306 Insight Enterprises, Inc.* $ 1,625,050
-----------
Total Technology
Hardware & Equipment $ 9,313,064
-----------
Semiconductors - 1.0%
Semiconductor Equipment - 0.3%
26,413 Brooks Automation, Inc.* $ 311,673
-----------
Semiconductors - 0.7%
98,244 Lattice Semiconductor Corp.* $ 607,148
-----------
Total Semiconductors $ 918,821
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 1.5%
110,933 Alaska Communications Systems
Group, Inc. $ 1,403,302
-----------
Total Telecommunication Services $ 1,403,302
-----------
Utilities - 2.4%
Gas Utilities - 2.4%
22,698 AGL Resources, Inc. $ 865,248
14,006 Energen Corp. 537,971
21,870 People's Energy Corp.(a) 785,352
-----------
$ 2,188,571
-----------
Total Utilities $ 2,188,571
-----------
TOTAL COMMON STOCKS
(Cost $76,526,286) $82,979,668
-----------
EXCHANGE TRADED FUNDS - 0.8%
3,177 Russell 2000 Exchange Traded Fund(a) $ 227,791
3,645 Russell 2000 Growth Exchange
Traded Fund(a) 268,272
3,620 Russell 2000 Value Exchange
Traded Fund(a) 261,979
-----------
$ 758,042
-----------
TOTAL EXCHANGE TRADED FUNDS
(Cost $641,672) $ 758,042
-----------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 15.3%
Repurchase Agreement - 8.3%
$ 7,600,000 UBS Warburg, Inc., 4.40%, dated
6/30/06, repurchase price of
$7,600,000 plus accrued interest on
7/3/06 collateralized by $7,762,000
U.S. Treasury Bill, 5.125%, 6/30/08 $ 7,600,000
-----------
Shares
Security Lending Collateral - 7.0%
6,454,751 Securities Lending Investment
Fund, 5.16% $ 6,454,751
-----------
TOTAL TEMPORARY
CASH INVESTMENTS
(Cost $14,054,751) $14,054,751
-----------
TOTAL INVESTMENT
IN SECURITIES - 106.8%
(Cost $91,688,709) $98,140,283
-----------
OTHER ASSETS
AND LIABILITIES - (6.8)% $(6,241,863)
-----------
TOTAL NET ASSETS - 100.0% $91,898,420
===========
* 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, 2006, the value of these securities amounted to $1,401,776 or 1.5%
of total net assets.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
11,203 AFC Enterprises, Inc.* $ 142,838
30,931 American Equity Investment
Life Holding* 329,724
35,725 Avid Technology, Inc.* 1,190,714
25,795 Bally Technologies, Inc.* 424,844
7,130 Basin Water, Inc.* 71,443
75,701 Cambior, Inc.* 203,636
69,349 Cooper Tire & Rubber* 772,548
4,512 Dryships, Inc. 48,684
22,611 Excel Maritime Carriers ,Ltd.* 234,024
8,793 Fresh Del Monte Produce, Inc.* 151,855
58,921 Hancock Fabrics, Inc. 196,796
10,474 Massey Energy Co. 377,064
7,717 People's Energy Corp. 277,117
41,939 Quintana Maritime, Ltd. 343,900
1,980 Rosetta Resources, Inc.* 32,908
2,859 Russell 2000 Exchange Traded Fund 204,990
3,316 Russell 2000 Growth Exchange
Traded Fund 244,058
3,584 Russell 2000 Value Exchange
Traded Fund 259,374
42,712 Sonic Solutions* 704,748
----------
Total $6,211,265
==========
50 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
COMMON STOCKS - 96.0%
Energy - 4.9%
Coal & Consumable Fuels - 1.5%
150,010 Massey Energy Co. $ 5,400,360
------------
Integrated Oil & Gas - 1.3%
90,310 Hess Corporation* $ 4,772,884
------------
Oil & Gas Drilling - 0.6%
26,954 Transocean Offshore Inc.* $ 2,164,945
------------
Oil & Gas Equipment & Services - 0.7%
53,552 Weatherford Intl, Inc.* $ 2,657,250
------------
Oil & Gas Refining & Marketing - 0.8%
40,504 Tesoro Petroleum Corp. $ 3,011,877
------------
Total Energy $ 18,007,316
------------
Materials - 8.9%
Aluminum - 0.8%
130,872 Novelis, Inc. $ 2,824,218
------------
Diversified Chemical - 2.6%
90,869 Ashland, Inc. $ 6,060,962
56,792 PPG Industries, Inc. 3,748,272
------------
$ 9,809,234
------------
Diversified Metals & Mining - 0.6%
40,417 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 2,239,506
------------
Industrial Gases - 1.8%
101,682 Air Products & Chemicals, Inc. $ 6,499,513
------------
Metal & Glass Containers - 1.7%
171,636 Ball Corp. $ 6,357,397
------------
Specialty Chemicals - 1.4%
144,610 International Flavor & Fragrances, Inc. $ 5,096,056
------------
Total Materials $ 32,825,924
------------
Capital Goods - 6.1%
Construction & Farm Machinery
& Heavy Trucks - 1.5%
67,336 Deere & Co. $ 5,621,883
------------
Electrical Component & Equipment - 1.1%
74,300 Thomas & Betts Corp.* $ 3,811,590
------------
Industrial Conglomerates - 1.3%
174,210 Tyco International Ltd. $ 4,790,775
------------
Trading Companies & Distributors - 2.2%
107,746 W.W. Grainger, Inc. $ 8,105,732
------------
Total Capital Goods $ 22,329,980
------------
Commercial Services & Supplies - 2.4%
Commercial Printing - 1.0%
120,793 R.R. Donnelly & Sons Co. $ 3,859,336
------------
Shares Value
Environmental & Facilities Services - 1.4%
123,873 Republic Services, Inc. $ 4,997,037
------------
Total Commercial
Services & Supplies $ 8,856,373
------------
Transportation - 1.3%
Railroads - 1.3%
67,400 CSX Corp.* $ 4,747,656
------------
Total Transportation $ 4,747,656
------------
Automobiles & Components - 2.4%
Auto Parts & Equipment - 1.1%
60,400 Borg-Warner Automotive Inc. $ 3,932,040
------------
Motorcycle Manufacturers - 1.3%
86,410 Harley -Davidson, Inc. $ 4,743,045
------------
Total Automobiles & Components $ 8,675,085
------------
Consumer Services - 2.6%
Casinos & Gaming - 1.7%
91,210 Harrah's Entertainment, Inc.* $ 6,492,328
------------
Hotels, Resorts & Cruise Lines - 0.9%
84,779 Royal Caribbean Cruises, Ltd. $ 3,242,797
------------
Total Consumer Services $ 9,735,125
------------
Media - 4.6%
Advertising - 1.5%
658,080 The Interpublic Group of Companies, Inc.* $ 5,494,968
------------
Broadcasting & Cable Television - 3.1%
248,222 Clear Channel Communications, Inc. $ 7,682,471
140,715 Entercom Communications Corp.* 3,681,104
------------
$ 11,363,575
------------
Total Media $ 16,858,543
------------
Retailing - 2.0%
Apparel Retail - 0.6%
40,600 Abercrombie & Fitch Co. $ 2,250,458
------------
Department Stores - 1.4%
26,522 Federated Department Stores, Inc.* $ 970,705
60,500 J.C. Penney Co., Inc. 4,084,355
------------
$ 5,055,060
------------
Total Retailing $ 7,305,518
------------
Food & Drug Retailing - 3.1%
Drug Retail - 0.7%
80,850 CVS Corp. $ 2,482,095
------------
Food Retail - 2.4%
345,308 Safeway, Inc. $ 8,978,008
------------
Total Food & Drug Retailing $ 11,460,103
------------
The accompanying notes are an integral part of these financial statements. 51
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Food, Beverage & Tobacco - 5.7%
Brewers - 1.9%
100,531 Molson Coors Brewing Co. (Class B) $ 6,824,044
------------
Packaged Foods & Meats - 1.7%
90,535 H.J. Heinz Co., Inc. $ 3,731,853
54,300 William Wrigley Jr. Co. 2,463,048
------------
$ 6,194,901
------------
Tobacco - 2.1%
174,410 UST, Inc.* $ 7,881,588
------------
Total Food, Beverage & Tobacco $ 20,900,533
------------
Health Care Equipment & Services - 6.0%
Health Care Equipment - 1.0%
223,910 Boston Scientific Corp.* $ 3,770,644
------------
Health Care Facilities - 1.1%
292,879 Tenet Healthcare Corp.* $ 2,044,295
45,224 Triad Hospitals, Inc.* 1,789,966
------------
$ 3,834,261
------------
Health Care Services - 1.7%
101,362 Laboratory Corporation of
America Holdings* $ 6,307,757
------------
Managed Health Care - 2.2%
83,614 CIGNA Corp. $ 8,236,815
------------
Total Health Care
Equipment & Services $ 22,149,477
------------
Pharmaceuticals & Biotechnology - 1.1%
Pharmaceuticals - 1.1%
26,856 Shire Pharmaceuticals Group Plc (A.D.R.) $ 1,187,841
93,910 Teva Pharmaceutical Industries, Ltd. 2,966,617
------------
$ 4,154,458
------------
Total Pharmaceuticals &
Biotechnology $ 4,154,458
------------
Banks - 9.9%
Regional Banks - 7.3%
34,956 City National Corp. $ 2,275,286
124,225 KeyCorp 4,432,348
100,710 Marshall & Ilsley Corp. 4,606,475
83,610 PNC Bank Corp. 5,866,914
53,900 Regions Financial Corp. 1,785,168
121,310 TCF Financial Corp.* 3,208,650
57,200 Zions Bancorporation 4,458,168
------------
$ 26,633,009
------------
Thrifts & Mortgage Finance - 2.6%
242,021 Hudson City Bancorp, Inc. $ 3,226,140
144,599 The PMI Group, Inc. 6,446,223
------------
$ 9,672,363
------------
Total Banks $ 36,305,372
------------
Shares Value
Diversified Financials - 3.6%
Asset Management & Custody Banks - 3.0%
155,014 Federated Investors, Inc.* $ 4,882,941
19,900 Legg Mason, Inc.* 1,980,448
120,459 Mellon Bank Corp. 4,147,403
------------
$ 11,010,792
------------
Investment Banking & Brokerage - 0.6%
94,500 E*TRADE Group, Inc.* $ 2,156,490
------------
Total Diversified Financials $ 13,167,282
------------
Insurance - 7.5%
Insurance Brokers - 1.2%
128,510 Aon Corp.* $ 4,474,718
------------
Life & Health Insurance - 2.1%
416,511 UNUM Corp. $ 7,551,344
------------
Multi-Line Insurance - 2.0%
47,260 Assurant, Inc. $ 2,287,384
148,028 Genworth Financial, Inc. 5,157,296
------------
$ 7,444,680
------------
Property & Casualty Insurance - 1.2%
21,567 Ambac Financial Group, Inc.* $ 1,749,084
5,698 White Mountains Insurance Group, Ltd. 2,774,926
------------
$ 4,524,010
------------
Reinsurance - 1.0%
127,992 Platinum Underwriter Holdings, Ltd. $ 3,581,216
------------
Total Insurance $ 27,575,968
------------
Real Estate - 2.1%
Industrial Real Estate Investment Trusts - 0.8%
53,900 ProLogis Trust $ 2,809,268
------------
Mortgage Real Estate Investment Trusts - 0.8%
220,210 Annaly Mortgage Management, Inc. $ 2,820,890
------------
Specialized Real Estate Investment Trusts - 0.5%
93,210 Host Hotels & Resorts, Inc.* $ 2,038,503
------------
Total Real Estate $ 7,668,661
------------
Software & Services - 1.0%
Data Processing & Outsourced Services - 1.0%
269,882 The BISYS Group, Inc.* $ 3,697,383
------------
Total Software & Services $ 3,697,383
------------
Technology Hardware & Equipment - 9.3%
Communications Equipment - 1.2%
270,020 Juniper Networks, Inc.* $ 4,317,620
------------
Computer Hardware - 4.1%
182,110 Dell, Inc.* $ 4,445,305
215,810 NCR Corp.* 7,907,278
168,910 Palm, Inc.* 2,719,451
------------
$ 15,072,034
------------
52 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 - 1.7%
590,910 Symbol Technologies, Inc.* $ 6,375,919
------------
Office Electronics - 2.3%
606,719 Xerox Corp.* $ 8,439,461
------------
Total Technology
Hardware & Equipment $ 34,205,034
------------
Semiconductors - 1.6%
Semiconductors - 1.6%
195,710 Freescale Semiconductor, Inc. (Class B)* $ 5,753,874
------------
Total Semiconductors $ 5,753,874
------------
Telecommunication Services - 0.2%
Integrated Telecommunication Services - 0.2%
138,313 Cincinnati Bell, Inc.* $ 567,083
------------
Total Telecommunication Services $ 567,083
------------
Utilities - 9.9%
Electric Utilities - 4.6%
114,310 Allegheny Energy, Inc.* $ 4,237,472
135,581 Edison International 5,287,659
86,810 Firstenergy Corp. 4,705,970
85,700 PPL Corp.* 2,768,110
------------
$ 16,999,211
------------
Gas Utilities - 1.6%
73,800 Questar Corp. $ 5,940,162
------------
Indep Power Producer & Energy Traders - 1.5%
113,166 NRG Energy, Inc.* $ 5,452,338
------------
Multi-Utilities - 2.2%
110,084 NSTAR $ 3,148,402
120,971 PG&E Corp. 4,751,744
------------
$ 7,900,146
------------
Total Utilities $ 36,291,857
------------
TOTAL COMMON STOCKS
(Cost $332,079,994) $353,238,605
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 4.6%
Repurchase Agreement - 4.6%
$16,800,000 UBS Warburg, Inc., 4.4%, dated
6/30/06, repurchase price of
$16,800,000 plus accrued interest on
7/3/06 collateralized by $17,158,000
U.S. Treasury Bill, 5.125%, 6/30/08 $ 16,800,000
------------
TOTAL TEMPORARY
CASH INVESTMENTS
(Cost $16,800,000) $ 16,800,000
------------
TOTAL INVESTMENT
IN SECURITIES - 100.6%
(Cost $348,879,994) $370,038,605
------------
OTHER ASSETS
AND LIABILITIES - (0.6)% $ (2,101,567)
------------
TOTAL NET ASSETS - 100.0% $367,937,038
============
* Non-income producing security.
The accompanying notes are an integral part of these financial statements. 53
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
COMMON STOCKS - 100.5%
Energy - 2.0%
Integrated Oil & Gas - 2.0%
5,500 ConocoPhillips $ 360,415
8,000 Repsol SA (A.D.R.) 224,480
-----------
$ 584,895
-----------
Total Energy $ 584,895
-----------
Materials - 1.8%
Diversified Chemical - 1.8%
14,100 Dow Chemical Co. $ 550,323
-----------
Total Materials $ 550,323
-----------
Capital Goods - 12.0%
Aerospace & Defense - 3.9%
3,800 L-3 Communications Holdings, Inc. $ 286,596
13,700 United Technologies Corp. 868,854
-----------
$ 1,155,450
-----------
Industrial Conglomerates - 8.1%
9,600 3M Co. $ 775,392
32,100 General Electric Co. 1,058,016
21,500 Tyco International, Ltd. 591,250
-----------
$ 2,424,658
-----------
Total Capital Goods $ 3,580,108
-----------
Consumer Durables & Apparel - 1.3%
Footwear - 1.3%
5,000 Nike, Inc. $ 405,000
-----------
Total Consumer Durables & Apparel $ 405,000
-----------
Consumer Services - 1.3%
Hotels, Resorts & Cruise Lines - 1.3%
9,400 Carnival Corp. $ 392,356
-----------
Total Consumer Services $ 392,356
-----------
Media - 2.1%
Broadcasting & Cable TV - 1.1%
3,775 Liberty Media Holding Corp.* $ 316,232
-----------
Movies & Entertainment - 1.0%
8,350 Viacom, Inc. (Class B) $ 299,264
-----------
Total Media $ 615,496
-----------
Retailing - 7.1%
Apparel Retail - 3.6%
10,600 Abercrombie & Fitch Co. $ 587,558
21,100 TJX Companies, Inc. 482,346
-----------
$ 1,069,904
-----------
Home Improvement Retail - 3.5%
29,400 Home Depot, Inc. $ 1,052,226
-----------
Total Retailing $ 2,122,130
-----------
Shares Value
Food & Drug Retailing - 2.2%
Drug Retail - 2.2%
21,700 CVS Corp. $ 666,190
-----------
Total Food & Drug Retailing $ 666,190
-----------
Food, Beverage & Tobacco - 4.9%
Soft Drinks - 0.8%
2,700 Fomento Economico Mexicano SA de CV* $ 226,044
-----------
Tobacco - 4.1%
16,800 Altria Group, Inc. $ 1,233,624
-----------
Total Food, Beverage & Tobacco $ 1,459,668
-----------
Household & Personal Products - 3.5%
Household Products - 3.5%
18,800 Procter & Gamble Co. $ 1,045,280
-----------
Total Household &
Personal Products $ 1,045,280
-----------
Health Care Equipment & Services - 7.9%
Health Care Equipment - 5.5%
14,600 Biomet, Inc. $ 456,834
71,353 Boston Scientific Corp.* 1,201,585
-----------
$ 1,658,419
-----------
Health Care Supplies - 1.2%
7,800 Cooper Companies, Inc.(a) $ 345,462
-----------
Managed Health Care - 1.2%
9,000 Aetna, Inc.* $ 359,370
-----------
Total Health Care
Equipment & Services $ 2,363,251
-----------
Pharmaceuticals & Biotechnology - 15.6%
Biotechnology - 5.8%
18,458 Amgen, Inc.* $ 1,204,015
8,900 Gilead Sciences, Inc.* 526,524
-----------
$ 1,730,539
-----------
Pharmaceuticals - 9.8%
12,400 Astrazeneca Plc (A.D.R.) $ 741,768
9,700 Eli Lilly & Co. 536,119
11,300 Johnson & Johnson 677,096
16,892 Par Pharmaceutical Co., Inc.*(a) 311,826
20,904 Teva Pharmaceutical Industries, Ltd.(a) 660,357
-----------
$ 2,927,166
-----------
Total Pharmaceuticals &
Biotechnology $ 4,657,705
-----------
Diversified Financials - 5.5%
Asset Management & Custody Banks - 2.2%
5,400 Franklin Resources, Inc.* $ 468,774
2,000 Legg Mason, Inc.* 199,040
-----------
$ 667,814
-----------
54 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Consumer Finance - 2.3%
12,600 American Express Co. $ 670,572
-----------
Investment Banking & Brokerage - 1.0%
4,300 Merrill Lynch & Co., Inc. $ 299,108
-----------
Total Diversified Financials $ 1,637,494
-----------
Software & Services - 7.9%
Systems Software - 7.9%
36,900 Macrovision Corp.* $ 794,088
67,300 Microsoft Corp. 1,568,090
-----------
$ 2,362,178
-----------
Total Software & Services $ 2,362,178
-----------
Technology Hardware & Equipment - 18.3%
Communications Equipment - 12.3%
64,050 Cisco Systems, Inc.* $ 1,250,897
23,300 Corning, Inc.* 563,627
6,060 F5 Networks, Inc.* 324,089
18,000 Foundry Networks, Inc.* 191,880
40,380 Juniper Networks, Inc.* 645,676
35,500 Motorola, Inc. 715,325
-----------
$ 3,691,494
-----------
Computer Hardware - 6.0%
11,100 Apple Computer, Inc.* $ 634,032
35,800 Dell, Inc.* 873,878
18,070 Palm, Inc.*(a) 290,927
-----------
$ 1,798,837
-----------
Total Technology
Hardware & Equipment $ 5,490,331
-----------
Semiconductors - 4.4%
Semiconductors - 4.4%
10,790 Maxim Integrated Products* $ 346,467
31,800 Texas Instruments, Inc. 963,222
-----------
$ 1,309,689
-----------
Total Semiconductors $ 1,309,689
-----------
Utilities - 2.7%
Independent Power Producer &
Energy Traders - 2.7%
13,800 TXU Corp. $ 825,102
-----------
Total Utilities $ 825,102
-----------
TOTAL COMMON STOCKS
(Cost $30,881,619) $30,067,196
-----------
Shares Value
TEMPORARY CASH INVESTMENTS - 5.1%
Security Lending Collateral - 5.1%
1,519,655 Securities Lending Investment
Fund, 5.16% $ 1,519,655
-----------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $1,519,655) $ 1,519,655
-----------
TOTAL INVESTMENT
IN SECURITIES - 105.6%
(Cost $32,401,274) $31,586,851
-----------
OTHER ASSETS
AND LIABILITIES - (5.6)% $(1,673,720)
-----------
TOTAL NET ASSETS - 100.0% $29,913,131
===========
* Non-income producing security.
(A.D.R.) American Depositary Receipt.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
7,722 Cooper Companies, Inc. $ 342,007
14,820 Palm, Inc.* 238,602
11,514 Par Pharmaceutical Co., Inc.* 212,548
20,695 Teva Pharmaceutical Industries, Ltd. 653,755
-----------
Total $ 1,446,912
===========
The accompanying notes are an integral part of these financial statements. 55
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
COMMON STOCKS - 98.3%
Consumer Services - 3.8%
Hotels, Resorts & Cruise Lines - 3.8%
74,000 Hilton Hotels Corp. $ 2,092,720
30,000 Starwood Hotels & Resorts* 1,810,200
-------------
$ 3,902,920
-------------
Total Consumer Services $ 3,902,920
-------------
Real Estate - 94.5%
Diversified Real Estate Investment Trusts - 8.8%
82,500 Liberty Property Trust (a) $ 3,646,500
18,000 PS Business Parks, Inc. 1,062,000
52,700 Spirit Finance Corp. 593,402
39,000 Vornado Realty Trust 3,804,450
-------------
$ 9,106,352
-------------
Industrial Real Estate Investment Trusts - 7.4%
35,000 AMB Property Corp. $ 1,769,250
17,700 First Potomac Realty Trust 527,283
103,500 ProLogis Trust 5,394,420
-------------
$ 7,690,953
-------------
Mortgage Real Estate Investment Trusts - 0.8%
23,500 iStar Financial, Inc. $ 887,125
-------------
Office Real Estate Investment Trusts - 18.1%
28,000 BioMed Property Trust, Inc. $ 838,320
62,000 Boston Properties, Inc. 5,604,800
71,000 Brandywine Realty Trust 2,284,070
7,000 Carramerica Realty Corp. 311,850
26,500 Corporate Office Properties (a) 1,115,120
30,000 Duke Realty Investments, Inc. 1,054,500
44,500 Equity Office Properties Trust (a) 1,624,695
55,500 Highwoods Properties, Inc. 2,007,990
20,000 Kilroy Realty Corp. 1,445,000
13,500 Mack-Cali Realty Corp. 619,920
65,000 Trizec Properties, Inc. 1,861,600
-------------
$ 18,767,865
-------------
Real Estate Management & Development - 3.3%
108,000 Brookfield Properties Corp. (a) $ 3,474,360
-------------
Residential Real Estate Investment Trusts - 19.5%
23,100 Apartment Investment & Management Co. $ 1,003,695
74,500 Archstone Communities Trust 3,789,815
45,000 AvalonBay Communities, Inc. (a) 4,977,900
39,000 Camden Property Trust 2,868,450
8,000 Equity Lifestyle Properties, Inc. 350,640
109,000 Equity Residential Property Trust (a) 4,875,570
13,900 Home Properties, Inc.*(a) 771,589
57,000 United Dominion Realty Trust 1,596,570
-------------
$ 20,234,229
-------------
Shares Value
Retail Real Estate Investment Trusts - 25.8%
67,000 Developers Diversifies Realty Corp. $ 3,496,060
35,200 Federal Realty Investment Trust 2,464,000
63,000 General Growth Properties, Inc. 2,838,780
52,500 Kimco Realty Corp. (a) 1,915,725
40,900 Kite Realty Group Trust 637,631
33,000 Pan Pacific Retail Properties, Inc. 2,289,210
37,000 Regency Centers Corp. 2,299,550
89,000 Simon DeBartolo Group, Inc. 7,381,660
48,000 Taubman Centers, Inc. 1,963,200
20,900 The Macerich Co. 1,467,180
-------------
$ 26,752,996
-------------
Specialized Real Estate Investment Trusts - 10.8%
41,000 Extra Space Storage, Inc.* $ 665,840
11,000 Healthcare Realty Trust, Inc. 350,350
12,000 Hospitality Properties Trust 527,040
190,000 Host Hotels & Resorts, Inc.*(a) 4,155,300
34,500 Nationwide Health Properties, Inc.* 776,595
42,100 Public Storage, Inc. 3,195,390
13,500 Shurgard Storage Centers, Inc. 843,750
20,000 Strategic Hotels & Resorts, Inc.* 414,800
14,500 U-Store-It Trust* 273,470
-------------
$ 11,202,535
-------------
Total Real Estate $ 98,116,415
-------------
TOTAL COMMON STOCKS
(Cost $56,906,299) $ 102,019,335
-------------
TEMPORARY CASH INVESTMENT - 18.5%
Security Lending Collateral - 18.5%
19,238,901 Securities Lending Investment
Fund, 5.16% $ 19,238,901
-------------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $19,238,901) $ 19,238,901
-------------
TOTAL INVESTMENT
IN SECURITIES - 116.8%
(Cost $76,145,200) $ 121,258,236
-------------
OTHER ASSETS
AND LIABILITIES - (16.8)% $ (17,416,823)
-------------
TOTAL NET ASSETS - 100.0% $ 103,841,413
=============
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
35,000 AvalonBay Communities, Inc. $ 3,871,700
52,400 Brookfield Properties Corp. 1,685,708
26,235 Corporate Office Properties 1,103,969
44,055 Equity Office Properties Trust 1,608,448
31,910 Equity Residential Property Trust 1,427,334
13,761 Home Properties, Inc.* 763,873
188,100 Host Hotels & Resorts, Inc.* 4,113,747
20,200 Kimco Realty Corp. 737,098
81,675 Liberty Property Trust 3,610,035
------------
Total $ 18,921,912
============
56 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
COMMON STOCKS - 96.2%
Energy - 7.6%
Integrated Oil & Gas - 5.8%
179,531 Chevron Corp. $ 11,141,694
88,025 ConocoPhillips 5,768,278
114,668 Exxon Mobil Corp. 7,034,882
53,725 Occidental Petroleum Corp. 5,509,499
------------
$ 29,454,353
------------
Oil & Gas Equipment & Services - 0.4%
42,162 Weatherford Intl, Inc.* $ 2,092,078
------------
Oil & Gas Exploration & Production - 1.4%
61,094 Apache Corp. $ 4,169,666
67,515 Pioneer Natural Resources Co. 3,133,371
------------
$ 7,303,037
------------
Total Energy $ 38,849,468
------------
Materials - 5.0%
Aluminum - 0.5%
72,726 Alcoa, Inc. $ 2,353,413
------------
Diversified Chemical - 0.8%
70,100 Dow Chemical Co. $ 2,736,003
37,427 E.I. du Pont de Nemours and Co. 1,556,963
------------
$ 4,292,966
------------
Diversified Metals & Mining - 2.5%
98,510 Inco, Ltd.* $ 6,491,809
122,524 Rio Tinto Plc 6,473,996
------------
$ 12,965,805
------------
Industrial Gases - 0.9%
25,334 Air Products & Chemicals, Inc. $ 1,619,349
53,762 Praxair, Inc. 2,903,148
------------
$ 4,522,497
------------
Specialty Chemicals - 0.3%
37,481 Ecolab, Inc. $ 1,520,979
------------
Total Materials $ 25,655,660
------------
Capital Goods - 9.7%
Aerospace & Defense - 2.6%
86,022 General Dynamics Corp. $ 5,631,000
7,100 Lockheed Martin Corp.* 509,354
111,683 United Technologies Corp. 7,082,936
------------
$ 13,223,290
------------
Building Products - 0.0%
8,309 Masco Corp. $ 246,279
------------
Shares Value
Construction & Farm Machinery &
Heavy Trucks - 4.5%
99,679 Caterpillar, Inc. $ 7,424,092
94,266 Deere & Co. 7,870,268
91,215 PACCAR, Inc. 7,514,292
------------
$ 22,808,652
------------
Electrical Component & Equipment - 1.2%
48,640 Emerson Electric Co. $ 4,076,518
29,606 Rockwell International Corp. 2,131,928
------------
$ 6,208,446
------------
Industrial Conglomerates - 1.1%
7,200 3M Co. $ 581,544
154,654 General Electric Co. 5,097,396
------------
$ 5,678,940
------------
Industrial Machinery - 0.3%
16,367 Parker Hannifin Corp. $ 1,270,079
------------
Total Capital Goods $ 49,435,686
------------
Transportation - 3.9%
Airlines - 0.4%
135,293 Southwest Airlines Co. $ 2,214,746
------------
Railroads - 3.5%
74,802 Burlington Northern, Inc. $ 5,928,059
222,911 Norfolk Southern Corp. 11,863,323
------------
$ 17,791,382
------------
Total Transportation $ 20,006,128
------------
Automobiles & Components - 2.3%
Auto Parts & Equipment - 1.5%
91,445 Johnson Controls, Inc. $ 7,518,608
------------
Automobile Manufacturers - 0.8%
628,984 Ford Motor Corp. $ 4,358,859
------------
Total Automobiles & Components $ 11,877,467
------------
Consumer Durables & Apparel - 0.2%
Apparel, Accessories & Luxury Goods - 0.2%
23,883 Liz Claiborne, Inc. $ 885,104
------------
Total Consumer Durables & Apparel $ 885,104
------------
Consumer Services - 0.1%
Restaurants - 0.1%
14,325 Yum! Brands, Inc. $ 720,118
------------
Total Consumer Services $ 720,118
------------
Media - 5.2%
Advertising - 0.7%
42,090 Omnicom Group $ 3,749,798
------------
Movies & Entertainment - 1.0%
162,516 The Walt Disney Co. $ 4,875,480
------------
The accompanying notes are an integral part of these financial statements. 57
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Publishing - 3.5%
41,058 Elsevier NV $ 617,338
64,140 Gannett Co. 3,587,350
125,263 John Wiley & Sons, Inc. 4,158,732
188,438 McGraw-Hill Co., Inc. 9,465,241
------------
$ 17,828,661
------------
Total Media $ 26,453,939
------------
Retailing - 4.7%
Computer & Electronics Retail - 0.1%
9,295 GameStop Corp. (Class B)* $ 318,354
------------
Department Stores - 1.8%
100,356 Federated Department Stores, Inc.* $ 3,673,030
147,889 Nordstrom, Inc. 5,397,949
------------
$ 9,070,979
------------
General Merchandise Stores - 1.5%
150,713 Target Corp. $ 7,365,344
------------
Home Improvement Retail - 0.8%
70,792 Lowe's Companies, Inc. $ 4,294,951
------------
Specialty Stores - 0.5%
29,018 Barnes & Noble, Inc. $ 1,059,157
69,072 Staples, Inc.* 1,679,831
------------
$ 2,738,988
------------
Total Retailing $ 23,788,616
------------
Food & Drug Retailing - 3.3%
Drug Retail - 2.1%
75,467 CVS Corp. $ 2,316,837
190,303 Walgreen Co. 8,533,187
------------
$ 10,850,024
------------
Food Distributors - 1.0%
161,566 Sysco Corp. $ 4,937,457
------------
Hypermarkets & Supercenters - 0.2%
19,649 Costco Wholesale Corp. $ 1,122,547
------------
Total Food & Drug Retailing $ 16,910,028
------------
Food, Beverage & Tobacco - 5.2%
Packaged Foods & Meats - 3.9%
118,941 Campbell Soup Co. $ 4,413,901
76,411 General Mills, Inc. 3,947,392
108,055 H.J. Heinz Co., Inc. 4,454,027
82,795 Hershey Foods Corp. 4,559,521
23,685 Kellogg Co. 1,147,065
73,473 Sara Lee Corp. 1,177,037
------------
$ 19,698,943
------------
Soft Drinks - 1.3%
113,124 PepsiCo, Inc. $ 6,791,965
------------
Total Food, Beverage & Tobacco $ 26,490,908
------------
Shares Value
Household & Personal Products - 1.8%
Household Products - 1.3%
14,255 Clorox Co. $ 869,127
96,982 Colgate-Palmolive Co. 5,809,222
------------
$ 6,678,349
------------
Personal Products - 0.5%
67,208 Estee Lauder Co.* $ 2,598,933
------------
Total Household &
Personal Products $ 9,277,282
------------
Health Care Equipment & Services - 4.0%
Health Care Equipment - 4.0%
71,108 Becton, Dickinson & Co. $ 4,346,832
103,638 Biomet, Inc. 3,242,833
63,800 C. R. Bard, Inc. 4,673,988
50,339 Medtronic, Inc. 2,361,906
104,000 St. Jude Medical, Inc.* 3,371,680
39,300 Zimmer Holdings, Inc.* 2,229,096
------------
$ 20,226,335
------------
Total Health Care
Equipment & Services $ 20,226,335
------------
Pharmaceuticals & Biotechnology - 8.1%
Biotechnology - 0.7%
53,778 Amgen, Inc.* $ 3,507,939
------------
Pharmaceuticals - 7.4%
102,710 Abbott Laboratories $ 4,479,183
53,017 Barr Laboratorie, Inc.* 2,528,381
132,985 Bristol-Myers Squibb Co. 3,438,992
80,039 Eli Lilly & Co. 4,423,756
72,158 Johnson & Johnson 4,323,707
95,767 Merck & Co., Inc. 3,488,792
77,980 Novartis AG (A.D.R.)* 4,204,682
134,400 Pfizer, Inc. 3,154,368
36,377 Roche Holdings AG (A.D.R.)* 3,006,486
175,915 Schering-Plough Corp. 3,347,662
44,611 Teva Pharmaceutical Industries, Ltd. 1,409,261
------------
$ 37,805,270
------------
Total Pharmaceuticals &
Biotechnology $ 41,313,209
------------
Banks - 8.8%
Diversified Banks - 3.7%
235,635 U.S. Bancorp $ 7,276,409
39,577 Wachovia Corp. 2,140,324
140,973 Wells Fargo & Co. 9,456,469
------------
$ 18,873,202
------------
58 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Regional Banks - 3.3%
25,377 Compass Bancshares Inc.* $ 1,410,961
83,035 First Horizon National Corp. 3,338,007
170,284 National City Corp. 6,162,578
55,102 SunTrust Banks, Inc. 4,202,079
21,817 Zions Bancorporation 1,700,417
------------
$ 16,814,042
------------
Thrifts & Mortgage Finance - 1.8%
34,700 Golden West Financial Corp. $ 2,574,740
146,301 Washington Mutual, Inc. 6,668,400
------------
$ 9,243,140
------------
Total Banks $ 44,930,384
------------
Diversified Financials - 6.5%
Asset Management & Custody Banks - 3.3%
43,970 Federated Investors, Inc.* $ 1,385,055
104,482 State Street Corp. 6,069,359
249,606 T. Rowe Price Associates, Inc. 9,437,603
------------
$ 16,892,017
------------
Consumer Finance - 1.2%
112,725 American Express Co. $ 5,999,225
------------
Investment Banking & Brokerage - 0.8%
58,452 Merrill Lynch & Co., Inc. $ 4,065,921
------------
Diversified Financial Services - 1.2%
86,529 Bank of America Corp. $ 4,162,045
42,750 Citigroup, Inc. 2,062,260
------------
$ 6,224,305
------------
Total Diversified Financials $ 33,181,468
------------
Insurance - 2.4%
Life & Health Insurance - 0.5%
49,100 MetLife, Inc. $ 2,514,411
------------
Multi-Line Insurance - 0.2%
13,522 Hartford Financial Services Group, Inc. $ 1,143,961
------------
Property & Casualty Insurance - 1.7%
137,506 Chubb Corp. $ 6,861,549
34,082 Safeco Corp. 1,920,521
------------
$ 8,782,070
------------
Total Insurance $ 12,440,442
------------
Software & Services - 3.5%
Application Software - 0.5%
86,186 Adobe Systems, Inc.* $ 2,616,607
------------
Data Processing & Outsourced Services - 2.2%
181,884 Automatic Data Processing, Inc. $ 8,248,439
25,841 DST Systems, Inc.* 1,537,540
28,113 Fiserv, Inc.* 1,275,206
------------
$ 11,061,185
------------
Shares Value
Systems Software - 0.8%
181,275 Microsoft Corp. $ 4,223,708
------------
Total Software & Services $ 17,901,500
------------
Technology Hardware & Equipment - 6.1%
Communications Equipment - 2.9%
139,000 Cisco Systems, Inc.* $ 2,714,670
313,651 Motorola, Inc. 6,320,068
274,102 Nokia Corp. (A.D.R.)* 5,553,307
------------
$ 14,588,045
------------
Computer Hardware - 2.1%
100,576 Dell, Inc.* $ 2,455,060
176,511 Hewlett-Packard Co. 5,591,868
703,372 Sun Microsystems, Inc.* 2,918,994
------------
$ 10,965,922
------------
Computer Storage & Peripherals - 0.3%
134,374 EMC Corp.* $ 1,474,083
------------
Office Electronics - 0.8%
57,242 Canon, Inc. (A.D.R.) $ 4,194,121
------------
Total Technology
Hardware & Equipment $ 31,222,171
------------
Semiconductors - 2.6%
Semiconductor Equipment - 0.3%
96,070 Applied Materials, Inc. $ 1,564,020
------------
Semiconductors - 2.3%
20,845 Freescale Semiconductor, Inc. (Class B)* $ 612,843
258,029 Intel Corp. 4,889,650
211,248 Texas Instruments, Inc. 6,398,702
------------
$ 11,901,195
------------
Total Semiconductors $ 13,465,215
Telecommunication Services - 4.2%
Integrated Telecommunication Services - 3.9%
279,088 AT&T Corp. $ 7,783,764
141,901 BellSouth Corp. 5,136,816
74,411 Century Telephone Enterprises, Inc. 2,764,369
129,130 Verizon Communications, Inc. 4,324,564
------------
$ 20,009,513
------------
Wireless Telecommunication Services - 0.3%
23,216 Alltel Corp. $ 1,481,877
------------
Total Telecommunication Services $ 21,491,390
------------
Utilities - 0.9%
Electric Utilities - 0.5%
15,000 Exelon Corp. $ 852,450
56,177 Southern Co. 1,800,473
------------
$ 2,652,923
------------
The accompanying notes are an integral part of these financial statements. 59
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Multi-Utilities - 0.4%
34,904 Consolidated Edison, Inc. $ 1,551,132
13,700 PG&E Corp. 538,134
------------
$ 2,089,266
------------
Total Utilities $ 4,742,189
------------
TOTAL COMMON STOCKS
(Cost $376,681,138) $491,264,707
------------
Principal
Amount
TEMPORARY CASH INVESTMENT - 2.2%
Repurchase Agreement - 2.2%
$11,300,000 UBS Warburg, Inc., 4.40% dated
6/30/06, repurchase price of
$11,300,000 plus accrued interest on
7/3/06 collateralized by $12,053,000
U.S. Treasury Bill, 3.375%, 9/15/09 $ 11,300,000
------------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $11,300,000) $ 11,300,000
------------
TOTAL INVESTMENT
IN SECURITIES - 98.4%
(Cost $387,981,138) $502,564,707
------------
OTHER ASSETS
AND LIABILITIES - 1.6% $ 8,367,499
------------
TOTAL NET ASSETS - 100.0% $510,932,206
============
(A.D.R.) American Depositary Receipt
* Non-income producing security.
60 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
CONVERTIBLE PREFERRED STOCKS - 0.5%
Automobiles & Components - 0.4%
Automobile Manufacturers - 0.4%
60,747 Ford Cap Trust 6.50% 01/15/32 $ 1,680,869
------------
Total Automobiles & Components $ 1,680,869
------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
4,255 Schering-Plough Corp. Cnpfd
6.0%, 9/14/07 $ 214,346
------------
Total Pharmaceuticals &
Biotechnology $ 214,346
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $3,070,923) $ 1,895,215
------------
COMMON STOCKS - 97.0%
Energy - 5.8%
Integrated Oil & Gas - 5.8%
144,649 Chevron Corp. $ 8,976,917
115,922 ConocoPhillips 7,596,369
84,898 Exxon Mobil Corp. 5,208,492
------------
$ 21,781,778
------------
Total Energy $ 21,781,778
------------
Materials - 4.4%
Diversified Chemical - 1.1%
73,300 Dow Chemical Co. $ 2,860,899
82,800 Olin Corp. 1,484,604
------------
$ 4,345,503
------------
Diversified Metals & Mining - 0.3%
43,156 Compass Minerals International, Inc. $ 1,076,742
------------
Forest Products - 0.8%
46,000 Weyerhaeuser Co. $ 2,863,500
------------
Industrial Gases - 1.2%
71,152 Air Products & Chemicals, Inc. $ 4,548,036
------------
Specialty Chemicals - 1.0%
146,365 Valspar Corp. $ 3,865,500
------------
Total Materials $ 16,699,281
------------
Capital Goods - 9.2%
Aerospace & Defense - 1.7%
103,955 United Technologies Corp. $ 6,592,826
------------
Construction & Farm Machinery &
Heavy Trucks - 4.2%
38,489 Deere & Co. $ 3,213,447
153,643 PACCAR, Inc. 12,657,110
------------
$ 15,870,557
------------
Shares Value
Electrical Component & Equipment - 2.0%
91,501 Emerson Electric Co. $ 7,668,699
------------
Industrial Machinery - 1.3%
30,350 Gorman-Rupp Co. $ 807,310
117,902 The Timken Co. 3,950,896
------------
$ 4,758,206
------------
Total Capital Goods $ 34,890,288
------------
Commercial Services & Supplies - 0.4%
Office Services & Supplies - 0.4%
37,000 Mine Safety Appliances Co.*(a) $ 1,487,400
------------
Total Commercial
Services & Supplies $ 1,487,400
------------
Automobiles & Components - 2.7%
Auto Parts & Equipment - 2.0%
93,560 Johnson Controls, Inc. $ 7,692,503
------------
Automobile Manufacturers - 0.7%
378,522 Ford Motor Corp.(a) $ 2,623,157
------------
Total Automobiles & Components $ 10,315,660
------------
Consumer Durables & Apparel - 0.6%
Housewares & Specialties - 0.6%
123,380 Tupperware Brands Corp. $ 2,429,352
------------
Total Consumer Durables & Apparel $ 2,429,352
------------
Consumer Services - 1.8%
Leisure Facilities - 1.4%
200,827 Cedar Fair, L.P. $ 5,329,949
------------
Specialized Consumer Services - 0.4%
134,841 Servicemaster Co. $ 1,392,908
------------
Total Consumer Services $ 6,722,857
------------
Media - 1.5%
Publishing - 1.5%
113,625 McGraw-Hill Co., Inc. $ 5,707,384
------------
Total Media $ 5,707,384
------------
Retailing - 1.5%
Department Stores - 0.6%
55,242 Federated Department Stores, Inc.* $ 2,021,857
------------
Distributors - 0.9%
84,730 Genuine Parts Co. $ 3,529,852
------------
Total Retailing $ 5,551,709
------------
The accompanying notes are an integral part of these financial statements. 61
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Food, Beverage & Tobacco - 7.1%
Packaged Foods & Meats - 6.5%
188,614 Campbell Soup Co. $ 6,999,466
60,831 General Mills, Inc. 3,142,529
187,543 H.J. Heinz Co., Inc. 7,730,522
66,100 Kellogg Co. 3,201,223
81,300 The J.M. Smucker Co. 3,634,110
------------
$ 24,707,850
------------
Soft Drinks - 0.6%
38,972 PepsiCo, Inc. $ 2,339,879
------------
Total Food, Beverage & Tobacco $ 27,047,729
------------
Household & Personal Products - 2.3%
Household Products - 2.3%
70,315 Clorox Co. $ 4,287,106
76,594 Colgate-Palmolive Co. 4,587,981
------------
$ 8,875,087
------------
Total Household &
Personal Products $ 8,875,087
------------
Pharmaceuticals & Biotechnology - 6.7%
Pharmaceuticals - 6.7%
111,066 Abbott Laboratories $ 4,843,588
238,807 Bristol-Myers Squibb Co. 6,175,549
74,039 Eli Lilly & Co. 4,092,136
260,932 Merck & Co., Inc. 9,505,753
36,900 Pfizer, Inc. 866,043
------------
$ 25,483,069
------------
Total Pharmaceuticals &
Biotechnology $ 25,483,069
------------
Banks - 14.3%
Diversified Banks - 4.1%
153,101 U.S. Bancorp $ 4,727,759
103,024 Wachovia Corp. 5,571,538
74,937 Wells Fargo & Co. 5,026,774
------------
$ 15,326,071
------------
Regional Banks - 7.2%
88,467 First Horizon National Corp. $ 3,556,373
123,911 National City Corp. 4,484,339
54,800 PNC Bank Corp. 3,845,316
73,800 Regions Financial Corp. 2,444,256
102,478 SunTrust Banks, Inc. 7,814,972
144,505 Whitney Holding Corp. 5,111,142
------------
$ 27,256,398
------------
Thrifts & Mortgage Finance - 3.0%
250,458 Washington Mutual, Inc. $ 11,415,876
------------
Total Banks $ 53,998,345
------------
Shares Value
Diversified Financials - 5.6%
Asset Management & Custody Banks - 4.3%
152,899 Eaton Vance Corp.(a) $ 3,816,359
34,424 State Street Corp. 1,999,690
279,886 T. Rowe Price Associates, Inc. 10,582,490
------------
$ 16,398,539
------------
Investment Banking & Brokerage - 0.8%
55,113 A.G. Edwards, Inc. $ 3,048,851
------------
Diversified Financial Services - 0.5%
35,852 Bank of America Corp. $ 1,724,481
------------
Total Diversified Financials $ 21,171,871
------------
Insurance - 4.6%
Life & Health Insurance - 1.4%
91,791 Lincoln National Corp.* $ 5,180,684
------------
Property & Casualty Insurance - 3.2%
142,492 Chubb Corp. $ 7,110,351
92,994 Safeco Corp. 5,240,212
------------
$ 12,350,563
------------
Total Insurance $ 17,531,247
------------
Real Estate - 2.7%
Diversified Real Estate Investment Trusts - 0.9%
73,500 Liberty Property Trust(a) $ 3,248,700
------------
Residential Real Estate Investment
Trusts - 0.8%
56,454 Archstone Communities Trust(a) $ 2,871,815
------------
Retail Real Estate Investment Trusts - 1.0%
109,500 Kimco Realty Corp. $ 3,995,655
------------
Total Real Estate $ 10,116,170
------------
Software & Services - 0.6%
Data Processing & Outsourced Services - 0.6%
50,297 Automatic Data Processing, Inc. $ 2,280,969
------------
Total Software & Services $ 2,280,969
------------
Technology Hardware & Equipment - 0.3%
Computer Hardware - 0.3%
36,500 Hewlett-Packard Co. $ 1,156,320
------------
Total Technology
Hardware & Equipment $ 1,156,320
------------
Telecommunication Services - 9.3%
Integrated Telecommunication Services - 8.2%
305,096 AT&T Corp. $ 8,509,127
251,696 BellSouth Corp. 9,111,395
364,179 Citizens Utilities Co. (Class B) 4,752,536
254,800 Verizon Communications, Inc. 8,533,252
------------
$ 30,906,310
------------
62 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Wireless Telecommunication Services - 1.1%
66,304 Alltel Corp. $ 4,232,184
------------
Total Telecommunication Services $ 35,138,494
------------
Utilities - 15.6%
Electric Utilities - 2.3%
127,711 Great Plains Energy, Inc.(a) $ 3,558,028
157,858 Southern Co. 5,059,349
------------
$ 8,617,377
------------
Gas Utilities - 6.4%
120,100 AGL Resources Inc. $ 4,578,212
129,470 Atmos Energy Corp. 3,613,508
170,238 Equitable Resources, Inc. 5,702,973
126,481 Questar Corp. 10,180,456
------------
$ 24,075,149
------------
Multi-Utilities - 6.9%
98,272 Ameren Corp. $ 4,962,736
94,780 Consolidated Edison, Inc. 4,212,023
180,200 Duke Energy Corp. 5,292,474
143,415 NSTAR 4,101,668
193,900 PG&E Corp. 7,616,392
------------
$ 26,185,293
------------
Total Utilities $ 58,877,819
------------
TOTAL COMMON STOCKS
(Cost $297,591,022) $367,262,829
------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 6.5%
Repurchase Agreement - 2.7%
$10,100,000 UBS Warburg, Inc., 4.4% dated
6/30/06, repurchase price of
$10,100,000 plus accrued interest on
7/3/06 collateralized by $10,302,000
U.S. Treasury Bill, 4.625%, 3/31/08 $ 10,100,000
------------
Shares
Security Lending Collateral - 3.8%
14,278,681 Securities Lending Investment
Fund, 5.16% $ 14,278,681
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $24,378,681) $ 24,378,681
------------
TOTAL INVESTMENT
IN SECURITIES - 104.0%
(Cost $325,040,626) $393,536,725
------------
OTHER ASSETS
AND LIABILITIES - (4.0)% $(14,959,301)
------------
TOTAL NET ASSETS - 100.0% $378,577,424
============
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
54,026 Archstone Communities Trust $ 2,748,303
142,328 Eaton Vance Corp. 3,552,507
374,737 Ford Motor Corp. 2,596,927
69,296 Great Plains Energy, Inc. 1,930,587
38,112 Liberty Property Trust 1,684,550
36,630 Mine Safety Appliances Co.* 1,472,526
-----------
Total $13,985,400
===========
The accompanying notes are an integral part of these financial statements. 63
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Shares Value
COMMON STOCKS - 63.1%
Energy - 4.9%
Integrated Oil & Gas - 1.1%
6,700 Exxon Mobil Corp. $ 411,045
-----------
Oil & Gas Drilling - 1.4%
12,300 ENSCO International, Inc. $ 566,046
-----------
Oil & Gas Equipment & Services - 2.0%
12,598 National-Oilwell Varco, Inc.* $ 797,705
-----------
Oil & Gas Exploration & Production - 0.4%
2,700 Encana Corp.(a) $ 142,128
-----------
Total Energy $ 1,916,924
-----------
Materials - 3.8%
Gold - 1.4%
10,000 Newmont Mining Corp. $ 529,300
-----------
Industrial Gases - 2.4%
17,400 Praxair, Inc. $ 939,600
-----------
Total Materials $ 1,468,900
-----------
Capital Goods - 4.4%
Aerospace & Defense - 2.6%
16,000 Northrop Grumman Corp. $ 1,024,960
-----------
Industrial Conglomerates - 1.8%
8,500 3M Co. $ 686,545
-----------
Total Capital Goods $ 1,711,505
-----------
Commercial Services & Supplies - 0.4%
Diversified Commercial Services - 0.4%
3,600 Cintas Corp.*(a) $ 143,136
-----------
Total Commercial
Services & Supplies $ 143,136
-----------
Transportation - 2.4%
Air Freight & Couriers - 2.4%
11,200 United Parcel Service $ 922,096
-----------
Total Transportation $ 922,096
-----------
Consumer Durables & Apparel - 1.4%
Apparel, Accessories & Luxury Goods - 1.4%
14,600 Liz Claiborne, Inc. $ 541,076
-----------
Total Consumer Durables & Apparel $ 541,076
-----------
Media - 3.5%
Broadcasting & Cable Television - 2.1%
25,100 Comcast Corp.* $ 822,778
-----------
Movies & Entertainment - 1.4%
14,659 Viacom, Inc. (Class B) $ 525,379
-----------
Total Media $ 1,348,157
-----------
Shares Value
Retailing - 1.5%
Apparel Retail - 1.5%
20,500 Ross Stores, Inc. $ 575,025
-----------
Total Retailing $ 575,025
-----------
Food & Drug Retailing - 3.5%
Drug Retail - 3.3%
42,100 CVS Corp. $ 1,292,470
-----------
Hypermarkets & Supercenters - 0.2%
1,600 Wal-Mart Stores, Inc. $ 77,072
-----------
Total Food & Drug Retailing $ 1,369,542
-----------
Food, Beverage & Tobacco - 6.6%
Brewers - 0.6%
5,100 Anheuser-Busch Companies, Inc.(a) $ 232,509
-----------
Packaged Foods & Meats - 1.5%
13,375 William Wrigley Jr. Co. $ 606,690
-----------
Soft Drinks - 4.5%
10,000 Coca-Cola Co. $ 430,200
21,700 PepsiCo, Inc. 1,302,868
-----------
$ 1,733,068
-----------
Total Food, Beverage & Tobacco $ 2,572,267
-----------
Household & Personal Products - 0.9%
Personal Products - 0.9%
9,300 Estee Lauder Co.* $ 359,631
-----------
Total Household &
Personal Products $ 359,631
-----------
Health Care Equipment & Services - 2.0%
Health Care Distributors - 1.1%
6,400 Cardinal Health, Inc. $ 411,712
-----------
Health Care Equipment - 0.9%
11,100 Biomet, Inc. $ 347,319
-----------
Total Health Care Equipment &
Services $ 759,031
-----------
Pharmaceuticals & Biotechnology - 6.5%
Biotechnology - 1.9%
11,616 Amgen, Inc.* $ 757,712
-----------
Pharmaceuticals - 4.6%
4,000 Eli Lilly & Co. $ 221,080
20,788 Pfizer, Inc. 487,894
10,069 Teva Pharmaceutical Industries, Ltd.(a) 318,080
16,900 Wyeth 750,529
-----------
$ 1,777,583
-----------
Total Pharmaceuticals &
Biotechnology $ 2,535,295
-----------
64 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Diversified Financials - 5.1%
Asset Management & Custody Banks - 1.3%
15,900 The Bank of New York Co., Inc. $ 511,980
-----------
Consumer Finance - 1.7%
13,100 American Express Co. $ 697,182
-----------
Investment Banking & Brokerage - 0.5%
2,900 Merrill Lynch & Co., Inc. $ 201,724
-----------
Other Diversified Finance Services - 1.4%
11,900 Bank of America Corp. $ 572,390
-----------
Total Diversified Financials $ 1,983,276
-----------
Insurance - 4.6%
Property & Casualty Insurance - 4.6%
465 Berkshire Hathaway, Inc. (Class B)* $ 1,414,995
14,800 Progressive Corp. 380,508
-----------
$ 1,795,503
-----------
Total Insurance $ 1,795,503
-----------
Software & Services - 6.4%
Data Processing & Outsourced Services - 3.3%
28,600 First Data Corp. $ 1,288,144
-----------
Systems Software - 3.1%
52,000 Microsoft Corp. $ 1,211,600
-----------
Total Software & Services $ 2,499,744
-----------
Shares Value
Technology Hardware & Equipment - 4.2%
Communications Equipment - 2.8%
21,900 Cisco Systems, Inc.* $ 427,707
9,500 Corning, Inc.* 229,805
10,900 Qualcomm, Inc. 436,763
-----------
$ 1,094,275
-----------
Computer Hardware - 1.4%
16,922 Hewlett-Packard Co. $ 536,089
-----------
Total Technology
Hardware & Equipment $ 1,630,364
-----------
Semiconductors - 0.3%
Semiconductors - 0.3%
7,800 Intel Corp. $ 147,810
-----------
Total Semiconductors $ 147,810
-----------
Telecommunication Services - 0.4%
Wireless Telecommunication Services - 0.4%
7,800 Vodafone Group Plc (A.D.R.) $ 166,140
-----------
Total Telecommunication Services $ 166,140
-----------
TOTAL COMMON STOCKS
(Cost $20,621,774) $24,445,422
-----------
The accompanying notes are an integral part of these financial statements. 65
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
ASSET BACKED SECURITIES - 0.8%
Diversified Financials - 0.4%
Other Diversified Finance Services - 0.4%
72,624 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 72,612
81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881
-----------
$ 153,493
-----------
Total Diversified Financials $ 153,493
-----------
Utilities - 0.4%
Electric Utilities - 0.4%
82,600 BBB-/Baa3 FPL Energy America Wind LLC, 6.639%, 6/20/23 (144A) $ 84,431
59,400 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 59,326
-----------
$ 143,757
-----------
Total Utilities $ 143,757
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $300,274) $ 297,250
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1%
Diversified Financials - 0.2%
Diversified Financial Services - 0.2%
25,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 24,966
50,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 49,111
-----------
$ 74,077
-----------
Total Diversified Financials $ 74,077
-----------
Government - 0.9%
Government - 0.9%
250,000 AAA/Aaa Fannie Mae Benchmark Remic, 6.0%, 6/25/16 $ 249,141
98,503 AAA/Aaa Federal Home Loan Mortgage Corp., 5.875%, 5/15/16 98,172
-----------
Total Government $ 347,313
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $422,379) $ 421,390
-----------
CORPORATE BONDS - 10.2%
Energy - 0.8%
Integrated Oil & Gas - 0.1%
40,000 A-/A3 Occidental Petroleum, 6.75%, 1/15/12 $ 42,087
-----------
Oil & Gas Equipment And Services - 0.2%
500,000 NR/NR Sevan Marine, 9.0%, 3/31/08 $ 82,888
-----------
Oil & Gas Exploration & Production - 0.3%
100,000 BBB/NR Gazprom International SA., 7.201%, 2/1/20 (144A) $ 101,375
-----------
Oil & Gas Refining & Marketing - 0.2%
25,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 23,583
50,000 BB-/Ba2 Semco Energy, Inc., 7.125%, 5/15/08 49,643
-----------
$ 73,226
-----------
Total Energy $ 299,576
-----------
Materials - 1.2%
Aluminum - 0.1%
50,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 48,000
-----------
66 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Commodity Chemicals - 0.3%
100,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 92,000
-----------
Diversified Metals & Mining - 0.3%
125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 127,964
-----------
Metal & Glass Containers - 0.1%
40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 44,151
-----------
Paper Products - 0.4%
50,000 B+/B1 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 48,438
100,000 B-/B3 MDP Acquisitions, 9.625%, 10/1/12 103,000
-----------
$ 151,438
-----------
Total Materials $ 463,553
-----------
Capital Goods - 0.5%
Electrical Component & Equipment - 0.1%
25,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 24,338
-----------
Industrial Conglomerates - 0.2%
55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 56,034
30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,023
-----------
$ 88,057
-----------
Trading Companies & Distributors - 0.2%
100,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 91,329
-----------
Total Capital Goods $ 203,724
-----------
Automobiles & Components - 0.5%
Automobile Manufacturers - 0.5%
200,000 B-/Caa1 General Motors, 7.2%, 1/15/11(a) $ 177,000
-----------
Total Automobiles & Components $ 177,000
-----------
Consumer Durables & Apparel - 0.1%
Home Furnishings - 0.1%
30,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 28,921
-----------
Total Consumer Durables & Apparel $ 28,921
-----------
Consumer Services - 0.1%
Hotels, Resorts & Cruise Lines - 0.1%
50,000 BBB-/Ba1 Royal Caribbean Cruises, 7.25%, 6/15/16 $ 49,513
-----------
Total Consumer Services $ 49,513
-----------
Media - 1.4%
Broadcasting & Cable Television - 0.9%
250,000 BBB+/Baa2 Comcast Cable Corp., 7.125%, 6/15/13 $ 261,883
100,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 103,432
-----------
$ 365,315
-----------
Publishing - 0.5%
170,000 BBB/Baa2 News America, Inc., 7.3%, 4/30/28 $ 172,389
-----------
Total Media $ 537,704
-----------
The accompanying notes are an integral part of these financial statements. 67
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Retailing - 0.1%
Specialty Stores - 0.1%
50,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 48,578
-----------
Total Retailing $ 48,578
-----------
Health Care Equipment & Services - 0.5%
Health Care Facilities - 0.5%
200,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 188,104
-----------
Total Health Care Equipment & Services $ 188,104
-----------
Banks - 0.3%
Diversified Banks - 0.3%
50,000 AAA/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,841
75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 79,415
-----------
$ 128,256
-----------
Total Banks $ 128,256
-----------
Diversified Financials - 0.6%
Consumer Finance - 0.2%
100,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 $ 91,376
-----------
Investment Banking & Brokerage - 0.2%
75,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 76,500
-----------
Diversified Financial Services - 0.2%
100,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 99,375
-----------
Total Diversified Financials $ 267,251
-----------
Insurance - 1.4%
Life & Health Insurance - 0.3%
100,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 $ 96,548
-----------
Multi-Line Insurance - 0.1%
50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,264
-----------
Property & Casualty Insurance - 0.6%
85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 84,166
150,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 151,712
-----------
$ 235,878
-----------
Reinsurance - 0.4%
100,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 96,081
50,000 BBB/NA Platinum Underwriters HD, 7.50%, 6/1/17 49,050
-----------
$ 145,131
-----------
Total Insurance $ 523,821
-----------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
100,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 $ 98,537
100,000 BBB-/Baa3 Health Care Real Estate Investment Trust, Inc., 6.2%, 6/1/16 97,145
107,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 100,580
75,000 B+/B1 Trustreet Properties Inc., 7.5%, 4/1/15 73,875
50,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 50,000
-----------
$ 420,137
-----------
Total Real Estate $ 420,137
-----------
68 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Technology Hardware & Equipment - 0.7%
Computer Hardware - 0.7%
250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 255,207
-----------
Total Technology Hardware & Equipment $ 255,207
-----------
Semiconductors - 0.2%
Semiconductors - 0.2%
85,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 81,146
-----------
Total Semiconductors $ 81,146
-----------
Telecommunication Services - 0.7%
Integrated Telecom Services - 0.6%
140,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 133,870
100,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 92,447
-----------
$ 226,317
-----------
Wireless Telecommunication Services - 0.1%
30,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 29,835
-----------
Total Telecommunication Services $ 256,152
-----------
Utilities - 0.1%
Electric Utilities - 0.1%
50,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 47,043
-----------
Total Utilities $ 47,043
-----------
TOTAL CORPORATE BONDS
(Cost $3,982,853) $ 3,975,686
-----------
U.S GOVERNMENT AGENCY OBLIGATIONS - 24.1%
92,562 Federal Home Loan Bank, 5.27%, 12/28/12 $ 91,266
144,812 Federal Home Loan Mortgage Corp., 4.5%, 12/1/20 136,718
201,589 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 188,869
317,123 Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 305,398
96,475 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 94,803
159,426 Federal Home Loan Mortgage Corp., 5.5%, 12/1/35 153,227
129,125 Federal Home Loan Mortgage Corp., 5.5%, 9/01/17 126,915
71,766 Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 70,968
849,489 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 839,534
216,070 Federal Home Loan Mortgage Corp., 6.0%, 11/1/33 213,388
31,360 Federal Home Loan Mortgage Corp., 6.0%, 6/1/34 30,939
6,962 Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 7,050
16,478 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 16,571
117,407 Federal National Mortgage Association, 5.0%, 6/1/34 110,099
237,021 Federal National Mortgage Association, 5.5%, 10/1/34 228,263
172,091 Federal National Mortgage Association, 5.5%, 11/1/33 166,016
86,756 Federal National Mortgage Association, 5.5%, 12/1/34 83,550
146,258 Federal National Mortgage Association, 5.5%, 2/1/17 143,813
65,758 Federal National Mortgage Association, 5.5%, 3/1/34 63,329
171,466 Federal National Mortgage Association, 5.5%, 4/1/34 165,130
201,282 Federal National Mortgage Association, 5.5%, 9/1/34 193,845
90,212 Federal National Mortgage Association, 6.0%, 12/1/33 89,067
350,000 Federal National Mortgage Association, 6.0%, 7/1/36 344,422
110,000 Federal National Mortgage Association, 6.125%, 3/15/12 113,330
The accompanying notes are an integral part of these financial statements. 69
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal
Amount
USD ($) Value
U.S. Government Agency Obligations (Cont.)
28,439 Federal National Mortgage Association, 6.5%, 10/1/32 $ 28,691
13,285 Federal National Mortgage Association, 6.5%, 10/1/32 13,402
42,462 Federal National Mortgage Association, 6.5%, 4/1/29 43,110
84,705 Federal National Mortgage Association, 6.5%, 7/1/32 85,453
55,336 Federal National Mortgage Association, 6.5%, 7/1/32 55,840
12,587 Federal National Mortgage Association, 6.5%, 8/1/13 12,760
10,913 Federal National Mortgage Association, 6.5%, 8/1/14 11,065
44,967 Federal National Mortgage Association, 6.5%, 9/1/32 45,572
42,967 Federal National Mortgage Association, 6.50%, 12/1/21 43,485
10,000 Federal National Mortgage Association, 7.125%, 6/15/10 10,581
17,635 Federal National Mortgage Association, 9.0%, 4/1/33 18,626
250,000 Freddie Mac, 4.9%, 11/3/08 246,095
150,000 Freddie Mac 5.75% 01/15/12 151,765
129,026 Government National Mortgage Association II, 5.5%, 2/20/34 124,648
44,611 Government National Mortgage Association II, 6.0%, 10/20/33 44,355
41,094 Government National Mortgage Association, 4.5%, 1/15/35 37,739
88,365 Government National Mortgage Association, 4.5%, 4/15/35 81,151
290,389 Government National Mortgage Association, 5.0%, 10/15/34 274,887
85,022 Government National Mortgage Association, 5.0%, 4/15/34 80,562
39,914 Government National Mortgage Association, 5.5%, 4/15/2033 38,737
120,563 Government National Mortgage Association, 5.5%, 7/15/33 117,006
189,470 Government National Mortgage Association, 5.5%, 8/15/19 187,270
135,536 Government National Mortgage Association, 5.5%, 8/15/33 131,538
35,108 Government National Mortgage Association, 5.5%, 9/15/33 34,093
152,395 Government National Mortgage Association, 5.50%, 06/15/33 147,899
223,293 Government National Mortgage Association, 6.0%, 8/15/32 221,918
112,619 Government National Mortgage Association, 6.0%, 8/15/34 111,839
54,618 Government National Mortgage Association, 6.0%, 9/15/32 54,261
249,666 Government National Mortgage Association, 6.0%, 9/15/33 247,998
33,889 Government National Mortgage Association, 6.5%, 10/15/28 34,413
48,876 Government National Mortgage Association, 6.5%, 5/15/33 49,513
13,434 Government National Mortgage Association, 7.5%, 9/20/29 13,958
50,000 U.S. Treasury Bonds, 4.0%, 2/15/14 46,449
325,000 U.S. Treasury Bonds, 5.25%, 11/15/28 323,476
100,000 U.S. Treasury Bonds, 6.25%, 8/15/23 110,289
28,936 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 30,266
470,000 U.S. Treasury Notes, 4.0%, 11/15/12 441,763
175,000 U.S. Treasury Notes, 4.125%, 5/15/15 162,497
500,000 U.S. Treasury Notes, 4.25%, 11/15/14 470,235
100,000 U.S. Treasury Notes, 4.25%, 8/15/15 93,566
300,000 U.S. Treasury Notes, 4.75%, 11/15/08 297,317
130,000 U.S. Treasury Notes, 5.375%, 2/15/31 132,245
5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137
250,000 U.S. Treasury Notes, 5.625%, 5/15/08 251,973
200,000 U.S. Treasury Notes, 4.75%, 5/15/14 195,102
----------
TOTAL U.S GOVERNMENT AGENCY OBLIGATIONS
Cost $ 9,722,285) $9,337,055
----------
70 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
TEMPORARY CASH INVESTMENT - 2.6%
Security Lending Collateral - 2.6%
1,028,510 Securities Lending Investment Fund, 5.16% $ 1,028,510
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,028,510) $ 1,028,510
-----------
TOTAL INVESTMENT IN SECURITIES - 101.9%
(Cost $36,078,075) $39,505,313
-----------
OTHER ASSETS AND LIABILITIES - (1.9%) $ (739,854)
-----------
TOTAL NET ASSETS - 100.0% $38,765,459
===========
* Non-income producing security.
(A.D.R) American Depositary Receipt
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, 2006, the value of these securities amounted to $589,258 or 1.5% of
total net assets.
NR Not Rated by either S&P or Moody's.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
5,049 Anheuser-Busch Companies, Inc. $ 230,184
3,554 Cintas Corp.* 141,307
2,673 Encana Corp. 140,707
9,968 Teva Pharmaceutical Industries, Ltd. 314,889
Principal
Amount
$198,000 General Motors, 7.2%, 1/15/11 175,230
----------
Total $1,002,317
==========
The accompanying notes are an integral part of these financial statements. 71
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
S&P/Moody's
Ratings
Shares (unaudited) Value
CONVERTIBLE PREFERRED STOCKS - 2.0%
Materials - 1.4%
Diversified Metals & Mining - 1.4%
1,200 NR/NR Freeport-MC Copp., 5.5%, 12/31/49 $ 1,504,050
------------
Total Materials $ 1,504,050
------------
Banks - 0.6%
Thrifts & Mortgage Finance - 0.6%
14,000 NR/NR Sovereign Cap Trust IV, 4.375%, 3/1/34 $ 633,500
------------
Total Banks $ 633,500
------------
TOTAL CONVERTIBLE PREFERRED STOCKS $ 2,137,550
------------
(Cost $1,831,500)
Principal
Amount
USD ($)
CONVERTIBLE CORPORATE BONDS - 7.1%
Materials - 1.0%
Commodity Chemicals - 0.3%
200,000 B+/B1 Millennium Chemicals, Inc., 4.0%, 11/15/23 $ 358,250
------------
Gold - 0.7%
800,000 B-/NR Coeur D'Alene Mines Corp 1.25%, 1/15/24 $ 728,000
------------
Total Materials $ 1,086,250
------------
Capital Goods - 1.5%
Electrical Component & Equipment - 1.5%
2,595,000 BB-/B1 Roper Industries, Inc., 1.4813%, 1/15/34 $ 1,576,463
------------
Total Capital Goods $ 1,576,463
------------
Media - 1.7%
Advertising - 1.7%
1,800,000 B/Ba3 Interpublic Group Cos., 4.5%, 3/15/23 $ 1,770,750
------------
Total Media $ 1,770,750
------------
Retailing - 0.9%
Automotive Retail - 0.9%
1,000,000 B/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 $ 978,750
------------
Total Retailing $ 978,750
------------
Health Care Equipment & Services - 0.6%
Health Care Equipment - 0.6%
375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) $ 251,250
450,000 NR/NR Wilson Greatbatch Tech., 2.25%, 6/15/13 391,500
------------
$ 642,750
------------
Total Health Care Equipment & Services $ 642,750
------------
72 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Technology Hardware & Equipment - 1.4%
Electronic Equipment & Instruments - 1.2%
300,000 NR/NR Flir Systems, Inc., 3.0%, 6/1/23 $ 360,000
1,000,000 NR/NR Veeco Instruments, 4.125%, 12/21/08 972,500
------------
$ 1,332,500
------------
Technology Distributors - 0.2%
300,000 NR/ NR Bell Microproducts, Inc., 3.75%, 3/5/24 $ 250,125
------------
Total Technology Hardware & Equipment $ 1,582,625
------------
TOTAL CONVERTIBLE CORPORATE BONDS $ 7,637,588
------------
(Cost $8,078,583)
Shares
PREFERRED STOCK - 1.8%
Real Estate - 1.8%
Real Estate Management & Development - 1.8%
75,000 Forest City Enterprises, 7.375%, 2/1/34 $ 1,871,250
------------
Total Real Estate $ 1,871,250
------------
TOTAL PREFERRED STOCK $ 1,871,250
------------
(Cost $1,917,000)
COMMON STOCKS - 13.9%
Energy - 1.6%
Oil & Gas Exploration & Production - 0.3%
8,110 Pogo Producing Co.* $ 373,871
------------
Oil & Gas Refining & Marketing - 0.5%
7,800 Tesoro Petroleum Corp. $ 580,008
------------
Oil & Gas Storage & Transportation - 0.8%
7,900 Kinder Morgan, Inc. $ 789,131
------------
Total Energy $ 1,743,010
------------
Materials - 2.3%
Commodity Chemicals - 0.1%
3,500 Georgia Gulf Corp.* $ 87,570
------------
Construction Materials - 0.1%
1,752 Texas Industries, Inc. $ 93,031
------------
Gold - 0.5%
17,600 Barrick Gold Corp.* $ 520,960
------------
Industrial Gases - 0.5%
8,600 Air Products & Chemicals, Inc. $ 549,712
------------
Specialty Chemicals - 1.1%
1,700 Arch Chemicals, Inc. $ 61,285
63,100 RPM, Inc. 1,135,800
------------
$ 1,197,085
------------
Total Materials $ 2,448,358
------------
The accompanying notes are an integral part of these financial statements. 73
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Shares Value
Capital Goods - 1.4%
Electrical Component & Equipment - 0.9%
6,200 Franklin Electric Co., Inc.* $ 320,168
19,500 General Cable Corp.* 682,500
------------
$ 1,002,668
------------
Industrial Machinery - 0.5%
10,500 ITT Industries, Inc. $ 519,750
------------
Total Capital Goods $ 1,522,418
------------
Household & Personal Products - 1.1%
Personal Products - 1.1%
24,600 Alberto-Culver Co. (Class B) $ 1,198,512
------------
Total Household & Personal Products $ 1,198,512
------------
Health Care Equipment & Services - 0.6%
Health Care Equipment - 0.6%
10,900 Beckman Coulter, Inc.* $ 605,495
------------
Total Health Care Equipment & Services $ 605,495
------------
Pharmaceuticals & Biotechnology - 2.6%
Biotechnology - 1.1%
11,900 PDL BioPharma, Inc.* $ 219,079
28,400 Vertex Pharmaceuticals, Inc.* 1,042,564
------------
$ 1,261,643
------------
Life Sciences Tools & Services - 1.1%
18,000 Bio-Rad Laboratories, Inc.* $ 1,168,920
------------
Pharmaceuticals - 0.4%
15,000 Bristol-Myers Squibb Co. $ 387,900
------------
Total Pharmaceuticals & Biotechnology $ 2,818,463
------------
Real Estate - 0.1%
Office Real Estate Investment Trusts - 0.1%
1,500 Equity Office Properties Trust (a) $ 54,765
------------
Total Real Estate $ 54,765
------------
Technology Hardware & Equipment - 0.5%
Electronic Equipment & Instruments - 0.5%
10,000 Amphenol Corp.* $ 559,600
------------
Total Technology Hardware & Equipment $ 559,600
------------
Utilities - 3.7%
Gas Utilities - 2.3%
10,900 Questar Corp. $ 877,341
47,700 Southern Union Co.* 1,290,762
9,600 Washington Gas Light Co.* 277,920
------------
$ 2,446,023
------------
74 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Shares Value
Independent Power Producer & Energy Traders - 1.4%
31,100 NRG Energy, Inc.* $ 1,498,398
------------
Total Utilities $ 3,944,421
------------
TOTAL COMMON STOCKS $ 14,895,042
------------
(Cost $13,636,095)
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited)
CORPORATE BONDS - 72.5%
Energy - 5.6%
Coal & Consumable Fuels - 2.1%
2,500,000 NA/NA Massey Energy Co., 6.875%, 12/15/13 $ 2,325,000
------------
Oil & Gas Refining & Marketing - 3.5%
1,031,000 B+/B1 Frontier Oil Corp., 6.625%, 10/1/11 $ 987,183
2,850,000 BB+/Ba1 Tesoro Petroleum Corp., 6.25%, 11/1/12 (144A) 2,707,500
------------
$ 3,694,683
------------
Total Energy $ 6,019,683
------------
Materials - 19.7%
Aluminum - 2.1%
2,300,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 2,208,000
------------
Commodity Chemicals - 6.0%
1,750,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 2,056,250
2,000,000 BB-/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,985,000
2,500,000 BB-/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,396,875
------------
$ 6,438,125
------------
Construction Materials - 1.4%
1,500,000 BB-/Ba3 Texas Industries, Inc, 7.25%, 7/15/13 $ 1,485,000
------------
Fertilizers & Agricultural Chemicals - 2.2%
2,500,000 B+/Ba2 Scotts Co., 6.625%, 11/15/13 $ 2,400,000
------------
Metal & Glass Containers - 0.6%
800,000 B/B2 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 $ 702,000
------------
Paper Products - 4.7%
200,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 162,000
2,250,000 B+/B1 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 (a) 2,131,875
3,100,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 2,697,000
------------
$ 4,990,875
------------
Specialty Chemicals - 2.7%
2,090,000 B+/B1 Millennium America, Inc., 7.625%, 11/15/26 $ 1,766,050
1,000,000 B+/B1 Millennium America, Inc., 9.25%, 6/15/08 1,025,000
------------
$ 2,791,050
------------
Total Materials $ 21,015,050
------------
Capital Goods - 14.4%
Aerospace & Defense - 6.7%
4,000,000 B/B3 DRS Technologies, Inc., 6.875%, 11/1/13 $ 3,850,000
3,150,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 3,189,375
------------
$ 7,039,375
------------
The accompanying notes are an integral part of these financial statements. 75
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Industrial Machinery - 7.7%
2,500,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 2,625,000
517,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 535,095
800,000 BB-/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 784,000
4,750,000 NR/NR Mueller Industries, Inc. 6.0%, 11/1/14 4,370,000
------------
$ 8,314,095
------------
Total Capital Goods $ 15,353,470
------------
Consumer Durables & Apparel - 0.1%
Homebuilding - 0.1%
185,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 155,863
------------
Total Consumer Durables & Apparel $ 155,863
------------
Media - 2.0%
Advertising - 2.0%
2,300,000 B/Ba3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,087,250
------------
Total Media $ 2,087,250
------------
Retailing - 5.1%
Automotive Retail - 1.9%
2,290,000 CCC/B3 Pep Boys-Manny Moe Jack, 7.5%, 12/15/14 $ 1,992,300
------------
Distributors - 3.2%
3,500,000 B/B2 Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) $ 3,500,000
------------
Total Retailing $ 5,492,300
------------
Health Care Equipment & Services - 1.4%
Health Care Supplies - 1.4%
1,500,000 CCC+/Caa3 Inverness Medical Innovation, 8.75%, 2/15/12 $ 1,455,000
------------
Total Health Care Equipment & Services $ 1,455,000
------------
Pharmaceuticals & Biotechnology - 1.8%
Pharmaceuticals - 1.8%
2,000,000 BB-/B1 Valeant Pharmaceuticals, 7.0%, 12/15/11 $ 1,900,000
------------
Total Pharmaceuticals & Biotechnology $ 1,900,000
------------
Real Estate - 8.2%
Real Estate Management & Development - 3.2%
3,435,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 3,460,763
------------
Real Estate Investment Trusts - 2.7%
1,500,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 1,522,500
1,300,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 1,351,350
------------
$ 2,873,850
------------
Retail Real Estate Investment Trusts - 2.3%
2,500,000 BB+/Ba1 Rouse Co Lp/TRC Co- ISSR 6.75%, 5/1/13 (144A) $ 2,434,763
------------
Total Real Estate $ 8,769,376
------------
Technology Hardware & Equipment - 5.5%
Electronic Equipment & Instruments - 3.3%
1,835,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 1,945,100
1,500,000 B/B2 Itron, Inc., 7.75%, 5/15/12 1,530,000
------------
$ 3,475,100
------------
76 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Technology Distributors - 2.2%
1,600,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 1,472,000
1,000,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 982,812
------------
$ 2,454,812
------------
Total Technology Hardware & Equipment $ 5,929,912
------------
Utilities - 8.7%
Electric Utilities - 5.4%
3,300,000 BB-/Ba3 Allegheny Energy Supply, 7.8%, 3/15/11 $ 3,423,750
1,000,000 BB-/Ba3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,062,500
1,300,000 B+/B1 CMS Energy Corp., 7.5%, 1/15/09 1,316,250
------------
$ 5,802,500
------------
Multi-Utilities - 3.3%
3,000,000 B+/B1 CMS Energy Corp., 7.75%, 8/1/10 $ 3,045,000
450,000 B+/B1 CMS Energy Corp., 6.875%, 12/15/15 427,500
------------
$ 3,472,500
------------
Total Utilities $ 9,275,000
------------
TOTAL CORPORATE BONDS
(Cost $80,127,755) $ 77,452,904
------------
Shares
TEMPORARY CASH INVESTMENT - 1.6%
Security Lending Collateral - 1.6%
1,695,184 Securities Lending Investment Fund, 5.16% $ 1,695,184
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,695,184) $ 1,695,184
------------
TOTAL INVESTMENT IN SECURITIES - 98.9%
(Cost $107,286,117) $105,689,518
------------
OTHER ASSETS AND LIABILITIES - 1.1% $ 1,161,880
------------
TOTAL NET ASSETS - 100.0% $106,851,398
============
NR Not rated by either S&P or Moody's
* Non-income producing security.
+ Investment held by the fund representing 5% or more of the outstanding
voting stock of such company.
(a) At June 30, 2006, the following securities were out on loan:
Principal
Amount Security Value
$1,641,250 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 $1,555,084
Shares
1,125 Equity Office Properties Trust 41,074
----------
Total $1,596,158
==========
The accompanying notes are an integral part of these financial statements. 77
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
CONVERTIBLE CORPORATE BONDS - 0.3%
Semiconductors - 0.3%
Semiconductor Equipment - 0.3%
170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,113
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $158,934) $ 165,113
-----------
ASSET BACKED SECURITIES - 3.4%
Diversified Financials - 1.1%
Diversified Financial Services - 1.1%
270,805 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 265,226
185,190 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) 185,159
247,636 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 246,687
-----------
$ 697,072
-----------
Total Diversified Financials $ 697,072
-----------
Utilities - 1.6%
Electric Utilities - 1.6%
169,850 BBB-/Baa3 Empresa Electric, 8.625%, 4/30/13 (144A) $ 183,353
308,880 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 308,494
376,193 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 385,598
83,065 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 80,956
-----------
$ 958,401
-----------
Total Utilities $ 958,401
-----------
Government - 0.7%
Government - 0.7%
COP 413,256 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 $ 446,317
-----------
Total Government $ 446,317
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $2,115,884) $ 2,101,790
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5%
Diversified Financials - 0.5%
Diversified Financial Services - 0.5%
80,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 79,890
265,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 260,288
-----------
$ 340,178
-----------
Total Diversified Financials $ 340,178
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $345,000) $ 340,178
-----------
CORPORATE BONDS - 35.3%
Energy - 4.6%
Coal & Consumable Fuels - 0.4%
250,000 B+/Ba3 Adaro Finance BV, 8.5%, 12/8/10 (144A) $ 248,750
-----------
Oil & Gas Drilling - 0.5%
30,000 B/B2 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 29,850
300,000 NR/NR DDI Holding AS, 9.3%, 1/19/12 308,250
-----------
$ 338,100
-----------
78 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Oil & Gas Equipment & Services - 0.2%
150,000 NR/B1 Semgroup LP, 8.75%, 11/15/15 (144A) $ 149,250
-----------
Oil & Gas Exploration & Production - 2.9%
70,000 B+/B1 Atlas Pipeline Partners, 8.125%, 12/15/15 (144A) $ 69,738
210,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 216,825
260,000 B-/B3 Clayton Williams Energy, 7.75%, 8/1/13 239,200
245,000 B/B2 Compton Petroleum Corp., 7.625%, 12/1/13 233,975
355,000 BBB/NR Gazprom International SA, 7.201%, 2/1/20 (144A) 359,881
170,000 B-/B3 Harvest Operations Corp., 7.875%, 10/15/11 161,500
ITL 275,000,000 BBB-/Baa1 Petroleos Mexicanos, 7.375%, 8/13/07 187,792
115,000 CCC+/Caa1 Petroquest Energy, Inc., 10.375%, 5/15/12 119,025
200,000 B/B2 Quicksilver Resources, Inc., 7.125%, 4/1/16 187,500
45,000 BB+/Ba3 Southern Star Central Corp., 6.75%, 3/1/16 (144A) 43,200
-----------
$ 1,818,636
-----------
Oil & Gas Storage & Transportation - 0.6%
75,000 B/B1 Inergy LP, 8.25%, 3/1/16 $ 75,750
85,000 B-/B2 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 82,025
176,000 B-/B3 Transmontaigne, Inc., 9.125%, 6/1/10 187,440
-----------
$ 345,215
-----------
Total Energy $ 2,899,951
-----------
Materials - 6.1%
Aluminum - 0.8%
370,000 BB/Ba3 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 346,875
140,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 134,400
-----------
$ 481,275
-----------
Commodity Chemicals - 1.0%
110,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 129,250
65,000 B-/B3 Aventine Renewable Energy, Floating Rate Note, 12/15/11(a) 68,494
130,000 B-/B2 Basell Finance Co., 8.1%, 3/15/27 (144A) 117,650
300,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) 315,000
-----------
$ 630,394
-----------
Construction Materials - 0.4%
275,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 $ 277,750
-----------
Diversified Chemical - 0.5%
100,000 B-/B2 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 119,225
EURO 145,000 B-/B2 Nell AF Sarl, 8.375%, 8/15/15 (144A) 187,244
-----------
$ 306,469
-----------
Diversified Metals & Mining - 1.4%
70,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 70,875
100,000 BBB+/Baa3 Vale Overseas, Ltd., 6.25%, 1/11/16 95,250
400,000 BBB+/Baa3 Vale Overseas, Ltd., 8.25%, 1/17/34 431,500
280,000 BB/Ba1 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 267,400
-----------
$ 865,025
-----------
The accompanying notes are an integral part of these financial statements. 79
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Forest Products - 0.5%
305,000 B+/B2 Ainsworth Lumber, 6.75%, 3/15/14 $ 231,800
90,000 BB-/Ba2 Sino Forest Corp., 9.125%, 8/17/11 (144A) 92,700
-----------
$ 324,500
-----------
Metal & Glass Containers - 0.2%
130,000 BB-/B1 Greif Brothers Corp., 8.875%, 8/1/12 $ 136,825
-----------
Paper Packaging - 0.2%
110,000 CCC+/Caa2 Graham Packaging Co., 9.875%, 10/15/14 (b) $ 108,900
-----------
Paper Products - 0.4%
100,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 81,000
200,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 174,000
-----------
$ 255,000
-----------
Specialty Chemicals - 0.7%
350,000 B/Caa2 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 273,875
150,000 BB+/NA LPG International, Inc., 7.25%, 12/20/15 138,000
-----------
$ 411,875
-----------
Total Materials $ 3,798,013
-----------
Capital Goods - 4.1%
Aerospace & Defense - 0.1%
75,000 BB+/Ba3 L-3 Communications Corp., 6.375%, 10/15/15 $ 71,625
-----------
Building Products - 0.9%
325,000 B/B3 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 333,125
250,000 BB-/Ba3 Desarrolladora Homex SA, 7.5%, 9/28/15 235,000
-----------
$ 568,125
-----------
Construction & Engineering - 1.0%
3,450,000 NR/ NR Kvaerner ASA, 0.0%, 10/30/11 $ 611,315
-----------
Construction, Farm Machinery & Heavy Trucks - 0.7%
130,000 B+/Ba3 Commercial Vehicle Group, 8.0%, 7/1/13 $ 124,475
270,000 B+/B1 Greenbrier Co., Inc., 8.375%, 5/15/15 275,738
-----------
$ 400,213
-----------
Industrial Machinery - 0.3%
150,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 157,500
53,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 54,855
-----------
$ 212,355
-----------
Trading Companies & Distributors - 1.1%
325,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 296,818
475,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 411,756
-----------
$ 708,574
-----------
Total Capital Goods $ 2,572,207
-----------
Commercial Services & Supplies - 1.2%
Diversified Commercial Services - 0.6%
130,000 B+/Ba2 FTI Consulting, 7.625%, 6/15/13 $ 131,625
240,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 211,200
-----------
$ 342,825
-----------
80 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Environmental & Facilities Services - 0.5%
80,000 B+/B1 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 90,000
240,000 CCC+/Caa1 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 231,600
-----------
$ 321,600
-----------
Office Services & Supplies - 0.1%
90,000 CCC/B3 Nutro Products, Inc., Floating Rate Note, 10/15/13 (144A)(a) $ 91,688
-----------
Total Commercial Services & Supplies $ 756,113
-----------
Transportation - 1.1%
Airlines - 0.1%
85,000 CCC+/Caa2 AMR Corp., 9.8%, 10/1/21 $ 79,263
-----------
Airport Services - 0.1%
55,000 B-/Caa1 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 54,175
-----------
Marine - 0.8%
185,000 BB+/NR CMA CGM SA, 7.25%, 2/1/13 (144A) $ 169,275
315,000 BB-/Ba3 Stena AB, 7.0%, 12/1/16 289,800
40,000 B-/B3 Trailer Bridge, Inc., 9.25%, 11/15/11 41,000
-----------
$ 500,075
-----------
Railroads - 0.1%
70,000 B-/B3 TFM SA De CV, 9.375%, 5/1/12 $ 74,550
-----------
Total Transportation $ 708,063
-----------
Automobiles & Components - 0.4%
Tires & Rubber - 0.4%
280,000 B-/B3 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 267,400
-----------
Total Automobiles & Components $ 267,400
-----------
Consumer Durables & Apparel - 1.2%
Footwear - 0.2%
153,000 BB-/B1 Brown Shoe Co., Inc., 8.75%, 5/1/12 $ 157,208
-----------
Homebuilding - 1.0%
148,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 124,690
150,000 BB/Ba3 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) 150,000
250,000 B+/Ba3 WCI Communities, Inc., 6.625%, 3/15/15 (b) 207,500
150,000 B+/Ba3 WCI Communities, Inc., 7.875%, 10/1/13 131,625
-----------
$ 613,815
-----------
Total Consumer Durables & Apparel $ 771,023
-----------
Consumer Services - 0.8%
Casinos & Gaming - 0.8%
200,000 AAA/Aaa Lottomatica S.p.A., Floating Rate Note, 3/31/66 (144A) (a) $ 255,378
245,000 B-/Caa1 Trump Entertainment Resorts, 8.5%, 6/1/15(b) 235,506
-----------
$ 490,884
-----------
Total Consumer Services $ 490,884
-----------
Media - 1.7%
Broadcasting & Cable TV - 0.9%
250,000 BB+/Ba2 C&M Finance Ltd., 8.1%, 2/1/16 (144A) $ 238,750
300,000 B-/B2 Kabel Deutschland GMBH, 10.625%, 7/1/14 316,500
-----------
$ 555,250
-----------
The accompanying notes are an integral part of these financial statements. 81
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Movies & Entertainment - 0.5%
335,000 B+/Ba2 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 318,250
-----------
Publishing - 0.3%
200,000 B/B1 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 203,250
-----------
Total Media $ 1,076,750
-----------
Retailing - 0.6%
Automotive Retail - 0.2%
115,000 BB+/Ba2 Autonation, Inc., 7.0%, 4/15/14 (144A) $ 113,275
-----------
Computer & Electronics Retail - 0.2%
95,000 B+/ Ba3 GSC Holdings Corp., 8.0%, 10/1/12(b) $ 95,000
-----------
Distributors - 0.2%
EURO 100,000 B-/B2 Central Eur Distribution Corp., 8.0%, 7/25/12 (144A) $ 137,291
-----------
Total Retailing $ 345,566
-----------
Food & Drug Retailing - 0.2%
Drug Retail - 0.2%
110,000 CCC/Caa1 Duane Reade, Inc., Floating Rate Note, 12/15/10 (a) $ 106,700
-----------
Total Food & Drug Retailing $ 106,700
-----------
Food, Beverage & Tobacco - 0.8%
Brewers - 0.8%
202,000 NR/NR Argentine Beverages, 7.375%, 3/22/12 (144A) $ 193,920
220,000 BBB/Baa3 Cia Brasileira de Bebida, 8.75%, 9/15/13 242,275
80,000 BBB/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 93,000
-----------
$ 529,195
-----------
Total Food, Beverage & Tobacco $ 529,195
-----------
Health Care Equipment & Services - 0.3%
Health Care Services - 0.3%
165,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 $ 170,569
-----------
Total Health Care Equipment & Services $ 170,569
-----------
Pharmaceuticals & Biotechnology - 0.6%
Biotechnology - 0.3%
200,000 B/B2 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 191,000
-----------
Pharmaceuticals - 0.3%
180,000 CCC+/Caa1 Warner Chilcott Corp., 8.75%, 2/1/15 $ 182,250
-----------
Total Pharmaceuticals & Biotechnology $ 373,250
-----------
Banks - 1.4%
Diversified Banks - 1.4%
185,000 B/Ba1 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 184,112
170,000 BB+/Baa2 Kazkommerts International BV, 8.0%, 11/3/15 164,900
150,000 B+/Ba2 Russian Stand Bank, 7.5%, 10/7/10 (144A) 139,875
15,000 BBB+/A1 SEB, 8.125%, 9/6/49 (144A) 15,067
200,000 NA/NA Sibacademfinance Plc, 9.0%, 5/12/09 (144A) 196,720
175,000 BB/Baa1 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 171,719
-----------
$ 872,393
-----------
Total Banks $ 872,393
-----------
82 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Diversified Financials - 1.7%
Consumer Finance - 0.9%
300,000 B+/Ba2 Ford Motor Credit Co., 5.7%, 1/15/10 $ 262,781
35,000 B+/Ba2 Ford Motor Credit Co., 5.8%, 1/12/09 31,975
320,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) 292,403
-----------
$ 587,159
-----------
Investment Banking & Brokerage - 0.5%
275,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 280,500
-----------
Diversified Financial Services - 0.3%
200,000 BB/NR CCSA Finance, Ltd., 7.875%, 5/17/16 (144A) $ 189,000
-----------
Total Diversified Financials $ 1,056,659
-----------
Insurance - 3.4%
Life & Health Insurance - 0.9%
390,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 388,050
140,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 135,167
-----------
$ 523,217
-----------
Multi-Line Insurance - 0.5%
325,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 325,791
-----------
Property & Casualty Insurance - 1.0%
285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 282,203
350,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 353,995
-----------
$ 636,198
-----------
Reinsurance - 1.0%
300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 288,243
365,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 358,062
-----------
$ 646,305
-----------
Total Insurance $ 2,131,511
-----------
Real Estate - 1.4%
Real Estate Management & Development - 0.2%
125,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 125,938
-----------
Real Estate Investment Trusts - 1.2%
120,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 121,800
95,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 98,753
340,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 334,900
180,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 180,000
-----------
$ 735,453
-----------
Total Real Estate $ 861,391
-----------
Technology Hardware & Equipment - 0.7%
Communications Equipment - 0.1%
50,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 49,436
-----------
Technology Distributors - 0.6%
406,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 373,520
-----------
Total Technology Hardware & Equipment $ 422,956
-----------
The accompanying notes are an integral part of these financial statements. 83
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Semiconductors - 0.3%
Semiconductors - 0.3%
175,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 167,066
-----------
Total Semiconductors $ 167,066
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 0.6%
160,000 B+/Ba3 Dycom Industries, 8.125%, 10/15/15 $ 160,400
140,000 B-/B3 Eschelon Operating Co., 8.375%, 3/15/10 133,000
63,000 NR/Baa3 Tele Norte Leste Participacoes , 8.0%, 12/18/13 65,520
-----------
$ 358,920
-----------
Wireless Telecommunication Services - 0.9%
120,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 119,341
115,000 BB-/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 114,856
210,000 B-/B2 Stratos Global Corp., 9.875%, 2/15/13 (144A) 197,400
240,000 B/Caa1 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A)(a) 165,600
-----------
$ 597,197
-----------
Total Telecommunication Services $ 956,117
-----------
Utilities - 1.2%
Electric Utilities - 1.1%
313,542 NR/Ba1 Juniper Generation, 6.79%, 12/31/14 (144A) $ 298,056
250,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 231,933
190,000 BB-/Ba3 MSW Energy Holdings, 7.375%, 9/1/10 190,000
-----------
$ 719,989
-----------
Multi-Utilities - 0.1%
60,000 B/B2 Reliant Energy, Inc., 6.75%, 12/15/14 $ 55,200
-----------
Total Utilities $ 775,189
-----------
TOTAL CORPORATE BONDS
(Cost $22,157,475) $22,108,966
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 48.2%
797,953 Federal Home Loan Mortgage Corp., 4.5%, 4/1/20 $ 753,357
462,676 Federal Home Loan Mortgage Corp., 4.5%, 7/1/20 436,817
273,791 Federal Home Loan Mortgage Corp., 4.5%, 4/1/35 249,004
40,690 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 38,123
138,807 Federal Home Loan Mortgage Corp., 5.0%, 6/1/35 129,733
350,000 Federal Home Loan Mortgage Corp., 5.0%, 6/1/36 326,893
48,238 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 47,402
773,619 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 746,255
338,543 Federal Home Loan Mortgage Corp., 5.5%, 1/1/35 326,026
237,538 Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 237,984
13,593 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 13,434
9,464 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 9,353
235,755 Federal Home Loan Mortgage Corp., 6.0% 11/1/33 232,828
179,827 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 177,414
218,166 Federal Home Loan Mortgage Corp., 6.0%, 4/1/35 214,937
233,366 Federal Home Loan Mortgage Corp., 6.0%, 6/1/35 229,912
290,416 Federal National Mortgage Association, 4.5%, 5/1/20 274,513
186,859 Federal National Mortgage Association, 4.5%, 9/1/20 176,627
151,432 Federal National Mortgage Association, 4.5%, 3/1/35 137,285
84 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal
Amount
USD ($) Value
U.S. Government & Agency Obligations (Cont.)
598,025 Federal National Mortgage Association, 4.5%, 9/1/35 $ 542,159
172,184 Federal National Mortgage Association, 5.0%, 2/1/20 165,882
821,244 Federal National Mortgage Association, 5.0%, 10/1/20 791,186
346,087 Federal National Mortgage Association, 5.0%, 9/1/35 323,721
31,818 Federal National Mortgage Association, 5.0%, 2/1/36 29,761
567,477 Federal National Mortgage Association, 5.0%, 4/1/36 530,479
36,343 Federal National Mortgage Association, 5.5%, 3/1/18 35,727
79,966 Federal National Mortgage Association, 5.5%, 12/1/18 78,611
88,140 Federal National Mortgage Association, 5.5%, 4/1/19 86,681
186,044 Federal National Mortgage Association, 5.5%, 5/1/34 179,171
774,135 Federal National Mortgage Association, 5.5%, 10/1/35 744,077
150,000 Federal National Mortgage Association, 5.5%, 12/1/35 144,176
484,230 Federal National Mortgage Association, 5.5%, 3/1/36 465,429
149,704 Federal National Mortgage Association, 5.5%, 5/1/36 143,797
72,668 Federal National Mortgage Association, 6.0%, 7/1/17 72,946
4,537 Federal National Mortgage Association, 6.0%, 12/1/31 4,485
9,288 Federal National Mortgage Association, 6.0%, 2/1/32 9,182
5,483 Federal National Mortgage Association, 6.0% 11/1/32 5,417
306,157 Federal National Mortgage Association, 6.0%, 11/1/33 302,272
195,493 Federal National Mortgage Association, 6.0%, 12/1/33 193,013
111,861 Federal National Mortgage Association, 6.0%, 1/1/34 110,320
800,000 Federal National Mortgage Association, 6.375%, 8/15/07 595,939
998 Federal National Mortgage Association, 7.0%, 9/1/29 1,023
1,235 Federal National Mortgage Association, 6.5%, 7/1/31 1,247
4,832 Federal National Mortgage Association, 6.5%, 10/1/31 4,877
8,523 Federal National Mortgage Association, 6.5%, 2/1/32 8,601
207,864 Government National Mortgage Association, 4.5%, 9/15/33 191,218
173,629 Government National Mortgage Association, 4.5%, 5/15/34 159,600
629,492 Government National Mortgage Association, 4.5%, 4/15/35 578,101
300,000 Government National Mortgage Association, 4.5%, 3/15/36 275,366
209,039 Government National Mortgage Association, 5.0%, 12/15/34 198,074
453,463 Government National Mortgage Association, 5.0%, 4/15/35 429,303
349,213 Government National Mortgage Association, 5.5%, 10/15/19 345,159
201,856 Government National Mortgage Association, 5.5%, 1/15/34 195,826
381,254 Government National Mortgage Association, 5.5%, 4/15/34 369,864
133,266 Government National Mortgage Association, 5.5%, 4/20/34 128,744
50,556 Government National Mortgage Association, 5.5%, 7/15/34 49,046
397,913 Government National Mortgage Association, 5.5%, 10/15/34 386,026
395,083 Government National Mortgage Association, 5.5%, 6/15/35 383,125
946,538 Government National Mortgage Association, 5.5%, 11/15/35 917,890
447,202 Government National Mortgage Association, 6.0%, 8/15/16 450,547
22,238 Government National Mortgage Association, 6.0%, 5/15/17 22,410
212,294 Government National Mortgage Association, 6.0%, 6/15/17 213,937
252,056 Government National Mortgage Association, 6.0%, 2/15/18 254,051
148,335 Government National Mortgage Association, 6.0%, 8/15/19 149,468
26,119 Government National Mortgage Association, 6.0%, 2/15/33 25,945
95,208 Government National Mortgage Association, 6.0%, 3/15/33 94,579
46,786 Government National Mortgage Association, 6.0%, 6/15/33 46,474
102,992 Government National Mortgage Association, 6.0%, 7/15/33 102,304
157,456 Government National Mortgage Association, 6.0%, 9/15/33 156,404
61,248 Government National Mortgage Association, 6.0%, 10/15/33 60,839
The accompanying notes are an integral part of these financial statements. 85
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Strategic Income VCT Portfolio
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
U.S. Government & Agency Obligations (Cont.)
168,928 Government National Mortgage Association, 6.0%, 8/15/34 $ 167,758
24,700 Government National Mortgage Association, 6.5%, 3/15/29 25,077
7,067 Government National Mortgage Association, 6.5%, 1/15/30 7,168
2,064 Government National Mortgage Association, 6.5%, 6/15/31 2,092
18,749 Government National Mortgage Association, 6.5%, 2/15/32 18,999
21,107 Government National Mortgage Association, 6.5%, 3/15/32 21,388
25,641 Government National Mortgage Association, 6.5%, 11/15/32 25,995
19,181 Government National Mortgage Association, 6.5%, 1/15/33 19,431
30,012 Government National Mortgage Association, 6.5%, 5/15/33 30,403
64,380 Government National Mortgage Association, 6.5%, 1/15/34 65,204
815 Government National Mortgage Association, 7.0%, 3/15/31 841
8,998 Government National Mortgage Association, 7.5%, 5/15/23 9,280
2,463 Government National Mortgage Association, I, 7.0%, 3/15/31 2,541
125,198 Government National Mortgage Association II, 5.5%, 3/20/34 120,949
236,787 Government National Mortgage Association II, 6.0%, 11/20/33 234,613
625,000 U.S. Treasury Bonds, 4.375%, 12/15/10 607,080
2,240,000 U.S. Treasury Bonds, 5.25%, 11/15/28 2,229,499
425,000 U.S. Treasury Bonds, 6.25%, 8/15/23 468,729
80,000 U.S. Treasury Bonds, 7.25%, 5/15/16 92,631
1,237,602 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1,174,319
314,631 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 300,461
840,278 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 865,289
153,155 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 160,430
1,186,356 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 1,240,889
700,000 U.S. Treasury Notes, 4.0%, 2/15/15 645,039
620,000 U.S. Treasury Notes, 4.25%, 1/15/11 598,663
675,000 U.S. Treasury Notes, 4.25%, 11/15/14 634,817
400,000 U.S. Treasury Notes, 4.25%, 8/15/15 374,266
265,000 U.S. Treasury Notes, 4.875%, 2/15/12 262,101
1,200,000 U.S. Treasury Notes, 5.0%, 2/15/11 1,197,047
700,000 U.S. Treasury Notes, 5.5%, 8/15/28 719,195
1,920,000 U.S. Treasury Strip, 0.0%, 11/15/13 1,321,096
-----------
$30,155,666
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $31,033,922) $30,155,666
-----------
FOREIGN GOVERNMENT BONDS - 6.1%
ITL 45,000,000 B+/B2 Banco Nac De Desen Econo, 8.0%, 4/28/10 $ 31,933
CAD 399,000 AAA/Aaa Government of Canada, 4.25%, 9/1/09 354,785
SEK 3,445,000 AAA/Aaa Government of Sweden, 5.25%, 3/15/11 507,675
SEK 2,955,000 NR/NR Government of Sweden, 5.5%, 10/8/12 446,015
SEK 2,150,000 NR/NR Government of Sweden, 8.0%, 8/15/07 314,925
NOK 1,500,000 AAA/Aaa Norwegian Government, 5.5%, 5/15/09 250,661
NOK 1,320,000 AAA/Aaa Norwegian Government, 6.0%, 5/16/11 228,832
NOK 3,410,000 AAA/Aaa Norwegian Government, 6.75%, 1/15/07 557,288
AUD 532,000 AAA/Aaa Ontario Province, 5.5%, 4/23/13 379,819
AUD 207,000 AAA/Aaa Queensland Treasury, 6.0%, 8/14/13 154,633
GBP 335,000 AAA/Aaa United Kingdom Treasury, 4.75%, 6/7/10 617,782
-----------
$ 3,844,348
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $3,568,480) $ 3,844,348
-----------
86 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
MUNICIPAL BONDS - 1.2%
Muni Airport - 0.5%
50,000 B/CAA2 New Jersey Economic Development Authority, 6.25%, 9/15/29 $ 51,147
175,000 B/CAA2 New Jersey Economic Development Authority Special Facility Revenue,
7.0%, 11/15/30 183,393
100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 55,663
-----------
$ 290,203
-----------
Muni Medical - 0.1%
80,000 AAA/NR Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 83,570
-----------
Muni Tobacco - 0.5%
90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 100,731
105,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%, 6/1/32 114,124
60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 68,030
-----------
$ 282,885
-----------
Muni Utilities - 0.1%
60,000 AAA/Aaa San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A)(a) $ 77,242
-----------
TOTAL MUNICIPAL BONDS
(Cost $647,737) $ 733,900
-----------
Shares
RIGHTS/WARRANTS - 0.0%
Transportation - 0.0%
Railroads - 0.0%
210 Atlantic Express Transportation, Exp. 4/15/08* $ --
-----------
Total Transportation $ --
-----------
TOTAL RIGHTS/WARRANTS
(Cost $0) $ --
-----------
TEMPORARY CASH INVESTMENT - 1.5%
Security Lending Collateral - 1.5%
941,101 Securities Lending Investment Fund, 5.16% $ 941,101
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $941,101) $ 941,101
-----------
TOTAL INVESTMENT IN SECURITIES - 96.5%
(Cost $60,968,533) $60,391,062
-----------
OTHER ASSETS AND LIABILITIES - 3.5% $ 2,225,966
-----------
TOTAL NET ASSETS - 100.0% $62,617,028
===========
The accompanying notes are an integral part of these financial statements. 87
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Strategic Income VCT Portfolio
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
* 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, 2006, the
value of these securities amounted to $8,986,634 or 14.4% of total net
assets.
NR Not Rated by either S&P or Moody's.
(a) Debt obligation initially issued at one coupon which converts to a higher
coupon at a specified date. The rate shown is the rate at period end.
(b) At June 30, 2006, the following securities were out on loan:
Principal
Amount Security Value
$ 94,050 GSC Holdings Corp., 8.0%, 10/1/12 $ 94,050
277,200 Goodyear Tire & Rubber, 9.0%, 7/1/15 264,726
108,900 Graham Packaging Co., 9.875%, 10/15/14 108,901
242,550 Trump Entertainment Resorts, 8.5%, 6/1/15 233,151
247,500 WCI Communities, Inc., 6.625%, 3/15/15 205,425
--------
Total $906,253
========
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted.
ITL Italian Lira
EURO Euro
CAD Canadian Dollar
SEK Swedish Krona
NOK Norwegian Kroner
AUD Australian Dollar
GBP British Pound
COP Colombian Peso
88 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Principal
Amount Value
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.6%
Government - 1.6%
$ 213,395 Federal Home Loan Bank, 4.75%, 10/25/10 $ 207,107
116,164 Federal Home Loan Bank, 5.0%, 1/15/16 114,569
350,000 Freddie Mac, 5.5%, 7/15/28 345,437
-----------
$ 667,113
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $690,757) $ 667,113
-----------
CORPORATE BONDS - 0.6%
Diversified Financials - 0.6%
Specialized Finance - 0.6%
250,000 Private Export Funding, 3.375%, 2/15/09 $ 237,761
-----------
TOTAL CORPORATE BONDS
(Cost $250,000) $ 237,761
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 95.8%
200,960 Fannie Mae, 5.5%, 6/1/23 $ 195,653
250,000 Federal Farm Credit Bank, 3.25%, 6/15/2007 244,778
400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 380,366
100,000 Federal Farm Credit Bank, 5.3%, 9/28/15 95,931
100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 100,855
250,000 Federal Farm Credit Bank, 4.45%, 6/1/15 231,219
200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 200,717
250,000 Federal Home Loan Bank 4.25%, 10/10/08 243,879
300,000 Federal Home Loan Bank 4.43%, 4/7/08 294,739
250,000 Federal Home Loan Bank, 4.0%, 2/12/10 237,927
250,000 Federal Home Loan Bank, 4.25%, 2/16/10 240,360
200,000 Federal Home Loan Bank, 4.5%, 11/15/12 189,328
500,000 Federal Home Loan Bank, 4.75%, 12/10/10 485,227
100,000 Federal Home Loan Bank, 5.375%, 5/18/16 98,694
34,841 Federal Home Loan Corp., 6.5%, 2/1/32 35,180
28,642 Federal Home Loan Corp., 7.0%, 3/1/32 29,418
29,809 Federal Home Loan Corp., 7.0%, 4/1/32 30,548
300,000 Federal Home Loan Mortgage Corp., 5.0%, 1/1/36 280,388
210,000 Federal Home Loan Mortgage Corp., 5.0%, 3/1/36 196,135
209,461 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 201,717
223,200 Federal Home Loan Mortgage Corp., 5.5%, 9/1/34 214,947
64,095 Federal Home Loan Mortgage Corp., 6.0% 10/1/32 63,344
467,787 Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 461,509
123,519 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 122,072
319,864 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 316,115
25,814 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 25,512
125,480 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 124,010
174,701 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 172,654
836,287 Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 825,906
184,028 Federal Home Loan Mortgage Corp., 6.5% 4/1/32 185,758
48,346 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 48,869
84,665 Federal Home Loan Mortgage Corp., 6.5%, 10/1/31 85,490
60,129 Federal Home Loan Mortgage Corp., 6.5%, 3/1/11 60,769
30,461 Federal Home Loan Mortgage Corp., 6.5%, 3/1/29 30,794
The accompanying notes are an integral part of these financial statements. 89
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 11,360 Federal Home Loan Mortgage Corp., 6.5%, 3/1/32 $ 11,467
27,373 Federal Home Loan Mortgage Corp., 6.5%, 4/1/31 27,640
62,428 Federal Home Loan Mortgage Corp., 6.5%, 7/1/32 63,014
16,412 Federal Home Loan Mortgage Corp., 7.0%, 2/1/31 16,819
2,653 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 2,718
1,361 Federal Home Loan Mortgage Corp., 7.0%, 7/1/31 1,395
5,090 Federal Home Loan Mortgage Corp., 7.0%, 9/1/31 5,217
29,942 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 30,989
216,990 Federal National Mortgage Association, 4.5%, 4/1/19 205,362
104,783 Federal National Mortgage Association, 5.0%, 12/1/35 98,012
65,954 Federal National Mortgage Association, 5.0%, 3/1/09 64,565
197,643 Federal National Mortgage Association, 5.0%, 7/1/19 190,645
294,265 Federal National Mortgage Association, 5.5%, 11/1/23 286,494
329,863 Federal National Mortgage Association, 5.5%, 11/1/33 318,219
173,512 Federal National Mortgage Association, 5.5%, 12/1/34 167,101
65,839 Federal National Mortgage Association, 5.5%, 2/1/33 62,995
262,024 Federal National Mortgage Association, 5.5%, 3/1/18 257,687
195,772 Federal National Mortgage Association, 5.5%, 3/1/24 190,299
211,130 Federal National Mortgage Association, 5.5%, 3/1/34 203,329
313,429 Federal National Mortgage Association, 5.5%, 4/1/18 308,322
147,137 Federal National Mortgage Association, 5.5%, 6/1/33 145,270
289,416 Federal National Mortgage Association, 5.5%, 9/1/33 279,200
63,565 Federal National Mortgage Association, 6.0%, 6/1/33 62,759
38,601 Federal National Mortgage Association, 6.0%, 10/1/32 38,136
61,631 Federal National Mortgage Association, 6.0%, 11/1/32 60,888
79,506 Federal National Mortgage Association, 6.0%, 11/1/32 78,548
211,205 Federal National Mortgage Association, 6.0%, 11/1/32 208,660
152,421 Federal National Mortgage Association, 6.0%, 12/1/11 152,516
30,245 Federal National Mortgage Association, 6.0%, 12/1/31 29,898
407,887 Federal National Mortgage Association, 6.0%, 3/1/33 402,972
99,030 Federal National Mortgage Association, 6.0%, 4/1/33 97,837
135,064 Federal National Mortgage Association, 6.0%, 7/1/34 133,204
275,000 Federal National Mortgage Association, 6.0%, 7/1/36 270,617
124,525 Federal National Mortgage Association, 6.0%, 9/1/34 122,810
250,000 Federal National Mortgage Association, 6.07%, 5/12/16 249,423
39,140 Federal National Mortgage Association, 6.5%, 1/1/29 39,539
65,385 Federal National Mortgage Association, 6.5%, 1/1/32 65,981
9,074 Federal National Mortgage Association, 6.5%, 10/1/31 9,157
47,294 Federal National Mortgage Association, 6.5%, 10/1/31 47,725
46,875 Federal National Mortgage Association, 6.5%, 11/1/28 47,356
26,935 Federal National Mortgage Association, 6.5%, 2/1/32 27,181
33,047 Federal National Mortgage Association, 6.5%, 3/1/32 33,369
82,029 Federal National Mortgage Association, 6.5%, 3/1/32 82,753
26,710 Federal National Mortgage Association, 6.5%, 3/1/32 26,953
75,431 Federal National Mortgage Association, 6.5%, 4/1/32 76,097
34,591 Federal National Mortgage Association, 6.5%, 7/1/21 35,008
63,181 Federal National Mortgage Association, 6.5%, 7/1/32 63,739
287,626 Federal National Mortgage Association, 6.5%, 7/1/34 289,312
57,583 Federal National Mortgage Association, 6.5%, 8/1/32 58,108
90 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 146,524 Federal National Mortgage Association, 6.5%, 8/1/32 $ 147,817
45,697 Federal National Mortgage Association, 6.5%, 8/1/32 46,101
30,953 Federal National Mortgage Association, 6.5%, 9/1/32 31,226
7,573 Federal National Mortgage Association, 7.0%, 1/1/29 7,764
20,784 Federal National Mortgage Association, 7.0%, 1/1/32 21,296
3,875 Federal National Mortgage Association, 7.0%, 5/1/31 3,973
16,847 Federal National Mortgage Association, 7.0%, 7/1/31 17,262
24,162 Federal National Mortgage Association, 7.0%, 8/1/19 24,843
37,753 Federal National Mortgage Association, 7.0%, 9/1/18 38,818
106,191 Federal National Mortgage Association, 7.0%, 9/1/30 108,869
14,336 Federal National Mortgage Association, 7.5%, 2/1/31 14,852
35,665 Federal National Mortgage Association, 9.0%, 4/1/33 37,669
300,000 Freddie Mac, 5.25%, 11/15/12 290,859
256,046 Government National Mortgage Association, 4.5%, 4/15/20 243,935
299,529 Government National Mortgage Association, 4.5%, 5/20/36 271,846
424,354 Government National Mortgage Association, 4.5%, 6/15/34 390,068
201,139 Government National Mortgage Association, 4.5%, 6/15/34 184,888
340,210 Government National Mortgage Association, 4.5%, 8/15/33 312,966
143,772 Government National Mortgage Association, 5.0%, 1/20/20 139,097
90,908 Government National Mortgage Association, 5.0%, 10/15/20 88,228
190,865 Government National Mortgage Association, 5.0%, 11/20/19 184,717
173,359 Government National Mortgage Association, 5.0%, 2/15/20 168,249
203,737 Government National Mortgage Association, 5.0%, 3/15/34 193,050
163,418 Government National Mortgage Association, 5.0%, 4/15/35 154,711
254,149 Government National Mortgage Association, 5.0%, 7/15/17 246,812
165,037 Government National Mortgage Association, 5.0%, 9/15/33 156,351
179,688 Government National Mortgage Association, 5.5%, 10/15/34 174,320
139,051 Government National Mortgage Association, 5.5%, 2/15/19 137,473
168,847 Government National Mortgage Association, 5.5%, 3/15/33 163,866
262,232 Government National Mortgage Association, 5.5%, 4/15/33 254,496
255,176 Government National Mortgage Association, 5.5%, 6/15/17 252,346
145,187 Government National Mortgage Association, 5.5%, 7/15/19 140,969
182,235 Government National Mortgage Association, 5.5%, 7/15/19 180,119
201,048 Government National Mortgage Association, 5.50%, 7/15/33 195,117
77,576 Government National Mortgage Association, 6.0%, 1/15/33 77,069
84,486 Government National Mortgage Association, 6.0%, 10/15/32 83,933
91,849 Government National Mortgage Association, 6.0%, 10/15/32 91,248
26,647 Government National Mortgage Association, 6.0%, 10/15/32 26,473
70,596 Government National Mortgage Association, 6.0%, 10/15/32 70,134
199,652 Government National Mortgage Association, 6.0%, 11/15/32 198,603
128,104 Government National Mortgage Association, 6.0%, 11/15/32 127,266
225,725 Government National Mortgage Association, 6.0%, 12/15/32 224,470
220,415 Government National Mortgage Association, 6.0%, 12/15/33 218,943
186,118 Government National Mortgage Association, 6.0%, 2/15/18 187,590
219,705 Government National Mortgage Association, 6.0%, 3/15/34 218,184
225,000 Government National Mortgage Association, 6.0%, 30 YR TBA 223,249
147,802 Government National Mortgage Association, 6.0%, 4/15/28 147,177
98,382 Government National Mortgage Association, 6.0%, 5/15/17 99,143
112,920 Government National Mortgage Association, 6.0%, 6/20/16 113,412
337,290 Government National Mortgage Association, 6.0%, 7/15/23 335,912
The accompanying notes are an integral part of these financial statements. 91
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 130,440 Government National Mortgage Association, 6.0%, 8/15/19 $ 131,437
127,058 Government National Mortgage Association, 6.0%, 8/15/34 126,299
157,972 Government National Mortgage Association, 6.0%, 8/15/34 156,878
105,080 Government National Mortgage Association, 6.0%, 9/15/32 104,392
104,677 Government National Mortgage Association, 6.0%, 9/15/34 103,952
238,068 Government National Mortgage Association, 6.0% 1/15/33 236,478
96,570 Government National Mortgage Association, 6.5%, 1/15/34 97,806
88,726 Government National Mortgage Association, 6.5%, 10/15/31 89,956
48,731 Government National Mortgage Association, 6.5%, 12/15/31 49,406
19,928 Government National Mortgage Association, 6.5%, 12/15/31 20,205
33,278 Government National Mortgage Association, 6.5%, 12/20/28 33,668
22,100 Government National Mortgage Association, 6.5%, 2/15/29 22,437
8,964 Government National Mortgage Association, 6.5%, 2/15/32 9,247
11,566 Government National Mortgage Association, 6.5%, 3/15/26 11,740
101,880 Government National Mortgage Association, 6.5%, 4/15/17 103,684
26,874 Government National Mortgage Association, 6.5%, 4/15/17 27,350
24,564 Government National Mortgage Association, 6.5%, 4/15/32 24,891
26,938 Government National Mortgage Association, 6.5%, 4/15/32 27,297
124,834 Government National Mortgage Association, 6.5%, 5/15/29 126,739
123,940 Government National Mortgage Association, 6.5%, 5/15/29 125,848
49,660 Government National Mortgage Association, 6.5%, 5/15/29 50,426
41,604 Government National Mortgage Association, 6.5%, 5/15/31 42,181
17,153 Government National Mortgage Association, 6.5%, 6/15/17 17,456
41,982 Government National Mortgage Association, 6.5%, 6/15/28 42,628
35,989 Government National Mortgage Association, 6.5%, 6/15/28 36,546
8,845 Government National Mortgage Association, 6.5%, 6/15/29 8,980
53,899 Government National Mortgage Association, 6.5%, 6/15/31 54,646
23,962 Government National Mortgage Association, 6.5%, 6/15/32 24,282
27,099 Government National Mortgage Association, 6.5%, 6/15/32 27,461
20,732 Government National Mortgage Association, 6.5%, 6/15/32 21,009
69,674 Government National Mortgage Association, 6.5%, 7/15/31 70,639
57,788 Government National Mortgage Association, 6.5%, 7/15/32 58,559
62,380 Government National Mortgage Association, 6.5%, 9/15/31 63,244
24,351 Government National Mortgage Association, 6.5%, 9/20/31 24,597
12,508 Government National Mortgage Association, 7.0%, 1/15/26 12,916
21,530 Government National Mortgage Association, 7.0%, 1/15/29 22,218
39,463 Government National Mortgage Association, 7.0%, 11/15/28 40,714
37,347 Government National Mortgage Association, 7.0%, 11/15/30 38,541
4,798 Government National Mortgage Association, 7.0%, 12/15/30 4,952
47,578 Government National Mortgage Association, 7.0%, 2/15/28 49,087
17,947 Government National Mortgage Association, 7.0%, 2/15/31 18,516
5,160 Government National Mortgage Association, 7.0%, 3/15/28 5,324
17,904 Government National Mortgage Association, 7.0%, 4/15/28 18,472
16,276 Government National Mortgage Association, 7.0%, 5/15/31 16,793
106,445 Government National Mortgage Association, 7.0%, 5/15/32 109,807
26,551 Government National Mortgage Association, 7.0%, 6/15/29 27,400
37,494 Government National Mortgage Association, 7.0%, 7/15/26 38,718
26,802 Government National Mortgage Association, 7.0%, 7/15/29 27,658
7,909 Government National Mortgage Association, 7.0%, 7/15/29 8,162
19,480 Government National Mortgage Association, 7.0%, 8/15/31 20,098
92 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 13,546 Government National Mortgage Association, 7.0%, 9/15/27 $ 13,993
13,083 Government National Mortgage Association, 7.5%, 1/15/31 13,674
2,325 Government National Mortgage Association, 7.5%, 1/15/32 2,430
6,888 Government National Mortgage Association, 7.5%, 10/15/22 7,197
22,982 Government National Mortgage Association, 7.5%, 10/15/29 24,036
30,875 Government National Mortgage Association, 7.5%, 11/15/29 32,291
1,771 Government National Mortgage Association, 7.5%, 6/15/23 1,852
1,316 Government National Mortgage Association, 7.5%, 8/15/23 1,376
2 Government National Mortgage Association, 7.5%, 8/15/29 2
1,751 Government National Mortgage Association, 7.5%, 8/15/29 1,832
5,523 Government National Mortgage Association, 7.5%, 8/20/27 5,748
2,025 Government National Mortgage Association, 8.0%, 8/20/25 2,139
96,307 Government National Mortgage Association I, 6.0%, 2/15/29 95,771
293,283 Government National Mortgage Association II, 5.0%, 12/20/18 283,951
157,335 Government National Mortgage Association II, 5.5%, 11/20/34 151,996
322,566 Government National Mortgage Association II, 5.5%, 2/20/34 311,621
334,588 Government National Mortgage Association II, 5.5%, 7/20/19 329,660
170,917 Government National Mortgage Association II, 6.0%, 11/20/33 169,348
46,057 Government National Mortgage Association II, 6.0%, 12/20/18 46,278
118,218 Government National Mortgage Association II, 6.0%, 7/20/19 118,752
25,413 Government National Mortgage Association II, 6.5%, 8/20/28 25,708
12,071 Government National Mortgage Association II, 7.0%, 1/20/31 12,371
65,348 Government National Mortgage Association II, 7.0%, 2/20/29 66,987
34,120 Government National Mortgage Association II, 7.0%, 5/20/26 34,999
12,000 Tennessee Valley Authority, Floating Rate Note, 6/1/28 267,720
1,850,000 U.S. Treasury Bonds, 5.125%, 5/15/16 1,847,832
850,000 U.S. Treasury Bonds, 4.0%, 2/15/14 789,636
2,050,000 U.S. Treasury Bonds, 6.25%, 8/15/23 2,260,927
400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 463,156
825,000 U.S. Treasury Notes, 4.0%, 11/15/12 775,436
870,000 U.S. Treasury Notes, 4.25%, 11/15/14 818,208
300,000 U.S. Treasury Notes, 4.25%, 8/15/15 280,699
100,000 U.S. Treasury Notes, 4.5%, 2/15/16 95,141
250,000 U.S. Treasury Notes, 4.5%, 11/15/15 238,125
475,000 U.S. Treasury Notes, 4.75%, 5/15/14 463,366
200,000 U.S. Treasury Notes, 5.0%, 2/15/11 199,506
1,150,000 U.S. Treasury Notes, 6.375%, 8/15/27 1,305,340
1,350,000 U.S. Treasury Notes, 6.5%, 2/15/10 1,410,487
207,130 U.S. Treasury Inflation Notes, 1.875%, 7/15/15 196,539
3,006,372 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 3,149,175
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS $38,912,937
-----------
(Cost $ 40,065,748)
TOTAL INVESTMENT IN SECURITIES - 98.0% $39,817,811
-----------
(Cost $41,006,505)
OTHER ASSETS AND LIABILITIES - 2.0% $ 813,169
-----------
TOTAL NET ASSETS - 100.0% $40,630,980
===========
The accompanying notes are an integral part of these financial statements. 93
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
================================================================================
Principal
Amount Value
COLLATERALIZED MORTGAGE
OBLIGATIONS - 2.6%
Banks - 2.6%
Thrifts & Mortgage Finance - 2.5%
$ 975,658 Federal Home Loan Mortgage, Corp.,
Multifamily VRD Certificate, Floating
Rate Note, 1/15/42 $ 975,658
-----------
TOTAL COLLATERALIZED
MORTGAGE OBLIGATIONS
(Cost $975,658) $ 975,658
-----------
CORPORATE BONDS - 40.5%
Capital Goods - 5.5%
Construction & Farm Machinery &
Heavy Trucks - 4.2%
1,600,000 Caterpillar Financial Services, Floating
Rate Note, 2/26/07 $ 1,600,849
-----------
Industrial Conglomerates - 1.3%
500,000 GE Capital Corp., Floating Rate
Note, 6/15/07 $ 500,000
-----------
Total Capital Goods $ 2,100,849
-----------
Food & Drug Retailing - 2.4%
Hypermarkets & Supercenters - 2.4%
900,000 Wal-Mart Stores, Floating Rate
Note, 3/28/07 $ 899,732
-----------
Total Food & Drug Retailing $ 899,732
-----------
Pharmaceuticals & Biotechnology - 3.9%
Pharmaceuticals - 3.9%
1,500,000 Abbott Laboratories, 5.625%, 7/1/06 $ 1,500,000
-----------
Total Pharmaceuticals &
Biotechnology $ 1,500,000
-----------
Diversified Financials - 27.4%
Consumer Finance - 5.9%
1,500,000 American Express Credit, Floating Rate
Note, 9/19/06 $ 1,500,488
750,000 HSBC Finance Corp., Floating Rate
Note, 5/10/07 750,250
-----------
$ 2,250,738
-----------
Principal
Amount Value
Investment Banking & Brokerage - 10.8%
$ 500,000 Goldman Sachs Group Inc., Floating
Rate Note, 3/30/07 $ 500,459
500,000 Goldman Sachs Group Inc., Floating
Rate Note, 7/2/07 500,748
200,000 Goldman Sachs Group Inc., Floating
Rate Note, 8/1/06 200,009
400,000 Lehman Brothers Holdings, Floating
Rate Note, 4/20/07 400,386
1,000,000 Merrill Lynch & Co., Floating Rate
Note, 7/11/07 1,000,000
1,500,000 Morgan Stanley Dean Witter, Floating
Rate Note, 1/12/07 1,501,319
-----------
$ 4,102,921
-----------
Diversified Financial Services - 4.2%
800,000 Bank One Corp., Floating Rate
Note, 8/11/06 $ 800,029
800,000 GE Capital Corp., Floating Rate
Note, 7/9/07 800,000
-----------
$ 1,600,029
-----------
Specialized Finance - 6.4%
400,000 Citigroup Inc., Floating Rate
Note, 2/15/07 $ 400,503
1,050,000 Citigroup Inc., Floating Rate
Note, 1/12/07 1,050,428
1,000,000 Citigroup Inc., Floating Rate
Note, 9/22/06 1,000,906
-----------
$ 2,451,837
-----------
Total Diversified Financials $10,405,525
-----------
Insurance - 1.3%
Multi-Line Insurance - 1.3%
500,000 American General Finance, Floating
Rate Note, 11/15/06 $ 500,298
-----------
Total Insurance $ 500,298
-----------
TOTAL CORPORATE BONDS
(Cost $15,406,404) $15,406,404
-----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 2.6%
Banks - 2.6%
Thrifts & Mortgage Finance - 2.6%
1,000,000 Freddie Mac, Floating Rate
Note, 1/26/07 $ 1,000,000
-----------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS
(Cost $1,000,000) $ 1,000,000
-----------
94 The accompanying notes are an integral part of these financial statements.
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 54.0%
Commercial Paper - 54.0%
$ 1,500,000 Abbey National Treasury,
4.92%, 7/19/06 $ 1,496,310
1,000,000 Bank of America Corp., 5.22%, 7/17/06 997,760
100,000 BNP Paribas Financial Inc.,
5.04%, 7/13/06 99,832
1,000,000 BNP Paribas Financial Inc.,
5.33%, 8/28/06 991,714
500,000 Citigroup Inc., 0%, 7/18/06 498,834
750,000 Depfa Bank Plc, 5.31%, 8/15/06 750,000
500,000 Dresner U.S. Finance, Inc.,
5.05%, 7/7/06 499,579
1,000,000 Dresner U.S. Finance, Inc.,
5.175%, 8/10/06 994,372
1,000,000 Fortis Banque Luxembourg,
5.02%, 7/5/06 999,442
300,000 HBOS Treasury Services PLC,
5.045%, 8/15/06 298,108
500,000 HBOS Treasury Services PLC,
5.08%, 8/8/06 497,319
700,000 HBOS Treasury Services PLC,
5.11%, 8/16/06 695,429
100,000 HBOS Treasury Services PLC,
5.4%, 9/12/06 98,905
1,000,000 ING Funding LLC, 5.015%, 7/12/06 998,468
500,000 ING Funding LLC, 5.05%, 8/10/06 497,195
400,000 JP Morgan Bank, 5.07%, 7/3/06 137,961
1,093,000 JP Morgan Bank, 5.07%, 7/6/06 342,758
500,000 Landesbank Baden-Wurttemberg, 5.38%,
9/19/2006 395,218
1,000,000 MetLife Funding Corp., 4.95%, 7/18/06 1,090,445
1,000,000 MetLife Funding Corp., 5.23%, 7/20/06 498,673
500,000 National Rural Utilities, 5.1%, 7/11/06 998,583
500,000 Nordea North America Inc.,
5.04%, 8/11/06 994,260
500,000 Nordea North America, Inc.
5.29%, 9/11/06 494,795
500,000 Paccar Financial Corp.,
5.05%, 8/17/06 496,704
500,000 Paccar Financial, 5.03%, 8/9/06 497,275
1,000,000 Paccar Financial, 5.04%, 8/15/06 496,850
1,200,000 Prudential Funding LLC,
5.02%, 7/10/06 499,372
138,000 Prudential Funding LLC, 5.04%, 7/7/06 999,160
343,000 Rabobank USA Financial Corp.,
5.25%, 7/3/06 1,199,655
1,000,000 UBS Finance LLC, 4.99%, 8/22/06 992,662
-----------
TOTAL TEMPORARY
CASH INVESTMENTS
(Cost $20,547,638) $20,547,638
-----------
Principal
Amount Value
TOTAL INVESTMENT
IN SECURITIES - 99.7%
(Cost $37,929,700) $37,929,700
-----------
OTHER ASSETS
AND LIABILITIES - (0.3%) $ 112,486
-----------
TOTAL NET ASSETS - 100.0% $38,042,186
===========
The accompanying notes are an integral part of these financial statements. 95
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 28.09 $ 20.48 $ 17.37 $ 11.03 $11.23 $ 12.10
------- ------- ------- ------- ------ -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.18 $ 0.22 $ 0.22 $ 0.20 $ 0.06 $ 0.15
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 2.20 7.51 3.04 6.20 (0.19) (1.02)
------- ------- ------- ------- ------ -------
Net increase (decrease) from investment operations $ 2.38 $ 7.73 $ 3.26 $ 6.40 $(0.13) $ (0.87)
Distributions to shareowners:
Net investment income (0.16) (0.12) (0.15) (0.06) (0.07) --
Net realized gain (2.77) -- -- -- -- --
------- ------- ------- ------- ------ -------
Net increase (decrease) in net asset value $ (0.55) $ 7.61 $ 3.11 $ 6.34 $(0.20) $ (0.87)
------- ------- ------- ------- ------ -------
Net asset value, end of period $ 27.54 $ 28.09 $ 20.48 $ 17.37 $11.03 $ 11.23
======= ======= ======= ======= ====== =======
Total return* 9.14% 37.95% 18.93% 58.17% (1.20)% (7.19)%
Ratio of net expenses to average net assets+ 1.57%** 1.75% 1.75% 1.75% 1.75% 1.66%
Ratio of net investment income (loss) to average net assets+ 1.11%** 0.94% 1.12% 1.43% 0.63% 1.30%
Portfolio turnover rate 49%** 74% 66% 79% 124% 175%
Net assets, end of period (in thousands) $11,237 $11,205 $ 8,633 $ 8,399 $5,886 $ 6,896
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.57%** 1.77% 1.87% 2.51% 2.88% 3.83%
Net investment income (loss) 1.11%** 0.92% 1.00% 0.67% (0.50)% (0.87)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.57%** 1.75% 1.75% 1.75% 1.75% 1.66%
Net investment income (loss) 1.11%** 0.94% 1.12% 1.43% 0.63% 1.30%
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
96 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 11.42 $ 10.64 $ 9.05 $ 6.82 $ 8.42 $ 11.07
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.24 $ 0.12 $ 0.11 $ 0.09 $ 0.05 $ 0.01
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 1.17 0.73 1.55 2.17 (1.65) (2.51)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.41 $ 0.85 $ 1.66 $ 2.26 $ (1.60) $ (2.50)
Distributions to shareowners:
Net income (0.08) (0.07) (0.07) (0.03) -- (0.15)
Net realized gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.33 $ 0.78 $ 1.59 $ 2.23 $ (1.60) $ (2.65)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 12.75 $ 11.42 $ 10.64 $ 9.05 $ 6.82 $ 8.42
======= ======= ======= ======= ======= =======
Total return* 12.41% 8.05% 18.48% 33.26% (19.00)% (22.66)%
Ratio of net expenses to average net assets+ 1.53%** 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income (loss) to average net assets+ 3.66%** 0.97% 0.92% 1.14% 0.68% 0.25%
Portfolio turnover rate 20%** 95% 55% 52% 94% 73%
Net assets, end of period (in thousands) $ 8,970 $ 8,714 $ 9,478 $ 9,330 $ 8,696 $12,417
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.58%** 1.76% 1.94% 2.52% 2.21% 1.99%
Net investment income (loss) 3.61%** 0.71% 0.48% 0.12% 0.03% (0.24)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.53%** 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income (loss) 3.66%** 0.97% 0.92% 1.14% 0.68% 0.25%
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 13.71 $ 11.88 $ 10.06 $ 7.79 $ 9.00 $ 11.83
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.12 $ 0.10 $ 0.05 $ 0.07 $ 0.03 $ 0.02
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.97 1.75 1.82 2.26 (1.23) (2.83)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.09 $ 1.85 $ 1.87 $ 2.33 $ (1.20) $ (2.81)
Distributions to shareowners:
Net investment income (0.07) (0.02) (0.05) (0.06) (0.01) (0.02)
Net realized gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.02 $ 1.83 $ 1.82 $ 2.27 $ (1.21) $ (2.83)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.73 $ 13.71 $ 11.88 $ 10.06 $ 7.79 $ 9.00
======= ======= ======= ======= ======= =======
Total return* 7.99% 15.58% 18.71% 30.06% (13.31)% (23.74)%
Ratio of net expenses to average net assets+ 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38%
Ratio of net investment income (loss) to average net assets+ 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21%
Portfolio turnover rate 114%** 108% 129% 99% 31% 39%
Net assets, end of period (in thousands) $20,848 $21,176 $22,859 $22,506 $21,271 $32,083
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38%
Net investment income 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.44%** 1.53% 1.75% 1.69% 1.46% 1.38%
Net investment income 1.48%** 0.70% 0.45% 0.68% 0.62% 0.21%
** Annualized.
* 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.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 97
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year 11/8/01(a)
6/30/06 Ended Ended Ended Ended to
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 16.19 $ 15.02 $ 12.50 $ 9.23 $ 10.87 $ 10.00
------- ------- ------- ------- ------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.01 $ 0.05 $ (0.03) $ -- $ (0.01) $ 0.01
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 0.85 1.61 2.55 3.27 (1.63) 0.86
------- ------- ------- ------- ------- --------
Net increase (decrease) from investment operations $ 0.86 $ 1.66 $ 2.52 $ 3.27 $ (1.64) $ 0.87
Distributions to Shareowners:
Net investment income (0.02) -- -- -- (0.00)(b) --
Net realized gain (0.52) (0.49) -- -- (0.00)(b) --
------- ------- ------- ------- ------- --------
Net increase (decrease) in net asset value $ 0.32 $ 1.17 $ 2.52 $ 3.27 $ (1.65) $ 0.87
------- ------- ------- ------- ------- --------
Net asset value, end of period $ 16.51 $ 16.19 $ 15.02 $ 12.50 $ 9.23 $ 10.87
======= ======= ======= ======= ======= ========
Total return* 5.43% 11.39% 20.16% 35.43% (15.08)% 8.70%
Ratio of net expenses to average net assets+ 0.98%** 1.15% 1.25% 1.25% 1.25% 1.21%**
Ratio of net investment income (loss) to average net assets+ 0.90%** 0.35% (0.21)% 0.03% (0.05)% 0.86%**
Portfolio turnover rate 146%** 38% 36% 74% 50% 0%
Net assets, end of period (in thousands) $59,141 $20,555 $17,993 $12,049 $ 6,603 $ 504
Ratios with no waiver of management fees and assumption of
expenses by PIM:
Net expenses 0.98%** 1.15% 1.30% 2.40% 2.76% 77.48%**
Net investment income (loss) 0.90%** 0.35% (0.26)% (1.12)% (1.56)% (75.41)%**
Ratios with waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.98%** 1.15% 1.25% 1.25% 1.25% 1.21%**
Net investment income (loss) 0.90%** 0.35% (0.21)% 0.03% (0.05)% 0.86%**
(a) Shares of Pioneer Small Cap Value VCT Portfolio were first publicly offered
on November 8, 2001.
(b) Amount rounds to less than one cent per share
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
98 The accompanying notes are an integral part of these financial statements.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 25.00 $ 24.67 $ 20.47 $ 14.94 $ 17.35 $ 17.79
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.11 $ 0.15 $ 0.08 $ 0.14 $ 0.07 $ 0.07
Net realized and unrealized gain (loss) on investments 0.01 1.75 4.41 5.45 (1.97) 1.06
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 0.12 $ 1.90 $ 4.49 $ 5.59 $ (1.90) $ 1.13
Distributions to shareowners:
Net investment income (0.26) (0.08) (0.08) (0.06) (0.05) (0.10)
Net realized gain (6.60) (1.49) (0.21) -- (0.46) (1.47)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (6.74) $ 0.33 $ 4.20 $ 5.53 $ (2.41) $ (0.44)
-------- -------- -------- -------- -------- --------
Net asset value, end of year $ 18.26 $ 25.00 $ 24.67 $ 20.47 $ 14.94 $ 17.35
======== ======== ======== ======== ======== ========
Total return* 1.18% 7.88% 22.12% 37.48% (11.21)% 6.49%
Ratio of net expenses to average net assets+ 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79%
Ratio of net investment income (loss) to average net assets+ 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45%
Portfolio turnover rate 115%** 42% 55% 52% 68% 95%
Net assets, end of period (in thousands) $273,839 $288,837 $303,138 $170,237 $120,687 $128,340
Ratio with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79%
Net investment income (loss) 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45%
Ratio with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.72%** 0.71% 0.72% 0.76% 0.80% 0.79%
Net investment income (loss) 0.89%** 0.58% 0.53% 0.86% 0.46% 0.45%
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 99
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 13.39 $ 13.04 $ 12.22 $ 9.75 $ 14.95 $ 18.39
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.02 $ 0.04 $ 0.09 $ (0.01) $ 0.00(a) $ 0.01
Net realized and unrealized gain (loss) on investments (0.38) 0.41 0.73 2.48 (5.19) (3.45)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ (0.36) $ 0.45 $ 0.82 $ 2.47 $ (5.19) $ (3.44)
Distributions to shareowners:
Net investment income (0.03) (0.10) -- (0.00)(a) (0.01) --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.39) $ 0.35 $ 0.82 $ 2.47 $ (5.20) $ (3.44)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 13.00 $ 13.39 $ 13.04 $ 12.22 $ 9.75 $ 14.95
======= ======= ======= ======= ======= =======
Total return* (2.71)% 3.48% 6.71% 25.35% (34.71)% (18.71)%
Ratio of net expenses to average net assets+ 1.00%** 0.96% 0.96% 1.08% 0.97% 0.85%
Ratio of net investment income (loss) to average net assets+ 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07%
Portfolio turnover rate 102%** 79% 206% 58% 86% 111%
Net assets, end of period (in thousands) $23,446 $26,986 $32,300 $35,750 $34,746 $72,456
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.00%** 0.96% 0.97% 1.08% 0.97% 0.85%
Net investment income (loss) 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07%
Ratios with waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.00%** 0.96% 0.96% 1.08% 0.97% 0.85%
Net investment income (loss) 0.31%** 0.19% 0.71% (0.05%) 0.01% 0.07%
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 26.13 $ 24.30 $ 18.57 $ 14.47 $ 14.77 $ 14.42
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.39 $ 0.43 $ 0.52 $ 0.74 $ 0.62 $ 0.68
Net realized and unrealized gain (loss) on investments 3.41 3.10 5.99 4.16 (0.23) 0.40
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 3.80 $ 3.53 $ 6.51 $ 4.90 $ 0.39 $ 1.08
Distributions to shareowners:
Net investment income (0.38) (0.39) (0.45) (0.64) (0.69) (0.56)
Net realized gain (1.49) (1.31) (0.33) -- -- --
Tax return of capital -- -- -- (0.16) -- (0.17)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.93 $ 1.83 $ 5.73 $ 4.10 $ (0.30) $ 0.35
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 28.06 $ 26.13 $ 24.30 $ 18.57 $ 14.47 $ 14.77
======= ======= ======= ======= ======= =======
Total return* 14.83% 15.13% 35.74% 34.75% (2.53)% 7.80%
Ratio of net expenses to average net assets+ 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16%
Ratio of net investment income to average net assets+ 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71%
Portfolio turnover rate 18%** 12% 35% 20% 29% 34%
Net assets, end of period (in thousands) $31,852 $32,086 $36,447 $31,891 $29,873 $33,026
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16%
Net investment income 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.89%** 0.94% 0.98% 1.03% 1.07% 1.16%
Net investment income 2.63%** 1.65% 2.41% 4.49% 4.76% 4.71%
(a) Amount rounds to less than one cent per share.
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
100 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 21.55 $ 20.57 $ 18.70 $ 15.28 $ 19.08 $ 22.67
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.15 $ 0.27 $ 0.24 $ 0.20 $ 0.19 $ 0.17
Net realized and unrealized gain (loss) on investments 0.95 0.99 1.85 3.41 (3.81) (2.57)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.10 $ 1.26 $ 2.09 $ 3.61 $ (3.62) (2.40)
Distributions to shareowners:
Net investment income (0.15) (0.28) (0.22) (0.19) (0.18) (0.17)
Net realized gain -- -- -- -- -- (1.02)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 0.95 $ 0.98 $ 1.87 $ 3.42 $ (3.80) $ (3.59)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 22.50 $ 21.55 $ 20.57 $ 18.70 $ 15.28 $ 19.08
======== ======== ======== ======== ======== ========
Total return* 5.11% 6.17% 11.26% 23.76% 19.03% (10.85)%
Ratio of net expenses to average net assets+ 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74%
Ratio of net investment income (loss) to average net assets+ 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83%
Portfolio turnover rate 9%** 23% 17% 11% 11% 7%
Net assets, end of period (in thousands) $369,688 $382,973 $454,136 $154,839 $141,892 $199,160
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74%
Net investment income (loss) 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.70%** 0.70% 0.71% 0.76% 0.80% 0.74%
Net investment income (loss) 1.37%** 1.26% 1.26% 1.16% 1.09% 0.83%
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 21.25 $ 20.58 $ 18.09 $ 15.11 $ 18.40 $ 21.28
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.28 $ 0.51 $ 0.44 $ 0.41 $ 0.42 $ 0.40
Net realized and unrealized gain (loss) on investments 1.53 0.66 2.49 2.96 (3.30) (1.86)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ 1.81 $ 1.17 $ 2.93 $ 3.37 $ (2.88) $ (1.46)
Distributions to shareowners:
Net investment income (0.28) (0.50) (0.44) (0.39) (0.41) (0.36)
Net realized gain (0.37) -- -- -- -- (1.06)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 1.16 $ 0.67 $ 2.49 $ 2.98 $ (3.29) $ (2.88)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 22.41 $ 21.25 $ 20.58 $ 18.09 $ 15.11 $ 18.40
======== ======= ======== ======== ======== ========
Total return* 8.62% 5.72% 16.39% 0.86% (15.82)% (6.97)%
Ratio of net expenses to average net assets+ 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75%
Ratio of net investment income (loss) to average net assets+ 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07%
Portfolio turnover rate 28%** 22% 19% 12% 12% 13%
Net assets, end of period (in thousands) $246,508 $232,249 $188,234 $155,634 $133,258 $164,019
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75%
Net investment income (loss) 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.69%** 0.71% 0.72% 0.78% 0.80% 0.75%
Net investment income (loss) 2.56%** 2.56% 2.40% 2.55% 2.48% 2.07%
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 101
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01(a)
Net asset value, beginning of period $ 14.71 $ 14.40 $ 14.04 $ 12.27 $ 13.91 $ 14.60
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.14 $ 0.25 $ 0.28 $ 0.23 $ 0.21 $ 0.34
Net realized and unrealized gain (loss) on investments (0.12) 0.33 0.39 1.80 (1.63) (0.67)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.02 $ 0.58 $ 0.67 $ 2.03 $ (1.42) $ (0.33)
Distributions to shareowners:
Net investment income (0.14) (0.27) (0.31) (0.26) (0.22) (0.36)
Net realized gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.12) $ 0.31 $ 0.36 $ 1.77 $ (1.64) $ (0.69)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 14.59 $ 14.71 $ 14.40 $ 14.04 $ 12.27 $ 13.91
======= ======= ======= ======= ======= =======
Total return* 0.13% 4.08% 4.79% 16.71% (10.27)% (2.26)%
Ratio of net expenses to average net assets+ 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84%
Ratio of net investment income to average net assets+ 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42%
Portfolio turnover rate 16%** 25% 30% 37% 179% 136%
Net assets, end of period (in thousands) $25,522 $29,420 $35,312 $40,773 $42,849 $56,890
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84%
Net investment income 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.89%** 0.92% 0.90% 0.91% 0.95% 0.84%
Net investment income 1.81%** 1.66% 1.96% 1.75% 1.62% 2.42%
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months Year Year Year Year Year
Ended 6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 10.88 $ 11.67 $ 11.45 $ 9.27 $ 10.33 $ 9.82
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.31 $ 0.61 $ 0.62 $ 0.76 $ 0.92 $ 0.95
Net realized and unrealized gain (loss) on investments (0.15) (0.41) 0.27 2.18 (1.06) 0.62
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.16 $ 0.20 $ 0.89 $ 2.94 $ (0.14) $ 1.57
Distributions to shareowners:
Net investment income (0.31) (0.61) (0.62) (0.76) (0.92) (0.95)
Net realized gain (0.15) (0.38) (0.05) -- -- (0.11)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.30) $ (0.79) $ 0.22 $ 2.18 $ (1.06) $ 0.51
------- -------- ------- ------- ------- -------
Net asset value, end of period $ 10.58 $ 10.88 $ 11.67 $ 11.45 $ 9.27 $ 10.33
======= ======= ======= ======= ======= =======
Total return* 1.52% 1.95% 8.03% 32.78% (1.42)% 16.60%
Ratio of net expenses to average net assets+ 0.74%** 0.77% 0.78% 0.89% 1.02% 1.15%
Ratio of net investment income (loss) to average net assets+ 5.71%** 5.52% 5.40% 7.22% 9.39% 9.15%
Portfolio turnover rate 34%** 37% 42% 48% 42% 36%
Net assets, end of period (in thousands) $61,948 $63,452 $70,890 $66,587 $41,111 $32,331
Ratios with no waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.74%** 0.77% 0.78% 0.89% 1.02% 1.28%
Net investment income (loss) 5.71%** 5.52% 5.40% 7.22% 9.39% 9.02%
(a) The Portfolio began accreting discounts and amortizing premiums on debt
securities. The effect of this change for the year ended December 31, 2001,
was to decrease net investment income by $0.00, increase net realized and
unrealized gain (loss) by $0.00 (both amounts round to less than one cent
per share) and to decrease the ratio of net investment income to average net
assets with waiver of management fees by PIM and reduction for fees paid
indirectly.
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
102 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 10.76 $ 11.26 $ 11.01 $ 9.67 $ 9.33 $ 9.43
------- ------- ------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income $ 0.28 $ 0.61 $ 0.60 $ 0.62 $ 0.65 $ 0.67
Net realized and unrealized gain (loss) on investments and
foreign currency transactions (0.16) (0.31) 0.47 1.38 0.32 (0.04)
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.12 $ 0.30 $ 1.07 $ 2.00 $ 0.97 $ 0.63
Distributions to shareowners:
Net investment income (0.31) (0.64) (0.66) (0.66) (0.63) (0.67)
Net realized gain (0.05) (0.16) (0.16) -- -- (0.06)
------- ------ ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.24) $ (0.50) $ 0.25 $ 1.34 $ 0.34 $(0.10)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.52 $ 10.76 $ 11.26 $ 11.01 $ 9.67 $ 9.33
======= ======= ======= ======= ======= ======
Total return* 1.16% 2.74% 10.25% 21.24% 10.72% 6.90%
Ratio of net expenses to average net assets+ 0.87%** 0.89% 1.03% 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets+ 5.20%** 5.57% 5.52% 5.95% 6.75% 7.16%
Portfolio turnover rate 52%** 46% 53% 68% 50% 55%
Net assets, end of period (in thousands) $19,469 $20,662 $20,814 $19,312 $14,692 $7,479
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.87%** 0.89% 1.03% 1.25% 1.62% 2.44%
Net investment income 5.20%** 5.57% 5.52% 5.95% 6.38% 5.97%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.87%** 0.89% 1.03% 1.25% 1.25% 1.25%
Net investment income 5.20%** 5.57% 5.52% 5.95% 6.75% 7.16%
* 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.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 103
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01(a)
Net asset value, beginning of period $ 9.84 $ 10.11 $ 10.35 $ 10.59 $ 10.06 $ 9.97
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.19 $ 0.38 $ 0.37 $ 0.35 $ 0.46 $ 0.52
Net realized and unrealized gain (loss) on investments (0.29) (0.18) (0.03) (0.16) 0.56 0.12
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ (0.10) $ 0.20 $ 0.34 $ 0.19 $ 1.02 $ 0.64
Distributions to shareowners:
Net investment income (0.23) (0.47) (0.58) (0.43) (0.49) (0.55)
Net realized gain -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.33) $ (0.27) $ (0.24) $ (0.24) $ 0.53 $ 0.09
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 9.51 $ 9.84 $ 10.11 $ 10.35 $ 10.59 $ 10.06
======= ======= ======= ======= ======= =======
Total return* (1.03)% 2.02% 3.42% 1.81% 10.32% 6.48%
Ratio of net expenses to average net assets+ 0.75%** 0.82% 0.79% 0.78% 0.81% 0.83%
Ratio of net investment income (loss) to average net assets+ 4.12%** 4.05% 3.74% 3.45% 4.39% 5.19%
Portfolio turnover rate 49% 23% 37% 34% 54% 71%
Net assets, end of period (in thousands) $22,590 $25,767 $32,342 $44,526 $69,551 $37,381
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.75%** 0.82% 0.79% 0.78% 0.81% 0.85%
Net investment income (loss) 4.12%** 4.05% 3.74% 3.45% 4.39% 5.17%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.75%** 0.82% 0.79% 0.78% 0.81% 0.82%
Net investment income (loss) 4.12%** 4.05% 3.74% 3.45% 4.39% 5.20%
Pioneer Money Market VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
================================================================================
FINANCIAL HIGHLIGHTS
================================================================================
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.000 $ 1.000 $ 1.00 $ 1.00
------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.020 $ 0.025 $ 0.007 $ 0.006 $ 0.01 $ 0.03
Net realized and unrealized gain (loss) on investments -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.020 $ 0.025 $ 0.007 $ 0.006 $ 0.01 $ 0.03
Distributions to shareowners:
Net investment income (0.020) (0.025) (0.007) (0.006) (0.01) (0.03)
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= =======
Total return* 2.05% 2.47% 0.65% 0.56% 1.19% 3.39%
Ratio of net expenses to average net assets+ 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78%
Ratio of net investment income to average net assets+ 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16%
Net assets, end of period (in thousands) $38,042 $33,216 $42,896 $34,736 $59,521 $49,545
Ratios with no waiver of fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78%
Net investment income 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16%
Ratios with waiver of fees and assumption of expenses by PIM
and reduction for fees paid indirectly:
Net expenses 0.61%** 0.73% 0.74% 0.72% 0.78% 0.78%
Net investment income 4.08%** 2.40% 0.66% 0.58% 1.11% 3.16%
(a) The Portfolio began accreting discounts and amortizing premiums on debt
securities. The effect of this change for the year ended December 31, 2001,
was to decrease net investment income by $0.00, increase net realized and
unrealized gain (loss) by $0.00 (both amounts round to less than one cent
per share) and to decrease the ratio of net investment income to average net
assets with waiver of management fees by PIM and reduction for fees paid
indirectly from 5.38% to 5.17%.
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
104 The accompanying notes are an integral part of these financial statements.
(This page has been left blank intentionally.)
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
================================================================================
Pioneer
Emerging Pioneer
Markets Europe
VCT Portfolio VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $1,841,466, $0,
$729,516,
$6,211,265, $0, $1,446,912 and $18,921,912, respectively) (Cost $41,380,403,
$16,098,593, $24,076,514, $91,688,709, $348,879,994, $32,401,274 and
$76,145,200, respectively) $ 58,053,110 $ 19,799,795
Cash 60,692 252,966
Futures collateral -- --
Foreign currencies, at value (Cost $86,276, $36, $40, $0, $0, $0 and $0, respectively) 86,806 36
Receivables --
Investment securities sold 845,683 268,416
Fund shares sold 61,490 102,579
Variation margin -- --
Dividends, interest and foreign taxes withheld 122,730 40,635
Forward foreign currency settlement contracts, net -- 1,884
Due from Pioneer Investment Management, Inc. -- --
Other 7,266 1,947
------------ ------------
Total assets $ 59,237,777 $ 20,468,258
------------ ------------
LIABILITIES:
Payables --
Investment securities purchased $ 603,268 $ 335,790
Fund shares repurchased 137,647 2,991
Upon return of securities loaned 1,829,705 --
Forward foreign currency settlement contracts, net 3,372 --
Forward foreign currency portfolio hedge contracts, open -- net -- --
Reserve for repatriation taxes 36,643 --
Due to bank -- --
Due to affiliates 9,976 8,364
Accrued expenses 76,123 46,268
Other -- --
------------ ------------
Total liabilities $ 2,696,734 $ 393,413
------------ ------------
NET ASSETS:
Paid-in capital $ 34,171,390 $ 19,926,514
Undistributed net investment income (loss) 83,178 353,175
Accumulated net realized gain (loss) 5,647,909 (3,907,755)
Net unrealized gain (loss) on:
Investments 16,636,064 3,701,202
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated
in foreign currencies 2,502 1,709
------------ ------------
Total net assets $ 56,541,043 $ 20,074,845
------------ ------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 11,237,015 $ 8,970,304
Shares outstanding 408,029 703,576
------------ ------------
Net asset value per share $ 27.54 $ 12.75
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 45,304,028 $ 11,104,541
Shares outstanding 1,659,941 887,007
------------ ------------
Net asset value per share $ 27.29 $ 12.52
106 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer
International Small Cap Mid Cap Growth Real Estate
Value Value Value Shares Shares
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
$ 28,345,420 $ 98,140,283 $ 370,038,605 $ 31,586,851 $ 121,258,236
518,610 26,127 -- -- 1,226,876
-- -- -- -- --
40 -- -- -- --
-- 4,833 5,261,104 1,235,287 295,747
19,362 250,498 134,741 -- 69,653
-- 25,250 -- -- --
45,937 137,978 386,844 51,596 369,768
-- -- -- -- --
-- 3,102 -- -- --
3,660 9,564 61,331 3,774 5,905
------------ ------------ ------------- ------------- -------------
$ 28,933,029 $ 98,597,635 $ 375,882,625 $ 32,877,508 $ 123,226,185
------------ ------------ ------------- ------------- -------------
$ -- $ 40,105 $ 7,210,113 $ 1,188,348 $ 42,070
944 64,060 425,989 52,196 52,917
743,621 6,454,751 -- 1,519,655 19,238,901
-- -- -- -- --
-- -- -- -- --
-- -- -- -- --
-- -- 180,277 169,467 --
9,661 2,167 22,470 8,400 10,706
55,257 138,132 106,738 26,311 40,178
-- -- -- -- --
------------ ------------ ------------- ------------- -------------
$ 809,483 $ 6,699,215 $ 7,945,587 $ 2,964,377 $ 19,384,772
------------ ------------ ------------- ------------- -------------
$ 30,364,401 $ 68,936,874 $ 322,562,891 $ 66,458,982 $ 53,200,452
201,886 206,359 1,554,166 39,631 229,457
(6,711,987) 16,211,745 22,661,370 (35,771,059) 5,298,468
4,268,906 6,451,574 21,158,611 (814,423) 45,113,036
-- 91,868 -- -- --
340 -- -- -- --
------------ ------------ ------------- ------------- -------------
$ 28,123,546 $ 91,898,420 $ 367,937,038 $ 29,913,131 $ 103,841,413
------------ ------------ ------------- ------------- -------------
$ 20,848,150 $ 59,140,617 $ 273,838,888 $ 23,445,764 $ 31,851,653
1,414,874 3,582,110 14,995,239 1,804,084 1,135,310
------------ ------------ ------------- ------------- -------------
$ 14.73 $ 16.51 $ 18.26 $ 13.00 $ 28.06
$ 7,275,396 $ 32,757,803 $ 94,098,150 $ 6,467,367 $ 71,989,760
496,375 1,998,916 5,165,326 504,366 2,570,361
------------ ------------ ------------- ------------- -------------
$ 14.66 $ 16.39 $ 18.22 $ 12.82 $ 28.01
The accompanying notes are an integral part of these financial statements. 107
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED) (continued)
================================================================================
Pioneer
Pioneer Equity
Fund Income
VCT Portfolio VCT Portfolio
ASSETS:
Investment in securities, at value (including securities loaned of $0, $13,985,400,
$1,002,317, $1,596,158, $906,253, $0 and $0, respectively) (Cost $387,981,138,
$325,040,626, $36,078,075, $107,286,117, $60,968,533, $41,006,505 and
$37,929,700, respectively) $ 502,564,707 $ 393,536,725
Cash -- --
Futures collateral -- --
Foreign currencies, at value (cost $0, $0, $0, $0, $730,020, $0 and $0, respectively) -- --
Receivables --
Investment securities sold 271,151 37,746
Fund shares sold 9,378,559 217,641
Dividends, interest and foreign taxes withheld 598,463 736,988
Forward foreign currency settlement contracts, net -- --
Forward foreign currency portfolio hedge contracts, open -- net -- --
Due from Pioneer Investment Management, Inc. -- --
Other 18,273 12,514
------------- -------------
Total assets $ 512,831,153 $ 394,541,614
------------- -------------
LIABILITIES:
Payables --
Investment securities purchased $ 835,823 $ --
Fund shares repurchased 652,335 1,448,052
Dividends -- --
Upon return for securities loaned -- 14,278,681
Forward foreign currency settlement contracts, net -- --
Forward foreign currency portfolio hedge contracts, open -- net -- --
Due to bank 299,613 152,838
Due to affiliates 16,409 16,432
Accrued expenses 94,767 68,187
Other -- --
------------- -------------
Total liabilities $ 1,898,947 $ 15,964,190
------------- -------------
NET ASSETS:
Paid-in capital $ 425,701,652 $ 294,876,155
Undistributed net investment income (loss) 117,633 1,866,096
Accumulated net realized gain (loss) (29,470,697) 13,339,074
Net unrealized gain (loss) on:
Investments 114,583,569 68,496,099
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated
in foreign currencies 49 --
------------- -------------
Total net assets $ 510,932,206 $ 378,577,424
------------- -------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 369,688,116 $ 246,508,491
Shares outstanding 16,429,291 10,998,771
------------- -------------
Net asset value per share $ 22.50 $ 22.41
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 141,244,090 $ 132,068,933
Shares outstanding 6,291,688 5,859,143
------------- -------------
Net asset value per share $ 22.45 $ 22.54
108 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer Pioneer Pioneer Pioneer
Pioneer High Strategic America Money
Balanced Yield Income Income Market
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
$ 39,505,313 $105,689,518 $60,391,062 $ 39,817,811 $37,929,700
-- 711,034 1,675,991 643,506 74,120
-- -- -- -- --
-- -- 753,343 -- --
500,963 944,726 4,086 454,790 --
142,062 35,217 50,126 1,476 --
138,464 1,334,645 787,740 349,458 130,596
-- -- -- -- --
2,778 -- -- -- --
-- -- -- -- --
3,553 6,303 4,177 1,511 3,612
------------ ------------ ----------- ------------ -----------
$ 40,293,133 $108,721,443 $63,666,525 $ 41,268,552 $38,138,028
------------ ------------ ----------- ------------ -----------
$ 343,755 $ -- $ -- $ 493,391 $ --
80,310 120,084 4,322 76,733 70,154
-- -- 4,651 -- 1,479
1,028,510 1,695,184 941,101 -- --
-- -- 16,543 -- --
-- -- 23,367 -- --
17,559 -- -- -- --
8,591 10,019 9,602 8,605 4,767
48,949 44,758 49,911 58,843 19,442
-- -- -- -- --
------------ ------------ ----------- ------------ -----------
$ 1,527,674 $ 1,870,045 $ 1,049,497 $ 637,572 $ 95,842
------------ ------------ ----------- ------------ -----------
$ 38,744,584 $108,601,819 $62,510,593 $ 43,749,823 $38,045,036
(12,371) 31,588 193,339 (458,405) 124
(3,396,735) (185,410) 502,914 (1,471,744) (2,974)
-- --
3,427,238 (1,596,599) (577,471) (1,188,694) --
-- -- -- -- --
2,743 -- (12,347) -- --
------------ ------------ ----------- ------------ -----------
$ 38,765,459 $106,851,398 $62,617,028 $ 40,630,980 $38,042,186
------------ ------------ ----------- ------------ -----------
$ 25,522,157 $ 61,947,521 $19,468,874 $ 22,589,980 $38,042,186
1,749,566 5,856,696 1,850,367 2,375,632 38,049,402
------------ ------------ ----------- ------------ -----------
$ 14.59 $ 10.58 $ 10.52 $ 9.51 $ 1.00
$ 13,243,302 $ 44,903,878 $43,148,154 $ 18,041,000 $ --
910,098 4,246,731 4,100,763 1,894,401 --
------------ ------------ ----------- ------------ -----------
$ 14.55 $ 10.57 $ 10.52 $ 9.52 $ --
The accompanying notes are an integral part of these financial statements. 109
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF OPERATIONS 6/30/06 (UNAUDITED)
================================================================================
Pioneer Pioneer
Emerging Markets Europe
VCT Portfolio VCT Portfolio
Six Months Six Months
Ended Ended
6/30/06 6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $72,558, $68,353, $56,387, $0, $4,143,
$1,892 and $6,237, respectively) $ 785,027 $ 516,174
Interest 13,259 3,352
Income on securities loaned, net 6,449 --
Other -- --
------------ ----------
Total investment income $ 804,735 $ 519,526
------------ ----------
EXPENSES:
Management fees $ 346,428 $ 84,927
Transfer agent fees and expenses 4,996 4,920
Distribution fees (Class II) 59,681 13,598
Administrative reimbursements 9,470 9,698
Custodian fees 57,614 17,120
Professional fees 36,185 28,376
Printing expense 2,818 6,598
Fees and expenses of nonaffiliated trustees 2,542 923
Miscellaneous 5,641 5,381
------------ ----------
Total expenses $ 525,375 $ 171,541
Less management fees waived and expenses assumed by Pioneer Investment
Management, Inc. -- (5,304)
Less fees paid indirectly -- --
------------ ----------
Net expenses $ 525,375 $ 166,237
------------ ----------
Net investment income (loss) $ 279,360 $ 353,289
------------ ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments (net of foreign capital gain taxes of $30,901, $0, $0, $0, $0, $0
and $0, respectively) $ 5,740,092 $ 787,847
Redemption in kind -- --
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (12,762) (1,296)
------------ ----------
$ 5,727,330 $ 786,551
------------ ----------
Change in net unrealized gain or loss from:
Investments (net of the change in reserve for repatriation taxes of $15,716, $0, $0,
$0, $0, $0 and $0, respectively) $ (1,415,958) $1,142,972
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (967) 1,865
------------ ----------
$ (1,416,925) $1,144,837
------------ ----------
Net gain (loss) on investments, futures contracts and foreign currency transactions $ 4,310,405 $1,931,388
============ ==========
Net increase (decrease) in net assets resulting from operations $ 4,589,765 $2,284,677
============ ==========
110 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer
International Value Small Cap Value Mid Cap Value Growth Shares Real Estate Shares
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
Six Months Six Months Six Months Six Months Six Months
Ended Ended Ended Ended Ended
6/30/06 6/30/06 6/30/06 6/30/06 6/30/06
$ 401,984 $ 328,598 $ 2,801,601 $ 208,529 $ 1,787,776
3,659 130,202 220,983 3,834 20,348
10,758 20,763 -- 480 10,145
-- -- -- -- --
------------ ------------- ------------- ------------ -----------
$ 416,401 $ 479,563 $ 3,022,584 $ 212,843 $ 1,818,269
------------ ------------- ------------- ------------ -----------
$ 120,195 $ 197,413 $ 1,223,963 $ 114,866 $ 412,565
5,011 1,483 4,577 5,007 4,996
8,308 31,324 115,590 8,674 88,416
9,536 8,805 55,072 9,558 9,698
40,746 17,163 11,251 12,820 7,208
19,579 23,576 19,514 14,032 17,406
3,748 11,330 37,440 5,837 --
1,955 2,300 2,645 2,072 1,862
5,302 491 1,921 180 472
------------ ------------- ------------- ------------ -----------
$ 214,380 $ 293,885 $ 1,471,973 $ 173,046 $ 542,623
-- -- -- -- --
-- -- (4,021) -- --
------------ ------------- ------------- ------------ -----------
$ 214,380 $ 293,885 $ 1,467,952 $ 173,046 $ 542,623
------------ ------------- ------------- ------------ -----------
$ 202,021 $ 185,678 $ 1,554,632 $ 39,797 $ 1,275,646
------------ ------------- ------------- ------------ -----------
$ 3,182,264 $ 16,357,805 $ 27,674,699 $ 853,762 $ 5,583,655
-- 2,170,274 -- -- --
-- (6,512) -- -- --
(12,056) 165 -- -- --
------------ ------------- ------------- ------------ -----------
$ 3,170,208 $ 18,521,732 $ 27,674,699 $ 853,762 $ 5,583,655
------------ ------------- ------------- ------------ -----------
$ (1,263,381) $ (15,901,452) $ (24,698,742) $ (1,707,559) $ 7,249,324
-- 109,596 -- -- --
834 -- -- -- --
------------ ------------- ------------- ------------ -----------
$ (1,262,547) $ (15,791,856) $ (24,698,742) $ (1,707,559) $ 7,249,324
------------ ------------- ------------- ------------ -----------
$ 1,907,661 $ 2,729,876 $ 2,975,957 $ (853,797) $12,832,979
============ ============= ============= ============ ===========
$ 2,109,682 $ 2,915,554 $ 4,530,589 $ (814,000) $14,108,625
============ ============= ============= ============ ===========
The accompanying notes are an integral part of these financial statements. 111
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF OPERATIONS 6/30/06 (UNAUDITED) (continued)
================================================================================
Pioneer Pioneer
Fund Equity Income
VCT Portfolio VCT Portfolio
Six Months Six Months
Ended Ended
6/30/06 6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $64,753, $0, $39, $290, $0, $0
and $0, respectively) $ 5,097,295 $ 5,786,629
Interest 110,772 178,990
Income on securities loaned, net -- 2,659
Other -- --
----------- -----------
Total investment income $ 5,208,067 $ 5,968,278
----------- -----------
EXPENSES:
Management fees $ 1,640,540 $ 1,191,418
Transfer agent fees and expenses 2,774 5,052
Distribution fees (Class II) 155,592 161,034
Administrative reimbursements 49,141 34,556
Custodian fees 21,099 21,619
Professional fees 17,706 13,706
Printing expense 29,920 51
Fees and expenses of nonaffiliated trustees 3,610 2,810
Miscellaneous 1,009 393
----------- -----------
Total expenses $ 1,921,391 $ 1,430,639
Less fees paid indirectly -- (796)
----------- -----------
Net expenses $ 1,921,391 $ 1,429,843
----------- -----------
Net investment income (loss) $ 3,286,676 $ 4,538,435
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $10,710,235 $13,469,756
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (19,335) --
----------- -----------
$10,690,900 $13,469,756
----------- -----------
Change in net unrealized gain or loss from:
Investments $11,152,705 $12,301,600
Futures contracts -- --
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies 49 --
----------- -----------
$11,152,754 $12,301,600
----------- -----------
Net gain (loss) on investments, futures contracts and foreign currency transactions $21,843,654 $25,771,356
=========== ===========
Net increase (decrease) in net assets resulting from operations $25,130,330 $30,309,791
=========== ===========
112 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer Pioneer Pioneer Pioneer Pioneer
Balanced High Yield Strategic Income America Income Money Market
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
Six Months Six Months Six Months Six Months Six Months
Ended Ended Ended Ended Ended
6/30/06 6/30/06 6/30/06 6/30/06 6/30/06
$ 160,982 $ 198,071 $ -- $ -- $ --
388,016 3,429,052 1,832,489 1,009,616 831,342
1,683 2,251 805 -- --
-- -- -- -- --
---------- ------------ ------------ ------------ --------
$ 550,681 $ 3,629,374 $ 1,833,294 $ 1,009,616 $831,342
---------- ------------ ------------ ------------ --------
$ 132,865 $ 365,507 $ 195,783 $ 103,904 $ 70,806
4,863 4,858 5,001 4,996 961
16,241 60,958 51,007 22,339 --
9,490 10,548 9,750 9,474 9,536
8,116 12,409 11,403 8,511 10,635
18,953 16,793 24,616 18,517 13,621
13 3,168 4,163 2,954 43
2,258 1,574 1,068 2,215 1,967
6,163 817 8,480 6,405 313
---------- ------------ ------------ ------------ --------
$ 198,962 $ 476,632 $ 311,271 $ 179,315 $107,882
-- -- -- -- --
---------- ------------ ------------ ------------ --------
$ 198,962 $ 476,632 $ 311,271 $ 179,315 $107,882
---------- ------------ ------------ ------------ --------
$ 351,719 $ 3,152,742 $ 1,522,023 $ 830,301 $723,460
---------- ------------ ------------ ------------ --------
$ 680,214 $ (177,537) $ 466,958 $ (127,147) $ --
-- -- -- -- --
(95) -- 77,651 -- --
---------- ------------ ------------ ------------ --------
$ 680,119 $ (177,537) $ 544,609 $ (127,147) $ --
---------- ------------ ------------ ------------ --------
$ (944,644) $ (1,391,350) $ (1,394,462) $ (1,136,024) $ (126)
-- -- -- -- --
2,743 -- (22,005) -- --
---------- ------------ ------------ ------------ --------
$ (941,901) $ (1,391,350) $ (1,416,467) $ (1,136,024) $ (126)
---------- ------------ ------------ ------------ --------
$ (261,782) $ (1,568,887) $ (871,858) $ (1,263,171) $ (126)
========== ============ ============ ============ ========
$ 89,937 $ 1,583,855 $ 650,165 $ (432,870) $723,334
========== ============ ============ ============ ========
The accompanying notes are an integral part of these financial statements. 113
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS 6/30/06
================================================================================
Pioneer Emerging Pioneer
Markets VCT Portfolio Europe VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05
FROM OPERATIONS:
Net investment income (loss) $ 279,360 $ 332,259 $ 353,289 $ 148,281
Net realized gain (loss) on investments,
redemptions in kind, futures contracts and
foreign currency transactions 5,727,330 7,305,703 786,551 3,108,967
Change in net unrealized gain or loss on
investments, futures contracts and foreign
currency transactions (1,416,925) 7,390,352 1,144,837 (1,857,317)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations $ 4,589,765 $ 15,028,314 $ 2,284,677 $ 1,399,931
------------- ------------- ------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (59,203) $ (50,778) $ (58,839) $ (58,420)
Class II (161,771) (161,235) (47,365) (44,828)
Net realized gain
Class I (1,033,768) -- -- --
Class II (4,159,777) -- -- --
------------- ------------- ------------ ------------
Total distributions to shareowners $ (5,414,519) $ (212,013) $ (106,204) $ (103,248)
------------- ------------- ------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 10,487,956 $ 13,210,315 $ 2,077,577 $ 3,090,347
Shares issued in reorganization -- -- -- --
Reinvestment of distributions 5,414,519 210,764 106,204 103,248
Cost of shares repurchased (13,768,240) (11,986,023) (2,959,113) (3,544,212)
Redemptions in kind -- -- -- --
------------- ------------- ------------ ------------
Net increase (decrease) in net assets resulting
from Fund share transactions $ 2,134,235 $ 1,435,056 $ (775,332) $ (350,617)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets $ 1,309,481 $ 16,251,357 $ 1,403,141 $ 946,066
------------- ------------- ------------ ------------
NET ASSETS:
Beginning of period $ 55,231,562 $ 38,980,205 $ 18,671,704 $ 17,725,638
------------- ------------- ------------ ------------
End of period $ 56,541,043 $ 55,231,562 $ 20,074,845 $ 18,671,704
============= ============= ============ ============
Undistributed net investment income,
end of period $ 83,178 $ 24,792 $ 353,175 $ 106,090
============= ============= ============ ============
114 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer International Pioneer Small Cap Pioneer Mid Cap
Value VCT Portfolio Value VCT Portfolio Value VCT Portfolio
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05 (unaudited) 12/31/05
$ 202,021 $ 163,925 $ 185,678 $ 92,250 $ 1,554,632 $ 2,876,590
3,170,208 4,186,631 18,521,732 3,025,018 27,674,699 146,233,723
(1,262,547) (617,934) (15,791,856) 1,010,721 (24,698,742) (98,298,212)
------------ ------------ ------------- ------------ ------------- --------------
$ 2,109,682 $ 3,732,622 $ 2,915,554 $ 4,127,989 $ 4,530,589 50,812,101
------------ ------------ ------------- ------------ ------------- --------------
$ (100,557) $ (31,154) $ (73,422) $ -- $ (2,875,198) $ (980,182)
(20,185) (3,084) (580) -- -- (1,186,576)
-- -- (1,788,652) (593,880) (71,620,430) (18,901,870)
-- -- (1,003,743) (497,417) (24,935,216) (33,992,323)
------------ ------------ ------------- ------------ ------------- --------------
$ (120,742) $ (34,238) $ (2,866,397) $ (1,091,297) $ (99,430,844) $ (55,060,951)
------------ ------------ ------------- ------------ ------------- --------------
$ 2,991,315 $ 3,244,454 $ 15,453,544 $ 20,346,152 $ 23,886,018 $ 138,080,446
-- -- 51,400,124 -- -- --
120,741 34,238 2,866,397 -- 99,430,844 55,060,951
(3,879,174) (7,067,685) (8,332,855) (9,966,656) (37,533,546) (163,603,573)
-- -- (11,792,154) -- -- (488,210,933)
------------ ------------ ------------- ------------ ------------- --------------
$ (767,118) $ (3,788,993) $ 49,595,056 $ 10,379,496 $ 85,783,316 $ (458,673,109)
------------ ------------ ------------- ------------ ------------- --------------
$ 1,221,822 $ (90,609) $ 49,644,213 $ 13,416,188 $ (9,116,939) $ (462,921,959)
------------ ------------ ------------- ------------ ------------- --------------
$ 26,901,724 $ 26,992,333 $ 42,254,207 $ 28,838,019 $ 377,053,977 $ 839,975,936
------------ ------------ ------------- ------------ ------------- --------------
$ 28,123,546 $ 26,901,724 $ 91,898,420 $ 42,254,207 $ 367,937,038 $ 377,053,977
============ ============ ============= ============ ============= ==============
$ 201,886 $ 120,607 $ 206,359 $ 94,683 $ 1,554,166 $ 2,874,732
============ ============ ============= ============ ============= ==============
The accompanying notes are an integral part of these financial statements. 115
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 (continued)
================================================================================
Pioneer Growth Pioneer Real Estate
Shares VCT Portfolio Shares VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05
FROM OPERATIONS:
Net investment income (loss) $ 39,797 $ 49,245 $ 1,275,646 $ 1,488,954
Net realized gain (loss) on investments and foreign
currency transactions 853,762 3,211,502 5,583,655 6,859,537
Change in net unrealized gain or loss on
investments and foreign currency transactions (1,707,559) (2,083,627) 7,249,324 5,415,473
------------ ------------ ------------- -------------
Net increase (decrease) in net assets resulting
from operations $ (814,000) $ 1,177,120 $ 14,108,625 $ 13,763,964
------------ ------------ ------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (49,224) $ (221,887) $ (420,758) $ (513,835)
Class II -- (50,023) (836,959) (868,561)
Net realized gain
Class I -- -- (1,594,710) (1,720,481)
Class II -- -- (3,624,498) (3,467,765)
------------ ------------ ------------- -------------
Total distributions to shareowners $ (49,224) $ (271,910) $ (6,476,925) $ (6,570,642)
------------ ------------ ------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 605,124 $ 2,192,354 $ 4,325,603 $ 14,850,583
Class I shares issued in reorganization -- -- -- --
Reinvestment of distributions 49,224 271,910 6,476,926 6,570,642
Cost of shares repurchased (3,959,678) (9,337,142) (14,062,070) (27,391,461)
Redemptions in kind -- -- -- --
------------ ------------ ------------- -------------
Net increase (decrease) in net assets resulting
from Fund share transactions $ (3,305,330) $ (6,872,878) $ (3,259,541) $ (5,970,236)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets $ (4,168,554) $ (5,967,668) $ 4,372,159 $ 1,223,086
------------ ------------ ------------- -------------
NET ASSETS:
Beginning of period $ 34,081,685 $ 40,049,353 $ 99,469,254 $ 98,246,168
------------ ------------ ------------- -------------
End of period $ 29,913,131 $ 34,081,685 $ 103,841,413 $ 99,469,254
============ ============ ============= =============
Undistributed (distributions in excess of) net
investment income, end of period $ 39,631 $ 49,058 $ 229,457 $ 211,528
============ ============ ============= =============
116 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer Fund Pioneer Equity Pioneer
VCT Portfolio Income VCT Portfolio Balanced VCT Portfolio
Six Months Six Months Six Months
Ended Year Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05 (unaudited) 12/31/05
$ 3,286,676 $ 6,406,915 $ 4,538,435 $ 8,063,117 $ 351,719 $ 704,175
10,690,900 46,679,070 13,469,756 19,415,048 680,119 1,339,268
11,152,754 (23,029,256) 12,301,600 (9,053,445) (941,901) (318,959)
------------- -------------- ------------- ------------- ------------ ------------
$ 25,130,330 $ 30,056,729 $ 30,309,791 $ 18,424,720 $ 89,937 $ 1,724,484
------------- -------------- ------------- ------------- ------------ ------------
$ (2,525,809) $ (5,374,313) $ (3,001,872) $ (5,101,572) $ (253,793) $ (588,607)
(670,506) (1,440,262) (1,421,557) (2,458,044) (105,572) (208,623)
-- -- (4,037,203) -- -- --
-- -- (2,136,789) -- -- --
------------- -------------- ------------- ------------- ------------ ------------
$ (3,196,315) $ (6,814,575) $ (10,597,421) $ (7,559,616) $ (359,365) $ (797,230)
------------- -------------- ------------- ------------- ------------ ------------
$ 43,018,367 $ 42,859,167 $ 23,815,875 $ 96,224,481 $ 1,651,171 $ 4,365,660
-- 53,856,933 -- -- -- --
3,196,315 6,814,325 10,597,420 7,559,617 359,363 797,221
(56,846,033) (139,175,447) (35,255,571) (36,867,650) (5,055,963) (9,774,029)
-- (75,731,419) -- -- -- --
------------- -------------- ------------- ------------- ------------ ------------
$ (10,631,351) $ (111,376,441) $ (842,276) $ 66,916,448 $ (3,045,429) $ (4,611,148)
------------- -------------- ------------- ------------- ------------ ------------
$ 11,302,664 $ (88,134,287) $ 18,870,094 $ 77,781,552 $ (3,314,857) $ (3,683,894)
------------- -------------- ------------- ------------- ------------ ------------
$ 499,629,542 $ 587,763,829 $ 359,707,330 $ 281,925,778 $ 42,080,316 $ 45,764,210
------------- -------------- ------------- ------------- ------------ ------------
$ 510,932,206 $ 499,629,542 $ 378,577,424 $ 359,707,330 $ 38,765,459 $ 42,080,316
============= ============== ============= ============= ============ ============
$ 117,633 $ 27,272 $ 1,866,096 $ 1,751,090 $ (12,371) $ (4,725)
============= ============== ============= ============= ============ ============
The accompanying notes are an integral part of these financial statements. 117
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS 6/30/06 (continued)
================================================================================
Pioneer High Yield Pioneer Strategic
VCT Portfolio Income VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05
FROM OPERATIONS:
Net investment income (loss) $ 3,152,742 $ 6,046,966 $ 1,522,023 $ 2,985,351
Net realized gain (loss) on investments and foreign
currency transactions (177,537) 1,530,055 544,609 511,506
Change in net unrealized gain or loss on
investments and foreign currency transactions (1,391,350) (5,535,598) (1,416,467) (2,035,611)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations $ 1,583,855 $ 2,041,423 $ 650,165 $ 1,461,246
------------- ------------- ------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,828,845) $ (3,563,099) $ (568,788) $ (1,227,712)
Class II (1,352,174) (2,466,908) (1,157,399) (1,916,310)
Net realized gain
Class I (896,053) (2,147,727) (95,758) (308,227)
Class II (641,246) (1,587,624) (211,483) (487,951)
------------- ------------- ------------ ------------
Total distributions to shareowners $ (4,718,318) $ (9,765,358) $ (2,033,428) $ (3,940,200)
------------- ------------- ------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,639,803 $ 43,512,782 $ 6,964,425 $ 19,663,891
Reinvestment of distributions 4,703,710 9,721,259 2,011,270 3,902,297
Cost of shares repurchased (28,978,600) (57,690,620) (5,682,815) (6,220,715)
------------- ------------- ------------ ------------
Net increase (decrease) in net assets resulting
from Fund share transactions $ (635,087) $ (4,456,579) $ 3,292,880 $ 17,345,473
------------- ------------- ------------ ------------
Net increase (decrease) in net assets $ (3,769,550) $ (12,180,514) $ 1,909,617 $ 14,866,519
------------- ------------- ------------ ------------
NET ASSETS:
Beginning of period $ 110,620,948 $ 122,801,462 $ 60,707,411 $ 45,840,892
------------- ------------- ------------ ------------
End of period $ 106,851,398 $ 110,620,948 $ 62,617,028 $ 60,707,411
============= ============= ============ ============
Undistributed (distributions in excess of) net
investment income, end of period $ 31,588 $ 59,865 $ 193,339 $ 397,503
============= ============= ============ ============
118 The accompanying notes are an integral part of these financial statements.
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
Pioneer America Pioneer Money
Income VCT Portfolio Market VCT Portfolio
Six Months Six Months
Ended Year Ended Year
6/30/06 Ended 6/30/06 Ended
(unaudited) 12/31/05 (unaudited) 12/31/05
$ 830,301 $ 1,818,811 $ 723,460 $ 942,592
(127,147) (8,670) -- 85
(1,136,024) (945,559) (126) 126
------------ ------------- ------------ -------------
$ (432,870) $ 864,582 $ 723,334 $ 942,803
------------ ------------- ------------ -------------
$ (563,165) $ (1,378,835) $ (723,669) $ (944,260)
(403,021) (792,466) -- --
-- -- -- --
-- -- -- --
------------ ------------- ------------ -------------
$ (966,186) $ (2,171,301) $ (723,669) $ (944,260)
------------ ------------- ------------ -------------
$ 2,842,982 $ 11,779,535 $ 12,972,512 $ 19,583,940
963,281 2,174,179 725,034 942,853
(8,894,397) (11,661,922) (8,871,120) (30,205,433)
------------ ------------- ------------ -------------
$ (5,088,134) $ 2,291,792 $ 4,826,426 $ (9,678,640)
------------ ------------- ------------ -------------
$ (6,487,190) $ 985,073 $ 4,826,091 $ (9,680,097)
------------ ------------- ------------ -------------
$ 47,118,170 $ 46,133,097 $ 33,216,095 $ 42,896,192
------------ ------------- ------------ -------------
$ 40,630,980 $ 47,118,170 $ 38,042,186 $ 33,216,095
============ ============= ============ =============
$ (458,405) $ (322,520) $ 124 $ 333
============ ============= ============ =============
The accompanying notes are an integral part of these financial statements. 119
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
================================================================================
1. Organization and Significant Accounting Policies
The Pioneer Variable Contracts Trust (the "Trust") is a Delaware statutory
trust registered under the Investment Company Act of 1940 as an open-end
management investment company. The Trust consists of twenty-seven separate
diversified portfolios, thirteen of which issue both Class I and Class II
shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The financial statements of Value Portfolio, AmPac Growth Portfolio, Small and
Mid Cap Growth Portfolio, Oak Ridge Large Cap Growth Portfolio, Growth
Opportunities Portfolio, Bond Portfolio, Cullen Value Portfolio, Equity
Opportunity Portfolio, Core Bond Portfolio, Global High Yield Portfolio,
Ibbotson Aggressive Allocation Portfolio, Ibbotson Moderate Allocation
Portfolio and Ibbotson Growth Allocation Portfolio and the Class II financial
highlights of all the Portfolios are presented in separate books.
Emerging Markets Portfolio, Europe Portfolio and International Value Portfolio
seek long-term capital growth. Small Cap Value Portfolio, Mid Cap Value
Portfolio and Growth Shares Portfolio seek capital appreciation. Real Estate
Shares Portfolio pursues long-term capital growth and, secondarily, current
income. Fund Portfolio seeks reasonable income and growth of capital. Equity
Income Portfolio seeks current income and long-term capital growth. Balanced
Portfolio seeks capital growth and current income. High Yield Portfolio seeks
to maximize total return through a combination of income and capital
appreciation. Strategic Income Portfolio seeks to produce a high level of
current income. America Income Portfolio seeks a high level of current income
as consistent with preservation of capital. Money Market Portfolio seeks
current income consistent with preserving capital and providing liquidity.
The Trust's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles 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 income, expenses and gains and losses on investments during the
reporting periods. Actual results
120
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of
its financial statements, which are consistent 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 (NYSE) is open, as of the close of regular trading on the NYSE. 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 NYSE. The
value of such securities used in computing the net asset value of a
Portfolio's shares is based on the last sale price on the principal
exchange where they traded.
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.
The Portfolios also may use the fair value of a security, including a
non-U.S. security, when the closing market price on the primary exchange
where the security is traded no longer accurately reflects the value of the
security as of the close of the exchange.
At June 30, 2006, there were no fair valued securities except as follows.
All securities that trade in foreign markets whose closing prices are as of
times prior to the close of the NYSE and that are held by Emerging Markets
Portfolio, Europe Portfolio and International Value Portfolio are fair
valued using vendor-supplied pricing updates for each security to the time
of the close of the NYSE. The principal exchanges and markets for such
securities have closing times prior to the close of the NYSE. However, the
value of these securities may be influenced by changes in global markets
occurring after the closing times of the local exchanges and markets up to
the time the Portfolios determine their net asset values. Consequently, the
Board of Trustees of the Trust has determined that the use of daily fair
valuations as provided by a pricing service is appropriate for these
Portfolios. The Portfolios may also take into consideration other
significant events in determining the fair value of these securities. Thus,
a Portfolio's securities valuations may differ from prices reported by the
various local exchanges and markets. Temporary cash investments and
securities held by any Portfolio are valued at amortized cost.
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. Discounts and premiums on fixed income securities are
accreted and amortized, respectively, on a yield-to-maturity basis and are
included in interest income. Dividend and interest income from foreign
securities are reported net of unrecoverable foreign taxes withheld at the
applicable country rates.
Gains and losses from sales of investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Information regarding the Trust's principal investment risks is contained
in the Trust's prospectus(es). Please refer to those documents when
considering the Trust's risks.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate investment trusts (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 return of capital distributions 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.
Emerging Markets, International Value and Europe Portfolios' investments in
emerging markets or countries with limited or developing markets may
subject these Portfolios to a greater degree of risk than in a developed
market. Risks associated with
121
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
these developing markets include political, social or economic factors and
may affect the price of the Portfolios' investments and income generated by
these investments, as well as the Portfolios' ability to repatriate such
amounts.
High Yield and Strategic Income Portfolios invest in below investment grade
(high yield) debt securities and preferred stocks. Some of these high yield
securities may be convertible into equity securities of the issuer. Debt
securities rated below investment grade are commonly referred to as "junk
bonds" and are considered speculative. These securities involve greater
risk of loss, are subject to greater price volatility, and are less liquid,
especially during periods of economic uncertainty or change, than higher
rated debt securities.
Small capitalization stocks, such as those in the Small Cap Value Portfolio
while offering the potential for higher returns, may be subject to greater
short-term price fluctuations than securities of larger companies.
B. Futures Contracts
The Portfolios may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. Upon entering into a futures contract, the
Portfolios are required to deposit with a broker an amount of cash or
securities equal to the minimum "initial margin" requirements of the
associated futures exchange. Subsequent payments for futures contracts
("variation margin") are paid or received by the Portfolios, depending on
the daily fluctuation in the value of the contracts, and are recorded by
the Portfolios as unrealized gains or losses. When the contract is closed,
the Portfolios realize a gain or loss equal to the difference between the
opening and closing value of the contract. The use of futures contracts
involves, to varying degrees, elements of market risk such as the changes
in the value of the contracts may not directly correlate to the changes in
the value of the underlying securities. These risks may decrease the
effectiveness of the Portfolios' hedging and trading strategies and
potentially result in a loss. As of June 30, 2006, open contracts are shown
in the table below.
- ------------------------------------------------------------------------------------------------------------
Number of
Contracts Settlement Unrealized
Portfolio Type Long/(Short) Month Market Value Gain/(Loss)
- ------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio Russell 2000 5 9/06 $1,828,750 $91,868
- ------------------------------------------------------------------------------------------------------------
C. Foreign Currency Translation
The books and records of the Portfolios 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 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. dollars 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.
D. Forward Foreign Currency Contracts
Certain Portfolios are authorized to enter 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
Portfolios record 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 8).
122
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
E. 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.
In addition to the requirements of the Internal Revenue Code, the
Portfolios may also be required to pay local taxes on the recognition of
capital gains and/or the repatriation of foreign currencies in certain
countries. During the six months ended June 30, 2006, no such taxes were
paid. In determining the daily net asset value, the Portfolios estimate the
reserve for such taxes, if any, associated with investments in certain
countries. Any estimated reserve for taxes on capital gains is based on the
net unrealized appreciation on certain portfolio securities, the holding
period of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. As of June 30, 2006, the Portfolios
had no reserves related to taxes on capital gains, except Emerging Markets
Portfolio, which had $36,643 in reserve related to capital gains.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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.
A portion of the dividend income recorded by Real Estate Shares Portfolio
is from distributions by publicly traded 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 Trust as a
reduction of the cost basis of the securities held, and those determined to
be capital gains are reflected as such in the Statement of Operations.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2005, certain Portfolios had capital loss
carryforwards and expirations as follows:
- ---------------------------------------------------------------------------------------------------------
International Mid Cap Growth
Expires in Europe Value Value Shares
Fiscal Year Ending Portfolio Portfolio Portfolio Portfolio
- ---------------------------------------------------------------------------------------------------------
2006 $ -- $ -- $ -- $ --
2007 $ -- $ -- $ -- $ --
2008 $ -- $ -- $ -- $ --
2009 $ 1,921,644 $2,426,453 $1,330,134 $ 9,618,208
2010 $ 1,896,288 $5,309,516 $2,529,788 $19,245,183
2011 $ 783,043 $2,130,998 $ -- $ 7,319,241
2012 $ -- $ -- $ -- $ --
2013 $ -- $ -- $ -- $ --
------------------------------------------------------------------------------
Total $ 4,600,975 $9,866,967 $3,859,922 $36,182,632
==============================================================================
America Money
Expires in Fund Balanced Income Market
Fiscal Year Ending Portfolio Portfolio Portfolio Portfolio
- --------------------- ----------- ---------- ---------- -----------
2006 $ -- $ -- $ -- $ --
2007 $ -- $ -- $ -- $ --
2008 $ -- $ -- $ 382,424 $ --
2009 $ -- $ -- $ -- $ --
2010 $26,951,317 $1,409,746 $ -- $ 2,728
2011 $13,017,527 $2,590,145 $ 435,523 $ --
2012 $ -- $ -- $ 171,643 $ 246
2013 $ -- $ -- $ 241,325 $ --
------------------------------------------------------------------------------
Total $39,968,844 $3,999,891 $1,230,915 $ 2,974
==============================================================================
- ---------------------------------------------------------------------------------------------------------
123
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
The following Portfolios elected to defer capital and/or currency losses
recognized between November 1, 2005 and December 31, 2005 to their fiscal
year ending December 31, 2006.
- --------------------------------------------------------------------------------
Portfolio Capital Losses Currency Losses
- --------------------------------------------------------------------------------
Europe Portfolio $ 17,485 $--
America Income Portfolio $109,707 $--
Strategic Income Portfolio $ 40,713 $--
- --------------------------------------------------------------------------------
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
distributions paid during the year ended December 31, 2005 and the
components of distributable earnings (accumulated losses) as of December
31, 2005, on a tax basis.
--------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Pioneer
Pioneer Pioneer International Small Cap
Emerging Markets Europe Value Value
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2005 2005 2005 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 212,013 $ 103,248 $ 34,238 $ --
Long-Term capital gain -- -- -- 1,091,297
------------------------------------------------------------------------
$ 212,013 $ 103,248 $ 34,238 $ 1,091,297
Return of Capital -- -- -- --
------------------------------------------------------------------------
Total distributions $ 212,013 $ 103,248 $ 34,238 $ 1,091,297
========================================================================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 220,926 $ 106,090 $ 120,607 $ 646,863
Undistributed long-term gain/(Capital Loss carryforward) 5,193,430 (4,600,975) (9,866,967) 2,238,710
Post-October loss deferred -- (17,485) -- --
Unrealized appreciation (depreciation) 17,780,051 2,482,228 5,516,565 6,006,705
------------------------------------------------------------------------
Total $23,194,407 $ (2,030,142) $(4,229,795) $ 8,892,278
========================================================================
Pioneer Pioneer Pioneer
Mid Cap Growth Real Estate Pioneer
Value Shares Shares Fund
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2005 2005 2005 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 6,510,571 $ 271,910 $ 1,584,389 $ 6,814,575
Long-Term capital gain 48,550,380 -- 4,986,253 --
------------------------------------------------------------------------
$ 55,060,951 $ 271,910 $ 6,570,462 $ 6,814,575
Return of Capital -- -- -- --
------------------------------------------------------------------------
Total distributions $ 55,060,951 $ 271,910 $ 6,570,462 $ 6,814,575
========================================================================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 30,629,491 $ 49,058 $ -- $ 27,272
Capital loss carryforward from merger (3,859,922) -- -- (39,968,844)
Undistributed long-term gain/(Capital loss carryforward) 68,794,908 (36,182,632) 5,283,368 --
REIT Dividend Payable -- -- 211,528 --
Unrealized appreciation (depreciation) 44,709,925 450,947 37,514,365 103,238,111
------------------------------------------------------------------------
Total $140,274,402 $(35,682,627) $43,009,261 $63,296,539
========================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
124
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Pioneer Equity Pioneer Pioneer Pioneer
Income Balanced High Yield Strategic Income
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
2005 2005 2005 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 7,559,616 $ 797,097 $6,600,658 $3,166,871
Long-Term capital gain -- -- 3,164,700 773,329
----------------------------------------------------------------------
$ 7,559,616 $ 797,097 $9,765,358 $3,940,200
Return of Capital -- -- -- --
----------------------------------------------------------------------
Total distributions $ 7,559,616 $ 797,097 $9,765,358 $3,940,200
======================================================================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 203,918 $ -- $ 798,588 $ 573,117
Undistributed long-term gain/Capital loss carryforward 6,168,262 (3,999,891) 803,653 148,610
Post-October loss deferred -- -- -- (40,713)
Unrealized appreciation (depreciation) 57,618,364 4,290,194 (212,035) 808,684
----------------------------------------------------------------------
Total $63,990,544 $ 290,303 $1,390,206 $1,489,698
======================================================================
Pioneer Pioneer
America Income Money Market
VCT Portfolio VCT Portfolio
2005 2005
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 2,171,301 $ 944,260
Long-Term capital gain -- --
----------------------------------------------------------------------
$ 2,171,301 $ 944,260
Return of Capital -- --
----------------------------------------------------------------------
Total distributions $ 2,171,301 $ 944,260
======================================================================
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 5,442 $ 333
Undistributed long-term gain/(Capital loss carryforward) (1,230,915) (2,974)
Post-October loss deferred (109,707) --
Unrealized appreciation (depreciation) (384,607) 126
----------------------------------------------------------------------
Total $(1,719,787) $ (2,515)
======================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Emerging Markets Portfolio,
Europe Portfolio and International Value Portfolio have elected to pass
through foreign tax credits of $181,164, $46,274 and $58,710, respectively.
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, the recognition of unrealized
gains or losses on certain futures contracts and the tax treatment of
premium amortization.
F. Portfolio Shares
The Portfolios record sales and repurchases of their 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006.
Distribution fees for Class II shares are calculated based on the average
daily net asset values attributable to Class II shares of the Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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
share based on their respective percentage of the adjusted net assets at
the beginning of the day. High Yield, Strategic Income, America Income and
Money Market Portfolios declare
125
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
as daily dividends substantially all of their respective 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. Dividends
and distributions to shareowners are recorded on the ex-dividend date.
Distributions paid by a Portfolio with respect to each class of shares are
calculated in the same manner, at the same time, and in the same amount,
except that Class I and Class II shares can bear different transfer agent
and distribution fees.
G. Securities Lending
The Portfolios lend securities in their portfolios 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 Portfolios also
continue to receive payments in lieu of interest or dividends on the
securities loaned. Gain or loss on the fair value of the loaned securities
that may occur during the term of the loan will be for the account of the
Portfolios. The loans are secured by collateral of at least 102%, at all
times, of the fair value of the securities loaned. The amount of the
collateral will be adjusted daily to reflect any price fluctuation in the
value of the loaned securities. The Portfolios have the right under the
lending agreements to recover the securities on loan from the borrower on
demand. The Portfolios invest cash collateral in the Securities Lending
Investment Fund, which is sponsored by Brown Brothers Harriman & Co., the
Portfolios' custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolios, 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 agreements at the time of purchase.
The collateral for all repurchase agreements are held in safekeeping in the
customer-only account of the Trust's custodian, or subcustodians. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
Portfolios. Management fees are calculated daily at the following annual rates:
- --------------------------------------------------------------------------------
Management Fee as a Percentage
of each Portfolio's Average
Portfolio Daily Net Assets
- --------------------------------------------------------------------------------
Emerging Markets Portfolio 1.15%
Europe Portfolio 1.00%
International Value Portfolio 1.00%
Small Cap Value Portfolio 0.75%
Mid Cap Value Portfolio 0.65%
Growth Shares Portfolio 0.70%
Real Estate Shares Portfolio 0.80%
Fund Portfolio 0.65%
Equity Income Portfolio 0.65%
Balanced Portfolio 0.65%
High Yield Portfolio 0.65%
Strategic Income Portfolio 0.65%
America Income Portfolio 0.55%
Money Market Portfolio 0.50%
- --------------------------------------------------------------------------------
126
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
PIM has agreed not to impose a portion of its management fees and to assume
other operating expenses for certain Portfolios through May 1, 2007 to the
extent necessary to limit expenses of Class I shares to the following
percentages of the Portfolios' average daily net assets attributable to Class I
shares:
- --------------------------------------------------------------------------------
Expense Limitation as a Percentage
of each Portfolio's Average
Portfolio Daily Net Assets
- --------------------------------------------------------------------------------
Mid Cap Value Portfolio 0.88%
Fund Portfolio 0.80%
Money Market Portfolio 0.90%
- --------------------------------------------------------------------------------
The portion of the Portfolios' expenses attributable to Class II will be
reduced only to the extent such expenses are reduced for Class I shares (or
Class II shares).
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, are paid by the Portfolios. At June 30, 2006, the following amounts
were payable to PIM related to management fees, administrative fees and certain
other services and are included in due to affiliates:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $ 1,980
Europe Portfolio 920
International Value Portfolio 943
Small Cap Value Portfolio 1,442
Mid Cap Value Portfolio 14,552
Growth Shares Portfolio 897
Real Estate Shares Portfolio 2,528
Fund Portfolio 11,776
Equity Income Portfolio 7,786
Balanced Portfolio 941
High Yield Portfolio 2,164
Strategic Income Portfolio 1,614
America Income Portfolio 790
Money Market Portfolio 416
- --------------------------------------------------------------------------------
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Trust at
negotiated rates. The following amounts of transfer agent fees payable to PIMSS
are included in due to affiliates at June 30, 2006:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $7,692
Europe Portfolio 7,369
International Value Portfolio 8,669
Small Cap Value Portfolio 502
Mid Cap Value Portfolio 7,276
Growth Shares Portfolio 7,459
Real Estate Shares Portfolio 7,691
Fund Portfolio 3,729
Equity Income Portfolio 7,747
Balanced Portfolio 7,560
High Yield Portfolio 7,551
Strategic Income Portfolio 7,696
America Income Portfolio 7,692
Money Market Portfolio 4,351
- --------------------------------------------------------------------------------
127
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
4. Distribution Plans
The Portfolios have adopted plans of distribution for Class II shares in
accordance with Rule 12b-1 under the Investment Company Act of 1940. Under the
plans, each Portfolio pays PFD a distribution fee of 0.25% of the average daily
net assets attributable to Class II shares to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with each Portfolio's
Class II shares. The following amounts of distribution fees payable to PFD are
included in due to affiliates at June 30, 2006:
- --------------------------------------------------------------------------------
Portfolio Amount
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $304
Europe Portfolio 75
International Value Portfolio 49
Small Cap Value Portfolio 223
Mid Cap Value Portfolio 642
Growth Shares Portfolio 44
Real Estate Shares Portfolio 487
Fund Portfolio 904
Equity Income Portfolio 899
Balanced Portfolio 90
High Yield Portfolio 304
Strategic Income Portfolio 292
America Income Portfolio 123
- --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes were as follows:
- ------------------------------------------------------------------------------------------------------------
Gross Gross Net Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio $ 41,655,843 $ 17,606,129 $ (1,208,862) $ 16,397,267
Europe Portfolio $ 16,174,439 $ 4,031,428 $ (406,072) $ 3,625,356
International Value Portfolio $ 24,091,742 $ 4,835,999 $ (582,321) $ 4,253,678
Small Cap Value Portfolio $ 91,844,645 $ 10,071,511 $ (3,775,873) $ 6,295,638
Mid Cap Value Portfolio $350,027,408 $ 33,294,480 $ (13,283,283) $ 20,011,197
Growth Shares Portfolio $ 32,843,463 $ 1,327,536 $ (2,584,148) $ (1,256,612)
Real Estate Shares Portfolio $ 76,427,953 $ 44,874,867 $ (44,584) $ 44,830,283
Fund Portfolio $388,173,891 $131,389,694 $ (16,998,878) $114,390,816
Equity Income Portfolio $323,616,761 $ 75,806,765 $ (5,886,801) $ 69,919,964
Balanced Portfolio $ 36,159,763 $ 4,686,107 $ (1,340,557) $ 3,345,550
High Yield Portfolio $107,292,903 $ 3,132,922 $ (4,736,307) $ (1,603,385)
Strategic Income Portfolio $ 60,972,673 $ 1,120,768 $ (1,702,379) $ (581,611)
America Income Portfolio $ 41,338,442 $ 78,166 $ (1,598,797) $ (1,520,631)
Money Market Portfolio $ 37,929,700 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------
128
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
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, 2006, were as follows:
- --------------------------------------------------------------------------------
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Emerging Markets Portfolio $ 14,209,019 $ 17,047,023
Europe Portfolio $ 4,015,468 $ 4,480,689
International Value Portfolio $ 15,889,704 $ 17,170,894
Small Cap Value Portfolio $ 38,553,305 $ 50,592,666
Mid Cap Value Portfolio $210,947,409 $228,145,769
Growth Shares Portfolio $ 16,547,824 $ 19,750,398
Real Estate Shares Portfolio $ 9,304,012 $ 18,417,009
Fund Portfolio $ 21,306,387 $ 51,565,444
Equity Income Portfolio $ 49,579,685 $ 56,519,684
Balanced Portfolio $ 2,352,309 $ 4,858,625
High Yield Portfolio $ 18,419,965 $ 20,008,959
Strategic Income Portfolio $ 5,133,308 $ 9,346,181
America Income Portfolio $ -- $ --
Money Market Portfolio $292,629,694 $289,651,751
- --------------------------------------------------------------------------------
The cost of purchases and the proceeds from sales of U.S. Government
obligations for the six months ended June 30, 2006, were as follows:
- --------------------------------------------------------------------------------
Portfolio Purchases Sales
- --------------------------------------------------------------------------------
Balanced Portfolio $ 745,225 $ 1,000,186
Strategic Income Portfolio $12,786,100 $ 5,695,303
America Income Portfolio $ 5,484,201 $10,673,855
- --------------------------------------------------------------------------------
129
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
- -------------------------------------------------------------------------------------------------
Emerging Markets Portfolio
CLASS I:
Shares sold 55,634 $ 1,782,641 57,112 $ 1,329,128
Reinvestment of distributions 42,233 1,092,971 2,300 49,529
Shares repurchased (88,778) (2,738,986) (82,002) (1,885,112)
------------------------------------------------------------
Net increase (decrease) 9,089 $ 136,626 (22,590) $ (506,455)
============================================================
CLASS II:
Shares sold 275,162 $ 8,705,315 530,098 $ 11,881,187
Reinvestment of distributions 168,481 4,321,548 7,549 161,235
Shares repurchased (364,999) (11,029,254) (449,363) (10,100,911)
------------------------------------------------------------
Net increase 78,644 $ 1,997,609 88,284 $ 1,941,511
============================================================
Europe Portfolio
CLASS I:
Shares sold 19,182 $ 242,185 21,878 $ 233,953
Reinvestment of distributions 4,791 58,839 5,591 58,420
Shares repurchased (83,616) (1,042,402) (155,613) (1,693,646)
------------------------------------------------------------
Net decrease (59,643) $ (741,378) (128,144) $ (1,401,273)
============================================================
CLASS II:
Shares sold 148,729 $ 1,835,392 268,948 $ 2,856,394
Reinvestment of distributions 3,927 47,365 4,369 44,828
Shares repurchased (154,937) (1,916,711) (174,429) (1,850,566)
------------------------------------------------------------
Net increase (decrease) (2,281) $ (33,954) 98,888 $ 1,050,656
============================================================
International Value Portfolio:
CLASS I:
Shares sold 56,236 $ 831,610 48,222 $ 576,930
Reinvestment of distributions 7,188 100,557 2,721 31,154
Shares repurchased (192,976) (2,841,013) (430,261) (5,229,863)
------------------------------------------------------------
Net decrease (129,552) $ (1,908,846) (379,318) $ (4,621,779)
============================================================
CLASS II:
Shares sold 147,514 $ 2,159,705 218,007 $ 2,667,524
Reinvestment of distributions 1,451 20,184 270 3,084
Shares repurchased (72,693) (1,038,161) (147,285) (1,837,822)
------------------------------------------------------------
Net increase 76,272 $ 1,141,728 70,992 $ 832,786
============================================================
Small Cap Value Portfolio
CLASS I:
Shares sold 245,412 $ 4,167,166 571,103 $ 8,553,972
Shares issued in reorganization 2,861,983 48,796,816 -- --
Redemptions in kind (654,874) (11,792,154) -- --
Reinvestment of distributions 116,744 1,862,074 40,427 589,019
Shares repurchased (256,798) (4,378,928) (539,585) (8,145,222)
------------------------------------------------------------
Net increase 2,312,467 $ 38,654,974 71,945 $ 997,769
============================================================
CLASS II:
Shares sold 665,015 $ 11,286,378 712,018 $ 10,705,770
Shares issued in reorganization 153,951 2,603,308 -- --
Reinvestment of distributions 63,445 1,004,323 34,350 497,391
Shares repurchased (233,745) (3,953,927) (121,596) (1,821,434)
------------------------------------------------------------
Net increase 648,666 $ 10,940,082 624,772 $ 9,381,727
============================================================
- -------------------------------------------------------------------------------------------------
130
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Variable Contracts Trust
================================================================================
================================================================================
- ---------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio
CLASS I:
Shares sold 374,576 $ 9,587,662 2,037,703 $ 50,295,966
Reinvestment of distributions 4,182,798 74,495,628 821,233 19,882,052
Shares repurchased (1,115,637) (28,263,675) (2,727,151) (66,908,971)
Redemptions in kind -- -- (868,079) (21,000,610)
--------------------------------------------------------------------
Net increase (decrease) 3,441,737 $ 55,819,615 (736,294) $ (17,731,563)
====================================================================
CLASS II:
Shares sold 570,095 $ 14,298,356 3,599,252 $ 87,784,480
Reinvestment of distributions 1,403,220 24,935,2165 1,468,235 35,178,899
Shares repurchased (377,034) (9,269,871) (3,965,242) (96,694,602)
Redemptions in kind -- -- (19,499,464) (467,210,323)
--------------------------------------------------------------------
Net increase (decrease) 1,596,281 $ 29,963,701 (18,397,219) $ (440,941,546)
====================================================================
Growth Shares Portfolio
CLASS I:
Shares sold 14,376 $ 195,725 34,054 $ 438,600
Reinvestment of distributions 3,819 49,224 17,362 221,887
Shares repurchased (229,888) (3,115,703) (512,773) (6,658,363)
--------------------------------------------------------------------
Net decrease (211,693) $ (2,870,754) (461,357) $ (5,997,876)
====================================================================
CLASS II:
Shares sold 30,827 $ 409,399 137,249 $ 1,753,754
Reinvestment of distributions -- -- 3,965 50,023
Shares repurchased (63,951) (843,975) (205,695) (2,678,779)
--------------------------------------------------------------------
Net decrease (33,124) $ (434,576) (64,481) $ (875,002)
====================================================================
Real Estate Shares Portfolio
CLASS I:
Shares sold 33,257 $ 937,604 57,099 $ 1,401,143
Reinvestment of distributions 74,125 2,015,469 91,076 2,234,316
Shares repurchased (199,965) (5,670,285) (420,029) (10,198,782)
--------------------------------------------------------------------
Net decrease (92,583) $ (2,717,212) (271,854) $ (6,563,323)
====================================================================
CLASS II:
Shares sold 118,596 $ 3,387,999 558,332 $ 13,449,440
Reinvestment of distributions 164,596 4,461,457 176,725 4,336,326
Shares repurchased (296,023) (8,391,785) (699,655) (17,192,679)
--------------------------------------------------------------------
Net increase (decrease) (12,831) $ (542,329) 35,402 $ 593,087
====================================================================
Fund Portfolio
CLASS I:
Shares sold 540,777 $ 12,165,407 580,758 $ 11,975,172
Reinvestment of distributions 112,827 2,525,809 257,653 5,374,312
Shares repurchased (1,995,750) (44,772,169) (5,148,933) (106,238,103)
--------------------------------------------------------------------
Net decrease (1,342,146) $ (30,080,953) (4,310,522) $ (88,888,619)
====================================================================
CLASS II:
Shares sold 1,374,253 $ 30,852,960 1,500,748 $ 30,883,995
Shares issued in reorganization -- -- 2,567,061 53,856,933
Reinvestment of distributions 30,016 670,506 69,257 1,440,013
Shares repurchased (540,293) (12,073,864) (1,597,303) (32,937,344)
Redemptions in kind -- -- (3,626,019) (75,731,419)
--------------------------------------------------------------------
Net increase (decrease) 863,976 $ 19,449,602 (1,086,256) $ (22,487,822)
====================================================================
- ---------------------------------------------------------------------------------------------------------
131
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
- ---------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------
Equity Income Portfolio
CLASS I:
Shares sold 561,352 $ 12,533,920 2,853,636 $ 59,389,539
Reinvestment of distributions 320,294 7,039,074 242,794 5,101,573
Shares repurchased (810,119) (17,986,672) (1,317,139) (27,494,268)
--------------------------------------------------------------------
Net increase 71,527 $ 1,586,322 1,779,291 $ 36,996,844
====================================================================
CLASS II:
Shares sold 503,869 $ 11,281,955 1,763,038 $ 36,834,942
Reinvestment of distributions 161,060 3,558,346 116,340 2,458,044
Shares repurchased (770,080) (17,268,899) (444,619) (9,373,382)
--------------------------------------------------------------------
Net increase (decrease) (105,151) $ (2,428,598) 1,434,759 $ 29,919,604
====================================================================
Balanced Portfolio
CLASS I:
Shares sold 13,004 $ 191,534 30,803 $ 441,468
Reinvestment of distributions 17,277 253,793 40,641 588,607
Shares repurchased (280,761) (4,188,699) (522,797) (7,567,111)
--------------------------------------------------------------------
Net decrease (250,480) $ (3,743,372) (451,353) $ (6,537,036)
====================================================================
CLASS II:
Shares sold 98,246 $ 1,459,637 272,986 $ 3,924,192
Reinvestment of distributions 7,213 105,570 14,431 208,614
Shares repurchased (58,191) (867,264) (151,515) (2,206,918)
--------------------------------------------------------------------
Net increase 47,268 $ 697,943 135,902 $ 1,925,888
====================================================================
High Yield Portfolio
CLASS I:
Shares sold 839,034 $ 9,137,961 1,902,148 $ 21,181,455
Reinvestment of distributions 252,418 2,710,344 514,993 5,666,754
Shares repurchased (1,066,068) (11,559,180) (2,659,638) (29,739,088)
--------------------------------------------------------------------
Net increase (decrease) 25,384 $ 289,125 (242,497) $ (2,890,879)
====================================================================
CLASS II:
Shares sold 1,328,901 $ 14,501,842 2,014,754 $ 22,331,327
Reinvestment of distributions 185,574 1,993,366 368,486 4,054,505
Shares repurchased (1,602,920) (17,419,420) (2,495,978) (27,951,532)
--------------------------------------------------------------------
Net decrease (88,445) $ (924,212) (112,738) $ (1,565,700)
====================================================================
Strategic Income Portfolio
CLASS I:
Shares sold 139,804 $ 1,499,060 299,475 $ 3,285,765
Reinvestment of distributions 60,283 642,387 136,735 1,498,145
Shares repurchased (270,006) (2,903,452) (364,351) (3,995,330)
--------------------------------------------------------------------
Net increase (decrease) (69,919) $ (762,005) 71,859 $ 788,580
====================================================================
CLASS II:
Shares sold 509,569 $ 5,465,365 1,483,721 $ 16,378,126
Reinvestment of distributions 128,525 1,368,883 219,709 2,404,152
Shares repurchased (258,667) (2,779,363) (204,670) (2,225,385)
--------------------------------------------------------------------
Net increase 379,427 $ 4,054,885 1,498,760 $ 16,556,893
====================================================================
- ---------------------------------------------------------------------------------------------------------
132
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Variable Contracts Trust
================================================================================
================================================================================
- ---------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
(unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------
America Income Portfolio
CLASS I:
Shares sold 78,094 $ 751,072 116,997 $ 1,169,565
Reinvestment of distributions 58,136 560,266 138,561 1,381,733
Shares repurchased (379,934) (3,682,011) (836,177) (8,331,104)
--------------------------------------------------------------------
Net decrease (243,704) $ (2,370,673) (580,619) $ (5,779,806)
====================================================================
CLASS II:
Shares sold 216,051 $ 2,091,910 1,061,522 $ 10,609,970
Reinvestment of distributions 41,773 403,015 79,492 792,446
Shares repurchased (530,616) (5,212,386) (336,194) (3,330,818)
--------------------------------------------------------------------
Net increase (decrease) (272,792) $ (2,717,461) 804,820 $ 8,071,598
====================================================================
Money Market Portfolio
CLASS I:
Shares sold 12,972,512 $ 12,972,512 19,584,349 $ 19,583,940
Reinvestment of distributions 725,034 725,034 942,853 942,853
Shares repurchased (8,871,120) (8,871,120) (30,205,433) (30,205,433)
--------------------------------------------------------------------
Net increase (decrease) 4,826,426 $ 4,826,426 (9,678,231) $ (9,678,640)
====================================================================
- ---------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2006, 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, 2006, the Portfolios' open portfolio hedges were as follows:
- --------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Contracts to In Exchange Settlement Net
Portfolio Deliver For Date Value Unrealized Gain (Loss)
- -------------------------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio AUD (925,000) $ (677,757) 7/31/06 $ (687,440) $ (9,683)
Strategic Income Portfolio CAD (278,225) (250,427) 7/14/06 (249,112) 1,315
Strategic Income Portfolio EUR 487,705 617,509 7/5/06 623,583 6,074
Strategic Income Portfolio EUR (486,000) (623,465) 7/5/06 (621,597) 1,868
Strategic Income Portfolio GBP (335,000) (619,336) 8/7/06 (620,114) (778)
Strategic Income Portfolio GBP (335,000) (617,509) 7/5/06 (619,025) (1,516)
Strategic Income Portfolio JPY 195,000,000 1,733,617 7/5/06 1,709,257 (24,360)
Strategic Income Portfolio JPY 195,000,000 1,714,536 8/7/06 1,718,249 3,713
Balanced Fund Portfolio NOK (530,000) (88,114) 8/14/06 (85,335) 2,778
- -------------------------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as
follows:
- -------------------------------------------------------------------------------------------------------------------------------
Settlement Net
Portfolio Gross Receivable Date Gross Payable Receivable/(Payable)
- -------------------------------------------------------------------------------------------------------------------------------
Emerging Markets Portfolio $ 514,150 7/1/06 $ (517,522) $ (3,372)
Europe Portfolio 118,230 7/1/06 (116,346) 1,884
Strategic Income Portfolio 1,687,794 7/1/06 (1,704,337) (16,543)
- -------------------------------------------------------------------------------------------------------------------------------
133
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
================================================================================
9. Merger Information
On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio,
Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio,
three of the six portfolios that comprised Safeco Resource Series Trust,
approved a proposed Agreement and Plan of Reorganization that provided for the
mergers listed below. These tax-free reorganizations were accomplished on
December 10, 2004 ("Closing Date"), by exchanging all of the Safeco's net
assets for Class I shares as indicated below, based on Class I shares' ending
net asset value on the Closing Date. The following charts show the details of
the reorganizations as of that Closing Date:
Pioneer Fund VCT Portfolio
- ---------------------------------------------------------------------------------------------------
Pioneer Fund Safeco RST Core Pioneer Fund
VCT Portfolio Equity Portfolio VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------
Net Assets $281,591,969 $298,220,832 $879,147,352
Shares Outstanding 13,990,134 12,804,673 28,812,243
Class I Shares Issued 14,822,109
- ---------------------------------------------------------------------------------------------------
Pioneer Money Market VCT Portfolio
- ---------------------------------------------------------------------------------------------------
Pioneer Money Pioneer Money
Market VCT Safeco RST Money Market VCT
Portfolio Market Portfolio Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------
Net Assets $23,493,640 $21,976,837 $67,613,266
Shares Outstanding 23,500,655 21,976,837 45,477,492
Class I Shares Issued 21,976,837
Pioneer Mid Cap Value VCT Portfolio
- ---------------------------------------------------------------------------------------------------
Pioneer Mid Cap Pioneer Mid Cap
Value VCT Safeco RST Multi- Value VCT
Portfolio Cap Core Portfolio Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------
Net Assets $757,206,652 $49,670,328 $858,922,877
Shares Outstanding 32,072,498 2,399,533 34,160,364
Class I Shares Issued 2,087,866
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Unrealized Realized
Appreciation on Gain/(Loss)
Closing Date on Closing Date
- ---------------------------------------------------------------------------------------------------
Safeco RST Core Equity Portfolio $68,714,366 $20,662,968
Safeco RST Money Market Portfolio -- --
Safeco RST Multi-Cap Core Portfolio 5,550,191 7,992,587
- ---------------------------------------------------------------------------------------------------
134
Pioneer Variable Contracts Trust PIONEER VARIABLE CONTRACTS TRUST
================================================================================
================================================================================
In addition, on November 4, 2005, beneficial owners of AmSouth VIF Select
Equity Portfolio approved a proposed Agreement and Plan of Reorganization that
provided for the merger listed below. This tax-free reorganization was
accomplished on November 4, 2005, by exchanging all of the AmSouth Fund's net
assets for Class II shares as indicated below, based on Class II share's
ending net asset value on the Closing Date. The following charts show the
details of the reorganizations as of that closing date ("Closing Date"):
- ----------------------------------------------------------------------------------------------------
Pioneer Fund AmSouth VIF Pioneer Fund
VCT Portfolio Select Equity VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ----------------------------------------------------------------------------------------------------
Net Assets $444,635,312 $53,856,933 $498,492,245
Shares Outstanding 21,144,152 4,928,631 23,711,213
Class II Shares Issued 2,567,061
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Unrealized Realized
Appreciation on (Loss) on
Closing Date Closing Date
- ----------------------------------------------------------------------------------------------------
AmSouth VIF Select Equity $4,928,126 $ (49,233)
- ----------------------------------------------------------------------------------------------------
On May 23, 2006, beneficial owners of Pioneer Small Company VCT Portfolio and
Pioneer Small Cap Value II VCT Portfolio approved a proposed Agreement and
Plan of Reorganization that provided for the merger listed below. This
tax-free reorganization was accomplished on May 24, 2006, by exchanging all of
Pioneer Small Company VCT Portfolio's Class I and Class II net assets and
Pioneer Small Cap Value II VCT Portfolio's Class I net assets for Pioneer
Small Cap Value VCT Portfolio's shares, based on Pioneer Small Cap Value VCT
Portfolio's Class I and Class II shares' ending net asset value, respectively.
The following charts show the details of the reorganization as of that closing
date ("Closing Date"):
- ---------------------------------------------------------------------------------------------------------------------------------
Pioneer Small Pioneer Small Pioneer Small Pioneer Small
Cap Value Company Cap Value II Cap Value
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets
Class I $11,665,357 $3,024,464 $45,772,352 $60,462,173
Class II $30,138,805 $2,603,308 -- $32,742,113
-----------------------------------------------------------------------------------------
Total Net Assets $41,804,162 $5,627,772 $45,772,352 $93,204,286
-----------------------------------------------------------------------------------------
Shares Outstanding
Class I 684,211 247,234 2,521,638 3,546,194
Class II 1,782,074 215,447 -- 1,936,024
Shares Issued in Reorganization
Class I 2,861,983
Class II 153,951
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Unrealized Accumulated
Appreciation Gain/(Loss) on
on Closing Date Closing Date
- -----------------------------------------------------------------------------------------
Pioneer Small Company VCT Portfolio $ 1,554,529 $ 1,706
Pioneer Small Cap Value II VCT Portfolio $14,635,856 $ (85,337)
---------------------------------------------
Total $16,190,385 $ (83,631)
---------------------------------------------
- -----------------------------------------------------------------------------------------
135
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's website at
http://www.sec.gov.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information
regarding the operations of the Public Reference Room may be obtained by
calling 1-800-SEC-0330.
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
Pioneer Vision(SM) variable annuities were issued by Allmerica Financial Life
Insurance and Annuity Company under contract form numbers A3025-96 (Pioneer
Vision(SM) 2), A3027-98 (Pioneer C-Vision(SM), and A3028-99 (Pioneer
XtraVision[RegTM]), located at 440 Lincoln Street, Worcester, MA 01653.
Securities were distributed by VeraVest Investments, Inc., member NASD/SIPC.
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
[LOGO] PIONEER
Investments(R)
Pioneer Investment Management, Inc.
60 State Street
Boston, MA 02109
www.pioneerinvestments.com
[Logo]
PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Growth Opportunities VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 11
Notes to Financial Statements 15
Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
U.S. Common Stocks 82.5%
Temporary Cash Investment 14.4%
Exchange Traded Funds 2.2%
Depositary Receipts for international Stocks 0.90%
Sector Distribution
(As a percentage of equity holdings)
Information Technology 24.6%
Health Care 18.5%
Industrials 16.3%
Consumer Discretionary 14.7%
Financials 10.4%
Energy 8.9%
Materials 2.9%
Consumer Staples 2.4%
Telecommunication Services 0.8%
Utilities 0.5%
Five Largest Holdings
(As a percentage of equity holdings)
1. Cubist
Pharmaceuticals, Inc. 1.99%
2. Scientific Games Corp. 1.51
3. Stage Stores, Inc. 1.47
4. Rare Hospitality
International, Inc. 1.41
5. Central Garden & Pet Co. 1.38
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 25.18 $ 25.37
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
- --------------------------------------------------------------------------------
The following chart shows the change in value of an investment made in Pioneer
Growth Opportunities VCT Portfolio at net asset value, compared to that of the
Russell 2000 Growth Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
6/96 10000 10000
10460 13311
6/98 11840 19396
12823 15959
6/00 16463 18001
12621 20497
6/02 9465 16344
9530 14390
6/04 12537 19262
13074 21471
6/06 14981 22889
The Russell 2000 Growth Index is an unmanaged measure of the performance of U.S.
small-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. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Year 8.63%
5 Year 2.23%
1 Year 6.60%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit pioneerinvestments.com 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 VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
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 variable annuities. 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 Growth Opportunities VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006
Share Class I
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 992.50
Expenses Paid During Period* $ 3.90
* Expenses are equal to the Portfolio's annualized expense ratio of 0.79% 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 Growth Opportunities VCT
Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class I
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,020.88
Expenses Paid During Period* $ 3.96
* Expenses are equal to the Portfolio's annualized expense ratio of 0.79% for
Class I shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
In the following interview, Diego Franzin and Peter Wiley, members of the
Pioneer Growth Opportunities VCT Portfolio management team, discuss the factors
that influenced performance for the six-month period ended June 30, 2006.
Q. How did the Portfolio perform during the semiannual period?
A. Class I shares of the Portfolio produced a total return of -0.75% at net
asset value during the first half of the year, trailing the 6.07% return of
its benchmark, the Russell 2000 Growth Index. The Portfolio's 126 Small-Cap
Core peers returned an average of 6.47% over the period.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Why did the Portfolio underperform?
A. Our investment style was not well-suited to the environment of the past
six months. To review, we use a disciplined and largely sector-neutral
approach in order to pick stocks for the Portfolio. We begin with a
quantitative screen that narrows down the broad investment universe based
on a variety of fundamental factors. Then we use an intensive research
process to select what we believe are the very best stocks from those that
the screen shows to be potentially attractive investments. We strive to
keep the Portfolio's sector weightings close to the sector weightings in
the Russell 2000 Growth benchmark, meaning that our performance will
largely be the result of individual stock selection.
Unfortunately, the quantitative aspect of our process did not perform well
during the most recent period. Our screens are designed to identify stocks
with what we believe to be strong growth characteristics and reasonable
valuations, but such stocks generally underperformed. We believe this is a
short-term phenomenon, however.
Having said this, we are always taking steps to tweak the investment
process. Following a shift in the Portfolio's management team in May, we
have been looking for ways to refine the quantitative screen better to
identify the stocks with the best growth characteristics. Specifically, we
are trying to identify companies that can continue to grow their sales per
share, expand their profit margins, and deploy shareholders equity
effectively. Quantitative management is an evolutionary process, and we
will always be taking steps to try to improve the way, we pick stocks for
the Portfolio.
Q. What specific holdings helped and hurt performance?
A. Looking first at what did well, the top contributor to the Portfolio's
performance was Skechers USA, the maker of casual and outdoor footwear. The
company's stock soared in late April when it reported sharply improved
first quarter earnings on the strength of higher-than-expected sales both
in the United States and abroad. Also contributing was a position in
Packeteer, a network technology company that delivered earnings that were
well above expectations for both the fourth quarter of 2005 and the first
quarter of this year. Terex, which makes construction and mining equipment,
produced a nice gain on the strength of a stock split, analyst upgrades and
news that its first quarter earnings more than doubled from their level of
one year ago. Rounding out the list of leading contributors, the
Portfolio's position in Scientific Games, which provides services and
systems to state lotteries and race tracks worldwide, gained ground on a
steady flow of new contracts and two better-than-expected earnings reports.
In terms of detractors, the Portfolio's performance was hurt by its
positioning in three sectors: technology, health care and energy. While in
most other sectors our performance was in line with the benchmark, our
shortfall in these areas was large enough to result in underperformance for
the Portfolio as a whole. In technology, Avid Technology, Bottom Line
Technology and Westel Technology all declined as a result of earnings
shortfalls; while in health care, Merge Technologies and CB Therapeutics
also reported profits that came in below expectations. The situation was
slightly different in energy. Here, the Portfolio's holdings performed well
on an absolute basis, but failed to keep pace with the exceptional return
produced by the energy stocks in the benchmark.
A Word About Risk:
Investments in small 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 may invest a substantial amount of its
assets in issuers located in a limited number of countries and therefore is
more susceptible to adverse developments affecting those countries.
Call 800-688-9915 or visit pioneerinvestments.com 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 VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. Do you have any closing thoughts for investors?
A. Looking ahead to the remainder of 2006, it seems reasonable to expect that
the market backdrop will remain challenging. High oil prices, geopolitical
issues and questions surrounding economic growth and Federal Reserve policy
are all factors that we believe may contribute to additional market
volatility. Going forward, we will remain focused on our efforts to improve
the Portfolio's long-term 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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 95.1%
Energy - 8.7%
Coal & Consumable Fuels - 0.6%
90,300 Alpha Natural Resources, Inc.* $ 1,771,686
-----------
Oil & Gas Drilling - 2.1%
298,600 Grey Wolf, Inc.*(a) $ 2,299,220
237,200 Parker Drilling Co.* 1,703,096
75,200 Pride International, Inc.*(a) 2,348,496
-----------
$ 6,350,812
-----------
Oil & Gas Equipment & Services - 1.1%
33,100 Dresser-Rand Group, Inc.* $ 777,188
66,500 Hornbeck Offshore Services* 2,362,080
-----------
$ 3,139,268
-----------
Oil & Gas Exploration & Production - 3.1%
15,400 Cheniere Energy, Inc.*(a) $ 569,184
66,000 Comstock Resources, Inc.* 1,970,760
87,500 Energy Partners, Ltd.*(a) 1,658,125
51,500 Newfield Exploration Co.* 2,520,410
51,000 Stone Energy Corp.* 2,374,050
-----------
$ 9,092,529
-----------
Oil & Gas Refining & Marketing - 1.8%
88,200 Frontier Oil Corp.* $ 2,857,680
35,000 Giant Industries, Inc.* 2,329,250
-----------
$ 5,186,930
-----------
Total Energy $25,541,225
-----------
Materials - 2.8%
Aluminum - 0.4%
35,300 Century Aluminum Co.* $ 1,259,857
-----------
Construction Materials - 1.5%
44,450 Florida Rock Industries, Inc. $ 2,207,832
34,100 Headwaters, Inc.*(a) 871,596
25,200 Texas Industries, Inc. 1,338,120
-----------
$ 4,417,548
-----------
Fertilizers & Agricultural Chemicals - 0.4%
27,800 The Scotts Miracle-Gro Co. $ 1,176,496
-----------
Specialty Chemicals - 0.1%
63,400 Omnova Solutions, Inc.* $ 360,112
-----------
Steel - 0.4%
13,400 Cleveland-Cliffs, Inc.* $ 1,062,486
-----------
Total Materials $ 8,276,499
-----------
Capital Goods - 9.9%
Aerospace & Defense - 1.7%
36,900 DRS Technologies, Inc. $ 1,798,875
58,700 Moog, Inc.* 2,008,714
37,900 Teledyne Technologies, Inc.* 1,241,604
-----------
$ 5,049,193
-----------
Shares Value
Building Products - 1.6%
56,800 Elcor Corp.* $ 1,577,336
45,800 Lennox International, Inc. 1,212,784
36,000 NCI Building Systems, Inc.* 1,914,120
-----------
$ 4,704,240
-----------
Construction, Farm Machinery &
Heavy Trucks - 1.4%
25,000 Terex Corp.* $ 2,467,500
102,700 Wabash National Corp. 1,577,472
-----------
$ 4,044,972
-----------
Electrical Component & Equipment - 2.1%
508,400 Power-One, Inc.* $ 3,355,440
14,100 Regal-Beloit Corp.* 622,515
39,800 Thomas & Betts Corp.* 2,041,740
-----------
$ 6,019,695
-----------
Industrial Conglomerates - 0.7%
137,300 Tredegar Corp. $ 2,172,086
-----------
Industrial Machinery - 2.4%
51,300 Crane Co. $ 2,134,080
35,000 Flowserve Corp.* 1,991,500
21,100 Gardner Denver, Inc.* 812,350
42,400 Idex Corp. 2,001,280
-----------
$ 6,939,210
-----------
Total Capital Goods $28,929,396
-----------
Commercial Services & Supplies - 3.1%
Commercial Printing - 0.8%
23,400 Deluxe Corp.* $ 409,032
59,737 R.R. Donnelly & Sons Co. 1,908,597
-----------
$ 2,317,629
-----------
Diversified Commercial Services - 0.3%
122,600 Sirva, Inc.* $ 793,222
-----------
Human Resource & Employment
Services - 0.9%
80,600 Labor Ready, Inc.* $ 1,825,590
102,000 Spherion Corp.* 930,240
-----------
$ 2,755,830
-----------
Office Services & Supplies - 1.1%
122,200 Ikon Office Solutions, Inc.* $ 1,539,720
33,800 United Stationers, Inc.* 1,667,016
-----------
$ 3,206,736
-----------
Total Commercial
Services & Supplies $ 9,073,417
-----------
Transportation - 2.9%
Air Freight & Couriers - 0.6%
37,300 EGL, Inc.* $ 1,872,460
-----------
6 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Airlines - 1.9%
66,100 Alaska Air Group, Inc.* $ 2,605,662
66,600 Continental Airlines (Class B)*(a) 1,984,680
143,800 ExpressJet Holdings, Inc.* 993,658
-----------
$ 5,584,000
-----------
Trucking - 0.4%
43,000 Laidlaw International, Inc. $ 1,083,600
-----------
Total Transportation $ 8,540,060
-----------
Consumer Durables & Apparel - 4.7%
Apparel, Accessories & Luxury Goods - 1.0%
65,700 Phillips-Van Heusen $ 2,507,112
28,600 The Warnaco Group, Inc.* 534,248
-----------
$ 3,041,360
-----------
Footwear - 2.0%
65,400 K-Swiss, Inc.* $ 1,746,180
79,900 Skechers U.S.A.* 1,926,389
98,700 Wolverine World Wide, Inc. 2,302,671
-----------
$ 5,975,240
-----------
Homebuilding - 0.5%
144,500 Champion Enterprises, Inc.* $ 1,595,280
-----------
Leisure Products - 1.2%
73,200 Marvel Entertainment, Inc.*(a) $ 1,464,000
102,400 The Nautilus Group, Inc.*(a) 1,608,704
-----------
$ 3,072,704
-----------
Total Consumer Durables
& Apparel $13,684,584
-----------
Consumer Services - 4.6%
Casinos & Gaming - 2.2%
77,400 Monarch Casino & Resort, Inc.* $ 2,176,488
120,900 Scientific Games Corp.* 4,306,458
-----------
$ 6,482,946
-----------
Education Services - 0.2%
29,800 DeVry, Inc.* $ 654,706
-----------
Hotels, Resorts & Cruise Lines - 0.8%
76,600 Ambassadors Group, Inc.* $ 2,212,208
-----------
Restaurants - 1.4%
7,700 Morton's Restaurant Group* $ 117,964
140,400 Rare Hospitality International, Inc.* 4,037,904
-----------
$ 4,155,868
-----------
Total Consumer Services $13,505,728
-----------
Media - 1.0%
Publishing - 1.0%
31,400 R.H. Donnelley Corp.* $ 1,697,798
95,700 Readers Digest Association, Inc.* 1,335,972
-----------
$ 3,033,770
-----------
Total Media $ 3,033,770
-----------
Shares Value
Retailing - 4.0%
Apparel Retail - 3.8%
134,500 Bebe Stores, Inc.*(a) $ 2,073,990
170,100 New York & Company, Inc.* 1,661,877
127,050 Stage Stores, Inc.* 4,192,650
103,600 Stein Mart, Inc. 1,533,280
71,900 The Dress Barn, Inc.* 1,822,665
-----------
$11,284,462
-----------
Internet Retail - 0.2%
18,900 Priceline.com, Inc.*(a) $ 564,354
-----------
Total Retailing $11,848,816
-----------
Household & Personal Products - 2.3%
Household Products - 1.5%
91,400 Central Garden & Pet Co.* $ 3,934,770
12,000 Church & Dwight Co., Inc. 437,040
-----------
$ 4,371,810
-----------
Personal Products - 0.8%
235,300 Playtex Products, Inc.* $ 2,454,179
-----------
Total Household & Personal
Products $ 6,825,989
-----------
Health Care Equipment & Services - 10.6%
Health Care Distributors - 0.8%
62,300 Owens & Minor, Inc. $ 1,781,780
26,300 PSS World Medical, Inc.* 464,195
-----------
$ 2,245,975
-----------
Health Care Equipment - 4.7%
81,300 Adeza Biomedical Corp.* $ 1,139,826
42,000 ArthroCare Corp.*(a) 1,764,420
69,600 Hologic, Inc.*(a) 3,435,456
187,000 NMT Medical, Inc.*(a) 1,871,870
176,300 Symmetry Medical, Inc.* 2,715,020
86,300 Thoratec Corp.* 1,196,981
63,100 Wilson Greatbatch Technologies, Inc.* 1,489,160
-----------
$13,612,733
-----------
Health Care Facilities - 1.3%
73,700 Symbion, Inc.* $ 1,530,012
71,700 VCA Antech, Inc.* 2,289,381
-----------
$ 3,819,393
-----------
Health Care Services - 1.3%
107,000 AMN Healthcare Services* $ 2,172,100
60,400 Inventive Health, Inc.* 1,738,312
-----------
$ 3,910,412
-----------
Health Care Supplies - 1.2%
254,800 Merit Medical Systems, Inc.* $ 3,506,048
-----------
Health Care Technology - 0.8%
197,200 Merge Technologies, Inc.*(a) $ 2,427,532
-----------
The accompanying notes are an integral part of these financial statements. 7
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Managed Health Care - 0.5%
5,300 Healthspring, Inc.* $ 99,375
29,000 WellCare Health Plans, Inc.* 1,422,450
-----------
$ 1,521,825
-----------
Total Health Care Equipment &
Services $31,043,918
-----------
Pharmaceuticals & Biotechnology - 7.5%
Biotechnology - 4.4%
89,900 Alkermes, Inc.*(a) $ 1,700,908
225,500 Cubist Pharmaceuticals, Inc.*(a) 5,678,090
156,200 CV Therapeutics, Inc.*(a) 2,182,114
93,000 Vertex Pharmaceuticals, Inc.* 3,414,030
-----------
$12,975,142
-----------
Life Sciences Tools & Services - 1.4%
51,600 Molecular Devices Corp.* $ 1,576,896
82,200 Serologicals Corp.* 2,584,368
-----------
$ 4,161,264
-----------
Pharmaceuticals - 1.7%
235,400 Connetics Corp.* $ 2,768,304
71,800 Par Pharmaceutical Co., Inc.* 1,325,428
30,200 Sciele Pharma, Inc.* 700,338
-----------
$ 4,794,070
-----------
Total Pharmaceuticals &
Biotechnology $21,930,476
-----------
Banks - 0.9%
Regional Banks - 0.3%
16,000 Security Bank Corp.* $ 356,320
18,180 Southwest Bancorp, Inc.* 463,590
-----------
$ 819,910
-----------
Thrifts & Mortgage Finance - 0.6%
84,400 Franklin Bank Corp.* $ 1,704,036
-----------
Total Banks $ 2,523,946
-----------
Diversified Financials - 2.4%
Asset Management & Custody Banks - 0.8%
47,100 Apollo Investment Corp. $ 870,408
76,000 Waddell & Reed Financial, Inc.* 1,562,560
-----------
$ 2,432,968
-----------
Consumer Finance - 1.1%
59,700 Asta Funding, Inc. (a) $ 2,235,765
17,200 The First Marblehead Corp. (a) 979,368
-----------
$ 3,215,133
-----------
Investment Banking & Brokerage - 0.5%
23,000 A.G. Edwards, Inc. $ 1,272,360
-----------
Total Diversified Financials $ 6,920,461
-----------
Insurance - 2.4%
Life & Health Insurance - 0.3%
74,000 American Equity Investment Life
Holding*(a) $ 788,840
-----------
Shares Value
Property & Casualty Insurance - 1.1%
133,200 Assured Guaranty, Ltd. $ 3,379,284
-----------
Reinsurance - 1.0%
83,300 IPC Holdings, Ltd. $ 2,054,178
34,000 Platinum Underwriter Holdings, Ltd. 951,320
-----------
$ 3,005,498
-----------
Total Insurance $ 7,173,622
-----------
Real Estate - 2.0%
Mortgage Real Estate Investment Trusts - 2.0%
191,500 Annaly Mortgage Management, Inc. (a) $ 2,453,115
258,500 Deerfield Triarc Capital Corp. 3,355,330
-----------
$ 5,808,445
-----------
Total Real Estate $ 5,808,445
-----------
Software & Services - 11.6%
Application Software - 5.1%
34,600 Ansys, Inc.* $ 1,654,572
41,300 Bottomline Technologies, Inc.* 336,182
65,800 Corel Corp.* 793,548
59,900 FileNet Corp.* 1,613,107
23,600 Intergraph Corp.* 743,164
181,200 Intervoice, Inc.* 1,290,144
70,800 Jack Henry & Associates, Inc. 1,391,928
16,000 MicroStrategy, Inc.* 1,560,320
69,500 Net 1 UEPS Technologies, Inc.* 1,900,825
229,600 Sonic Solutions*(a) 3,788,400
-----------
$15,072,190
-----------
Data Processing & Outsourced Services - 0.4%
51,700 eFunds Corp.* $ 1,139,985
-----------
Internet Software & Services - 4.3%
56,700 Digital River, Inc.*(a) $ 2,290,113
146,400 Digitas, Inc.* 1,701,168
38,100 Infospace, Inc.* 863,727
97,400 J2 Global Communications, Inc.*(a) 3,040,828
179,900 RealNetworks, Inc.* 1,924,930
74,700 WebEx Communications, Inc.* 2,654,838
-----------
$12,475,604
-----------
IT Consulting & Other Services - 0.5%
62,600 Acxiom Corp.* $ 1,565,000
-----------
Systems Software - 1.3%
54,600 Macrovision Corp.* $ 1,174,992
28,100 Micros Systems, Inc.* 1,227,408
57,800 Progress Software Corp.* 1,353,098
-----------
$ 3,755,498
-----------
Total Software & Services $34,008,277
-----------
8 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Technology Hardware & Equipment - 6.7%
Communications Equipment - 3.1%
46,600 CommScope, Inc.* $ 1,464,172
138,200 Foundry Networks, Inc.* 1,473,212
119,500 NETGEAR, Inc.* 2,587,175
167,400 Packeteer, Inc.* 1,898,316
85,300 Symmetricom, Inc.* 603,071
452,100 Westell Technologies, Inc.* 990,099
------------
$ 9,016,045
------------
Computer Hardware - 0.6%
55,100 Avid Technology, Inc.*(a) $ 1,836,483
------------
Electronic Equipment & Instruments - 1.2%
170,900 Paxar Corp.* $ 3,515,413
------------
Electronic Manufacturing
Services - 1.1%
68,900 Plexus Corp.* $ 2,357,069
157,900 Sanmina-SCI Corp.* 726,340
------------
$ 3,083,409
------------
Technology Distributors - 0.7%
70,000 Scansource, Inc.* $ 2,052,400
------------
Total Technology Hardware &
Equipment $ 19,503,750
------------
Semiconductors - 5.7%
Semiconductor Equipment - 2.1%
106,300 Advanced Energy Industries, Inc.* $ 1,407,412
170,100 Amkor Technology, Inc.*(a) 1,609,146
85,300 MKS Instruments, Inc.* 1,716,236
94,300 Photronics, Inc.* 1,395,640
------------
$ 6,128,434
------------
Semiconductors - 3.6%
88,100 AMIS Holdings, Inc.* $ 881,000
346,900 Atmel Corp.* 1,925,295
21,400 Diodes, Inc.* 886,816
26,500 Hittite Microwave Corp.* 958,240
165,800 IXYS Corp.* 1,591,680
70,600 Microsemi Corp.* 1,721,228
345,400 SGC Holding Corp.* 2,030,952
15,500 Supertex, Inc.* 619,070
------------
$ 10,614,281
------------
Total Semiconductors $ 16,742,715
------------
Telecommunication Services - 0.8%
Integrated Telecommunication
Services - 0.8%
98,900 Alaska Communications Systems
Group, Inc. $ 1,251,085
29,500 Commonwealth Telephone
Enterprises, Inc.* 978,220
------------
$ 2,229,305
------------
Total Telecommunication Services $ 2,229,305
------------
Shares Value
Utilities - 0.5%
Independent Power Producer &
Energy Traders - 0.5%
40,900 Black Hills Corp. $ 1,404,097
------------
Total Utilities $ 1,404,097
------------
TOTAL COMMON STOCKS
(Cost $271,970,096) $278,548,496
------------
WARRANTS - 0.0%
Commercial Services & Supplies - 0.0%
Diversified Commercial Services - 0.0%
37,165 NCO Group Warrants, Exp. 9/28/06* $ -
------------
Total Commercial Services
& Supplies $ -
------------
Health Care Equipment &
Services - 0.0%
Health Care Facilities - 0.0%
140,000 Lifepoint Warrants, Exp. 4/1/07* $ -
84,000 Lifepoint Warrants, Exp. 7/21/07* -
------------
$ -
------------
Total Health Care Equipment &
Services $ -
------------
Pharmaceuticals & Biotechnology - 0.0%
Biotechnology - 0.0%
250,000 Photomedex Warrants, Exp. 6/13/07* $ 17,500
------------
Total Pharmaceuticals &
Biotechnology $ 17,500
------------
TOTAL WARRANTS
(Cost $21,608) $ 17,500
------------
EXCHANGE TRADED FUNDS - 2.5%
34,100 Russell 2000 Growth Exchange
Traded Fund (a) $ 2,509,760
24,900 Russell 2000 Value Exchange
Traded Fund (a) 1,802,013
23,900 S&P Small Cap 600/BARRA Growth
Exchange Traded Fund (a) 2,926,555
------------
$ 7,238,328
------------
TOTAL EXCHANGE TRADED FUNDS
(Cost $5,027,288) $ 7,238,328
------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 16.4%
Repurchase Agreement - 2.8%
$8,200,000 UBS Warburg, Inc., 4.40%, dated
6/30/06, repurchase price of
$8,200,000 plus accrued interest on
7/3/06, collateralized by $5,399,000
U.S. Treasury Bill, 4.625%, 3/31/08
and $2,969,000 U.S. Treasury Bill,
5.125%, 6/30/08 $ 8,200,000
------------
The accompanying notes are an integral part of these financial statements. 9
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Security Lending Collateral - 13.6%
39,933,867 Securities Lending Investment
Fund, 5.16% $ 39,933,867
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $48,133,867) $ 48,133,867
------------
TOTAL INVESTMENT IN
SECURITIES - 114.0%
(Cost $325,152,859) $333,938,191
------------
OTHER ASSETS AND
LIABILITIES - (14.0)% $(40,942,154)
------------
TOTAL NET ASSETS - 100.0% $292,996,037
------------
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
89,001 Alkermes, Inc. * $ 1,683,899
73,260 American Equity Investment Life
Holding * 780,952
168,399 Amkor Technology, Inc. * 1,593,055
76,980 Annaly Mortgage Management, Inc. 986,114
41,580 ArthroCare Corp. * 1,746,776
54,403 Asta Funding, Inc. 2,037,392
9,449 Avid Technology, Inc. * 314,935
66,300 Bebe Stores, Inc. * 1,022,346
8,064 Cheniere Energy, Inc. * 298,045
65,934 Continental Airlines (Class B) * 1,964,833
41,600 Cubist Pharmaceuticals, Inc. * 1,047,488
154,638 CV Therapeutics, Inc. * 2,160,293
56,133 Digital River, Inc. * 2,267,212
2,300 Energy Partners, Ltd * 43,585
156,714 Grey Wolf, Inc. * 1,206,698
15,000 Headwaters, Inc. * 383,400
56,000 Hologic, Inc. * 2,764,160
38,200 J2 Global Communications, Inc. * 1,192,604
72,468 Marvel Entertainment, Inc. * 1,449,360
195,228 Merge Technologies, Inc. * 2,403,257
82,068 NMT Medical, Inc. * 821,501
18,711 Priceline.com, Inc. * 558,710
7,154 Pride International, Inc. * 223,419
33,717 Russell 2000 Growth Exchange
Traded Fund 2,481,571
1,551 Russell 2000 Value Exchange Traded
Fund 112,246
19,701 S&P Small Cap 600/BARRA Growth
Exchange Traded Fund 2,412,387
172,199 Sonic Solutions * 2,841,284
17,028 The First Marblehead Corp. 969,574
91,376 The Nautilus Group, Inc. * 1,435,517
-----------
Total $39,202,613
===========
10 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
Class I (unaudited) 12/31/05
Net asset value, beginning of period $ 25.37 $ 23.78
--------- -------
Increase (decrease) from investment operations:
Net investment loss $ (0.01) $ (0.01)
Net realized and unrealized gain (loss)
on investments (0.18) 1.60
--------- --------
Net increase (decrease) from
investment operations $ (0.19) $ 1.59
--------- --------
Distributions to shareowners:
Net realized gain - -
--------- --------
Net increase (decrease) in net asset value $ (0.19) $ 1.59
--------- --------
Net asset value, end of period $ 25.18 $ 25.37
========= ========
Total return* (0.75)% 6.69%
Ratio of net expenses to average net assets 0.79%** 0.79%
Ratio of net investment loss to average net assets (0.05)%** (0.02)%
Portfolio turnover rate 137%** 75%
Net assets, end of period (in thousands) $ 292,996 $323,945
Ratios with no waiver of management fees and
assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 0.80%** 0.80%
Net investment loss (0.06)%** (0.03)%
Ratios with waiver of management fees and
assumption of expenses by PIM and reduction
for fees paid indirectly:
Net expenses 0.79%** 0.79%
Net investment loss (0.05)%** (0.02)%
Year Year Year Year
Ended Ended Ended Ended
Class I 12/31/04 (b) 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 19.44 $ 13.60 $ 21.89 $ 18.81
-------- -------- --------- --------
Increase (decrease) from investment operations:
Net investment loss $ (0.01) $ (0.02) $ (0.10) $ (0.10)
Net realized and unrealized gain (loss)
on investments 4.35 5.86 (8.12)(a) 3.67
-------- -------- --------- --------
Net increase (decrease) from
investment operations $ 4.34 $ 5.84 $ (8.22) $ 3.57
-------- -------- --------- --------
Distributions to shareowners:
Net realized gain - - (0.07) (0.49)
-------- -------- --------- --------
Net increase (decrease) in net asset value $ 4.34 $ 5.84 $ (8.29) $ 3.08
-------- ------- --------- -------
Net asset value, end of period $ 23.78 $ 19.44 $ 13.60 $ 21.89
======== ======== ========= ========
Total return* 22.33% 42.94% (37.67)% 19.14%
Ratio of net expenses to average net assets 0.81% 0.80% 0.79% 0.78%
Ratio of net investment loss to average net assets (0.06)% (0.16)% (0.58)% (0.53)%
Portfolio turnover rate 19% 54% 38% 47%
Net assets, end of period (in thousands) $383,468 $337,573 $ 245,954 $428,013
Ratios with no waiver of management fees and
assumption of expenses by PIM and no
reduction for fees paid indirectly:
Net expenses 0.81% 0.80% 0.79% 0.78%
Net investment loss (0.06)% (0.16)% (0.58)% (0.53)%
Ratios with waiver of management fees and
assumption of expenses by PIM and reduction
for fees paid indirectly:
Net expenses 0.81% 0.80% 0.79% 0.78%
Net investment loss (0.06)% (0.16)% (0.58)% (0.53)%
* 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.
** Annualized.
(a) Includes $0.01 related to investment reimbursement by advisor. (Safeco
Asset Management)
(b) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 11
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
ASSETS:
Investment in securities, at value (including securities loaned of $39,202,613)
(cost $325,152,859) $333,938,191
Receivables -
Fund shares sold 41,116
Dividends, interest and foreign taxes withheld 93,891
Other 12,861
------------
Total assets $334,086,059
------------
LIABILITIES:
Payables -
Investment securities purchased $ 476,578
Fund shares repurchased 508,258
Upon return of securities loaned 39,933,867
Due to bank 154,341
Due to affiliates 5,736
Accrued expenses 11,242
------------
Total liabilities $ 41,090,022
------------
NET ASSETS:
Paid-in capital $246,554,636
Accumulated net investment loss (72,435)
Accumulated net realized gain on investments 37,728,504
Net unrealized gain on:
Investments 8,785,332
------------
Total net assets $292,996,037
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $292,996,037
Shares outstanding 11,636,786
------------
Net asset value per share $ 25.18
12 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $938) $ 878,381
Interest 172,934
Income on securities loaned, net 141,288
-------------
Total investment income $ 1,192,603
-------------
EXPENSES:
Management fees $ 1,184,972
Transfer agent fees and expenses 1,253
Administrative reimbursements 29,114
Custodian fees 24,684
Professional fees 23,322
Printing expense 18,038
Fees and expenses of nonaffiliated trustees 3,275
Miscellaneous 1,481
-------------
Total expenses $ 1,286,139
Less management fees waived and expenses assumed by Pioneer Investment
Management, Inc. (21,101)
-------------
Net expenses $ 1,265,038
-------------
Net investment loss $ (72,435)
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Investments $ 52,474,018
-------------
Change in net unrealized gain from:
Investments $ (53,613,957)
-------------
Net loss on investments $ (1,139,939)
=============
Net decrease in net assets resulting from operations $ (1,212,374)
=============
The accompanying notes are an integral part of these financial statements. 13
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment loss $ (72,435) $ (68,614)
Net realized gain on investments 52,474,018 74,701,451
Change in net unrealized gain or (loss) on investments (53,613,957) (54,760,663)
------------- -------------
Net increase (decrease) in net assets resulting from operations $ (1,212,374) $ 19,872,174
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 8,314,860 $ 9,685,009
Cost of shares repurchased (38,051,644) (89,080,383)
------------- -------------
Net decrease in net assets resulting from Fund share transactions $ (29,736,784) $ (79,395,374)
------------- -------------
Net decrease in net assets $ (30,949,158) $ (59,523,200)
NET ASSETS:
Beginning of period 323,945,195 383,468,395
------------- -------------
End of period $ 292,996,037 $ 323,945,195
============= =============
Accumulated net investment loss, end of period $ (72,435) $ -
============= =============
14 The accompanying notes are an integral part of these financial statements.
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Growth Opportunities VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II
shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth
Portfolio) (Class II shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio)
(Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or by
qualified pension and retirement plans.
The Portfolio is the successor to the Safeco RST Growth Opportunities Portfolio.
Safeco RST Growth Opportunities Portfolio, one of six portfolios that comprised
Safeco Resource Series Trust, transferred all of the net assets to the portfolio
in exchange for the Portfolio's Class I shares in a one-to-one exchange ratio,
on December 10, 2004, pursuant to an agreement and plan of reorganization (the
"reorganization" which was approved by the shareholders of Safeco RST Growth
Opportunities Portfolio on December 8, 2004). The Portfolio had no assets or
liabilities prior to the reorganization. Accordingly, the reorganization, which
was a tax-free exchange, had no effect on the Portfolio's operations.
The Growth Opportunities VCT Portfolio seeks capital appreciation.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolio in the
preparation of its financial statements, which are consistent with those
generally accepted in the investment company industry:
15
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued securities. Temporary cash investments are valued at
amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Investments in small 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 may invest a
substantial amount of its assets in issuers located in a limited number of
countries and therefore is more susceptible to adverse developments
affecting those countries. Information regarding the Portfolio's principal
investment risks is contained in the Portfolio's prospectus(es). Please
refer to those documents when considering the Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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, 2005, Growth Opportunities Portfolio had a net
capital loss carryforward of $14,745,514, of which the following amounts
will expire between 2011 and 2012, if not utilized: $14,496,308 in 2011 and
$249,206 in 2012.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
Pioneer Growth
Opportunities
VCT Portfolio
2005
- --------------------------------------------------------------------------------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/(capital loss carryforward) (14,745,514)
Unrealized appreciation (depreciation) 62,399,289
-------------
Total $ 47,653,775
=============
- --------------------------------------------------------------------------------
16
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. Portfolio Shares
The Portfolio records sales and repurchases of its Portfolio 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)
$462,503 in commissions on the sale of Trust shares for the six months
ended June 30, 2006.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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 the 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
Portfolio has the right under the lending agreement to recover the
securities on loan from the borrower on demand. The Portfolio invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolio. Management fees are calculated at the annual rate of 0.74% of the
Portfolio's average daily net assets.
Prior to the reorganization, the Portfolio was advised by Safeco Asset
Management, which received an annual fee equal to 0.74% of its average daily
net assets.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and to assume other operating expenses of the Portfolio to the
extent necessary to limit Class I expenses to 0.79% of the average daily net
assets attributable to Class I shares.
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. At June 30, 2006, $5,607 was payable to
PIM related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
Since the reorganization, 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 $129 in transfer agent
fees payable to PIMSS at June 30, 2006. Prior to the reorganization Safeco
Services Corporation was the Transfer and Shareholder Servicing agent.
4. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------------
Growth Opportunities Portfolio $325,152,859 $32,075,133 $ (23,289,801) $8,785,332
============ =========== ============= ==========
- ----------------------------------------------------------------------------------------------------------
17
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
25. 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, 2006, were $214,061,531 and $247,745,412, respectively.
6. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
Growth Opportunities Portfolio (unaudited) (unaudited)
- ----------------------------------------------------------------------------------------------------------
Class I:
Shares Sold 310,966 $ 8,314,860 406,285 $ 9,685,009
Shares repurchased (1,441,332) (38,051,644) (3,765,592) (89,080,383)
--------------------------------------------------------------------
Net decrease (1,130,366) $ (29,736,784) (3,359,307) $ (79,395,374)
====================================================================
- ----------------------------------------------------------------------------------------------------------
18
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Opportunities VCT Portfolio
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[Logo] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19616-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Bond VCT Portfolio -- Class I Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Bond VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 11
Notes to Financial Statements 15
Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Government Securities 67.1%
U.S. Corporate Bonds 29.1%
Asset Backed Securities 1.9%
Collateralized Mortgage Obligations 1.9%
Quality Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Treasury/Agency 67.3%
AAA 0.4%
AA 0.7%
A 3.9%
BBB 16.0%
BB 9.0%
B & Lower 2.5%
Commercial Paper 0.5%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Government National
Mortgage Association, 5.5%,
10/15/33 4.31%
2. Federal National Mortgage
Association, 4.78%,
12/1/12 4.02%
3. Federal National Mortgage
Association, 5.0%, 12/1/17 4.00%
4. Federal National Mortgage
Association, 5.0%, 3/1/33 3.83%
5. U.S. Treasury Notes,
5.5%, 8/15/28 3.38%
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.46 $ 10.79
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2668 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Bond VCT Portfolio at net asset value, compared to that of the Lehman Brothers
Aggregate Bond Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Bond Lehman Brothers
VCT Portfolio Aggregate Bond Index
6/06 10000 10000
10492 10815
6/98 11641 11955
11691 12331
6/00 12128 12894
13458 14342
6/02 14316 15579
15621 17200
6/04 15573 17255
16564 18428
6/06 16446 18280
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market. A
market value-weighted measure of treasure and agency issues, corporate bond
issues and mortgage-backed securities. Index returns assume reinvestment of
dividends and, unlike Portfolio returns, do not reflect any fees, expenses or
sales charges. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(as of June 30, 2006)
Net Asset Value
10 Years 5.10%
5 Years 4.09%
1 Year -0.71%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable products report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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 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 variable annuities. 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
[divided by] $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, 2006 through June 30, 2006
Share Class I
- ------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 994.10
Expenses Paid During Period* $ 3.07
* Expenses are equal to the Portfolio's annualized expense ratio of 0.62% 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 Bond VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class I
- ------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,021.72
Expenses Paid During Period* $ 3.11
* Expenses are equal to the Portfolio's annualized expense ratio of 0.62% for
Class I shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Against a backdrop of strong economic growth throughout the globe, inflation
concerns grew steadily during the first six months of 2006. With dramatic
increases in commodity prices - most notably in energy prices - fears built that
inflationary pressures would start to spread throughout the general economy.
Given these concerns, the U.S. Federal Reserve Board continued to raise
short-term interest rates to relieve inflationary pressures and control economic
growth. The Fed raised its Fed funds rate four successive times over the six
months, from 4.25% to 5.25%. As the Fed acted, rates across securities of all
maturities also rose, and bond prices generally declined. In the following
interview, Kenneth J. Taubes discusses the factors that influenced Pioneer Bond
VCT Portfolio's performance during the six months ended June 30, 2006. Mr.
Taubes, Director 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, 2006?
A: Pioneer Bond VCT Portfolio, Class I shares, had a total return of -0.59%
for the six months at net asset value. During the same six months, the
Lehman Aggregate Bond Index produced a total return of -0.72%. The average
return of the 52 portfolios in the Lipper underlying General Bond category
was 0.09%. The Portfolio's SEC 30-day yield on June 30, 2006 was 4.98%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q: What were the primary factors influencing performance?
A: It was challenging period in the bond market, given the persistent economic
growth and the Federal Reserve Board's increasing concern about rising
inflationary pressures. The Fed raised short-term rates at each of the
board's four meetings during the six months. Over the half year, the yield
on the six-month Treasury bill rose by about 90 basis points (nine-tenths
of one percentage point). Yields of two- to three-year Treasury securities
rose by about 79 basis points, the yields of 10-year Treasuries climbed by
78 basis points, and the yields of 30-year Treasuries rose by 67 basis
points. As these rate changes occurred, bond prices - especially among
higher-quality securities - tended to depreciate, with most high-grade
securities recording negative total returns. The most notable exceptions
were issues with short maturities of two years and less, which were the
best-performing over the six months. Corporate bonds, including high-yield
securities, performed somewhat better than Treasuries, as the yield
advantages of corporate bonds compensated for the erosion in the market
value of high-yield bonds.
Q: What were your principal strategies during the period?
A: In general, as the period progressed we became increasingly defensive to
guard against the risks of a slowing economy as the impacts of the Federal
Reserve's rate hikes worked their way through the economy. When interest
rates rose, we gradually increased duration - a measure of a bond's price
sensitivity to changes in interest rates - as longer-maturity bonds began
to decline and started to offer greater value. The Portfolio's effective
duration on June 30, 2006, was 5.05 years, compared with 4.84 years six
months earlier. We maintained an exposure to Treasury Inflation Protected
Securities (TIPS) for most of the six months, although we did reduce our
positions late in the period.
Over the six months, we reduced the Portfolio's investments in corporate
bonds, including high-yield bonds, as they began to appear increasingly
expensive while raising the overall credit quality of the Portfolio. These
measures also were in anticipation that corporates would not perform as
well as economic growth eventually begins to slow.
At the end of the fiscal period on June 30, 2006, average credit quality
was AA-, and 67.3% of assets were invested in Treasury and U.S. government
agency securities, including agency-backed mortgage securities. On the same
date, 11.5% of Portfolio assets were invested in high-yield, below
investment-grade bonds.
Q: What types of investments had the greatest impact on Portfolio performance?
A: The positions in TIPS helped performance, as did individual investments in
corporate bonds of Ford Motor and of Corning, a major producer of
flat-panel screens for personal computers and television sets.
While our exposure to the corporate sector - both investment-grade and
high-yield bonds - helped performance generally, individual corporate bond
holdings that were disappointing included securities of Hospital
Corporation of America (HCA) and of Abitibi-Consolidated, a global paper
products company.
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages. 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 associated with falling interest rates. Investments in high
yield or lower-rated securities are subject to greater-than-average risk. The
securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie
Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio may
invest in mortgage-backed securities, which during times of fluctuating interest
rates may increase or decrease more than other fixed-income securities.
Mortgage-Backed securities are also subject to pre-payments. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Q: What is your investment outlook?
A: We anticipate that we will see increased evidence that the Federal Reserve
has been successful in slowing the rate of economic growth. We also see a
drying up of liquidity in the global markets because of widespread hikes in
short-term interest rates by central banks across the globe.
Given these factors, we believe it makes sense to lengthen the Portfolio's
duration and to increase investments in Treasury and high-quality mortgage
securities. We believe these maneuvers could help protect the Portfolio in
a slowing economy while positioning it for the time when the Federal
Reserve ends its cycle of rate hikes.
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 the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
ASSET BACKED SECURITIES - 1.8%
Diversified Financials - 0.6%
Diversified Financial Services - 0.6%
$ 93,381 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 91,457
81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881
-----------
$ 172,338
-----------
Total Diversified Financials $ 172,338
-----------
Utilities - 1.2%
Electric Utilities - 1.2%
127,157 BB-/Ba2 FPL Energy National Wind, 6.125%, 3/25/19 (144A) $ 123,129
186,120 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 185,887
58,634 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 57,146
-----------
$ 366,162
-----------
Total Utilities $ 366,162
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $552,405) $ 538,500
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.9%
Diversified Financials - 1.5%
Diversified Financial Services - 1.5%
450,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 $ 441,999
-----------
Total Diversified Financials $ 441,999
-----------
Government - 0.4%
Government - 0.4%
104,982 AAA/Aaa Freddie Mac, 6.1%, 9/15/18 $ 104,600
-----------
Total Government $ 104,600
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $555,833) $ 546,599
-----------
CORPORATE BONDS - 28.8%
Energy - 4.1%
Integrated Oil & Gas - 1.1%
215,000 BBB/Baa2 Petro-Canada, 4.0%, 7/15/13 $ 190,198
140,000 BBB+/Baa1 USX Corp., 6.85%, 3/1/08 142,570
-----------
$ 332,768
-----------
Oil & Gas Equipment & Services - 0.4%
125,000 B+/Ba3 Holly Energy Partners LP, 6.25%, 3/1/15 $ 114,375
-----------
Oil & Gas Exploration & Production - 1.4%
370,000 BBB/Baa1 Pemex Project Funding Master, 9.125%, 10/13/10 $ 405,150
-----------
Oil & Gas Refining & Marketing - 0.2%
50,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 47,165
-----------
Oil & Gas Storage & Transportation - 1.0%
295,000 BBB+/Baa1 Kinder Morgan Energy Partners, 6.75%, 3/15/11 $ 301,362
-----------
Total Energy $ 1,200,820
-----------
Materials - 3.0%
Aluminum - 1.0%
285,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 273,600
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Commodity Chemicals - 0.7%
$ 80,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) $ 84,000
135,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 124,200
-----------
$ 208,200
-----------
Fertilizers & Agricultural Chemicals - 0.7%
220,000 BBB+/Baa1 Potash Corp. Saskatchewan, 4.875%, 3/1/13 $ 206,926
-----------
Paper Products - 0.6%
225,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 182,250
-----------
Total Materials $ 870,976
-----------
Capital Goods - 2.0%
Aerospace & Defense - 0.6%
190,000 A/A2 Boeing Co., 5.125%, 2/15/13 $ 183,307
-----------
Electrical Component & Equipment - 0.2%
60,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 58,412
-----------
Trading Companies & Distributors - 1.2%
245,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 223,755
145,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 125,694
-----------
$ 349,449
-----------
Total Capital Goods $ 591,168
-----------
Consumer Durables & Apparel - 0.2%
Home Furnishings - 0.2%
70,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 67,483
-----------
Total Consumer Durables & Apparel $ 67,483
-----------
Consumer Services - 0.4%
Education Services - 0.4%
100,000 AAA/Aaa President & Fellows of Harvard, 6.3%, 10/1/37 $ 100,578
-----------
Total Consumer Services $ 100,578
-----------
Media - 0.5%
Broadcasting & Cable TV - 0.5%
135,000 BBB+/Baa2 Comcast Corp., 5.3%, 1/15/14 $ 127,013
-----------
Total Media $ 127,013
-----------
Food, Beverage & Tobacco - 2.8%
Brewers - 0.9%
280,000 BBB+/Baa1 Miller Brewing Co., 5.5%, 8/15/13 (144A) $ 268,655
-----------
Packaged Foods & Meats - 1.0%
280,000 A+/A1 Unilever Capital Corp., 7.125%, 11/1/10 $ 293,987
-----------
Soft Drinks - 0.9%
280,000 A/A3 Bottling Group LLC, 5.0%, 11/15/13 $ 266,273
-----------
Total Food, Beverage & Tobacco $ 828,915
-----------
Health Care Equipment & Services - 1.0%
Health Care Facilities - 1.0%
300,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 282,156
-----------
Total Health Care Equipment & Services $ 282,156
-----------
Banks - 0.7%
Diversified Banks - 0.7%
225,000 AA-/Aa2 US Bancorp, 3.125%, 3/15/08 $ 216,113
-----------
Total Banks $ 216,113
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Diversified Financials - 3.0%
Consumer Finance - 1.3%
$ 415,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) $ 379,210
-----------
Diversified Financial Services - 1.7%
500,000 BBB-/Baa3 Bombardier Capital, Inc., 7.09%, 3/30/07 $ 500,000
-----------
Total Diversified Financials $ 879,210
-----------
Insurance - 3.4%
Life & Health Insurance - 0.5%
160,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 159,200
-----------
Multi-Line Insurance - 0.5%
130,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 130,316
-----------
Property & Casualty Insurance - 1.7%
250,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 247,546
250,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 252,853
-----------
$ 500,399
-----------
Reinsurance - 0.7%
200,000 BBB/NA Platinum Underwriters Holding, 7.5%, 6/1/17 $ 196,199
-----------
Total Insurance $ 986,114
-----------
Real Estate - 3.6%
Real Estate Investment Trusts - 3.6%
350,000 BBB-/Baa3 Health Care, Inc., 6.0%, 11/15/13 $ 338,322
350,000 BBB/Baa2 Hospitality Properties Trust, 5.125%, 2/15/15 321,054
225,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 211,500
50,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 49,250
130,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 130,000
-----------
$ 1,050,126
-----------
Total Real Estate $ 1,050,126
-----------
Technology Hardware & Equipment - 1.2%
Communications Equipment - 1.2%
350,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 346,051
-----------
Total Technology Hardware & Equipment $ 346,051
-----------
Semiconductors - 0.5%
Semiconductors - 0.5%
155,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 147,972
-----------
Total Semiconductors $ 147,972
-----------
Telecommunication Services - 0.0%
Integrated Telecommunication Services - 0.0%
10,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 9,562
-----------
Total Telecommunication Services $ 9,562
-----------
Utilities - 2.4%
Electric Utilities - 1.5%
109,092 BBB-/Baa3 Crocket Cogeneration, 5.869%, 3/30/25 (144A) $ 102,006
85,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 79,973
260,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 241,210
-----------
$ 423,189
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S&P/Moody's
Principal Ratings
Amount (unaudited) Value
Multi-Utilities - 0.9%
$ 270,000 BBB-/Baa3 Avista Corp., 7.75%, 1/1/07 $ 272,310
-----------
Total Utilities $ 695,499
-----------
TOTAL CORPORATE BONDS
(Cost $8,750,223) $ 8,399,756
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 66.4%
955,000 Federal Home Loan Bank, 6.0%, 4/15/32 $ 965,187
1,052,521 Federal Home Loan Mortgage Corp., 4.5%, 5/1/35 954,870
537,550 Federal Home Loan Mortgage Corp., 4.5%, 10/1/35 487,677
233,526 Federal Home Loan Mortgage Corp., 5.5%, 9/1/33 225,289
79,923 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 78,851
17,696 Federal Home Loan Mortgage Corp., 8.0%, 4/1/08 17,886
1,214,356 Federal National Mortgage Association, 4.78%, 12/1/12 1,161,574
1,196,486 Federal National Mortgage Association, 5.0%, 12/1/17 1,154,970
1,176,287 Federal National Mortgage Association, 5.0%, 3/1/33 1,104,888
588,223 Federal National Mortgage Association, 5.0%, 5/1/34 551,610
730,000 Federal National Mortgage Association, 5.24%, 8/7/18 692,503
763,327 Federal National Mortgage Association, 5.5%, 9/1/17 750,693
957,646 Federal National Mortgage Association, 5.5%, 2/1/18 942,020
456,997 Federal National Mortgage Association, 5.5%, 7/1/23 444,929
294,937 Federal National Mortgage Association, 5.5%, 4/1/36 283,299
64,992 Federal National Mortgage Association, 6.0%, 6/1/15 65,220
65,739 Federal National Mortgage Association, 6.0%, 1/1/29 65,892
104,571 Federal National Mortgage Association, 6.0%, 9/1/29 103,434
53,968 Federal National Mortgage Association, 7.0%, 3/1/12 54,962
48,300 Federal National Mortgage Association, 8.0%, 2/1/29 51,041
15,204 Federal National Mortgage Association, 8.0%, 2/1/30 16,064
6,286 Federal National Mortgage Association, 8.0%, 4/1/30 6,634
18,903 Federal National Mortgage Association, 8.0%, 7/1/30 19,949
39,527 Federal National Mortgage Association, 8.0%, 10/1/30 41,715
18,275 Federal National Mortgage Association, 8.0%, 1/1/31 19,287
221,432 Federal National Mortgage Association, 8.0%, 3/1/31 233,959
10,884 Federal National Mortgage Association, 8.0%, 5/1/31 11,486
21,369 Federal National Mortgage Association, 9.5%, 2/1/21 23,311
696,981 Government National Mortgage Association, 4.5%, 12/15/18 664,427
341,623 Government National Mortgage Association, 4.5%, 8/15/33 314,266
126,888 Government National Mortgage Association, 4.5%, 12/15/34 116,636
200,149 Government National Mortgage Association, 5.0%, 7/15/19 194,333
312,470 Government National Mortgage Association, 5.5%, 8/15/33 303,252
1,283,067 Government National Mortgage Association, 5.5%, 10/15/33 1,245,214
324,440 Government National Mortgage Association, 5.5%, 12/15/34 314,748
53,134 Government National Mortgage Association, 6.0%, 8/15/13 53,423
10,464 Government National Mortgage Association, 6.0%, 4/15/14 10,538
381,096 Government National Mortgage Association, 6.0%, 8/15/34 378,457
690,870 Government National Mortgage Association, 6.0%, 9/15/34 686,085
42,145 Government National Mortgage Association, 7.0%, 4/15/28 43,482
14,336 Government National Mortgage Association, 7.75%, 11/15/29 15,121
865,344 Government National Mortgage Association II, 5.5%, 11/20/34 835,980
170,000 U.S. Treasury Bonds, 5.25%, 11/15/28 169,203
685,000 U.S. Treasury Bonds, 7.125%, 2/15/23 819,538
787,094 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 746,848
The accompanying notes are an integral part of these financial statements. 9
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT & AGENCY OBLIGATIONS - (continued)
$ 177,615 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 $ 169,615
187,189 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 196,081
104,168 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 108,957
150,000 U.S. Treasury Notes, 4.0%, 2/15/15 138,223
950,000 U.S. Treasury Notes, 5.5%, 8/15/28 976,051
525,000 U.S. Treasury Strip, 0.0%, 11/15/13 361,237
-----------
$19,390,915
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $20,180,926) $19,390,915
-----------
TOTAL INVESTMENT IN SECURITIES - 98.9%
(Cost $30,039,387) $28,875,770
-----------
OTHER ASSETS AND LIABILITIES - 1.1% $ 308,056
-----------
TOTAL NET ASSETS - 100.0% $29,183,826
===========
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, 2006, the
value of these securities amounted to $1,772,232 or 6.1% of total net
assets.
NR Not rated by either S&P or Moody's
(a) Debt obligation initially issued at one coupon which converts to a higher
coupon at a specified date. The rate shown is the rate at period end.
10 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class I (unaudited) 12/31/05 12/31/04(a) 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 10.79 $ 11.61 $ 11.24 $ 11.39 $ 11.12 $ 10.92
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations:
Net investment income $ 0.25 $ 0.59 $ 0.44 $ 0.46 $ 0.52 $ 0.59
Net realized and unrealized gain (loss) on investments (0.31) (0.29) (0.04) (0.09) 0.35 0.20
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (0.06) $ 0.30 $ 0.40 $ 0.37 $ 0.87 $ 0.79
Distributions to shareowners:
Net investment income (0.27) (1.12) (0.03) (0.52) (0.60) (0.59)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.33) $ (0.82) $ 0.37 $ (0.15) $ 0.27 $ 0.20
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 10.46 $ 10.79 $ 11.61 $ 11.24 $ 11.39 $ 11.12
======== ======== ======== ======== ======== ========
Total return* (0.59)% 2.62% 3.56% 3.28% 7.79% 7.28%
Ratio of net expenses to average net assets 0.62%** 0.62% 0.89% 0.86% 0.84% 0.82%
Ratio of net investment income to average net assets 4.80%** 4.48% 3.61% 3.79% 4.87% 5.56%
Portfolio turnover rate 18%** 31% 57% 56% 87% 133%
Net assets, end of period (in thousands) $ 29,184 $ 33,332 $ 45,793 $ 51,565 $ 51,201 $ 44,847
Ratios with no waiver of management fees by PIM and no
reduction for fees paid indirectly:
Net expenses 0.92%** 0.83% 0.89% 0.86% 0.84% 0.82%
Net investment income 4.50%** 4.27% 3.61% 3.79% 4.87% 5.56%
Ratios with waiver of management fees by PIM and reduction
for fees paid indirectly:
Net expenses 0.62%** 0.62% 0.89% 0.86% 0.84% 0.82%
Net investment income 4.80%** 4.48% 3.61% 3.79% 4.87% 5.56%
(a) Effective August 2, 2004, PIM became the sub-advisor of the Fund and
subsequently became the advisor on December 10, 2004.
* 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.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 11
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (cost $30,039,387) $ 28,875,770
Cash 81,112
Receivables --
Dividends, interest and foreign taxes withheld 283,112
Other 3,265
------------
Total assets $ 29,243,259
------------
LIABILITIES:
Payables --
Fund shares repurchased $ 30,379
Due to affiliates 566
Accrued expenses 28,488
------------
Total liabilities $ 59,433
------------
NET ASSETS:
Paid-in capital $ 31,169,827
Distributions in excess of net investment income (93,467)
Accumulated net realized loss on investments (728,917)
Net unrealized loss on:
Investments (1,163,617)
------------
Total net assets $ 29,183,826
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 29,183,826
Shares outstanding 2,790,450
------------
Net asset value per share $ 10.46
12 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Interest $ 840,268
Income on securities loaned, net 1,228
----------
Total investment income $ 841,496
----------
EXPENSES:
Management fees $ 77,612
Transfer agent fees and expenses 716
Administrative reimbursements 9,460
Custodian fees 6,356
Professional fees 35,464
Printing expense 5,150
Fees and expenses of nonaffiliated trustees 1,994
Miscellaneous 6,545
----------
Total expenses $ 143,297
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (47,059)
----------
Net expenses $ 96,238
----------
Net investment income $ 745,258
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Investments $ 40,927
----------
Change in net unrealized loss from:
Investments $ (968,580)
----------
Net loss on investments $ (927,653)
==========
Net decrease in net assets resulting from operations $ (182,395)
==========
The accompanying notes are an integral part of these financial statements. 13
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 745,258 $ 1,706,430
Net realized gain on investments 40,927 166,785
Change in net unrealized loss on investments (968,580) (885,532)
------------ -------------
Net increase (decrease) in net assets resulting from operations $ (182,395) $ 987,683
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class I $ (783,477) $ (3,723,847)
------------ -------------
Total distributions to shareholders $ (783,477) $ (3,723,847)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 940,298 $ 440,667
Reinvestment of distributions 783,406 3,722,866
Cost of shares repurchased (4,905,618) (13,889,129)
------------ -------------
Net decrease in net assets resulting from Fund share transactions $ (3,181,914) $ (9,725,596)
------------ -------------
Net decrease in net assets $ (4,147,786) $ (12,461,760)
NET ASSETS:
Beginning of period 33,331,612 45,793,372
------------ -------------
End of period $ 29,183,826 $ 33,331,612
============ =============
Distributions in excess of net investment income, end of period $ (93,467) $ (55,248)
============ =============
14 The accompanying notes are an integral part of these financial statements.
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Bond VCT Portfolio (The Portfolio) (formerly Safeco RST Bond
Portfolio) is a portfolio of Pioneer Variable Contracts Trust (the Trust), which
is a Delaware statutory trust registered under the Investment Company Act of
1940 as an open-end management investment company. The Trust consists of
twenty-seven separate diversified portfolios, thirteen of which issue both Class
I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or by
qualified pension and retirement plans.
Bond Portfolio seeks current income from an investment grade portfolio with due
regard to preservation of capital and prudent investment risk. Secondarily, the
Portfolio seeks a relatively stable level of dividends.
The Portfolio, organized on December 10, 2004, is the successor to the Safeco
RST Bond Portfolio. Safeco RST Bond Portfolio, one of six series of portfolios
that comprised Safeco Resource Series Trust, transferred all of the net assets
of Trust shares in exchange for the Portfolio's Class I shares in a one-to-one
exchange ratio, on December 10, 2004, pursuant to an agreement and plan of
reorganization (the "reorganization" which was approved by the shareholders of
Safeco RST Bond Portfolio on December 8, 2004). The Portfolio had no assets or
liabilities prior to the reorganization. Accordingly, the reorganization, which
was a tax-free exchange, had no effect on the Portfolio's operations.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolio, in the
preparation of its financial statements which are consistent with those
generally accepted in the investment company industry:
15
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded.
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. 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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors. Information regarding the
Portfolio's principal investment risks is contained in the Portfolio's
prospectus(es). Please refer to those documents when considering the
Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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.
The Portfolio elected to defer $52,974 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2005, Bond VCT Portfolio had a net capital loss
carryforward of $716,870, of which the following amounts will expire
between 2008 and 2010, if not utilized: $136,015 in 2008 and $580,855 in
2010.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
distributions paid during the year ended December 31, 2005 and the
components of distributable earnings (accumulated losses) as of December
31, 2005.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 3,723,847
Long-Term capital gain --
------------
$ 3,723,847
Return of Capital --
------------
Total distributions $ 3,723,847
------------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 86,609
Undistributed long-term gain/(capital loss carryforward) (716,870)
Post-October loss deferred (52,974)
Unrealized appreciation (depreciation) (336,894)
------------
Total $ (1,020,129)
------------
- --------------------------------------------------------------------------------
16
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax treatment of premium
and amortization.
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on demand. The Trust invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated at the annual rate of 0.50% of the
Portfolio's average daily net assets.
Prior to the reorganization, the Portfolio was advised by Safeco Asset
Management, which received an annual fee equal to 0.74% of its average daily net
assets.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and to assume other operating expenses of the Portfolio to the
extent necessary to limit Class I expenses to 0.62% of the average daily net
assets attributable to Class I shares.
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. At June 30, 2006 $349 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
Since the reorganization 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 $217 in transfer
agent fees payable to PIMSS June 30, 2006. Prior to the reorganization Safeco
services corporation was the transfer and shareholder servicing agent.
4. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------
Bond Portfolio $30,181,244 $65,702 $ (1,371,176) $ (1,305,474)
=========== ======= ============ ============
- -------------------------------------------------------------------------------
17
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
5. 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, 2006, were $370,337 and $2,517,564, respectively. The cost of purchases
and the proceeds from sales of investments in U.S. Government obligations for
the six months ended June 30, 2006, were $2,389,483 and $3,517,102,
respectively.
6. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Bond Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ---------------------------------------------------------------------------------------------
CLASS I:
Shares sold 88,079 $ 940,298 38,950 $ 440,667
Reinvestment of distributions 73,899 783,406 334,515 3,722,866
Shares repurchased (461,490) (4,905,618) (1,227,950) (13,889,129)
--------------------------------------------------------
Net decrease (299,512) $ (3,181,914) (854,485) $ (9,725,596)
========================================================
- ---------------------------------------------------------------------------------------------
18
Pioneer Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
24
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
25
[LOGO]PIONEER
Investments(R)
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19617-00-0806
[Logo] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 5
Financial Statements 7
Notes to Financial Statements 11
Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S Common Stocks 86.3%
Temporary Cash Investment 9.2%
Depositary Receipts for International Stocks 3.1%
International Common Stocks 1.4%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Financials 33.4%
Consumer Staples 9.8%
Health Care 9.6%
Energy 8.7%
Industrials 8.4%
Utilities 7.7%
Consumer Discretionary 7.1%
Materials 5.5%
Information Technology 5.2%
Telecommunication Services 4.6%
Five Largest Holdings
(As a percentage of equity holdings)
1. Wachovia Corp. 5.34%
2. Citigroup, Inc. 5.16
3. Bank of America Corp. 5.13
4. Dow Chemical Co. 4.32
5. ConocoPhillips 4.32
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 13.59 $ 13.92
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$0.0317 $ - $0.7902
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Value VCT Portfolio at net asset value, compared to that of the Russell 1000
Value Index. Portfolio returns are based on net asset value and do not reflect
any applicable insurance fees or surrender charges.
[THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Value Russell 1000
VCT Portfolio Value Index
5/03 10,000 10,000
6/03 10,193 10,125
6/04 12,002 12,265
6/05 12,960 13,989
6/06 14,063 15,682
The Russell 1000 Value Index measures the performance of the value-oriented
stocks in the Russell 1000 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 any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.59%
(5/1/03)
1 Year 8.51%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charge. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 funds. 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 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 variable annuities. 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 [divided by] $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 Value VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- ---------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,036.80
Expenses Paid During Period* $ 5.61
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for
Class II 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 Value VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- ---------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.29
Expenses Paid During Period* $ 5.56
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Portfolio Manager Aaron C. Clark describes the economic background and
investment strategies that affected results for Pioneer Value VCT Portfolio
through the first half of 2006.
Q. What was the investment background and how did the Portfolio perform during
this period?
A. The ongoing economic expansion has brought robust increases in corporate
profits, a widespread strengthening of balance sheets and a lengthy rally
in U.S. equity markets. But after recording solid gains in the first few
months of the year, stocks suffered a period of volatility beginning in
May. Investors grew anxious about the ultimate extent of the Federal
Reserve Board's interest rates hikes, the economic impact of high energy
prices, and mounting geopolitical tensions.
For the six months ended June 30, 2006, the Portfolio returned 3.68% at net
asset value. This result trailed the Portfolio's benchmark, the Russell
1000 Value Index, which returned 6.56% over the same period. The average
return for the 98 portfolios in Lipper's Large-Cap Value category was
4.72%. The bulk of the portfolio's underperformance during this period
traces back to stock selection, which we describe in further detail below.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Which sectors or stocks helped performance?
A. Energy stocks continued their strong run. We took profits in Devon Energy
and Occidental Petroleum. Suncor, which extracts oil from sands found in
Canada, again contributed to results. Cable operator Comcast, one of our
largest holdings, rebounded when the market began to appreciate the revenue
potential of Comcast's rollout of phone services to its many subscribers.
Deere, a major farm equipment maker, benefited from robust business
conditions and the focus on ethanol, derived from corn, as an alternative
fuel. Deere's earnings could expand further because tight supplies are
likely to keep corn prices high, contributing to farm income for some time
to come. Texas-based utility TXU moved higher after announcing plans to
invest in coal-powered plants with potential for high returns, allaying
uncertainty over how TXU would deploy its significant free cash flow. Bank
of America contributed to returns as its broad range of products and
services provided some profit protection while traditional bank margins -
the gap between rates paid on deposits and rates charged on loans - were
shrinking. Strong equity markets and investment banking activity helped
Goldman Sachs rack up impressive earnings increases and lead brokerage
holdings.
Q. Please discuss the stocks that contributed to underperformance versus the
benchmark.
A. Detractors included disability insurer Unum Provident, which continues to
work through a turnaround. The company had been making progress, but hit a
snag last quarter. Dow Chemical suffered when earnings growth failed to
meet Wall Street's expectations and there were concerns that a slowing
economy would adversely affect Dow's business. Schering Plough's shares
fell despite good earnings. And earnings shortfalls dogged Tyco, an
industrial conglomerate. An announced breakup of the company may realize
greater value for shareholders, but investors also await better business
execution. Insurance company, American International Group also turned in
disappointing results.
Q. What is your current outlook?
A. We think the economy will go on growing, which should fuel further profit
expansion, but at a slackening pace. Whether high interest rates and
expensive energy will trigger a slowdown - and to what extent - remains an
open question.
As value investors, we watch for stresses to create investment
opportunities by driving valuations down. But in recent months the range of
valuations among companies has narrowed, eliminating the kinds of
disparities we aim to exploit. An exception seems to be the pharmaceutical
industry, where we have expanded commitments. We continue to search for
companies that can prosper and raise prices in an environment of higher
interest rates and more costly energy. We also seek companies that trade
below our estimate of their intrinsic value, with good businesses that can
grow that value over time. As the period ended, valuations were declining
and a shift away from riskier assets toward more stable issuers seemed to
be underway.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 91.8%
Energy - 8.0%
Integrated Oil & Gas - 7.1%
40,376 ConocoPhillips $ 2,645,839
5,321 Occidental Petroleum Corp. 545,669
14,321 Suncor Energy, Inc. 1,160,144
4,600 USX-Marathon Group, Inc. 383,180
-----------
$ 4,734,832
-----------
Oil & Gas Equipment & Services - 0.9%
10,938 Technip* $ 605,541
-----------
Total Energy $ 5,340,373
-----------
Materials - 5.0%
Diversified Chemical - 3.9%
67,840 Dow Chemical Co. $ 2,647,795
-----------
Diversified Metals & Mining - 1.1%
12,907 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 715,177
-----------
Total Materials $ 3,362,972
-----------
Capital Goods - 7.7%
Aerospace & Defense - 1.5%
16,240 United Technologies Corp. $ 1,029,941
-----------
Construction & Farm Machinery &
Heavy Trucks - 3.3%
26,360 Deere & Co. $ 2,200,796
-----------
Industrial Conglomerates - 2.9%
70,563 Tyco International, Ltd. $ 1,940,483
-----------
Total Capital Goods $ 5,171,220
-----------
Media - 6.5%
Broadcasting & Cable TV - 6.5%
57,890 Clear Channel Communications, Inc. $ 1,791,696
77,974 Comcast Corp.* 2,552,869
-----------
$ 4,344,565
-----------
Total Media $ 4,344,565
-----------
Food, Beverage & Tobacco - 6.7%
Packaged Foods & Meats - 1.5%
19,300 General Mills, Inc. $ 997,038
-----------
Soft Drinks - 1.6%
17,883 PepsiCo, Inc. $ 1,073,695
-----------
Tobacco - 3.6%
32,550 Altria Group, Inc. $ 2,390,147
-----------
Total Food, Beverage & Tobacco $ 4,460,880
-----------
Household & Personal Products - 2.3%
Household Products - 2.3%
25,200 Kimberly-Clark Corp. $ 1,554,840
-----------
Total Household & Personal
Products $ 1,554,840
-----------
Shares Value
Pharmaceuticals & Biotechnology - 8.8%
Pharmaceuticals - 8.8%
75,220 Bristol-Myers Squibb Co. $ 1,945,189
43,700 Merck & Co., Inc. 1,591,991
122,770 Schering-Plough Corp. 2,336,313
-----------
$ 5,873,493
-----------
Total Pharmaceuticals &
Biotechnology $ 5,873,493
-----------
Banks - 7.9%
Diversified Banks - 4.9%
60,580 Wachovia Corp. $ 3,276,166
-----------
Thrifts & Mortgage Finance - 3.0%
44,118 Washington Mutual, Inc. $ 2,010,898
-----------
Total Banks $ 5,287,064
-----------
Diversified Financials - 14.0%
Asset Management & Custody
Banks - 0.5%
34,300 Amvescap Plc* $ 313,837
-----------
Investment Banking & Brokerage - 4.1%
5,475 Goldman Sachs Group, Inc. $ 823,604
27,720 Merrill Lynch & Co., Inc. 1,928,203
-----------
$ 2,751,807
-----------
Diversified Financial Services - 9.4%
65,324 Bank of America Corp. $ 3,142,084
65,534 Citigroup, Inc. 3,161,360
-----------
$ 6,303,444
-----------
Total Diversified Financials $ 9,369,088
-----------
Insurance - 8.7%
Life & Health Insurance - 2.0%
71,595 UNUM Corp. $ 1,298,017
-----------
Multi-Line Insurance - 2.8%
31,858 American International Group, Inc. $ 1,881,215
-----------
Property & Casualty Insurance - 3.9%
47,709 Allstate Corp. $ 2,611,114
-----------
Total Insurance $ 5,790,346
-----------
Software & Services - 1.9%
Data Processing & Outsourced
Services - 1.9%
28,766 First Data Corp. $ 1,295,621
-----------
Total Software & Services $ 1,295,621
-----------
Technology Hardware & Equipment - 2.8%
Communications Equipment - 1.4%
47,448 Nokia Corp. (A.D.R.)* $ 961,296
-----------
Computer Hardware - 1.4%
38,200 Dell, Inc.* $ 932,462
-----------
Total Technology Hardware &
Equipment $ 1,893,758
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Telecommunication Services - 4.2%
Integrated Telecommunication Services - 2.1%
41,200 Verizon Communications, Inc. $ 1,379,788
-----------
Wireless Telecommunication Services - 2.1%
72,104 Sprint Nextel Corp. $ 1,441,359
-----------
Total Telecommunication Services $ 2,821,147
-----------
Utilities - 7.1%
Electric Utilities - 4.1%
22,890 Edison International $ 892,710
9,000 Exelon Corp. 511,470
24,290 Firstenergy Corp. 1,316,761
-----------
$ 2,720,941
-----------
Independent Power Producer &
Energy Traders - 3.0%
33,730 TXU Corp. $ 2,016,718
-----------
Total Utilities $ 4,737,659
-----------
TOTAL COMMON STOCKS
(Cost $56,084,636) $61,303,026
-----------
Principal
Amount
TEMPORARY CASH INVESTMENT - 9.3%
Repurchase Agreement - 9.3%
$6,200,000 UBS Warburg, Inc., 4.40% dated
6/30/06, repurchase price of
$6,200,000 plus accrued interest on
7/3/06 collateralized by $6,612,000
U.S. Treasury Bill, 3.375%, 9/15/09 $ 6,200,000
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $6,200,000) $ 6,200,000
-----------
TOTAL INVESTMENT IN SECURITIES - 101.1%
(Cost $62,284,636) $67,503,026
-----------
OTHER ASSETS AND LIABILITIES - (1.1)% $ (713,674)
-----------
TOTAL NET ASSETS - 100.0% $66,789,352
===========
* Non-income producing security.
6 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 5/1/03(a)
6/30/06 Year Ended Year Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03
Net asset value, beginning of period $ 13.92 $ 13.40 $ 12.04 $ 10.00
------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.09 $ 0.02 $ 0.02 $ 0.01
Net realized and unrealized gain on investments and foreign
currency transactions 0.40 0.60 1.36 2.03
------- ------- ------- -------
Net increase from investment operations $ 0.49 $ 0.62 $ 1.38 $ 2.04
Distributions to shareowners:
Net income (0.03) (0.01) (0.01) -
Net realized gain (0.79) (0.09) (0.01) -
-------- ------- ------- --------
Net increase (decrease) in net asset value $ (0.33) $ 0.52 $ 1.36 $ 2.04
-------- ------- ------- --------
Net asset value, end of period $ 13.59 $ 13.92 $ 13.40 $ 12.04
-------- ------- ------- --------
Total return* 3.68% 4.67% 11.40% 20.40%
Ratio of net expenses to average net assets+ 1.11%** 1.34% 1.50% 1.50%**
Ratio of net investment income to average net assets+ 1.29%** 0.63% 0.27% 0.27%**
Portfolio turnover rate 91%** 208% 52% 24%
Net assets, end of period (in thousands) $66,789 $71,136 $10,879 $ 1,695
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.11%** 1.43% 3.61% 10.93%**
Net investment income (loss) 1.29%** 0.54% (1.85)% (9.16)%**
Ratios assuming waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 1.11%** 1.34% 1.50% 1.50%**
Net investment income 1.29%** 0.63% 0.27% 0.27%**
(a) Class II shares were first publicly offered on 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.
Note: The above financial highlights do not reflect the deduction of non-fund
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. 7
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (cost $62,284,636) $ 67,503,026
Foreign currencies, at value (cost $105,847) 107,859
Receivables -
Investment securities sold 3,479,875
Dividends, interest and foreign taxes withheld 127,332
Other 3,659
------------
Total assets $ 71,221,751
------------
LIABILITIES:
Payables -
Investment securities purchased $ 4,312,165
Fund shares repurchased 36,002
Due to bank 33,917
Due to affiliates 3,151
Accrued expenses 47,164
------------
Total liabilities $ 4,432,399
------------
NET ASSETS:
Paid-in capital $ 66,026,036
Undistributed net investment income 446,847
Accumulated net realized loss (4,891,401)
Net unrealized gain (loss) on:
Investments 5,218,390
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (10,520)
------------
Total net assets $ 66,789,352
------------
NET ASSET VALUE PER SHARE:
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 66,789,352
Shares outstanding 4,914,589
------------
Net asset value per share $ 13.59
8 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $3,190) $ 782,422
Interest 49,294
----------
Total investment income $ 831,716
----------
EXPENSES:
Management fees $ 260,133
Transfer agent fees 950
Distribution fees (Class II) 87,865
Administrative fees 9,751
Custodian fees 10,136
Professional fees 14,868
Printing 181
Fees and expenses of nonaffiliated trustees 828
Miscellaneous 70
----------
Total expenses $ 384,782
----------
Net investment income $ 446,934
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $2,919,951
Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (240)
----------
$2,919,711
----------
Change in net unrealized gain or (loss) from:
Investments $ (708,472)
Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (10,516)
----------
$ (718,988)
----------
Net gain on investments and foreign currency transactions $2,200,723
----------
Net increase in net assets resulting from operations $2,647,657
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 446,934 $ 143,759
Net realized gain on investments 2,919,711 3,979,230
Change in net unrealized gain or loss on investments and foreign currency transactions (718,988) (2,014,683)
------------ ------------
Net increase in net assets resulting from operations $ 2,647,657 $ 2,108,306
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (145,013) $ (12,530)
Net realized gain
Class II (3,614,807) (94,867)
------------ ------------
Total distributions to shareholders $ (3,759,820) $ (107,397)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 1,878,493 $ 4,536,146
Shares issued in reorganization - 56,877,053
Reinvestment of distributions 3,759,820 104,862
Cost of shares repurchased (8,872,738) (3,262,015)
------------ ------------
Net increase (decrease) in net assets resulting from fund share transactions $ (3,234,425) $58,256,046
------------ ------------
Net increase (decrease) in net assets $ (4,346,588) $60,256,955
NET ASSETS:
Beginning of period 71,135,940 10,878,985
------------ ------------
End of period $ 66,789,352 $71,135,940
============ ===========
Undistributed net investment income, end of period $ 446,847 $ 144,926
============ ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Value VCT Portfolio (the Portfolio), is a Portfolio of Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust registered
under the Investment Company Act of 1940 as an open-end management investment
company. The Trust consists of twenty- seven separate diversified portfolios,
thirteen of which issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth
Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II shares
only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer I bbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation
Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
The Value VCT Portfolio commenced operations on May 1, 2003.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The Value Portfolio seeks reasonable income and capital growth.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risk is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investing in foreign and/or emerging markets
securities involves risks relating to interest rates, currency exchange rates,
economic and political conditions.
The following is a summary of significant accounting policies consistently
followed by the Trust, in the preparation of its financial statements which are
consistent with those generally accepted in the investment company industry:
11
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
A. Security Valuation
Security transactions are recorded as of trade date. Net asset values for
the Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued securities. Temporary cash investments are valued at
amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. 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 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. dollars 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
Portfolio's 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.
At June 30, 2006, there were no open forward foreign currency contracts.
D. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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, 2005, Value Portfolio had a net capital loss
carryforward of $7,737,092, of which the following amounts will expire in
between 2009 and 2010, if not utilized: $5,070,587 in 2009 and $2,666,505
in 2010.
12
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The tax character of current year distributions paid will be determined at the
end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- -------------------------------------------------------------------------------
2005
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 20,216
Long-Term capital gain 87,181
Return of Capital --
------------
Total distributions $ 107,397
============
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 144,926
Undistributed long-term gain/
(capital loss carryforward) 3,614,768
Capital loss carryforward from
AmSouth merger (7,737,092)
Unrealized appreciation
(depreciation) 5,852,878
------------
Total $ 1,875,480
============
- -------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily 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.
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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% 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. At June 30, 2006, $1,884 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses to
the extent required to reduce Class II expenses to 1.30% of the average daily
net assets attributable to class II shares.
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 $810 in transfer agent fees payable to PIMSS
at June 30, 2006.
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
13
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
assets attributable to Class II shares to compensate PFD for (1) distribution
services and (2) personal and account maintenance services performed and
expenses incurred by PFD in connection with the Portfolio's Class II shares.
Included in due to affiliates is $457 payable to PFD at June 30, 2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------------
Value Portfolio $62,358,616 $6,022,601 $ (878,191) $5,144,410
=========== ========== =========== ==========
- -----------------------------------------------------------------------------------------------------
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, 2006, were $30,353,914 and $41,891,792, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -----------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -----------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 136,668 $ 1,878,493 338,599 $ 4,536,146
Shares issued in reorganization -- -- 4,188,296 56,877,053
Reinvestment of distributions 283,332 3,759,820 7,796 104,862
Shares repurchased (615,835) (8,872,738) (236,328) (3,262,015)
-------- ------------ --------- ------------
Net increase (decrease) (195,835) $ (3,234,425) 4,298,363 $ 58,256,046
======== ============ ========= ============
- -----------------------------------------------------------------------------------------------------
8. Merger Information
On November 4, 2005, beneficial owners of AmSouth VIF Value Portfolio approved
a proposed Agreement and Plan of Reorganization that provided for the merger
listed below. This tax-free reorganization was accomplished on November 4,
2005, by exchanging all of the AmSouth Fund's net assets for Class II shares as
indicated below, based on Class II share's ending net asset value on the
Closing Date. The following charts show the details of the reorganization as of
that closing date ("Closing Date"):
- -----------------------------------------------------------------------------------------------------
Pioneer Portfolio
Value VCT AmSouth Value VCT
Portfolio VIF Value Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- -----------------------------------------------------------------------------------------------------
Net Assets $14,728,843 $56,877,053 $71,605,896
Shares Outstanding 1,084,731 3,957,885 5,273,027
Class II Shares Issued 4,188,296
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Unrealized
Appreciation Realized (Loss)
on Closing Date on Closing Date
- -----------------------------------------------------------------------------------------------------
AmSouth VIF Value $6,995,580 $ (8,135,854)
========== =============
- -----------------------------------------------------------------------------------------------------
14
Pioneer Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[Logo]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19629-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Cullen Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Cullen Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
International Common Stocks 2.5%
Temporary Cash Investments 7.1%
Depositary Receipts for International Stocks 19.3%
U.S. Common Stocks 71.1%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Consumer Discretionary 5.5%
Telecommunication Services 6.4%
Materials 6.5%
Information Technology 6.7%
Industrials 8.1%
Energy 8.7%
Health Care 9.7%
Consumer Staples 18.6%
Financials 29.8%
Five Largest Holdings
(As a percentage of equity holdings)
1. BellSouth Corp. 3.49%
2. Pfizer, Inc. 3.40
3. Chubb Corp. 3.32
4. MetLife, Inc. 3.29
5. J.P. Morgan Chase & Co. 3.28
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 11.61 $ 10.99
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0209 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Cullen Value VCT Portfolio at net asset value, compared to that of the Standard
& Poor's (S&P) 500 Index and the Russell 1000 Value Index. Portfolio returns
are based on net asset value and do not reflect any applicable insurance fees
or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Russell
S&P Cullen Value 1000
500 VCT Portfolio Value Index
Mar-05 10,000 10,000 10,000
Jun-05 10,137 10,131 10,167
Jun-06 11,011 11,702 11,398
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. The Russell 1000 Value Index measures the
performance of large-cap U.S. value stocks. Index returns 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, 2006)
- ----------------------------
Net Asset Value
- ----------------------------
Life-of-Class 12.48%
(3/18/05)
1 Year 15.51%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Cullen 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 variable annuities. 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 Cullen Value VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- ----------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,058.40
Expenses Paid During Period* $ 5.10
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II 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 Cullen Value VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- ---------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.84
Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
The domestic stock market experienced significant volatility during the first
six months of 2006. Supported by a healthy economy and rising corporate
earnings, equity prices generally rose early in the year. The favorable market
environment abruptly changed in the second quarter of 2006, when investors
became increasingly worried that the Federal Reserve Board might raise rates
more than had been anticipated. In the following interview, James P. Cullen
discusses the factors that influenced Pioneer Cullen Value VCT Portfolio's
performance during the six months ended June 30, 2006. Mr. Cullen, President of
Cullen Capital Management LLC, oversees the team responsible for the daily
management of the Portfolio.
Q: How did the Portfolio perform during the six months ended June 30, 2006?
A: Pioneer Cullen Value VCT Portfolio Class II shares had a total return of
5.84% for the six months, at net asset value. During the same period, the
Russell 1000 Value Index produced a total return of 6.56% while the average
return of the 98 portfolios in Lipper's Large-Cap Value category was 4.72%
The S&P 500 Index, a broad measure of market performance returned 2.71% over
the six-month period.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q: What were the primary factors influencing performance?
A: The Portfolio lagged somewhat early in the period when highly speculative
stocks led the market rally. Our fundamentally-based value discipline leads
us to de-emphasize such stocks. However, the speculative areas were among
those hardest hit when the equity markets declined in May and June because
of interest-rate fears. Our de-emphasis of speculative stocks, including
emerging markets, commodities and small-cap stocks helped us during the late
correction. We also had become more conservative in the first quarter of
2006 because we were concerned that stock prices were becoming inflated and
driven by speculation.
Pioneer Cullen Value VCT Portfolio follows a value-based strategy that we
have used since 1982, with a concentrated portfolio - usually of between 30
and 35 stocks. A typical position in each company comprises about 3% of
Portfolio assets. The Portfolio is constructed based on our intensive
analysis of the strengths and potential of each company. We believe this
focused portfolio allows our analysts to understand each company and has led
to consistently good returns on a risk-adjusted basis over the long term.
While the number of holdings is relatively low, we keep the Portfolio well
diversified across a broad range of industries. We also add to
diversification with some investments in international markets.
About 25% of our holdings were international, including about five percent
in emerging markets. These positions detracted from results during the
correction of May and June. International investments from developed nations
included Diageo, a major international marketer of beer, wine and liquor;
UBS, the Swiss-based global investment bank; Nestle, the well-known
international food company; Nokia, the telecommunications equipment
corporation; Unilever, a diversified consumer staples firm; and
GlaxoSmithKline, the London-based pharmaceutical company. Our
emerging-market exposure was limited to three companies with global
businesses: Petrobras, the Brazilian oil company; Cemex, the Mexican-based
cement company; and Anglo-American, the U.K.-based mining company with gold,
silver and diamond mine operations, principally in South Africa.
Q: What types of investments most affected performance for the six months?
A: Several of our more defensive holdings did very well. They included three
consumer staples companies: Kraft Foods, General Mills and Kimberly Clark.
These companies have defensive characteristics, including relatively stable
earnings and very good dividend yields.
Other investments that helped support results included Archer Daniels
Midland, a leader in grain commodities, which has benefited from increased
use of ethanol as a fuel additive. In addition, our positions in two
Canadian railroads, Canadian Pacific and Canadian National, added to results
as both companies benefited when rising energy costs made rail shipping more
efficient. Canadian Pacific earns a major share of its business shipping
commodities, while Canadian National does more business shipping industrial
products.
A Word About Risk:
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 Portfolio invests in a limited number of securities
and, as a result, the Portfolio's performance may be more volatile than the
performance of other portfolios holding more securities. Investing in foreign
and/or emerging markets securities involves risks relating to interest rates,
currency exchange rates, economic, and political conditions. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Our investments in several traditional growth stocks gained and helped
results. We found opportunities in a number of such companies in the fall of
2005 when, for various reasons, the prices of these companies had slipped
enough for them to be considered value stocks. These included technology
companies Hewlett-Packard and Motorola. Shares of Hewlett-Packard, which
conducts 75% of its business overseas, rose as the company reorganized
itself under a new chairman. The investment in Motorola enabled us to play
on the fast-growing demand for wireless telecommunications products in
emerging markets. We have taken profits and sold the position in Motorola
during this reporting period.
We did have some disappointments, however. One was Home Depot, another
example of a growth stock in which we invested in 2005 when its price became
attractive. We saw opportunities because of its new success in Mexico and
because of its positioning to benefit from increased home-renovation
activity. However, its stock price has fallen because of a controversy over
compensation for its chief executive. Also detracting from results was the
investment in Bunge, a global agricultural company, and Tidewater, an oil
drill operator whose stock price was pulled down by the correction in
small-cap shares. We have retained Tidewater as of June 30, 2006 because of
its potential to benefit from increased oil drilling activity, but we sold
Bunge.
Q: What is your investment outlook?
A: The stocks in the Portfolio have an average price of about 13.5 times
earnings over the past 12 months. That is substantially lower than the
average price/earnings ratio in the overall market. We are finding many
companies that continue to do well for two basic reasons: they successfully
have cut their costs, putting more cash on their balance sheets, and they
have found ways to do business in the global marketplace.
We think corporate earnings will continue to grow, although the rate of
profit increase may start to slow somewhat. The economy appears to be in a
relatively late stage of its growth cycle. Given this, we intend to be more
defensive in our overall positioning. We think this is a good time to focus
on a stock's total return - the combination of price change and dividend -
and generally to avoid companies heavily dependent on movements in commodity
prices.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 98.4%
Energy - 8.6%
Integrated Oil & Gas - 3.3%
2,900 ConocoPhillips $ 190,037
1,150 Petroleo Brasileiro SA* 102,707
----------
$ 292,744
----------
Oil & Gas Equipment & Services - 1.9%
3,400 Tidewater, Inc.* $ 167,280
----------
Oil & Gas Exploration & Production - 3.4%
2,400 Anadarko Petroleum Corp. $ 114,456
3,500 Encana Corp. (a) 184,240
----------
$ 298,696
----------
Total Energy $ 758,720
----------
Materials - 6.4%
Construction Materials - 2.2%
3,500 Cemex SA (A.D.R.)* $ 199,395
----------
Diversified Metals & Mining - 2.2%
9,440 Anglo American Plc $ 192,954
----------
Forest Products - 2.0%
2,800 Weyerhaeuser Co. $ 174,300
----------
Total Materials $ 566,649
----------
Capital Goods - 4.7%
Aerospace & Defense - 2.2%
4,300 Raytheon Co. $ 191,651
----------
Industrial Conglomerates - 2.5%
6,700 General Electric Co. $ 220,832
----------
Total Capital Goods $ 412,483
----------
Transportation - 3.3%
Railroads - 3.3%
3,220 Canadian National Railway Co. $ 140,875
3,000 Canadian Pacific Railway, Ltd. (a) 153,420
----------
$ 294,295
----------
Total Transportation $ 294,295
----------
Automobiles & Components - 2.6%
Auto Parts & Equipment - 2.6%
3,600 Borg-Warner Automotive Inc. $ 234,360
----------
Total Automobiles & Components $ 234,360
----------
Retailing - 2.8%
Home Improvement Retail - 2.8%
6,900 Home Depot, Inc. $ 246,951
----------
Total Retailing $ 246,951
----------
Food, Beverage & Tobacco - 15.7%
Agricultural Products - 2.4%
5,150 Archer Daniels Midland Co.* $ 212,592
----------
Distillers & Vintners - 3.1%
4,100 Diageo Plc (A.D.R.) (a) $ 276,955
----------
Shares Value
Packaged Foods & Meats - 10.2%
4,400 General Mills, Inc. $ 227,304
5,200 Kraft Foods, Inc.*(a) 160,680
3,400 Nestle SA (A.D.R.)* 266,961
11,000 Unilever N.V. 248,050
----------
$ 902,995
----------
Total Food, Beverage & Tobacco $1,392,542
----------
Household & Personal Products - 2.6%
Household Products - 2.6%
3,700 Kimberly-Clark Corp. $ 228,290
----------
Total Household & Personal
Products $ 228,290
----------
Pharmaceuticals & Biotechnology - 9.5%
Pharmaceuticals - 9.5%
4,800 GlaxoSmithKline $ 267,840
12,600 Pfizer, Inc. 295,722
5,750 Sanofi-Synthelabo SA (A.D.R.) 280,025
----------
$ 843,587
----------
Total Pharmaceuticals &
Biotechnology $ 843,587
----------
Banks - 6.5%
Diversified Banks - 3.3%
2,850 ICIC Bank, Ltd. $ 67,403
4,100 Wachovia Corp. 221,728
----------
$ 289,131
----------
Regional Banks - 3.2%
8,600 Regions Financial Corp. $ 284,832
----------
Total Banks $ 573,963
----------
Diversified Financials - 13.2%
Diversified Capital Markets - 2.6%
2,100 UBS AG* $ 230,370
----------
Investment Banking & Brokerage - 2.8%
3,600 Merrill Lynch & Co., Inc. $ 250,416
----------
Diversified Financial Services - 7.8%
5,900 Bank of America Corp. $ 283,790
2,450 Citigroup, Inc. 118,188
6,800 J.P. Morgan Chase & Co. 285,600
----------
$ 687,578
----------
Total Diversified Financials $1,168,364
----------
Insurance - 9.6%
Life & Health Insurance - 3.2%
5,600 MetLife, Inc. $ 286,776
----------
Multi-Line Insurance - 3.1%
3,200 Hartford Financial Services Group, Inc. $ 270,720
----------
Property & Casualty Insurance - 3.3%
5,800 Chubb Corp. $ 289,420
----------
Total Insurance $ 846,916
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Technology Hardware & Equipment - 6.6%
Communications Equipment - 2.7%
12,000 Nokia Corp. (A.D.R.)* $ 243,120
----------
Computer Hardware - 2.4%
6,700 Hewlett-Packard Co. $ 212,256
----------
Technology Distributors - 1.5%
4,000 Arrow Electronics, Inc.* $ 128,800
----------
Total Technology Hardware &
Equipment $ 584,176
----------
Telecommunication Services - 6.3%
Integrated Telecommunication
Services - 6.3%
8,400 BellSouth Corp. $ 304,080
7,450 Verizon Communications, Inc. 249,500
----------
$ 553,580
----------
Total Telecommunication Services $ 553,580
----------
TOTAL COMMON STOCKS
(Cost $8,216,886) $8,704,876
----------
TEMPORARY CASH INVESTMENTS - 7.6%
Security Lending Collateral - 7.6%
668,311 Securities Lending Investment
Fund, 5.16% $ 668,311
----------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $668,311) $ 668,311
----------
TOTAL INVESTMENT IN
SECURITIES - 106.0%
(Cost $8,885,197) $9,373,187
----------
OTHER ASSETS AND LIABILITIES $ (527,350)
----------
TOTAL NET ASSETS - 100.0% $8,845,837
==========
(A.D.R.) American Depositary Receipt
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
2,970 Canadian Pacific Railway, Ltd. $151,886
2,707 Diageo Plc (A.D.R.) 182,858
3,019 Encana Corp. 158,920
5,148 Kraft Foods Inc.* 159,073
--------
Total $652,737
========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 3/18/05 (a)
6/30/06 to
Class II (unaudited) 12/31/05
Net asset value, beginning of period $ 10.99 $ 10.00
------- -------
Increase from investment operations:
Net investment income $ 0.05 $ 0.04
Net realized and unrealized gain on investments 0.59 0.95
------- -------
Net increase from investment operations $ 0.64 $ 0.99
Distributions to shareowners:
Net income (0.02) --
------- -------
Net increase in net asset value $ 0.62 $ 0.99
------- -------
Net asset value, end of period $ 11.61 $ 10.99
======= =======
Total return* 5.84% 9.90%(b)
Ratio of net expenses to average net assets 1.00%** 1.00%**
Ratio of net investment income to average net assets 1.83%** 1.13%**
Portfolio turnover rate 22%** 34%(b)
Net assets, end of period (in thousands) $ 8,846 $ 4,523
Ratios assuming no waiver of management fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
Net expenses 2.43%** 5.71%**
Net investment income (loss) 0.41%** (3.58)%**
(a) Class II shares were first publicly offered on March 18, 2005.
* 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.
(b) Not Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $652,737) (cost $9,373,187
$8,885,197) respectively)
Receivables --
Investment securities sold 169,659
Dividends, interest and foreign taxes withheld 10,566
Due from Pioneer Investment Management, Inc. 2,976
Other 880
----------
Total assets $9,557,268
----------
LIABILITIES:
Payables --
Fund shares repurchased $ 2,060
Upon return of securities loaned 668,311
Due to bank 15,590
Due to affiliates 572
Accrued expenses 24,737
----------
Total liabilities $ 711,270
----------
NET ASSETS:
Paid-in capital $8,304,295
Undistributed net investment income 59,053
Accumulated undistributed net realized loss (5,340)
Net unrealized gain on investments 487,990
----------
Total net assets $8,845,998
----------
NET ASSET VALUE PER SHARE:
Class II:
No par value (unlimited number of shares authorized)
Net assets $8,845,998
Shares outstanding 761,650
----------
Net asset value per share $ 11.61
The accompanying notes are an integral part of these financial statements. 9
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $4,336) $ 79,006
Interest 9,825
Income on securities loaned, net 2,537
---------
Total investment income $ 91,368
---------
EXPENSES:
Management fees $ 22,576
Transfer agent fees 782
Distribution fees (Class II) 8,066
Administrative fees 9,469
Custodian fees 10,680
Professional fees 18,718
Printing 5,541
Fees and expenses of nonaffiliated trustees 1,923
Miscellaneous 468
---------
Total expenses $ 78,223
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (45,941)
---------
Net expenses $ 32,282
---------
Net investment income $ 59,086
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Investments $ 36,337
---------
Change in net unrealized gain or (loss) from:
Investments $ 227,773
---------
Net gain on investments $ 264,110
=========
Net increase in net assets resulting from operations $ 323,196
=========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months 3/18/05
Ended (Commencement
6/30/06 of Operations)
(unaudited) to 12/31/05
FROM OPERATIONS:
Net investment income $ 59,086 $ 17,229
Net realized gain (loss) on investments 36,337 (41,677)
Change in net unrealized gain or (loss) on investments 227,773 260,217
------------ ----------
Net increase in net assets resulting from operations $ 323,196 $ 235,769
------------ ----------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (17,546) $ --
------------ ----------
Total distributions to shareowners $ (17,546) $ --
------------ ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 5,316,370 $4,361,712
Reinvestment of distributions 17,128 --
Cost of shares repurchased (1,316,243) (74,388)
------------ ----------
Net increase in net assets resulting from Fund share transactions $ 4,017,255 $4,287,324
------------ ----------
Net increase in net assets $ 4,322,905 $4,523,093
NET ASSETS:
Beginning of period 4,523,093 --
------------ ----------
End of period $ 8,845,998 $4,523,093
============ ==========
Undistributed net investment income, end of period $ 59,053 $ 17,513
============ ==========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Cullen Value VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio)
(Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio)
(Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The Cullen Value Portfolio commenced operations on March 18, 2005.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The Cullen Value VCT Portfolio seeks capital appreciation and, secondarily, it
seeks income.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investing 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 following is a summary of significant accounting policies consistently
followed by the Trust, in the preparation of its financial statements which are
consistent 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 portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are
12
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. The Portfolio also may use
the fair value of a security, including a non-U.S. security, when the
closing market price on the primary exchange where the security is traded
no longer accurately reflects the value of the security as of the close of
the NYSE. At December 31, 2005, there were no fair valued securities.
Temporary cash investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with income tax
rules. Therefore, the source of the 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, 2005, Cullen Value Portfolio had a net capital loss
carryforward of $38,265, which will expire in 2013, if not utilized.
The Portfolio elected to defer $3,412 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the distributions
paid during the year ended December 31, 2005 and the components of
distributable earnings (accumulated losses) as of December 31, 2005.
- ----------------------------------------------------------
2005
- ----------------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 17,513
Undistributed long-term gain/(capital loss
carryforward) (38,265)
Post-October loss deferred (3,412)
Unrealized appreciation (depreciation) 260,217
--------
Total $236,053
========
- ----------------------------------------------------------
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Trust's custodian.
E. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities
13
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.70% 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. At June 30, 2006, $231 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses to
the extent required to reduce Class II expenses to 1.00% of the average daily
net assets attributable to Class II shares.
3. Transfer Agent
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 $282 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $59 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------
Cullen Value Portfolio $8,885,197 $608,879 $ (120,889) $487,990
========== ======== =========== ========
- ---------------------------------------------------------------------------------------------
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, 2006, were $5,013,239 and $674,711, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Fund Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 464,882 $ 5,316,370 418,641 $4,361,712
Reinvestment of distributions 1,514 17,128 -- --
Shares repurchased (116,257) (1,316,243) (7,130) (74,388)
----------------------------------------------------------
Net increase 350,139 $ 4,017,255 411,511 $4,287,324
==========================================================
- -------------------------------------------------------------------------------------------------
14
Pioneer Cullen Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Subadviser
Cullen Capital Management, LLC
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19637-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity Opportunity VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Equity Opportunity VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Depositary Receipts for International Stocks 1.6%
Temporary Cash Investments 6.1%
U.S. Common Stocks 92.3%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Consumer Discretionary 0.7%
Consumer Staples 2.6%
Information Technology 3.0%
Energy 7.7%
Health Care 12.6%
Utilities 15.6%
Materials 16.7%
Industrials 20.3%
Financials 20.8%
Five Largest Holdings
(As a percentage of equity holdings)
1. Host Hotels &
Resorts, Inc. 4.22%
2. Southern Union Co. 4.18%
3. Kinder Morgan, Inc. 3.32%
4. Equity Office
Properties Trust 3.18%
5. NRG Energy, Inc. 3.12%
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 11.51 $ 10.78
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0398 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Opportunity VCT Portfolio at net asset value, compared to that of the
Russell 2500 Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell
Opportunity 2500
VCT Portfolio Index
Mar-05 10,000 10,000
Jun-05 10,396 10,452
Jun-06 11,739 11,867
The Russell 2500 Index measures the performance of U.S. small- and mid-cap
stocks. 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, 2006)
- ---------------------------
Net Asset Value
- ---------------------------
Life-of-Class 11.88%
(3/18/05)
1 Year 12.92%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Opportunity 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 variable annuities. 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 Opportunity VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,071.60
Expenses Paid During Period* $ 6.42
* Expenses are equal to the Portfolio's annualized expense ratio of 1.25% for
Class II 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 Equity Opportunity VCT
Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- -------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,018.60
Expenses Paid During Period* $ 6.26
* Expenses are equal to the Portfolio's annualized expense ratio of 1.25% for
Class II shares multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Pioneer Equity Opportunity VCT Portfolio's focus on key sectors led to positive
returns over the past six months. In the following discussion, portfolio
manager Margie Patel details the market background and discusses some of the
strategies she employed.
Q: How did the Portfolio perform over this period?
A: For the six months ended June 30, 2006, the Portfolio's Class II shares
returned 7.16% at net asset value. The Portfolio's benchmark, the Russell
2500 Index, returned 6.32%. The Portfolio's 84 Mid-Cap Core peers returned
4.02% over the six months.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q: Please describe the investment background and the areas you have been
emphasizing.
A: Equity markets began moving higher in October and rose through the first
half of 2006. Investors seemed eager to add to stock portfolios despite
record prices for energy, rising interest rates and some hints that the
economy's rate of expansion might decelerate. Stocks turned lower in May,
however, especially for companies whose fortunes are linked to volatile
commodity prices. Also contributing to the decline was uncertainty over how
fast and how aggressively the Federal Reserve Board, under its new
chairman, might hike interest rates as it sought to restrain inflationary
forces. While the economy continues tracking close to its long-term growth
rate, our industry analysis has led us to sectors that we believe are
capable of outperforming the economy as a whole. In particular, we have
been finding attractive investment candidates in the industrial, basic
materials, financial services and health-care sectors. Within those
sectors, we then sought individual issues whose current valuations appeared
to understate the long-term potential we see in them.
We think industrial firms should benefit from continued global growth. In
addition, the current stretch of better business conditions has bolstered
optimism among corporate managers. That increased confidence could translate
into greater capital expenditures, benefiting a range of industrial
suppliers.
We believe that expanding demand for metals and other basic materials should
absorb or exceed the new capacity that is coming on-line. Resulting higher
operating rates could then lead to improved cash flows.
Within the financials sector, we are emphasizing real estate investment
trusts (REITs), whose holdings are diversified by geography and type, office
buildings, shopping centers, and industrial facilities. The current
relationship between supply and demand points to stronger rental markets,
reversing the trend of recent years, when expired leases were often replaced
by leases at lower rents. Further, we believe that increased economic
activity should improve income, and some REITs are working to bolster their
cash flow through new property development.
Q: Which holdings had a beneficial impact on performance during this period?
A: Our disciplined, value-centered approach seeks companies whose growth
prospects exceed stock valuations at the time of purchase. Other investors
also saw strong potential in some of our selections. As a result, four
holdings -- paper and building materials maker Georgia-Pacific; gold miner
Placer Dome; Fisher Scientific, which provides products for scientific
research; and hotel operator MeriStar -- were targets of buyout offers. In
addition, Kinder Morgan, an energy distribution company, has received a
management offer to take it private. All of these transactions brought
profits to the Portfolio.
In materials, both Arch Chemicals and FMC rose as firmer prices for
chemicals led to stronger earnings. Shares of metals producer Inco moved
sharply higher thanks in part to two unsolicited takeover offers and strong
demand for nickel.
Forest City Enterprises, a major owner and developer of commercial and
residential properties, also contributed to results, reflecting its positive
rental outlook and slate of development projects.
A Word About Risk:
Investing in small and 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. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors. 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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages.
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 associated with falling interest rates.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q: Which of your decisions hurt overall performance?
A: We felt valuations among energy companies were too high, a decision that
undercut comparative results as the sector moved higher. Shares of Getty
Images, which provides visual content to filmmakers, broadcasters and
others, slumped as growth prospects for the media image business appeared
to stall. The possibility that energy prices had peaked drove down the
stock of Edison International. Results were disappointing at NOVA
Chemicals, a producer of commodity chemicals. At issue were operating
difficulties at some of NOVA's facilities and concerns that excess supply
might weaken prices for some core products. Getty, Edison and NOVA were not
held in the Portfolio as of June 30, 2006.
PDL BioPharma, a volatile biotechnology stock, fell. Earnings expectations
were undercut by unexpectedly high research and development costs tied to
clinical trials.
Q: What is your outlook, and how does the Portfolio reflect that outlook?
A: We believe that global and U.S. economies will continue to grow over the
longer term. We also think that the impact of higher interest rates will
not be so great as to stifle expansion. While volatile commodity prices
have caused sharp price swings in some areas of emphasis, we anticipate
continued growth in demand. Most importantly, we have selected the
companies in the Portfolio based on our assessment of their potential to
increase in value by expanding their earnings over the longer term.
Historically, short-term profit swings have carried little weight in our
stock selection process.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 93.2%
Energy - 7.2%
Coal & Consumable Fuels - 1.4%
151 Foundation Coal Holdings, Inc.* $ 7,086
-------
Oil & Gas Exploration & Production - 0.1%
15 Pogo Producing Co.* $ 692
-------
Oil & Gas Refining & Marketing - 2.6%
185 Tesoro Petroleum Corp. $13,757
-------
Oil & Gas Storage & Transportation - 3.1%
163 Kinder Morgan, Inc. $16,282
-------
Total Energy $37,817
-------
Materials - 15.5%
Aluminum - 1.4%
231 Alcoa, Inc. $ 7,475
-------
Commodity Chemicals - 0.1%
20 Georgia Gulf Corp.* $ 500
-------
Construction Materials - 2.7%
269 Texas Industries, Inc. $14,284
-------
Diversified Chemical - 2.8%
155 FMC Corp.* $ 9,980
259 Olin Corp. 4,644
-------
$14,624
-------
Fertilizers & Agricultural Chemicals - 2.0%
254 The Scotts Miracle-Gro Co. $10,749
-------
Gold - 1.6%
280 Barrick Gold Corp.* $ 8,288
-------
Industrial Gases - 1.6%
133 Air Products & Chemicals, Inc. $ 8,501
-------
Metal & Glass Containers - 0.3%
100 Owens-Illinois, Inc.* $ 1,676
-------
Paper Products - 0.5%
1,000 Abitibi-Consolidated, Inc. $ 2,740
-------
Specialty Chemicals - 2.5%
200 Arch Chemicals, Inc. $ 7,210
322 RPM, Inc. 5,796
-------
$13,006
-------
Total Materials $81,843
-------
Capital Goods - 16.9%
Aerospace & Defense - 1.4%
300 EDO Corp.* $ 7,302
-------
Building Products - 1.3%
267 Lennox International, Inc. $ 7,070
-------
Construction & Farm Machinery &
Heavy Trucks - 0.4%
152 Wabash National Corp. $ 2,335
-------
Shares Value
Electrical Component & Equipment - 4.6%
63 AMETEK, Inc. $ 2,985
100 Franklin Electric Co., Inc.* 5,164
221 General Cable Corp.* 7,735
178 Roper Industries, Inc.* 8,322
-------
$24,206
-------
Industrial Machinery - 7.6%
187 Donaldson Co., Inc. $ 6,334
60 Gardner Denver, Inc.* 2,310
306 ITT Industries, Inc. 15,147
135 Kaydon Corp. 5,037
109 Kennametal, Inc. 6,785
55 Parker Hannifin Corp. 4,268
-------
$39,881
-------
Trading Companies & Distributors - 1.6%
123 Wesco International, Inc.* $ 8,487
-------
Total Capital Goods $89,281
-------
Commercial Services & Supplies - 1.9%
Office Services & Supplies - 1.9%
175 Avery Dennison Corp.* $10,161
-------
Total Commercial Services &
Supplies $10,161
-------
Media - 0.7%
Advertising - 0.7%
426 The Interpublic Group of Companies,
Inc.*(a) $ 3,557
-------
Total Media $ 3,557
-------
Food, Beverage & Tobacco - 1.6%
Packaged Foods & Meats - 1.6%
257 McCormick & Co., Inc. $ 8,622
-------
Total Food, Beverage & Tobacco $ 8,622
-------
Household & Personal Products - 0.8%
Personal Products - 0.8%
85 Alberto-Culver Co. (Class B) $ 4,141
-------
Total Household & Personal
Products $ 4,141
-------
Health Care Equipment & Services - 4.7%
Health Care Distributors - 0.7%
136 Owens & Minor, Inc. $ 3,890
-------
Health Care Equipment - 1.8%
69 Beckman Coulter, Inc.* $ 3,833
242 Steris Corp. 5,532
-------
$ 9,365
-------
Health Care Supplies - 2.2%
83 Haemonetics Corp.* $ 3,860
280 Inverness Medical Innovations, Inc.* 7,904
-------
$11,764
-------
Total Health Care Equipment &
Services $25,019
-------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Pharmaceuticals & Biotechnology - 7.0%
Biotechnology - 1.5%
65 Cubist Pharmaceuticals, Inc.* $ 1,637
200 Human Genome Sciences, Inc.* 2,140
214 PDL BioPharma, Inc.* 3,940
--------
$ 7,717
--------
Life Sciences Tools & Services - 4.8%
125 Bio-Rad Laboratories, Inc.* $ 8,118
101 Fisher Scientific International, Inc.* 7,378
270 Thermo Electron Corp.* 9,785
--------
$ 25,281
--------
Pharmaceuticals - 0.7%
150 Bristol-Myers Squibb Co. $ 3,879
--------
Total Pharmaceuticals &
Biotechnology $ 36,877
--------
Banks - 1.1%
Thrifts & Mortgage Finance - 1.1%
280 Sovereign Bancorp, Inc. $ 5,694
--------
Total Banks $ 5,694
--------
Insurance - 0.7%
Insurance Brokers - 0.7%
100 Aon Corp.* $ 3,482
--------
Total Insurance $ 3,482
--------
Real Estate - 17.7%
Diversified Real Estate
Investment Trust's - 2.8%
154 Liberty Property Trust (a) $ 6,807
214 Washington Real Estate Investment Trust* 7,854
--------
$ 14,661
--------
Office Real Estate Investment Trust's - 5.2%
428 Equity Office Properties Trust (a) $ 15,626
262 Mack-Cali Realty Corp. 12,031
--------
$ 27,657
--------
Real Estate Management &
Development - 1.7%
175 Forest City Enterprises, Inc. $ 8,734
--------
Retail Real Estate Investment Trust's - 4.1%
100 Federal Realty Investment Trust $ 7,000
150 General Growth Pro TLB SC 6,759
187 Saul Centers, Inc. 7,626
--------
$ 21,385
--------
Specialized Real Estate
Investment Trust's - 3.9%
948 Host Hotels & Resorts, Inc.* $ 20,733
--------
Total Real Estate $ 93,170
--------
Shares Value
Technology Hardware & Equipment - 1.7%
Electronic Equipment & Instruments - 1.7%
110 Amphenol Corp.* $ 6,155
50 Itron, Inc.* 2,963
--------
$ 9,118
--------
Total Technology Hardware &
Equipment $ 9,118
--------
Semiconductors - 1.1%
Semiconductor Equipment - 1.1%
252 FEI Co.*(a) $ 5,715
--------
Total Semiconductors $ 5,715
--------
Utilities - 14.5%
Gas Utilities - 10.8%
404 Atmos Energy Corp. $ 11,276
275 National Fuel Gas Co. 9,664
108 Questar Corp. 8,693
567 SEMCO Energy, Inc.* 3,153
758 Southern Union Co.* 20,510
121 Washington Gas Light Co.* 3,503
--------
$ 56,799
--------
Independent Power Producer &
Energy Traders - 2.9%
318 NRG Energy, Inc.* $ 15,321
--------
Multi-Utilities - 0.8%
127 OGE Energy Corp.* $ 4,449
--------
Total Utilities $ 76,569
--------
TOTAL COMMON STOCKS
(Cost $456,585) $491,066
--------
TEMPORARY CASH INVESTMENTS - 6.1%
Security Lending Collateral - 6.1%
31,953 Securities Lending Investment Fund, 5.16% $ 31,953
--------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $31,953) $ 31,953
--------
TOTAL INVESTMENT IN SECURITIES - 99.3%
(Cost $488,538) $523,019
--------
OTHER ASSETS AND LIABILITIES - 0.7% $ 3,779
--------
TOTAL NET ASSETS - 100.0% $526,798
========
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Market Value
424 Equity Office Properties Trust $15,480
249 FEI Co.* 5,647
422 The Interpublic Group of Companies, Inc.* 3,524
152 Liberty Property Trust 6,719
-------
Total $31,370
=======
The accompanying notes are an integral part of these financial statements. 7
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 3/18/05 (a)
6/30/06 to
Class II (unaudited) 12/31/05
Net asset value, beginning of period $ 10.78 $ 10.00
------- -------
Increase from investment operations:
Net investment income $ 0.01 $ 0.07
Net realized and unrealized gain on investments 0.76 0.71
------- -------
Net increase from investment operations $ 0.77 $ 0.78
Distributions to shareholders:
Net investment income $ (0.04) $ --
------- -------
Net increase in net asset value $ 0.73 $ 0.78
------- -------
Net asset value, end of period $ 11.51 $ 10.78
======= ========
Total return* 7.16% 7.80%(b)
Ratio of net expense to average net assets 1.25%** 1.25%**
Ratio of net investment income to average net assets 0.76%** 1.05%**
Portfolio turnover rate 50%** 3%(b)
Net assets, end of period (in thousands) $ 527 $ 314
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 25.34%** 38.61%**
Net investment loss (23.33)%** (36.32)%**
(a) Class II shares were first publicly offered on March 18, 2005.
(b) Not annualized.
* 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.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $31,370) (cost $ 523,019
$488,538)
Cash 76,510
Receivables -
Investment securities sold 6,149
Fund shares sold 10,304
Dividends, interest and foreign taxes withheld 634
Due from Pioneer Investment Management, Inc. 6,583
Other 455
---------
Total assets $ 623,654
---------
LIABILITIES:
Payables -
Investment securities purchased $ 33,643
Fund shares repurchased 189
Upon return of securities loaned 31,953
Due to affiliates 562
Accrued expenses 30,509
---------
Total liabilities $ 96,856
---------
NET ASSETS:
Paid-in capital $ 483,636
Undistributed net investment income 1,852
Accumulated undistributed net realized gain 6,829
Net unrealized gain on investments 34,481
---------
Total net assets $ 526,798
---------
NET ASSET VALUE PER SHARE:
Class II:
No par value (unlimited number of shares authorized)
Net assets $ 526,798
Shares outstanding 45,751
---------
Net asset value per share $ 11.51
The accompanying notes are an integral part of these financial statements. 9
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $18) $ 3,473
Interest 287
Income on securities loaned, net 9
---------
Total investment income $ 3,769
---------
EXPENSES:
Management fees $ 1,409
Transfer agent fees 730
Distribution fees (Class II) 797
Administrative fees 9,441
Custodian fees 6,154
Professional fees 19,685
Printing 5,081
Fees and expenses of nonaffiliated trustees 4,164
Miscellaneous 99
---------
Total expenses $ 47,560
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (45,212)
---------
Net expenses $ 2,348
---------
Net investment income $ 1,421
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from:
Investments $ 8,740
---------
Change in net unrealized gain from:
Investments $ 16,603
---------
Net gain on investments $ 25,343
---------
Net increase in net assets resulting from operations $ 26,764
=========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months 3/18/05
Ended (Commencement
6/30/06 of Operations)
(unaudited) to 12/31/05
FROM OPERATIONS:
Net investment income $ 1,421 $ 2,080
Net realized gain (loss) on investments 8,740 (1,911)
Change in net unrealized gain or loss on investments 16,603 17,878
-------- ---------
Net increase in net assets resulting from operations $ 26,764 $ 18,047
-------- ---------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income:
Class II $ (1,759) $ --
-------- ---------
Total distributions to shareowners $ (1,759) $ --
-------- ---------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $193,837 $ 339,533
Reinvestment of distributions 963 --
Cost of shares repurchased (7,056) (43,531)
-------- ---------
Net increase in net assets resulting from fund share transactions $187,744 $ 296,002
-------- ---------
Net increase in net assets $212,749 $ 314,049
NET ASSETS:
Beginning of period 314,049 --
-------- ---------
End of period $526,798 $ 314,049
======== =========
Undistributed net investment income, end of period $ 1,852 $ 2,190
======== =========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Equity Opportunity VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The Equity Opportunity Portfolio commenced operations on March 18, 2005.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The Equity Opportunity Portfolio seeks long-term capital growth and
secondarily, it seeks income.
The financial statements and financial highlights of all other Portfolios are
presented in separate books. The Portfolio's financial statements have been
prepared in conformity with U.S. generally accepted accounting principles that
require the management of the Portfolio 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 income, expenses, gains and losses
during the reporting periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investing in small and 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 following is a summary of significant accounting policies consistently
followed by the Trust, in the preparation of its financial statements which are
consistent 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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
12
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued securities. Temporary cash investments are valued at
amortized cost. 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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with income tax
rules. Therefore, the source of the 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, 2005, Equity Opportunity Portfolio
had a net capital loss carryforward of $437, which will expire in 2013, if
not utilized.
The Portfolio elected to defer $1,474 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. There were no distributions paid during the
year ended December 31, 2005. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 on a
tax basis.
- -----------------------------------------------------
2005
- -----------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income 2,190
Undistributed long-term gain/
(capital loss carryforward) (437)
Post-October loss deferred (1,474)
Unrealized appreciation (depreciation) 17,878
-------
Total $18,157
=======
- -----------------------------------------------------
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. 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 Trust. 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
Portfolio has the right under the lending agreement to recover the
securities on loan from the borrower on demand. The Portfolio invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
E. 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
13
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% 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. At June 30, 2006, $203 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses to
the extent required to reduce Class II expenses to 1.25% of the average daily
net assets attributable to class II shares.
3. Transfer Agent
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 $355 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $4 payable to PFD at June 30, 2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------
Equity Opportunity Portfolio $488,538 $48,849 $ (14,368) $34,481
======== ======= ========== =======
- -----------------------------------------------------------------------------------------------
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, 2006, was $215,209 and $99,337, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -----------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Equity Opportunity Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -----------------------------------------------------------------------------------------------
CLASS II:
Shares sold 17,139 $193,837 33,266 $ 339,533
Reinvestment of distributions 87 963 -- --
Shares repurchased (612) (7,056) (4,129) (43,531)
-------------------------------------------------------
Net increase 16,614 $187,744 29,137 $ 296,002
=======================================================
- -----------------------------------------------------------------------------------------------
14
Pioneer Equity Opportunity VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19638-00-0806
[Logo] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Small and Mid Cap Growth VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Small and Mid Cap Growth VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 15
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Common Stocks 85.0%
Temporary Cash Investment 12.2%
Depositary Receipts for International Stocks 2.8%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING TABLE WAS DEPICTED AS A MOUNTAIN CHART IN THE PRINTED MATERIAL.]
Information Technology 26.7%
Health Care 21.9%
Consumer Discretionary 16.8%
Industrials 11.9%
Financials 10.0%
Energy 6.6%
Materials 3.3%
Consumer Staples 2.8%
Five Largest Holdings
(As a percentage of equity holdings)
1. Expeditors International of
Washington, Inc. 3.75%
2. Sigma-Aldrich Corp. 3.32%
3. WPP Group Plc 3.18%
4. Fiserv, Inc. 3.13%
5. Trimble Navigation, Ltd. 3.08%
The Portfolio is actively managed and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $11.66 $11.37
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small and Mid Cap Growth VCT Portfolio at net asset value, compared to that of
the Russell 2500 Growth Index. Portfolio returns are based on net asset value
and do not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Small and
Mid Cap Growth Russell 2500
VCT Portfolio Growth Index
3/04 10,000 10,000
6/04 10,742 10,013
6/05 10,504 10,761
6/06 11,533 12,334
The Russell 2500 Growth Index measures the performance of U.S. small- and
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. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 6.93%
(3/15/04)
1 Year 9.79%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit pioneerinvestments.com 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 fund performance would be lower. Waivers
may not be in effect for all funds. 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 Small and 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 variable annuities. 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 [divided by] $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 Small and Mid Cap Growth VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,025.50
Expenses Paid During Period* $ 5.02
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II 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 Small and Mid Cap Growth VCT
Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.84
Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
The nation's equity markets went through two very different periods during the
first half of 2006. The first four months saw the major stock indexes rise, led
by more volatile sectors, including small-cap stocks, emerging market companies
and commodity-linked corporations. In May and June, however, market trends
reversed themselves and the more volatile parts of the market tended to suffer
the greatest declines. In the following interview, L. Roy Papp and Rosellen
Papp, members of the management team of L. Roy Papp & Associates, LLP, which is
responsible for the Fund's management, discuss the factors that influenced the
performance of Pioneer Small and Mid Cap Growth VCT Portfolio during the six
months ended June 30, 2006.
Q: How did the Portfolio perform during the six months ended June 30, 2006?
A: Class II shares of Pioneer Small and Mid Cap Growth VCT Portfolio had a
total return of 2.55% for the six months, at net asset value. During the
same period, the Russell 2500 Growth Index produced a total return of
4.98%, while the average return of the 138 funds in Lipper's Mid-Cap Growth
category was 2.77%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q: How did the market environment influence performance?
A: Even though several of our holdings fared relatively well in May and June,
we trailed the Russell 2500 Growth Index, which focuses on smaller-cap
companies than our Portfolio.
The performance of the stock market did not reflect the underlying strength
of the economy in the first six months of 2006. Economic growth was brisk,
unemployment was low, and the second calendar quarter of 2006 is likely to
be the seventeenth consecutive quarter in which corporate profits climb by
more than 10%. For the first four months of 2006, the stock market averages
climbed on this favorable news. However, on May 10, the trend reversed
direction and stock prices started heading down. The immediate cause was
the action of the U.S. Federal Reserve Board to raise the key Fed Funds
rate from 4.75% to 5.00%, the 16th rate hike since the Fed began tightening
in June 2004. The Fed followed up in late June by raising the rate once
again, to 5.25%. Investors became increasingly concerned that the Fed might
go too far in its effort to control growth and limit inflationary pressures
and thereby increase the chances the economy could fall into recession. As
a result, stocks began falling, consistent with the view that a recession
was possible.
The stock market rally in the first four months of 2006 was led by highly
speculative parts of the markets, including basic materials, industrials,
small-cap and emerging market companies. This was an environment that did
not favor the strategy of Pioneer Small and Mid Cap Growth VCT Portfolio,
which focuses on medium-sized, higher quality, industry-leading companies
with good growth records. However, when volatility increased in May and
June, our emphasis on quality helped the Portfolio better withstand the
downward move in stock prices.
Q: What were your principal strategies during the six months?
A: One of the key decisions we made during the period was to place more
emphasis on energy companies, which we had underweighted in the belief that
oil and natural gas prices were too high. However, as world events
unfolded, we revised our opinion because we believed that the higher prices
reflected the worsening of international tensions. As a consequence, we
added some energy positions, particularly in the oil field and gas services
industries, where we saw significant opportunities. Among the new energy
investments were Cameron International and FMC Technologies, two oil field
services companies; Tetra Technologies, which specializes in
de-commissioning older offshore drilling platforms; Chesapeake Energy,
which is involved in natural gas exploration and production; and Pioneer
Natural Resources, an oil and gas exploration and production company. While
the Portfolio's underweight in the energy sector held back results early in
the six months, the increased emphasis on energy helped later in the
six-month period.
Most of our decisions are based on long-term investment themes that we have
been pursuing. Two of those themes relate to significant demographic
changes occurring in our society as a result of the aging of the baby-boom
generation, the first members of which are entering their 60s. The maturing
of this generation is creating great demand for retirement products and
services and provides an important opportunity for financial services firms
that offer retirement products. The aging of this generation also creates
new demands for health-care services and products -- demands that are
likely to persist.
A Word About Risk:
Investing in small and 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 Portfolio invests in a limited number
of securities and, as a result, the Portfolio's performance may be more
volatile than the performance of other portfolios holding more securities. At
times, the Portfolio's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Call 800-688-9915 or visit pioneerinvestments.com 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 Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Two other trends relate to changes in the economy and in business. New
information technology products have had a great impact on increasing the
productivity and the competitiveness of corporations. At the same time, the
globalization of the economy has created long-term opportunities for
companies that have positioned themselves to benefit from international
trade.
For several years, small-cap stocks have outperformed mid-cap stocks. We've
had to work harder in our research to uncover more compelling valuation
opportunities in mid-cap companies as opposed to the small-caps that have
continued to power the Russell 2500 Growth Index during the first half of
2006.
Q: What types of investments had the greatest impact on results for the six
months?
A: During the first six months of the year, performance trailed the Russell
2500 Growth Index due to differentials in sector weighting and a few
individual companies that experienced specific challenges. The Portfolio
was underweighted in energy even though we did add significantly to this
sector during the quarter. We were also underweighted in industrials which
performed well. We were overweighted in health care and information
technology which have not performed well over the first half of the year.
Some of the individual holdings that experienced challenges include
technology position Adobe Systems, a software company specializing in
digital imaging; KLA, which produces test equipment for the semiconductor
manufacturing process; and Micros, which makes software for restaurants. In
health care, Express-Scripts, a pharmacy benefits manager, declined because
of profit taking by investors. Stryker, a leading producer of orthopedic
devices, fell because of concerns that developing Medicare reimbursement
formulas might adversely affect its revenues. In financial services,
Federated Investors, a prominent manager of money market products, declined
because of low short-term interest rates. We remain optimistic about the
long-term opportunities for each of these companies.
We also experienced weakness in Polaris, the recreational vehicle company
that was hurt by inventory problems; Waters, which sells equipment to
biotechnology industry but was beset by inconsistent earnings; and
Plantronics, a headset manufacturer that attracted margin-eroding
competition. During the first six months of the year, we liquidated each of
these positions.
Our underweight position in the consumer discretionary area helped results
during period; however, we did add to our investments in that area finding
attractive opportunities in upscale retailer, Coach, which is growing its
international business and in International Speedway, which operates auto
raceways and is benefiting from the growing popularity of NASCAR and other
racing circuits.
In health care, two holdings that helped results included Dentsply, which
supplies dental equipment, and ResMed, which specializes in products for
treating sleep disorders. Sigma-Aldrich, a newer position, also helped
results. While Sigma-Aldrich is technically classified as a materials
company, they supply equipment and chemicals for medical laboratories and
pharmaceutical and related companies. Also supporting performance was our
investment in Expeditors International of Washington state which handles
logistical planning and is a beneficiary of increased trade between China
and the United States. We also enjoyed good results from our investment in
Trimble Navigation, which develops and produces software for global
positioning satellite systems.
Q: What is your investment outlook?
A: Entering the second half of 2006, the overall economy appears to be sound,
which should be good for stocks. We think the correction in stock prices
that occurred during the second quarter of the year was an overreaction. A
Wall Street Journal poll of 56 professional economists on July 5, 2006
revealed that 54 of those economists believe the economy will continue to
grow at a healthy pace for the remainder of 2006, perhaps with gross
domestic product (GDP) growth in the range of 21/2% to 31/2%. We think the
Federal Reserve Board may raise short-term interest rates once or twice
more, before pausing. A look at historical trends reveals that when the
economy is strong and the Fed stops raising interest rates, stocks
generally perform well. At this stage, we think many stocks look
inexpensive and represent a good long-term value.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 98.2%
Energy - 6.5%
Oil & Gas Equipment & Services - 4.1%
1,200 Cameron International Corp.* $ 57,324
1,100 FMC Technologies, Inc.* 74,206
2,500 TETRA Technologies, Inc.* 75,725
----------
$ 207,255
----------
Oil & Gas Exploration & Production - 2.4%
1,600 Chesapeake Energy Corp.*(a) $ 48,400
1,500 Pioneer Natural Resources Co. 69,615
----------
$ 118,015
----------
Total Energy $ 325,270
----------
Materials - 3.3%
Specialty Chemicals - 3.3%
2,250 Sigma-Aldrich Corp. $ 163,440
----------
Total Materials $ 163,440
----------
Capital Goods - 2.9%
Building Products - 2.9%
4,000 Simpson Manufacturing Co., Inc. (a) $ 144,200
----------
Total Capital Goods $ 144,200
----------
Commercial Services & Supplies - 5.1%
Diversified Commercial Services - 5.1%
2,750 ChoicePoint, Inc.* $ 114,868
3,598 Cintas Corp.*(a) 143,056
----------
$ 257,924
----------
Total Commercial Services &
Supplies $ 257,924
----------
Transportation - 3.7%
Air Freight & Couriers - 3.7%
3,300 Expeditors International of Washington, Inc.* $ 184,833
----------
Total Transportation $ 184,833
----------
Consumer Durables & Apparel - 1.5%
Apparel, Accessories & Luxury Goods - 1.5%
2,500 Coach, Inc.* $ 74,750
----------
Total Consumer Durables & Apparel $ 74,750
----------
Consumer Services - 6.2%
Education Services - 1.5%
3,500 DeVry, Inc.* $ 76,895
----------
Leisure Facilities - 2.5%
2,700 International Speedway Corp.* $ 125,199
----------
Restaurants - 2.2%
3,000 Brinker International, Inc. $ 108,900
----------
Total Consumer Services $ 310,994
----------
Shares Value
Media - 6.0%
Advertising - 6.0%
5,600 Harte-Hanks, Inc. $ 143,584
2,600 WPP Group Plc 156,754
----------
$ 300,338
----------
Total Media $ 300,338
----------
Retailing - 2.8%
Automotive Retail - 2.8%
4,500 O'Reilly Automotive, Inc.* $ 140,355
----------
Total Retailing $ 140,355
----------
Household & Personal Products - 2.8%
Household Products - 2.8%
2,300 Clorox Co. $ 140,231
----------
Total Household & Personal
Products $ 140,231
----------
Health Care Equipment & Services - 16.0%
Health Care Distributors - 1.6%
2,400 Patterson Co's.* $ 83,832
----------
Health Care Equipment - 7.4%
1,700 C. R. Bard, Inc. $ 124,542
2,200 ResMed, Inc.* 103,290
3,400 Stryker Corp.* 143,174
----------
$ 371,006
----------
Health Care Services - 4.0%
1,500 Express Scripts, Inc.* $ 107,610
1,600 Medco Health Solutions, Inc.* 91,648
----------
$ 199,258
----------
Health Care Supplies - 3.0%
2,500 Dentsply International, Inc. $ 151,500
----------
Total Health Care Equipment &
Services $ 805,596
----------
Pharmaceuticals & Biotechnology - 5.5%
Life Sciences Tools & Services - 5.5%
4,500 Molecular Devices Corp.* $ 137,520
2,700 Techne Corp.* 137,484
----------
$ 275,004
----------
Total Pharmaceuticals &
Biotechnology $ 275,004
----------
Banks - 2.7%
Regional Banks - 2.7%
8,300 UCBH Holdings, Inc. (a) $ 137,282
----------
Total Banks $ 137,282
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 7.0%
Asset Management & Custody Banks - 7.0%
4,100 Federated Investors, Inc.* $ 129,150
1,800 Investors Financial Services Corp. (a) 80,820
3,800 T. Rowe Price Associates, Inc. 143,678
----------
$ 353,648
----------
Total Diversified Financials $ 353,648
----------
Software & Services - 11.0%
Application Software - 2.0%
3,300 Adobe Systems, Inc.* $ 100,188
----------
Data Processing & Outsourced Services - 6.0%
2,500 DST Systems, Inc.* $ 148,750
3,400 Fiserv, Inc.* 154,224
----------
$ 302,974
----------
Systems Software - 3.0%
3,400 Micros Systems, Inc.* $ 148,512
----------
Total Software & Services $ 551,674
----------
Technology Hardware & Equipment - 7.9%
Electronic Equipment & Instruments - 3.6%
2,450 Mettler-Toledo International, Inc.* $ 148,397
1,100 National Instruments Corp. 30,140
----------
$ 178,537
----------
Electronic Manufacturing Services - 4.3%
2,300 Molex, Inc. $ 66,078
3,400 Trimble Navigation, Ltd.* 151,776
----------
$ 217,854
----------
Total Technology Hardware &
Equipment $ 396,391
----------
Semiconductors - 7.3%
Semiconductor Equipment - 1.9%
2,300 KLA-Tencor Corp. $ 95,611
----------
Semiconductors - 5.4%
3,600 Linear Technology Corp. (a) $ 120,564
4,500 Microchip Technology 150,975
----------
$ 271,539
----------
Total Semiconductors $ 367,150
----------
TOTAL COMMON STOCKS
(Cost $4,366,072) $4,929,080
----------
Shares Value
TEMPORARY CASH INVESTMENT - 13.6%
Security Lending Collateral - 13.6%
683,349 Securities Lending Investment Fund, 5.16% $ 683,349
----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $683,349) $ 683,349
----------
TOTAL INVESTMENT IN SECURITIES - 111.8%
(Cost $5,049,421) $5,612,429
----------
OTHER ASSETS AND
LIABILITIES - (11.8)% $ (593,769)
----------
TOTAL NET ASSETS - 100.0% $5,018,660
==========
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
1,584 Chesapeake Energy Corp.* $ 47,916
3,562 Cintas Corp.* 141,625
1,782 Investors Financial Services Corp. 80,012
3,564 Linear Technology Corp. 119,358
3,960 Simpson Manufacturing Co., Inc. 142,758
8,217 UCBH Holdings, Inc. 135,909
--------
Total $667,578
========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year 3/15/04(a)
6/30/06 Ended to
Class II (unaudited) 12/31/05 12/31/04
Net asset value, beginning of period $ 11.37 $ 10.87 $ 10.00
------- ------- -------
Increase (decrease) from investment operations:
Net investment loss $ (0.02) $ (0.03) $ (0.02)
Net realized and unrealized gain on investments 0.31 0.53 0.89
-------- ------- --------
Net increase from investment operations $ 0.29 $ 0.50 $ 0.87
-------- ------- --------
Net increase in net asset value $ 0.29 $ 0.50 $ 0.87
-------- ------- --------
Net asset value, end of period $ 11.66 $ 11.37 $ 10.87
-------- ------- --------
Total return* 2.55% 4.60% 8.70%(b)
Ratio of net expenses to average net assets+ 1.00%** 1.00% 1.00%**
Ratio of net investment loss to average net assets+ (0.27)%** (0.36)% (0.51)%**
Portfolio turnover rate 32%** 13% 44%
Net assets, end of period (in thousands) $ 5,019 $ 4,602 $ 2,579
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 2.63%** 3.25% 7.50%**
Net investment loss (1.90)%** (2.61)% (7.01)%**
Ratios with waiver of management fees and assumption of expenses by
PIM and reduction for fees paid indirectly:
Net expenses 1.00%* * 1.00% 1.00%**
Net investment loss (0.27)%** (0.36)% (0.51)%**
(a) The Portfolio commenced operations on March 15, 2004.
(b) Not annualized.
* 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.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $667,578)
(cost $5,612,429) $5,049,421
Cash 100,498
Receivables -
Investment securities sold 34,854
Fund shares sold 9,521
Dividends, interest and foreign taxes withheld 2,404
Due from Pioneer Investment Management, Inc. 3,656
Other 1,026
----------
Total assets $5,764,388
----------
LIABILITIES:
Payables -
Investment securities purchased $ 36,030
Fund shares repurchased 539
Upon return of securities loaned 683,349
Due to affiliates 789
Accrued expenses 25,021
----------
Total liabilities $ 745,728
----------
NET ASSETS:
Paid-in capital $4,594,788
Accumulated net investment loss (6,545)
Accumulated net realized loss on investments (132,591)
Net unrealized gain on:
Investments 563,008
----------
Total net assets $5,018,660
----------
NET ASSET VALUE PER SHARE:
Class II:
(No par value, unlimited number of shares authorized)
Net assets $5,018,660
Shares outstanding 430,509
----------
Net asset value per share $ 11.66
The accompanying notes are an integral part of these financial statements. 9
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends $ 15,973
Interest 1,982
Income on securities loaned, net 124
---------
Total investment income $ 18,079
---------
EXPENSES:
Management fees $ 18,478
Transfer agent fees and expenses 732
Distribution fees 6,159
Administrative reimbursements 9,750
Custodian fees 9,050
Professional fees 15,619
Printing expense 4,272
Fees and expenses of nonaffiliated trustees 746
Miscellaneous 4
---------
Total expenses $ 64,810
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (40,186)
---------
Net expenses $ 24,624
---------
Net investment loss $ (6,545)
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from:
Investments $ (23,221)
---------
Change in net unrealized gain from:
Investments $ 138,638
---------
Net gain on investments $ 115,417
---------
Net increase in net assets resulting from operations $ 108,872
=========
The accompanying notes are an integral part of these financial statements.
10
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment loss $ (6,545) $ (13,587)
Net realized loss on investments (23,221) (56,634)
Change in net unrealized gain on investments 138,638 279,248
---------- ----------
Net increase in net assets resulting from operations $ 108,872 $ 209,027
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 632,779 $2,273,067
Cost of shares repurchased (325,358) (458,251)
---------- ----------
Net increase in net assets resulting from Fund share transactions $ 307,421 $1,814,816
---------- ----------
Net increase in net assets $ 416,293 $2,023,843
NET ASSETS:
Beginning of period 4,602,367 2,578,524
---------- ----------
End of period $5,018,660 $4,602,367
========== ==========
Accumulated net investment loss, end of period $ (6,545) $ --
========== ==========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Small and Mid Cap Growth VCT Portfolio (the Portfolio) is a
Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust registered under the Investment Company Act of 1940 as an open-end
management investment company. The Trust consists of twenty-seven separate
diversified portfolios, thirteen of which issue both Class I and Class II
shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares
only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth
Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth Allocation
Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
The Small and Mid Cap Growth VCT Portfolio commenced operations on March 15,
2004.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or
by qualified pension and retirement plans.
Small and Mid Cap Growth Portfolio seeks long-term capital growth.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market
12
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
price on the primary exchange where the security is traded no longer
accurately reflects the value of the security as of the close of the NYSE.
At June 30, 2006, there were no securities fair valued. Temporary cash
investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Investing in small and 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. Information regarding
the Portfolio's principal investment risks is contained in the Portfolio's
prospectus(es). Please refer to those documents when considering the
Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are 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, 2005, Small and Mid Cap Growth Portfolio had a net
capital loss carryforward of $65,546, of which the following amounts will
expire between 2012 and 2013, if not utilized: $25,641 in 2012 and $39,905
in 2013.
The Portfolio elected to defer $25,174 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005. There were no distributions paid during the year ended December
31, 2005.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ --
Capital loss carryforward (65,546)
Post-October loss deferred (25,174)
Unrealized appreciation (depreciation) 405,720
--------
Total $315,000
========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
attributable to the tax deferral of losses on wash sales.
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on demand. The Trust invests cash
collateral in
13
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
the Securities Lending Investment Fund which is sponsored by Brown Brothers
Harriman & Co., the Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% of
the Portfolio's average daily net assets up to $1 billion and 0.70% on assets
over $1 billion.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses of
the Portfolio to the extent required to reduce Class II expenses to 1.00% of
the average daily net assets attributable to Class II shares.
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. At June 30, 2006, $513 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $242 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $34 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------------------------
Small and Mid Cap Growth Portfolio $5,068,071 $657,986 $ (113,628) $544,358
========== ======== =========== ========
- ---------------------------------------------------------------------------------------------------------------
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, 2006, were $1,019,567 and $787,912, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Small & Mid Cap Growth Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ---------------------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 53,518 $ 632,779 209,164 $2,273,067
Shares repurchased (27,656) (325,358) (41,774) (458,251)
------- ---------- ------- ----------
Net increase 25,862 $ 307,421 167,390 $1,814,816
======== ========== ======= ==========
- ---------------------------------------------------------------------------------------------------------------
14
Pioneer Small and Mid Cap Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Subadviser
L. Roy Papp & Associates, LLP
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19633-00-0806
[Logo] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Oak Ridge Large Cap Growth VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 94.2%
Depositary Receipts for International Stocks 3.3%
Temporary Cash Investment 2.5%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Information Technology 26.3%
Industrials 19.5%
Financials 14.3%
Health Care 14.1%
Consumer Discretionary 13.9%
Consumer Staples 7.0%
Energy 4.5%
Materials 0.4%
Five Largest Holdings
(As a percentage of equity holdings)
1. Cognizant Tech Solutions Corp. 3.73%
2. FedEx Corp. 3.66%
3. General Electric Co. 3.65%
4. Staples, Inc. 3.27%
5. Qualcomm, Inc. 3.04%
The Portfolio is actively managed and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 11.29 $ 11.98
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0036 $ - $ 0.1652
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Oak Ridge Large Cap Growth VCT Portfolio at net asset value, compared to that
of the Russell 1000 Growth Index. Portfolio returns are based on net asset
value and do not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Oak Ridge Russell 1000
Large Cap Growth Growth
VCT Portfolio Index
3/04 $10,000 $10,000
6/04 10,147 10,194
6/05 10,759 10,365
6/06 11,231 10,999
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. 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 any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 6.19%
(3/15/04)
1 Year 4.39%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 fund performance would be lower. Waivers
may not be in effect for all funds. 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 Oak Ridge Large 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 variable annuities. 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 [divided by] $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 Oak Ridge Large Cap Growth VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 956.70
Expenses Paid During Period* $ 4.61
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II 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 funds. In addition, if
these transaction costs were included, your costs would have been higher.
Expenses Paid on a $1,000 Investment in Pioneer Oak Ridge Large Cap Growth VCT
Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,020.08
Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
In the following interview, David Klaskin, Pioneer Oak Ridge Large Cap Growth
VCT Portfolio's Lead Portfolio Manager, discusses the factors that influenced
performance during the six months ended June 30, 2006.
Q. How did the market and the Portfolio perform during the reporting period?
A. Although the U.S. stock market performed relatively well, concerns about
building inflation pressures and rising interest rates began to weigh
heavily on stock prices in May.
Two additional factors combined to create a challenging environment for the
Portfolio. First, lower-quality stocks (as measured by their S&P rating)
outperformed their higher-quality counterparts. Given our emphasis on the
latter, the Portfolio did not participate in the more speculative nature of
the market. Second, a number of stocks that outperformed in 2005, most
notably those in the health-care sector, gave back some ground during the
past half-year. We did not take profits in some of these holdings until
their fundamentals weakened and share prices had declined.
With this as a backdrop, the Portfolio's Class II shares returned -4.33% at
net asset value during the past six months, trailing the -0.93% return of
its benchmark, the Russell 1000 Growth Index. The primary reason for
underperformance was the performance of certain individual stock
selections, which we discuss in greater detail below.
It is important to note, however, that we employ a long-term approach that
seeks to identify fast-growing, reasonably valued companies that we believe
have the potential to perform well over a three- to five-year period. As a
result, any six month period is a very short window in which to measure our
performance as managers. We always prefer to focus on longer-term results.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. How did the Portfolio's holdings in health care affect performance?
A. Health care was the most significant area of underperformance. A
substantial overweight in the sector detracted from performance, given that
health-care shares in general trailed the overall market in 2006. In
addition, the Portfolio's holding in the vision care products company Alcon
- which performed very well for us in 2005 - suffered from a significant
downturn before we eliminated it from the Portfolio during this reporting
period. We also hesitated to sell shares of UnitedHealth Group, a benefits
manager that dropped considerably from its December 2005 high throughout
the course of the period. The biotechnology company Genentech, a position
that we pared in the wake of the stock's strong advance of the past
two-plus years, detracted from performance as well. As of June 30, 2006 we
continue to hold a position in Genentech on our belief that the stock is
attractively valued relative to its earnings prospects.
Our active decisions to trim or eliminate many of the Portfolio's holdings
in health care caused our weighting in this sector to decline. At the start
of the period, roughly 24% of the Portfolio was invested in health-care
stocks, compared with about 20% for the Russell 1000 Growth Index. By the
end of the reporting period, this weighting had fallen to about 14%.
Q. Where did you redeploy the proceeds of these sales?
A. We put a significant portion of these assets to work in the technology
sector. Although tech stocks did not perform well in May, we believe the
sector includes to a number of companies that are poised to take advantage
of the likely strength in corporate spending. While consumer spending could
come under pressure from a variety of sources - such as rising energy
prices and the sluggish housing market - many corporations appear to be
flush with cash that is available to be put to work in the form of new
capital investment. The Portfolio is now overweight in technology, and we
believe that this positioning should prove beneficial to performance in the
months ahead. Recent additions to the Portfolio include Microchip
Technology, Jabil Circuit, Cisco Systems and Corning.
A Word About Risk:
The Portfolio invests in a limited number of securities and, as a result, the
Portfolio's performance may be more volatile than the performance of other
portfolios holding more securities. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In terms of performance over the past six months, our positioning in the
tech sector was helpful to returns. A top performer was Cognizant
Technology Solutions, which continues to benefit from the trend of American
companies outsourcing elements of their business to India. Performance was
also boosted by the Portfolio's holding in software giant Oracle, which
held up well amid the downdraft in the broader market late in the period.
Q. What other elements of the Portfolio's positioning helped and hurt
performance?
A. Our stock selection in the industrials sector also was a source of positive
performance. As is the case with the technology sector, many industrial
companies are positioned to capitalize on rising corporate spending.
Rockwell Automation, Ingersoll Rand, and Danaher all made positive
contributions during the period. Even though the economic cycle is mature
at this juncture, we believe these companies may continue to perform well
given that a longer-than-normal cycle appears likely and the financial
strength of their customers seems to be at unprecedented levels.
On the other side of the ledger, stocks in both the consumer staples and
consumer discretionary sectors detracted from performance. In the former,
the Portfolio's holding in Procter & Gamble delivered a weak performance on
concerns that its profits will be dampened by the fact that Wal-Mart (which
accounts for about 20% of P&G's sales) is pressuring its suppliers to bear
the cost of holding inventories. We continue to like the stock from a
long-term perspective. In consumer discretionary, Carnival Cruise Lines was
hurt by concerns about weaker consumer spending, rising fuel costs, and the
reduced demand for Caribbean cruises that followed the destructive autumn
hurricane season. We sold the stock from the Portfolio during this
reporting period.
We made two new purchases in the consumer discretionary sector during the
period: Marriott International and Harrah's Entertainment. While we are not
positive on the outlook for consumer spending, we believe these two
companies have the ability to outperform due to their catering to business
spending. With respect to Marriott, we believe the company can benefit from
the fact that demand for hotel rooms has been rising faster than the
supply. We believe Harrah's, meanwhile, is a well managed hotel and casino
operator that has been successfully integrating its purchase of Caesars and
has shown good results from its customer awards programs.
Q. What is your outlook for growth stocks?
A. Growth stocks have underperformed value by a wide margin in recent years,
and we believe this creates an excellent opportunity. Traditionally, the
ten-year returns of the Russell 1000 Growth Index and Russell 1000 Value
Index compare closely with one another. However, the two indices have
diverged quite sharply in recent years. During the past 12 months, for
instance, the return on the value index was more than double that of its
growth counterpart. The three- and five-year differences also are quite
large. The result is that the ten-year return differential is at the high
end of historical standards, with an average annualized return of 10.79%
for the Russell 1000 Value and 5.48% for the Russell 1000 Growth. There are
valid reasons for this disparity, such as the excesses of the late 1990s
and the changes in the accounting practices regarding employee stock
options - issues that had a disproportionately large impact on growth
stocks. However, we believe that these problems are now largely in the
past. With growth stocks enjoying significantly better prospects for
earnings expansion and trading at nearly the same earnings multiples as
value stocks, we believe the asset class should begin closing the
performance gap in relation to value.
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 the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 94.8%
Energy - 4.2%
Oil & Gas Equipment & Services - 2.0%
7,895 Schlumberger, Ltd. $ 514,043
----------
Oil & Gas Exploration & Production - 2.2%
12,605 XTO Energy, Inc. $ 558,023
----------
Total Energy $1,072,066
----------
Materials - 0.4%
Specialty Chemicals - 0.4%
2,300 Ecolab, Inc. $ 93,334
----------
Total Materials $ 93,334
----------
Capital Goods - 15.0%
Aerospace & Defense - 4.5%
6,995 L-3 Communications Holdings, Inc. $ 527,563
9,660 United Technologies Corp. 612,637
----------
$1,140,200
----------
Electrical Component & Equipment - 2.7%
9,335 Rockwell International Corp. $ 672,213
----------
Industrial Conglomerates - 3.5%
26,470 General Electric Co. $ 872,451
----------
Industrial Machinery - 4.3%
8,540 Danaher Corp. (a) $ 549,293
12,620 Ingersoll-Rand Co. 539,884
----------
$1,089,177
----------
Total Capital Goods $3,774,041
----------
Transportation - 3.5%
Air Freight & Couriers - 3.5%
7,485 FedEx Corp. $ 874,697
----------
Total Transportation $ 874,697
----------
Consumer Durables & Apparel - 1.9%
Apparel, Accessories & Luxury Goods - 1.9%
16,200 Coach, Inc.* $ 484,380
----------
Total Consumer Durables & Apparel $ 484,380
----------
Consumer Services - 4.3%
Casinos & Gaming - 1.9%
6,920 Harrah's Entertainment, Inc.* $ 492,566
----------
Hotels, Resorts & Cruise Lines - 2.4%
15,850 Marriott International, Inc.* $ 604,202
----------
Total Consumer Services $1,096,768
----------
Retailing - 6.9%
Computer & Electronics Retail - 2.0%
9,425 Best Buy Co., Inc. $ 516,867
----------
General Merchandise Stores - 1.8%
9,200 Target Corp. $ 449,604
----------
Specialty Stores - 3.1%
32,082 Staples, Inc.* $ 780,234
----------
Total Retailing $1,746,705
----------
Shares Value
Food & Drug Retailing - 2.1%
Drug Retail - 2.1%
11,730 Walgreen Co. $ 525,973
----------
Total Food & Drug Retailing $ 525,973
----------
Food, Beverage & Tobacco - 2.2%
Soft Drinks - 2.2%
9,085 PepsiCo, Inc. $ 545,463
----------
Total Food, Beverage & Tobacco $ 545,463
----------
Household & Personal Products - 2.4%
Household Products - 2.4%
10,835 Procter & Gamble Co. $ 602,426
----------
Total Household & Personal
Products $ 602,426
----------
Health Care Equipment & Services - 7.2%
Health Care Equipment - 5.0%
9,175 Medtronic, Inc. $ 430,491
9,450 Varian Medical Systems, Inc.* 447,458
6,715 Zimmer Holdings, Inc.* 380,875
----------
$1,258,824
----------
Health Care Services - 2.2%
10,960 Caremark Rx, Inc.* $ 546,575
----------
Total Health Care Equipment &
Services $1,805,399
----------
Pharmaceuticals & Biotechnology - 6.2%
Biotechnology - 4.4%
6,060 Amgen, Inc.* $ 395,294
8,845 Genentech, Inc.* 723,521
----------
$1,118,815
----------
Pharmaceuticals - 1.8%
14,200 Teva Pharmaceutical Industries, Ltd. (a) $ 448,578
----------
Total Pharmaceuticals &
Biotechnology $1,567,393
----------
Banks - 2.4%
Diversified Banks - 2.4%
19,310 U.S. Bancorp $ 596,293
----------
Total Banks $ 596,293
----------
Diversified Financials - 9.1%
Asset Management & Custody Banks - 1.8%
4,635 Legg Mason, Inc.* $ 461,275
----------
Consumer Finance - 3.9%
8,660 American Express Co. $ 460,885
9,630 SLM Corp. 509,620
----------
$ 970,505
----------
Investment Banking & Brokerage - 1.9%
30,165 Charles Schwab Corp.* $ 482,037
----------
Diversified Financial Services - 1.5%
7,905 Citigroup, Inc. $ 381,337
----------
Total Diversified Financials $2,295,154
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Insurance - 2.1%
Life & Health Insurance - 2.1%
11,435 Aflac, Inc. $ 530,012
-----------
Total Insurance $ 530,012
-----------
Software & Services - 10.6%
Internet Software & Services - 2.6%
1,574 Google, Inc.* $ 660,025
-----------
IT Consulting & Other Services - 3.5%
13,230 Cognizant Tech Solutions Corp.* $ 891,305
-----------
Systems Software - 4.5%
23,635 Microsoft Corp. $ 550,696
39,175 Oracle Corp.* 567,646
-----------
$ 1,118,342
-----------
Total Software & Services $ 2,669,672
-----------
Technology Hardware & Equipment - 8.8%
Communications Equipment - 6.7%
25,250 Cisco Systems, Inc.* $ 493,133
19,540 Corning, Inc.* 472,673
18,130 Qualcomm, Inc. 726,469
-----------
$ 1,692,275
-----------
Computer Hardware - 0.8%
3,665 Apple Computer, Inc.* $ 209,345
-----------
Electronic Manufacturing Services - 1.3%
12,540 Jabil Circuit, Inc.* $ 321,024
-----------
Total Technology Hardware &
Equipment $ 2,222,644
-----------
Semiconductors - 5.5%
Semiconductors - 5.5%
8,125 Marvell Technology Group, Ltd.* $ 360,181
14,700 Microchip Technology 493,185
17,860 Texas Instruments, Inc. 540,979
-----------
$ 1,394,345
-----------
Total Semiconductors $ 1,394,345
-----------
TOTAL COMMON STOCKS
(Cost $22,885,673) $23,896,765
-----------
Shares Value
TEMPORARY CASH INVESTMENT - 2.4%
Security Lending Collateral - 2.4%
617,506 Securities Lending Investment Fund,
5.16% $ 617,506
-----------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $617,506) $ 617,506
-----------
TOTAL INVESTMENT
IN SECURITIES - 97.2%
(Cost $23,503,179) $24,514,271
-----------
OTHER ASSETS AND
LIABILITIES - 2.8% $ 700,347
-----------
TOTAL NET ASSETS - 100.0% $25,214,618
===========
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
2,641 Danaher Corp. $169,869
13,850 Teva Pharmaceutical Industries, Ltd. 437,522
--------
Total $607,391
========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 3/15/04 (a)
6/30/06 Year Ended to
CLASS II (unaudited) 12/31/05 12/31/04
Net asset value, beginning of period $ 11.98 $ 11.09 $ 10.00
-------- ------- -------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.01 $ (0.01) $ 0.03
Net realized and unrealized gain (loss) on investments (0.53) 0.92 1.06
-------- ------- -------
Net increase (decrease) from investment operations $ (0.52) $ 0.91 $ 1.09
Distributions to shareowners:
Net investment income 0.00(c) (0.02) --
Net realized gain (0.17) -- --
-------- ------- -------
Net increase (decrease) in net asset value $ (0.69) $ 0.89 $ 1.09
-------- ------- -------
Net asset value, end of period $ 11.29 $ 11.98 $ 11.09
======== ======= =======
Total return* (4.33)% 8.18% 10.90%(b)
Ratio of net expenses to average net assets 0.95%** 0.95% 0.95%* *
Ratio of net investment income to average net assets 0.15%** 0.08% 0.79%* *
Portfolio turnover rate 54%** 131% 21%
Net assets, end of period (in thousands) $ 25,215 $25,908 $ 4,397
Ratios with no waiver of management fees and assumption of expenses by PIM:
Net expenses 1.37%* * 1.93% 6.22%**
Net investment loss (0.27)%** (0.90)% (4.48)%**
(a) The Portfolio commenced operations on March 15, 2004.
(b) Not annualized.
(c) Amount rounds to less than one cent per share.
* 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.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of
$607,391) (cost $23,503,179) $ 24,514,271
Cash 1,354,676
Receivables -
Fund shares sold 8,322
Dividends, interest and foreign taxes withheld 18,616
Other 2,288
------------
Total assets $ 25,898,173
------------
LIABILITIES:
Payables -
Investment securities purchased $ 23,723
Fund shares repurchased 3,058
Upon return of securities loaned 617,506
Due to affiliates 1,556
Accrued expenses 37,712
------------
Total liabilities $ 683,555
------------
NET ASSETS:
Paid-in capital $ 24,096,173
Undistributed net investment income 19,776
Accumulated net realized gain on investments 87,577
Net unrealized gain on:
Investments 1,011,092
------------
Total net assets $ 25,214,618
------------
NET ASSET VALUE PER SHARE:
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 25,214,618
Shares outstanding 2,232,722
------------
Net asset value per share $ 11.29
The accompanying notes are an integral part of these financial statements. 9
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $380) $ 116,091
Interest 27,023
Income on securities loaned, net 195
------------
Total investment income $ 143,309
------------
EXPENSES:
Management fees $ 97,429
Transfer agent fees and expenses 1,117
Distribution fees 32,476
Administrative reimbursements 9,490
Custodian fees 18,941
Professional fees 12,734
Printing expense 3,584
Fees and expenses of nonaffiliated trustees 1,972
Miscellaneous 378
------------
Total expenses $ 178,121
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (54,679)
------------
Net expenses $ 123,442
------------
Net investment income $ 19,867
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Investments $ 477,483
------------
Change in net unrealized gain from:
Investments $ (1,630,696)
------------
Net loss on investments $ (1,153,213)
------------
Net decrease in net assets resulting from operations $ (1,133,346)
============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 19,867 $ 7,863
Net realized gain on investments 477,483 432,428
Change in net unrealized gain on investments (1,630,696) 703,415
------------ ------------
Net increase (decrease) in net assets resulting from operations $ (1,133,346) $ 1,143,706
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (7,919) $ (10,689)
Net realized gain
Class II (363,376) -
------------ ------------
Total distributions to shareholders $ (371,295) $ (10,689)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 3,229,278 $ 6,123,375
Shares issued in reorganization -- 15,272,045
Reinvestment of distributions 371,295 10,533
Cost of shares repurchased (2,789,322) (1,027,637)
------------ ------------
Net increase in net assets resulting from
Fund share transactions $ 811,251 $ 20,378,316
------------ ------------
Net increase (decrease) in net assets $ (693,390) $ 21,511,333
NET ASSETS:
Beginning of period 25,908,008 4,396,675
------------ ------------
End of period $ 25,214,618 $ 25,908,008
============ ============
Undistributed net investment income, end of period $ 19,776 $ 7,828
============ ============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Oak Ridge Large Cap Growth VCT Portfolio (the Portfolio) is a
Portfolio of Pioneer Variable Contracts Trust (the Trust), a Delaware statutory
trust registered under the Investment Company Act of 1940 as an open-end
management investment company. The Trust consists of twenty-seven separate
diversified portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or
by qualified pension and retirement plans.
Oak Ridge Large Cap Growth Portfolio seeks capital appreciation.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued
12
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
securities. Temporary cash investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Information regarding the Portfolio's principal investment risks is
contained in the Portfolio's prospectus(es). Please refer to those
documents when considering the Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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 carry forwards are available to offset future realized capital
gains. At December 31, 2005, Oak Ridge Large Cap Growth Portfolio had a net
capital loss carry forward of $376,066, of which the following amounts will
expire between 2009 and 2013, if not utilized: $295,876 in 2009, $14,739 in
2010, $10,529 in 2011, $16,924 in 2012 and $37,998 in 2013.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 10,689
Long-Term capital gain --
----------
Total distributions $ 10,689
==========
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 7,828
Undistributed long-term gain/
(capital loss carryforward) 363,286
Capital loss carryforward from
AmSouth Capital Growth VIF (376,066)
Unrealized appreciation (depreciation) 2,628,038
----------
Total $2,623,086
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on demand. The Trust invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
13
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% of
the Portfolio's average daily net assets up to $1 billion and 0.70% on assets
over $1 billion.
Pioneer, and not the Portfolio, pays a portion of the fee it receives from the
Portfolio to Oak Ridge Investments, LLC (Oak Ridge) as compensation for Oak
Ridge's subadvisory services to the Portfolio.
On January 7, 2005, Pioneer Investment Management USA Inc. ("PIMUSA") acquired
a 49% ownership interest in Oak Ridge from the existing shareholders of Oak
Ridge. As part of the acquisition, PIMUSA also obtained the right to purchase
from the existing shareholders of Oak Ridge (i) an additional 11% ownership
interest in Oak Ridge two years from the date on which the acquisition was
consummated, and (ii) the remaining ownership interest twelve years from the
date on which the acquisition is consummated. Consequently, the acquisition
provides PIMUSA the ability to own 100% of Oak Ridge over time. PIMUSA is the
direct parent of PIM. On December 28, 2004, shareholders of the Portfolio
approved a new Sub-Advisory Agreement between PIM and Oak Ridge, in
anticipation of the acquisition causing the existing agreement to terminate.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses of
the Portfolio to the extent required to reduce Class II expenses to 0.95% of
the average daily net assets attributable to Class II shares.
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. At June 30, 2006, $462 is payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $921 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $173 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------------------
Oak Ridge Large Cap Growth Portfolio $23,516,929 $1,911,304 $(913,962) $997,342
=========== ========== ========= ========
- --------------------------------------------------------------------------------------------------------------
14
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006, were $6,949,888 and $6,656,221, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
Oak Ridge Large Cap Growth Portfolio (unaudited) (unaudited)
- ---------------------------------------------------------------------------------------------------------
CLASS II:
Shares sold 272,533 $ 3,229,278 550,434 $ 6,123,375
Shares issued in reorganization -- -- 1,303,076 15,272,045
Reinvestment of distributions 33,420 371,295 957 10,533
Shares repurchased (235,515) (2,789,322) (88,477) (1,027,637)
----------------------------------------------------------
Net increase 70,438 $ 811,251 1,765,990 $20,378,316
==========================================================
- ---------------------------------------------------------------------------------------------------------
8. Merger Information
On November 4, 2005, beneficial owners of AmSouth VIF Capital Growth Portfolio
approved a proposed Agreement and Plan of Reorganization that provided for the
merger listed below. This tax-free reorganization was accomplished on November
4, 2005, by exchanging all of the AmSouth's net assets for Class II shares as
indicated below, based on Class II share's ending net asset value on the Closing
Date. The following charts show the details of the reorganization as of that
closing date ("Closing Date"):
- ---------------------------------------------------------------------------------------------------------
Pioneer Oak Ridge Pioneer Oak Ridge
Large Cap Growth AmSouth VIF Large Cap Growth
VCT Portfolio Capital Growth VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------------
Net Assets $9,574,427 $15,272,045 $24,846,472
Shares Outstanding 816,966 1,726,097 2,120,042
Class II Shares Issued 1,303,076
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Unrealized Appreciation Realized Gain/(Loss) on
on Closing Date Closing Date
- ---------------------------------------------------------------------------------------------------------
AmSouth VIF Capital Growth $1,590,957 $(409,691)
====================================
- ---------------------------------------------------------------------------------------------------------
15
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Subadviser
Oak Ridge Investments, LLC
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19634-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer AmPac Growth VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer AmPac Growth VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Depositary Receipts for International Stocks 4.9%
Temporary Investments 5.8%
U.S. Common Stocks 89.3%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Energy 3.3%
Consumer Staples 6.7%
Consumer Discretionary 9.4%
Financials 12.3%
Health Care 15.7%
Industrials 21.5%
Information Technology 31.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. WPP Group Plc 5.19%
2. State Street Corp. 5.00
3. Microchip Technology 4.81
4. T. Rowe Price
Associates, Inc. 4.77
5. Expeditors International of
Washington, Inc. 4.50
The Portfolio is actively managed and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.27 $ 10.22
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0442 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in PioneerSS
AmPac Growth VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Pioneer Russell
AmPac Growth 100 Growth
VCT Portfolio* Index
Mar-04 10,000 10,000
Jun-04 10,109 10,194
Jun-05 9,673 10,365
Jun-06 10,233 10,999
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. 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 any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 1.54%
(3/15/04)
1 Year 5.79%
All total returns shown assume reinvestment of distributions at net asset
value. Please refer to the variable product's report wrapper for performance
that reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to the variable product's semiannual report
for performance that reflects the deduction of the variable products fees and
charges.
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 AmPac 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 variable annuities. 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 AmPac Growth VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,009.20
Expenses Paid During Period* $ 4.73
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II 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 AmPac Growth VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,020.08
Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Concerns about higher interest rates and their potential impact on economic
growth depressed stock prices in the final weeks of the Portfolio's reporting
period. However, as Rosellen Papp, a member of the Portfolio's management team
discusses in the following interview, the outlook is far from bleak, and the
correction is providing attractive buying opportunities.
Q: The first four months of 2006 were marked by generally strong economic
reports and rising stock prices. What precipitated the subsequent decline?
A: The Federal Reserve Board (the Fed) raised short-term interest rates to 5%
on May 10, a development that was widely expected. This event is generally
considered to be the catalyst to the drop in stock prices, although the Fed
has not signaled a change in course or policy, and we do not believe that
the underlying economic fundamentals have changed materially. The correction
appears to reflect a general reduction in risk appetite rather than a
response to a specific fundamental deterioration.
Q: How did the Portfolio perform in this environment?
A: With investors demonstrating an increased aversion to risk, we witnessed a
flight to quality during the stock market correction. This benefited the
more well-established, higher-quality companies, such as those included in
your Portfolio.
For the six months ended June 30, 2006, Class II shares rose 0.92% at net
asset value. In comparison, the average return of the 140
Multi-Capitalization Growth Funds tracked by Lipper Inc., the Portfolio's
peer group, was -0.68%. The Russell 1000 Growth Index posted a return of
0.93% for the same period. Investments in the industrial and financial
sectors proved rewarding, but a slight emphasis on technology stocks
detracted from performance as this sector underperformed for the six months.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q: Technology stocks have languished for several months. Why is that?
A: The market generally remains nervous about the technology sector, but we
think the successful application of new technologies will be a key driver of
global growth for years to come. We have focused the Portfolio's holdings in
what we believe to be the highest-quality, most dominant companies in the
technology sector - including Applied Materials and Adobe Systems Inc.
Another holding, Intel, struggled during the six months, but we think its
tremendous research and development capabilities will help it regain market
share. Overall, the Portfolio's slight greater-than-benchmark weighting in
technology stocks worked against it during the period.
Q: Investments in the industrial and financial sectors were positive
contributors to performance. Could you mention some of them?
A: Certainly. Expeditor's International of Washington, which operates an
airfreight forwarding company with China-to-Europe and China-to-United
States trade routes, has been very successful. New business and air-freight
tonnage have grown rapidly without corresponding increases in expenses.
Emerson Electric has experienced rising order growth, and United Parcel
Services (UPS) has benefited from the increased growth of its small package
and international businesses.
In the financial sector, both State Street Corp. and T. Rowe Price have
enjoyed strong global demand for their retirement services. UCBH Holdings
Inc., which is a commercial bank that caters to the Chinese-American
population, is expanding its presence in New York, Hong Kong and China.
While this build out is pressuring earnings near term, we think the
investment in infrastructure will pay off longer term.
Q: Any notable purchases or sales in the Portfolio?
A: We like to buy companies with the intention of holding them for the long
term to keep the Portfolio's turnover rate well below the industry average.
However, the prices of many stocks became quite compelling during the market
correction. As a result, we added three new stocks to the Portfolio - Coach
Inc., the designer of classic leather accessories, International Speedway
Corp., a leading promoter of motor sports activities in the United States,
and the high-end discounter Target.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is susceptible to adverse
economic, political or regulatory developments affecting those countries.
Investing in the securities of U.S. issuers with substantial foreign activities
involves many of the same risks as investing in the securities of foreign
issuers. The Portfolio invests in a limited number of securities and, as a
result, the Portfolio's performance may be more volatile than the performance
of other portfolios holding more securities. At times, the Portfolio's
investments may represent industries or industry sectors that are interrelated
or have common risks, making it more susceptible to any economic, political, or
regulatory developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
To help purchase these holdings, we scaled back investments in State Street
Corp., Expeditors International and Emerson Electric and sold American
International Group (AIG). We have concerns about the quality of AIG's
future earnings, especially in light of the impact of recent hurricanes on
the property and casualty insurance business.
Q: Are you optimistic about the balance of the Portfolio's fiscal year?
A: We are upbeat and looking past the market's reaction this spring. We do not
believe the underlying economic fundamentals have changed or that we have
reached a turning point in the economy. We expect the Fed to raise
short-term interest rates into late summer, but we believe the economy is
strong and should be able to absorb them. We'll be keeping a sharp eye on
stock valuations to ensure that prices remain reasonable relative to
earnings prospects in this market environment.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 97.4%
Energy - 3.3%
Integrated Oil & Gas - 3.3%
940 Chevron Corp. $ 58,336
----------
Total Energy $ 58,336
----------
Capital Goods - 12.4%
Electrical Component & Equipment - 4.2%
900 Emerson Electric Co. $ 75,429
----------
Industrial Conglomerates - 8.2%
950 3M Co. $ 76,732
2,100 General Electric Co. 69,216
----------
$ 145,948
----------
Total Capital Goods $ 221,377
----------
Transportation - 8.5%
Air Freight & Couriers - 8.5%
1,400 Expeditors International of Washington, Inc.* $ 78,414
900 United Parcel Service 74,097
----------
$ 152,511
----------
Total Transportation $ 152,511
----------
Consumer Durables & Apparel - 1.3%
Apparel, Accessories & Luxury Goods - 1.3%
800 Coach, Inc.* $ 23,920
----------
Total Consumer Durables & Apparel $ 23,920
----------
Consumer Services - 1.7%
Leisure Facilities - 1.7%
670 International Speedway Corp.* $ 31,068
----------
Total Consumer Services $ 31,068
----------
Media - 5.1%
Advertising - 5.1%
1,500 WPP Group Plc $ 90,435
----------
Total Media $ 90,435
----------
Retailing - 1.0%
General Merchandise Stores - 1.0%
350 Target Corp. $ 17,105
----------
Total Retailing $ 17,105
----------
Food, Beverage & Tobacco - 2.6%
Packaged Foods & Meats - 2.6%
1,025 William Wrigley Jr. Co. $ 46,494
----------
Total Food, Beverage & Tobacco $ 46,494
----------
Household & Personal Products - 3.9%
Household Products - 3.9%
1,170 Colgate-Palmolive Co. $ 70,083
----------
Total Household & Personal
Products $ 70,083
----------
Health Care Equipment & Services - 9.4%
Health Care Equipment - 8.1%
1,650 Medtronic, Inc. $ 77,418
1,600 Stryker Corp.* 67,376
----------
$ 144,794
----------
Shares Value
Health Care Technology - 1.3%
900 IMS Health, Inc. $ 24,165
----------
Total Health Care Equipment &
Services $ 168,959
----------
Pharmaceuticals & Biotechnology - 5.9%
Pharmaceuticals - 5.9%
550 Eli Lilly & Co. $ 30,399
1,250 Johnson & Johnson 74,900
----------
$ 105,299
----------
Total Pharmaceuticals &
Biotechnology $ 105,299
----------
Banks - 2.5%
Regional Banks - 2.5%
2,700 UCBH Holdings, Inc. (a) $ 44,658
----------
Total Banks $ 44,658
----------
Diversified Financials - 9.5%
Asset Management & Custody Banks - 9.5%
1,500 State Street Corp. $ 87,135
2,200 T. Rowe Price Associates, Inc. 83,182
----------
$ 170,317
----------
Total Diversified Financials $ 170,317
----------
Software & Services - 7.6%
Application Software - 3.7%
2,200 Adobe Systems, Inc.* $ 66,792
----------
Systems Software - 3.9%
3,000 Microsoft Corp. $ 69,900
----------
Total Software & Services $ 136,692
----------
Technology Hardware & Equipment - 10.8%
Communications Equipment - 4.2%
3,800 Cisco Systems, Inc.* $ 74,214
----------
Computer Hardware - 3.0%
700 IBM Corp.* $ 53,774
----------
Computer Storage & Peripherals - 2.9%
4,800 EMC Corp.* $ 52,656
----------
Electronic Equipment & Instruments - 0.7%
429 National Instruments Corp. $ 11,755
----------
Total Technology Hardware &
Equipment $ 192,399
----------
Semiconductors - 11.9%
Semiconductor Equipment - 0.5%
500 Applied Materials, Inc. $ 8,140
----------
Semiconductors - 11.4%
3,200 Intel Corp. $ 60,640
1,800 Linear Technology Corp. (a) 60,281
2,500 Microchip Technology 83,875
----------
$ 204,796
----------
Total Semiconductors $ 212,936
----------
TOTAL COMMON STOCKS
(Cost $1,636,011) $1,742,589
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
TEMPORARY CASH INVESTMENT - 6.0%
Security Lending Collateral - 6.0%
107,009 Securities Lending Investment
Fund, 5.16% $ 107,009
----------
TOTAL TEMPORARY
CASH INVESTMENT
(Cost $107,009) $ 107,009
----------
TOTAL INVESTMENT
IN SECURITIES - 103.4%
(Cost $1,743,020) $1,849,598
----------
OTHER ASSETS AND
LIABILITIES - (3.4)% $ (61,107)
----------
TOTAL NET ASSETS - 100.0% $1,788,491
==========
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
1,782 Linear Technology Corp. $ 59,679
2,673 UCBH Holdings, Inc. 44,211
--------
Total $103,890
========
The accompanying notes are an integral part of these financial statements. 7
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 3/15/04 (a)
6/30/06 Year Ended to
Class II (unaudited) 12/31/05 12/31/04
Net asset value, beginning of period $ 10.22 $ 10.14 $ 10.00
------- ------- -------
Increase from investment operations:
Net investment income $ 0.04 $ 0.03 $ 0.05
Net realized and unrealized gain on investments 0.05 0.09 0.09
------- ------- -------
Net increase from investment operations $ 0.09 $ 0.12 $ 0.14
Distributions to shareowners:
Net investment income (0.04) (0.04) --
-------- ------- -------
Net increase in net asset value $ 0.05 $ 0.08 $ 0.14
-------- ------- -------
Net asset value, end of period $ 10.27 $ 10.22 $ 10.14
-------- ------- -------
Total return* 0.92% 1.19% 1.40%(b)
Ratio of net expenses to average net assets+ 0.95%** 0.95% 0.95%**
Ratio of net investment income to average net assets+ 0.59%** 0.43% 1.40%**
Portfolio turnover rate 18%** 16% 7%
Net assets, end of period (in thousands) $ 1,788 $ 1,872 $ 1,424
Ratios with no waiver of management fees and assumption of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 4.58%** 6.62% 15.01%**
Net investment loss (3.04)%** (5.24)% (12.68)%**
Ratios with waivers of management fees and assumptions of expenses by PIM
and no reduction for fees paid indirectly:
Net expenses 0.95%** 0.95% 0.95%**
Net investment income 0.59%** 0.43% 1.40%**
(a) The Portfolio commenced operations on March 15, 2004.
(b) Not annualized.
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $103,890) (cost $1,849,598
$1,743,020)
Cash 56,680
Receivables -
Fund shares sold 12,894
Dividends, interest and foreign taxes withheld 1,861
Due from Pioneer Investment Management, Inc. 7,108
Other 826
----------
Total assets $1,928,967
----------
LIABILITIES:
Payables -
Fund shares repurchased $ 271
Upon return of securities loaned 107,009
Due to affiliates 738
Accrued expenses 32,458
----------
Total liabilities $ 140,476
----------
NET ASSETS:
Paid-in capital $1,693,130
Undistributed net investment income 5,576
Accumulated net realized loss on investments (16,793)
Net unrealized gain on:
Investments 106,578
----------
Total net assets $1,788,491
----------
NET ASSET VALUE PER SHARE:
Class II:
(No par value, unlimited number of shares authorized)
Net assets $1,788,491
Shares outstanding 174,088
----------
Net asset value per share $ 10.27
The accompanying notes are an integral part of these financial statements. 9
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $89) $ 13,975
Interest 596
Income on securities loaned, net 1
---------
Total investment income $ 14,572
---------
EXPENSES:
Management fees $ 7,089
Transfer agent fees and expenses 696
Distribution fees 2,363
Administrative reimbursements 9,522
Custodian fees 8,954
Professional fees 8,971
Printing expense 3,724
Fees and expenses of nonaffiliated trustees 1,869
Miscellaneous 110
---------
Total expenses $ 43,298
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (34,319)
---------
Net expenses $ 8,979
---------
Net investment income $ 5,593
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from:
Investments $ 30,524
---------
Change in net unrealized gain from:
Investments $ (17,732)
---------
Net gain on investments $ 12,792
---------
Net increase in net assets resulting from operations $ 18,385
=========
10 The accompanying notes are an integral part of these financial statements.
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 5,593 $ 7,536
Net realized gain (loss) on investments 30,524 (39,329)
Change in net unrealized gain on investments (17,732) 62,350
---------- ----------
Net increase in net assets resulting from operations $ 18,385 $ 30,557
---------- ----------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (7,547) $ (7,006)
---------- ----------
Total distributions to shareowners $ (7,547) $ (7,006)
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 178,992 $ 633,120
Reinvestment of distributions 7,104 6,611
Cost of shares repurchased (280,619) (215,562)
---------- ----------
Net increase (decrease) in net assets resulting from
Fund share transactions $ (94,523) $ 424,169
---------- ----------
Net increase (decrease) in net assets $ (83,685) $ 447,720
NET ASSETS:
Beginning of period 1,872,176 1,424,456
---------- ----------
End of period $1,788,491 $1,872,176
========== ==========
Undistributed net investment income, end of period $ 5,576 $ 7,530
========== ==========
The accompanying notes are an integral part of these financial statements. 11
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer AmPac Growth VCT Portfolio (the Portfolio), is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (formerly America Pacific Rim Portfolio)
(AmPac Growth Portfolio) (Class II shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The AmPac Growth VCT Portfolio commenced operations on March 15, 2004.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
AmPac Growth Portfolio seeks capital appreciation.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market price on the primary
exchange where the security is
12
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
traded no longer accurately reflects the value of the security as of the
close of the NYSE. At June 30, 2006, there were no securities fair valued.
Temporary cash investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and
political conditions. The Portfolio may invest a substantial amount of its
assets in issuers located in a limited number of countries and therefore is
susceptible to adverse economic, political or regulatory developments
affecting those countries. Investing in the securities of U.S. issuers with
substantial foreign activities involves many of the same risks as investing
in the securities of foreign issuers. Information regarding the Portfolio's
principal investment risks is contained in the Portfolio's prospectus.
Please refer to those documents when considering the Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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, 2005, AmPac Growth Portfolio had a net capital loss
carryforward of $26,565, of which the following amounts will expire between
2012 and 2013, if not utilized: $7,988 in 2012 and $18,577 in 2013.
The Portfolio elected to defer $20,752 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
distributions paid during the year ended December 31, 2005 and the
components of distributable earnings (accumulated losses) as of December
31, 2005.
- ---------------------------------------------------
2005
- ---------------------------------------------------
Distributions paid from:
Ordinary Income $ 7,006
Long-term capital gain --
-------
$ 7,006
-------
Return of capital --
-------
Total distributions $ 7,006
-------
Distributable Earnings
(Accumulated Losses):
Undistributed ordinary income $ 7,530
Undistributed long-term gain/
(capital loss carryforward) (26,565)
Post October Loss Deferred (20,752)
Unrealized appreciation (depreciation) 124,310
-------
Total $84,523
=======
- ---------------------------------------------------
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors with the Portfolio's 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
13
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
value of the securities loaned that may occur during the term of the loan,
will be for the account of 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 Portfolio has
the right under the lending agreement to recover the securities on loan
from the borrower on demand. The Portfolio invests cash collateral in the
Securities Lending Investment Fund which is sponsored by Brown Brothers
Harriman & Co., the Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% of
the Portfolio's average daily net assets up to $1 billion and 0.70% on assets
over $1 billion.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses of
the Portfolio to the extent required to reduce Class II expenses to 0.95% of
the average daily net assets attributable to Class II shares.
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. At June 30, 2006, $284 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $442 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $12 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Portfolio Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------
AmPac Growth Portfolio $1,743,020 $183,967 $(77,389) $106,578
- ---------------------------------------------------------------------------------------------
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, 2006, were $169,340 and $383,131, respectively.
14
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -----------------------------------------------------------------------------------------------
'06 Shares '06 Amount
AmPac Growth Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -----------------------------------------------------------------------------------------------
CLASS II:
Shares sold 17,174 $ 178,992 63,412 $ 633,120
Reinvestment of distributions 696 7,104 669 6,611
Shares repurchased (26,927) (280,619) (21,368) (215,562)
---------------------------------------------------------
Net increase (decrease) (9,057) $ (94,523) 42,713 $ 424,169
=========================================================
- -----------------------------------------------------------------------------------------------
15
Pioneer AmPac Growth VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19635-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Core Bond VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Core Bond VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 9
Notes to Financial Statements 13
Trustees, Officers and Service Providers 17
Before investing consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read
it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Asset Backed Securities 0.4%
Collateralized Mortgage Obligations 0.8%
U.S. Corporate Bonds 10.0%
U.S. Government Securities 88.8%
Quality Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Commercial Paper 0.8%
B & Lower 0.9%
BB 2.1%
BBB 6.9%
AAA 0.5%
Treasury/Agency 88.8%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Government National
Mortgage Association,
4.5%, 3/15/20 22.58%
2. Government National Mortgage
Association, 5.0%, 8/15/35 22.39
3. U.S. Treasury Notes,
3.625%, 6/30/07 15.46
4. U.S. Treasury Strip,
0.0%, 11/15/13 3.71
5. Federal National Mortgage
Association,
5.5%, 3/1/36 3.43
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 9.58 $ 9.88
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2018 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Core Bond VCT Portfolio at net asset value, compared to that of the Lehman
Brothers Aggregate Bond Index. Portfolio returns are based on net asset value
and do not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Lehman Bros.
Core Bond Aggregate
VCT Portfolio Bond Index
7/05 $10,000 $10,000
6/06 10,001 10,011
The Lehman Brothers Aggregate Bond Index is a market value-weighted measure of
treasury and agency issues, corporate bond issues and mortgage-backed
securities. Index returns assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(as of June 30, 2006)
- --------------------------
Net Asset Value
- --------------------------
Life-of-Class
(7/15/05) -0.59%
All total returns shown assume reinvestment of distributions at net asset
value. Please refer to the variable product's report wrapper for performance
that reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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 Core 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 variable annuities. 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 [divided by] $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 Core Bond VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II
- ---------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 990.00
Expenses Paid During Period* $ 4.19
* Expenses are equal to the Portfolio's annualized expense ratio of 0.85% for
Class II 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 Core Bond VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
- ---------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,020.58
Expenses Paid During Period* $ 4.26
* Expenses are equal to the Portfolio's annualized expense ratio of 0.85% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Against a backdrop of strong economic growth throughout the globe, inflation
concerns grew steadily during the first six months of 2006. With dramatic
increases in commodity prices - most notably in energy prices - fears built
that inflationary pressures were starting to spread throughout the general
economy. Given these concerns, the U.S. Federal Reserve Board continued to
raise short-term interest rates to relieve inflationary pressures and control
economic growth. The Fed raised its Fed funds rate four successive times over
the six months, from 4.25% to 5.25%. As the Fed acted, rates across securities
of all maturities also rose, and bond prices generally declined. In the
following interview, Kenneth J. Taubes discusses the factors that influenced
Pioneer Core Bond VCT Portfolio's performance during the six months ended June
30, 2006. Mr. Taubes, Director 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, 2006?
A. Pioneer Core Bond VCT Portfolio, Class II shares, had a total return of
-1.00% for the six months, at net asset value. During the same six months,
the Lehman Aggregate Bond Index produced a total return of -0.72%. The
Portfolio's 30-day SEC yield on June 30, 2006 was 4.38%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were the primary factors influencing performance?
A. It was a challenging period in the bond market, given the persistent
economic growth and the Federal Reserve Board's increasing concern about
rising inflationary pressures. The Fed raised short-term rates at each of
the board's four meetings during the six months and rates rose across the
board and in almost parallel fashion among securities of all maturities.
Over the half year, the yield on the six-month Treasury bill rose by about
90 basis points (nine-tenths of one percentage point). Yields of two- to
three-year Treasury securities rose by about 79 basis points, the yields of
10-year Treasuries climbed by 78 basis points, and the yields of 30-year
Treasuries rose by 67 basis points. As these rate changes occurred, bond
prices - especially among higher-quality securities - tended to depreciate,
with most high-grade securities recording negative total returns. The most
notable exceptions were issues with short maturities of two years and less,
which were the best-performing over the six months. Corporate bonds,
including high-yield securities, performed somewhat better than Treasuries,
as the yield advantages of corporate bonds compensated for the erosion in
the market value of high-yield bonds.
Q. What were your principal strategies during the period?
A. In general, as the period progressed we became increasingly defensive to
guard against the risks of a slowing economy as the impacts of the Federal
Reserve's rate hikes worked their way through the economy. When interest
rates rose, we gradually increased duration - a measure of a bond's price
sensitivity to changes in interest rates -- as longer-maturity bonds began
to decline and started to offer greater value. The Portfolio's effective
duration on June 30, 2006, was 4.86 years. We maintained an exposure to
Treasury Inflation Protected Securities (TIPS) for most of the period,
although we did reduce our positions late in the period after these
investments had performed particularly well.
Over the six months, we maintained the Portfolio's primary focus on very
high quality bonds, including Treasuries, TIPS and high-quality,
mortgage-backed securities.
At the end of the fiscal period on June 30, 2006, average credit quality was
AA+, and 88.3% of assets were invested in Treasury and U.S. government
agency securities, including agency-backed mortgage securities. As of the
same date, only 3.0% of Portfolio assets were invested in high-yield, below
investment-grade bonds.
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages.
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 associated with falling interest rates.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. The securities issued by U.S. Government- sponsored
entities (i.e., FNMA, Freddie Mac) are neither guaranteed nor issued by the
U.S. Government. The Portfolio may invest in mortgage-backed securities, which
during times of fluctuating interest rates may increase or decrease more than
other fixed-income securities. Mortgage-Backed securities are also subject to
pre-payments. At times, the Portfolio's investments may represent industries or
industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. What types of investments had the greatest impact on Portfolio performance?
A. Our positions in TIPS had the greatest positive influence on results.
Holding back results somewhat was our investment in individual bonds of Host
Marriot. These bonds underperformed the Portfolio's benchmark index.
However, industry, as well as company, fundamentals remain sound. We
continue to like the security, which remains a Portfolio holding.
Q. What is your investment outlook?
A. We anticipate that we will see increased evidence that the Federal Reserve
has been successful in slowing the rate of economic growth. We also see a
drying up of liquidity in the global markets because of widespread hikes in
short-term interest rates by central banks across the globe.
Given these factors, we believe it makes sense to lengthen the Portfolio's
duration and to maintain exposure to Treasury and high-quality mortgage
securities. We believe these maneuvers can help to protect the Portfolio in
a slowing economy while positioning it for the time when the Federal Reserve
ends its cycle of rate hikes.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
(unaudited) Value
ASSET BACKED SECURITIES - 0.4%
Utilities - 0.4%
Electric Utilities - 0.4%
$ 3,960 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) $ 3,955
------------
Total Utilities $ 3,955
------------
TOTAL ASSET BACKED SECURITIES
(Cost $4,013) $ 3,955
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.8%
Government - 0.8%
Government - 0.8%
8,749 AAA/Aaa Freddie Mac, 6.1%, 9/15/18 $ 8,717
------------
Total Government $ 8,717
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $8,820) $ 8,717
------------
CORPORATE BONDS - 10.2%
Capital Goods - 0.9%
Electrical Component & Equipment - 0.5%
5,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 4,868
------------
Trading Companies & Distributors - 0.4%
5,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 4,566
------------
Total Capital Goods $ 9,434
------------
Consumer Durables & Apparel - 0.4%
Home Furnishings - 0.4%
5,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 4,820
------------
Total Consumer Durables & Apparel $ 4,820
------------
Consumer Services - 0.5%
Education Services - 0.5%
5,000 AAA/Aaa President & Fellows of Harvard, 6.3%, 10/1/37 $ 5,029
------------
Total Consumer Services $ 5,029
------------
Media - 0.9%
Broadcasting & Cable TV - 0.9%
10,000 BBB+/Baa2 Comcast Corp., 5.85%, 11/15/15 $ 9,631
------------
Total Media $ 9,631
------------
Retailing - 0.4%
Specialty Stores - 0.4%
5,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 4,858
------------
Total Retailing $ 4,858
------------
Insurance - 3.2%
Life & Health Insurance - 0.4%
5,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 4,975
------------
Multi-Line Insurance - 0.5%
5,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 5,012
------------
Property & Casualty Insurance - 1.4%
5,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 4,951
10,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 10,114
------------
$ 15,065
------------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
(unaudited) Value
Reinsurance - 0.9%
$ 10,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 $ 9,810
--------
Total Insurance $ 34,862
--------
Real Estate - 2.6%
Real Estate Investment Trusts - 2.6%
10,000 BBB-/Baa3 Health Care, Inc., 6.0%, 11/15/13 $ 9,666
5,000 BBB/Baa2 Hospitality Properties Trust, 5.125%, 2/15/15 4,586
10,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 9,400
5,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 4,925
--------
$ 28,577
--------
Total Real Estate $ 28,577
--------
Semiconductors - 0.9%
Semiconductors - 0.9%
10,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 9,547
--------
Total Semiconductors $ 9,547
--------
Utilities - 0.4%
Electric Utilities - 0.4%
5,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 4,704
--------
Total Utilities $ 4,704
--------
TOTAL CORPORATE BONDS
(Cost $115,979) $111,462
--------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 90.8%
$ 23,965 Federal Home Loan Mortgage Corp., 5.0%, 8/1/35 $ 22,399
10,000 Federal Home Loan Mortgage Corp., 5.25%, 2/24/11 9,841
39,806 Federal National Mortgage Association, 5.5%, 3/1/36 38,235
24,578 Federal National Mortgage Association, 5.5%, 4/1/36 23,608
24,951 Federal National Mortgage Association, 5.5%, 5/1/36 23,966
264,004 Government National Mortgage Association, 4.5%, 3/15/20 251,516
263,408 Government National Mortgage Association, 5.0%, 8/15/35 249,374
36,000 U.S. Treasury Bonds, 5.25%, 11/15/28 35,831
22,784 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 21,619
5,075 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 4,846
5,075 U.S. Treasury Inflation Protected Security, 2.375%, 4/15/11 5,054
1,120 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 1,154
175,000 U.S. Treasury Notes, 3.625%, 6/30/07 172,204
25,000 U.S. Treasury Notes, 4.0%, 11/15/12 23,498
25,000 U.S. Treasury Notes, 4.625%, 2/29/08 24,772
10,000 U.S. Treasury Notes, 5.375%, 2/15/31 10,175
5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137
35,000 U.S. Treasury Strip, 0.0%, 2/15/13 25,049
60,000 U.S. Treasury Strip, 0.0%, 11/15/13 41,284
----------
$ 989,562
----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $1,025,707) $ 989,562
----------
TOTAL INVESTMENT IN SECURITIES - 102.2%
(Cost $1,154,519) $1,113,696
----------
OTHER ASSETS AND LIABILITIES - (2.2)% $ (24,107)
----------
TOTAL NET ASSETS - 100.0% $1,089,589
==========
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, 2006, the
value of these securities amounted to $13,389 or 1.2% of total net assets.
NR Not rated by either S&P or Moody's.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 7/15/05 (a)
6/30/06 to
Class II (unaudited) 12/31/05
Net asset value, beginning of period $ 9.88 $ 10.00
------ -------
Increase (decrease) from investment operations:
Net investment income $ 0.20 $ 0.16
Net realized and unrealized loss on investments (0.30) (0.12)
------ -------
Net increase (decrease) in net assets from investment operations $(0.10) $ 0.04
------ -------
Distributions to shareowners:
Net investment income (0.20) (0.16)
------ -------
Net decrease in net asset value $(0.30) $ (0.12)
------ -------
Net asset value, end of period $ 9.58 $ 9.88
====== =======
Total return* (1.00)% 0.42%(b)
Ratio of net expenses to average net assets 0.85%** 0.85%**
Ratio of net investment income to average net assets 4.20%** 3.57%**
Portfolio turnover rate 29%** 7%(b)
Net assets, end of period (in thousands) $1,090 $ 994
Ratios with no waiver of management fees and assumption of expenses by PIM
Net expenses 11.40%** 10.10%**
Net investment loss (6.35)%** (5.68)%**
(a) The Portfolio commenced operations on July 15, 2005.
(b) Not annualized.
* 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.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 9
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (cost $1,154,519) $1,113,696
Cash 10,931
Receivables --
Dividends, interest and foreign taxes withheld 5,803
Due from Pioneer Investment Management, Inc. 3,928
Other 447
----------
Total assets $1,134,805
----------
LIABILITIES:
Payables --
Fund shares repurchased $ 9
Dividends 3,748
Due to affiliates 8,949
Accrued expenses 32,510
----------
Total liabilities $ 45,216
----------
NET ASSETS:
Paid-in capital $1,134,523
Undistributed net investment income 332
Accumulated net realized loss on investments (4,443)
Net unrealized loss on investments (40,823)
----------
Total net assets $1,089,589
----------
NET ASSET VALUE PER SHARE:
Class II:
(No par value, unlimited number of shares authorized)
Net assets $1,089,589
Shares outstanding 113,749
----------
Net asset value per share $ 9.58
10 The accompanying notes are an integral part of these financial statements.
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Interest $ 26,390
---------
Total investment income $ 26,390
---------
EXPENSES:
Management fees $ 4,229
Transfer agent fees and expenses 599
Distribution fees 1,279
Administrative reimbursements 11,486
Custodian fees 5,470
Professional fees 18,922
Printing expense 5,561
Fees and expenses of nonaffiliated trustees 11,374
Miscellaneous 628
---------
Total expenses $ 59,548
Less management fees waived and expenses assumed
by Pioneer Investment Management, Inc. (55,108)
---------
Net expenses $ 4,440
---------
Net investment income $ 21,950
---------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from:
Investments $ (3,505)
---------
Change in net unrealized loss from:
Investments $ (29,455)
---------
Net loss on investments $ (32,960)
---------
Net decrease in net assets resulting from operations $ (11,010)
=========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period
Six Months from 7/15/05
Ended (Commencement
6/30/06 of Operations)
(unaudited) to 12/31/05
FROM OPERATIONS:
Net investment income $ 21,950 $ 16,387
Net realized loss on investments (3,505) (915)
Change in net unrealized gain or loss on investments (29,455) (11,368)
---------- ----------
Net increase (decrease) in net assets resulting from operations $ (11,010) $ 4,104
---------- ----------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (21,983) $ (16,140)
---------- ----------
Total distributions to shareowners $ (21,983) $ (16,140)
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 129,675 $1,006,348
Reinvestment of distributions 1,805 63
Cost of shares repurchased (3,254) (19)
---------- ----------
Net increase in net assets resulting from Fund share transactions $ 128,226 $1,006,392
---------- ----------
Net increase in net assets $ 95,233 $ 994,356
NET ASSETS:
Beginning of period 994,356 --
---------- ----------
End of period $1,089,589 $ 994,356
========== ==========
Undistributed net investment income, end of period $ 332 $ 365
========== ==========
12 The accompanying notes are an integral part of these financial statements.
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Core Bond VCT Portfolio (The Portfolio) is a Portfolio of Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust registered
under the Investment Company Act of 1940 as an open-end management investment
company. The Trust consists of twenty -seven separate diversified portfolios,
thirteen of which issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio)
(Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio)
(Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The Portfolio commenced operations on July 15, 2005.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
Core Bond Portfolio seeks to provide current income from an investment grade
portfolio with due regard to preservation of capital and prudent investment
risk.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements, which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded. Temporary cash
investments are valued at amortized cost.
Fixed income securities with remaining maturity of more than 60 days are
valued at prices supplied by independent pricing services, which consider
such factors as Treasury spreads, yields, maturities and
13
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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. 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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
At times, the Portfolio's Investments may represent industries or industry
sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors. Information regarding the
Portfolio's principal investment risks is contained in the Portfolio's
prospectus(es). Please refer to those documents when considering the
Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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.
The Portfolio elected to defer $945 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ended December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
distributions paid during the period ended December 31, 2005 and the
components of distributable earnings (accumulated losses) as of December
31, 2005.
- -----------------------------------------------------------------------
2005
- -----------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 16,140
Long-Term capital gain/capital loss carryforward --
--------
$ 16,140
Return of Capital --
--------
Total distributions $ 16,140
--------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 562
Undistributed long-term gain/(capital loss carryforward) --
Post-October Loss Deferred (945)
Unrealized appreciation (depreciation) (11,558)
--------
Total $(11,941)
========
- -----------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax treatment of
amortization on securities purchased at premium.
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's custodian acting as
the lending agent. When entering into a loan, the Portfolio receives
collateral which is maintained by the custodian and earns
14
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
income in the form of negotiated lenders' fees. The Portfolio also
continues to receive payments in lieu of interest or dividends on the
securities loaned. Gain or loss in the fair value of the securities loaned
that may occur during the term of the loan, will be for the account of the
Trust. 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 Portfolio has the right under the
lending agreement to recover the securities on loan from the borrower on
demand. The Portfolio invests cash collateral in the Securities Lending
Investment Fund which is sponsored by Brown Brothers Harriman & Co., the
Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolios. Management fees are calculated daily at the annual rate of 0.50% of
the Portfolio's average daily net assets.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and to assume other operating expenses of the Portfolio to the
extent necessary to limit Class II expenses to 0.85% of the average daily net
assets attributable to Class II 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, 2006, $6,286 was payable to
PIM related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
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 $1,207 in transfer agent fees payable to PIMSS
at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $1,456 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At December 31, 2005, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------
Core Bond Portfolio $1,154,709 $47 $ (41,060) $ (41,013)
========== ==== ========== ==========
- ------------------------------------------------------------------------------------------
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, 2006, were $39,031 and $1,480, respectively. The cost of
purchases and the proceeds from sales of investments in U.S. Government
obligations for the six months ended June 30, 2006, were $271,783 and $153,077,
respectively.
15
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the period ended December 31, 2005:
- --------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
Core Bond VCT (unaudited) (unaudited)
- --------------------------------------------------------------------------------------------
CLASS II:
Shares sold 13,253 $129,675 100,642 $1,006,348
Reinvestment of distributions 187 1,805 7 63
Shares repurchased (338) (3,254) (2) (19)
-------------------------------------------------------
Net increase 13,102 $128,226 100,647 $1,006,392
=======================================================
16
Pioneer Core Bond VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read
it carefully.
19639-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Ibbotson Asset Allocation Series VCT Portfolios -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
Moderate Allocation Portfolio - Portfolio and
Performance Update 2
Growth Allocation Portfolio - Portfolio and
Performance Update 3
Aggressive Allocation Portfolio - Portfolio and
Performance Update 4
Comparing Ongoing Portfolio Expenses 5
Market Overview and Strategy 8
Portfolio Reviews 9
Schedule of Investments 10
Financial Statements 13
Notes to Financial Statements 21
Trustees, Officers and Service Providers 24
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Ibbotson Moderate Allocation VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Target Asset Allocations
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Equity 60%
Fixed Income 40%
Large Cap Growth Stocks 15.5%
- ---------------------------------------------------
Large Cap Value Stocks 15.5
- ---------------------------------------------------
Mid/Small Cap Growth Stocks 6.0
- ---------------------------------------------------
Mid/Small Cap Value Stocks 6.0
- ---------------------------------------------------
International Stocks 12.0
- ---------------------------------------------------
Emerging Markets 2.0
- ---------------------------------------------------
Real Estate (REITs) 3.0
- ---------------------------------------------------
High Yield Bonds 8.0
- ---------------------------------------------------
Bonds 9.0
- ---------------------------------------------------
Short Term Bonds 17.0
- ---------------------------------------------------
Cash Equivalents 6.0
- ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio)
U.S. Stocks Pioneer Growth Opportunities 2.11%
- --------------------------------------------------------------------------------
Pioneer Fund 7.35% International Stocks
- --------------------------------------------------------------------------------
Pioneer Research 10.47 Pioneer International Equity 11.68
- --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Pioneer Emerging Markets 2.14
-----------------------------------------
Cap Growth 13.58 Bonds
- --------------------------------------------------------------------------------
Pioneer Value 3.15 Pioneer High Yield 6.35
- --------------------------------------------------------------------------------
Pioneer Cullen Value 3.15 Pioneer Bond 9.49
- --------------------------------------------------------------------------------
Pioneer Mid Cap Growth 3.15 Pioneer Short Term Income 16.83
- --------------------------------------------------------------------------------
Pioneer Mid Cap Value 1.05 Pioneer Government Income 3.16
- --------------------------------------------------------------------------------
Pioneer Small Cap Value 3.16
- --------------------------------------------------------------------------------
Pioneer Real Estate 3.18
- --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings
will vary for other periods.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.72 $ 10.63
Distributions per Share Short-Term Long-Term
(1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains
$ 0.0397 $ - $ 0.0949
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Ibbotson Moderate Allocation VCT Portfolio at net asset value, compared to that
of the Standard & Poor's 500 Stock Index and Lehman Brothers Aggregate Bond
Index. Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson
Moderate Allocation Lehman Brothers
VCT Portfolio S&P 500 Aggregate Bond Index
3/05 $10,000 $10,000 $10,000
6/05 10,111 10,137 10,301
6/06 10,912 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market.
The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of
the broad U.S. stock market. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June, 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class
(3/18/05) 6.61%
1 Year 7.93%
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 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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 Ibbotson Growth Allocation VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Target Asset Allocations
Equity 75%
Fixed Income 25%
Large Cap Growth Stocks 16.5%
- ---------------------------------------------------
Large Cap Value Stocks 17.5
- ---------------------------------------------------
Mid/Small Cap Growth Stocks 8.5
- ---------------------------------------------------
Mid/Small Cap Value Stocks 8.5
- ---------------------------------------------------
International Stocks 16.0
- ---------------------------------------------------
Emerging Markets 4.0
- ---------------------------------------------------
Real Estate (REITs) 4.0
- ---------------------------------------------------
High Yield Bonds 5.0
- ---------------------------------------------------
Bonds 7.5
- ---------------------------------------------------
Short Term Bonds 12.5
- ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio)
U.S. Stocks Pioneer Growth Opportunities 4.01%
- --------------------------------------------------------------------------------
Pioneer Fund 7.97% International Stocks
- --------------------------------------------------------------------------------
Pioneer Research 10.93 Pioneer International Equity 15.11
- --------------------------------------------------------------------------------
Pioneer Oak Ridge Large Pioneer Emerging Markets 4.06
-----------------------------------------
Cap Growth 12.88 Bonds
- --------------------------------------------------------------------------------
Pioneer Value 3.98 Pioneer High Yield 3.01
- --------------------------------------------------------------------------------
Pioneer Cullen Value 3.99 Pioneer Bond 8.00
- --------------------------------------------------------------------------------
Pioneer Mid Cap Growth 3.99 Pioneer Short Term Income 11.96
- --------------------------------------------------------------------------------
Pioneer Mid Cap Value 1.99 Pioneer Government Income 1.09
- --------------------------------------------------------------------------------
Pioneer Small Cap Value 3.00
- --------------------------------------------------------------------------------
Pioneer Real Estate 4.03
- --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings
will vary for other periods.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 11.01 $ 10.78
Distributions per Share Short-Term Long-Term
(1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains
$ 0.0185 $ - $ 0.049
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Ibbotson Growth Allocation VCT Portfolio at net asset value, compared to that of
the Standard & Peer's 500 Stock Index and Lehman Brothers Aggregate Bond Index.
Portfolio returns are based on net asset value and do not reflect any applicable
insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson
Moderate Allocation Lehman Brothers
VCT Portfolio S&P 500 Aggregate Bond Index
3/05 $10,000 $10,000 $10,000
6/05 10,111 10,137 10,301
6/06 11,180 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market.
The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of
the broad U.S. stock market. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
Net Asset Value
Life-of-Class
(3/18/05) 8.30%
1 Year 10.02%
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 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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.
3
Pioneer Ibbotson Aggressive Allocation VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Target Asset Allocations
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Equity 90%
Fixed Income 10%
Large Cap Growth Stocks 19.0%
- ---------------------------------------------------
Large Cap Value Stocks 19.0
- ---------------------------------------------------
Mid/Small Cap Growth Stocks 10.5
- ---------------------------------------------------
Mid/Small Cap Value Stocks 10.5
- ---------------------------------------------------
International Stocks 21.0
- ---------------------------------------------------
Emerging Markets 5.0
- ---------------------------------------------------
Real Estate (REITs) 5.0
- ---------------------------------------------------
High Yield Bonds 0.0
- ---------------------------------------------------
Bonds 7.0
- ---------------------------------------------------
Short Term Bonds 3.0
- ---------------------------------------------------
Actual Portfolio Holdings (Based on total portfolio)
U.S. Stocks Pioneer Small Cap Value 2.99%
- --------------------------------------------------------------------------------
Pioneer Fund 8.93% Pioneer Real Estate 5.03
- --------------------------------------------------------------------------------
Pioneer Research 11.90 Pioneer Growth 5.02
Opportunities
- --------------------------------------------------------------------------------
Pioneer Oak Ridge Large International Stocks
-----------------------------------------
Cap Growth 14.81 Pioneer International Equity 20.36
- --------------------------------------------------------------------------------
Pioneer Value 3.97 Pioneer Emerging Markets 5.14
- --------------------------------------------------------------------------------
Pioneer Cullen Value 4.97 Bonds
- --------------------------------------------------------------------------------
Pioneer Mid Cap Growth 4.96 Pioneer Bond 5.97
- --------------------------------------------------------------------------------
Pioneer Mid Cap Value 2.98 Pioneer Short Term Income 2.97
- --------------------------------------------------------------------------------
This list excludes temporary cash and derivative instruments. Portfolio holdings
will vary for other periods.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 11.22 $ 10.98
Distributions per Share Short-Term Long-Term
(1/1/06 - 6/30/06) Dividends Capital Gains Capital Gains
$ 0.027 $ - $ 0.1006
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Ibbotson Aggressive Allocation VCT Portfolio at net asset value, compared to
that of the Standard & Poor's 500 Stock Index and Lehman Brothers Aggregate Bond
Index. Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Ibbotson
Moderate Allocation Lehman Brothers
VCT Portfolio S&P 500 Aggregate Bond Index
3/05 $10,000 $10,000 $10,000
6/05 10,151 10,137 10,301
6/06 11,397 11,011 10,218
The Lehman Brothers Aggregate Bond Index is a measure of the U.S. bond market.
The Standard & Poor's Stock Index (the S&P 500) is a commonly used measure of
the broad U.S. stock market. Index returns are calculated monthly, assume
reinvestment of dividends and, unlike Fund returns, do not reflect any fees,
expenses or sales charges. You cannot invest directly in the index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
Net Asset Value
Life-of-Class
(3/18/05) 10.37%
1 Year 12.28%
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 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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 Ibbotson Moderate Allocation 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 variable annuities. 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
[divided by] $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 Ibbotson Moderate Allocation
VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,021.40
Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for
Class II 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). 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 Ibbotson Moderate Allocation
VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,021.92
Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for
Class II Shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
5
Pioneer Ibbotson Growth Allocation VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
COMPARING ONGOING PORTFOLIO EXPENSES (continued)
- --------------------------------------------------------------------------------
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 variable annuities. 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
[divided by] $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 Ibbotson Growth Allocation VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,027.80
Expenses Paid During Period* $ 2.92
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for
Class II 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). 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 Ibbotson Growth Allocation VCT
Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1.021.92
Expenses Paid During Period* $ 2.91
* Expenses are equal to the Portfolio's annualized expense ratio of 0.58% for
Class II Shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
6
Pioneer Ibbotson Growth Allocation VCT Portfolio
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 variable annuities. 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
[divided by] $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 Ibbotson Aggressive Allocation
VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,033.80
Expenses Paid During Period* $ 3.73
* Expenses are equal to the Portfolio's annualized expense ratio of 0.74% for
Class II 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). 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 Ibbotson Aggressive Allocation
VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,021.12
Expenses Paid During Period* $ 3.71
* Expenses are equal to the Portfolio's annualized expense ratio of 0.74% for
Class II Shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
7
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
MARKET OVERVIEW AND STRATEGY 6/30/06
- --------------------------------------------------------------------------------
In the following interview, Portfolio manager Peng Chen, Chief Investment
Officer for Ibbotson Associates Advisors, LLC, discusses the market environment
and investment strategies that applied to the Portfolios in the Pioneer Ibbotson
Asset Allocation Series VCT Portfolios for the semiannual period ended June 30,
2006.
Q. Could you characterize the economic backdrop during the first six months of
2006?
A. The economic situation has been difficult to interpret for a while. While
growth was solid in the first quarter of 2006 after a slight slowdown at
the end of 2005, the more recent employment data have failed to provide a
clear picture. In particular, job creation in manufacturing has been
disappointing. The Federal Reserve (the Fed) continued to raise short-term
rates gradually throughout the period, despite the transition to Chairman
Bernanke. However, the Fed has announced a shift from a course of measured
rate increases to a data-driven approach to policy. As a result, many
economists have been paying even more attention than usual to economic
releases, which are expected to affect short-term interest rates and,
through them, the economy and the markets.
After a positive start, U.S. equity markets fell in the second quarter,
erasing most of the year-to-date's gains. The downturn impacted growth
stocks the most, while large-cap and value-oriented stocks held up
relatively well. International equities generally provided strong returns
for the six months, although their performance also eased considerably as
the period progressed. In the fixed-income markets, intermediate and
longer-term bond prices generally fell as yields rose.
Q. What were the strategic considerations that you applied to the three
Portfolios in allocating assets?
A. For each Portfolio, assets have been invested in keeping with their broad
asset allocation and specific mutual fund targets. In addition, we have
implemented three strategies across all the Portfolios.
Within the U.S. stock portion of the Portfolios, we introduced during the
period a slight overweighting of U.S. large-capitalization stocks relative
to small-cap stocks. We did this for a number of reasons. First, although
small cap stocks have historically outperformed large caps over long
periods, there is a cyclical aspect to this performance leadership. After
several years of small cap outperformance, this trend seems to have become
less pronounced. In our view this suggests that a cycle of large cap
performance leadership may begin reasonably soon. Supporting this view as
well is the fact that small cap stocks are currently trading at valuations
approximately double those for large caps. Finally, if as many expect the
economy slows as a result of higher interest rates, large cap stocks may be
more resilient. With respect to the other equity categories, exposure
remained neutral throughout the period. We have also maintained neutral
target weightings in the non-U.S. equity market alternatives, both
developed and emerging.
A second strategic emphasis is within the bond portion of the Portfolios,
where we have continued to underweight the long-term bond vehicle, with the
difference allocated to the shorter-term fixed-income alternative. While we
do not see a clear direction for long-term interest rates over the short
term, over time we do expect long-term bond yields to continue to trend
higher, with corresponding downward pressure on prices of these issues. In
addition, short-term rates have become much more attractive given the Fed's
raising of the benchmark rate. In view of these factors, we believe the
risk/reward profile is more favorable among shorter term issues. Elsewhere
within fixed income, we have maintained neutral positions in the high yield
bond offering, as well as in the non-U.S. fixed income option.
Finally, we continue to underweight REITs (Real Estate Investment Trusts).
REITs are traditionally most attractive to investors seeking income return,
and these issues benefited from the period of low interest rates
experienced in the recent past. As rates have risen, REIT yields have
reached historically low levels relative to Treasury bonds. At the same
time, REITs in the aggregate are priced at roughly double the general stock
market, as gauged by traditional valuation measures such as
price-to-earnings ratio. In addition to appearing fully valued when
compared to both bonds and the rest of the stock market, REITs may be
vulnerable to higher market interest rate levels, which we expect to lead
to continued cooling in the real estate sector.
Q. What factors are you watching most closely as you determine strategy for
the Portfolios going forward?
Going forward, we will continue to monitor economic indicators and interest
rates to evaluate whether we need to adjust the views underlying our
strategic allocations. The Federal deficit has been stable around four
percent of Gross Domestic Product (GDP); the trade deficit reached a record
six percent of GDP; meanwhile, the absence of household savings persists.
While the markets do not seem to be especially focused on these numbers,
the persistence of these imbalances is something we are watching.
The markets are, however, focused on the Fed's next moves. On the one hand,
we have limited employment growth and core inflation that remains
relatively low; on the other hand, core inflation is increasing and GDP
growth is solid. Will Chairman Bernanke keep increasing the benchmark rate
to strengthen his reputation as an inflation hawk, or will he keep the rate
stable while waiting for the effects of the 17 consecutive increases to
kick in? In the meantime, the U.S. yield curve remains rather flat, meaning
there is very little reward for buying longer maturities, and the stock
market appears to be treading water pending economic data that will enable
participants to forecast Fed actions more effectively.
We continue to view the financial markets as lacking in clear direction,
making appropriate diversification across asset classes vitally important
as we enter the second half of 2006.
Please see Portfolio Reviews beginning on page 9 for information on specific
weightings and performance for each of the three Portfolios in the Pioneer
Ibbotson Asset Allocation Series VCT Portfolios.
Any information in this shareholder report regarding market or economic trends
or the factors influencing a Portfolio's historical or future performance are
statements of the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
A Word About Risk:
The Portfolio performance depends on the adviser's skill in determining the
strategic asset class allocations, the mix of underlying Pioneer funds, as well
as the performance of those underlying funds. The underlying funds' performance
may be lower than the performance of the asset class that they were selected to
represent. Stocks and bonds can decline due to adverse issuer, market,
regulatory, or economic developments. International markets may be less liquid
and can be more volatile than U.S. markets. These risk factors, including those
associated with currency exchange rates, also apply to investments in
international markets, all of which make international markets more volatile and
less liquid than investments in domestic markets. Some of the underlying
portfolios can invest in either high-yield securities or small/emerging growth
companies. Investments in these types of securities generally are subject to
greater volatility than either higher-grade securities or more-established
companies, respectively. Before making an investment in a Portfolio, you should
consider all the risks associated with it.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 each 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.
8
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO REVIEWS 6/30/06
- --------------------------------------------------------------------------------
Moderate Allocation
The Portfolio's total return for the semiannual period ended June 30, 2006 was
2.14% for Class II shares.
The Portfolio targeted an asset allocation of 60% equities, 40% fixed income
during the semiannual period ended June 30, 2006. Within the equity portion of
the Portfolio, Pioneer Oak Ridge Large Cap Growth Fund was the largest holding
at 13.58% of investments on June 30, 2006. Pioneer International Equity Fund was
the next largest equity holding at 11.68% of investments. Large capitalization
holdings were weighted slightly above target at the end of the period,
reflecting management's view that these stocks were more attractive than their
smaller cap counterparts. Within the fixed-income portion of the Portfolio, the
largest holding at the end of the period was in a shorter duration bond fund,
Pioneer Short Term Income Fund, at 16.83%, while a longer duration bond fund,
Pioneer Bond Fund represented 9.49% of investments.
Growth Allocation
The Portfolio's total return for the semiannual period ended June 30, 2006 was
2.78% for Class II shares.
The Portfolio targeted an asset allocation of 75% equities, 25% fixed income
during the period. Within the equity portion of the fund, Pioneer International
Equity Fund was the largest holding at 15.11% of investments on June 30, 2006.
The largest domestic equity allocation was to Pioneer Oak Ridge Large Cap Growth
Fund (12.88%) followed by Pioneer Research Fund (10.93%). Large capitalization
holdings were weighted slightly above target at the end of the period,
reflecting management's view that these stocks were more attractive than their
smaller cap counterparts. Within the fixed-income portion of the Portfolio, the
largest holding at the end of the period was in a shorter term bond fund,
Pioneer Short Term Income Fund, at 11.96% of investments, while a longer
duration bond fund, Pioneer Bond Fund represented 8.00% of investments.
Aggressive Allocation
The Portfolio's total return for the semiannual period ended June 30, 2006, was
3.38% for Class II shares.
The Portfolio targeted an asset allocation of 90% equities, 10% fixed income
during the period. Within the equity portion of the fund, Pioneer International
Equity Fund was the largest holding at 20.36% of investments on June 30, 2006.
On the domestic side, Pioneer Oak Ridge Large Cap Growth Fund (14.81%) and
Pioneer Research Fund (11.90%) were the largest holdings. Large capitalization
holdings were weighted slightly above target at the end of the period,
reflecting management's view that these stocks were more attractive than their
smaller cap counterparts. Within the fixed-income portion of the Portfolio, the
largest holding at the end of the period was in a long-term bond fund, Pioneer
Bond Fund, at 5.97% of assets, while a shorter term bond fund, Pioneer Short
Term Income Fund represented 2.97% of assets.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
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 the opinion of Portfolio management as of the date of this report.
These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
A Word About Risk:
The Portfolio performance depends on the adviser's skill in determining the
strategic asset class allocations, the mix of underlying Pioneer funds, as well
as the performance of those underlying funds. The underlying funds' performance
may be lower than the performance of the asset class that they were selected to
represent. Stocks and bonds can decline due to adverse issuer, market,
regulatory, or economic developments. International markets may be less liquid
and can be more volatile than U.S. markets. These risk factors, including those
associated with currency exchange rates, also apply to investments in
international markets, all of which make international markets more volatile and
less liquid than investments in domestic markets. Some of the underlying
portfolios can invest in either high-yield securities or small/emerging growth
companies. Investments in these types of securities generally are subject to
greater volatility than either higher-grade securities or more-established
companies, respectively. Before making an investment in a Portfolio, you should
consider all the risks associated with it.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 each 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.
9
Pioneer Ibbotson Moderate Allocation VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
MUTUAL FUNDS - 94.7%
PIONEER FUNDS - 94.7 %
392,642 Pioneer Bond Fund Class Y $ 3,467,026
-----------
62,742 Pioneer Cullen Value Fund Class Y 1,150,686
-----------
27,024 Pioneer Emerging Markets Fund Class Y 780,183
-----------
58,121 Pioneer Fund Class Y 2,682,885
-----------
126,324 Pioneer Government Income Fund Class Y 1,155,866
-----------
24,912 Pioneer Growth Opportunities Fund
Class Y 772,011
-----------
216,360 Pioneer High Yield Fund Class Y 2,319,375
-----------
170,760 Pioneer International Equity Fund Class Y 4,263,868
-----------
76,606 Pioneer Mid Cap Growth Fund Class Y 1,150,627
-----------
15,684 Pioneer Mid Cap Value Fund Class Y 383,462
-----------
382,569 Pioneer Oak Ridge Large Cap Growth Fund
Class Y 4,958,099
-----------
39,703 Pioneer Real Estate Shares Class Y 1,161,707
-----------
371,766 Pioneer Research Fund Class Y 3,821,751
-----------
634,139 Pioneer Short Term Income Fund Class Y 6,144,811
-----------
34,204 Pioneer Small Cap Value Fund Class Y 1,153,361
-----------
63,333 Pioneer Value Fund Class Y 1,148,863
-----------
TOTAL INVESTMENTS IN SECURITIES - 94.7%
(Cost $36,187,413)(a) $36,514,581
-----------
OTHER ASSETS AND
LIABILITIES - 5.3% 2,053,548
-----------
TOTAL NET ASSETS - 100.0% $38,568,129
===========
(a) At June 30, 2006, the net unrealized gain on investments based on cost for
federal tax purposes of $36,251,476 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $661,039
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (397,934)
--------
Net unrealized gain $263,105
========
Purchases and sales of securities (excluding temporary cash investments) for the
period ended June 30, 2006 aggregated $17,348,059 and $0, respectively.
10 The accompanying notes are an integral part of these financial statements.
Pioneer Ibbotson Growth Allocation VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
MUTUAL FUNDS - 99.5%
PIONEER FUNDS - 99.5%
491,924 Pioneer Bond Fund Class Y $ 4,343,685
-----------
118,012 Pioneer Cullen Value Fund Class Y 2,164,345
-----------
76,299 Pioneer Emerging Markets Fund Class Y 2,202,758
-----------
93,699 Pioneer Fund Class Y 4,325,131
-----------
64,752 Pioneer Government Income Fund Class Y 592,478
-----------
70,325 Pioneer Growth Opportunities Fund
Class Y 2,179,374
-----------
152,523 Pioneer High Yield Fund Class Y 1,635,044
-----------
328,660 Pioneer International Equity Fund Class Y 8,206,642
-----------
144,109 Pioneer Mid Cap Growth Fund Class Y 2,164,519
-----------
44,253 Pioneer Mid Cap Value Fund Class Y 1,081,976
-----------
539,681 Pioneer Oak Ridge Large Cap Growth Fund
Class Y 6,994,261
-----------
74,699 Pioneer Real Estate Shares Class Y 2,185,694
-----------
577,043 Pioneer Research Fund Class Y 5,932,004
-----------
670,384 Pioneer Short Term Income Fund Class Y 6,496,023
-----------
48,268 Pioneer Small Cap Value Fund Class Y 1,627,610
-----------
119,139 Pioneer Value Fund Class Y 2,161,181
-----------
TOTAL INVESTMENTS IN SECURITIES - 99.5 %
(Cost $54,191,871)(a) $54,292,725
-----------
OTHER ASSETS AND
LIABILITIES - 0.5% 291,248
-----------
TOTAL NET ASSETS - 100.0% $54,583,973
===========
(a) At June 30, 2006, the net unrealized gain on investments based on cost for
federal tax purposes of $54,233,055 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $585,257
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (525,587)
--------
Net unrealized gain $ 59,670
========
Purchases and sales of securities (excluding temporary cash investments) for the
period ended June 30, 2006 aggregated $41,253,503 and $111,973, respectively.
The accompanying notes are an integral part of these financial statements. 11
Pioneer Ibbotson Aggressive Allocation VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
MUTUAL FUNDS - 100.3%
PIONEER FUNDS - 100.3%
51,556 Pioneer Bond Fund Class Y $ 455,238
----------
20,667 Pioneer Cullen Value Fund Class Y 379,037
----------
13,590 Pioneer Emerging Markets Fund Class Y 392,350
----------
14,755 Pioneer Fund Class Y 681,080
----------
12,353 Pioneer Growth Opportunities Fund
Class Y 382,828
----------
62,223 Pioneer International Equity Fund Class Y 1,553,704
----------
25,197 Pioneer Mid Cap Growth Fund Class Y 378,453
----------
9,296 Pioneer Mid Cap Value Fund Class Y 227,283
----------
87,173 Pioneer Oak Ridge Large Cap Growth Fund
Class Y 1,129,765
----------
13,114 Pioneer Real Estate Shares Class Y 383,702
----------
88,298 Pioneer Research Fund Class Y 907,701
----------
23,439 Pioneer Short Term Income Class Y 227,126
----------
6,767 Pioneer Small Cap Value Fund Class Y 228,184
----------
16,684 Pioneer Value Fund Class Y 302,652
----------
TOTAL INVESTMENTS IN SECURITIES - 100.3%
(Cost $7,521,383)(a) $7,629,103
----------
OTHER ASSETS AND
LIABILITIES - (0.3%) (24,897)
----------
TOTAL NET ASSETS - 100.0% $7,604,206
----------
(a) At June, 30, 2006, the net unrealized gain on investments based on cost for
federal tax purposes of $7,532,989 was as follows:
Aggregate gross unrealized gain for all investments in which
there is an excess of value over tax cost $172,751
Aggregate gross unrealized loss for all investments in which
there is an excess of tax cost over value (76,637)
--------
Net unrealized gain $ 96,114
========
Purchases and sales of securities (excluding temporary cash investments) for the
period ended June 30, 2006 aggregated $4,614,176 and $129,280, respectively.
12 The accompanying notes are an integral part of these financial statements.
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the
six months For the period
ended 3/18/05(a)
06/30/06 to
(unaudited) 12/31/05
----------- --------------
Moderate Allocation VCT Portfolio Class II Class II
Net asset value, beginning of period $ 10.63 $ 10.00
-------- --------
Increase from investment operations:
Net investment income (b) $ 0.07 $ 0.15
Net realized and unrealized gain on investments 0.15 0.48
-------- --------
Net increase from investment operations $ 0.22 $ 0.63
-------- --------
Distributions to shareowners:
Net investment income $ (0.04) --
Net realized gain (0.09) --
-------- --------
Total distributions to shareowners $ (0.13) --
-------- --------
Net increase in net asset value $ 0.09 $ 0.63
-------- --------
Net asset value, end of period $ 10.72 $ 10.63
======== ========
Total return* (c) 2.14% 6.30%
Ratio of net expenses to average net assets** 0.58% 0.74%++
Ratio of net investment income to average net assets** 1.43% 1.73%
Portfolio turnover rate (c) 0% 27%
Net assets, end of period (in thousands) $ 38,568 $ 20,067
(a) Commencement of operations.
(b) Calculated using average shares outstanding for the period.
(c) Not Annualized.
* 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.
** Annualized.
++ In the absence of expense reimbursement, expenses on an annualized basis
for the period ended 12/31/05, would have been 1.42% of average net assets
for Class II shares.
Note: The above financial highlights do not reflect the deduction of non-fund
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 Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the
six months For the period
ended 3/18/05(a)
06/30/06 to
(unaudited) 12/31/05
----------- --------------
Growth Allocation VCT Portfolio Class II Class II
Net asset value, beginning of period $ 10.78 $ 10.00
-------- --------
Increase from investment operations:
Net investment income (b) $ 0.05 $ 0.11
Net realized and unrealized gain on investments 0.25 0.67
-------- --------
Net increase from investment operations $ 0.30 $ 0.78
-------- --------
Distributions to shareowners:
Net investment income $ (0.02) --
Net realized gain ( 0.05) --
-------- --------
Total distributions to shareowners $ (0.07) --
-------- --------
Net increase in net asset value $ 0.23 $ 0.78
-------- --------
Net asset value, end of period $ 11.01 $ 10.78
======== ========
Total return* (c) 2.78% 7.80%
Ratio of net expenses to average net assets** 0.58% 0.74%++
Ratio of net investment income to average net assets** 0.97% 1.34%
Portfolio turnover rate (c) 0.39% 20%
Net assets, end of period (in thousands) $ 54,584 $ 13,245
(a) Commencement of operations.
(b) Calculated using average shares outstanding for the period.
(c) Not Annualized.
* 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.
** Annualized.
++ In the absence of expense reimbursement, expenses on an annualized basis
for the period ended 12/31/05, would have been 1.74% of average net assets
for Class II shares.
Note: The above financial highlights do not reflect the deduction of non-fund
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 Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the
six months For the period
ended 3/18/05(a)
06/30/06 to
(unaudited) 12/31/05
----------- --------------
Aggressive Allocation VCT Portfolio Class II Class II
Net asset value, beginning of period $ 10.98 $ 10.00
-------- --------
Increase from investment operations:
Net investment income (b) $ 0.01 $ 0.08
Net realized and unrealized gain on investments 0.36 0.90
-------- --------
Net increase from investment operations $ 0.37 $ 0.98
-------- --------
Distributions to shareowners:
Net investment income $ (0.03) --
Net realized gain (0.10) --
-------- --------
Total distributions to shareowners $ (0.13) --
-------- --------
Net increase in net asset value $ 0.24 $ 0.98
-------- --------
Net asset value, end of period $ 11.22 $ 10.98
======== ========
Total return* (c) 3.38% 9.80%
Ratio of net expenses to average net assets**++ 0.74% 0.74%
Ratio of net investment income to average net assets** 0.17% 0.90%
Portfolio turnover rate (c) 3% 17%
Net assets, end of period (in thousands) $ 7,604 $ 3,077
(a) Commencement of operations.
(b) Calculated using average shares outstanding for the period.
(c) Not Annualized.
* 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.
** Annualized.
++ In the absence of expense reimbursement, expenses on an annualized basis
would have been 1.51% and 5.94% for the periods ended 6/30/06 and 12/31/05,
respectively, for Class II shares.
Note: The above financial highlights do not reflect the deduction of non-fund
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 Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Moderate Growth Aggressive
Allocation Allocation Allocation
VCT Portfolio VCT Portfolio VCT Portfolio
ASSETS:
Investments in securities of affiliated issuers, at value (at cost
$36,187,413, $54,191,871 and $7,521,383, respectively) $36,514,581 $54,292,725 $7,629,103
Cash 2,825,721 1,340,118 53,851
Receivable for:
Fund shares sold 186,750 306,876 2,453
Due from Pioneer Investment Management, Inc. -- -- 2,399
Other 459 426 429
----------- ----------- ----------
Total assets $39,527,511 $55,940,145 $7,688,235
----------- ----------- ----------
LIABILITIES:
Payables for:
Securities purchased $ 918,319 $ 1,309,856 $ 54,403
Fund shares redeemed -- -- 1,350
Due to affiliates 11,917 16,023 2,430
Accrued expenses and other liabilities 29,146 30,293 25,846
----------- ----------- ----------
Total liabilities $ 959,382 $ 1,356,172 $ 84,029
----------- ----------- ----------
NET ASSETS:
Paid-in capital $38,103,055 $54,375,938 $7,505,463
Undistributed net investment income 193,264 137,340 4,311
Accumulated net realized loss on investments (55,358) (30,159) (13,288)
Net unrealized gain on investments 327,168 100,854 107,720
----------- ----------- ----------
Total net assets $38,568,129 $54,583,973 $7,604,206
=========== =========== ==========
NET ASSET VALUE PER SHARE:
(No par value, unlimited number of shares authorized)
Net Assets of Class II Shares $38,568,129 $54,583,973 $7,604,206
Class II Shares outstanding 3,597,989 4,955,892 677,519
----------- ----------- ----------
Net Asset Value--Class II Shares $ 10.72 $ 11.01 $ 11.22
16 The accompanying notes are an integral part of these financial statements.
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
For the Six Months Ended 6/30/06
Moderate Growth Aggressive
Allocation Allocation Allocation
VCT Portfolio VCT Portfolio VCT Portfolio
INVESTMENT INCOME:
Dividend income received from securities of affiliated issuers $230,562 $ 192,738 $ 20,304
Interest 41,662 27,318 2,838
-------- ---------- ---------
Total investment income $272,224 $ 220,056 $ 23,142
-------- ---------- ---------
EXPENSES:
Management fees $ 17,621 $ 18,399 $ 3,306
Transfer agent fees 708 708 723
Distribution fees 33,887 35,382 6,357
Custodian fees 7,020 8,230 8,129
Professional fees 15,325 15,325 15,325
Printing fees 1,483 1,498 1,632
Fees and expenses of nonaffiliated trustees 2,583 2,583 2,667
Miscellaneous 190 200 199
-------- ---------- ---------
Total expenses $ 78,817 $ 82,325 $ 38,338
Less expenses reimbursed by Pioneer Investment Management, Inc. -- -- (19,521)
-------- ---------- ---------
Net expenses $ 78,817 $ 82,325 $ 18,817
-------- ---------- ---------
Net investment income $193,407 $ 137,731 $ 4,325
-------- ---------- ---------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS IN SECURITIES OF
AFFILIATED ISSUERS:
Net realized gain (loss) on investments $ -- $ 5,379 $ (3,326)
Realized gain distributions received from investment company shares 8,710 5,765 1,660
Change in net unrealized gain (loss) on investments 111,948 (152,405) 20,965
-------- ---------- ---------
Net gain (loss) on investments $120,658 $ (141,261) $ 19,299
-------- ---------- ---------
Net increase (decrease) in net assets resulting from operations $314,065 $ (3,530) $ 23,624
======== ========== =========
The accompanying notes are an integral part of these financial statements. 17
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Moderate Allocation Growth Allocation
VCT Portfolio VCT Portfolio
------------------------------------ ------------------------------------
Six Months Ended Six Months Ended
June 30, 2006 March 18, 2005* to June 30, 2006 March 18, 2005* to
(unaudited) December 31, 2005 (unaudited) December 31, 2005
FROM OPERATIONS:
Net investment income $ 193,407 $ 99,539 $ 137,731 $ 55,335
Net realized gain (loss) on investments 8,710 293,310 11,144 219,398
Change in net unrealized gain (loss) on investments 111,948 215,220 (152,405) 253,259
------------ ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations $ 314,065 $ 608,069 $ (3,530) $ 527,992
------------ ----------- ----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income $ (135,015) $ -- $ (86,886) $ --
Net capital gains (322,743) -- (230,130) --
------------ ----------- ----------- -----------
Total distributions to shareowners $ (457,758) $ -- $ (317,016) $ --
------------ ----------- ----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 20,148,385 $20,272,067 $42,070,845 $13,118,169
Cost of shares repurchased (1,503,629) (913,070) (410,939) (501,548)
------------ ----------- ----------- -----------
Net increase in net assets resulting from fund
share transactions $ 18,644,756 $19,358,997 $41,659,906 $12,616,621
------------ ----------- ----------- -----------
Net increase in net assets $ 18,501,063 $19,967,066 $41,339,360 $13,144,613
NET ASSETS:
Beginning of period (Initial capitalization - 10,000
shares per fund) $ 20,067,066 $ 100,000 $13,244,613 $ 100,000
------------ ----------- ----------- -----------
End of period (including undistributed net
investment income of $193,264, $134,872,
$137,340 and $86,495 respectively) $ 38,568,129 $20,067,066 $54,583,973 $13,244,613
============ =========== =========== ===========
18 The accompanying notes are an integral part of these financial statements.
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
Aggressive Allocation
VCT Portfolio
-------------------------------------
Six Months Ended
June 30, 2006 March 18, 2005* to
(unaudited) December 31, 2005
FROM OPERATIONS:
Net investment income $ 4,325 $ 9,138
Net realized gain (loss) on investments (1,666) 63,857
Change in net unrealized gain (loss) on investments 20,965 86,755
---------- ----------
Net increase in net assets resulting from operations $ 23,624 $ 159,750
---------- ----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income $ (17,942) $ --
Net capital gains (66,851) --
---------- ----------
Total distributions to shareowners $ (84,793) $ --
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $5,018,211 $2,893,199
Cost of shares repurchased (430,085) (75,700)
---------- ----------
Net increase in net assets resulting from fund share transactions $4,588,126 $2,817,499
---------- ----------
Net increase in net assets $4,526,957 $2,977,249
NET ASSETS:
Beginning of period (Initial capitalization - 10,000 shares per fund) $3,077,249 $ 100,000
---------- ----------
End of period (including undistributed net investment income of $4,311 and 17,928 $7,604,206 $3,077,249
========== ==========
respectively)
* Commencement of operations.
The accompanying notes are an integral part of these financial statements. 19
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS (continued)
- --------------------------------------------------------------------------------
Moderate Allocation VCT Portfolio
-------------------------------------------------------
Six Months Ended
June 30, 2006 March 18, 2005* to
(unaudited) December 31, 2005
Shares Amount Shares Amount
Class II
Shares sold 1,850,327 $ 20,148,385 1,965,325 $20,272,067
Less shares repurchased (139,848) (1,503,629) (87,815) (913,070)
--------- ------------ --------- -----------
Net increase 1,710,479 $ 18,644,756 1,877,510 $19,358,997
========= ============ ========= ===========
Growth Allocation VCT Portfolio
-------------------------------------------------------
Six Months Ended
June 30, 2006 March 18, 2005* to
(unaudited) December 31, 2005
Shares Amount Shares Amount
Class II
Shares sold 3,764,181 $42,070,845 1,266,361 $13,118,169
Less shares repurchased (36,635) (410,939) (48,015) (501,548)
--------- ----------- --------- -----------
Net increase 3,727,546 $41,659,906 1,218,346 $12,616,621
========= ============ ========= ===========
Aggressive Allocation VCT Portfolio
-------------------------------------------------------
Six Months Ended
June 30, 2006 March 18, 2005* to
(unaudited) December 31, 2005
Shares Amount Shares Amount
Class II
Shares sold 434,830 $ 5,018,211 277,535 $ 2,893,199
Less shares repurchased (37,610) (430,085) (7,236) (75,700)
--------- ----------- --------- -----------
Net increase 397,220 $ 4,588,126 270,299 $ 2,817,499
========= ============ ========= ===========
* Commencement of operations.
20 The accompanying notes are an integral part of these financial statements.
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Ibbotson Moderate Allocation VCT Portfolio, Pioneer Ibbotson Growth
Allocation VCT Portfolio and Pioneer Ibbotson Aggressive Allocation VCT
Portfolio (the Portfolios) are Portfolios of the Pioneer Variable Contracts
Trust (the Trust) which is a Delaware statutory trust registered under the
Investment Company Act of 1940 as an open-end management investment company.
Each of these Portfolios is a "fund of funds" which means that it seeks to
achieve its investment objective by investing in other funds ("underlying
funds") rather than direct investment in securities. These Portfolios indirectly
pay a portion of the expenses incurred by the underlying funds. Consequently, an
investment in these Portfolios entails more direct and indirect expenses than
direct investment in the underlying funds. The Trust consists of twenty seven
separate portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
Shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Moderate Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Growth Portfolio) (Class
II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Aggressive Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The investment objective of the Moderate Portfolio is to seek a balance between
long-term capital growth and current income. The Growth Portfolio seeks a
balance between long-term capital growth and current income. The Aggressive
Portfolio seeks long-term capital growth.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The financial statements have been prepared in accordance with United States
generally accepted accounting principles that require the management of the
Portfolios to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reporting period. Actual results could
differ from these estimates. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of its
financial statements, which are in conformity with those generally accepted in
the investment company industry.
A. Security Valuation
Security transactions are recorded as of the trade date. The net asset
value 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. In
computing the net asset value, holdings of mutual fund shares are valued at
the net asset value. Dividend
21
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (unaudited) (continued)
- --------------------------------------------------------------------------------
income is recorded on the ex-dividend date. Temporary cash investments are
valued at amortized cost.
Gains and losses on sales of investments are calculated on the identified
cost method for both financial reporting and Federal income tax purposes.
B. Federal Income Taxes
It is the Portfolios' policy to comply with the requirements of the
Internal Revenue Service Code applicable to regulated investment companies
and to distribute all taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no Federal income tax provisions are
required.
The amount and characterization of distributions to shareowners for
financial reporting purposes is determined in accordance with federal
income tax rules. Therefore, the source of the Portfolios' 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.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. There were no distributions paid for
the period ended December 31, 2005.
The following shows the components of distributable earnings on a federal
income tax basis for the period ended December 31, 2005:
- --------------------------------------------------------------------------------
Undistributed Undistributed Net Unrealized
Ordinary Long-Term Appreciation
Portfolio Income Capital Gains (Depreciation)
- --------------------------------------------------------------------------------
Moderate VCT Portfolio $134,872 $322,738 $151,157
Growth VCT Portfolio $ 86,495 $230,011 $212,075
Aggressive VCT Portfolio $ 17,928 $ 66,835 $ 75,149
- --------------------------------------------------------------------------------
C. Portfolio Shares
The Portfolios record sales and repurchases of each of their 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),
$462,503 in commissions on the sale of Trust shares for the six months
ended June 30, 2006. Distribution fees for Class II shares are calculated
based on the average daily net asset values attributable to Class II shares
of each Portfolio. Dividends and distributions to shareowners are recorded
on the ex-dividend date.
2. Management Agreement
Pioneer Investment Management, Inc. (PIM), a wholly owned indirect subsidiary of
UniCredito Italiano, is the Portfolios' investment adviser, and manages the
Portfolios. Management fees are calculated daily at the following annual rates
on Pioneer managed assets:
- --------------------------------------------------------------------------------
Management Fee as a Percentage
of each Fund's Average
Fund Daily Net Assets
- --------------------------------------------------------------------------------
Moderate VCT Portfolio 0.13%
Growth VCT Portfolio 0.13%
Aggressive VCT Portfolio 0.13%
- --------------------------------------------------------------------------------
22
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PIM has entered into a sub-advisory agreement with Ibbotson Associates, LLC.
PIM, not the Portfolios, pays a portion of the fee it receives from each
Portfolio to Ibbotson Associates as compensation for its services to the
Portfolios.
In addition, under the management and administration agreements, certain other
services and costs, including accounting, regulatory reporting and insurance
premiums, will be paid by the Portfolios. At June 30, 2006, the following fees
were payable to PIM relating to management fees and certain other services and
are included in due to affiliates:
- --------------------------------------------------------------------------------
Fund Amount
- --------------------------------------------------------------------------------
Moderate VCT Portfolio $3,920
Growth VCT Portfolio $5,325
Aggressive VCT Portfolio $ 804
- --------------------------------------------------------------------------------
From March 18, 2005 through June 30, 2006, PIM did not impose all or a portion
of its management fees and assumed other operating expenses of the Portfolios
to the extent necessary to limit Class II expenses to the following annual
expense limitations:
- --------------------------------------------------------------------------------
Fund Class II
- --------------------------------------------------------------------------------
Moderate VCT Portfolio 0.74%
Growth VCT Portfolio 0.74%
Aggressive VCT Portfolio 0.74%
- --------------------------------------------------------------------------------
3. Transfer Agent
PIMSS, a wholly owned indirect subsidiary of UniCredito Italiano, provides
substantially all transfer agent and shareowner services to the Portfolios at
negotiated rates. Included in due to affiliates are the following amounts of
transfer agent fees payable to PIMSS at June 30, 2006:
- --------------------------------------------------------------------------------
Fund Amount
- --------------------------------------------------------------------------------
Moderate VCT Portfolio $458
Growth VCT Portfolio $458
Aggressive VCT Portfolio $ 80
- --------------------------------------------------------------------------------
4. Distribution Plans
The Portfolios have adopted a Plan of Distribution with respect to Class II
shares (Class II Plan) in accordance with Rule 12b-1 of the Investment Company
Act of 1940. Pursuant to the Class II Plan, the Portfolios will pay PFD a
service fee of up to 0.25% of the Fund's average daily net assets attributable
to Class II shares in reimbursement of its actual expenditures to finance
activities primarily intended to result in the sale of Class II shares. At June
30, 2006, the following fees were payable to PFD relating to service fees and
are included in due to affiliates:
- --------------------------------------------------------------------------------
Fund Amount
- --------------------------------------------------------------------------------
Moderate VCT Portfolio $ 7,539
Growth VCT Portfolio $10,240
Aggressive VCT Portfolio $ 1,546
- --------------------------------------------------------------------------------
23
Pioneer Ibbotson Asset Allocation Series VCT Portfolios
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice
President Vincent Nave, Treasurer
Mary K. Bush Dorothy E. Bourassa, Secretary
Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Subadviser
Ibbotson Associates Advisors, LLC
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
24
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
25
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19640-00-0806
[LOGO}PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Strategic Income VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Strategic Income VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 17
Notes to Financial Statements 21
Trustees, Officers and Service Providers 26
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Goverment Securities 49.9%
U.S. Corporate Bonds 36.6%
Foreign Government Bonds 6.3%
Asset Backed Securities 3.5%
Temporary Cash Investment 1.6%
Municipal Bonds 1.2%
Collateralized Mortgage Obligations 0.6%
Convertible Corporate Bonds 0.3%
Maturity Distribution
(As a percentage of total investment portfolio)
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 year 5.1%
1-3 years 12.5%
3-4 years 13.9%
4-6 years 43.5%
6-8 years 14.9%
8+ years 10.1%
Five Largest Holdings
(As a percentage of long-term holdings)
1. U.S. Treasury Bonds,
5.25%, 11/15/28 3.75%
2. U.S. Treasury Strip,
0.0%, 11/15/13 2.22
3. U.S. Treasury Inflation
Protected Security,
3.5%, 1/15/11 2.09
4. U.S. Treasury Notes,
5.0%, 2/15/11 2.01
5. U.S. Treasury Inflation
Protected Security,
1.875%, 7/15/15 1.98
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.52 $ 10.76
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2995 $ 0.0270 $ 0.0254
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
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.
[THE FOLLOWING TABLE WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Strategic
Income VCT Lehman Brothers U.S.
Portfolio Universal Index
7/99 10,000 10,000
6/00 10,157 10,520
6/01 10,861 11,652
6/02 11,695 12,551
6/03 14,966 14,137
6/05 16,677 15,186
6/06 17,008 15,146
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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
Net Asset Value
Life-of-Class 7.97%
(5/1/03)
1 Year 1.98%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 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 variable annuities. 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, 2006 through June 30, 2006.
Share Class II
-------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,010.40
Expenses Paid During Period* $ 5.53
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for
Class II 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 Strategic Income VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
-------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.29
Expenses Paid During Period* $ 5.56
* Expenses are equal to the Portfolio's annualized expense ratio of 1.11% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Against a backdrop of strong economic growth throughout the globe, inflation
concerns grew steadily during the first six months of 2006. With dramatic
increases in commodity prices - most notably in energy prices - fears built
that inflationary pressures would start to spread throughout the general
economy. Given these concerns, the U.S. Federal Reserve Board continued to
raise short-term interest rates to relieve inflationary pressures and control
economic growth. The Fed raised its Fed funds rate four successive times over
the six months, from 4.25% to 5.25%. As the Fed acted, rates across the yield
curve - among securities of all maturities - also rose, and bond prices
generally declined. While lower-rated bonds tended to outperform early in the
period, worries grew in the final two months that the Fed might become too
aggressive and stall the global economic resurgence. As a result,
lower-quality, higher-yielding bonds - most notably emerging market debt -
suffered price declines in the final two months of the period. In the following
interview, Kenneth J. Taubes discusses the factors that influenced Pioneer
Strategic Income VCT Portfolio's performance during the six months ended June
30, 2006. Mr. Taubes, Director 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, 2006?
A. Pioneer Strategic Income VCT Portfolio, Class II shares, had a total return
of 1.04% for the six months at net asset value. During the same six months,
the benchmark Lehman Brothers U.S. Universal Index fell by 0.46%. The
average return of the 52 portfolios in the Lipper General Bond variable
annuity fund category was 0.09%. The Portfolio also continued to deliver a
competitive yield. On June 30, 2006, the Portfolio's 30-day SEC yield was
4.98%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What was the investment environment during the six-months?
A. The global fixed-income markets operated in a challenging environment
during the first six months of the year. Among the primary factors
influencing investors were the persistent actions of the U.S. Federal
Reserve Board and other central banks to control economic growth and rein
in inflationary pressures by raising short-term interest rates. Early in
the period, the healthy economic and corporate profit growth resulted in
continued good performance by lower-rated bonds, including emerging market
debt and domestic high-yield bonds. The U.S. Treasury market was relatively
stable. That environment abruptly changed in the second quarter of this
year, when investors grew increasingly risk averse because of concerns that
the Fed and other central banks might raise rates too far and cause an
economic slowdown. After the Federal Reserve raised the fed funds rate to
5.00% on May 10 (the rate subsequently would be raised again, to 5.25% in
late June), Treasury securities declined as longer-term interest rates
rose. High yield bonds and commodities-exposed emerging market debt
performed worse, as investors sought to lower their risk profiles. In this
environment, the U.S. dollar lost value against most major currencies.
Q. What were your principal strategies during the period, and how did they
influence performance?
A. Throughout the six months, we upgraded overall credit quality. Relative to
many competitive funds, we were significantly underweighted in emerging
market debt over the entire period. While this deemphasis initially
detracted from results early in 2006, it was a significant help as the
period progressed. As domestic high-yield bonds rallied in the first
quarter, we sold into strength, reducing our high-yield exposure. Taking
profits in high yield holdings also proved helpful as volatility increased
in the second quarter and high-yield bonds slumped. Average credit quality
of the Portfolio was a solid A on June 30, 2006, up from A- six months
earlier and from BBB 12 months earlier. On June 30, 2006, 55% of the
Portfolio's assets were invested in U.S. Treasury and government agency
securities, while 19% were invested in U.S. high yield bonds and just 13.6%
were invested in emerging market debt.
As interest rates rose, we gradually increased the Portfolio's duration -
or sensitivity to interest changes - to take advantage of the improving
values in longer-maturity
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages.
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 associated with falling interest rates. The
securities issued by U.S. Government sponsored entities (i.e., FNMA, Freddie
Mac) are neither guaranteed nor issued by the U.S. Government. The Portfolio
may invest in mortgage-backed securities, which during times of fluctuating
interest rates may increase or decrease more than other fixed-income
securities. Mortgage-Backed securities are also subject to pre-payments.
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. Investing in foreign and/or emerging markets
securities involves risks relating to interest rates, currency exchange rates,
economic, and political conditions. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
securities. Within our Treasury holdings, we had a greater-than-benchmark
weighting in Treasury Inflation Protected Securities (TIPS) for most of the
period. Those securities, which tend to do well in rising-interest rate
environments, outperformed straight Treasuries and contributed to
performance results. The Portfolio's effective duration on June 30, 2006,
was 5.07 years, compared to 4.72 years six months earlier.
The Portfolio also had an above-usual foreign currency exposure, at 11.4%
of assets on June 30, which helped results as the U.S. dollar lost relative
value. The euro, Norwegian krone and Swedish krona all gained more than 5%
against the dollar, while the Canadian dollar and the Japanese yen also
were strong.
Q. What individual investments had the greatest impact on results?
A. Several high-yield issuers bought back their bonds - or tendered their debt
- resulting in profits for the Portfolio. These issues included Stone
Energy, an oil and gas exploration company that was acquired; Resolution
Performance, a chemical company; J. Ray McDermott, an oil field services
firm; and Indo Coal, an Indonesian corporation that was acquired.
Among high-yield investments that detracted from results were bonds of two
forest product companies, Ainsworth Lumber and Abitibi-Consolidated, a
global paper products company. Securities issued by Bowater, a paper
company, also held back results, as did our positions in two Kazakh banks.
Q. What is your investment outlook?
A. By the midpoint of 2006, we have modestly increased duration - or
interest-rate sensitivity - to an essentially neutral position relative to
the Portfolio's benchmark. We anticipate increasing duration in the second
half of the year when we have seen clear signs that the Federal Reserve
Board has been successful in slowing the pace of economic growth and
moderating inflationary pressures. By late June, we had only seen
persuasive evidence of slowing in the housing sector. We anticipate keeping
the Portfolio's credit quality relatively high, as we believe the Fed's
actions have limited the potential for price appreciation in lower-rated,
high-yield bonds. Among investment-grade securities, we prefer mortgage
securities to corporate bonds, which offer little yield advantage for their
added credit risk.
In this environment, we think it makes sense to position the Portfolio
conservatively while being well diversified to take advantage of
opportunities throughout the fixed-income markets.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
CONVERTIBLE CORPORATE BONDS - 0.3%
Semiconductors - 0.3%
Semiconductor Equipment - 0.3%
170,000 NR/NR Brooks Automation, Inc., 4.75%, 6/1/08 $ 165,113
-----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $158,934) $ 165,113
-----------
ASSET BACKED SECURITIES - 3.4%
Diversified Financials - 1.1%
Diversified Financial Services - 1.1%
270,805 BB-/Ba2 Caithness Coso Fund Corp., 6.263%, 6/15/14 (144A) $ 265,226
185,190 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) 185,159
247,636 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 246,687
-----------
$ 697,072
-----------
Total Diversified Financials $ 697,072
-----------
Utilities - 1.6%
Electric Utilities - 1.6%
169,850 BBB-/Baa3 Empresa Electric, 8.625%, 4/30/13 (144A) $ 183,353
308,880 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 308,494
376,193 NR/NR Ormat Funding Corp., 8.25%, 12/30/20 385,598
83,065 BB-/Ba2 Tenaska Alabama, 7.0%, 6/30/21 (144A) 80,956
-----------
$ 958,401
-----------
Total Utilities $ 958,401
-----------
Government - 0.7%
Government - 0.7%
COP 413,256 BB+/Ba2 Republic of Columbia, 9.75%, 4/9/11 $ 446,317
-----------
Total Government $ 446,317
-----------
TOTAL ASSET BACKED SECURITIES
(Cost $2,115,884) $ 2,101,790
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.5%
Diversified Financials - 0.5%
Diversified Financial Services - 0.5%
80,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 79,890
265,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 260,288
-----------
$ 340,178
-----------
Total Diversified Financials $ 340,178
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $345,000) $ 340,178
-----------
CORPORATE BONDS - 35.3%
Energy - 4.6%
Coal & Consumable Fuels - 0.4%
250,000 B+/Ba3 Adaro Finance BV, 8.5%, 12/8/10 (144A) $ 248,750
-----------
Oil & Gas Drilling - 0.5%
30,000 B/B2 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 29,850
300,000 NR/NR DDI Holding AS, 9.3%, 1/19/12 308,250
-----------
$ 338,100
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Oil & Gas Equipment & Services - 0.2%
150,000 NR/B1 Semgroup LP, 8.75%, 11/15/15 (144A) $ 149,250
-----------
Oil & Gas Exploration & Production - 2.9%
70,000 B+/B1 Atlas Pipeline Partners, 8.125%, 12/15/15 (144A) $ 69,738
210,000 B-/B3 Baytex Energy, Ltd., 9.625%, 7/15/10 216,825
260,000 B-/B3 Clayton Williams Energy, 7.75%, 8/1/13 239,200
245,000 B/B2 Compton Petroleum Corp., 7.625%, 12/1/13 233,975
355,000 BBB/NR Gazprom International SA, 7.201%, 2/1/20 (144A) 359,881
170,000 B-/B3 Harvest Operations Corp., 7.875%, 10/15/11 161,500
ITL 275,000,000 BBB-/Baa1 Petroleos Mexicanos, 7.375%, 8/13/07 187,792
115,000 CCC+/Caa1 Petroquest Energy, Inc., 10.375%, 5/15/12 119,025
200,000 B/B2 Quicksilver Resources, Inc., 7.125%, 4/1/16 187,500
45,000 BB+/Ba3 Southern Star Central Corp., 6.75%, 3/1/16 (144A) 43,200
-----------
$ 1,818,636
-----------
Oil & Gas Storage & Transportation - 0.6%
75,000 B/B1 Inergy LP, 8.25%, 3/1/16 $ 75,750
85,000 B-/B2 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 82,025
176,000 B-/B3 Transmontaigne, Inc., 9.125%, 6/1/10 187,440
-----------
$ 345,215
-----------
Total Energy $ 2,899,951
-----------
Materials - 6.1%
Aluminum - 0.8%
370,000 BB/Ba3 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 346,875
140,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 134,400
-----------
$ 481,275
-----------
Commodity Chemicals - 1.0%
110,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 129,250
65,000 B-/B3 Aventine Renewable Energy, Floating Rate Note, 12/15/11(a) 68,494
130,000 B-/B2 Basell Finance Co., 8.1%, 3/15/27 (144A) 117,650
300,000 B+/Ba3 Invista, 9.25%, 5/1/12 (144A) 315,000
-----------
$ 630,394
-----------
Construction Materials - 0.4%
275,000 B-/B3 U.S. Concrete, Inc., 8.375%, 4/1/14 $ 277,750
-----------
Diversified Chemical - 0.5%
100,000 B-/B2 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) $ 119,225
EURO 145,000 B-/B2 Nell AF Sarl, 8.375%, 8/15/15 (144A) 187,244
-----------
$ 306,469
-----------
Diversified Metals & Mining - 1.4%
70,000 B-/B3 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 70,875
100,000 BBB+/Baa3 Vale Overseas, Ltd., 6.25%, 1/11/16 95,250
400,000 BBB+/Baa3 Vale Overseas, Ltd., 8.25%, 1/17/34 431,500
280,000 BB/Ba1 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 267,400
-----------
$ 865,025
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Forest Products - 0.5%
305,000 B+/B2 Ainsworth Lumber, 6.75%, 3/15/14 $ 231,800
90,000 BB-/Ba2 Sino Forest Corp., 9.125%, 8/17/11 (144A) 92,700
-----------
$ 324,500
-----------
Metal & Glass Containers - 0.2%
130,000 BB-/B1 Greif Brothers Corp., 8.875%, 8/1/12 $ 136,825
-----------
Paper Packaging - 0.2%
110,000 CCC+/Caa2 Graham Packaging Co., 9.875%, 10/15/14 (b) $ 108,900
-----------
Paper Products - 0.4%
100,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 81,000
200,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 174,000
-----------
$ 255,000
-----------
Specialty Chemicals - 0.7%
350,000 B/Caa2 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 273,875
150,000 BB+/NA LPG International, Inc., 7.25%, 12/20/15 138,000
-----------
$ 411,875
-----------
Total Materials $ 3,798,013
-----------
Capital Goods - 4.1%
Aerospace & Defense - 0.1%
75,000 BB+/Ba3 L-3 Communications Corp., 6.375%, 10/15/15 $ 71,625
-----------
Building Products - 0.9%
325,000 B/B3 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 333,125
250,000 BB-/Ba3 Desarrolladora Homex SA, 7.5%, 9/28/15 235,000
-----------
$ 568,125
-----------
Construction & Engineering - 1.0%
3,450,000 NR/ NR Kvaerner ASA, 0.0%, 10/30/11 $ 611,315
-----------
Construction, Farm Machinery & Heavy Trucks - 0.7%
130,000 B+/Ba3 Commercial Vehicle Group, 8.0%, 7/1/13 $ 124,475
270,000 B+/B1 Greenbrier Co., Inc., 8.375%, 5/15/15 275,738
-----------
$ 400,213
-----------
Industrial Machinery - 0.3%
150,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 157,500
53,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 54,855
-----------
$ 212,355
-----------
Trading Companies & Distributors - 1.1%
325,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 296,818
475,000 BB+/Ba1 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 411,756
-----------
$ 708,574
-----------
Total Capital Goods $ 2,572,207
-----------
Commercial Services & Supplies - 1.2%
Diversified Commercial Services - 0.6%
130,000 B+/Ba2 FTI Consulting, 7.625%, 6/15/13 $ 131,625
240,000 CCC+/Caa1 Park-Ohio Industries, Inc., 8.375%, 11/15/14 211,200
-----------
$ 342,825
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Environmental & Facilities Services - 0.5%
80,000 B+/B1 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 90,000
240,000 CCC+/Caa1 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 231,600
-----------
$ 321,600
-----------
Office Services & Supplies - 0.1%
90,000 CCC/B3 Nutro Products, Inc., Floating Rate Note, 10/15/13 (144A)(a) $ 91,688
-----------
Total Commercial Services & Supplies $ 756,113
-----------
Transportation - 1.1%
Airlines - 0.1%
85,000 CCC+/Caa2 AMR Corp., 9.8%, 10/1/21 $ 79,263
-----------
Airport Services - 0.1%
55,000 B-/Caa1 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 54,175
-----------
Marine - 0.8%
185,000 BB+/NR CMA CGM SA, 7.25%, 2/1/13 (144A) $ 169,275
315,000 BB-/Ba3 Stena AB, 7.0%, 12/1/16 289,800
40,000 B-/B3 Trailer Bridge, Inc., 9.25%, 11/15/11 41,000
-----------
$ 500,075
-----------
Railroads - 0.1%
70,000 B-/B3 TFM SA De CV, 9.375%, 5/1/12 $ 74,550
-----------
Total Transportation $ 708,063
-----------
Automobiles & Components - 0.4%
Tires & Rubber - 0.4%
280,000 B-/B3 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 267,400
-----------
Total Automobiles & Components $ 267,400
-----------
Consumer Durables & Apparel - 1.2%
Footwear - 0.2%
153,000 BB-/B1 Brown Shoe Co., Inc., 8.75%, 5/1/12 $ 157,208
-----------
Homebuilding - 1.0%
148,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 124,690
150,000 BB/Ba3 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) 150,000
250,000 B+/Ba3 WCI Communities, Inc., 6.625%, 3/15/15 (b) 207,500
150,000 B+/Ba3 WCI Communities, Inc., 7.875%, 10/1/13 131,625
-----------
$ 613,815
-----------
Total Consumer Durables & Apparel $ 771,023
-----------
Consumer Services - 0.8%
Casinos & Gaming - 0.8%
200,000 AAA/Aaa Lottomatica S.p.A., Floating Rate Note, 3/31/66 (144A) (a) $ 255,378
245,000 B-/Caa1 Trump Entertainment Resorts, 8.5%, 6/1/15(b) 235,506
-----------
$ 490,884
-----------
Total Consumer Services $ 490,884
-----------
Media - 1.7%
Broadcasting & Cable TV - 0.9%
250,000 BB+/Ba2 C&M Finance Ltd., 8.1%, 2/1/16 (144A) $ 238,750
300,000 B-/B2 Kabel Deutschland GMBH, 10.625%, 7/1/14 316,500
-----------
$ 555,250
-----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Movies & Entertainment - 0.5%
335,000 B+/Ba2 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 318,250
-----------
Publishing - 0.3%
200,000 B/B1 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 203,250
-----------
Total Media $ 1,076,750
-----------
Retailing - 0.6%
Automotive Retail - 0.2%
115,000 BB+/Ba2 Autonation, Inc., 7.0%, 4/15/14 (144A) $ 113,275
-----------
Computer & Electronics Retail - 0.2%
95,000 B+/ Ba3 GSC Holdings Corp., 8.0%, 10/1/12(b) $ 95,000
-----------
Distributors - 0.2%
EURO 100,000 B-/B2 Central Eur Distribution Corp., 8.0%, 7/25/12 (144A) $ 137,291
-----------
Total Retailing $ 345,566
-----------
Food & Drug Retailing - 0.2%
Drug Retail - 0.2%
110,000 CCC/Caa1 Duane Reade, Inc., Floating Rate Note, 12/15/10 (a) $ 106,700
-----------
Total Food & Drug Retailing $ 106,700
-----------
Food, Beverage & Tobacco - 0.8%
Brewers - 0.8%
202,000 NR/NR Argentine Beverages, 7.375%, 3/22/12 (144A) $ 193,920
220,000 BBB/Baa3 Cia Brasileira de Bebida, 8.75%, 9/15/13 242,275
80,000 BBB/Baa3 Cia Brasileira de Bebida, 10.5%, 12/15/11 93,000
-----------
$ 529,195
-----------
Total Food, Beverage & Tobacco $ 529,195
-----------
Health Care Equipment & Services - 0.3%
Health Care Services - 0.3%
165,000 CCC+/B3 Rural/Metro Corp., 9.875%, 3/15/15 $ 170,569
-----------
Total Health Care Equipment & Services $ 170,569
-----------
Pharmaceuticals & Biotechnology - 0.6%
Biotechnology - 0.3%
200,000 B/B2 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 191,000
-----------
Pharmaceuticals - 0.3%
180,000 CCC+/Caa1 Warner Chilcott Corp., 8.75%, 2/1/15 $ 182,250
-----------
Total Pharmaceuticals & Biotechnology $ 373,250
-----------
Banks - 1.4%
Diversified Banks - 1.4%
185,000 B/Ba1 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 184,112
170,000 BB+/Baa2 Kazkommerts International BV, 8.0%, 11/3/15 164,900
150,000 B+/Ba2 Russian Stand Bank, 7.5%, 10/7/10 (144A) 139,875
15,000 BBB+/A1 SEB, 8.125%, 9/6/49 (144A) 15,067
200,000 NA/NA Sibacademfinance Plc, 9.0%, 5/12/09 (144A) 196,720
175,000 BB/Baa1 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 171,719
-----------
$ 872,393
-----------
Total Banks $ 872,393
-----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Diversified Financials - 1.7%
Consumer Finance - 0.9%
300,000 B+/Ba2 Ford Motor Credit Co., 5.7%, 1/15/10 $ 262,781
35,000 B+/Ba2 Ford Motor Credit Co., 5.8%, 1/12/09 31,975
320,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 (a) 292,403
-----------
$ 587,159
-----------
Investment Banking & Brokerage - 0.5%
275,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 280,500
-----------
Diversified Financial Services - 0.3%
200,000 BB/NR CCSA Finance, Ltd., 7.875%, 5/17/16 (144A) $ 189,000
-----------
Total Diversified Financials $ 1,056,659
-----------
Insurance - 3.4%
Life & Health Insurance - 0.9%
390,000 B-/B2 Presidential Life Corp., 7.875%, 2/15/09 $ 388,050
140,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 135,167
-----------
$ 523,217
-----------
Multi-Line Insurance - 0.5%
325,000 BB+/Ba1 Hanover Insurance Group, 7.625%, 10/15/25 $ 325,791
-----------
Property & Casualty Insurance - 1.0%
285,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 282,203
350,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 353,995
-----------
$ 636,198
-----------
Reinsurance - 1.0%
300,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 288,243
365,000 BBB/NA Platinum Underwriters Holdings, 7.5%, 6/1/17 358,062
-----------
$ 646,305
-----------
Total Insurance $ 2,131,511
-----------
Real Estate - 1.4%
Real Estate Management & Development - 0.2%
125,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 125,938
-----------
Real Estate Investment Trusts - 1.2%
120,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 121,800
95,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 98,753
340,000 B+/B1 Trustreet Properties, Inc., 7.5%, 4/1/15 334,900
180,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 180,000
-----------
$ 735,453
-----------
Total Real Estate $ 861,391
-----------
Technology Hardware & Equipment - 0.7%
Communications Equipment - 0.1%
50,000 BBB/Baa3 Corning, Inc., 5.9%, 3/15/14 $ 49,436
-----------
Technology Distributors - 0.6%
406,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 373,520
-----------
Total Technology Hardware & Equipment $ 422,956
-----------
The accompanying notes are an integral part of these financial statements. 11
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Semiconductors - 0.3%
Semiconductors - 0.3%
175,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 167,066
-----------
Total Semiconductors $ 167,066
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 0.6%
160,000 B+/Ba3 Dycom Industries, 8.125%, 10/15/15 $ 160,400
140,000 B-/B3 Eschelon Operating Co., 8.375%, 3/15/10 133,000
63,000 NR/Baa3 Tele Norte Leste Participacoes , 8.0%, 12/18/13 65,520
-----------
$ 358,920
-----------
Wireless Telecommunication Services - 0.9%
120,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 119,341
115,000 BB-/Ba3 Mobile Telesystems Finance, 8.375%, 10/14/10 (144A) 114,856
210,000 B-/B2 Stratos Global Corp., 9.875%, 2/15/13 (144A) 197,400
240,000 B/Caa1 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A)(a) 165,600
-----------
$ 597,197
-----------
Total Telecommunication Services $ 956,117
-----------
Utilities - 1.2%
Electric Utilities - 1.1%
313,542 NR/Ba1 Juniper Generation, 6.79%, 12/31/14 (144A) $ 298,056
250,000 BBB-/Baa3 Kiowa Power Partners LLC, 5.737%, 3/30/21 (144A) 231,933
190,000 BB-/Ba3 MSW Energy Holdings, 7.375%, 9/1/10 190,000
-----------
$ 719,989
-----------
Multi-Utilities - 0.1%
60,000 B/B2 Reliant Energy, Inc., 6.75%, 12/15/14 $ 55,200
-----------
Total Utilities $ 775,189
-----------
TOTAL CORPORATE BONDS
(Cost $22,157,475) $22,108,966
-----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS - 48.2%
797,953 Federal Home Loan Mortgage Corp., 4.5%, 4/1/20 $ 753,357
462,676 Federal Home Loan Mortgage Corp., 4.5%, 7/1/20 436,817
273,791 Federal Home Loan Mortgage Corp., 4.5%, 4/1/35 249,004
40,690 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 38,123
138,807 Federal Home Loan Mortgage Corp., 5.0%, 6/1/35 129,733
350,000 Federal Home Loan Mortgage Corp., 5.0%, 6/1/36 326,893
48,238 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 47,402
773,619 Federal Home Loan Mortgage Corp., 5.5%, 11/1/34 746,255
338,543 Federal Home Loan Mortgage Corp., 5.5%, 1/1/35 326,026
237,538 Federal Home Loan Mortgage Corp., 6.0%, 6/1/17 237,984
13,593 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 13,434
9,464 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 9,353
235,755 Federal Home Loan Mortgage Corp., 6.0% 11/1/33 232,828
179,827 Federal Home Loan Mortgage Corp., 6.0%, 1/1/34 177,414
218,166 Federal Home Loan Mortgage Corp., 6.0%, 4/1/35 214,937
233,366 Federal Home Loan Mortgage Corp., 6.0%, 6/1/35 229,912
290,416 Federal National Mortgage Association, 4.5%, 5/1/20 274,513
186,859 Federal National Mortgage Association, 4.5%, 9/1/20 176,627
151,432 Federal National Mortgage Association, 4.5%, 3/1/35 137,285
12 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
U.S. Government & Agency Obligations (Cont.)
598,025 Federal National Mortgage Association, 4.5%, 9/1/35 $ 542,159
172,184 Federal National Mortgage Association, 5.0%, 2/1/20 165,882
821,244 Federal National Mortgage Association, 5.0%, 10/1/20 791,186
346,087 Federal National Mortgage Association, 5.0%, 9/1/35 323,721
31,818 Federal National Mortgage Association, 5.0%, 2/1/36 29,761
567,477 Federal National Mortgage Association, 5.0%, 4/1/36 530,479
36,343 Federal National Mortgage Association, 5.5%, 3/1/18 35,727
79,966 Federal National Mortgage Association, 5.5%, 12/1/18 78,611
88,140 Federal National Mortgage Association, 5.5%, 4/1/19 86,681
186,044 Federal National Mortgage Association, 5.5%, 5/1/34 179,171
774,135 Federal National Mortgage Association, 5.5%, 10/1/35 744,077
150,000 Federal National Mortgage Association, 5.5%, 12/1/35 144,176
484,230 Federal National Mortgage Association, 5.5%, 3/1/36 465,429
149,704 Federal National Mortgage Association, 5.5%, 5/1/36 143,797
72,668 Federal National Mortgage Association, 6.0%, 7/1/17 72,946
4,537 Federal National Mortgage Association, 6.0%, 12/1/31 4,485
9,288 Federal National Mortgage Association, 6.0%, 2/1/32 9,182
5,483 Federal National Mortgage Association, 6.0% 11/1/32 5,417
306,157 Federal National Mortgage Association, 6.0%, 11/1/33 302,272
195,493 Federal National Mortgage Association, 6.0%, 12/1/33 193,013
111,861 Federal National Mortgage Association, 6.0%, 1/1/34 110,320
800,000 Federal National Mortgage Association, 6.375%, 8/15/07 595,939
998 Federal National Mortgage Association, 7.0%, 9/1/29 1,023
1,235 Federal National Mortgage Association, 6.5%, 7/1/31 1,247
4,832 Federal National Mortgage Association, 6.5%, 10/1/31 4,877
8,523 Federal National Mortgage Association, 6.5%, 2/1/32 8,601
207,864 Government National Mortgage Association, 4.5%, 9/15/33 191,218
173,629 Government National Mortgage Association, 4.5%, 5/15/34 159,600
629,492 Government National Mortgage Association, 4.5%, 4/15/35 578,101
300,000 Government National Mortgage Association, 4.5%, 3/15/36 275,366
209,039 Government National Mortgage Association, 5.0%, 12/15/34 198,074
453,463 Government National Mortgage Association, 5.0%, 4/15/35 429,303
349,213 Government National Mortgage Association, 5.5%, 10/15/19 345,159
201,856 Government National Mortgage Association, 5.5%, 1/15/34 195,826
381,254 Government National Mortgage Association, 5.5%, 4/15/34 369,864
133,266 Government National Mortgage Association, 5.5%, 4/20/34 128,744
50,556 Government National Mortgage Association, 5.5%, 7/15/34 49,046
397,913 Government National Mortgage Association, 5.5%, 10/15/34 386,026
395,083 Government National Mortgage Association, 5.5%, 6/15/35 383,125
946,538 Government National Mortgage Association, 5.5%, 11/15/35 917,890
447,202 Government National Mortgage Association, 6.0%, 8/15/16 450,547
22,238 Government National Mortgage Association, 6.0%, 5/15/17 22,410
212,294 Government National Mortgage Association, 6.0%, 6/15/17 213,937
252,056 Government National Mortgage Association, 6.0%, 2/15/18 254,051
148,335 Government National Mortgage Association, 6.0%, 8/15/19 149,468
26,119 Government National Mortgage Association, 6.0%, 2/15/33 25,945
95,208 Government National Mortgage Association, 6.0%, 3/15/33 94,579
46,786 Government National Mortgage Association, 6.0%, 6/15/33 46,474
102,992 Government National Mortgage Association, 6.0%, 7/15/33 102,304
157,456 Government National Mortgage Association, 6.0%, 9/15/33 156,404
61,248 Government National Mortgage Association, 6.0%, 10/15/33 60,839
The accompanying notes are an integral part of these financial statements. 13
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
U.S. Government & Agency Obligations (Cont.)
168,928 Government National Mortgage Association, 6.0%, 8/15/34 $ 167,758
24,700 Government National Mortgage Association, 6.5%, 3/15/29 25,077
7,067 Government National Mortgage Association, 6.5%, 1/15/30 7,168
2,064 Government National Mortgage Association, 6.5%, 6/15/31 2,092
18,749 Government National Mortgage Association, 6.5%, 2/15/32 18,999
21,107 Government National Mortgage Association, 6.5%, 3/15/32 21,388
25,641 Government National Mortgage Association, 6.5%, 11/15/32 25,995
19,181 Government National Mortgage Association, 6.5%, 1/15/33 19,431
30,012 Government National Mortgage Association, 6.5%, 5/15/33 30,403
64,380 Government National Mortgage Association, 6.5%, 1/15/34 65,204
815 Government National Mortgage Association, 7.0%, 3/15/31 841
8,998 Government National Mortgage Association, 7.5%, 5/15/23 9,280
2,463 Government National Mortgage Association, I, 7.0%, 3/15/31 2,541
125,198 Government National Mortgage Association II, 5.5%, 3/20/34 120,949
236,787 Government National Mortgage Association II, 6.0%, 11/20/33 234,613
625,000 U.S. Treasury Bonds, 4.375%, 12/15/10 607,080
2,240,000 U.S. Treasury Bonds, 5.25%, 11/15/28 2,229,499
425,000 U.S. Treasury Bonds, 6.25%, 8/15/23 468,729
80,000 U.S. Treasury Bonds, 7.25%, 5/15/16 92,631
1,237,602 U.S. Treasury Inflation Protected Security, 1.875%, 7/15/15 1,174,319
314,631 U.S. Treasury Inflation Protected Security, 2.0%, 1/15/16 300,461
840,278 U.S. Treasury Inflation Protected Security, 3.0%, 7/15/12 865,289
153,155 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 160,430
1,186,356 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 1,240,889
700,000 U.S. Treasury Notes, 4.0%, 2/15/15 645,039
620,000 U.S. Treasury Notes, 4.25%, 1/15/11 598,663
675,000 U.S. Treasury Notes, 4.25%, 11/15/14 634,817
400,000 U.S. Treasury Notes, 4.25%, 8/15/15 374,266
265,000 U.S. Treasury Notes, 4.875%, 2/15/12 262,101
1,200,000 U.S. Treasury Notes, 5.0%, 2/15/11 1,197,047
700,000 U.S. Treasury Notes, 5.5%, 8/15/28 719,195
1,920,000 U.S. Treasury Strip, 0.0%, 11/15/13 1,321,096
-----------
$30,155,666
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $31,033,922) $30,155,666
-----------
FOREIGN GOVERNMENT BONDS - 6.1%
ITL 45,000,000 B+/B2 Banco Nac De Desen Econo, 8.0%, 4/28/10 31,933
CAD 399,000 AAA/Aaa Government of Canada, 4.25%, 9/1/09 354,785
SEK 3,445,000 AAA/Aaa Government of Sweden, 5.25%, 3/15/11 507,675
SEK 2,955,000 NR/NR Government of Sweden, 5.5%, 10/8/12 446,015
SEK 2,150,000 NR/NR Government of Sweden, 8.0%, 8/15/07 314,925
NOK 1,500,000 AAA/Aaa Norwegian Government, 5.5%, 5/15/09 250,661
NOK 1,320,000 AAA/Aaa Norwegian Government, 6.0%, 5/16/11 228,832
NOK 3,410,000 AAA/Aaa Norwegian Government, 6.75%, 1/15/07 557,288
AUD 532,000 AAA/Aaa Ontario Province, 5.5%, 4/23/13 379,819
AUD 207,000 AAA/Aaa Queensland Treasury, 6.0%, 8/14/13 154,633
GBP 335,000 AAA/Aaa United Kingdom Treasury, 4.75%, 6/7/10 617,782
-----------
$ 3,844,348
-----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $3,568,480) $ 3,844,348
===========
14 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
MUNICIPAL BONDS - 1.2%
Muni Airport - 0.5%
50,000 B/CAA2 New Jersey Economic Development Authority, 6.25%, 9/15/29 $ 51,147
175,000 B/CAA2 New Jersey Economic Development Authority Special Facility Revenue,
7.0%, 11/15/30 183,393
100,000 NR/NR Wayne Charter County SPL, 6.75%, 12/1/15 55,663
-----------
$ 290,203
-----------
Muni Medical - 0.1%
80,000 AAA/NR Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 83,570
-----------
Muni Tobacco - 0.5%
90,000 BBB/Baa3 Golden State Tobacco Securitization, 6.75%, 6/1/39 $ 100,731
105,000 BBB/Baa3 Tobacco Settlement Authority Washington, 6.625%, 6/1/32 114,124
60,000 BBB/Baa3 Tobacco Settlement Financing Corp., 7.0%, 6/1/41 68,030
-----------
$ 282,885
-----------
Muni Utilities - 0.1%
60,000 AAA/Aaa San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A)(a) $ 77,242
-----------
TOTAL MUNICIPAL BONDS
(Cost $647,737) $ 733,900
-----------
Shares
RIGHTS/WARRANTS - 0.0%
Transportation - 0.0%
Railroads - 0.0%
210 Atlantic Express Transportation, Exp. 4/15/08* $ --
-----------
Total Transportation $ --
-----------
TOTAL RIGHTS/WARRANTS
(Cost $0) $ --
-----------
TEMPORARY CASH INVESTMENT - 1.5%
Security Lending Collateral - 1.5%
941,101 Securities Lending Investment Fund, 5.16% $ 941,101
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $941,101) $ 941,101
-----------
TOTAL INVESTMENT IN SECURITIES - 96.5%
(Cost $60,968,533) $60,391,062
-----------
OTHER ASSETS AND LIABILITIES - 3.5% $ 2,225,966
-----------
TOTAL NET ASSETS - 100.0% $62,617,028
===========
The accompanying notes are an integral part of these financial statements. 15
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
* 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, 2006, the
value of these securities amounted to $8,986,634 or 14.4% of total net
assets.
NR Not Rated by either S&P or Moody's.
(a) Debt obligation initially issued at one coupon which converts to a higher
coupon at a specified date. The rate shown is the rate at period end.
(b) At June 30, 2006, the following securities were out on loan:
Principal
Amount Security Value
$ 94,050 GSC Holdings Corp., 8.0%, 10/1/12 $ 94,050
277,200 Goodyear Tire & Rubber, 9.0%, 7/1/15 264,726
108,900 Graham Packaging Co., 9.875%, 10/15/14 108,901
242,550 Trump Entertainment Resorts, 8.5%, 6/1/15 233,151
247,500 WCI Communities, Inc., 6.625%, 3/15/15 205,425
--------
Total $ 906,253
=========
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted.
ITL Italian Lira
EURO Euro
CAD Canadian Dollar
SEK Swedish Krona
NOK Norwegian Kroner
AUD Australian Dollar
GBP British Pound
COP Colombian Peso
16 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06 Year Ended
Class II (unaudited) 12/31/05
Net asset value, beginning of period $ 10.76 $ 11.26
-------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.26 $ 0.55
Net realized and unrealized gain (loss) on investments and foreign
currency transactions (0.15) (0.28)
-------- --------
Net increase from investment operations $ 0.11 $ 0.27
Distributions to shareowners:
Net investment income (0.30) (0.61)
Net realized gain (0.05) (0.16)
---------- --------
Net increase (decrease) in net asset value $ (0.24) $ (0.50)
---------- --------
Net asset value, end of period $ 10.52 $ 10.76
========== ========
Total return* 1.04% 2.49%
Ratio of net expenses to average net assets+ 1.11%** 1.14%
Ratio of net investment income to average net assets+ 4.98%** 5.30%
Portfolio turnover rate 52%** 46%
Net assets, end of period (in thousands) $ 43,148 $ 40,045
Ratios with no waiver of management fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.11%** 1.14%
Net investment income 4.98%** 5.30%
5/1/03 (a)
Year Ended to
Class II 12/31/04 12/31/03
Net asset value, beginning of period $ 11.01 $ 10.41
-------- --------
Increase (decrease) from investment operations:
Net investment income $ 0.55 $ 0.41
Net realized and unrealized gain (loss) on investments and foreign
currency transactions 0.49 0.62
-------- --------
Net increase from investment operations $ 1.04 $ 1.03
Distributions to shareowners:
Net investment income (0.63) (0.43)
Net realized gain (0.16) --
-------- --------
Net increase (decrease) in net asset value $ 0.25 $ 0.60
-------- --------
Net asset value, end of period $ 11.26 $ 11.01
======== =========
Total return* 9.95% 10.90%(b)
Ratio of net expenses to average net assets+ 1.29% 1.49%**
Ratio of net investment income to average net assets+ 5.49% 5.08%**
Portfolio turnover rate 53% 68%
Net assets, end of period (in thousands) $ 25,027 $ 3,663
Ratios with no waiver of management fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.29% 1.49%**
Net investment income 5.49% 5.08%**
(a) Class II shares were first publicly offered on May 1, 2003.
(b) Not annualized.
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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 Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $906,253)
(Cost $60,968,533) $60,391,062
Cash 1,675,991
Foreign currencies, at value (cost $730,020) 753,343
Receivables --
Investment securities sold 4,086
Fund shares sold 50,126
Dividends, interest and foreign taxes withheld 787,740
Other 4,177
-----------
Total assets $63,666,525
-----------
LIABILITIES:
Payables --
Fund shares repurchased $ 4,322
Dividends 4,651
Upon return for securities loaned 941,101
Forward foreign currency settlement contracts, net 16,543
Forward foreign currency portfolio hedge contracts, open -- net 23,367
Due to affiliates 9,602
Accrued expenses 49,911
-----------
Total liabilities $ 1,049,497
-----------
NET ASSETS:
Paid-in capital $62,510,593
Undistributed net investment income 193,339
Accumulated net realized gain on investments 502,914
Net unrealized loss on:
Investments (577,471)
Forward foreign currency contracts and other assets and liabilities denominated
in foreign currencies (12,347)
-----------
Total net assets $62,617,028
-----------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $19,468,874
Shares outstanding 1,850,367
-----------
Net asset value per share $ 10.52
Class II:
(No par value, unlimited number of shares authorized)
Net assets $43,148,154
Shares outstanding 4,100,763
-----------
Net asset value per share $ 10.52
18 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Interest $ 1,832,489
Income on securities loaned, net 805
------------
Total investment income $ 1,833,294
------------
EXPENSES:
Management fees $ 195,783
Transfer agent fees and expenses 5,001
Distribution fees (Class II) 51,007
Administrative reimbursements 9,750
Custodian fees 11,403
Professional fees 24,616
Printing expense 4,163
Fees and expenses of nonaffiliated trustees 1,068
Miscellaneous 8,480
------------
Total expenses $ 311,271
------------
Net expenses $ 311,271
------------
Net investment income $ 1,522,023
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments $ 466,958
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies 77,651
------------
$ 544,609
------------
Change in net unrealized loss from:
Investments $ (1,394,462)
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (22,005)
------------
$ (1,416,467)
------------
Net loss on investments and foreign currency transactions $ (871,858)
============
Net increase in net assets resulting from operations $ 650,165
============
The accompanying notes are an integral part of these financial statements. 19
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 1,522,023 $ 2,985,351
Net realized gain on investments and foreign currency transactions 544,609 511,506
Change in net unrealized loss on investments and foreign currency transactions (1,416,467) (2,035,611)
------------ ------------
Net increase in net assets resulting from operations $ 650,165 $ 1,461,246
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (568,788) $ (1,227,712)
Class II (1,157,399) (1,916,310)
Net realized gain
Class I (95,758) (308,227)
Class II (211,483) (487,951)
------------ ------------
Total distributions to shareowners $ (2,033,428) $ (3,940,200)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 6,964,425 $ 19,663,891
Reinvestment of distributions 2,011,270 3,902,297
Cost of shares repurchased (5,682,815) (6,220,715)
------------ ------------
Net increase in net assets resulting from Fund share transactions $ 3,292,880 $ 17,345,473
------------ ------------
Net increase in net assets $ 1,909,617 $ 14,866,519
------------ ------------
NET ASSETS:
Beginning of period $ 60,707,411 $ 45,840,892
------------ ------------
End of period $ 62,617,028 $ 60,707,411
------------ ------------
Undistributed net investment income, end of period $ 193,339 $ 397,503
------------ ------------
20 The accompanying notes are an integral part of these financial statements.
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Strategic Income VCT Portfolio (The Portfolio) is a portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio)
(Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio)(Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio)
(Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The portfolio commenced operations on May 1, 2003. Portfolio shares may only 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 financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio in the preparation of its financial statements, which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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 NYSE. The
value of such securities used in computing the net asset value of the
Portfolio's shares is based on the last sale price on the
21
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
principal exchange where they traded. The Portfolio also may use the fair
value of a security, including a non-U.S. security, when the closing market
price on the primary exchange where the security is traded no longer
accurately reflects the value of the security as of the close of the
exchange. At June 30, 2006, there were no fair valued securities. Temporary
cash investments are valued at amortized cost.
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. Discounts and premiums on fixed income securities are
accreted and amortized, respectively, on a yield-to-maturity basis and are
included in interest income. Dividend and interest income from foreign
securities are reported net of unrecoverable foreign taxes withheld at the
applicable country rates.
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,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates. 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 underlying securities and their
inability to meet their debt obligations. Prepayment risk is the chance
that mortgage-backed bonds will be paid off early if falling interest rates
prompt homeowners to refinance their mortgages. Information regarding the
Portfolio's principal investment risks is contained in the Portfolio's
prospectus(es). Please refer to those documents when considering the
Portfolio's risks.
B. 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 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. dollars 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
Portfolio's 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.
D. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also 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, 2005, no such taxes were paid.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax
22
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
rules. Therefore, the source of the 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.
The Portfolio elected to defer $40,713 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ending December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $3,166,871
Long-Term capital gain 773,329
----------
$3,940,200
Return of Capital --
----------
Total distributions $3,940,200
==========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 573,117
Undistributed long-term gain/(capital loss carryforward) 148,610
Post-October Loss Deferral (40,713)
Unrealized appreciation (depreciation) 808,684
----------
Total $1,489,698
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is attributable to the tax deferral of losses on wash sales,
the mark to market of foreign currency contracts and accrued interest on
defaulted bonds.
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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. The Portfolio declares as daily dividends
substantially all of its respective 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, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Dividends and distributions to shareowners are recorded on the ex-dividend
date.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to
23
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
recover the securities on loan from the borrower on demand. The Trust
invests cash collateral in the Securities Lending Investment Fund which is
sponsored 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.65% of
the Portfolio's average daily net assets.
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, 2006, $1,614 was payable to
PIM related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
(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 $7,696 in transfer agent
fees payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $292 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------------------
Strategic Income Portfolio $60,972,673 $1,120,768 $ (1,702,379) $ (581,611)
=========== ========== ============ ==========
- -----------------------------------------------------------------------------------------------------------
24
Pioneer Strategic Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006, were $5,133,308 and $9,346,181, respectively. The cost of
purchases and the proceeds from sales of U.S. Government obligations were
$12,786,100 and $5,695,303, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -----------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
Strategic Income Portfolio (unaudited) (unaudited)
- -----------------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 139,804 $ 1,499,060 299,475 $ 3,285,765
Reinvestment of distributions 60,283 642,387 136,735 1,498,145
Shares repurchased (270,006) (2,903,452) (364,351) (3,995,330)
-------------------------------------------------------
Net increase (decrease) (69,919) $ (762,005) 71,859 $ 788,580
=======================================================
CLASS II:
Shares sold 509,569 $ 5,465,365 1,483,721 $ 16,378,126
Reinvestment of distributions 128,525 1,368,883 219,709 2,404,152
Shares repurchased (258,667) (2,779,363) (204,670) (2,225,385)
-------------------------------------------------------
Net increase 379,427 $ 4,054,885 1,498,760 $ 16,556,893
=======================================================
- -----------------------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2006, 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, 2006, outstanding forward portfolio hedge contracts were as
follows:
- --------------------------------------------------------------------------------------------------------------
Net
Contracts to In Exchange Settlement Unrealized
Portfolio Deliver For Date Value Gain (Loss)
- --------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio AUD (925,000) $ (677,757) 7/31/06 $ (687,440) $ (9,683)
Strategic Income Portfolio CAD (278,225) (250,427) 7/14/06 (249,112) 1,315
Strategic Income Portfolio EUR 487,705 617,509 7/5/06 623,583 6,074
Strategic Income Portfolio EUR (486,000) (623,465) 7/5/06 (621,597) 1,868
Strategic Income Portfolio GBP (335,000) (619,336) 8/7/06 (620,114) (778)
Strategic Income Portfolio GBP (335,000) (617,509) 7/5/06 (619,025) (1,516)
Strategic Income Portfolio JPY 195,000,000 1,733,617 7/5/06 1,709,257 (24,360)
Strategic Income Portfolio JPY 195,000,000 1,714,536 8/7/06 1,718,249 3,713
- --------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as
follows:
- --------------------------------------------------------------------------------------------------------------
Settlement Net
Portfolio Gross Receivable Date Gross Payable Receivable/(Payable)
- --------------------------------------------------------------------------------------------------------------
Strategic Income Portfolio $1,687,794 7/1/06 $ (1,704,337) $ (16,543)
- --------------------------------------------------------------------------------------------------------------
25
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
26
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
28
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
29
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19636-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer America Income VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer America Income VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 11
Notes to Financial Statements 15
Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Government Agency Obligations 97.7%
Collateralized Mortgage Obligations 1.7%
U.S. Corporate Bonds 0.6%
Maturity Distribution
(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
0-1 year 2.6%
1-3 years 10.7%
3-4 years 33.5%
4-6 years 30.0%
6-8 years 13.8%
8+ years 9.4%
Five Largest Holdings
(As a percentage of long-term holdings)
1. U.S. Treasury Inflation
Protected Security,
3.375%, 1/15/12 7.91%
- -------------------------------------------------
2. U.S. Treasury Notes,
6.25%, 8/15/23 5.68
- -------------------------------------------------
3. U.S. Treasury Bond,
5.125%, 5/15/16 4.64
- -------------------------------------------------
4. U.S. Treasury Notes,
6.5%, 2/15/10 3.54
- -------------------------------------------------
5. U.S. Treasury Notes,
6.375%, 8/15/27 3.28
- -------------------------------------------------
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $9.52 $9.85
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2169 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
America Income VCT Portfolio at net asset value, compared to that of the Lehman
Brothers Fixed-Rate Mortgage-Backed Securities Index and of Lehman Brothers
Government Bond Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer America Lehman Brothers Lehman Brothers
Income VCT Government Bond Fixed Rate Mtge-Backed
Portfolio Index Index
6/96 $10,000 $10,000 $10,000
6/97 10,581 10,740 10,910
6/98 11,540 11,948 11,884
6/99 11,751 12,312 12,360
6/00 12,209 12,929 12,982
6/01 13,403 14,264 14,447
6/02 14,479 15,521 15,744
6/03 15,582 17,281 16,645
6/04 15,541 17,047 17,016
6/05 16,331 18,180 18,060
6/06 16,120 17,968 18,131
The Lehman Brothers Government Bond Index measures the performance of the U.S.
government bond market. The Lehman Brothers Fixed-Rate Mortgage-Backed Index
measures the performance of the government and mortgage securities markets.
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 any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Years 4.89%
5 Years 3.76%
1 Year -1.29%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 America 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 variable annuities. 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 [divided by] $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 America Income VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
----------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $ 988.40
Expenses Paid During Period* $ 4.98
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% for
Class II 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 America Income VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
----------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,019.79
Expenses Paid During Period* $ 5.06
* Expenses are equal to the Portfolio's annualized expense ratio of 1.01% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
During a period of solid economic growth and steadily rising interest rates,
yields on Treasury securities rose, and shareholders in Pioneer America Income
Trust VCT Portfolio earned a relatively high level of income during the first
half of 2006. In the interview below, Richard Schlanger, a member of Pioneer's
fixed-income team, discusses the factors that affected the fixed-income market
and the Trust over the semiannual period.
Q. How did the Trust perform during the period?
A. For the six months ended June 30, 2006, Class II shares of Pioneer America
Income Trust VCT Portfolio produced a total return of -1.16% at net asset
value. For the same period, the Trust underperformed its benchmark, the
Lehman Brothers Government Bond Index, which returned -0.89%, and the
Lehman Brothers Fixed-Rate Mortgage-Backed Index which returned -0.06%. The
Trust surpassed the average -1.25% return generated by the U.S. Government
Underlying Funds category of Lipper Inc., an independent monitor of mutual
fund performance. At the end of the period, the Trust's 30-day SEC yield
was 4.38%. The Trust had 227 issues, and the average credit quality of the
Portfolio was AAA.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What was the investment environment like during the six months?
A. In a period of relatively strong economic growth and higher prices for
commodities, concerns about the prospect of accelerating inflation
dominated the fixed-income markets. At the Federal Reserve, Ben Bernanke
became chairman in early February. When Mr. Bernanke took office, the
Federal funds target rate was 4.50%. In the first five months of his
chairmanship, the Federal funds rate rose to 5.25%, with the latest
increase occurring on June 29. (The Federal funds rate is the rate banks
charge for overnight loans. Since June 2004, the Federal Reserve has raised
interest rates 17 times, taking the Federal funds rate from a 40-year low
of 1% to the current 5.25%.) In the most recent six-month period, yields
across the maturity spectrum moved higher in a parallel fashion.
Q. How did you manage the Trust in this environment?
A. As higher interest rates boosted mortgage rates, we became concerned about
the duration (sensitivity to interest-rate changes), of our mortgage
holdings because as interest rates go up, mortgage duration tends to
lengthen when refinancing and prepayment activity slows. To limit this
drift in duration, we trimmed our mortgage position from 55% to about 52%
of net assets. Instead, we chose to concentrate on longer-term Treasury
securities. We thought that if the Federal Reserve went too far in raising
rates, economic growth would slow, and the central bank would have to
reverse course and begin lowering rates. If this were to occur, we believed
the Treasury market would rally, and longer-term Treasuries would
outperform their short-term counterparts. As conditions warranted, we
opportunistically added to or sold holdings in Treasury Inflation Protected
Securities (TIPS). TIPS are securities whose principal is tied to the
consumer price index. When inflation accelerates, the principal on TIPS
increases in value. At the end of the six-month period, 52.1% of the
Portfolio was in mortgage pass-through securities issued by the Government
National Mortgage Association (Ginnie Mae); 46.4% was in Treasury Issues,
TIPS and agency securities issued by the Federal National Mortgage
Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie
Mac), the Federal Home Loan Bank, and the Federal Farm Credit Bank.
A Word About Risk:
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. Prepayment
risk is the chance that mortgage-backed bonds will be paid off early if falling
interest rates prompt homeowners to refinance their mortgages. 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 associated with falling interest rates. 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.
Government guarantees apply to the underlying securities only and not to the
prices and yields of the Portfolio. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. What contributed to performance?
A. The shorter-duration assets aided returns as interest rates went up. Returns
on longer-term, fixed-rate Treasuries were negative; however, our positions
in TIPS and agency securities contributed to performance. Our mortgage
holdings also did well, with mortgages issued by Fannie Mae and Freddie Mac
outperforming those issued by Ginnie Mae.
Q. What detracted from performance?
A. Because the Federal Reserve was determined to fight inflation by raising
interest rates, long-duration assets vastly underperformed short-duration
assets. As a result, the Portfolio's longer-duration assets were the
biggest detractor from performance. For the six months under review,
five-year and 10-year Treasuries returned -1.35% and -3.90%, respectively.
We view the underperformance of longer-duration assets as a relatively
short-term event, because we believe that once the Federal Reserve stops
raising interest rates, securities with longer durations have the potential
to outperform.
Q. What is your outlook?
A. We believe that rising interest rates and oil prices have begun to affect
the mortgage market and consumer spending. We have seen a shift away from
adjustable-rate mortgages to fixed-rate mortgages and a decline in
refinance activity as mortgage rates have risen. If these trends continue,
economic growth is likely to slow, and the Federal Reserve may take a
breather from raising interest rates. The Portfolio is positioned to take
advantage of this type of environment. Should rates stabilize or decline,
we believe the Portfolio's intermediate-term and longer-term holdings could
outperform.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal
Amount Value
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.6%
Government - 1.6%
$ 213,395 Federal Home Loan Bank, 4.75%, 10/25/10 $ 207,107
116,164 Federal Home Loan Bank, 5.0%, 1/15/16 114,569
350,000 Freddie Mac, 5.5%, 7/15/28 345,437
-----------
$ 667,113
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $690,757) $ 667,113
-----------
CORPORATE BONDS - 0.6%
Diversified Financials - 0.6%
Specialized Finance - 0.6%
250,000 Private Export Funding, 3.375%, 2/15/09 $ 237,761
-----------
TOTAL CORPORATE BONDS
(Cost $250,000) $ 237,761
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 95.8%
200,960 Fannie Mae, 5.5%, 6/1/23 $ 195,653
250,000 Federal Farm Credit Bank, 3.25%, 6/15/2007 244,778
400,000 Federal Farm Credit Bank, 4.9%, 3/17/14 380,366
100,000 Federal Farm Credit Bank, 5.3%, 9/28/15 95,931
100,000 Federal Farm Credit Bank, 5.88%, 9/8/08 100,855
250,000 Federal Farm Credit Bank, 4.45%, 6/1/15 231,219
200,000 Federal Farm Credit Bank, Medium Term Note, 6.38%, 11/27/06 200,717
250,000 Federal Home Loan Bank 4.25%, 10/10/08 243,879
300,000 Federal Home Loan Bank 4.43%, 4/7/08 294,739
250,000 Federal Home Loan Bank, 4.0%, 2/12/10 237,927
250,000 Federal Home Loan Bank, 4.25%, 2/16/10 240,360
200,000 Federal Home Loan Bank, 4.5%, 11/15/12 189,328
500,000 Federal Home Loan Bank, 4.75%, 12/10/10 485,227
100,000 Federal Home Loan Bank, 5.375%, 5/18/16 98,694
34,841 Federal Home Loan Corp., 6.5%, 2/1/32 35,180
28,642 Federal Home Loan Corp., 7.0%, 3/1/32 29,418
29,809 Federal Home Loan Corp., 7.0%, 4/1/32 30,548
300,000 Federal Home Loan Mortgage Corp., 5.0%, 1/1/36 280,388
210,000 Federal Home Loan Mortgage Corp., 5.0%, 3/1/36 196,135
209,461 Federal Home Loan Mortgage Corp., 5.5%, 12/1/34 201,717
223,200 Federal Home Loan Mortgage Corp., 5.5%, 9/1/34 214,947
64,095 Federal Home Loan Mortgage Corp., 6.0% 10/1/32 63,344
467,787 Federal Home Loan Mortgage Corp., 6.0%, 5/1/34 461,509
123,519 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 122,072
319,864 Federal Home Loan Mortgage Corp., 6.0%, 11/1/32 316,115
25,814 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 25,512
125,480 Federal Home Loan Mortgage Corp., 6.0%, 12/1/32 124,010
174,701 Federal Home Loan Mortgage Corp., 6.0%, 2/1/33 172,654
836,287 Federal Home Loan Mortgage Corp., 6.0%, 3/1/33 825,906
184,028 Federal Home Loan Mortgage Corp., 6.5% 4/1/32 185,758
48,346 Federal Home Loan Mortgage Corp., 6.5%, 1/1/29 48,869
84,665 Federal Home Loan Mortgage Corp., 6.5%, 10/1/31 85,490
60,129 Federal Home Loan Mortgage Corp., 6.5%, 3/1/11 60,769
30,461 Federal Home Loan Mortgage Corp., 6.5%, 3/1/29 30,794
6 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 11,360 Federal Home Loan Mortgage Corp., 6.5%, 3/1/32 $ 11,467
27,373 Federal Home Loan Mortgage Corp., 6.5%, 4/1/31 27,640
62,428 Federal Home Loan Mortgage Corp., 6.5%, 7/1/32 63,014
16,412 Federal Home Loan Mortgage Corp., 7.0%, 2/1/31 16,819
2,653 Federal Home Loan Mortgage Corp., 7.0%, 4/1/30 2,718
1,361 Federal Home Loan Mortgage Corp., 7.0%, 7/1/31 1,395
5,090 Federal Home Loan Mortgage Corp., 7.0%, 9/1/31 5,217
29,942 Federal Home Loan Mortgage Corp., 7.5%, 8/1/31 30,989
216,990 Federal National Mortgage Association, 4.5%, 4/1/19 205,362
104,783 Federal National Mortgage Association, 5.0%, 12/1/35 98,012
65,954 Federal National Mortgage Association, 5.0%, 3/1/09 64,565
197,643 Federal National Mortgage Association, 5.0%, 7/1/19 190,645
294,265 Federal National Mortgage Association, 5.5%, 11/1/23 286,494
329,863 Federal National Mortgage Association, 5.5%, 11/1/33 318,219
173,512 Federal National Mortgage Association, 5.5%, 12/1/34 167,101
65,839 Federal National Mortgage Association, 5.5%, 2/1/33 62,995
262,024 Federal National Mortgage Association, 5.5%, 3/1/18 257,687
195,772 Federal National Mortgage Association, 5.5%, 3/1/24 190,299
211,130 Federal National Mortgage Association, 5.5%, 3/1/34 203,329
313,429 Federal National Mortgage Association, 5.5%, 4/1/18 308,322
147,137 Federal National Mortgage Association, 5.5%, 6/1/33 145,270
289,416 Federal National Mortgage Association, 5.5%, 9/1/33 279,200
63,565 Federal National Mortgage Association, 6.0%, 6/1/33 62,759
38,601 Federal National Mortgage Association, 6.0%, 10/1/32 38,136
61,631 Federal National Mortgage Association, 6.0%, 11/1/32 60,888
79,506 Federal National Mortgage Association, 6.0%, 11/1/32 78,548
211,205 Federal National Mortgage Association, 6.0%, 11/1/32 208,660
152,421 Federal National Mortgage Association, 6.0%, 12/1/11 152,516
30,245 Federal National Mortgage Association, 6.0%, 12/1/31 29,898
407,887 Federal National Mortgage Association, 6.0%, 3/1/33 402,972
99,030 Federal National Mortgage Association, 6.0%, 4/1/33 97,837
135,064 Federal National Mortgage Association, 6.0%, 7/1/34 133,204
275,000 Federal National Mortgage Association, 6.0%, 7/1/36 270,617
124,525 Federal National Mortgage Association, 6.0%, 9/1/34 122,810
250,000 Federal National Mortgage Association, 6.07%, 5/12/16 249,423
39,140 Federal National Mortgage Association, 6.5%, 1/1/29 39,539
65,385 Federal National Mortgage Association, 6.5%, 1/1/32 65,981
9,074 Federal National Mortgage Association, 6.5%, 10/1/31 9,157
47,294 Federal National Mortgage Association, 6.5%, 10/1/31 47,725
46,875 Federal National Mortgage Association, 6.5%, 11/1/28 47,356
26,935 Federal National Mortgage Association, 6.5%, 2/1/32 27,181
33,047 Federal National Mortgage Association, 6.5%, 3/1/32 33,369
82,029 Federal National Mortgage Association, 6.5%, 3/1/32 82,753
26,710 Federal National Mortgage Association, 6.5%, 3/1/32 26,953
75,431 Federal National Mortgage Association, 6.5%, 4/1/32 76,097
34,591 Federal National Mortgage Association, 6.5%, 7/1/21 35,008
63,181 Federal National Mortgage Association, 6.5%, 7/1/32 63,739
287,626 Federal National Mortgage Association, 6.5%, 7/1/34 289,312
57,583 Federal National Mortgage Association, 6.5%, 8/1/32 58,108
The accompanying notes are an integral part of these financial statements. 7
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 146,524 Federal National Mortgage Association, 6.5%, 8/1/32 $ 147,817
45,697 Federal National Mortgage Association, 6.5%, 8/1/32 46,101
30,953 Federal National Mortgage Association, 6.5%, 9/1/32 31,226
7,573 Federal National Mortgage Association, 7.0%, 1/1/29 7,764
20,784 Federal National Mortgage Association, 7.0%, 1/1/32 21,296
3,875 Federal National Mortgage Association, 7.0%, 5/1/31 3,973
16,847 Federal National Mortgage Association, 7.0%, 7/1/31 17,262
24,162 Federal National Mortgage Association, 7.0%, 8/1/19 24,843
37,753 Federal National Mortgage Association, 7.0%, 9/1/18 38,818
106,191 Federal National Mortgage Association, 7.0%, 9/1/30 108,869
14,336 Federal National Mortgage Association, 7.5%, 2/1/31 14,852
35,665 Federal National Mortgage Association, 9.0%, 4/1/33 37,669
300,000 Freddie Mac, 5.25%, 11/15/12 290,859
256,046 Government National Mortgage Association, 4.5%, 4/15/20 243,935
299,529 Government National Mortgage Association, 4.5%, 5/20/36 271,846
424,354 Government National Mortgage Association, 4.5%, 6/15/34 390,068
201,139 Government National Mortgage Association, 4.5%, 6/15/34 184,888
340,210 Government National Mortgage Association, 4.5%, 8/15/33 312,966
143,772 Government National Mortgage Association, 5.0%, 1/20/20 139,097
90,908 Government National Mortgage Association, 5.0%, 10/15/20 88,228
190,865 Government National Mortgage Association, 5.0%, 11/20/19 184,717
173,359 Government National Mortgage Association, 5.0%, 2/15/20 168,249
203,737 Government National Mortgage Association, 5.0%, 3/15/34 193,050
163,418 Government National Mortgage Association, 5.0%, 4/15/35 154,711
254,149 Government National Mortgage Association, 5.0%, 7/15/17 246,812
165,037 Government National Mortgage Association, 5.0%, 9/15/33 156,351
179,688 Government National Mortgage Association, 5.5%, 10/15/34 174,320
139,051 Government National Mortgage Association, 5.5%, 2/15/19 137,473
168,847 Government National Mortgage Association, 5.5%, 3/15/33 163,866
262,232 Government National Mortgage Association, 5.5%, 4/15/33 254,496
255,176 Government National Mortgage Association, 5.5%, 6/15/17 252,346
145,187 Government National Mortgage Association, 5.5%, 7/15/19 140,969
182,235 Government National Mortgage Association, 5.5%, 7/15/19 180,119
201,048 Government National Mortgage Association, 5.5%, 7/15/33 195,117
77,576 Government National Mortgage Association, 6.0%, 1/15/33 77,069
84,486 Government National Mortgage Association, 6.0%, 10/15/32 83,933
91,849 Government National Mortgage Association, 6.0%, 10/15/32 91,248
26,647 Government National Mortgage Association, 6.0%, 10/15/32 26,473
70,596 Government National Mortgage Association, 6.0%, 10/15/32 70,134
199,652 Government National Mortgage Association, 6.0%, 11/15/32 198,603
128,104 Government National Mortgage Association, 6.0%, 11/15/32 127,266
225,725 Government National Mortgage Association, 6.0%, 12/15/32 224,470
220,415 Government National Mortgage Association, 6.0%, 12/15/33 218,943
186,118 Government National Mortgage Association, 6.0%, 2/15/18 187,590
219,705 Government National Mortgage Association, 6.0%, 3/15/34 218,184
225,000 Government National Mortgage Association, 6.0%, 30 YR TBA 223,249
147,802 Government National Mortgage Association, 6.0%, 4/15/28 147,177
98,382 Government National Mortgage Association, 6.0%, 5/15/17 99,143
112,920 Government National Mortgage Association, 6.0%, 6/20/16 113,412
337,290 Government National Mortgage Association, 6.0%, 7/15/23 335,912
8 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 130,440 Government National Mortgage Association, 6.0%, 8/15/19 $ 131,437
127,058 Government National Mortgage Association, 6.0%, 8/15/34 126,299
157,972 Government National Mortgage Association, 6.0%, 8/15/34 156,878
105,080 Government National Mortgage Association, 6.0%, 9/15/32 104,392
104,677 Government National Mortgage Association, 6.0%, 9/15/34 103,952
238,068 Government National Mortgage Association, 6.0% 1/15/33 236,478
96,570 Government National Mortgage Association, 6.5%, 1/15/34 97,806
88,726 Government National Mortgage Association, 6.5%, 10/15/31 89,956
48,731 Government National Mortgage Association, 6.5%, 12/15/31 49,406
19,928 Government National Mortgage Association, 6.5%, 12/15/31 20,205
33,278 Government National Mortgage Association, 6.5%, 12/20/28 33,668
22,100 Government National Mortgage Association, 6.5%, 2/15/29 22,437
8,964 Government National Mortgage Association, 6.5%, 2/15/32 9,247
11,566 Government National Mortgage Association, 6.5%, 3/15/26 11,740
101,880 Government National Mortgage Association, 6.5%, 4/15/17 103,684
26,874 Government National Mortgage Association, 6.5%, 4/15/17 27,350
24,564 Government National Mortgage Association, 6.5%, 4/15/32 24,891
26,938 Government National Mortgage Association, 6.5%, 4/15/32 27,297
124,834 Government National Mortgage Association, 6.5%, 5/15/29 126,739
123,940 Government National Mortgage Association, 6.5%, 5/15/29 125,848
49,660 Government National Mortgage Association, 6.5%, 5/15/29 50,426
41,604 Government National Mortgage Association, 6.5%, 5/15/31 42,181
17,153 Government National Mortgage Association, 6.5%, 6/15/17 17,456
41,982 Government National Mortgage Association, 6.5%, 6/15/28 42,628
35,989 Government National Mortgage Association, 6.5%, 6/15/28 36,546
8,845 Government National Mortgage Association, 6.5%, 6/15/29 8,980
53,899 Government National Mortgage Association, 6.5%, 6/15/31 54,646
23,962 Government National Mortgage Association, 6.5%, 6/15/32 24,282
27,099 Government National Mortgage Association, 6.5%, 6/15/32 27,461
20,732 Government National Mortgage Association, 6.5%, 6/15/32 21,009
69,674 Government National Mortgage Association, 6.5%, 7/15/31 70,639
57,788 Government National Mortgage Association, 6.5%, 7/15/32 58,559
62,380 Government National Mortgage Association, 6.5%, 9/15/31 63,244
24,351 Government National Mortgage Association, 6.5%, 9/20/31 24,597
12,508 Government National Mortgage Association, 7.0%, 1/15/26 12,916
21,530 Government National Mortgage Association, 7.0%, 1/15/29 22,218
39,463 Government National Mortgage Association, 7.0%, 11/15/28 40,714
37,347 Government National Mortgage Association, 7.0%, 11/15/30 38,541
4,798 Government National Mortgage Association, 7.0%, 12/15/30 4,952
47,578 Government National Mortgage Association, 7.0%, 2/15/28 49,087
17,947 Government National Mortgage Association, 7.0%, 2/15/31 18,516
5,160 Government National Mortgage Association, 7.0%, 3/15/28 5,324
17,904 Government National Mortgage Association, 7.0%, 4/15/28 18,472
16,276 Government National Mortgage Association, 7.0%, 5/15/31 16,793
106,445 Government National Mortgage Association, 7.0%, 5/15/32 109,807
26,551 Government National Mortgage Association, 7.0%, 6/15/29 27,400
37,494 Government National Mortgage Association, 7.0%, 7/15/26 38,718
26,802 Government National Mortgage Association, 7.0%, 7/15/29 27,658
7,909 Government National Mortgage Association, 7.0%, 7/15/29 8,162
19,480 Government National Mortgage Association, 7.0%, 8/15/31 20,098
The accompanying notes are an integral part of these financial statements. 9
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount Value
U.S. Government Agency Obligations (Cont.)
$ 13,546 Government National Mortgage Association, 7.0%, 9/15/27 $ 13,993
13,083 Government National Mortgage Association, 7.5%, 1/15/31 13,674
2,325 Government National Mortgage Association, 7.5%, 1/15/32 2,430
6,888 Government National Mortgage Association, 7.5%, 10/15/22 7,197
22,982 Government National Mortgage Association, 7.5%, 10/15/29 24,036
30,875 Government National Mortgage Association, 7.5%, 11/15/29 32,291
1,771 Government National Mortgage Association, 7.5%, 6/15/23 1,852
1,316 Government National Mortgage Association, 7.5%, 8/15/23 1,376
2 Government National Mortgage Association, 7.5%, 8/15/29 2
1,751 Government National Mortgage Association, 7.5%, 8/15/29 1,832
5,523 Government National Mortgage Association, 7.5%, 8/20/27 5,748
2,025 Government National Mortgage Association, 8.0%, 8/20/25 2,139
96,307 Government National Mortgage Association I, 6.0%, 2/15/29 95,771
293,283 Government National Mortgage Association II, 5.0%, 12/20/18 283,951
157,335 Government National Mortgage Association II, 5.5%, 11/20/34 151,996
322,566 Government National Mortgage Association II, 5.5%, 2/20/34 311,621
334,588 Government National Mortgage Association II, 5.5%, 7/20/19 329,660
170,917 Government National Mortgage Association II, 6.0%, 11/20/33 169,348
46,057 Government National Mortgage Association II, 6.0%, 12/20/18 46,278
118,218 Government National Mortgage Association II, 6.0%, 7/20/19 118,752
25,413 Government National Mortgage Association II, 6.5%, 8/20/28 25,708
12,071 Government National Mortgage Association II, 7.0%, 1/20/31 12,371
65,348 Government National Mortgage Association II, 7.0%, 2/20/29 66,987
34,120 Government National Mortgage Association II, 7.0%, 5/20/26 34,999
12,000 Tennessee Valley Authority, Floating Rate Note, 6/1/28 267,720
1,850,000 U.S. Treasury Bonds, 5.125%, 5/15/16 1,847,832
850,000 U.S. Treasury Bonds, 4.0%, 2/15/14 789,636
2,050,000 U.S. Treasury Bonds, 6.25%, 8/15/23 2,260,927
400,000 U.S. Treasury Bonds, 7.25%, 5/15/16 463,156
825,000 U.S. Treasury Notes, 4.0%, 11/15/12 775,436
870,000 U.S. Treasury Notes, 4.25%, 11/15/14 818,208
300,000 U.S. Treasury Notes, 4.25%, 8/15/15 280,699
100,000 U.S. Treasury Notes, 4.5%, 2/15/16 95,141
250,000 U.S. Treasury Notes, 4.5%, 11/15/15 238,125
475,000 U.S. Treasury Notes, 4.75%, 5/15/14 463,366
200,000 U.S. Treasury Notes, 5.0%, 2/15/11 199,506
1,150,000 U.S. Treasury Notes, 6.375%, 8/15/27 1,305,340
1,350,000 U.S. Treasury Notes, 6.5%, 2/15/10 1,410,487
207,130 U.S. Treasury Inflation Notes, 1.875%, 7/15/15 196,539
3,006,372 U.S. Treasury Inflation Protected Security, 3.375%, 1/15/12 3,149,175
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $40,065,748) $38,912,937
-----------
TOTAL INVESTMENT IN SECURITIES - 98.0%
(Cost $41,006,505) $39,817,811
-----------
OTHER ASSETS AND LIABILITIES - 2.0% $ 813,169
-----------
TOTAL NET ASSETS - 100.0% $40,630,980
===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year 5/1/03(a)
6/30/06 Ended Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03
Net asset value, beginning of period $ 9.85 $ 10.12 $ 10.37 $10.57
------- ------- ------- ------
Increase (decrease) from investment operations:
Net investment income $ 0.18 $ 0.39 $ 0.41 $ 0.21
Net realized and unrealized loss on investments (0.29) (0.21) (0.11) (0.15)
------- ------- ------- ------
Net increase (decrease) from investment operations $ (0.11) $ 0.18 $ 0.30 $ 0.06
Distributions to shareowners:
Net investment income (0.22) (0.45) (0.55) (0.26)
------- ------- ------- ------
Net decrease in net asset value $ (0.33) $ (0.27) $ (0.25) $(0.20)
------- ------- ------- ------
Net asset value, end of period $ 9.52 $ 9.85 $ 10.12 $10.37
======= ======= ======= ======
Total return* (1.16)% 1.76% 3.04% 2.60%(b)
Ratio of net expenses to average net assets 1.01%** 1.08% 1.06% 1.01%**
Ratio of net investment income to average net assets 3.84%** 3.57% 3.29% 2.42%**
Portfolio turnover rate 49%** 23% 37% 34%**
Net assets, end of period (in thousands) $18,041 $21,351 $13,791 $2,637
Ratios with no waiver of management fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.01%** 1.08% 1.06% 1.01%**
Net investment income 3.84%** 3.57% 3.29% 2.42%**
(a) The Portfolio began offering Class II shares to the public on May 1, 2003
(b) Not annualized
* 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.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 11
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (Cost $41,006,505) $ 39,817,811
Cash 643,506
Receivables --
Investment securities sold 454,790
Fund shares sold 1,476
Dividends, interest and foreign taxes withheld 349,458
Other 1,511
------------
Total assets $ 41,268,552
------------
LIABILITIES:
Payables --
Investment securities purchased $ 493,391
Fund shares repurchased 76,733
Due to affiliates 8,605
Accrued expenses 58,843
------------
Total liabilities $ 637,572
------------
NET ASSETS:
Paid-in capital $ 43,749,823
Distributions in excess of net investment income (458,405)
Accumulated net realized loss (1,471,744)
Net unrealized loss on investments (1,188,694)
------------
Total net assets $ 40,630,980
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 22,589,980
Shares outstanding 2,375,632
------------
Net asset value per share $ 9.51
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 18,041,000
Shares outstanding 1,894,401
------------
Net asset value per share $ 9.52
12 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Interest $ 1,009,616
-----------
Total investment income $ 1,009,616
-----------
EXPENSES:
Management fees $ 103,904
Transfer agent fees and expenses 4,996
Distribution fees (Class II) 22,339
Administrative reimbursements 9,474
Custodian fees 8,511
Professional fees 18,517
Printing expense 2,954
Fees and expenses of nonaffiliated trustees 2,215
Miscellaneous 6,405
-----------
Total expenses $ 179,315
-----------
Net expenses $ 179,315
-----------
Net investment income $ 830,301
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from investments $ (127,147)
-----------
Change in net unrealized loss from investments $(1,136,024)
===========
Net loss on investments $(1,263,171)
===========
Net decrease in net assets resulting from operations $ (432,870)
-----------
The accompanying notes are an integral part of these financial statements. 13
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 830,301 $ 1,818,811
Net realized loss on investments (127,147) (8,670)
Change in net unrealized loss on investments (1,136,024) (945,559)
----------- -----------
Net increase (decrease) in net assets resulting from operations $ (432,870) $ 864,582
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (563,165) $(1,378,835)
Class II (403,021) (792,466)
----------- -----------
Total distributions to shareowners $ (966,186) $(2,171,301)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,842,982 $11,779,535
Reinvestment of distributions 963,281 2,174,179
Cost of shares repurchased (8,894,397) 11,661,922)
----------- -----------
Net increase (decrease) in net assets resulting from Fund share transactions $(5,088,134) $ 2,291,792
----------- -----------
Net increase (decrease) in net assets $(6,487,190) $ 985,073
----------- -----------
NET ASSETS:
Beginning of period $47,118,170 $46,133,097
----------- -----------
End of period $40,630,980 $47,118,170
=========== ===========
Distributions in excess of net investment income, end of period $ (458,405) $ (322,520)
=========== ===========
14 The accompanying notes are an integral part of these financial statements.
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer America Income VCT Portfolio (The Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
The Portfolio commenced operations on May 1, 2003.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The investment objective of America Income Portfolio is to produce a high level
of current income as consistent with preservation of capital.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. 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 following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements,
which are consistent 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 (NYSE) is
15
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
open, as of the close of regular trading on the NYSE. 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 NYSE. The value of such securities
used in computing the net asset value of the Portfolio's shares is based on
the last sale price on the principal exchange where they traded. The
Portfolio also may use the fair value of a security, including a non-U.S.
security, when the closing market price on the primary exchange where the
security is traded no longer accurately reflects the value of the security
as of the close of the exchange. At June 30, 2006, there were no fair
valued securities. 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,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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, 2005, America Income Trust Portfolio had a net
capital loss carryforward of $1,230,915, of which the following amounts
will expire between 2008 and 2013 if not utilized: $382,424 in 2008,
$435,523 in 2011, $171,643 in 2012 and $241,325 in 2013.
The Portfolio elected to defer $109,707 in capital losses recognized
between November 1, 2005 and December 31, 2005 to its fiscal year ending
December 31, 2006.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 2,171,301
Long-Term capital gain/capital loss carryforward --
-----------
$ 2,171,301
Return of Capital --
-----------
Total distributions $ 2,171,301
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 5,442
Undistributed long-term gain/(capital loss carryforward) (1,230,915)
Post-October Loss Deferred (109,707)
Unrealized appreciation (depreciation) (384,607)
-----------
Total $(1,719,787)
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales, and the tax treatment of amortization on securities purchased
at premium.
16
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio. Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services,
Inc. (PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). 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 the respective percentage of the adjusted-net assets at the
beginning of the day. The Portfolio declares as daily dividends
substantially all of its respective 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, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Dividends and distributions to shareowners are recorded on the ex-dividend
date.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian.
E. 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
Portfolio'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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolios. Management fees are calculated daily at the annual rate of 0.55% of
the Portfolio's average daily net assets.
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, 2006, $790 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
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 $7,692 in transfer agent fees payable to PIMSS
at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $123 payable to PFD at June 30,
2006.
17
Pioneer America Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
America Income Portfolio $41,338,442 $78,166 $(1,598,797) $(1,520,631)
- --------------------------------------------------------------------------------------------------
6. Portfolio Transactions
The cost of purchases and the proceeds from sales of U.S. Government
obligations for the six months ended June 30, 2006, were $5,484,201 and
$10,673,855, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------------
'06 Shares '06 Shares
America Income Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- --------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 78,094 $ 751,072 116,997 $ 1,169,565
Reinvestment of distributions 58,136 560,266 138,561 1,381,733
Shares repurchased (379,934) (3,682,011) (836,177) (8,331,104)
-----------------------------------------------------
Net decrease (243,704) $(2,370,673) (580,619) $(5,779,806)
=====================================================
CLASS II:
Shares sold 216,051 $ 2,091,910 1,061,522 $10,609,970
Reinvestment of distributions 41,773 403,015 79,492 792,446
Shares repurchased (530,616) (5,212,386) (336,194) (3,330,818)
-----------------------------------------------------
Net increase (decrease) (272,792) $(2,717,461) 804,820 $ 8,071,598
=====================================================
- --------------------------------------------------------------------------------------------------
18
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19632-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Balanced VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Balanced VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 14
Notes to Financial Statements 18
Trustees, Officers and Service Providers 22
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 60.7%
U.S. Government Agency Obligations 23.6%
U.S. Corporate Bonds 10.1%
Temporary Cash Investment 2.6%
Depositary Receipts for International Stocks 1.2%
Collateralized Mortgage Obligations 1.0%
Asset Backed Securities 0.8%
Sector Distribution
(As a percentage of long-term holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
GovernmentObligations 24.5%
Financials 14.5%
Information Technology 12.0%
Consumer Staples 11.2%
Health Care 9.1%
Consumer Discretionary 8.6%
Industrials 7.7%
Energy 5.8%
Materials 5.0%
Telecommunications Services 1.1%
Utilities 0.5%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Berkshire Hathaway, Inc.
(Class B) 3.60%
2. PepsiCo, Inc. 3.34
3. CVS Corp. 3.30
4. First Data Corp. 3.29
5. Microsoft Corp. 3.10
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 14.55 $ 14.67
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.1200 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Balanced VCT Portfolio at net asset value, compared to that of the Standard &
Poor's (S&P) 500 Index and the Lehman Brothers Aggregate Bond Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Lehman Bros.
Pioneer Balanced Aggregate
VCT Portfolio Bond Index S&P 500
6/96 10000 10000 10000
6/97 11936 10815 13468
6/98 13537 11955 17532
6/99 13407 12331 21520
6/00 13691 12894 23081
6/01 14120 14342 19660
6/02 12730 15579 16126
6/03 13352 17200 16165
6/04 14523 17255 19253
6/05 14913 18428 20469
6/06 15478 18280 22234
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. The Lehman Brothers Aggregate Bond Index is a
measure of the U.S. bond market. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. Portfolio returns are based on net asset value and do not reflect any
annuity-related costs. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Years 4.47%
5 Years 1.85%
1 Year 3.79%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Balanced 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 variable annuities. 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
[divided by] $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 Balanced VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,000.00
Expenses Paid During Period* $ 5.75
* Expenses are equal to the Portfolio's annualized expense ratio of 1.16% for
Class II 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 Balanced VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.04
Expenses Paid During Period* $ 5.81
* Expenses are equal to the Portfolio's annualized expense ratio of 1.16% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
The economy grew at a healthy pace during the first six months of 2006, although
some early signs emerged to indicate the rate of economic growth might be
slowing. Stocks generally delivered modest returns over the six months, despite
slumping in May and June on worries that the Federal Reserve might raise
interest rates further than had been anticipated and hold back economic growth.
Small- and mid-cap stocks continued to outperform large-caps, and benchmarks for
value stocks recorded higher gains than growth stock indexes. In the fixed
income market, interest rates across the yield curve - among securities of all
maturities - rose, and bond prices generally declined. Shorter duration
strategies tended to produce better returns than long-duration strategies,
especially in high-grade securities. High-yield, below-investment grade bonds
outperformed higher- quality securities early in the year, but slumped along
with stocks in the final two months. In the following interview, Timothy
Mulrenan, who is responsible for the equity portfolio of Pioneer Balanced VCT
Portfolio, and Richard Schlanger, who is responsible for the Portfolio's
fixed-income management, discuss the factors that influenced the Portfolio's
performance over the six months ending June 30, 2006.
Q. How did the Portfolio perform during the first half of 2006?
A. Class II shares of Pioneer Balanced VCT Portfolio had a flat return of
0.00% at net asset value, during the six months ending June 30, 2006. Over
the same time period, the S&P 500 Index and the Lehman Brothers Aggregate
Bond Index returned 2.71% and -0.72%, respectively. During the same six
months, the average return of the 114 funds in Lipper's Mixed-Asset Target
Allocation Growth Variable Annuity category was 2.14%.
Call 1-800-688-9915 or visit www.pioneerinvestmentscom 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.
Q. What were the Portolio's principal investment strategies during the six
months?
A. We maintained a slight overweighting in equities, which comprised about 63%
of assets on June 30, 2006, compared to a typical allocation of 60%. Within
the equity portfolio, we maintained our focus on large-cap, consistent
growth companies. This emphasis, however, did not help performance as value
stocks and small-company stocks outperformed the stable growth companies
that we believed offered the most attractive relative values.
We made no major sector changes among our equity investments, although we
modestly reduced our overweight in energy companies. While we still are
impressed by the long-term prospects for the energy sector, we thought
near-term growth may begin to slow. We were overweighted in consumer
staples and, to a lesser extent, in information technology and health care.
We were underweighted in financials, especially banks, because of the
vulnerability of their earnings margins as the difference between interest
rates of short-term and long-term securities flattens. Moreover, we believe
some banks may need to add to their reserves against loan losses.
We added to our information technology positions when we invested in
Corning, a leader in producing flat-screen panels for televisions and
computer monitors. In media, we sold shares of CBS because of concerns that
growth in traditional media would slow. At the same time, we invested in
cable company Comcast. We also reduced our position in the U.K.-based
Vodafone, a major telecommunications service provider, because of our
concerns about competitive pressure in Europe.
We made no significant changes in our fixed income strategy during the six
months, although duration - or sensitivity to interest rate changes -
increased somewhat, partly because of the natural lengthening of duration
in mortgage securities as mortgage prepayment rates declined. The
portfolio's duration was 4.88 years on June 30, 2006. We invested
opportunistically, buying bonds of Sevan Marine, a Norwegian oil field
services company, partly because we favored the prospects of the Norwegian
currency, the Krone. We also invested in collateralized mortgage
obligations. As we did this, we sold bonds of Bausch & Lomb, the eye
products company, and of Sunsage, a Korean auto parts company. We also
slightly upgraded the overall credit quality of the portfolio. On June 30,
average credit quality was AA-, with 69.6% of fixed income assets invested
in AAA or the equivalent, while just 9.7% of fixed income assets were
invested in high-yield corporates.
A Word About Risk:
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
underlying securities and their inability to meet their debt obligations.
Prepayment risk is the chance that mortgage-backed bonds will be paid off early
if falling interest rates prompt homeowners to refinance their mortgages. 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 associated with falling interest rates. Investing in foreign
and/or emerging markets securities involves risks relating to interest rates,
currency exchange rates, economic, and political conditions. 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. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. What types of equity investments most influenced performance?
A. Among our stock positions, pharmacy chain CVS was a particularly strong
performer. The company's sales and profit growth exceeded expectations as
the company continued to execute its strategy of buying underperforming
assets and increasing their profitability. Cable company Comcast, in which
we invested when its stock price was low, succeeded in taking more market
share of household expenditures by offering television, Internet and
telephone service.
Several information technology investments also helped, including Cisco,
Hewlett-Packard and First Data, all of which gained while other tech stocks
were declining. The Portfolio's performance was helped because we had very
limited exposure to the poor-performing semiconductor industry.
Several health-care investments held back results, including biotechnology
leader Amgen and generic pharmaceutical manufacturer Teva. Investors were
concerned about a patent dispute over rights to an anemia drug in which
Amgen is involved, while Teva declined after reporting disappointing
earnings. We have retained both positions. Also detracting from performance
was Wrigley, which lowered its earnings forecasts because of investments in
new marketing initiatives. We also continue to hold the position in
Wrigley, which has a very attractive franchise.
Q. What types of fixed income investments most influenced performance?
A. Our relatively short maturity helped in a rising interest rate environment,
as did the quality emphasis. In addition, our overweights in mortgage
securities helped support results during the period.
Holding back results were our positions in some long duration assets, which
were vulnerable to price losses as long-term interest rates rose. We had no
major credit problems.
Q. What is your investment outlook?
A. We anticipate that economic growth will slow in the coming months. The U.S.
Federal Reserve Board probably is near the end of its cycle of
interest-rate hikes, but other major central banks may continue to raise
rates. One consequence could be a further weakening of the U.S. dollar
versus other currencies. One positive for fixed income markets is that
there still is a lot of liquidity in world markets, which should guard
against any dramatic increase in long-term interest rates. Returns of
between 5% and 51/2% are still very attractive to foreign investors.
We expect continued volatility in the domestic equity market over the next
several months against a backdrop of a slowing economy, high energy prices,
high interest rates and the current slowdown in residential real estate. As
a consequence, we believe investors' expectations for corporate profit
growth probably needs to be softened. Offsetting these negative influences,
however, is the widespread expectation that the Federal Reserve will stop
raising interest rates soon. In addition, stock price increases over the
past two years have not kept pace with increases in profits. As a
consequence, current stock prices, as reflected in price/earnings ratios,
are reasonable and may provide some downside protection in a volatile
environment. The stock market over the past two years has not distinguished
between cyclical profits and consistent profits. As a result, we believe
that higher-quality growth stocks of companies with good earnings, high
returns on equity and high reinvestment rates should perform well. These
companies, which we have been emphasizing, are trading at valuations that
we do not believe reflect their potential.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 63.1%
Energy - 4.9%
Integrated Oil & Gas - 1.1%
6,700 Exxon Mobil Corp. $ 411,045
-----------
Oil & Gas Drilling - 1.4%
12,300 ENSCO International, Inc. $ 566,046
-----------
Oil & Gas Equipment & Services - 2.0%
12,598 National-Oilwell Varco, Inc.* $ 797,705
-----------
Oil & Gas Exploration & Production - 0.4%
2,700 Encana Corp.(a) $ 142,128
-----------
Total Energy $ 1,916,924
-----------
Materials - 3.8%
Gold - 1.4%
10,000 Newmont Mining Corp. $ 529,300
-----------
Industrial Gases - 2.4%
17,400 Praxair, Inc. $ 939,600
-----------
Total Materials $ 1,468,900
-----------
Capital Goods - 4.4%
Aerospace & Defense - 2.6%
16,000 Northrop Grumman Corp. $ 1,024,960
-----------
Industrial Conglomerates - 1.8%
8,500 3M Co. $ 686,545
-----------
Total Capital Goods $ 1,711,505
-----------
Commercial Services & Supplies - 0.4%
Diversified Commercial Services - 0.4%
3,600 Cintas Corp.*(a) $ 143,136
-----------
Total Commercial
Services & Supplies $ 143,136
-----------
Transportation - 2.4%
Air Freight & Couriers - 2.4%
11,200 United Parcel Service $ 922,096
-----------
Total Transportation $ 922,096
-----------
Consumer Durables & Apparel - 1.4%
Apparel, Accessories & Luxury Goods - 1.4%
14,600 Liz Claiborne, Inc. $ 541,076
-----------
Total Consumer Durables & Apparel $ 541,076
-----------
Media - 3.5%
Broadcasting & Cable Television - 2.1%
25,100 Comcast Corp.* $ 822,778
-----------
Movies & Entertainment - 1.4%
14,659 Viacom, Inc. (Class B) $ 525,379
-----------
Total Media $ 1,348,157
-----------
Shares Value
Retailing - 1.5%
Apparel Retail - 1.5%
20,500 Ross Stores, Inc. $ 575,025
-----------
Total Retailing $ 575,025
-----------
Food & Drug Retailing - 3.5%
Drug Retail - 3.3%
42,100 CVS Corp. $ 1,292,470
-----------
Hypermarkets & Supercenters - 0.2%
1,600 Wal-Mart Stores, Inc. $ 77,072
-----------
Total Food & Drug Retailing $ 1,369,542
-----------
Food, Beverage & Tobacco - 6.6%
Brewers - 0.6%
5,100 Anheuser-Busch Companies, Inc.(a) $ 232,509
-----------
Packaged Foods & Meats - 1.5%
13,375 William Wrigley Jr. Co. $ 606,690
-----------
Soft Drinks - 4.5%
10,000 Coca-Cola Co. $ 430,200
21,700 PepsiCo, Inc. 1,302,868
-----------
$ 1,733,068
-----------
Total Food, Beverage & Tobacco $ 2,572,267
-----------
Household & Personal Products - 0.9%
Personal Products - 0.9%
9,300 Estee Lauder Co.* $ 359,631
-----------
Total Household &
Personal Products $ 359,631
-----------
Health Care Equipment & Services - 2.0%
Health Care Distributors - 1.1%
6,400 Cardinal Health, Inc. $ 411,712
-----------
Health Care Equipment - 0.9%
11,100 Biomet, Inc. $ 347,319
-----------
Total Health Care Equipment &
Services $ 759,031
-----------
Pharmaceuticals & Biotechnology - 6.5%
Biotechnology - 1.9%
11,616 Amgen, Inc.* $ 757,712
-----------
Pharmaceuticals - 4.6%
4,000 Eli Lilly & Co. $ 221,080
20,788 Pfizer, Inc. 487,894
10,069 Teva Pharmaceutical Industries, Ltd.(a) 318,080
16,900 Wyeth 750,529
-----------
$ 1,777,583
-----------
Total Pharmaceuticals &
Biotechnology $ 2,535,295
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 5.1%
Asset Management & Custody Banks - 1.3%
15,900 The Bank of New York Co., Inc. $ 511,980
-----------
Consumer Finance - 1.7%
13,100 American Express Co. $ 697,182
-----------
Investment Banking & Brokerage - 0.5%
2,900 Merrill Lynch & Co., Inc. $ 201,724
-----------
Other Diversified Finance Services - 1.4%
11,900 Bank of America Corp. $ 572,390
-----------
Total Diversified Financials $ 1,983,276
-----------
Insurance - 4.6%
Property & Casualty Insurance - 4.6%
465 Berkshire Hathaway, Inc. (Class B)* $ 1,414,995
14,800 Progressive Corp. 380,508
-----------
$ 1,795,503
-----------
Total Insurance $ 1,795,503
-----------
Software & Services - 6.4%
Data Processing & Outsourced Services - 3.3%
28,600 First Data Corp. $ 1,288,144
-----------
Systems Software - 3.1%
52,000 Microsoft Corp. $ 1,211,600
-----------
Total Software & Services $ 2,499,744
-----------
Shares Value
Technology Hardware & Equipment - 4.2%
Communications Equipment - 2.8%
21,900 Cisco Systems, Inc.* $ 427,707
9,500 Corning, Inc.* 229,805
10,900 Qualcomm, Inc. 436,763
-----------
$ 1,094,275
-----------
Computer Hardware - 1.4%
16,922 Hewlett-Packard Co. $ 536,089
-----------
Total Technology
Hardware & Equipment $ 1,630,364
-----------
Semiconductors - 0.3%
Semiconductors - 0.3%
7,800 Intel Corp. $ 147,810
-----------
Total Semiconductors $ 147,810
-----------
Telecommunication Services - 0.4%
Wireless Telecommunication Services - 0.4%
7,800 Vodafone Group Plc (A.D.R.) $ 166,140
-----------
Total Telecommunication Services $ 166,140
-----------
TOTAL COMMON STOCKS
(Cost $20,621,774) $24,445,422
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
ASSET BACKED SECURITIES - 0.8%
Diversified Financials - 0.4%
Other Diversified Finance Services - 0.4%
72,624 BBB-/Baa2 PF Export Receivable Master Trust, 6.436%, 6/1/15 (144A) $ 72,612
81,192 BBB/Baa2 Power Receivables Finance, 6.29%, 1/1/12 (144A) 80,881
----------
$ 153,493
----------
Total Diversified Financials $ 153,493
----------
Utilities - 0.4%
Electric Utilities - 0.4%
82,600 BBB-/Baa3 FPL Energy America Wind LLC, 6.639%, 6/20/23 (144A) $ 84,431
59,400 BB-/Ba2 FPL Energy Wind Funding, 6.876%, 6/27/17 (144A) 59,326
----------
$ 143,757
----------
Total Utilities $ 143,757
----------
TOTAL ASSET BACKED SECURITIES
(Cost $300,274) $ 297,250
----------
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.1%
Diversified Financials - 0.2%
Diversified Financial Services - 0.2%
25,000 NR/Ba1 Global Signal, 7.036%, 2/15/36 (144A) $ 24,966
50,000 NR/Ba2 Tower 2004-2A F, 6.376%, 12/15/14 49,111
----------
$ 74,077
----------
Total Diversified Financials $ 74,077
----------
Government - 0.9%
Government - 0.9%
250,000 AAA/Aaa Fannie Mae Benchmark Remic, 6.0%, 6/25/16 $ 249,141
98,503 AAA/Aaa Federal Home Loan Mortgage Corp., 5.875%, 5/15/16 98,172
----------
Total Government $ 347,313
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $422,379) $ 421,390
----------
CORPORATE BONDS - 10.2%
Energy - 0.8%
Integrated Oil & Gas - 0.1%
40,000 A-/A3 Occidental Petroleum, 6.75%, 1/15/12 $ 42,087
----------
Oil & Gas Equipment And Services - 0.2%
500,000 NR/NR Sevan Marine, 9.0%, 3/31/08 $ 82,888
----------
Oil & Gas Exploration & Production - 0.3%
100,000 BBB/NR Gazprom International SA., 7.201%, 2/1/20 (144A) $ 101,375
----------
Oil & Gas Refining & Marketing - 0.2%
25,000 BBB/Baa2 Boardwalk Pipelines LLC, 5.5%, 2/1/17 $ 23,583
50,000 BB-/Ba2 Semco Energy, Inc., 7.125%, 5/15/08 49,643
----------
$ 73,226
----------
Total Energy $ 299,576
----------
Materials - 1.2%
Aluminum - 0.1%
50,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 48,000
----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Commodity Chemicals - 0.3%
100,000 BB-/Ba2 Nova Chemicals, Ltd., 6.5%, 1/15/12 $ 92,000
----------
Diversified Metals & Mining - 0.3%
125,000 BBB-/Baa3 Inco, Ltd., 7.2%, 9/15/32 $ 127,964
----------
Metal & Glass Containers - 0.1%
40,000 BBB/Baa2 Tenneco Packaging, 8.125%, 6/15/17 $ 44,151
----------
Paper Products - 0.4%
50,000 B+/B1 Abitibi-Consolidated, Inc., 6.95%, 4/1/08 $ 48,438
100,000 B-/B3 MDP Acquisitions, 9.625%, 10/1/12 103,000
----------
$ 151,438
----------
Total Materials $ 463,553
----------
Capital Goods - 0.5%
Electrical Component & Equipment - 0.1%
25,000 NR/WD Orcal Geothermal, 6.21%, 12/30/20 (144A) $ 24,338
----------
Industrial Conglomerates - 0.2%
55,000 AAA/Aaa General Electric Capital Corp., 6.125%, 2/22/11 $ 56,034
30,000 AAA/Aaa General Electric Capital Corp., 6.75%, 3/15/32 32,023
----------
$ 88,057
----------
Trading Companies & Distributors - 0.2%
100,000 BBB-/Baa3 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 91,329
----------
Total Capital Goods $ 203,724
----------
Automobiles & Components - 0.5%
Automobile Manufacturers - 0.5%
200,000 B-/Caa1 General Motors, 7.2%, 1/15/11(a) $ 177,000
----------
Total Automobiles & Components $ 177,000
----------
Consumer Durables & Apparel - 0.1%
Home Furnishings - 0.1%
30,000 BBB-/Baa3 Mohawk Industries, Inc., 6.125%, 1/15/16 $ 28,921
----------
Total Consumer Durables & Apparel $ 28,921
----------
Consumer Services - 0.1%
Hotels, Resorts & Cruise Lines - 0.1%
50,000 BBB-/Ba1 Royal Caribbean Cruises, 7.25%, 6/15/16 $ 49,513
----------
Total Consumer Services $ 49,513
----------
Media - 1.4%
Broadcasting & Cable Television - 0.9%
250,000 BBB+/Baa2 Comcast Cable Corp., 7.125%, 6/15/13 $ 261,883
100,000 BBB-/Baa3 Cox Communications, 7.125%, 10/1/12 103,432
----------
$ 365,315
----------
Publishing - 0.5%
170,000 BBB/Baa2 News America, Inc., 7.3%, 4/30/28 $ 172,389
----------
Total Media $ 537,704
----------
The accompanying notes are an integral part of these financial statements. 9
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Retailing - 0.1%
Specialty Stores - 0.1%
50,000 BBB-/Baa3 Tanger Factory Outlet Centers, Inc., 6.15%, 11/15/15 $ 48,578
----------
Total Retailing $ 48,578
----------
Health Care Equipment & Services - 0.5%
Health Care Facilities - 0.5%
2 00,000 BB+/Ba2 HCA, Inc., 6.3%, 10/1/12 $ 188,104
----------
Total Health Care Equipment & Services $ 188,104
----------
Banks - 0.3%
Diversified Banks - 0.3%
50,000 AAA/Aaa KFW-Kredit Wiederaufbau, 2.75%, 5/8/07 $ 48,841
75,000 AA-/Aa2 National Westminster, 7.375%, 10/1/09 79,415
----------
$ 128,256
----------
Total Banks $ 128,256
----------
Diversified Financials - 0.6%
Consumer Finance - 0.2%
1 00,000 A/A2 SLM Corp., Floating Rate Note, 7/25/14 $ 91,376
----------
Investment Banking & Brokerage - 0.2%
75,000 B+/Ba2 E*Trade Financial Corp., 8.0%, 6/15/11 $ 76,500
----------
Diversified Financial Services - 0.2%
1 00,000 A-/Baa3 Brascan Corp., 5.75%, 3/1/10 $ 99,375
----------
Total Diversified Financials $ 267,251
----------
Insurance - 1.4%
Life & Health Insurance - 0.3%
1 00,000 BB+/Ba1 Provident Co., Inc., 7.0%, 7/15/18 $ 96,548
----------
Multi-Line Insurance - 0.1%
50,000 A/Baa1 Loew Corp., 5.25%, 3/15/16 $ 46,264
----------
Property & Casualty Insurance - 0.6%
85,000 BBB-/NR Kingsway America, Inc., 7.5%, 2/1/14 $ 84,166
1 50,000 BB+/Baa3 Ohio Casualty Corp., 7.3%, 6/15/14 151,712
----------
$ 235,878
----------
Reinsurance - 0.4%
1 00,000 BBB-/Baa3 Odyssey Re Holdings, 7.65%, 11/1/13 $ 96,081
50,000 BBB/NA Platinum Underwriters HD, 7.50%, 6/1/17 49,050
----------
$ 145,131
----------
Total Insurance $ 523,821
----------
Real Estate - 1.1%
Real Estate Investment Trusts - 1.1%
1 00,000 BBB-/Baa3 Colonial Reality LP, 6.15%, 4/15/13 $ 98,537
1 00,000 BBB-/Baa3 Health Care Real Estate Investment Trust, Inc., 6.2%, 6/1/16 97,145
1 07,000 BB/Ba2 Host Marriott LP, 6.375%, 3/15/15 100,580
75,000 B+/B1 Trustreet Properties Inc., 7.5%, 4/1/15 73,875
50,000 BB+/Ba2 Ventas Realty Capital Corp., 7.125%, 6/1/15 (144A) 50,000
----------
$ 420,137
----------
Total Real Estate $ 420,137
----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD($) (unaudited) Value
Technology Hardware & Equipment - 0.7%
Computer Hardware - 0.7%
250,000 BBB-/Baa3 NCR Corp., 7.125%, 6/15/09 $ 255,207
----------
Total Technology Hardware & Equipment $ 255,207
----------
Semiconductors - 0.2%
Semiconductors - 0.2%
85,000 BBB-/Baa3 Chartered Semiconductor, 6.375%, 8/3/15 $ 81,146
----------
Total Semiconductors $ 81,146
----------
Telecommunication Services - 0.7%
Integrated Telecom Services - 0.6%
140,000 BBB+/Baa2 Telecom Italia Capital, 4.875%, 10/1/10 $ 133,870
100,000 BBB+/Baa2 Telecom Italia Capital, 5.25%, 11/15/13 92,447
----------
$ 226,317
----------
Wireless Telecommunication Services - 0.1%
30,000 BBB-/Baa3 Embarq Corp., 7.082%, 6/1/16 $ 29,835
----------
Total Telecommunication Services $ 256,152
----------
Utilities - 0.1%
Electric Utilities - 0.1%
50,000 BBB+/Baa3 Entergy Gulf States, 5.7%, 6/1/15 $ 47,043
----------
Total Utilities $ 47,043
----------
TOTAL CORPORATE BONDS
(Cost $3,982,853) $3,975,686
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 24.1%
92,562 Federal Home Loan Bank, 5.27%, 12/28/12 $ 91,266
144,812 Federal Home Loan Mortgage Corp., 4.5%, 12/1/20 136,718
201,589 Federal Home Loan Mortgage Corp., 5.0%, 5/1/34 188,869
317,123 Federal Home Loan Mortgage Corp., 5.5%, 1/1/34 305,398
96,475 Federal Home Loan Mortgage Corp., 5.5%, 10/1/16 94,803
159,426 Federal Home Loan Mortgage Corp., 5.5%, 12/1/35 153,227
129,125 Federal Home Loan Mortgage Corp., 5.5%, 9/01/17 126,915
71,766 Federal Home Loan Mortgage Corp., 6.0% , 1/1/32 70,968
849,489 Federal Home Loan Mortgage Corp., 6.0%, 1/1/33 839,534
216,070 Federal Home Loan Mortgage Corp., 6.0%, 11/1/33 213,388
31,360 Federal Home Loan Mortgage Corp., 6.0%, 6/1/34 30,939
6,962 Federal Home Loan Mortgage Corp., 6.5%, 11/1/33 7,050
16,478 Federal Home Loan Mortgage Corp., 6.5%, 5/1/09 16,571
117,407 Federal National Mortgage Association, 5.0%, 6/1/34 110,099
237,021 Federal National Mortgage Association, 5.5%, 10/1/34 228,263
172,091 Federal National Mortgage Association, 5.5%, 11/1/33 166,016
86,756 Federal National Mortgage Association, 5.5%, 12/1/34 83,550
146,258 Federal National Mortgage Association, 5.5%, 2/1/17 143,813
65,758 Federal National Mortgage Association, 5.5%, 3/1/34 63,329
171,466 Federal National Mortgage Association, 5.5%, 4/1/34 165,130
201,282 Federal National Mortgage Association, 5.5%, 9/1/34 193,845
90,212 Federal National Mortgage Association, 6.0%, 12/1/33 89,067
350,000 Federal National Mortgage Association, 6.0%, 7/1/36 344,422
110,000 Federal National Mortgage Association, 6.125%, 3/15/12 113,330
The accompanying notes are an integral part of these financial statements. 11
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount
USD($) Value
U.S. Government Agency Obligations (Cont.)
28,439 Federal National Mortgage Association, 6.5%, 10/1/32 $ 28,691
13,285 Federal National Mortgage Association, 6.5%, 10/1/32 13,402
42,462 Federal National Mortgage Association, 6.5%, 4/1/29 43,110
84,705 Federal National Mortgage Association, 6.5%, 7/1/32 85,453
55,336 Federal National Mortgage Association, 6.5%, 7/1/32 55,840
12,587 Federal National Mortgage Association, 6.5%, 8/1/13 12,760
10,913 Federal National Mortgage Association, 6.5%, 8/1/14 11,065
44,967 Federal National Mortgage Association, 6.5%, 9/1/32 45,572
42,967 Federal National Mortgage Association, 6.50%, 12/1/21 43,485
10,000 Federal National Mortgage Association, 7.125%, 6/15/10 10,581
17,635 Federal National Mortgage Association, 9.0%, 4/1/33 18,626
250,000 Freddie Mac, 4.9%, 11/3/08 246,095
150,000 Freddie Mac 5.75% 01/15/12 151,765
129,026 Government National Mortgage Association II, 5.5%, 2/20/34 124,648
44,611 Government National Mortgage Association II, 6.0%, 10/20/33 44,355
41,094 Government National Mortgage Association, 4.5%, 1/15/35 37,739
88,365 Government National Mortgage Association, 4.5%, 4/15/35 81,151
290,389 Government National Mortgage Association, 5.0%, 10/15/34 274,887
85,022 Government National Mortgage Association, 5.0%, 4/15/34 80,562
39,914 Government National Mortgage Association, 5.5%, 4/15/2033 38,737
120,563 Government National Mortgage Association, 5.5%, 7/15/33 117,006
189,470 Government National Mortgage Association, 5.5%, 8/15/19 187,270
135,536 Government National Mortgage Association, 5.5%, 8/15/33 131,538
35,108 Government National Mortgage Association, 5.5%, 9/15/33 34,093
152,395 Government National Mortgage Association, 5.50%, 06/15/33 147,899
223,293 Government National Mortgage Association, 6.0%, 8/15/32 221,918
112,619 Government National Mortgage Association, 6.0%, 8/15/34 111,839
54,618 Government National Mortgage Association, 6.0%, 9/15/32 54,261
249,666 Government National Mortgage Association, 6.0%, 9/15/33 247,998
33,889 Government National Mortgage Association, 6.5%, 10/15/28 34,413
48,876 Government National Mortgage Association, 6.5%, 5/15/33 49,513
13,434 Government National Mortgage Association, 7.5%, 9/20/29 13,958
50,000 U.S. Treasury Bonds, 4.0%, 2/15/14 46,449
325,000 U.S. Treasury Bonds, 5.25%, 11/15/28 323,476
100,000 U.S. Treasury Bonds, 6.25%, 8/15/23 110,289
28,936 U.S. Treasury Inflation Protected Security, 3.5%, 1/15/11 30,266
470,000 U.S. Treasury Notes, 4.0%, 11/15/12 441,763
175,000 U.S. Treasury Notes, 4.125%, 5/15/15 162,497
500,000 U.S. Treasury Notes, 4.25%, 11/15/14 470,235
100,000 U.S. Treasury Notes, 4.25%, 8/15/15 93,566
300,000 U.S. Treasury Notes, 4.75%, 11/15/08 297,317
200,000 U.S. Treasury Notes, 4.75%, 5/15/14 195,102
130,000 U.S. Treasury Notes, 5.375%, 2/15/31 132,245
5,000 U.S. Treasury Notes, 5.5%, 8/15/28 5,137
250,000 U.S. Treasury Notes, 5.625%, 5/15/08 251,973
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
Cost $ 9,722,285) $9,337,055
----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
TEMPORARY CASH INVESTMENT - 2.6%
Security Lending Collateral - 2.6%
1,028,510 Securities Lending Investment Fund, 5.16% $ 1,028,510
-----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,028,510) $ 1,028,510
-----------
TOTAL INVESTMENT IN SECURITIES - 101.9%
(Cost $36,078,075) $39,505,313
-----------
OTHER ASSETS AND LIABILITIES - (1.9%) $ (739,854)
-----------
TOTAL NET ASSETS - 100.0% $38,765,459
===========
* Non-income producing security.
(A.D.R) American Depositary Receipt
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, 2006, the
value of these securities amounted to $589,258 or 1.5% of total net
assets.
NR Not Rated by either S&P or Moody's.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
5,049 Anheuser-Busch Companies, Inc. $ 230,184
3,554 Cintas Corp.* 141,307
2,673 Encana Corp. 140,707
9,968 Teva Pharmaceutical Industries, Ltd. 314,889
Principal
Amount
$ 198,000 General Motors, 7.2%, 1/15/11 175,230
----------
Total $1,002,317
==========
The accompanying notes are an integral part of these financial statements. 13
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year 5/1/03(a)
6/30/06 Ended Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03
Net asset value, beginning of period $ 14.67 $ 14.38 $ 14.02 $12.67
------- ------- ------- ------
Increase from investment operations:
Net investment income $ 0.11 $ 0.19 $ 0.22 $ 0.14
Net realized and unrealized gain (loss) on investments (0.11) 0.34 0.42 1.40
------- ------- ------- ------
Net increase (decrease) from investment operations $ -- $ 0.53 $ 0.64 $ 1.54
Distributions to shareholders:
Net investment income (0.12) (0.24) (0.28) (0.19)
------- ------- ------- ------
Net increase (decrease) in net asset value $ (0.12) $ 0.29 $ 0.36 $ 1.35
------- ------- ------- ------
Net asset value, end of period $ 14.55 $ 14.67 $ 14.38 $14.02
======= ======= ======= ======
Total return* 0.00% 3.73% 4.59% 12.17%(b)
Ratio of net expenses to average net assets+ 1.16%** 1.19% 1.19% 1.11%**
Ratio of net investment income to average net assets+ 1.53%** 1.37% 1.81% 1.12%**
Portfolio turnover rate 16%** 25% 30% 37%**
Net assets, end of period (in thousands) $13,243 $12,660 $10,452 $3,390
Ratios with no waiver of management fees and assumption of expenses by
PIM and no reduction for fees paid indirectly:
Net expenses 1.16%** 1.19% 1.19% 1.11%**
Net investment income 1.53%** 1.37% 1.81% 1.12%**
(a) The portfolio began offering Class II shares to the public on May 1, 2003.
(b) Not annualized
* 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.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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 Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $1,002,317)
(Cost $36,078,075) $ 39,505,313
Receivables --
Investment securities sold 500,963
Fund shares sold 142,062
Dividends, interest and foreign taxes withheld 138,464
Forward foreign currency portfolio hedge contracts, open -- net 2,778
------------
Other 3,553
------------
Total assets $ 40,293,133
------------
LIABILITIES:
Payables --
Investment securities purchased $ 343,755
Fund shares repurchased 80,310
Upon return for securities loaned 1,028,510
Due to bank 17,559
Due to affiliates 8,591
Accrued expenses 48,949
------------
Total liabilities $ 1,527,674
------------
NET ASSETS:
Paid-in capital $ 38,744,584
Undistributed net investment loss (12,371)
Accumulated net realized loss (3,396,735)
Net unrealized gain on:
Investments 3,427,238
Forward foreign currency contracts and other assets and liabilities denominated in 2,743
------------
foreign currencies
Total net assets $ 38,765,459
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 25,522,157
Shares outstanding 1,749,566
------------
Net asset value per share $ 14.59
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 13,243,302
Shares outstanding 910,098
------------
Net asset value per share $ 14.55
The accompanying notes are an integral part of these financial statements. 15
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $39) $ 160,982
Interest 388,016
Income on securities loaned, net 1,683
----------
Total investment income $ 550,681
----------
EXPENSES:
Management fees $ 132,865
Transfer agent fees and expenses 4,863
Distribution fees (Class II) 16,241
Administrative reimbursements 9,490
Custodian fees 8,116
Professional fees 18,953
Printing expense 13
Fees and expenses of nonaffiliated trustees 2,258
Miscellaneous 6,163
----------
Total expenses $ 198,962
----------
Net expenses $ 198,962
----------
Net investment income $ 351,719
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 680,214
Forward foreign currency contracts and other assets and liabilities denominated in (95)
----------
foreign currencies
$ 680,119
----------
Change in net unrealized gain or loss from:
Investments $ (944,644)
Forward foreign currency contracts and other assets and liabilities denominated in 2,743
----------
foreign currencies
$ (941,901)
----------
Net loss on investments and foreign currency transactions $ (261,782)
==========
Net increase decrease in net assets resulting from operations $ 89,937
==========
16 The accompanying notes are an integral part of these financial statements.
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS 6/30/06
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 351,719 $ 704,175
Net realized gain on investments and foreign
currency transactions 680,119 1,339,268
Change in net unrealized loss on investments and foreign currency transactions (941,901) (318,959)
----------- -----------
Net increase in net assets resulting from operations $ 89,937 $ 1,724,484
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (253,793) $ (588,607)
Class II (105,572) (208,623)
----------- -----------
Total distributions to shareowners $ (359,365) $ (797,230)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 1,651,171 $ 4,365,660
Reinvestment of distributions 359,363 797,221
Cost of shares repurchased (5,055,963) (9,774,029)
----------- -----------
Net decrease in net assets resulting from Fund share transactions $(3,345,429) $(4,611,148)
----------- -----------
Net decrease in net assets $(3,314,857) $(3,683,894)
----------- -----------
NET ASSETS:
Beginning of period $42,080,316 $45,764,210
----------- -----------
End of period $38,765,459 $42,080,316
----------- -----------
Distributions in excess of net investment income, end of period $ (12,371) $ (4,725)
----------- -----------
The accompanying notes are an integral part of these financial statements. 17
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Balanced VCT Portfolio is a Portfolio of Pioneer Variable Contracts
Trust (the Trust), a Delaware statutory trust registered under the Investment
Company Act of 1940 as an open-end management investment company. The Trust
consists of twenty-seven separate diversified portfolios, thirteen of which
issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The Portfolio commenced operations on May 1, 2003.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objectives of Balanced Portfolio are capital growth and current
income.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investments in the Portfolio are subject to
possible loss due to the financial failure of underlying securities and their
inability to meet their debt obligations. 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. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
18
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following is a summary of significant accounting policies consistently
followed by the Portfolio, 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 (NYSE) is open, as of the close of regular trading on the NYSE. 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 NYSE. The
value of such securities used in computing the net asset value of the
Portfolio's shares is based on the last sale price on the principal
exchange where they traded. The Portfolio also may use the fair value of a
security, including a non-U.S. security, when the closing market price on
the primary exchange where the security is traded no longer accurately
reflects the value of the security as of the close of the NYSE. At June 30,
2006, there were no fair valued securities. 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.
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, net of unrecoverable foreign taxes withheld at the
applicable country rates. All discounts/ premiums are accreted/amortized
for financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. 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. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2006, the portfolio had no open futures contracts.
C. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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.
19
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2005, Balanced Portfolio had a net capital loss
carryforward of $3,999,891, of which the following amounts will expire
between 2010 and 2011, if not utilized: $1,409,746 in 2010 and $2,590,145
in 2011.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the distributions
paid during the year ended December 31, 2005 and the components of
distributable earnings (accumulated losses) as of December 31, 2005.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 797,097
Long-Term capital gain --
----------
$ 797,097
Return of Capital --
----------
Total distributions $ 797,097
----------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/(capital loss carryforward) (3,999,891)
Unrealized appreciation (depreciation) 4,290,194
----------
Total $ (290,303)
==========
- --------------------------------------------------------------------------------
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.
D. 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), $462,503 in
commissions on the sale of Trust shares for the year ended June 30, 2006.
Distribution fees for Class II shares are calculated based on the average
daily net asset values attributable to Class II shares of the Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted-net assets at the
beginning of the day. The Portfolio declares as daily dividends
substantially all of its respective 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, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Dividends and distributions to shareowners are recorded on the ex-dividend
date.
E. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian.
20
Pioneer Balanced VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolios. Management fees are calculated daily at the annual rate of 0.65% of
the Portfolio's average daily net assets.
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, 2006, $941 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
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 $7,560 in transfer agent fees payable to PIMSS at June 30,
2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $90 payable to PFD at June 30, 2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------
Balanced Portfolio $36,159,763 $4,686,107 $ (1,340,557) $3,345,550
----------- ---------- ------------ ----------
- ----------------------------------------------------------------------------------------------
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, 2006, were $2,352,309 and $4,858,625, respectively. The cost of
purchase and the proceeds from sales in U.S. Government obligations were
$745,225 and $1,000,186, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Balanced Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ----------------------------------------------------------------------------------------------
CLASS I:
Shares sold 13,004 $ 191,534 30,803 $ 441,468
Reinvestment of distributions 17,277 253,793 40,641 588,607
Shares repurchased (280,761) (4,188,699) (522,797) (7,567,111)
------------------------------------------------------
Net decrease (250,480) $ (3,743,372) (451,353) $ (6,537,036)
======================================================
CLASS II:
Shares sold 98,246 $ 1,459,637 272,986 $ 3,924,192
Reinvestment of distributions 7,213 105,570 14,431 208,614
Shares repurchased (58,191) (867,264) (151,515) (2,206,918)
------------------------------------------------------
Net increase 47,268 $ 697,943 135,902 $ 1,925,888
======================================================
- ----------------------------------------------------------------------------------------------
21
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
24
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
25
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19631-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Emerging Markets VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Emerging Markets VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 5
Financial Statements 9
Notes to Financial Statements 13
Trustees, Officers and Service Providers 18
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
[THE FOLLOWING DATA WAS REPRESENTED AS PIE CHARTS IN THE PRINTED MATERIAL]
Portfolio Diversification Geographical Distribution Five Largest Holdings
(As a percentage of total investment portfolio) (As a percentage of equity holdings) (As a percentage of equity holdings)
International Common Stocks 59.5% South Korea 18.1% 1. Petrobras Brasileiro (A.D.R.) 4.43%
Depositary Receipts for Brazil 16.9% 2. Gazprom (A.D.R.) 3.31
International Stocks 27.1% South Africa 11.7% 3. Lukoil Holding (A.D.R.) 2.27
U.S. Common Stocks 7.7% Russia 9.6% 4. Kookmin Bank (A.D.R.) 1.88
Temporary Cash Investment 3.2% Taiwan 8.1% 5. Teva Pharmaceutical
International Preferred People's Republic of China 7.0% Industries, Ltd. 1.84
Stocks 2.5% India 3.7% The Portfolio is actively managed, and
Israel 3.7% current holdings may be different.
Mexico 3.4%
Turkey 2.6%
Hong Kong 1.6%
Philippines 1.5%
Malaysia 1.5%
Thailand 1.5%
Indonesia 1.5%
Peru 1.2%
Argentina 1.1%
Other (individually less
than 1% 5.3%
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 27.29 $ 27.84
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.1077 $ - $ 2.7694
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Emerging Markets VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) Emerging Markets Index. Portfolio
returns are based on net asset value and do not reflect any applicable insurance
fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer MSCI
Emerging Emerging
Markets VCT Markets
Portfolio Index
10/98 $10,000 $10,000
6/99 $14,097 $14,930
6/00 $17,239 $16,344
6/01 $11,702 $12,124
6/02 $12,083 $12,282
6/03 $12,916 $13,137
6/04 $16,799 $17,539
6/05 $22,100 $23,659
6/06 $31,490 $32,154
The Morgan Stanley Capital International (MSCI) Emerging Markets Index measures
the performance of emerging market stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 16.14%
(10/30/98)
5 Years 21.89%
1 Year 42.49%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Emerging Markets 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 variable annuities. 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 [divided by] $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 Emerging Markets VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,090.20
Expenses Paid During Period* $ 9.28
* Expenses are equal to the Portfolio's annualized expense ratio of 1.79% for
Class II 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 Emerging Markets VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,015.92
Expenses Paid During Period* $ 8.95
* Expenses are equal to the Portfolio's annualized expense ratio of 1.79% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
In the following interview, Christopher Smart, Pioneer Emerging Market VCT
Portfolio's portfolio manager, discusses the factors that influenced performance
during the six months ended June 30, 2006.
Q. How did emerging markets equities perform during the Portfolio's semiannual
reporting period?
A. The performance of the emerging markets was essentially flat over the full
six months, masking a high level of volatility in the asset class. Returns
were very strong in the first four months of the period, during which
emerging markets stocks remained supported by improving fundamentals and
investors' robust appetite for risk. In May and June, however, the
investment backdrop shifted rapidly once it became apparent that rising
inflation might force the U.S. Federal Reserve to increase interest rates
more than had been expected. The possibility of reduced liquidity and a
slower U.S. economy prompted many investors to take profits in the emerging
markets, leading to a sharp downturn. While this drop may have been
unexpected for many investors, a pullback was inevitable given the strong
recent performance of the asset class.
Q. How did the Portfolio perform?
A. For the six months ended June 30, 2006, Class II shares rose 9.02% at net
asset value. We are pleased to report that the Portfolio outpaced both the
7.33% return of the Morgan Stanley Capital International (MSCI) Emerging
Markets Index and the 7.09% average return of the 32 portfolios in Lipper's
Emerging Markets Funds category.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What factors helped and hurt performance?
A. From a broader standpoint, we believe a key factor behind the Portfolio's
strong relative performance is our disciplined approach to investing. We
combine top-down country analysis - which is designed to identify the most
attractive markets within the asset class - with bottom-up fundamental
research that seeks to find companies that are undervalued relative to
their growth prospects.
In terms of specific contributors to performance during the past six
months, the Portfolio's return was helped by its above-benchmark weighting
in Brazil, where we benefited from rising consumer spending through
holdings in companies such as the supermarket chain Lojas Renner. Also
helping performance was the Portfolio's higher weighting in South Africa,
relative to the benchmark. We have sought to take advantage of two
important trends in the country: the growing middle class and rising
government spending on infrastructure projects. With respect to the former,
we benefited from holdings in Ellerines, a furniture company, and Standard
Bank, which has benefited from rapid growth in the demand for loans and
savings vehicles.
The Portfolio's positions in South Korea and Russia also boosted
performance. Two Korean stocks were among the Portfolio's leading
contributors during the period: the shipbuilding companies Samsung Heavy
Industries and Hyundai Heavy Industries. In Russia, rising energy prices
boosted shares of the gas giant Gazprom, which has become one of the
largest listed companies in the world.
The Portfolio's holdings in Turkey, which underperformed the broader market
by a wide margin, weighed on performance. We remain cautiously optimistic
on Turkey, however, since we believe valuations remain reasonable and the
country's growth story is intact. The Portfolio also was hurt by
below-benchmark weighting in Taiwan, which performed well behind a
surprisingly strong rebound in the domestic economy. We did not foresee
this recovery taking place as soon as it did and were therefore not fully
positioned to take advantage of the rally in Taiwanese equities.
Q. What is your broad view regarding the emerging markets?
A. We believe the long-term investment story remains very positive despite the
recent downturn. Government finances continue to improve, and corporations
are adopting increasingly shareholder-friendly management practices.
Additionally, the rate of economic growth in the emerging markets is
stronger than that of the industrialized nations - at about 6.5% versus
2.5% - yet valuations are less expensive. It should also be noted that the
emerging markets asset class makes up just 7% of the total global stock
market capitalization despite having 40% of its gross domestic product and
60% of its population. With these factors forming the investment backdrop,
we believe the foundation is in place for continued long-term performance
of emerging markets equities.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 3.2%
Materials - 0.6%
Steel - 0.6%
15,990 Cia Vale Do Rio Doce* $ 325,724
-----------
Total Materials $ 325,724
-----------
Media - 0.9%
Broadcasting & Cable TV - 0.9%
893,700 Net Servicos de Comunicacao SA* $ 482,992
-----------
Total Media $ 482,992
-----------
Banks - 1.1%
Diversified Banks - 1.1%
21,330 Banco Itau Holding Financeira $ 621,702
-----------
Total Banks $ 621,702
-----------
Telecommunication Services - 0.6%
Integrated Telecommunication Services - 0.6%
27,701 Tele Norte Leste Participacoes (A.D.R.)(a) $ 353,188
-----------
Total Telecommunication Services $ 353,188
-----------
TOTAL PREFERRED STOCKS
(Cost $1,119,971) $ 1,783,606
-----------
COMMON STOCKS - 96.3%
Energy - 20.7%
Integrated Oil & Gas - 16.6%
755,600 China Petroleum & Chemical $ 432,779
44,100 Gazprom (A.D.R.)* 1,859,918
15,300 Lukoil Holding (A.D.R.) 1,278,315
2,900 Mol Magyar Olaj* 298,519
31,200 Petrobras Brasileiro (A.D.R.) 2,491,008
710,400 PetroChina Co., Ltd. 766,170
45,000 PTT Public Co., Ltd.* 266,789
14,600 Repsol SA (A.D.R.) 409,676
23,600 Sasol, Ltd. (A.D.R.)* 911,904
9,100 Surgutneftegaz (A.D.R.)*(a) 664,300
-----------
$ 9,379,378
-----------
Oil & Gas Equipment & Services - 1.1%
15,200 TelecomAsia Corp. Public Co., Ltd.* $ 615,448
-----------
Oil & Gas Exploration & Production - 1.2%
852,700 Cnooc, Ltd.* $ 684,496
26,600 Reliance Natural Resources, Ltd.* 11,499
-----------
$ 695,995
-----------
Oil & Gas Refining & Marketing - 1.8%
26,000 Polski Koncern Naftowy Orlen SA $ 432,319
12,300 Reliance Industries, Ltd. (144A)* 570,720
-----------
$ 1,003,039
-----------
Total Energy $11,693,860
-----------
Shares Value
Materials - 11.4%
Construction Materials - 1.9%
2,460 Asia Cement Co., Ltd.* $ 96,071
884,900 PT Indocement Tunggal Prakarsa Tbk* 400,662
91,400 Siam Cement Co., Ltd. 553,775
-----------
$ 1,050,508
-----------
Diversified Metals & Mining - 2.7%
833,900 Aneka Tambang Tbk* $ 417,730
8,400 Freeport-McMoRan Copper & Gold, Inc.
(Class B)(a) 465,444
5,100 Norilsk Nickel* 663,000
-----------
$ 1,546,174
-----------
Gold - 2.9%
13,500 Anglogold Ashanti, Ltd. (A.D.R.) (a) $ 649,620
50,200 IAMGOLD Corp.* 446,780
1,123,100 Zijin Mining Group Co., Ltd.* 566,467
-----------
$ 1,662,867
-----------
Precious Metals & Minerals - 2.3%
5,700 Anglo American Platinum Corp., Ltd. $ 598,361
25,200 Compania de Minas Buenaventura SA* 687,456
-----------
$ 1,285,817
-----------
Steel - 1.6%
42,700 Companhia Vale do Rio Doce (A.D.R.) $ 878,766
-----------
Total Materials $ 6,424,132
-----------
Capital Goods - 12.8%
Aerospace & Defense - 0.9%
18,200 Elbit Systems, Ltd. $ 486,581
-----------
Construction & Engineering - 4.0%
124,500 Aveng, Ltd. $ 377,552
865,320 Continental Engineering Corp. 500,152
162,117 Empressa ICA Sociedad Controladora
SA de CV* 457,917
7,700 GS Engineering & Construction Corp.* 496,998
13,240 Kyeryong Construction Industrial Co., Ltd.* 419,982
-----------
$ 2,252,601
-----------
Construction, Farm Machinery &
Heavy Trucks - 4.8%
27,000 Daewoo Heavy Industries &
Machinery, Ltd.* $ 791,883
8,930 Hyundai Heavy Industries* 1,003,200
41,200 Samsung Heavy Industries Co., Ltd.* 948,063
-----------
$ 2,743,146
-----------
Industrial Conglomerates - 2.1%
24,200 Barloworld* $ 406,267
55,000 Keppel Corp.* 510,738
92,153 KOC Holding AS* 273,999
-----------
$ 1,191,004
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Industrial Machinery - 1.0%
32,500 Doosan Heavy Industries &
Construction Co.* $ 538,325
-----------
Total Capital Goods $ 7,211,657
-----------
Transportation - 2.5%
Airlines - 0.8%
13,400 Gol-Linhas Aereas Inteligentes SA* $ 476,604
-----------
Marine - 1.7%
807,300 China Shipping Development Co., Ltd.* $ 586,221
165,800 Malaysia International Shipping Bhd. 347,145
-----------
$ 933,366
-----------
Total Transportation $ 1,409,970
-----------
Automobiles & Components - 1.7%
Automobile Manufacturers - 1.7%
11,100 Hyundai Motor Co., Ltd.* $ 946,678
-----------
Total Automobiles & Components $ 946,678
-----------
Consumer Durables & Apparel - 2.0%
Homebuilding - 0.8%
28,720 Cyrela Brazil Realty SA $ 475,593
-----------
Household Appliances - 0.5%
49,340 Arcelik AS* $ 282,178
-----------
Housewares & Specialties - 0.7%
17,000 Woongjin Coway Co., Ltd.* $ 371,578
-----------
Total Consumer Durables & Apparel $ 1,129,349
-----------
Consumer Services - 0.9%
Hotels, Resorts & Cruise Lines - 0.9%
19,400 Indian Hotels Co. Ltd.* $ 484,941
-----------
Total Consumer Services $ 484,941
-----------
Media - 2.6%
Broadcasting & Cable TV - 2.1%
29,088 Grupo Televisa SA (A.D.R.)* $ 561,689
102,800 Television Broadcasts, Ltd. 636,204
-----------
$ 1,197,893
-----------
Publishing - 0.5%
133,716 Hurriyet Gazetecilik ve Matbaacilik AS* $ 272,680
-----------
Total Media $ 1,470,573
-----------
Retailing - 3.3%
Apparel Retail - 1.0%
61,800 Edgars Consolidated Stores, Ltd.* $ 250,044
112,400 Truworths International, Ltd. 337,624
-----------
$ 587,668
-----------
Department Stores - 1.7%
5,800 Hyundai Department Store Co., Ltd.* $ 449,747
10,000 Lojas Renner SA* 537,900
-----------
$ 987,647
-----------
Shares Value
Homefurnishing Retail - 0.6%
35,400 Ellerine Holdings, Ltd. $ 318,348
-----------
Total Retailing $ 1,893,663
-----------
Food & Drug Retailing - 2.0%
Food Retail - 0.7%
185,000 President Chain Store Corp. $ 406,444
-----------
Hypermarkets & Supercenters - 1.3%
12,200 Brasil Distr Pao Acu (A.D.R.)* $ 379,908
48,500 Massmart Holdings, Ltd. 318,666
-----------
$ 698,574
-----------
Total Food & Drug Retailing $ 1,105,018
-----------
Food, Beverage & Tobacco - 3.4%
Packaged Foods & Meats - 1.9%
5,080 CJ Corp.* $ 558,126
25,200 Tiger Brands, Ltd.* 506,839
-----------
$ 1,064,965
-----------
Soft Drinks - 1.5%
10,400 Fomento Economico Mexicano SA de CV* $ 870,688
-----------
Total Food, Beverage & Tobacco $ 1,935,653
-----------
Household & Personal Products - 1.6%
Personal Products - 1.6%
44,650 Natura Cosmeticos SA* $ 462,401
14,200 Oriflame Cosmetics SA* 471,439
-----------
$ 933,840
-----------
Total Household &
Personal Products $ 933,840
-----------
Pharmaceuticals & Biotechnology - 1.8%
Pharmaceuticals - 1.8%
32,700 Teva Pharmaceutical Industries, Ltd. $ 1,032,993
-----------
Total Pharmaceuticals &
Biotechnology $ 1,032,993
-----------
Banks - 10.7%
Diversified Banks - 10.3%
20,332 Banco Bradesco SA(a) $ 632,122
23,200 Banco do Brasil SA 535,607
124,200 Bank Hapoalim, Ltd. 535,476
295,400 Bumiputra-Commerce Holdings Bhd.* 477,277
13,110 Hana Financial Holdings* 618,450
12,700 Kookmin Bank (A.D.R.)* 1,054,862
13,100 Shinhan Financial Group Co., Ltd.* 617,610
44,549 Standard Bank Group, Ltd. 477,765
13,600 State Bank of India 216,104
44,325 Turkiye Is Bankasi (Isbank)* 217,241
6,262 Uniao de Bancos Brasileiros SA
(Unibanco) (G.D.R.) (144A) 415,734
-----------
$ 5,798,248
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Thrifts & Mortgage Finance - 0.4%
21,900 Banco De Oro (G.D.R.) (144A)* $ 256,033
-----------
Total Banks $ 6,054,281
-----------
Diversified Financials - 2.4%
Investment Banking & Brokerage - 0.9%
9,600 Samsung Securities Co., Ltd.* $ 515,121
-----------
Diversified Financial Services - 1.5%
213,406 FirstRand, Ltd.* $ 512,248
388,000 Fubon Group 335,351
26,600 Reliance Capital Ventures* 14,383
-----------
$ 861,982
-----------
Total Diversified Financials $ 1,377,103
-----------
Insurance - 5.1%
Life & Health Insurance - 3.6%
32,600 Cathay Financial Holding Co., Ltd.,
(144A) (G.D.R.) $ 702,204
309,800 China Life Insurance Co., Ltd.* 490,098
134,500 Ping An Insurance Company of China, Ltd.* 410,010
226,590 Sanlam, Ltd.* 458,499
-----------
$ 2,060,811
-----------
Property & Casualty Insurance - 1.5%
141,734 Aksigorta AS* $ 390,754
3,200 Samsung Fire & Marine Insurance* 428,267
-----------
$ 819,021
-----------
Total Insurance $ 2,879,832
-----------
Real Estate - 0.6%
Real Estate Management &
Development - 0.6%
1,456,600 Ayala Land, Inc.* $ 315,109
-----------
Total Real Estate $ 315,109
-----------
Software & Services - 1.1%
IT Consulting & Other Services - 1.1%
9,532 Infosys Technologies, Ltd. $ 643,003
-----------
Total Software & Services $ 643,003
-----------
Technology Hardware & Equipment - 3.2%
Computer Hardware - 1.0%
125,240 ACER Sertek, Inc. $ 219,858
212,900 Quanta Computer, Inc. 341,434
-----------
$ 561,292
-----------
Computer Storage & Peripherals - 1.0%
84,000 Asustek Computer, Inc. $ 205,918
297,800 LITE-ON IT Corp. 348,674
-----------
$ 554,592
-----------
Shares Value
Electronic Manufacturing Services - 1.2%
109,358 Hon Hai Precision Industry $ 673,453
-----------
Total Technology Hardware &
Equipment $ 1,789,337
-----------
Semiconductors - 0.7%
Semiconductors - 0.7%
229,383 Taiwan Semiconductor Manufacturing Co. $ 413,003
-----------
Total Semiconductors $ 413,003
-----------
Telecommunication Services - 4.7%
Integrated Telecommunication Services - 1.2%
13,000 Brasil Telecom Participacoes SA* $ 423,410
7,700 Philippine Long Distance Telephone Co. 266,290
-----------
$ 689,700
-----------
Wireless Telecommunication Services - 3.5%
14,600 Mobile Telesystems (A.D.R.) $ 429,824
64,600 MTN Group, Ltd.* 477,448
26,600 Reliance Communication Ventures, Ltd.* 145,122
416,000 Taiwan Mobile Co., Ltd 414,093
10,800 Vimpel-Communications (A.D.R.)* 494,856
-----------
$ 1,961,343
-----------
Total Telecommunication Services $ 2,651,043
-----------
Utilities - 1.1%
Electric Utilities - 0.0%
26,600 Reliance Energy Ventures, Ltd.* $ 19,609
-----------
Gas Utilities - 1.1%
627,100 Panva Gas Holdings, Ltd.* $ 286,975
3,300 Samchully Co., Ltd.* 338,177
-----------
$ 625,152
-----------
Total Utilities $ 644,761
-----------
TOTAL COMMON STOCKS
(Cost $38,430,727) $54,439,799
-----------
TEMPORARY CASH INVESTMENT - 3.2%
Security Lending Collateral - 3.2%
1,829,705 Securities Lending Investment
Fund, 5.16% $ 1,829,705
-----------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $1,829,705) $ 1,829,705
-----------
TOTAL INVESTMENT IN
SECURITIES - 102.7%
(Cost $41,380,403)(b) $58,053,110
-----------
OTHER ASSETS
AND LIABILITIES - (2.7)% $(1,512,067)
-----------
TOTAL NET ASSETS - 100.0% $56,541,043
===========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
(A.D.R.) American Depositary Receipt.
(G.D.R.) Global Depositary Receipt.
* 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, 2006, the value of these securities amounted to $1,944,691 or 3.4%
of total net assets.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
13,350 Anglogold Ashanti, Ltd. (A.D.R.) $ 642,402
2,829 Banco Bradesco SA 87,954
8,316 Freeport-McMoRan Copper & Gold,
Inc. (Class B) 460,790
8,639 Surgutneftegaz (A.D.R.) * 630,647
1,543 Tele Norte Leste Participacoes
(A.D.R.) 19,673
----------
Total $1,841,466
==========
(b) Distributions of investments by country of issue, as a percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
South Korea 18.1%
Brazil 16.9
South Africa 11.7
Russia 9.6
Taiwan 8.1
People's Republic of China 7.0
India 3.7
Israel 3.7
Mexico 3.4
Turkey 2.6
Hong Kong 1.6
Philippines 1.5
Malaysia 1.5
Thailand 1.5
Indonesia 1.5
Peru 1.2
Argentina 1.1
Other (individually less than 1%) 5.3
-----
100.0%
=====
8 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 27.84 $ 20.33 $ 17.26 $ 10.98 $ 11.19 $ 12.08
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment income $ 0.14 $ 0.15 $ 0.16 $ 0.12 $ 0.02 $ 0.09
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 2.19 7.46 3.04 6.21 (0.17) (0.98)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment
operations $ 2.33 $ 7.61 $ 3.20 $ 6.33 $ (0.15) $ (0.89)
Distributions to shareowners:
Net investment income (0.11) (0.10) (0.13) (0.05) (0.06) -
Net realized gain (2.77) - - - - -
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.55) $ 7.51 $ 3.07 $ 6.28 $ (0.21) $ (0.89)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 27.29 $ 27.84 $ 20.33 $ 17.26 $ 10.98 $ 11.19
======== ======== ======== ======== ======== ========
Total return* 9.02% 37.60% 18.73% 57.87% (1.42)% (7.37)%
Ratio of net expenses to average net assets+ 1.79%** 1.97% 1.99% 1.99% 1.99% 1.90%
Ratio of net investment income to average
net assets+ 0.88%** 0.70% 0.88% 1.04% 0.28% 1.05%
Portfolio turnover rate 49%** 74% 66% 79% 124% 175%
Net assets, end of period (in thousands) $ 45,304 $ 44,026 $ 30,347 $ 26,537 $ 8,852 $ 7,861
Ratios with no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 1.79%** 1.99% 2.11% 2.65% 3.11% 4.12%
Net investment income (loss) 0.88%** 0.68% 0.76% 0.38% (0.84)% (1.17)%
Ratios with waiver of management fees and
assumption of expenses by PIM and reduction for
fees paid indirectly:
Net expenses 1.79%** 1.97% 1.99% 1.99% 1.99% 1.90%
Net investment income 0.88%** 0.70% 0.88% 1.04% 0.28% 1.05%
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 9
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $1,841,466)
(Cost $41,380,403) $ 58,053,110
Cash 60,692
Foreign currencies, at value (Cost $86,276) 86,806
Receivables --
Investment securities sold 845,683
Fund shares sold 61,490
Dividends, interest and foreign taxes withheld 122,730
Other 7,266
------------
Total assets $ 59,237,777
------------
LIABILITIES:
Payables --
Investment securities purchased $ 603,268
Fund shares repurchased 137,647
Upon return of securities loaned 1,829,705
Forward foreign currency settlement contracts, net 3,372
Reserve for repatriation taxes 36,643
Due to affiliates 9,976
Accrued expenses 76,123
------------
Total liabilities $ 2,696,734
------------
NET ASSETS:
Paid-in capital $ 34,171,390
Undistributed net investment income 83,178
Accumulated net realized gain on investments 5,647,909
Net unrealized gain on:
Investments 16,636,064
Forward foreign currency contracts and other assets and liabilities denominated
in foreign currencies 2,502
------------
Total net assets $ 56,541,043
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 11,237,015
Shares outstanding 408,029
------------
Net asset value per share $ 27.54
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 45,304,028
Shares outstanding 1,659,941
------------
Net asset value per share $ 27.29
10 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $72,558) $ 785,027
Interest 13,259
Income on securities loaned, net 6,449
-----------
Total investment income $ 804,735
-----------
EXPENSES:
Management fees $ 346,428
Transfer agent fees and expenses 4,996
Distribution fees (Class II) 59,681
Administrative reimbursements 9,470
Custodian fees 57,614
Professional fees 36,185
Printing expense 2,818
Fees and expenses of nonaffiliated trustees 2,542
Miscellaneous 5,641
-----------
Total expenses $ 525,375
-----------
Net expenses $ 525,375
-----------
Net investment income $ 279,360
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments (net of foreign capital gain taxes of $30,901) $ 5,740,092
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (12,762)
-----------
$ 5,727,330
-----------
Change in net unrealized gain or loss from:
Investments (net of the change in reserve for repatriation taxes of $15,716) $(1,415,958)
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (967)
-----------
$(1,416,925)
-----------
Net gain on investments and foreign currency transactions $ 4,310,405
===========
Net increase in net assets resulting from operations $ 4,589,765
===========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 279,360 $ 332,259
Net realized gain on investments and foreign currency transactions 5,727,330 7,305,703
Change in net unrealized gain or loss on investments and foreign currency transactions (1,416,925) 7,390,352
------------- -------------
Net increase in net assets resulting from operations $ 4,589,765 $ 15,028,314
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (59,203) $ (50,778)
Class II (161,771) (161,235)
Net realized gain
Class I (1,033,768) --
Class II (4,159,777) --
------------- -------------
Total distributions to shareowners $ (5,414,519) $ (212,013)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 10,487,956 $ 13,210,315
Reinvestment of distributions 5,414,519 210,764
Cost of shares repurchased (13,768,240) (11,986,023)
------------- -------------
Net increase in net assets resulting from Fund share transactions $ 2,134,235 $ 1,435,056
------------- -------------
Net increase in net assets $ 1,309,481 $ 16,251,357
------------- -------------
NET ASSETS:
Beginning of period $ 55,231,562 $ 38,980,205
------------- -------------
End of period $ 56,541,043 $ 55,231,562
============= =============
Undistributed net investment income, end of period $ 83,178 $ 24,792
============= =============
12 The accompanying notes are an integral part of these financial statements.
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Emerging Markets Portfolio (the Portfolio) is a Portfolio of the
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or by
qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Emerging Markets VCT Portfolio is to seek long-term
capital growth.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolio, in the
preparation of its financial statements which are consistent 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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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 NYSE. 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
13
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
they traded. The principal exchanges and markets for such securities have
closing times prior to the close of the NYSE. However, the value of these
securities may be influenced by changes in global markets occurring after
the closing times of the local exchanges and markets up to the time the
Portfolios determines their net asset values. Consequently, the Board of
Trustees of the Trust has determined that the use of daily fair valuations
as provided by a pricing service is appropriate for the Portfolios. The
Portfolios may also take into consideration other significant events in
determining the fair value of these securities.
At June 30, 2006, there were no fair valued securities except as follows.
All securities that trade in foreign markets whose closing prices are as of
times prior to the close of the New York Stock Exchange (NYSE) and that are
held by Emerging Markets Portfolio are fair valued using vendor-supplied
pricing updates for each security to the time of the close of the NYSE.
Thus, the Portfolio's securities valuations may differ from prices reported
by the various local exchanges and markets. Temporary cash investments and
securities held by the Portfolio are valued at amortized cost.
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, net of unrecoverable foreign taxes withheld at the
applicable country rates.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
The Portfolio's investments in emerging markets or countries with limited
or developing markets may subject the Portfolio to a greater degree of risk
than in a developed market. Risks associated with these developing markets
include political, social or economic factors and may affect the price of
the Portfolio's investments and income generated by these investments, as
well as the Portfolio's ability to repatriate such amounts. Information
regarding the Portfolio's principal investment risks is contained in the
Portfolio's prospectus. Please refer to those documents when considering
the Portfolio's risks.
B. 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 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. dollars 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
Portfolio's 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.
The Portfolio had no outstanding portfolio or settlement hedges as of June
30, 2006.
D. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also 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, 2005, no such taxes were paid.
14
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In determining the daily net asset value, the Portfolio estimates the
reserve for such taxes, if any, associated with investments in certain
countries. The estimated reserve for taxes on capital gains is based on the
net unrealized appreciation on certain portfolio securities, the holding
year of such securities and the related tax rates, tax loss carryforward
(if applicable) and other such factors. As of June 30, 2006, the Portfolio
had $36,643 in reserves related to taxes on the repatriation of foreign
capital gains.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
distributions paid during the year ended December 31, 2005 and the
components of distributable earnings (accumulated losses) as of December
31, 2005.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 212,013
Long-Term capital gain -
-----------
$ 212,013
Return of Capital -
-----------
Total distributions $ 212,013
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 220,926
Undistributed long-term gain/(capital loss carryforward) 5,193,430
Unrealized appreciation (depreciation) 17,780,051
-----------
Total $23,194,407
===========
- --------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Emerging Markets Portfolio
has elected to pass through foreign tax credits of $181,164. The difference
between book-basis and tax-basis unrealized appreciation (depreciation) is
primarily attributable to the tax deferral of losses on wash sales and the
tax basis adjustments on Passive Foreign Investment Company (PFIC) holdings
and the mark to market on forward currency 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio. Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services,
Inc. (PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). 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 the
shares based on the respective percentage of adjusted net assets at the
beginning of the day. 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, at the
same time, and in the same amount, except that Class I and Class II shares
can bear different transfer agent and distribution fees.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that
15
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
may occur during the term of the loan, will be for the account of the
Trust. 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 Trust has the right under the lending
agreement to recover the securities on loan from the borrower on demand.
The Trust invests cash collateral in the Securities Lending Investment Fund
which is sponsored 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 1.15% of
the Portfolio's average daily net assets.
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, 2006, $1,980 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $7,692 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $304 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------
Emerging Markets Portfolio $41,655,843 $17,606,129 $(1,208,862) $16,397,267
=========== =========== =========== ===========
- ----------------------------------------------------------------------------------------------------
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, 2006, were $14,209,019 and $17,047,023, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the year ended December 31, 2005:
16
Pioneer Emerging Markets VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Emerging Markets Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 55,634 $ 1,782,641 57,112 $ 1,329,128
Reinvestment of distributions 42,233 1,092,971 2,300 49,529
Shares repurchased (88,778) (2,738,986) (82,002) (1,885,112)
------------------------------------------------------
Net increase (decrease) 9,089 $ 136,626 (22,590) $ (506,455)
======================================================
CLASS II:
Shares sold 275,162 $ 8,705,315 530,098 $ 11,881,187
Reinvestment of distributions 168,481 4,321,548 7,549 161,235
Shares repurchased (364,999) (11,029,254) (449,363) (10,100,911)
------------------------------------------------------
Net increase 78,644 $ 1,997,609 88,284 $ 1,941,511
======================================================
- -------------------------------------------------------------------------------------------------
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's website at
http://www.sec.gov.
18
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19623-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Equity Income VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Equity Income VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 9
Notes to Financial Statements 13
Trustees, Officers and Service Providers 17
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THIS DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 93.3%
Temporary Cash Investment 6.2%
Convertible Preferred Stocks 0.5%
Sector Distribution Portfolio
(As a percentage of equity holdings)
[THIS DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Financials 27.9%
Utilities 15.9%
Industrials 9.9%
Consumer Staples 9.7%
Telecommunication Services 9.5%
Consumer Discretionary 8.8%
Health Care 7.0%
Energy 5.9%
Materials 4.5%
Information Technology 0.9%
Five Largest Holdings
(As a percentage of equity holdings)
1. PACCAR, Inc. 3.43%
- ----------------------------------------------
2. Washington Mutual, Inc. 3.09
- ----------------------------------------------
3. T. Rowe Price Associates, Inc. 2.87
- ----------------------------------------------
4. Questar Corp. 2.76
- ----------------------------------------------
5. Merck & Co., Inc. 2.57
- ----------------------------------------------
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $22.54 $21.37
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2500 $ - $ 0.3749
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Equity Income VCT Portfolio at net asset value, 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.
[THIS DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Equity Russell 1000
Income VCT Portfolio Value Index
6/96 $10,000 $10,000
6/97 13,062 13,319
6/98 16,713 17,159
6/99 19,424 19,967
6/00 18,197 18,187
6/01 20,066 20,066
6/02 18,324 18,270
6/03 17,607 18,083
6/04 20,696 21,905
6/05 23,573 24,985
6/06 26,479 28,007
The Russell 1000 Value Index measures the performance of large-cap U.S. value
stocks. Index returns assume reinvestment of dividends and, unlike Portfolio
returns, do not reflect any fees, expenses or sales charges. You cannot invest
directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Years 10.23%
5 Years 5.70%
1 Year 12.33%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 variable annuities. 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 [divided by] $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, 2006 through June 30, 2006
Share Class II
--------------------------------------------------
Beginning Account Value On 1/1/06 $ 1,000.00
Ending Account Value On 6/30/06 $ 1,084.70
Expenses Paid During Period* $ 4.86
* Expenses are equal to the Portfolio's annualized expense ratio of 0.94% for
Class II 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 Equity Income VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
--------------------------------------------------
Beginning Account Value On 1/1/06 $ 1,000.00
Ending Account Value On 6/30/06 $ 1,020.13
Expenses Paid During Period* $ 4.71
* Expenses are equal to the Portfolio's annualized expense ratio of 0.94% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager John Carey discusses the
performance of Pioneer Equity Income VCT Portfolio, as well as the investment
environment over the six-month period ended June 30, 2006.
Q. How did the Portfolio perform relative to its benchmark, the Russell 1000
Value Index?
A. Class II shares of Pioneer Equity Income VCT Portfolio recorded a total
return of 8.47% at net asset value for the six months ended June 30, 2006.
By comparison, the Russell 1000 Value Index, an unmanaged index of stocks,
rose 6.56%. The average return for the 59 portfolios in the Lipper Equity
Income variable-account category was 5.23%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
While the stock market was positive for the first half as a whole, it began
showing signs of stress in the second half of May and continues to be shaky
as we write this letter. Investor concerns about inflation and interest
rates, high oil and other commodity prices, the slowdown in housing, and the
unsettled international situation, particularly in the Middle East, have
started to weigh heavily on the market. For the moment, corporate earnings
remain strong, but investors are apparently worrying about what may lie ahead
if the economy stalls.
Q. What were the reasons for the outperformance of the Portfolio versus its
benchmark?
A. The Portfolio benefited from good stock selection in a number of sectors,
principally financials, health care, industrials, and consumer staples.
Individual stocks that contributed importantly to performance were PACCAR,
BellSouth, Campbell Soup, Whitney Holding, H. J. Heinz, Roanoke Electric
Steel, and Gorman-Rupp. BellSouth and Roanoke Electric Steel both received
premium take-over bids. H. J. Heinz attracted the attention of some
aggressive private investors intent on getting more value from the company.
Whitney Holding, a bank based in New Orleans, continued its post-Katrina
hurricane recovery. PACCAR, Campbell Soup, and Gorman-Rupp all showed
strong business results.
On the negative side, our underweight in the strong energy sector and weak
stock selection in consumer discretionary hurt results. We had scaled back
our energy exposure due to our view that oil and natural-gas prices would
moderate. That has certainly been the case with natural gas, which has come
down considerably in price, but it has not been true of oil, which continues
to sell at near record prices. With respect to consumer discretionary, we had
three stocks that underperformed. Cedar Fair sold off following its
acquisition of another large amusement-park operator and the anticipation of
near-term dilution of earnings. We are retaining our position, however,
because we think that the acquisition will ultimately work out well for the
company. McGraw-Hill was soft because of a legislative push in Washington, D.
C., to facilitate more competition in the credit-rating industry, where
McGraw-Hill's highly profitable Standard & Poor's is a leader. Finally,
Tupperware traded down due to a disappointing first quarter, marked by higher
expenses.
Q. Did you make changes to the Portfolio during the past six months? If so,
please describe.
A. We were busy in the first half, adding seven positions and selling fourteen.
We are excluding from those totals our receipt of shares in Lincoln
National in exchange for our shares of Jefferson Pilot following the merger
of those two life insurance companies. The seven new names were: Mine
Safety Appliances, expert in industrial safety equipment including
respiratory gear; Kellogg, leading breakfast cereal maker; J. M. Smucker,
successful producer of jams and jellies, toppings and peanut butter;
Regions Financial, Alabama-based retail and commercial bank; Liberty
Property Trust, a real-estate investment trust (REIT) specializing in
suburban office and industrial properties; and AGL Resources and Duke
Energy, utilities operating generally in the southern part of the United
States. All of the additions are dividend-paying companies with valuations
we found attractive.
A Word About Risk:
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Among liquidations from the Portfolio, we sold Keyspan after it accepted a
premium-priced take-over bid from an English firm. We also sold Roanoke
Electric Steel in the wake of its acceptance of a take-over bid. Likewise,
Albertson's. We took advantage of the strong investor interest in materials
and other cyclical stocks to realize substantial percentage gains on Vulcan
Materials, Nucor, and Burlington Northern. We took big gains as well on our
sales of Becton Dickinson and Johnson & Johnson. Other sales were of
companies with which we were fundamentally less confident or which seemed
less compelling than other stocks in the Portfolio. Those sales included PPG
Industries, MeadWestvaco, Coca Cola, Comerica, Citigroup, and Sara Lee.
Q. What is your outlook for the remainder of the year?
A. Looking ahead, we anticipate a slower economy and less robust corporate
earnings. As always, there are those who say "it's different this time" and
that there is no reason why the economy should not continue growing
steadily. However, the business cycle takes an inexorable course, and
downturns are actually essential in keeping the economy growing in the long
term. During downturns, the good businesses are separated from the bad, the
sound loans from the unsound, and the strong managements from the weak.
Downturns also renew the investor base by providing opportunities to get
solid value at discounted prices. People who had not wanted to step in and
buy when prices were high will often buy aggressively when prices fall. We
are not, mind you, predicting any particular starting point for the coming
downturn, and there could still be some strength in the market before it
happens. But we are thinking that it is already time to be positioning
oneself appropriately, in stocks of resilient, well managed, and
financially solid companies. Of course, those are characteristics we always
emphasize in our stock selection, but now we shall be putting double weight
on them. Thank you as ever for your support.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
CONVERTIBLE PREFERRED STOCKS - 0.5%
Automobiles & Components - 0.4%
Automobile Manufacturers - 0.4%
60,747 Ford Cap Trust 6.50% 01/15/32 $ 1,680,869
------------
Total Automobiles & Components $ 1,680,869
------------
Pharmaceuticals & Biotechnology - 0.1%
Pharmaceuticals - 0.1%
4,255 Schering-Plough Corp. Cnpfd
6.0%, 9/14/07 $ 214,346
------------
Total Pharmaceuticals &
Biotechnology $ 214,346
------------
TOTAL CONVERTIBLE
PREFERRED STOCKS
(Cost $3,070,923) $ 1,895,215
------------
COMMON STOCKS - 97.0%
Energy - 5.8%
Integrated Oil & Gas - 5.8%
144,649 Chevron Corp. $ 8,976,917
115,922 ConocoPhillips 7,596,369
84,898 Exxon Mobil Corp. 5,208,492
------------
$ 21,781,778
------------
Total Energy $ 21,781,778
------------
Materials - 4.4%
Diversified Chemical - 1.1%
73,300 Dow Chemical Co. $ 2,860,899
82,800 Olin Corp. 1,484,604
------------
$ 4,345,503
------------
Diversified Metals & Mining - 0.3%
43,156 Compass Minerals International, Inc. $ 1,076,742
------------
Forest Products - 0.8%
46,000 Weyerhaeuser Co. $ 2,863,500
------------
Industrial Gases - 1.2%
71,152 Air Products & Chemicals, Inc. $ 4,548,036
------------
Specialty Chemicals - 1.0%
146,365 Valspar Corp. $ 3,865,500
------------
Total Materials $ 16,699,281
------------
Capital Goods - 9.2%
Aerospace & Defense - 1.7%
103,955 United Technologies Corp. $ 6,592,826
------------
Construction & Farm Machinery &
Heavy Trucks - 4.2%
38,489 Deere & Co. $ 3,213,447
153,643 PACCAR, Inc. 12,657,110
------------
$ 15,870,557
------------
Shares Value
Electrical Component & Equipment - 2.0%
91,501 Emerson Electric Co. $ 7,668,699
------------
Industrial Machinery - 1.3%
30,350 Gorman-Rupp Co. $ 807,310
117,902 The Timken Co. 3,950,896
------------
$ 4,758,206
------------
Total Capital Goods $ 34,890,288
------------
Commercial Services & Supplies - 0.4%
Office Services & Supplies - 0.4%
37,000 Mine Safety Appliances Co.*(a) $ 1,487,400
------------
Total Commercial
Services & Supplies $ 1,487,400
------------
Automobiles & Components - 2.7%
Auto Parts & Equipment - 2.0%
93,560 Johnson Controls, Inc. $ 7,692,503
------------
Automobile Manufacturers - 0.7%
378,522 Ford Motor Corp.(a) $ 2,623,157
------------
Total Automobiles & Components $ 10,315,660
------------
Consumer Durables & Apparel - 0.6%
Housewares & Specialties - 0.6%
123,380 Tupperware Brands Corp. $ 2,429,352
------------
Total Consumer Durables & Apparel $ 2,429,352
------------
Consumer Services - 1.8%
Leisure Facilities - 1.4%
200,827 Cedar Fair, L.P. $ 5,329,949
------------
Specialized Consumer Services - 0.4%
134,841 Servicemaster Co. $ 1,392,908
------------
Total Consumer Services $ 6,722,857
------------
Media - 1.5%
Publishing - 1.5%
113,625 McGraw-Hill Co., Inc. $ 5,707,384
------------
Total Media $ 5,707,384
------------
Retailing - 1.5%
Department Stores - 0.6%
55,242 Federated Department Stores, Inc.* $ 2,021,857
------------
Distributors - 0.9%
84,730 Genuine Parts Co. $ 3,529,852
------------
Total Retailing $ 5,551,709
------------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Food, Beverage & Tobacco - 7.1%
Packaged Foods & Meats - 6.5%
188,614 Campbell Soup Co. $ 6,999,466
60,831 General Mills, Inc. 3,142,529
187,543 H.J. Heinz Co., Inc. 7,730,522
66,100 Kellogg Co. 3,201,223
81,300 The J.M. Smucker Co. 3,634,110
------------
$ 24,707,850
------------
Soft Drinks - 0.6%
38,972 PepsiCo, Inc. $ 2,339,879
------------
Total Food, Beverage & Tobacco $ 27,047,729
------------
Household & Personal Products - 2.3%
Household Products - 2.3%
70,315 Clorox Co. $ 4,287,106
76,594 Colgate-Palmolive Co. 4,587,981
------------
$ 8,875,087
------------
Total Household &
Personal Products $ 8,875,087
------------
Pharmaceuticals & Biotechnology - 6.7%
Pharmaceuticals - 6.7%
111,066 Abbott Laboratories $ 4,843,588
238,807 Bristol-Myers Squibb Co. 6,175,549
74,039 Eli Lilly & Co. 4,092,136
260,932 Merck & Co., Inc. 9,505,753
36,900 Pfizer, Inc. 866,043
------------
$ 25,483,069
------------
Total Pharmaceuticals &
Biotechnology $ 25,483,069
------------
Banks - 14.3%
Diversified Banks - 4.1%
153,101 U.S. Bancorp $ 4,727,759
103,024 Wachovia Corp. 5,571,538
74,937 Wells Fargo & Co. 5,026,774
------------
$ 15,326,071
------------
Regional Banks - 7.2%
88,467 First Horizon National Corp. $ 3,556,373
123,911 National City Corp. 4,484,339
54,800 PNC Bank Corp. 3,845,316
73,800 Regions Financial Corp. 2,444,256
102,478 SunTrust Banks, Inc. 7,814,972
144,505 Whitney Holding Corp. 5,111,142
------------
$ 27,256,398
------------
Thrifts & Mortgage Finance - 3.0%
250,458 Washington Mutual, Inc. $ 11,415,876
------------
Total Banks $ 53,998,345
------------
Shares Value
Diversified Financials - 5.6%
Asset Management & Custody Banks - 4.3%
152,899 Eaton Vance Corp. (a) $ 3,816,359
34,424 State Street Corp. 1,999,690
279,886 T. Rowe Price Associates, Inc. 10,582,490
------------
$ 16,398,539
------------
Investment Banking & Brokerage - 0.8%
55,113 A.G. Edwards, Inc. $ 3,048,851
------------
Diversified Financial Services - 0.5%
35,852 Bank of America Corp. $ 1,724,481
------------
Total Diversified Financials $ 21,171,871
------------
Insurance - 4.6%
Life & Health Insurance - 1.4%
91,791 Lincoln National Corp.* $ 5,180,684
------------
Property & Casualty Insurance - 3.2%
142,492 Chubb Corp. $ 7,110,351
92,994 Safeco Corp. 5,240,212
------------
$ 12,350,563
------------
Total Insurance $ 17,531,247
------------
Real Estate - 2.7%
Diversified Real Estate Investment Trusts - 0.9%
73,500 Liberty Property Trust (a) $ 3,248,700
------------
Residential Real Estate Investment
Trusts - 0.8%
56,454 Archstone Communities Trust (a) $ 2,871,815
------------
Retail Real Estate Investment Trusts - 1.0%
109,500 Kimco Realty Corp. $ 3,995,655
------------
Total Real Estate $ 10,116,170
------------
Software & Services - 0.6%
Data Processing & Outsourced Services - 0.6%
50,297 Automatic Data Processing, Inc. $ 2,280,969
------------
Total Software & Services $ 2,280,969
------------
Technology Hardware & Equipment - 0.3%
Computer Hardware - 0.3%
36,500 Hewlett-Packard Co. $ 1,156,320
------------
Total Technology
Hardware & Equipment $ 1,156,320
------------
Telecommunication Services - 9.3%
Integrated Telecommunication Services - 8.2%
305,096 AT&T Corp. $ 8,509,127
251,696 BellSouth Corp. 9,111,395
364,179 Citizens Utilities Co. (Class B) 4,752,536
254,800 Verizon Communications, Inc. 8,533,252
------------
$ 30,906,310
------------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Wireless Telecommunication Services - 1.1%
66,304 Alltel Corp. $ 4,232,184
------------
Total Telecommunication Services $ 35,138,494
------------
Utilities - 15.6%
Electric Utilities - 2.3%
127,711 Great Plains Energy, Inc. (a) $ 3,558,028
157,858 Southern Co. 5,059,349
------------
$ 8,617,377
------------
Gas Utilities - 6.4%
120,100 AGL Resources Inc. $ 4,578,212
129,470 Atmos Energy Corp. 3,613,508
170,238 Equitable Resources, Inc. 5,702,973
126,481 Questar Corp. 10,180,456
------------
$ 24,075,149
------------
Multi-Utilities - 6.9%
98,272 Ameren Corp. $ 4,962,736
94,780 Consolidated Edison, Inc. 4,212,023
180,200 Duke Energy Corp. 5,292,474
143,415 NSTAR 4,101,668
193,900 PG&E Corp. 7,616,392
------------
$ 26,185,293
------------
Total Utilities $ 58,877,819
------------
TOTAL COMMON STOCKS
(Cost $297,591,022) $367,262,829
------------
Principal
Amount
TEMPORARY CASH INVESTMENTS - 6.5%
Repurchase Agreement - 2.7%
$10,100,000 UBS Warburg, Inc., 4.4% dated
6/30/06, repurchase price of
$10,100,000 plus accrued interest on
7/3/06 collateralized by $10,302,000
U.S. Treasury Bill, 4.625%, 3/31/08 $ 10,100,000
------------
Shares
Security Lending Collateral - 3.8%
14,278,681 Securities Lending Investment
Fund, 5.16% $ 14,278,681
------------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $24,378,681) $ 24,378,681
------------
TOTAL INVESTMENT
IN SECURITIES - 104.0%
(Cost $325,040,626) $393,536,725
------------
OTHER ASSETS
AND LIABILITIES - (4.0)% $(14,959,301)
------------
TOTAL NET ASSETS - 100.0% $378,577,424
============
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
54,026 Archstone Communities Trust $ 2,748,303
142,328 Eaton Vance Corp. 3,552,507
374,737 Ford Motor Corp. 2,596,927
69,296 Great Plains Energy, Inc. 1,930,587
38,112 Liberty Property Trust 1,684,550
36,630 Mine Safety Appliances Co.* 1,472,526
-----------
Total $13,985,400
===========
8 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 Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 21.37 $ 20.68 $ 18.19 $ 15.18 $ 18.49 $ 21.37
-------- -------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.26 $ 0.45 $ 0.36 $ 0.32 $ 0.31 $ 0.34
Net realized and unrealized gain (loss) on investments 1.53 0.68 2.53 3.02 (3.25) (1.84)
-------- -------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 1.79 $ 1.13 $ 2.89 $ 3.34 $ (2.94) $ (1.50)
Distributions to shareholders:
Net investment income (0.25) (0.44) (0.40) (0.33) (0.37) (0.32)
Net realized gain (0.37) -- -- -- -- (1.06)
-------- -------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.17 $ 0.69 $ 2.49 $ 3.01 $ (3.31) $ (2.88)
-------- -------- ------- ------- ------- -------
Net asset value, end of period $ 22.54 $ 21.37 $ 20.68 $ 18.19 $ 15.18 $ 18.49
======== ======== ======= ======= ======= =======
Total return* 8.47% 5.52% 16.04% 22.27% (16.05)% (7.15)%
Ratio of net expenses to average net assets+ 0.94%** 0.96% 0.98% 1.02% 1.07% 1.02%
Ratio of net investment income to average net assets+ 2.31%** 2.32% 2.16% 2.29% 2.25% 1.77%
Portfolio turnover rate 28%** 22% 19% 12% 12% 13%
Net assets, end of period (in thousands) $132,069 $127,459 $93,691 $60,355 $27,084 $17,948
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.94%** 0.96% 0.98% 1.02% 1.07% 1.02%
Net investment income 2.31%** 2.32% 2.16% 2.29% 2.25% 1.77%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.94%** 0.95% 0.98% 1.02% 1.07% 1.02%
Net investment income 2.31%** 2.33% 2.16% 2.29% 2.25% 1.77%
* 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.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
Note: The above financial highlights do not reflect the deduction of non-fund
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. 9
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $13,985,400) (Cost $325,040,626) $ 393,536,725
Receivables --
Investment securities sold 37,746
Fund shares sold 217,641
Dividends, interest and foreign taxes withheld 736,988
Other 12,514
-------------
Total assets $ 394,541,614
-------------
LIABILITIES:
Payables --
Fund shares repurchased $ 1,448,052
Upon return for securities loaned 14,278,681
Due to bank 152,838
Due to affiliates 16,432
Accrued expenses 68,187
-------------
Total liabilities $ 15,964,190
-------------
NET ASSETS:
Paid-in capital $ 294,876,155
Undistributed net investment income 1,866,096
Accumulated net realized gain 13,339,074
Net unrealized gain on investments 68,496,099
-------------
Total net assets $ 378,577,424
-------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 246,508,491
Shares outstanding 10,998,771
-------------
Net asset value per share $ 22.41
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 132,068,933
Shares outstanding 5,859,143
-------------
Net asset value per share $ 22.54
10 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends $ 5,786,629
Interest 178,990
Income on securities loaned, net 2,659
-----------
Total investment income $ 5,968,278
-----------
EXPENSES:
Management fees $ 1,191,418
Transfer agent fees and expenses 5,052
Distribution fees (Class II) 161,034
Administrative reimbursements 34,556
Custodian fees 21,619
Professional fees 13,706
Printing expense 51
Fees and expenses of nonaffiliated trustees 2,810
Miscellaneous 393
-----------
Total expenses $ 1,430,639
Less fees paid indirectly (796)
-----------
Net expenses $ 1,429,843
-----------
Net investment income $ 4,538,435
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investments $13,469,756
-----------
Change in net unrealized gain from investments $12,301,600
-----------
Net gain on investments $25,771,356
===========
Net increase in net assets resulting from operations $30,309,791
===========
The accompanying notes are an integral part of these financial statements. 11
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 4,538,435 $ 8,063,117
Net realized gain on investments 13,469,756 19,415,048
Change in net unrealized gain or loss on investments 12,301,600 (9,053,445)
------------- -------------
Net increase in net assets resulting from operations $ 30,309,791 $ 18,424,720
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (3,001,872) $ (5,101,572)
Class II (1,421,557) (2,458,044)
Net realized gain
Class I (4,037,203) --
Class II (2,136,789) --
------------- -------------
Total distributions to shareowners $ (10,597,421) $ (7,559,616)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,815,875 $ 96,224,481
Reinvestment of distributions 10,597,420 7,559,617
Cost of shares repurchased (35,255,571) (36,867,650)
------------- -------------
Net increase (decrease) in net assets resulting from Fund share transactions $ (842,276) $ 66,916,448
------------- -------------
Net increase in net assets $ 18,870,094 $ 77,781,552
------------- -------------
NET ASSETS:
Beginning of period $ 359,707,330 $ 281,925,778
------------- -------------
End of period $ 378,577,424 $ 359,707,330
============= =============
Undistributed net investment income, end of period $ 1,866,096 $ 1,751,090
============= =============
12 The accompanying notes are an integral part of these financial statements.
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Equity Income VCT Portfolio is a Portfolio of Pioneer Variable
Contracts Trust (the Trust), a Delaware statutory trust registered under the
Investment Company Act of 1940 as an open-end management investment company.
The Trust consists of twenty-seven separate diversified portfolios, thirteen of
which issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Equity Income Portfolio is to seek capital
appreciation.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
The following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements,
which are consistent 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 (NYSE) is open, as of the close of regular trading on the NYSE. In
13
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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 NYSE. The
value of such securities used in computing the net asset value of the
Portfolio's shares is based on the last sale price on the principal
exchange where they traded. The Portfolio also may use the fair value of a
security, including a non-U.S. security, when the closing market price on
the primary exchange where the security is traded no longer accurately
reflects the value of the security as of the close of the NYSE. At June 30,
2006, there were no fair valued securities. Temporary cash investments are
valued at amortized cost.
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, net of unrecoverable foreign taxes withheld at the
applicable country rates. All discounts/premiums are accreted/amortized for
financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. 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. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2006, the portfolio had no open futures contracts.
C. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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.
14
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 7,559,616
Long-Term capital gain --
-----------
$ 7,559,616
Return of Capital --
-----------
Total distributions $ 7,559,616
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 203,918
Undistributed long-term gain/(capital loss carryforward) 6,168,262
Post-October loss deferred --
Unrealized appreciation (depreciation) 57,618,364
-----------
Total $63,990,544
===========
- --------------------------------------------------------------------------------
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.
D. 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), $462,503 in
commissions on the sale of Trust shares for the year ended December 31,
2005. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted-net assets at the
beginning of the day. 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, at the
same time, and in the same amount, except that
Class I and Class II shares can bear different transfer agent and
distribution fees.
E. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian.
F. 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.
15
Pioneer Equity Income VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolios. Management fees are calculated daily at the annual rate of 0.65% of
the Portfolio's average daily net assets.
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, 2006, $7,786 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
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 $7,747 in transfer agent fees payable to PIMSS at June 30,
2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $899 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
Equity Income Portfolio $323,616,761 $75,806,765 $ (5,886,801) $69,919,964
============ =========== ============ ===========
- --------------------------------------------------------------------------------------------------
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, 2006, were $49,579,685 and $56,519,684, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Equity Income Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- --------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 561,352 $ 12,533,920 2,853,636 $ 59,389,539
Reinvestment of distributions 320,294 7,039,074 242,794 5,101,573
Shares repurchased (810,119) (17,986,672) (1,317,139) (27,494,268)
-------- ------------- ---------- -------------
Net increase 71,527 $ 1,586,322 1,779,291 $ 36,996,844
======== ============= ========== =============
CLASS II:
Shares sold 503,869 $ 11,281,955 1,763,038 $ 36,834,942
Reinvestment of distributions 161,060 3,558,346 116,340 2,458,044
Shares repurchased (770,080) (17,268,899) (444,619) (9,373,382)
-------- ------------- ---------- -------------
Net increase (decrease) (105,151) $ (2,428,598) 1,434,759 $ 29,919,604
======== ============= ========== =============
- --------------------------------------------------------------------------------------------------
16
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19625-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Europe VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
JUNE 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Europe VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 5
Financial Statements 7
Notes to Financial Statements 11
Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
International Common Stocks 94.7%
International Preferred Stocks 2.9%
U.S. Common Stocks 2.4%
Geographical Distribution
(As a percentage of equity holdings)
[THE DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
United Kingdom 34.2%
France 18.5%
Switzerland 11.6%
Germany 11.4%
Ireland 5.6%
Netherlands 4.1%
Sweden 4.0%
Spain 3.1%
Italy 3.0%
Panama 2.4%
Norway 2.1%
Five Largest Holdings
(As a percentage of equity holdings)
1. BP Amoco Plc 5.43%
- ------------------------------------------------
2. Royal Bank of Scotland Group Plc 5.18
- ------------------------------------------------
3. BNP Paribas SA 4.89
- ------------------------------------------------
4. CS Group 4.29
- ------------------------------------------------
5. TNT NV 4.14
- ------------------------------------------------
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $12.52 $11.20
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0539 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Europe VCT Portfolio at net asset value, compared to that of the Morgan Stanley
Capital International (MSCI) Europe Index. Portfolio returns are based on net
asset value and do not reflect any applicable insurance fees or surrender
charges.
[THE DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Europe MSCI Europe
VCT Portfolio Index
10/98 $10,000 $10,000
6/99 10,409 10,748
6/00 13,285 12,405
6/01 8,815 9,750
6/02 7,983 9,028
6/03 7,429 8,594
6/04 9,157 11,120
6/05 10,531 13,056
6/06 12,946 16,364
The Morgan Stanley Capital International (MSCI) Europe Index measures the
performance of stocks in European developed markets. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 3.43%
(10/30/98)
5 Years 7.99%
1 Year 22.93%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Europe 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 variable annuities. 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 [divided by] $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 Europe VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
--------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,122.90
Expenses Paid During Period* $ 9.37
* Expenses are equal to the Portfolio's annualized expense ratio of 1.78% for
Class II 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 Europe VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
--------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,015.97
Expenses Paid During Period* $ 8.90
* Expenses are equal to the Portfolio's annualized expense ratio of 1.78% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Despite a volatile second quarter as investors reacted to increased concerns
over inflation and interest rates, European stocks posted strong positive
returns over the first half of 2006, supported by solid company earnings
growth, ongoing merger and acquisition activity and an improving economic
backdrop. In the discussion below, Andrew Arbuthnott, who is responsible for
the day-to-day management of the Europe VCT Portfolio, discusses the factors
that influenced the Portfolio's performance over the period.
Q. How did the Portfolio perform?
A. For the six months ended June 30, 2006, Class II shares returned 12.29% at
net asset value. In comparison, the Portfolio benchmark, the Morgan Stanley
Capital International (MSCI) Europe Index, posted a return of 13.58% while
the 137 International Core funds in the Lipper peer group generated an
average return of 8.55%. European equity returns for the period were strong
relative to U.S. domestic equity indices. In addition, with Portfolio
holdings denominated in euros, returns for the Portfolio and the Index
reflect the positive impact for U.S. investors of the U.S. dollar's decline
over the period versus the euro.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Would you review the Portfolio's overall approach?
A. The Portfolio takes a focused approach to investing, holding around 30
stocks that reflect our strongest investment ideas. We believe this focus
helps to maximize the benefits of our bottom-up stock selection process
while at the same time giving us the ability to construct a diversified,
multi-cap portfolio. Despite the Portfolio's relatively high degree of
focus, we expect its overall level of volatility to remain broadly
comparable to that of its benchmark, due to the consistent application of
our rigorous investment process. The goal is to invest in those securities
with strong upside potential and - critically - limited downside risk.
Q. What positions most influenced the Portfolio's relative performance?
A. Among positive contributors, position in French supermarket group Carrefour
strongly outperformed during the period amid improving sales volumes at its
stores. We decided to take profits in this holding late in the second
quarter of 2006, reinvesting in other stocks where we believed more upside
potential remained. Holdings in the materials sector contributed positively
to performance, in particular Lafarge, a French building materials company.
Lafarge advanced on the strength of better-than-expected full year results
and its management team's restructuring and cost control plans. Other key
holdings in the materials sector such as St.Gobain and Rio Tinto also
outperformed, with the latter benefiting from exceptional increases in
commodity metal prices during the first half of 2006. We saw a strong
contribution from our holdings in the automotive sector where positions in
Porsche and Continental rose sharply.
On the negative side of the ledger, Portfolio returns were held back by
weakness in the share price of Carnival, a cruise ship operator, as renewed
strength in the price of oil and slower bookings on Caribbean routes eroded
the company's profits. We continue to believe that, as the global market
leader in the cruise industry, Carnival is well positioned to be a key
beneficiary from this area's attractive long-term growth potential, and we
used this period of weakness to add to the Portfolio's position. Investments
in Repsol YPF, a Spanish oil company, held back performance, as the company
unexpectedly lowered its oil reserves in the first quarter. In addition, the
Bolivian government's nationalization of oil assets dented investor
sentiment toward Repsol YPF in the second quarter, although the financial
impact of this move on the company was minimal.
Q. What is your outlook?
A. In our view, European equity market weakness in the second quarter was
driven by technical factors, such as investors adjusting their portfolios
ahead of potential interest rate rises, rather than deteriorating
underlying fundamentals. We believe European equities continue to trade at
attractive levels in absolute terms and also look well supported relative
to bonds. In general, company fundamentals remain healthy and management
teams continue to look to enhance shareholder value through acquisitions,
restructuring, and returning excess cash through dividends or share
buybacks. While investor sentiment has been improving, we do expect
volatility to remain a significant factor in equity markets over the coming
months, as uncertainties linger over future inflation and interest rates.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is susceptible to adverse
economic, political or regulatory developments affecting those countries. The
Portfolio invests in a limited number of securities and, as a result, the
Portfolio's performance may be more volatile than the performance of other
portfolios holding more securities. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCK - 2.9%
Automobiles & Components - 2.9%
Automobile Manufacturers - 2.9%
601 Porsche AG* $ 579,712
-----------
TOTAL PREFERRED STOCK
(Cost $384,137) $ 579,712
-----------
COMMON STOCKS - 95.7%
Energy - 11.4%
Integrated Oil & Gas - 11.4%
92,816 BP Amoco Plc $ 1,074,177
20,168 Eni SpA* 592,511
21,728 Repsol SA 613,977
-----------
$ 2,280,665
-----------
Total Energy $ 2,280,665
-----------
Materials - 7.6%
Construction Materials - 5.4%
21,189 CRH Plc $ 687,712
3,081 Lafarge Br* 386,161
-----------
$ 1,073,873
-----------
Diversified Metals & Mining - 2.2%
8,503 Rio Tinto Plc $ 445,835
-----------
Total Materials $ 1,519,708
-----------
Capital Goods - 7.7%
Building Products - 2.9%
8,064 Compagnie de Saint Gobain* $ 575,280
-----------
Industrial Conglomerates - 2.6%
6,139 Siemens $ 533,937
-----------
Trading Companies & Distributors - 2.2%
20,233 Wolseley* $ 444,485
-----------
Total Capital Goods $ 1,553,702
-----------
Transportation - 4.1%
Air Freight & Couriers - 4.1%
22,922 TNT NV $ 820,291
-----------
Total Transportation $ 820,291
-----------
Automobiles & Components - 7.4%
Automobile Manufacturers - 2.1%
6,723 PSA Peugeot* $ 417,529
-----------
Tires & Rubber - 5.3%
8,850 Compagnie Generale des
Etablissements Michelin* $ 530,758
5,301 Continental AG* 540,526
-----------
$ 1,071,284
-----------
Total Automobiles & Components $ 1,488,813
-----------
Shares Value
Consumer Durables & Apparel - 7.1%
Apparel, Accessories & Luxury Goods - 3.0%
12,484 Adidas-Salomon AG* $ 599,897
-----------
Homebuilding - 4.1%
21,596 Persimmon Plc. $ 491,915
38,793 Wimpey (George) Plc* 325,662
-----------
$ 817,577
-----------
Total Consumer Durables & Apparel $ 1,417,474
-----------
Consumer Services - 2.4%
Hotels, Resorts & Cruise Lines - 2.4%
11,547 Carnival Corp. $ 481,972
-----------
Total Consumer Services $ 481,972
-----------
Media - 3.3%
Advertising - 3.3%
54,988 WPP Group Plc $ 662,778
-----------
Total Media $ 662,778
-----------
Retailing - 1.7%
Department Stores - 1.7%
11,321 Next Plc $ 342,379
-----------
Total Retailing $ 342,379
-----------
Food & Drug Retailing - 2.7%
Drug Retail - 1.5%
21,694 Boots Group Plc $ 307,580
-----------
Hypermarkets & Supercenters - 1.2%
4,016 Carrefour Supermarch* $ 235,045
-----------
Total Food & Drug Retailing $ 542,625
-----------
Pharmaceuticals & Biotechnology - 8.5%
Pharmaceuticals - 8.5%
10,691 Astrazeneca Plc $ 639,900
4,787 Roche Holdings AG 790,000
19,449 Shire Plc* 285,583
-----------
$ 1,715,483
-----------
Total Pharmaceuticals &
Biotechnology $ 1,715,483
-----------
Banks - 21.1%
Diversified Banks - 21.1%
17,413 Allied Irish Banks Plc $ 418,736
63,745 Barclays Plc 724,904
10,136 BNP Paribas SA* 968,348
32,910 Dnb Nor Asa* 407,774
31,220 Royal Bank of Scotland Group Plc 1,026,484
11,376 Skand Enkilda Banken* 270,459
2,893 Societe Generale* 424,482
-----------
$ 4,241,187
-----------
Total Banks $ 4,241,187
-----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Diversified Financials - 7.5%
Diversified Capital Markets - 7.5%
15,233 CS Group* $ 850,279
6,087 UBS AG* 665,248
-----------
$ 1,515,527
-----------
Total Diversified Financials $ 1,515,527
-----------
Technology Hardware & Equipment - 2.6%
Communications Equipment - 2.6%
157,002 Ericsson LM* $ 518,677
-----------
Total Technology Hardware &
Equipment $ 518,677
-----------
Telecommunication Services - 0.6%
Integrated Telecommunication Services - 0.6%
5,536 France Telecom SA* $ 118,802
-----------
Total Telecommunication Services $ 118,802
-----------
TOTAL COMMON STOCKS
(Cost $15,714,456) $19,220,083
-----------
TOTAL INVESTMENT IN
SECURITIES - 98.6%
(Cost $16,098,593)(a) $19,799,795
-----------
OTHER ASSETS
AND LIABILITIES - 1.4% $ 275,050
-----------
TOTAL NET ASSETS - 100.0% $20,074,845
===========
* Non-income producing security.
(a) Distributions of investments by country of issue (excluding temporary
cash investments), as a percentage of total investment in equity
securities, is as follows:
United Kingdom 34.2%
France 18.5
Switzerland 11.6
Germany 11.4
Ireland 5.6
Netherlands 4.1
Sweden 4.0
Spain 3.1
Italy 3.0
Panama 2.4
Norway 2.1
-----
100.0%
=====
6 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year 1/2/01 (a)
6/30/06 Ended Ended Ended Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 11.20 $10.44 $ 8.89 $ 6.71 $ 8.29 $ 11.07
------- ------ ------ ------ ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.21 $ 0.06 $ 0.04 $ 0.03 $ 0.01 $ 0.08
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 1.16 0.75 1.57 2.17 (1.59) (2.71)
------- ------ ------ ------ ------- -------
Net increase (decrease) from investment operations $ 1.37 $ 0.81 $ 1.61 $ 2.20 $ (1.58) $ (2.63)
Distributions to shareowners:
Net investment income (0.05) (0.05) (0.06) (0.02) -- (0.15)
------- ------ ------ ------ ------- -------
Net increase (decrease) in net asset value $ 1.32 $ 0.76 $ 1.55 $ 2.18 $ (1.58) $ (2.78)
------- ------ ------ ------ ------- -------
Net asset value, end of period $ 12.52 $11.20 $10.44 $ 8.89 $ 6.71 $ 8.29
======= ====== ====== ====== ======= =======
Total return* 12.29% 7.81% 18.20% 32.92% (19.06)% (23.44)%
Ratio of net expenses to average net assets+ 1.78%** 1.75% 1.75% 1.79% 1.86% 3.22%
Ratio of net investment income (loss) to average net assets+ 3.43%** 0.66% 0.61% 0.56% 0.25% (2.56)%
Portfolio turnover rate 41%** 95% 55% 52% 95% 73%
Net assets, end of period (in thousands) $11,105 $9,958 $8,252 $5,005 $ 1,829 $ 398
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.83%** 2.01% 2.20% 2.75% 2.66% 4.57%
Net investment income (loss) 3.38%** 0.40% 0.17% (0.40)% (0.54)% (3.90)%
(a) Class II shares were first publicly offered on January 2, 2001.
* 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.
** Annualized
+ Ratios assuming no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 7
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (Cost $16,098,593) $ 19,799,795
Cash 252,966
Foreign currencies, at value (Cost $36) 36
Receivables --
Investment securities sold 268,416
Fund shares sold 102,579
Dividends, interest and foreign taxes withheld 40,635
Forward foreign currency settlement contracts, net 1,884
Other 1,947
------------
Total assets $ 20,468,258
------------
LIABILITIES:
Payables --
Investment securities purchased $ 335,790
Fund shares repurchased 2,991
Due to affiliates 8,364
Accrued expenses 46,268
------------
Total liabilities $ 393,413
------------
NET ASSETS:
Paid-in capital $ 19,926,514
Undistributed net investment income 353,175
Accumulated net realized loss (3,907,755)
Net unrealized gain on:
Investments 3,701,202
Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 1,709
------------
Total net assets $ 20,074,845
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 8,970,304
Shares outstanding 703,576
------------
Net asset value per share $ 12.75
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 11,104,541
Shares outstanding 887,007
------------
Net asset value per share $ 12.52
8 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $68,353) $ 516,174
Interest 3,352
----------
Total investment income $ 519,526
----------
EXPENSES:
Management fees $ 84,927
Transfer agent fees and expenses 4,920
Distribution fees (Class II) 13,598
Administrative reimbursements 9,698
Custodian fees 17,120
Professional fees 28,376
Printing expense 6,598
Fees and expenses of nonaffiliated trustees 923
Miscellaneous 5,381
----------
Total expenses $ 171,541
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (5,304)
----------
Net expenses $ 166,237
----------
Net investment income $ 353,289
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 787,847
Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies (1,296)
----------
$ 786,551
----------
Change in net unrealized gain from:
Investments $1,142,972
Forward foreign currency contracts and other assets and liabilities denominated in foreign currencies 1,865
----------
$1,144,837
----------
Net gain on investments and foreign currency transactions $1,931,388
==========
Net increase in net assets resulting from operations $2,284,677
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 353,289 $ 148,281
Net realized gain on investments and foreign currency transactions 786,551 3,108,967
Change in net unrealized gain or loss on investments and foreign
currency transactions 1,144,837 (1,857,317)
----------- -----------
Net increase in net assets resulting from operations $ 2,284,677 $ 1,399,931
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (58,839) $ (58,420)
Class II (47,365) (44,828)
----------- -----------
Total distributions to shareowners $ (106,204) $ (103,248)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,077,577 $ 3,090,347
Reinvestment of distributions 106,204 103,248
Cost of shares repurchased (2,959,113) (3,544,212)
----------- -----------
Net decrease in net assets resulting from Fund share transactions $ (775,332) $ (350,617)
----------- -----------
Net increase in net assets $ 1,403,141 $ 946,066
----------- -----------
NET ASSETS:
Beginning of period $18,671,704 $17,725,638
----------- -----------
End of period $20,074,845 $18,671,704
=========== ===========
Undistributed net investment income, end of period $ 353,175 $ 106,090
=========== ===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Europe Portfolio (the Portfolio) is a Portfolio of Pioneer Variable
Contracts Trust (the Trust), a Delaware statutory trust registered under the
Investment Company Act of 1940 as an open-end management investment company.
The Trust consists of twenty-seven separate diversified portfolios, thirteen of
which issue both Class I and Class II shares (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 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)
(Class I shares only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of Europe VCT Portfolio is to seek long-term capital
growth.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investing in foreign and/or emerging markets
securities involves risks relating to interest rates, currency exchange rates,
economic, and political conditions.
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements, which
are consistent 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 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. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they
11
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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 NYSE. 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. The principal exchanges and
markets for such securities have closing times prior to the close of the
NYSE. However, the value of these securities may be influenced by changes
in global markets occurring after the closing times of the local exchanges
and markets up to the time the Portfolio determines its net asset value.
Consequently, the Board of Trustees of the Portfolio has determined that
the use of daily fair valuations as provided by a pricing service is
appropriate for the Portfolio. The Portfolio may also take into
consideration other significant events in determining the fair value of
these securities. Thus, the Portfolio's securities valuations may differ
from prices reported by the various local exchanges and markets. At June
30, 2006, there were no fair valued securities.
All securities that trade in foreign markets whose closing prices are as of
times prior to the close of the NYSE and that are held by Europe Portfolio
are fair valued using vendor-supplied pricing updates for each security to
the time of the close of the NYSE. Temporary cash investments and
securities held by the Portfolio are valued at amortized cost.
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, net of unrecoverable foreign taxes withheld at the
applicable country rates.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. 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 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. dollars 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
Portfolio's 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.
As of June 30, 2006, the Portfolio had no outstanding portfolio or
settlement hedges.
D. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
In addition to the requirements of the Internal Revenue Code, the portfolio
may also be required to pay local taxes on the recognition of capital gains
and/or the repatriation of foreign currencies in certain countries. During
the six month ended June 30, 2006, no such taxes were paid.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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,
12
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2005, Europe VCT Portfolio had a capital loss
carryforward of $4,600,975 of which the following amounts will expire
between 2009 and 2011 if not utilized: $1,921,644 in 2009, $1,896,288 in
2010 and $783,043 in 2011.
The Portfolio elected to defer $17,485 in capital losses recognized between
November 1, 2005 and December 31, 2005 to its fiscal year ending December
31, 2006.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 103,248
Long-Term capital gain --
-----------
$ 103,248
Return of Capital --
-----------
Total distributions $ 103,248
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 106,090
Undistributed long-term gain/(capital loss carryforward) (4,600,975)
Post-October loss deferred (17,485)
Unrealized appreciation (depreciation) 2,482,228
-----------
Total $(2,030,142)
===========
- --------------------------------------------------------------------------------
For the fiscal year ending December 31, 2005, Europe Portfolio has elected
to pass through foreign tax credits of $46,274.
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily 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.
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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio. Shareowners of each class share all expenses and fees paid to
the transfer agent, Pioneer Investment Management Shareholder Services,
Inc. (PIMSS), for its services, which are allocated based on the number of
accounts in each class and the ratable allocation of related out-of-pocket
expenses (see Note 3). 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 the respective percentage of the adjusted-net assets at the
beginning of the day. The Portfolio declares as daily dividends
substantially all of its respective 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, at the same time, and in the same amount, except that Class I and
Class II shares can bear different transfer agent and distribution fees.
Dividends and distributions to shareowners are recorded on the ex-dividend
date.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
13
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Portfolio also continues to receive payments in lieu of interest or
dividends on the securities loaned. Gain or loss in the fair value of the
securities loaned that may occur during the term of the loan, will be for
the 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 Portfolio has the
right under the lending agreement to recover the securities on loan from
the borrower on demand. The Portfolio invests cash collateral in the
Securities Lending Investment Fund which is sponsored by Brown Brothers
Harriman & Co., the Portfolio'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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolio. Management fees are calculated daily at the annual rate of 1.00% of
the Portfolio's average daily net assets.
Through May 1, 2006, PIM has agreed not to impose a portion of its management
fees and to limit other operating expenses to the extent required to limit
expenses of Class I shares to 1.50% of the average daily net assets
attributable to Class I shares; the portion of portfolio expenses attributable
to Class II shares will be reduced only to the extent 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, 2006, $920 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
3. Transfer Agent
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 $7,369 in transfer agent
fees payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $75 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------
Europe Portfolio $16,174,439 $4,031,428 $(406,072) $3,625,356
=========== ========== ========= ==========
- ----------------------------------------------------------------------------------------
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, 2006, were $4,015,468 and $4,480,689, respectively.
14
Pioneer Europe VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Europe Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ------------------------------------------------------------------------------------------
CLASS I:
Shares sold 19,182 $ 242,185 21,878 $ 233,953
Reinvestment of distributions 4,791 58,839 5,591 58,420
Shares repurchased (83,616) (1,042,402) (155,613) (1,693,646)
-----------------------------------------------------
Net decrease (59,643) $ (741,378) (128,144) $(1,401,273)
=====================================================
CLASS II
Shares sold 148,729 $ 1,835,392 268,948 $ 2,856,394
Reinvestment of distributions 3,927 47,365 4,369 44,828
Shares repurchased (154,937) (1,916,711) (174,429) (1,850,566)
-----------------------------------------------------
Net increase (decrease) (2,281) $ (33,954) 98,888 $ 1,050,656
=====================================================
- ------------------------------------------------------------------------------------------
15
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
Proxy Voting Policies and Procedures of the 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.pioneerinvestments.com. This information is also available
on the Securities and Exchange Commission's web site at http://www.sec.gov.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19626-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Fund VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 10
Notes to Financial Statements 14
Trustees, Officers and Service Providers 20
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
[The following data was represented as pie charts in the printed material]
Portfolio Diversification
(As a percentage of total investment portfolio)
U.S. Common Stocks 92.7%
Depositary Receipts for
International Stocks 3.7%
Temporary Cash Investment 2.2%
International Common Stocks 1.4%
Sector Distribution
(As a percentage of equity holdings)
Financials 18.4%
Industrials 14.1%
Consumer Discretionary 13.0%
Information Technology 12.8%
Health Care 12.5%
Consumer Staples 10.7%
Energy 7.9%
Materials 5.2%
Telecommunication Services 4.4%
Utilities 1.0%
Five Largest Holdings
(As a percentage of equity holdings)
1. Norfolk Southern Corp. 2.41%
2. Chevron Corp. 2.27
3. McGraw-Hill Co., Inc. 1.93
4. Wells Fargo & Co. 1.92
5. T. Rowe Price Associates, Inc. 1.92
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 22.45 $ 21.49
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.1200 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Fund VCT Portfolio at net asset value, compared to that of the Standard & Poor's
(S&P) 500 Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[The following data was represented as a line chart in the printed material]
Pioneer
Fund VCT S&P
Portfolio 500
10/97 $10,000 $10,000
6/98 $11,945 $12,528
6/99 $14,667 $15,378
6/00 $15,912 $16,493
6/01 $14,633 $14,049
6/02 $12,541 $11,523
6/03 $11,896 $11,552
6/04 $13,984 $13,758
6/05 $15,099 $14,627
6/06 $16,931 $15,889
The Standard & Poor's 500 Stock Index (the S&P 500) is a commonly used measure
of the broad U.S. stock market. Index returns assume reinvestment of dividends
and, unlike Portfolio returns, do not reflect any fees, expenses or sales
charges. You cannot invest directly in the Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
Net Asset Value
Life-of-Class 6.27%
(10/31/97)
5 Years 2.96%
1 Year 12.14%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 variable annuities. 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 [divided by] $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, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,050.30
Expenses Paid During Period* $ 4.83
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II 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 Fund VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,020.08
Expenses Paid During Period* $ 4.76
* Expenses are equal to the Portfolio's annualized expense ratio of 0.95% for
Class II shares 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 6/30/06
- --------------------------------------------------------------------------------
In the following discussion, portfolio manager John Carey discusses the
performance of Pioneer Fund VCT Portfolio, as well as the investment environment
over the six-month period ended June 30, 2006.
Q. Please discuss the stock market of the last six months and the investment
results of Pioneer Fund VCT Portfolio.
A. Stocks showed modest gains in the first half of 2006. For the six months
ended June 30, 2006, Class II shares of Pioneer Fund VCT Portfolio achieved
a total return of 5.03% at net asset value, versus 2.71% for the Standard &
Poor's 500, our benchmark index. The Portfolio's 222 Lipper Large-Cap Core
peers returned 1.25% over the same period. Gains across the board had been
significantly greater through the first week of May, but an ensuing
correction pared them back.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
As we write, the market remains shaky. In our 2005 annual shareholder
letter, we stated that our outlook on 2006 was cautious, and that view has
been borne out by events. Despite good earnings reports from companies and
strong economic data, investors appear to be focusing on what comes next. A
common expectation is that the combination of higher interest rates,
record-high oil prices, and a slowing housing market will restrain consumer
spending, which in turn will lead, eventually, to reduced industrial
production and capital spending. Adding to the worries are the troubling
international events in the Middle East, the Far East, Latin America, and
Africa. Without enumerating all of the risks in the present world
situation, suffice it to say that together they weigh heavily on near-term
economic and market forecasts.
Only a year ago, investors appeared almost oblivious to risk as they bid up
the prices of low-quality debt issues and emerging-markets stocks to levels
that seemed not to factor in risk at all. Now the pendulum is swinging the
other way, as investors seek safety and stability. It should be noted,
however, that there is no altogether "safe haven" in the capital markets.
Even U.S. Treasuries fluctuate in market price with changes in interest
rates, and even the bluest of the blue chip companies will occasionally
have their earnings shortfalls.
Q. Which stocks contributed to the outperformance of Pioneer Fund VCT
Portfolio during the period? Were there also some weak spots in the
Portfolio?
A. Our outperformance can be largely explained by our good stock selection in
a number of key market sectors: industrials, information technology,
materials, financials, consumer staples, telecommunications services, and
health care. Detracting from performance were stock selections in consumer
discretionary and energy. Our largest positive contributors were: Inco and
Rio Tinto in materials; Norfolk Southern, Deere, Caterpillar, and PACCAR in
industrials; BellSouth in telecommunications services; and Canon in
information technology. Both Inco and BellSouth were recipients of
take-over bids. Among detractors, our long-term holding John Wiley & Sons
was caught in the general downward move of media stocks; Barr
Pharmaceuticals, St. Jude Medical, and Biomet each had some particular
ailments, though none that appeared terminal; and Target fell in sympathy
with other large retailers at a time of investor concern about consumer
spending. As usual, there were also some poor performers in the S&P 500
that we managed to avoid, and some strong performers that we likewise
missed. On the whole, however, it was a good period for us with respect to
our investment positioning.
Q. What changes did you make in the Portfolio over the past two quarters?
A. We did a bit of spring cleaning in the portfolio, liquidating twelve
holdings and adding only three. We took advantage of the ebullient market
for metals and mining stocks to realize gains in BHP Billiton, Newmont
Mining, and Allegheny Technologies. We sold Keyspan after the company
received a premium take-over bid from an English company.
A Word About Risk:
At times, the Portfolio's investments may represent industries or industry
sectors that are interrelated or have common risks, making it more susceptible
to any economic, political, or regulatory developments or other risks affecting
those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Our other sales reflected either our disappointment with the progress being
made by the company or our judgment that we had more attractive
alternatives. Those sales included PPG Industries, MeadWestvaco, Gap, Home
Depot, Stryker, Ameriprise Financial, ACE, and Axis Capital Holdings.
New entries were Lockheed Martin, Zimmer Holdings, and MetLife. Lockheed
Martin is a leading aerospace and defense manufacturer. The company has
made impressive progress in improving its profit margins, and it has a good
order book looking out into next year and potentially beyond. Zimmer
Holdings is a leader in orthopedic implants, namely artificial hips and
knees. The implant industry has been under a cloud due to government
investigations of sales practices, but we concluded that the price of
Zimmer stock took that into account and that growth prospects for the
company were otherwise attractive. MetLife, finally, is a large life and
group-health insurer. Its recent acquisition of Travelers Life and Annuity
greatly expanded its international business, bringing longer-term
opportunities to enhance profit growth.
Q. What is your outlook for the remainder of the year?
A. Looking ahead, we can see a slower economy and less robust corporate
earnings. As always, there are those who say "it's different this time" and
that there is no reason why the economy should not continue growing
steadily. However, the business cycle takes an inexorable course, and
downturns are actually essential in keeping the economy growing in the long
term. During downturns, the good businesses are separated from the bad, the
sound loans from the unsound, and the strong managements from the weak.
Downturns also renew the investor base by providing opportunities to get
solid value at discounted prices. People who had not wanted to step in and
buy when prices were high will often buy aggressively when prices fall. We
are not, mind you, predicting any particular starting point for the coming
downturn, and there could still be some strength in the market before it
happens. But we are thinking that it is already time to be positioning
oneself appropriately, in stocks of resilient, well managed, and
financially solid companies. Of course, those are characteristics we always
emphasize in our stock selection, but now we shall be putting double weight
on them. Thank you as ever for your support.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 96.2%
Energy - 7.6%
Integrated Oil & Gas - 5.8%
179,531 Chevron Corp. $ 11,141,694
88,025 ConocoPhillips 5,768,278
114,668 Exxon Mobil Corp. 7,034,882
53,725 Occidental Petroleum Corp. 5,509,499
------------
$ 29,454,353
------------
Oil & Gas Equipment & Services - 0.4%
42,162 Weatherford Intl, Inc.* $ 2,092,078
------------
Oil & Gas Exploration & Production - 1.4%
61,094 Apache Corp. $ 4,169,666
67,515 Pioneer Natural Resources Co. 3,133,371
------------
$ 7,303,037
------------
Total Energy $ 38,849,468
------------
Materials - 5.0%
Aluminum - 0.5%
72,726 Alcoa, Inc. $ 2,353,413
------------
Diversified Chemical - 0.8%
70,100 Dow Chemical Co. $ 2,736,003
37,427 E.I. du Pont de Nemours and Co. 1,556,963
------------
$ 4,292,966
------------
Diversified Metals & Mining - 2.5%
98,510 Inco, Ltd.* $ 6,491,809
122,524 Rio Tinto Plc 6,473,996
------------
$ 12,965,805
------------
Industrial Gases - 0.9%
25,334 Air Products & Chemicals, Inc. $ 1,619,349
53,762 Praxair, Inc. 2,903,148
------------
$ 4,522,497
------------
Specialty Chemicals - 0.3%
37,481 Ecolab, Inc. $ 1,520,979
------------
Total Materials $ 25,655,660
------------
Capital Goods - 9.7%
Aerospace & Defense - 2.6%
86,022 General Dynamics Corp. $ 5,631,000
7,100 Lockheed Martin Corp.* 509,354
111,683 United Technologies Corp. 7,082,936
------------
$ 13,223,290
------------
Building Products - 0.0%
8,309 Masco Corp. $ 246,279
------------
Shares Value
Construction & Farm Machinery &
Heavy Trucks - 4.5%
99,679 Caterpillar, Inc. $ 7,424,092
94,266 Deere & Co. 7,870,268
91,215 PACCAR, Inc.v 7,514,292
------------
$ 22,808,652
------------
Electrical Component & Equipment - 1.2%
48,640 Emerson Electric Co. $ 4,076,518
29,606 Rockwell International Corp. 2,131,928
------------
$ 6,208,446
------------
Industrial Conglomerates - 1.1%
7,200 3M Co. $ 581,544
154,654 General Electric Co. 5,097,396
------------
$ 5,678,940
------------
Industrial Machinery - 0.3%
16,367 Parker Hannifin Corp. $ 1,270,079
------------
Total Capital Goods $ 49,435,686
------------
Transportation - 3.9%
Airlines - 0.4%
135,293 Southwest Airlines Co. $ 2,214,746
------------
Railroads - 3.5%
74,802 Burlington Northern, Inc. $ 5,928,059
222,911 Norfolk Southern Corp. 11,863,323
------------
$ 17,791,382
------------
Total Transportation $ 20,006,128
------------
Automobiles & Components - 2.3%
Auto Parts & Equipment - 1.5%
91,445 Johnson Controls, Inc. $ 7,518,608
------------
Automobile Manufacturers - 0.8%
628,984 Ford Motor Corp. $ 4,358,859
------------
Total Automobiles & Components $ 11,877,467
------------
Consumer Durables & Apparel - 0.2%
Apparel, Accessories & Luxury Goods - 0.2%
23,883 Liz Claiborne, Inc. $ 885,104
------------
Total Consumer Durables & Apparel $ 885,104
------------
Consumer Services - 0.1%
Restaurants - 0.1%
14,325 Yum! Brands, Inc. $ 720,118
------------
Total Consumer Services $ 720,118
------------
Media - 5.2%
Advertising - 0.7%
42,090 Omnicom Group $ 3,749,798
------------
Movies & Entertainment - 1.0%
162,516 The Walt Disney Co. $ 4,875,480
------------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Publishing - 3.5%
41,058 Elsevier NV $ 617,338
64,140 Gannett Co. 3,587,350
125,263 John Wiley & Sons, Inc. 4,158,732
188,438 McGraw-Hill Co., Inc. 9,465,241
------------
$ 17,828,661
------------
Total Media $ 26,453,939
------------
Retailing - 4.7%
Computer & Electronics Retail - 0.1%
9,295 GameStop Corp. (Class B)* $ 318,354
------------
Department Stores - 1.8%
100,356 Federated Department Stores, Inc.* $ 3,673,030
147,889 Nordstrom, Inc. 5,397,949
------------
$ 9,070,979
------------
General Merchandise Stores - 1.5%
150,713 Target Corp. $ 7,365,344
------------
Home Improvement Retail - 0.8%
70,792 Lowe's Companies, Inc. $ 4,294,951
------------
Specialty Stores - 0.5%
29,018 Barnes & Noble, Inc. $ 1,059,157
69,072 Staples, Inc.* 1,679,831
------------
$ 2,738,988
------------
Total Retailing $ 23,788,616
------------
Food & Drug Retailing - 3.3%
Drug Retail - 2.1%
75,467 CVS Corp. $ 2,316,837
190,303 Walgreen Co. 8,533,187
------------
$ 10,850,024
------------
Food Distributors - 1.0%
161,566 Sysco Corp. $ 4,937,457
------------
Hypermarkets & Supercenters - 0.2%
19,649 Costco Wholesale Corp. $ 1,122,547
------------
Total Food & Drug Retailing $ 16,910,028
------------
Food, Beverage & Tobacco - 5.2%
Packaged Foods & Meats - 3.9%
118,941 Campbell Soup Co. $ 4,413,901
76,411 General Mills, Inc. 3,947,392
108,055 H.J. Heinz Co., Inc. 4,454,027
82,795 Hershey Foods Corp. 4,559,521
23,685 Kellogg Co. 1,147,065
73,473 Sara Lee Corp. 1,177,037
------------
$ 19,698,943
------------
Soft Drinks - 1.3%
113,124 PepsiCo, Inc. $ 6,791,965
------------
Total Food, Beverage & Tobacco $ 26,490,908
------------
Shares Value
Household & Personal Products - 1.8%
Household Products - 1.3%
14,255 Clorox Co. $ 869,127
96,982 Colgate-Palmolive Co. 5,809,222
------------
$ 6,678,349
------------
Personal Products - 0.5%
67,208 Estee Lauder Co.* $ 2,598,933
------------
Total Household &
Personal Products $ 9,277,282
------------
Health Care Equipment & Services - 4.0%
Health Care Equipment - 4.0%
71,108 Becton, Dickinson & Co. $ 4,346,832
103,638 Biomet, Inc. 3,242,833
63,800 C. R. Bard, Inc. 4,673,988
50,339 Medtronic, Inc. 2,361,906
104,000 St. Jude Medical, Inc.* 3,371,680
39,300 Zimmer Holdings, Inc.* 2,229,096
------------
$ 20,226,335
------------
Total Health Care
Equipment & Services $ 20,226,335
------------
Pharmaceuticals & Biotechnology - 8.1%
Biotechnology - 0.7%
53,778 Amgen, Inc.* $ 3,507,939
------------
Pharmaceuticals - 7.4%
102,710 Abbott Laboratories $ 4,479,183
53,017 Barr Laboratories, Inc.* 2,528,381
132,985 Bristol-Myers Squibb Co. 3,438,992
80,039 Eli Lilly & Co. 4,423,756
72,158 Johnson & Johnson 4,323,707
95,767 Merck & Co., Inc. 3,488,792
77,980 Novartis AG (A.D.R.)* 4,204,682
134,400 Pfizer, Inc. 3,154,368
36,377 Roche Holdings AG (A.D.R.)* 3,006,486
175,915 Schering-Plough Corp. 3,347,662
44,611 Teva Pharmaceutical Industries, Ltd. 1,409,261
------------
$ 37,805,270
------------
Total Pharmaceuticals &
Biotechnology $ 41,313,209
------------
Banks - 8.8%
Diversified Banks - 3.7%
235,635 U.S. Bancorp $ 7,276,409
39,577 Wachovia Corp. 2,140,324
140,973 Wells Fargo & Co. 9,456,469
------------
$ 18,873,202
------------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Regional Banks - 3.3%
25,377 Compass Bancshares Inc.* $ 1,410,961
83,035 First Horizon National Corp. 3,338,007
170,284 National City Corp. 6,162,578
55,102 SunTrust Banks, Inc. 4,202,079
21,817 Zions Bancorporation 1,700,417
------------
$ 16,814,042
------------
Thrifts & Mortgage Finance - 1.8%
34,700 Golden West Financial Corp. $ 2,574,740
146,301 Washington Mutual, Inc. 6,668,400
------------
$ 9,243,140
------------
Total Banks $ 44,930,384
------------
Diversified Financials - 6.5%
Asset Management & Custody Banks - 3.3%
43,970 Federated Investors, Inc.* $ 1,385,055
104,482 State Street Corp. 6,069,359
249,606 T. Rowe Price Associates, Inc. 9,437,603
------------
$ 16,892,017
------------
Consumer Finance - 1.2%
112,725 American Express Co. $ 5,999,225
------------
Investment Banking & Brokerage - 0.8%
58,452 Merrill Lynch & Co., Inc. $ 4,065,921
------------
Diversified Financial Services - 1.2%
86,529 Bank of America Corp. $ 4,162,045
42,750 Citigroup, Inc. 2,062,260
------------
$ 6,224,305
------------
Total Diversified Financials $ 33,181,468
------------
Insurance - 2.4%
Life & Health Insurance - 0.5%
49,100 MetLife, Inc. $ 2,514,411
------------
Multi-Line Insurance - 0.2%
13,522 Hartford Financial Services Group, Inc. $ 1,143,961
------------
Property & Casualty Insurance - 1.7%
137,506 Chubb Corp. $ 6,861,549
34,082 Safeco Corp. 1,920,521
------------
$ 8,782,070
------------
Total Insurance $ 12,440,442
------------
Software & Services - 3.5%
Application Software - 0.5%
86,186 Adobe Systems, Inc.* $ 2,616,607
------------
Data Processing & Outsourced Services - 2.2%
181,884 Automatic Data Processing, Inc. $ 8,248,439
25,841 DST Systems, Inc.* 1,537,540
28,113 Fiserv, Inc.* 1,275,206
------------
$ 11,061,185
------------
Shares Value
Systems Software - 0.8%
181,275 Microsoft Corp. $ 4,223,708
------------
Total Software & Services $ 17,901,500
------------
Technology Hardware & Equipment - 6.1%
Communications Equipment - 2.9%
139,000 Cisco Systems, Inc.* $ 2,714,670
313,651 Motorola, Inc. 6,320,068
274,102 Nokia Corp. (A.D.R.)* 5,553,307
------------
$ 14,588,045
------------
Computer Hardware - 2.1%
100,576 Dell, Inc.* $ 2,455,060
176,511 Hewlett-Packard Co. 5,591,868
703,372 Sun Microsystems, Inc.* 2,918,994
------------
$ 10,965,922
------------
Computer Storage & Peripherals - 0.3%
134,374 EMC Corp.* $ 1,474,083
------------
Office Electronics - 0.8%
57,242 Canon, Inc. (A.D.R.) $ 4,194,121
------------
Total Technology
Hardware & Equipment $ 31,222,171
------------
Semiconductors - 2.6%
Semiconductor Equipment - 0.3%
96,070 Applied Materials, Inc. $ 1,564,020
------------
Semiconductors - 2.3%
20,845 Freescale Semiconductor, Inc. (Class B)* $ 612,843
258,029 Intel Corp. 4,889,650
211,248 Texas Instruments, Inc. 6,398,702
------------
$ 11,901,195
------------
Total Semiconductors $ 13,465,215
Telecommunication Services - 4.2%
Integrated Telecommunication Services - 3.9%
279,088 AT&T Corp. $ 7,783,764
141,901 BellSouth Corp. 5,136,816
74,411 Century Telephone Enterprises, Inc. 2,764,369
129,130 Verizon Communications, Inc. 4,324,564
------------
$ 20,009,513
------------
Wireless Telecommunication Services - 0.3%
23,216 Alltel Corp. $ 1,481,877
------------
Total Telecommunication Services $ 21,491,390
------------
Utilities - 0.9%
Electric Utilities - 0.5%
15,000 Exelon Corp. $ 852,450
56,177 Southern Co. 1,800,473
------------
$ 2,652,923
------------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Multi-Utilities - 0.4%
34,904 Consolidated Edison, Inc. $ 1,551,132
13,700 PG&E Corp. 538,134
------------
$ 2,089,266
------------
Total Utilities $ 4,742,189
------------
TOTAL COMMON STOCKS
(Cost $376,681,138) $491,264,707
============
Principal
Amount
TEMPORARY CASH INVESTMENT - 2.2%
Repurchase Agreement - 2.2%
$11,300,000 UBS Warburg, Inc., 4.40% dated
6/30/06, repurchase price of
$11,300,000 plus accrued interest on
7/3/06 collateralized by $12,053,000
U.S. Treasury Bill, 3.375%, 9/15/09 $ 11,300,000
------------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $11,300,000) $ 11,300,000
------------
TOTAL INVESTMENT
IN SECURITIES - 98.4%
(Cost $387,981,138) $502,564,707
------------
OTHER ASSETS
AND LIABILITIES - 1.6% $ 8,367,499
------------
TOTAL NET ASSETS - 100.0% $510,932,206
============
(A.D.R.) American Depositary Receipt
* Non-income producing security.
The accompanying notes are an integral part of these financial statements. 9
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 21.49 $ 20.51 $ 18.66 $ 15.25 $ 19.05 $ 22.65
-------- -------- -------- -------- -------- --------
Increase (decrease) from investment
operations:
Net investment income $ 0.12 $ 0.20 $ 0.18 $ 0.14 $ 0.13 $ 0.14
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.96 1.01 1.85 3.42 (3.78) (2.59)
-------- -------- -------- -------- -------- --------
Net increase (decrease) from investment
operations $ 1.08 $ 1.21 $ 2.03 $ 3.56 $ (3.65) $ (2.45)
Distributions to shareowners:
Net investment income (0.12) (0.23) (0.18) (0.15) (0.15) (0.13)
Net realized gain -- -- -- -- -- (1.02)
-------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ 0.96 $ 0.98 $ 1.85 $ 3.41 $ (3.80) $ (3.60)
-------- -------- -------- -------- -------- --------
Net asset value, end of period $ 22.45 $ 21.49 $ 20.51 $ 18.66 $ 15.25 $ 19.05
======== ======== ======== ======== ======== ========
Total return* 5.03% 5.94% 10.93% 23.44% (19.25)% (11.09)%
Ratio of net expenses to average net assets+ 0.95%** 0.95% 0.96% 1.00% 1.06% 1.04%
Ratio of net investment income to average net
assets+ 1.11%** 1.01% 1.00% 0.87% 0.84% 0.49%
Portfolio turnover rate 9%** 23% 17% 11% 11% 7%
Net assets, end of period (in thousands) $141,244 $117,720 $133,627 $ 87,488 $ 36,218 $ 12,674
Ratios with no waiver of management fees and
assumption of expenses by PIM and no reduction
for fees paid indirectly:
Net expenses 0.95%** 0.95% 0.96% 1.00% 1.06% 1.04%
Net investment income 1.11%** 1.01% 1.00% 0.87% 0.84% 0.49%
* 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.)
** Annualized
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
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 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (Cost $387,981,138) $ 502,564,707
Receivables --
Investment securities sold 271,151
Fund shares sold 9,378,559
Dividends, interest and foreign taxes withheld 598,463
Other 18,273
-------------
Total assets $ 512,831,153
-------------
LIABILITIES:
Payables --
Investment securities purchased $ 835,823
Fund shares repurchased 652,335
Due to bank 299,613
Due to affiliates 16,409
Accrued expenses 94,767
-------------
Total liabilities $ 1,898,947
-------------
NET ASSETS:
Paid-in capital $ 425,701,652
Undistributed net investment income 117,633
Accumulated net realized gain loss (29,470,697)
Net unrealized gain on:
Investments 114,583,569
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies 49
-------------
Total net assets $ 510,932,206
-------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 369,688,116
Shares outstanding 16,429,291
-------------
Net asset value per share $ 22.50
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 141,244,090
Shares outstanding 6,291,688
-------------
Net asset value per share $ 22.45
The accompanying notes are an integral part of these financial statements. 11
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $64,753) $ 5,097,295
Interest 110,772
------------
Total investment income $ 5,208,067
------------
EXPENSES:
Management fees $ 1,640,540
Transfer agent fees and expenses 2,774
Distribution fees (Class II) 155,592
Administrative reimbursements 49,141
Custodian fees 21,099
Professional fees 17,706
Printing expense 29,920
Fees and expenses of nonaffiliated trustees 3,610
Miscellaneous 1,009
------------
Total expenses $ 1,921,391
------------
Net expenses $ 1,921,391
------------
Net investment income $ 3,286,676
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 10,710,235
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies (19,335)
------------
$ 10,690,900
------------
Change in net unrealized gain from:
Investments $ 11,152,705
Forward foreign currency contracts and other assets and liabilities
denominated in foreign currencies 49
------------
$ 11,152,754
------------
Net gain on investments, futures contracts and foreign currency transactions $ 21,843,654
============
Net increase in net assets resulting from operations $ 25,130,330
============
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 Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 3,286,676 $ 6,406,915
Net realized gain on investments and foreign currency transactions 10,690,900 46,679,070
Change in net unrealized gain or loss on investments and foreign currency transactions 11,152,754 (23,029,256)
------------- --------------
Net increase in net assets resulting from operations $ 25,130,330 $ 30,056,729
------------- --------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (2,525,809) $ (5,374,313)
Class II (670,506) (1,440,262)
------------- --------------
Total distributions to shareowners $ (3,196,315) $ (6,814,575)
------------- --------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 43,018,367 $ 42,859,167
Class I shares issued in reorganization -- 53,856,933
Reinvestment of distributions 3,196,315 6,814,325
Cost of shares repurchased (56,846,033) (139,175,447)
Redemptions in kind -- (75,731,419)
------------- --------------
Net decrease in net assets resulting from Fund share transactions $ (10,631,351) $ (111,376,441)
------------- --------------
Net increase (decrease) in net assets $ 11,302,664 $ (88,134,287)
------------- --------------
NET ASSETS:
Beginning of period $ 499,629,542 $ 587,763,829
------------- --------------
End of period $ 510,932,206 $ 499,629,542
============= ==============
Undistributed net investment income, end of period $ 117,633 $ 27,272
============= ==============
The accompanying notes are an integral part of these financial statements. 13
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Fund VCT Portfolio (the Portfolio) is a Portfolio of Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust registered
under the Investment Company Act of 1940 as an open-end management investment
company. The Trust consists of twenty-seven separate diversified portfolios,
thirteen of which issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The investment objective of Fund Portfolio is to seek capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus (es). Please refer to those documents when
considering the Portfolio's risks. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
The following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements, which
are consistent 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 portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE)
14
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
is open, as of the close of regular trading on the NYSE. 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. 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. The Portfolio also may use the fair value of a
security, including a non-U.S. security, when the closing market price on
the primary exchange where the security is traded no longer accurately
reflects the value of the security as of the close of the NYSE. At December
31, 2005, there were no fair valued securities. Temporary cash investments
are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. 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. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2006, Fund Portfolio had no open contracts.
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 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. dollars 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.
D. 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
Portfolio's 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.
At June 30, 2006, the Portfolio had no open forward contracts.
E. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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,
15
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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, 2005, Fund VCT Portfolio had a capital loss
carryforward of $39,968,844, of which the following amounts will expire
between 2010 and 2011 if not utilized: $26,951,317 in 2010 and $13,017,527
in 2011.
The tax character of current year distributions paid will be determined at
the end of the fiscal year ended December 31, 2005 and the components of
distributable earnings (accumulated losses) as of December 31, 2005, on a
tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 6,814,575
Long-Term capital gain --
-----------
$ 6,814,575
Return of Capital --
-----------
Total distributions $ 6,814,575
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 27,272
Undistributed long-term gain/(capital loss carryforward) (39,968,844)
Post-October loss deferred --
Unrealized appreciation 103,238,111
-----------
Total $63,296,539
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
F. 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 Portfolio and a wholly owned indirect
subsidiary of UniCredito Italiano S.p.A. (UniCredito Italiano), $462,503 in
commissions on the sale of Portfolio shares for the six months ended June
30, 2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. Distributions paid by a Portfolio with respect to
each class of shares are calculated in the same manner, at the same time,
and in the same amount, except that Class I and Class II shares can bear
different transfer agent and distribution fees. Dividends and distributions
to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian.
16
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolio. Management fees are calculated daily at the annual rate of 0.65% 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. At June 30, 2006, $11,776 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
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 $3,729 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $904 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolios' aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ------------------------------------------------------------------------------------------
Fund Portfolio $388,173,891 $131,389,694 $(16,998,878) $114,390,816
============ ============ ============ ============
- ------------------------------------------------------------------------------------------
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 year ended June
30, 2006, were $21,306,387 and $51,565,444, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
17
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Fund Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ------------------------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 540,777 $ 12,165,407 580,758 $ 11,975,172
Class I shares issued in reorganization -- -- -- --
Reinvestment of distributions 112,827 2,525,809 257,653 5,374,312
Shares repurchased (1,995,750) (44,772,169) (5,148,933) (106,238,103)
------------------------------------------------------------------
Net decrease (1,342,146) $ (30,080,953) (4,310,522) $ (88,888,619)
==================================================================
CLASS II:
Shares sold 1,374,253 $ 30,852,960 1,500,748 $ 30,883,995
Class II shares issued in reorganization -- -- 2,567,061 53,856,933
Reinvestment of distribution 30,016 670,506 69,257 1,440,013
Shares repurchased (540,293) (12,073,864) (1,597,303) (32,937,344)
Redemptions in kind -- -- (3,626,019) (75,731,419)
------------------------------------------------------------------
Net increase (decrease) 863,976 $ 19,449,602 (1,086,256) $ (22,487,822)
==================================================================
- ------------------------------------------------------------------------------------------------------------------
8. Merger Information
On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio,
Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio, three
of the six portfolios that comprised Safeco Resources Series Trust, approved a
proposed Agreement and Plan of Reorganization that provided for the mergers
listed. These tax-free reorganizations were accomplished on December 10, 2004
("Closing Date"), by exchanging all of the Safeco's net assets for Class I
shares as indicated below, based on Class I share's ending net asset value on
the Closing Date. The following charts show the details of the reorganizations
as of that Closing Date:
- ---------------------------------------------------------------------------------------------------
Pioneer Fund VCT Safeco RST Core Pioneer Fund VCT
Portfolio Equity Portfolio Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- ---------------------------------------------------------------------------------------------------
Net Assets $281,591,969 $298,220,832 $879,147,352
Shares Outstanding 13,990,134 12,804,673 28,812,243
------------ ------------ ------------
Class I Shares Issued $ 14,822,109
============
- ---------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Unrealized Appreciation Realized Gain/(Loss)
on Closing Date on Closing Date
- -----------------------------------------------------------------------------------------
Safeco RST Core Equity Portfolio $68,714,366 $20,662,968
=========== ===========
- -----------------------------------------------------------------------------------------
18
Pioneer Fund VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In addition, on November 4, 2005, beneficial owners of AmSouth VIF Select Equity
Portfolio approved a proposed Agreement and Plan of Reorganization that provided
for the merger listed below. This tax-free reorganization was accomplished on
November 4, 2005, by exchanging all of the AmSouth Fund's net assets for Class
II shares as indicated below, based on Class II share's ending net asset value
on the Closing Date. The following charts show the details of the
reorganizations as of that closing date ("Closing Date"):
- ----------------------------------------------------------------------------------------------------
Pioneer Fund VCT AmSouth VIF Pioneer Fund VCT
Portfolio Select Equity Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
Net Assets $444,635,312 $53,856,933 $498,492,245
Shares Outstanding 21,144,152 4,928,631 23,711,213
------------ ----------- ------------
Class II Shares Issued $ 2,567,061
============
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Unrealized Appreciation Realized Gain/(Loss)
on Closing Date on Closing Date
- --------------------------------------------------------------------------------
AmSouth VIF Select Equity $4,928,126 $ (49,233)
========== =========
- --------------------------------------------------------------------------------
19
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19620-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Growth Shares VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 89.3%
Depositary Receipts for International Stocks 5.9%
Temporary Cash Investment 4.8%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA IS A REPRESENTATION OF A PIE CHART IN THE PRINTED MATERIAL]
Information Technology 30.5%
Health Care 23.4%
Industrials 11.9%
Consumer Discretionary 11.8%
Consumer Staples 10.5%
Financials 5.4%
Utilities 2.8%
Energy 1.9%
Materials 1.8%
Five Largest Holdings
(As a percentage of equity holdings)
1. Microsoft Corp. 5.22%
2. Cisco Systems, Inc. 4.16
3. Altria Group, Inc. 4.10
4. Amgen, Inc. 4.00
5. Boston Scientific Corp. 4.00
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 12.82 $ 13.20
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ - $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Growth Shares VCT Portfolio at net asset value, compared to that of the Russell
1000 Growth Index. Portfolio returns are based on net asset value and do not
reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA IS A REPRESENTATION OF A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Growth Russell 1000
Shares VCT Portfolio Growth Index
10/97 10000 10000
6/98 12553 12690
6/99 14909 16150
6/00 14579 20294
6/01 12248 12953
6/02 8069 9522
6/03 7959 9802
6/04 8709 11554
6/05 9158 11749
6/06 9393 12467
The Russell 1000 Growth Index measures the performance of large-cap U.S. growth
stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class -0.72%
(10/31/97)
5 Years -5.17%
1 Year 2.56%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Growth 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 variable annuities. 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 [divided by] $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 Growth Shares VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006
Share Class II
- -----------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 971.20
Expenses Paid During Period* $ 6.35
* Expenses are equal to the Portfolio's annualized expense ratio of 1.30% for
Class II 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 Growth Shares VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- -----------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,018.35
Expenses Paid During Period* $ 6.51
* Expenses are equal to the Portfolio's annualized expense ratio of 1.30% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
The domestic stock market produced modest returns over the first half of 2006.
The stock market began the year with a strong rally, but the bull market faded
in May and June as investors focused more on the possibility that rising
interest rates might stall the economy. As they have done in the two previous
years, value stocks tended to outperform growth, and highly cyclical companies,
including those with exposures to commodities, outperformed traditional growth
companies. In the following interview, Christopher M. Galizio and Stephen A.
Balter, co-managers of Growth Shares VCT Portfolio, discuss the markets and the
factors that influenced performance over the six months.
Q. How did the Fund perform during the six months ended June 30, 2006?
A. Pioneer Growth Shares VCT Portfolio, Class II, had a total return of -2.88%
for the six months, at net asset value. During the same period, the Russell
1000 Growth Index produced a total return of -0.93%, while the average
return of the 199 funds in Lipper's Large-Cap Growth variable annuity fund
category was -2.44%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were your principal strategies, and how did they influence
performance?
A. The Portfolio was positioned to benefit from a growth environment, with an
emphasis on those companies, including health care companies and
information technology corporations, that were likely beneficiaries of
long-term trends. While, we thought - and we continue to believe - that the
best investment values can be found in those areas, the emphasis hurt
results during the six months, when cyclical companies in sectors such as
materials and industrials tended to lead the market.
We have favored health care because of the opportunities created as the
large baby boomer generation ages and requires more health care services
and products, including medical devices as well as pharmaceuticals. These
companies have underperformed recently, however, and have begun to offer
very attractive prices. We favored information technology corporations
because of the growth of the Internet and demand for more complex files,
including video, which generates more demand for hardware, such as
switches, routers and other devices. Companies such as Cisco Systems and F
5 Networks are potential beneficiaries of this multi-year trend.
As we increased the exposure to those areas, we reduced positions in energy
and materials, both of which looked very expensive. However, these
decisions did not help results for the six months, as energy and materials
continued to gain, while health care and information technology continued
to underperform.
Q. What were some of the individual investments that most affected results for
the six months?
A. Two of the most significant detractors were health care companies, Boston
Scientific and Teva Pharmaceuticals. Each declined for a company-specific
reason. Boston Scientific, a leading producer of devices used in cardiac
therapies, won a bidding war against Johnson & Johnson and acquired another
cardiac device company, Guidant. Investors generally believed Boston
Scientific overpaid for Guidant. We tend to agree with that opinion, but we
think that the combination of Boston Scientific and Guidant will be a
powerful company with excellent prospects over the longer term. Teva is a
leading manufacturer of generic pharmaceuticals. However, investors became
concerned about future revenues from generic drugs if prices start falling
because of the greater emphasis on controlling health care costs.
Several holdings had positive impacts on results. One was TXU, the
Texas-based utility, which lowered its costs by placing greater emphasis on
coal-fired plants at the same time it received favorable regulatory rulings
regarding rate structures. Cisco Systems contributed as its routers
remained in strong demand from Internet activity, while pharmacy chain CVS
successfully integrated two acquisitions into its operations and exceeded
earnings expectations.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. What is your investment outlook?
A. At the midpoint of 2006, the financial markets are encountering a number of
challenges that are worsened by rising geopolitical tensions. The economy
appears to be slowing, primarily as a result of hikes in interest rates,
but also because of rising energy and commodity prices. In this
environment, stock prices are likely to move unevenly, and individual stock
selection will be important in influencing 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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 100.5%
Energy - 2.0%
Integrated Oil & Gas - 2.0%
5,500 ConocoPhillips $ 360,415
8,000 Repsol SA (A.D.R.) 224,480
-----------
$ 584,895
-----------
Total Energy $ 584,895
-----------
Materials - 1.8%
Diversified Chemical - 1.8%
14,100 Dow Chemical Co. $ 550,323
-----------
Total Materials $ 550,323
-----------
Capital Goods - 12.0%
Aerospace & Defense - 3.9%
3,800 L-3 Communications Holdings, Inc. $ 286,596
13,700 United Technologies Corp. 868,854
-----------
$ 1,155,450
-----------
Industrial Conglomerates - 8.1%
9,600 3M Co. $ 775,392
32,100 General Electric Co. 1,058,016
21,500 Tyco International, Ltd. 591,250
-----------
$ 2,424,658
-----------
Total Capital Goods $ 3,580,108
-----------
Consumer Durables & Apparel - 1.3%
Footwear - 1.3%
5,000 Nike, Inc. $ 405,000
-----------
Total Consumer Durables & Apparel $ 405,000
-----------
Consumer Services - 1.3%
Hotels, Resorts & Cruise Lines - 1.3%
9,400 Carnival Corp. $ 392,356
-----------
Total Consumer Services $ 392,356
-----------
Media - 2.1%
Broadcasting & Cable TV - 1.1%
3,775 Liberty Media Holding Corp.* $ 316,232
-----------
Movies & Entertainment - 1.0%
8,350 Viacom, Inc. (Class B) $ 299,264
-----------
Total Media $ 615,496
-----------
Retailing - 7.1%
Apparel Retail - 3.6%
10,600 Abercrombie & Fitch Co. $ 587,558
21,100 TJX Companies, Inc. 482,346
-----------
$ 1,069,904
-----------
Home Improvement Retail - 3.5%
29,400 Home Depot, Inc. $ 1,052,226
-----------
Total Retailing $ 2,122,130
-----------
Shares Value
Food & Drug Retailing - 2.2%
Drug Retail - 2.2%
21,700 CVS Corp. $ 666,190
-----------
Total Food & Drug Retailing $ 666,190
-----------
Food, Beverage & Tobacco - 4.9%
Soft Drinks - 0.8%
2,700 Fomento Economico Mexicano SA de CV* $ 226,044
-----------
Tobacco - 4.1%
16,800 Altria Group, Inc. $ 1,233,624
-----------
Total Food, Beverage & Tobacco $ 1,459,668
-----------
Household & Personal Products - 3.5%
Household Products - 3.5%
18,800 Procter & Gamble Co. $ 1,045,280
-----------
Total Household &
Personal Products $ 1,045,280
-----------
Health Care Equipment & Services - 7.9%
Health Care Equipment - 5.5%
14,600 Biomet, Inc. $ 456,834
71,353 Boston Scientific Corp.* 1,201,585
-----------
$ 1,658,419
-----------
Health Care Supplies - 1.2%
7,800 Cooper Companies, Inc.(a) $ 345,462
-----------
Managed Health Care - 1.2%
9,000 Aetna, Inc.* $ 359,370
-----------
Total Health Care
Equipment & Services $ 2,363,251
-----------
Pharmaceuticals & Biotechnology - 15.6%
Biotechnology - 5.8%
18,458 Amgen, Inc.* $ 1,204,015
8,900 Gilead Sciences, Inc.* 526,524
-----------
$ 1,730,539
-----------
Pharmaceuticals - 9.8%
12,400 Astrazeneca Plc (A.D.R.) $ 741,768
9,700 Eli Lilly & Co. 536,119
11,300 Johnson & Johnson 677,096
16,892 Par Pharmaceutical Co., Inc.*(a) 311,826
20,904 Teva Pharmaceutical Industries, Ltd.(a) 660,357
-----------
$ 2,927,166
-----------
Total Pharmaceuticals &
Biotechnology $ 4,657,705
-----------
Diversified Financials - 5.5%
Asset Management & Custody Banks - 2.2%
5,400 Franklin Resources, Inc.* $ 468,774
2,000 Legg Mason, Inc.* 199,040
-----------
$ 667,814
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Consumer Finance - 2.3%
12,600 American Express Co. $ 670,572
-----------
Investment Banking & Brokerage - 1.0%
4,300 Merrill Lynch & Co., Inc. $ 299,108
-----------
Total Diversified Financials $ 1,637,494
-----------
Software & Services - 7.9%
Systems Software - 7.9%
36,900 Macrovision Corp.* $ 794,088
67,300 Microsoft Corp. 1,568,090
-----------
$ 2,362,178
-----------
Total Software & Services $ 2,362,178
-----------
Technology Hardware & Equipment - 18.3%
Communications Equipment - 12.3%
64,050 Cisco Systems, Inc.* $ 1,250,897
23,300 Corning, Inc.* 563,627
6,060 F5 Networks, Inc.* 324,089
18,000 Foundry Networks, Inc.* 191,880
40,380 Juniper Networks, Inc.* 645,676
35,500 Motorola, Inc. 715,325
-----------
$ 3,691,494
-----------
Computer Hardware - 6.0%
11,100 Apple Computer, Inc.* $ 634,032
35,800 Dell, Inc.* 873,878
18,070 Palm, Inc.*(a) 290,927
-----------
$ 1,798,837
-----------
Total Technology
Hardware & Equipment $ 5,490,331
-----------
Semiconductors - 4.4%
Semiconductors - 4.4%
10,790 Maxim Integrated Products* $ 346,467
31,800 Texas Instruments, Inc. 963,222
-----------
$ 1,309,689
-----------
Total Semiconductors $ 1,309,689
-----------
Utilities - 2.7%
Independent Power Producer &
Energy Traders - 2.7%
13,800 TXU Corp. $ 825,102
-----------
Total Utilities $ 825,102
-----------
TOTAL COMMON STOCKS
(Cost $30,881,619) $30,067,196
-----------
Shares Value
TEMPORARY CASH INVESTMENTS - 5.1%
Security Lending Collateral - 5.1%
1,519,655 Securities Lending Investment
Fund, 5.16% $ 1,519,655
-----------
TOTAL TEMPORARY CASH
INVESTMENTS
(Cost $1,519,655) $ 1,519,655
-----------
TOTAL INVESTMENT
IN SECURITIES - 105.6%
(Cost $32,401,274) $31,586,851
-----------
OTHER ASSETS
AND LIABILITIES - (5.6)% $(1,673,720)
-----------
TOTAL NET ASSETS - 100.0% $29,913,131
-----------
* Non-income producing security.
(A.D.R.) American Depositary Receipt.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
7,722 Cooper Companies, Inc. $ 342,007
14,820 Palm, Inc.* 238,602
11,514 Par Pharmaceutical Co., Inc.* 212,548
20,695 Teva Pharmaceutical Industries, Ltd. 653,755
-----------
Total $ 1,446,912
===========
The accompanying notes are an integral part of these financial statements. 7
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 13.20 $ 12.87 $ 12.10 $ 9.70 $ 14.94 $ 18.50
------- -------- -------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.00(a) $ (0.02) $ 0.06 $ (0.02) $ (0.13) $ (0.05)
Net realized and unrealized gain (loss) on investments (0.38) 0.43 0.71 2.42 (5.11) (3.51)
------- -------- -------- -------- -------- --------
Net increase (decrease) from investment operations $ (0.38) $ 0.41 $ 0.77 $ 2.40 $ (5.24) $ (3.56)
Distributions to shareowners:
Net investment income -- (0.08) -- -- -- --
------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value $ (0.38) $ 0.33 $ 0.77 $ 2.40 $ (5.24) $ (3.56)
------- -------- -------- -------- -------- --------
Net asset value, end of period $ 12.82 $ 13.20 $ 12.87 $ 12.10 $ 9.70 $ 14.94
======= ======== ======== ======== ======== ========
Total return* (2.88)% 3.19% 6.36% 24.74% (35.07)% (19.24)%
Ratio of net expenses to average net assets+ 1.30%** 1.24% 1.25% 1.44% 1.63% 1.58%
Ratio of net investment income (loss) to average net assets+ 0.01%** (0.09)% 0.74% (0.40)% (0.64)% (0.61)%
Portfolio turnover rate 102%** 79% 206% 58% 86% 111%
Net assets, end of period (in thousands) $ 6,467 $ 7,096 $ 7,749 $ 3,049 $ 263 $ 658
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.30%** 1.24% 1.26% 1.44% 1.63% 1.58%
Net investment income (loss) 0.01%** (0.09)% 0.73% (0.40)% (0.64)% (0.61)%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly: 1.30%** 1.24% 1.25% 1.44% 1.63% 1.58%
Net expenses 0.01%** (0.09)% 0.74% (0.40)% (0.64)% (0.61)%
Net investment income (loss)
(a) Amount rounds to less than one cent per share
* 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.
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $1,446,912)
(Cost $32,401,274) $ 31,586,851
Receivables --
Investment securities sold 1,235,287
Dividends, interest and foreign taxes withheld 51,596
Other 3,774
-------------
Total assets $ 32,877,508
-------------
LIABILITIES:
Payables --
Investment securities purchased $ 1,188,348
Fund shares repurchased 52,196
Upon return of securities loaned 1,519,655
Due to bank 169,467
Due to affiliates 8,400
Accrued expenses 26,311
-------------
Total liabilities $ 2,964,377
-------------
NET ASSETS:
Paid-in capital $ 66,458,982
Undistributed net investment income 39,631
Accumulated net realized loss on investments (35,771,059)
Net unrealized loss on investments (814,423)
-------------
Total net assets $ 29,913,131
-------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 23,445,764
Shares outstanding 1,804,084
-------------
Net asset value per share $ 13.00
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 6,467,367
Shares outstanding 504,366
-------------
Net asset value per share $ 12.82
The accompanying notes are an integral part of these financial statements. 9
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $1,892) $ 208,529
Interest 3,834
Income on securities loaned, net 480
------------
Total investment income $ 212,843
------------
EXPENSES:
Management fees $ 114,866
Transfer agent fees and expenses 5,007
Distribution fees (Class II) 8,674
Administrative reimbursements 9,558
Custodian fees 12,820
Professional fees 14,032
Printing expense 5,837
Fees and expenses of nonaffiliated trustees 2,072
Miscellaneous 180
------------
Total expenses $ 173,046
------------
Net expenses $ 173,046
------------
Net investment income $ 39,797
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investments $ 853,762
------------
Change in net unrealized loss from investments $ (1,707,559)
------------
Net loss on investments $ (853,797)
============
Net decrease in net assets resulting from operations $ (814,000)
============
10 The accompanying notes are an integral part of these financial statements.
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 39,797 $ 49,245
Net realized gain on investments 853,762 3,211,502
Change in net unrealized loss on investments (1,707,559) (2,083,627)
------------ ------------
Net increase (decrease) in net assets resulting from operations $ (814,000) $ 1,177,120
------------ ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (49,224) $ (221,887)
Class II -- (50,023)
------------ ------------
Total distributions to shareowners $ (49,224) $ (271,910)
------------ ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 605,124 $ 2,192,354
Reinvestment of distributions 49,224 271,910
Cost of shares repurchased (3,959,678) (9,337,142)
------------ ------------
Net decrease in net assets resulting from Fund share transactions $ (3,305,330) $ (6,872,878)
------------ ------------
Net decrease in net assets $ (4,168,554) $ (5,967,668)
------------ ------------
NET ASSETS:
Beginning of period $ 34,081,685 $ 40,049,353
------------ ------------
End of period $ 29,913,131 $ 34,081,685
============ ============
Undistributed net investment income, end of period $ 39,631 $ 49,058
============ ============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Growth Shares VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or by
qualified pension and retirement plans.
The investment objective of Growth Shares Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolio, in the
preparation of its financial statements, which are consistent 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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. 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. The Portfolio also may use the fair
value of a security, including a non-U.S. security, when the closing market
12
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
price on the primary exchange where the security is traded no longer
accurately reflects the value of the security as of the close of the
exchange. At June 30, 2006, there were no fair valued securities. Temporary
cash investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Investing in foreign and/or emerging markets securities involves risks
relating to interest rates, currency exchange rates, economic, and
political conditions. The Portfolio invests in REIT securities, the value
of which can fall for a variety of reasons, such as declines in rental
income, fluctuating interest rates, poor property management, environmental
liabilities, uninsured damage, increased competition, or changes in real
estate tax laws. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Information regarding the Portfolio's principal investment risks is
contained in the Portfolio's prospectus. Please refer to those documents
when considering the Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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, 2005, Growth Shares Portfolio had a net capital loss
carryforward of $36,182,632, of which the following amounts will expire
between 2009 and 2011, if not utilized: $9,618,208 in 2009, $19,245,183 in
2010 and $7,319,241 in 2011.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 271,910
Long-Term Capital Gain --
-------------
$ 271,910
Return of Capital --
-------------
Total Distributions $ 271,910
-------------
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 49,058
Undistributed long-term gain/(capital loss carryforward) (36,182,632)
Unrealized appreciation (depreciation) 450,947
-------------
Total $ (35,682,627)
=============
- --------------------------------------------------------------------------------
13
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
C. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). Income, common expenses (excluding transfer agent and the
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 the respective percentage of the adjusted net assets at the
beginning of the day. Distributions paid by the Portfolio with respect to
each class of shares are calculated in the same manner, at the same time,
and in the same amount, except that Class I and Class II shares can bear
different transfer agent and distribution fees.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on demand. The Trust invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
E. 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 sub custodian. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.70% 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. At June 30, 2006, $897 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $7,459 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $44 payable to PFD at June 30, 2006.
14
Pioneer Growth Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -------------------------------------------------------------------------------------------
Growth Shares Portfolio $32,843,463 $1,327,536 $ (2,584,148) $ (1,256,612)
=========== ========== ============ ============
- -------------------------------------------------------------------------------------------
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, 2006, were $16,547,824 and $19,750,398, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 30, 2005:
- -------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Growth Shares Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -------------------------------------------------------------------------------------------
CLASS I:
Shares sold 14,376 $ 195,725 34,054 $ 438,600
Reinvestment of distributions 3,819 49,224 17,362 221,887
Shares repurchased (229,888) (3,115,703) (512,773) (6,658,363)
---------------------------------------------------------
Net decrease (211,693) $ (2,870,754) (461,357) $ (5,997,876)
=========================================================
CLASS II:
Shares sold 30,827 $ 409,399 137,249 $ 1,753,754
Reinvestment of distributions -- -- 3,965 50,023
Shares repurchased (63,951) (843,975) (205,695) (2,678,779)
---------------------------------------------------------
Net decrease (33,124) $ (434,576) (64,481) $ (875,002)
=========================================================
- -------------------------------------------------------------------------------------------
15
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19627-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer High Yield VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
Table of Contents
- --------------------------------------------------------------------------------
Pioneer High Yield VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 5
Financial Statements 11
Notes to Financial Statements 15
Trustees, Officers and Service Providers 20
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Corporate Bonds 73.3%
U.S. Common Stocks 14.1%
Convertible Corporate Bonds 7.2%
Convertible Preferred Stocks 2.0%
U.S. Preferred Stocks 1.8%
Temporary Cash Investment 1.6%
Maturity Distribution
(As a percentage of total investment in securities)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
0-1 year 1.8%
1-3 years 16.5%
3-4 years 20.4%
4-6 years 49.8%
6-8 years 8.1%
8+ years 3.4%
Five Largest Holdings
(As a percentage of long-term holdings)
1. Mueller Industries, Inc.,
6.0%, 11/1/14 4.20%
2. DRS Technologies, Inc.,
6.875%, 11/1/13 3.70
3. Wesco Distribution, Inc.,
7.5%, 10/15/17 (144A) 3.37
4. Forest City Enterprises,
7.625%, 6/1/15 3.33
5. Allegheny Energy Supply,
7.8%, 3/15/11 3.29
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.57 $ 10.88
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.2975 $ 0.0731 $ 0.0801
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
High Yield VCT Portfolio at net asset value, compared to that of Merrill Lynch
(ML) High Yield Master II Index and of the ML Index of Convertible Bonds
(Speculative Quality). Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
Pioneer High Yield ML High Yield ML Convertible Bonds
VCT Portfolio Master II Speculative Quality
5/00 10000 10000 10000
6/00 10690 10193 10511
6/01 11846 10099 8075
6/02 12427 9658 7378
6/03 14688 11803 9201
6/04 16073 13006 11096
6/05 17156 14387 11243
6/06 17822 15064 12329
Index comparisons begin on 4/30/00. The ML High Yield Master II Index is a
commonly accepted measure of the performance of high yield securities. The ML
Index of Convertible Bonds (speculative quality) is a commonly accepted measure
of the performance of speculative grade convertible bond securities. Index
returns assume reinvestment of dividends and, unlike Portfolio returns, do not
reflect any fees, expenses or sales charges. You cannot invest directly in any
Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 9.47%
(5/1/00)
5 Years 8.51%
1 Year 3.89%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 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 variable annuities. 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 [divided by] $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, 2006 through June 30, 2006.
Share Class II
--------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,013.00
Expenses Paid During Period* $ 4.94
* Expenses are equal to the Portfolio's annualized expense ratio of 0.99% for
Class II 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 High Yield VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
--------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.89
Expenses Paid During Period* $ 4.96
* Expenses are equal to the Portfolio's annualized expense ratio of 0.99% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
During the six months ended June 30, 2006, sustained economic growth helped
high-yield bonds provide positive returns driven by healthy interest income.
Below, Portfolio Manager Margaret Patel describes the high-yield market and
explains why the Portfolio underperformed its benchmark.
Q. How did the Portfolio perform?
A. During the six months ended June 30, 2006, the Portfolio's Class II shares
had a total return based on net asset value of 1.30%. By comparison, the
Merrill Lynch High Yield Master II Index returned 3.07%, and the 103 Lipper
Variable Annuity High Current Yield funds returned an average 2.39%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What factors drove the high-yield market during the past six months?
A. Positive economic fundamentals and low default rates helped high-yield bonds
post generally positive returns during the period, driven largely by coupon
income. However, these returns were muted due to price declines, as yields
moved higher in reaction to rising Treasury rates. (Bond prices and yields
move in opposite directions.) Treasury yields increased because the Federal
Reserve Board continued its program of gradually withdrawing liquidity from
the marketplace through a steady program of short-term interest rate hikes.
Overall, two areas of the high-yield market outperformed: lower-quality
CCC-rated issues and bonds in the automotive sector.
Q. Why did the Portfolio lag the Merrill Lynch High Yield Master II Index?
A. The Portfolio lagged because of our credit-quality positioning. We continued
to emphasize the higher-quality segments of the high-yield market, because
we felt that the extra yield offered by lower-quality bonds did not
adequately compensate the Portfolio for the greater level of risk of
potential future bankruptcies or erosion in credit quality inherent in
lower-quality issues. During the period, lower-quality CCC-rated bonds
significantly outperformed higher-quality securities, leading to our
underperformance. Our decision generally to avoid the automotive sector
also held back relative returns, as bonds from this group offered strong
relative performance.
Q. Which investments performed best during the period? Which disappointed?
A. One of the Portfolio's top performers was a company that was acquired,
leading to the substantial appreciation of its price. Hotel real estate
investment trust (REIT) MeriStar Hospitality was bought by private equity
firm The Blackstone Group, with our holdings of the company's common stock
purchased at a premium. The convertible bonds of Coeur D'Alene Mines rose
due to gains in silver prices.
On the down side, the common stock of PDL BioPharma declined due to
lower-than-expected royalty revenues from its leading products. Convertible
securities issued by Lyondell, listed in the Portfolio's holdings as
Millennium Chemical, depreciated along with the underlying stock price
because of concerns about slowing end demand, softer prices, and the
negative impact of a lead paint suit. Advertising agency Interpublic Group
declined as investors became impatient with the pace of the company's
reorganization as well as slow growth in its advertising businesses.
Finally, Canadian paper and forest products manufacturer Abitibi
Consolidated fell because the strength of the Canadian dollar increased its
costs and due to concerns about declining demand for newsprint.
Q. What is your outlook?
A. We expect the fundamentals of the U.S. economy to remain strong, with growth
in U.S. gross domestic product near its long-term trend rate of about 3%
per year. We also anticipate that default rates should remain low (compared
to historical averages) because of the strong economy and ample liquidity
in the markets, which has made access to capital to even the most marginal
of borrowers rather easy. In terms of the Portfolio, we feel it is best to
maintain a relatively high credit quality, as lower-rated securities
historically have proved more vulnerable during economic slowdowns. We also
have moved some assets into equities to gain exposure to a wider range of
industries and because, in some cases, they offer greater capital
appreciation potential than bonds, whose prices would decline should rates
continue to rise.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
A Word About Risk:
Investments in high-yield or lower-rated securities are subject to
greater-than-average risk. 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 underlying securities and their inability to meet
their debt obligations. Prepayment risk is the chance that mortgage-backed
bonds will be paid off early if falling interest rates prompt homeowners to
refinance their mortgages. 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 associated with falling
interest rates. At times, the Portfolio's investments may represent industries
or industry sectors that are interrelated or have common risks, making it more
susceptible to any economic, political, or regulatory developments or other
risks affecting those industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
S&P/Moody's
Ratings
Shares (unaudited) Value
CONVERTIBLE PREFERRED STOCKS - 2.0%
Materials - 1.4%
Diversified Metals & Mining - 1.4%
1,200 NR/NR Freeport-MC Copp., 5.5%, 12/31/49 $ 1,504,050
-----------
Total Materials $ 1,504,050
-----------
Banks - 0.6%
Thrifts & Mortgage Finance - 0.6%
14,000 NR/NR Sovereign Cap Trust IV, 4.375%, 3/1/34 $ 633,500
-----------
Total Banks $ 633,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS $ 2,137,550
-----------
(Cost $1,831,500)
Principal
Amount
USD ($)
CONVERTIBLE CORPORATE BONDS - 7.1%
Materials - 1.0%
Commodity Chemicals - 0.3%
200,000 B+/B1 Millennium Chemicals, Inc., 4.0%, 11/15/23 $ 358,250
----------
Gold - 0.7%
800,000 B-/NR Coeur D'Alene Mines Corp 1.25%, 1/15/24 $ 728,000
----------
Total Materials $1,086,250
----------
Capital Goods - 1.5%
Electrical Component & Equipment - 1.5%
2,595,000 BB-/B1 Roper Industries, Inc., 1.4813%, 1/15/34 $1,576,463
----------
Total Capital Goods $1,576,463
----------
Media - 1.7%
Advertising - 1.7%
1,800,000 B/Ba3 Interpublic Group Cos., 4.5%, 3/15/23 $1,770,750
----------
Total Media $1,770,750
----------
Retailing - 0.9%
Automotive Retail - 0.9%
1,000,000 B/B3 Sonic Automotive, Inc., 5.25%, 5/7/09 $ 978,750
----------
Total Retailing $ 978,750
----------
Health Care Equipment & Services - 0.6%
Health Care Equipment - 0.6%
375,000 NR/NR Epix Medical, 3.0%, 6/15/24 (144A) $ 251,250
450,000 NR/NR Wilson Greatbatch Tech., 2.25%, 6/15/13 391,500
----------
$ 642,750
----------
Total Health Care Equipment & Services $ 642,750
----------
The accompanying notes are an integral part of these financial statements. 5
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Technology Hardware & Equipment - 1.4%
Electronic Equipment & Instruments - 1.2%
300,000 NR/NR Flir Systems, Inc., 3.0%, 6/1/23 $ 360,000
1,000,000 NR/NR Veeco Instruments, 4.125%, 12/21/08 972,500
----------
$1,332,500
----------
Technology Distributors - 0.2%
300,000 NR/ NR Bell Microproducts, Inc., 3.75%, 3/5/24 $ 250,125
----------
Total Technology Hardware & Equipment $1,582,625
----------
TOTAL CONVERTIBLE CORPORATE BONDS $7,637,588
----------
(Cost $8,078,583)
Shares
PREFERRED STOCK - 1.8%
Real Estate - 1.8%
Real Estate Management & Development - 1.8%
75,000 Forest City Enterprises, 7.375%, 2/1/34 $1,871,250
----------
Total Real Estate $1,871,250
----------
TOTAL PREFERRED STOCK $1,871,250
----------
(Cost $1,917,000)
COMMON STOCKS - 13.9%
Energy - 1.6%
Oil & Gas Exploration & Production - 0.3%
8,110 Pogo Producing Co.* $ 373,871
----------
Oil & Gas Refining & Marketing - 0.5%
7,800 Tesoro Petroleum Corp. $ 580,008
----------
Oil & Gas Storage & Transportation - 0.8%
7,900 Kinder Morgan, Inc. $ 789,131
----------
Total Energy $1,743,010
----------
Materials - 2.3%
Commodity Chemicals - 0.1%
3,500 Georgia Gulf Corp.* $ 87,570
----------
Construction Materials - 0.1%
1,752 Texas Industries, Inc. $ 93,031
----------
Gold - 0.5%
17,600 Barrick Gold Corp.* $ 520,960
----------
Industrial Gases - 0.5%
8,600 Air Products & Chemicals, Inc. $ 549,712
----------
Specialty Chemicals - 1.1%
1,700 Arch Chemicals, Inc. $ 61,285
63,100 RPM, Inc. 1,135,800
----------
$1,197,085
----------
Total Materials $2,448,358
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Capital Goods - 1.4%
Electrical Component & Equipment - 0.9%
6,200 Franklin Electric Co., Inc.* $ 320,168
19,500 General Cable Corp.* 682,500
------------
$ 1,002,668
------------
Industrial Machinery - 0.5%
10,500 ITT Industries, Inc. $ 519,750
------------
Total Capital Goods $ 1,522,418
------------
Household & Personal Products - 1.1%
Personal Products - 1.1%
24,600 Alberto-Culver Co. (Class B) $ 1,198,512
------------
Total Household & Personal Products $ 1,198,512
------------
Health Care Equipment & Services - 0.6%
Health Care Equipment - 0.6%
10,900 Beckman Coulter, Inc.* $ 605,495
------------
Total Health Care Equipment & Services $ 605,495
------------
Pharmaceuticals & Biotechnology - 2.6%
Biotechnology - 1.1%
11,900 PDL BioPharma, Inc.* $ 219,079
28,400 Vertex Pharmaceuticals, Inc.* 1,042,564
------------
$ 1,261,643
------------
Life Sciences Tools & Services - 1.1%
18,000 Bio-Rad Laboratories, Inc.* $ 1,168,920
------------
Pharmaceuticals - 0.4%
15,000 Bristol-Myers Squibb Co. $ 387,900
------------
Total Pharmaceuticals & Biotechnology $ 2,818,463
------------
Real Estate - 0.1%
Office Real Estate Investment Trusts - 0.1%
1,500 Equity Office Properties Trust(a) $ 54,765
------------
Total Real Estate $ 54,765
------------
Technology Hardware & Equipment - 0.5%
Electronic Equipment & Instruments - 0.5%
10,000 Amphenol Corp.* $ 559,600
------------
Total Technology Hardware & Equipment $ 559,600
------------
Utilities - 3.7%
Gas Utilities - 2.3%
10,900 Questar Corp. $ 877,341
47,700 Southern Union Co.* 1,290,762
9,600 Washington Gas Light Co.* 277,920
------------
$ 2,446,023
------------
The accompanying notes are an integral part of these financial statements. 7
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Independent Power Producer & Energy Traders - 1.4%
31,100 NRG Energy, Inc.* $ 1,498,398
------------
Total Utilities $ 3,944,421
------------
TOTAL COMMON STOCKS $ 14,895,042
------------
(Cost $13,636,095)
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited)
CORPORATE BONDS - 72.5%
Energy - 5.6%
Coal & Consumable Fuels - 2.1%
2,500,000 NR/NR Massey Energy Co., 6.875%, 12/15/13 $ 2,325,000
------------
Oil & Gas Refining & Marketing - 3.5%
1,031,000 B+/B1 Frontier Oil Corp., 6.625%, 10/1/11 $ 987,183
2,850,000 BB+/Ba1 Tesoro Petroleum Corp., 6.25%, 11/1/12 (144A) 2,707,500
------------
$ 3,694,683
------------
Total Energy $ 6,019,683
------------
Materials - 19.7%
Aluminum - 2.1%
2,300,000 B/B1 Novelis, Inc., 7.25%, 2/15/15 $ 2,208,000
------------
Commodity Chemicals - 6.0%
1,750,000 BB-/Ba3 Arco Chemical Co., 9.8%, 2/1/20 $ 2,056,250
2,000,000 BB-/Ba2 Nova Chemicals Corp., 7.4%, 4/1/09 1,985,000
2,500,000 BB-/Ba2 Nova Chemicals Corp., 7.875%, 9/15/25 2,396,875
------------
$ 6,438,125
------------
Construction Materials - 1.4%
1,500,000 BB-/Ba3 Texas Industries, Inc, 7.25%, 7/15/13 $ 1,485,000
------------
Fertilizers & Agricultural Chemicals - 2.2%
2,500,000 B+/Ba2 Scotts Co., 6.625%, 11/15/13 $ 2,400,000
------------
Metal & Glass Containers - 0.6%
800,000 B/B2 Crown Cork and Seal Co., Inc., 7.375%, 12/15/26 $ 702,000
------------
Paper Products - 4.7%
200,000 B+/B1 Abitibi-Consolidated, Inc., 6.0%, 6/20/13 $ 162,000
2,250,000 B+/B1 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 (a) 2,131,875
3,100,000 B+/B1 Bowater, Inc., 6.5%, 6/15/13 2,697,000
------------
$ 4,990,875
------------
Specialty Chemicals - 2.7%
2,090,000 B+/B1 Millennium America, Inc., 7.625%, 11/15/26 $ 1,766,050
1,000,000 B+/B1 Millennium America, Inc., 9.25%, 6/15/08 1,025,000
------------
$ 2,791,050
------------
Total Materials $ 21,015,050
------------
Capital Goods - 14.4%
Aerospace & Defense - 6.7%
4,000,000 B/B3 DRS Technologies, Inc., 6.875%, 11/1/13 $ 3,850,000
3,150,000 B+/B1 Esterline Technology, 7.75%, 6/15/13 3,189,375
------------
$ 7,039,375
------------
8 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Industrial Machinery - 7.7%
2,500,000 B/B2 Gardner Denver, Inc., 8.0%, 5/1/13 (144A) $ 2,625,000
517,000 B+/B2 JLG Industries, Inc., 8.375%, 6/15/12 535,095
800,000 BB-/B1 Manitowoc Co., Inc., 7.125%, 11/1/13 784,000
4,750,000 NR/NR Mueller Industries, Inc. 6.0%, 11/1/14 4,370,000
------------
$ 8,314,095
------------
Total Capital Goods $ 15,353,470
------------
Consumer Durables & Apparel - 0.1%
Homebuilding - 0.1%
185,000 BB-/Ba2 Meritage Homes Corp., 6.25%, 3/15/15 $ 155,863
------------
Total Consumer Durables & Apparel $ 155,863
------------
Media - 2.0%
Advertising - 2.0%
2,300,000 B/Ba3 Interpublic Group, Inc., 7.25%, 8/15/11 $ 2,087,250
------------
Total Media $ 2,087,250
------------
Retailing - 5.1%
Automotive Retail - 1.9%
2,290,000 CCC/B3 Pep Boys-Manny Moe Jack, 7.5%, 12/15/14 $ 1,992,300
------------
Distributors - 3.2%
3,500,000 B/B2 Wesco Distribution, Inc., 7.5%, 10/15/17 (144A) $ 3,500,000
------------
Total Retailing $ 5,492,300
------------
Health Care Equipment & Services - 1.4%
Health Care Supplies - 1.4%
1,500,000 CCC+/Caa3 Inverness Medical Innovation, 8.75%, 2/15/12 $ 1,455,000
------------
Total Health Care Equipment & Services $ 1,455,000
------------
Pharmaceuticals & Biotechnology - 1.8%
Pharmaceuticals - 1.8%
2,000,000 BB-/B1 Valeant Pharmaceuticals, 7.0%, 12/15/11 $ 1,900,000
------------
Total Pharmaceuticals & Biotechnology $ 1,900,000
------------
Real Estate - 8.2%
Real Estate Management & Development - 3.2%
3,435,000 BB-/Ba3 Forest City Enterprises, 7.625%, 6/1/15 $ 3,460,763
------------
Real Estate Investment Trusts - 2.7%
1,500,000 BB-/B2 BF Saul Real Estate Investment Trust, 7.5%, 3/1/14 $ 1,522,500
1,300,000 B/B1 Crescent Real Estate, 9.25%, 4/15/09 1,351,350
------------
$ 2,873,850
------------
Retail Real Estate Investment Trusts - 2.3%
2,500,000 BB+/Ba1 Rouse Co Lp/TRC Co- ISSR 6.75%, 5/1/13 (144A) $ 2,434,763
------------
Total Real Estate $ 8,769,376
------------
Technology Hardware & Equipment - 5.5%
Electronic Equipment & Instruments - 3.3%
1,835,000 B/B2 General Cable Corp., 9.5%, 11/15/10 $ 1,945,100
1,500,000 B/B2 Itron, Inc., 7.75%, 5/15/12 1,530,000
------------
$ 3,475,100
------------
The accompanying notes are an integral part of these financial statements. 9
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal S&P/Moody's
Amount Ratings
USD ($) (unaudited) Value
Technology Distributors - 2.2%
1,600,000 BB+/Ba1 Anixter International Corp., 5.95%, 3/1/15 $ 1,472,000
1,000,000 BBB-/Baa3 Arrow Electronic, Inc., 6.875%, 6/1/18 982,812
------------
$ 2,454,812
------------
Total Technology Hardware & Equipment $ 5,929,912
------------
Utilities - 8.7%
Electric Utilities - 5.4%
3,300,000 BB-/Ba3 Allegheny Energy Supply, 7.8%, 3/15/11 $ 3,423,750
1,000,000 BB-/Ba3 Allegheny Energy Supply, 8.25%, 4/15/12 (144A) 1,062,500
1,300,000 B+/B1 CMS Energy Corp., 7.5%, 1/15/09 1,316,250
------------
$ 5,802,500
------------
Multi-Utilities - 3.3%
3,000,000 B+/B1 CMS Energy Corp., 7.75%, 8/1/10 $ 3,045,000
450,000 B+/B1 CMS Energy Corp., 6.875%, 12/15/15 427,500
------------
$ 3,472,500
------------
Total Utilities $ 9,275,000
------------
TOTAL CORPORATE BONDS
(Cost $80,127,755) $ 77,452,904
------------
Shares
TEMPORARY CASH INVESTMENT - 1.6%
Security Lending Collateral - 1.6%
1,695,184 Securities Lending Investment Fund, 5.16% $ 1,695,184
------------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $1,695,184) $ 1,695,184
------------
TOTAL INVESTMENT IN SECURITIES - 98.9%
(Cost $107,286,117) $105,689,518
------------
OTHER ASSETS AND LIABILITIES - 1.1% $ 1,161,880
------------
TOTAL NET ASSETS - 100.0% $106,851,398
============
NR Not rated by either S&P or Moody's
* Non-income producing security.
+ Investment held by the fund representing 5% or more of the outstanding
voting stock of such company.
(a) At June 30, 2006, the following securities were out on loan:
Principal
Amount Security Value
$ 1,641,250 Abitibi-Consolidated, Inc., 8.55%, 8/1/10 $ 1,555,084
Shares
1,125 Equity Office Properties Trust 41,074
-----------
Total $ 1,596,158
===========
10 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year 5/1/01
6/30/06 Ended Ended Ended Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 10.88 $ 11.67 $ 11.46 $ 9.28 $ 10.33 $ 10.51
-------- ------- ------- ------- ------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.29 $ 0.59 $ 0.58 $ 0.76 $ 0.80 $ 0.60
Net realized and unrealized gain (loss) on investments (0.15) ( 0.41) 0.27 2.17 (1.05) (0.07)
-------- ------- ------- ------- ------- -------
Net increase (decrease) from investment operations $ 0.14 $ 0.18 $ 0.85 $ 2.93 $ (0.25) $ 0.53
Distributions to shareowners:
Net investment income (0.30) (0.59) (0.59) (0.75) (0.80) (0.60)
Net realized gain (0.15) (0.38) (0.05) - - (0.11)
-------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ (0.31) $ (0.79) $ 0.21 $ 2.18 $ (1.05) $ (0.18)
-------- ------- ------- ------- ------- -------
Net asset value, end of period $ 10.57 $ 10.88 $ 11.67 $ 11.46 $ 9.28 $ 10.33
======== ======= ======= ======= ======= =======
Total return* 1.30% 1.70% 7.76% 32.64% (2.42)% 5.39%
Ratio of net expenses to average net assets+ 0.99%** 1.02% 1.04% 1.09% 1.82% 1.39%**
Ratio of net investment income to average net assets+ 5.47%** 5.27% 5.12% 6.33% 8.67% 8.94%**
Portfolio turnover rate 34%** 37% 42% 48% 42% 36%
Net assets, end of period (in thousands) $ 44,904 $47,169 $51,912 $17,601 $ 228 $ 28
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.99%** 1.02% 1.04% 1.09% 1.82% 1.50%**
Net investment income 5.47%** 5.27% 5.12% 6.33% 8.67% 8.83%**
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.99%** 1.02% 1.04% 1.09% 0.97% 0.85%**
Net investment income 5.47%** 5.27% 5.12% 6.33% 0.01% 0.07%**
* 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.
** Annualized.
+ Ratios assuming no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 11
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $1,596,158) $105,689,518
(Cost $107,286,117)
Cash 711,034
Receivables --
Investment securities sold 944,726
Fund shares sold 35,217
Dividends, interest and foreign taxes withheld 1,334,645
Other 6,303
------------
Total assets $108,721,443
------------
LIABILITIES:
Payables --
Fund shares repurchased $ 120,084
Upon return for securities loaned 1,695,184
Due to affiliates 10,019
Accrued expenses 44,758
------------
Total liabilities $ 1,870,045
------------
NET ASSETS:
Paid-in capital $108,601,819
Undistributed net investment income 31,588
Accumulated net realized loss (185,410)
Net unrealized loss on Investments (1,596,599)
------------
Total net assets $106,851,398
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 61,947,521
Shares outstanding 5,856,696
------------
Net asset value per share $ 10.58
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 44,903,878
Shares outstanding 4,246,731
------------
Net asset value per share $ 10.57
12 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $290) $ 198,071
Interest 3,429,052
Income on securities loaned, net 2,251
------------
Total investment income $ 3,629,374
------------
EXPENSES:
Management fees $ 365,507
Transfer agent fees and expenses 4,858
Distribution fees (Class II) 60,958
Administrative reimbursements 10,548
Custodian fees 12,409
Professional fees 16,793
Printing expense 3,168
Fees and expenses of nonaffiliated trustees 1,574
Miscellaneous 817
------------
Total expenses $ 476,632
------------
Net expenses $ 476,632
------------
Net investment income $ 3,152,742
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss from investments $ (177,537)
------------
Change in net unrealized loss from investments $ (1,391,350)
------------
Net loss on investments $ (1,568,887)
============
Net increase in net assets resulting from operations $ 1,583,855
============
The accompanying notes are an integral part of these financial statements. 13
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 3,152,742 $ 6,046,966
Net realized gain (loss) on investments (177,537) 1,530,055
Change in net unrealized loss on investments (1,391,350) (5,535,598)
------------- -------------
Net increase in net assets resulting from operations $ 1,583,855 $ 2,041,423
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (1,828,845) $ (3,563,099)
Class II (1,352,174) (2,466,908)
Net realized gain
Class I (896,053) (2,147,727)
Class II (641,246) (1,587,624)
------------- -------------
Total distributions to shareowners $ (4,718,318) $ (9,765,358)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,639,803 $ 43,512,782
Reinvestment of distributions 4,703,710 9,721,259
Cost of shares repurchased (28,978,600) (57,690,620)
------------- -------------
Net decrease in net assets resulting from Fund share transactions $ (635,087) $ (4,456,579)
------------- -------------
Net decrease in net assets $ (3,769,550) $ (12,180,514)
------------- -------------
NET ASSETS:
Beginning of period $ 110,620,948 $ 122,801,462
------------- -------------
End of period $ 106,851,398 $ 110,620,948
============= =============
Undistributed net investment income, end of period $ 31,588 $ 59,865
============= =============
14 The accompanying notes are an integral part of these financial statements.
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer High Yield VCT Portfolio (The Portfolio) is a Portfolio of Pioneer
Variable Contracts Trust (the Trust), a Delaware statutory trust registered
under the Investment Company Act of 1940 as an open-end management investment
company. The Trust consists of twenty- seven separate diversified portfolios,
thirteen of which issue both Class I and Class II shares (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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The investment objective of High Yield Portfolio is to maximize total return
through a combination of income and capital appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
Generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investments in high-yield or lower-rated
securities are subject to greater-than-average risk.
The following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements,
which are consistent 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 (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange
15
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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 NYSE. The value of such securities used in
computing the net asset value of the Portfolio's shares is based on the
last sale price on the principal exchange where they traded. The Portfolio
also may use the fair value of a security, including a non-U.S. security,
when the closing market price on the primary exchange where the security is
traded no longer accurately reflects the value of the security as of the
close of the NYSE. At June 30, 2006, there were no fair valued securities.
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.
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, net of unrecoverable foreign taxes withheld at the
applicable country rates. All discounts/premiums are accreted/amortized for
financial reporting purposes.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
The High Yield Portfolio invests in below investment grade (high yield)
debt securities and preferred stocks. These high yield securities may be
convertible into equity securities of the issuer. Debt securities rated
below investment grade are commonly referred to as "junk bonds" and are
considered speculative. These securities involve greater risk of loss, are
subject to greater price volatility, and are less liquid, especially during
years of economic uncertainty or change, than higher rated debt securities.
The Portfolio is not diversified, which means that it can invest a higher
percentage of its asset in any one issuer than a diversified fund. Being
non-diversified may magnify the fund's losses from adverse events affecting
a particular issuer.
In addition, the non-diversified Portfolio may have concentrations in
certain asset types, which may subject the Portfolio to additional risks.
Further description of these risks is included in the Trust's Prospectus.
B. 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 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. dollars 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
Portfolio's 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.
At June 30, 2006, the Portfolio had no open forward contracts.
D. 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 taxable income and net realized capital gains, if
16
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
any, to its shareowners. Therefore, no federal income tax provision is
required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also 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, 2005, no such taxes were paid.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $6,600,658
Long-Term capital gain 3,164,700
----------
$9,765,358
Return of Capital -
----------
Total distributions $9,765,358
==========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 798,588
Undistributed long-term gain/(capital loss carryforward) 803,653
Unrealized appreciation (depreciation) (212,035)
----------
Total $1,390,206
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is primarily attributable to the tax deferral of losses on
wash sales and interest accrual on preferred stock.
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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006 Distribution fees for Class II are calculated based on the average
daily net asset values attributable to Class II shares of the Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. The Portfolio declares as daily dividends
substantially all of its respective 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 a Portfolio
with respect to each class of shares are calculated in the same manner, at
the same time, and in the same amount, except that Class I and Class II
shares can bear different transfer agent and distribution fees. Dividends
and distributions to shareowners are recorded on the ex-dividend date.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Portfolio. The loans are
secured by collateral of at least 102%, at all times, of the fair
17
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio'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 sub custodian. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolio. Management fees are calculated daily at the annual rate of 0.65% of
the Portfolio's average daily net assets.
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. June 30, 2006, $2,164 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
3. Transfer Agent
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 $7,551 in transfer agent
fees payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $304 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------
High Yield Portfolio $107,292,903 $3,132,922 $(4,736,307) $(1,603,385)
============ ========== =========== ===========
- -----------------------------------------------------------------------------------------------
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, 2006, were $18,419,965 and $20,008,959, respectively.
18
Pioneer High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
High Yield Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 839,034 $ 9,137,961 1,902,148 $ 21,181,455
Reinvestment of distributions 252,418 2,710,344 514,993 5,666,754
Shares repurchased (1,066,068) (11,559,180) (2,659,638) (29,739,088)
-------------------------------------------------------------
Net increase (decrease) 25,384 $ 289,125 (242,497) $ (2,890,879)
=============================================================
CLASS II:
Shares sold 1,328,901 $ 14,501,842 2,014,754 $ 22,331,327
Reinvestment of distributions 185,574 1,993,366 368,486 4,054,505
Shares repurchased (1,602,920) (17,419,420) (2,495,978) (27,951,532)
-------------------------------------------------------------
Net decrease (88,445) $ (924,212) (112,738) $ (1,565,700)
=============================================================
- -------------------------------------------------------------------------------------------------
19
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19622-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer International Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer International Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 10
Notes to Financial Statements 14
Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
International Common Stocks 83.4%
Depositary Receipts for International Stocks 11.1%
Temporary Cash Investment 2.6%
U.S. Common Stocks 2.0%
International Preferred Stocks 0.9%
Geographical Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Japan 30.2%
France 11.5%
United Kingdom 11.3%
Switzerland 7.9%
Germany 6.6%
Brazil 4.7%
South Korea 4.0%
Russia 3.4%
Australia 2.4%
Singapore 2.2%
People's Republic of China 2.0%
Spain 1.9%
Sweden 1.8%
United States 1.5%
Turkey 1.3%
Italy 1.0%
Austria 1.0%
Other (individually less than 1%) 5.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. BNP Paribas SA 2.31%
2. Royal Bank of Scotland
Group Plc 2.25
3. Total SA 2.13
4. CS Group 2.11
5. Toyota Motor Co. 2.01
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 14.66 $ 13.63
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0409 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
International Value VCT Portfolio at net asset value, compared to that of the
Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.) Index.
Portfolio returns are based on net asset value and do not reflect any
applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer MCSI
International All Country
Value VCT World (ex. U.S.)
Portfolio Index
6/96 $10,000 $10,000
$11,695 $11,414
6/98 $10,823 $11,572
$10,878 $12,675
6/00 $13,750 $14,969
$ 9,450 $11,406
6/02 $ 8,692 $10,474
$ 7,925 $10,035
6/04 $10,013 $13,297
$11,018 $15,551
6/06 $14,261 $19,967
The Morgan Stanley Capital International (MSCI) All Country World (ex. U.S.)
Index measures the performance of developed and emerging market stock markets.
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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
Net Asset Value
10 Years 3.61%
5 Years 8.58%
1 Year 29.43%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 International 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 variable annuities. 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 International Value VCT
Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- ---------------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,078.70
Expenses Paid During Period* $ 9.07
* Expenses are equal to the Portfolio's annualized expense ratio of 1.76% for
Class II 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 International Value VCT
Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- ----------------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,016.07
Expenses Paid During Period* $ 8.80
* Expenses are equal to the Portfolio's annualized expense ratio of 1.76% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
International stocks rallied considerably during the first half of the
Portfolio's fiscal year - despite a retreat this spring, when global
inflationary concerns sparked a more cautionary undercurrent and a general
flight to quality. Lead portfolio manager Christopher Smart discusses these
developments in the following interview.
Q. How did the Portfolio perform during the first half of fiscal 2006?
A. For the six months ended June 30, 2006, Class II shares rose 7.87% at net
asset value. Three factors - an emphasis on emerging markets, stock
selection in Japan and financial stocks in Europe - contributed to this
return. Despite these successes, however, the Portfolio lagged the 9.99%
return of the Morgan Stanley Capital International (MSCI) All Country World
(ex. U.S.) Index and the 8.95% average return for the 137 International
Large-Cap Core funds in its Lipper category for the same period.
We attribute this relative underperformance in part to the disappointing
performance of two stocks in the telecom sector. Wireless provider Vodafone
Group and telecommunications provider France Telecom encountered some
headwinds during the fiscal year. Vodafone's stock fell in response to the
company's announcement in November 2005 that it was facing substantially new
competition in Europe. We believe the competition, combined with the
difficulties that Vodafone is experiencing with the restructuring of its
subsidiary in Japan, will generate much slower growth in the next few years.
Consequently, we sold the entire position. Investments in France Telecom
also fell during the year, but we believe the company's prospects are more
attractive longer term and retained the stock in the Portfolio.
Spanish oil giant Repsol also detracted from performance, as it was forced
to reduce the estimated size of its oil reserves in Argentina and Bolivia.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. The Portfolio's exposure to key emerging markets helped performance. Could
you mention some of those holdings?
A. Certainly. The Portfolio's positions in South Korea and Russia were strong
contributors to performance. We remain positive on the Korean market, based
on our confidence in the continued health of both the consumer and export
sectors. Two Korean shipbuilding companies stood out during the period -
Daewoo Heavy Industries & Machinery and Hyundai Heavy Industries, which are
benefiting from trade and globalization trends. In Russia, rising energy
prices boosted shares of Lukoil and the natural gas giant Gazprom, which has
become one of the largest listed companies in the world.
A Word About Risk:
Investing in foreign and/or emerging markets securities involves risks relating
to interest rates, currency exchange rates, economic, and political conditions.
The Portfolio may invest a substantial amount of its assets in issuers located
in a limited number of countries and therefore is susceptible to adverse
economic, political or regulatory developments affecting those countries. At
times, the Portfolio's investments may represent industries or industry sectors
that are interrelated or have common risks, making it more susceptible to any
economic, political, or regulatory developments or other risks affecting those
industries and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. Europe is experiencing new signs of growth. Are the Portfolio's European
investments benefiting?
A. With the exception of the telecommunications sector, holdings across Europe
fared well - particularly in the financial services sector. Societe Generale
is focused on lowering costs to improve its profit margins. In addition,
this diversified bank is expanding financial services businesses outside of
France to increase its market share. Credit Suisse, which is domiciled in
Switzerland, has initiated substantial internal restructuring and cost
reductions that may contribute to its future profitability and growth
prospects.
Q. Are you concerned that the market's reversal this spring could be signaling
a shift in investor sentiment, or do you see it a temporary correction?
A. We do not anticipate a wholesale shift in investor sentiment at this time.
High oil and commodity prices are understandably causing concerns for
investors, but global growth remains solid and is supported by strong
economic numbers. The correction appears to reflect a general reduction in
risk appetite rather than a response to specific fundamental deterioration.
As long as global inflationary pressures remain tame, we are upbeat about
growth prospects worldwide. In Japan, domestic forces, including rising
wages and climbing property values, are driving the recovery there. Europe
may face some headwinds if the Central Bank tightens significantly, but
consumers appear optimistic. New signs of growth in Germany suggest that the
rest of the continent may see economic improvement. And in emerging markets,
increasing prosperity and rising consumer demand are driving economic
growth. We'll be keeping a sharp eye on valuations to ensure that stock
prices remain reasonable relative to earnings prospects, but we still
believe that the long-term outlook for international markets remains bright.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCK - 0.9%
Utilities - 0.9%
Multi-Utilities - 0.9%
3,360 RWE AG - Non-Voting $ 252,525
-----------
TOTAL PREFERRED STOCK
(Cost $203,729) $ 252,525
-----------
COMMON STOCKS - 97.2%
Energy - 9.9%
Integrated Oil & Gas - 8.0%
7,875 Gazprom - Reg S, (A.D.R.)* $ 332,128
3,930 Lukoil Holding (A.D.R.) 328,352
4,020 Petrobras Brasileiro (A.D.R.) 320,957
18,950 Repsol SA 535,478
5,000 Statoil ASA* 142,302
8,980 Total SA* 588,753
-----------
$ 2,247,970
-----------
Oil & Gas Equipment & Services - 1.1%
3,500 Saipem S.p.A.* $ 79,452
4,080 Technip* 225,444
-----------
$ 304,896
-----------
Oil & Gas Exploration & Production - 0.8%
299,630 CNOOC, Ltd.* $ 240,525
-----------
Total Energy $ 2,793,391
-----------
Materials - 8.9%
Construction Materials - 2.0%
3,720 CRH Plc $ 121,777
4,310 Holcim, Ltd.* 330,330
900 Lafarge Br* 112,803
-----------
$ 564,910
-----------
Diversified Metals & Mining - 3.1%
16,722 Broken Hill Proprietary Co., Ltd. $ 360,335
5,140 Freeport-McMoRan Copper & Gold, Inc.
(Class B)(b) 284,807
4,650 Rio Tinto Plc 243,812
-----------
$ 888,954
-----------
Specialty Chemicals - 0.9%
4,500 Shin-Etsu Chemical Co., Ltd. $ 245,738
-----------
Steel - 2.9%
15,380 Companhia Vale do Rio Doce (A.D.R.) $ 316,520
25,600 Hitachi Metals, Ltd.* 253,081
5,800 JFE Holdings, Inc.* 246,269
-----------
$ 815,870
-----------
Total Materials $ 2,515,472
-----------
Shares Value
Capital Goods - 11.2%
Building Products - 1.1%
4,270 Compagnie de Saint Gobain* $ 304,618
-----------
Construction & Farm Machinery &
Heavy Trucks - 3.1%
11,770 Daewoo Heavy Industries &
Machinery, Ltd.* $ 345,202
2,380 Hyundai Heavy Industries* 267,370
12,800 Komatsu, Ltd.* 256,352
-----------
$ 868,924
-----------
Electrical Component & Equipment - 0.4%
1,100 Schneider Electric SA* $ 114,619
-----------
Heavy Electrical Equipment - 1.7%
59,000 Mitsubishi Electric Corp.* $ 474,742
-----------
Industrial Conglomerates - 2.8%
33,000 Keppel Corp* $ 306,443
61,711 KOC Holding AS* 183,487
3,560 Siemens 309,630
-----------
$ 799,560
-----------
Industrial Machinery - 1.1%
8,900 AB SKF* $ 139,855
14,220 Nabtesco Corp.* 160,157
-----------
$ 300,012
-----------
Trading Companies & Distributors - 1.0%
21,000 Sumitomo Corp.* $ 278,211
-----------
Total Capital Goods $ 3,140,686
-----------
Commercial Services & Supplies - 0.3%
Office Services & Supplies - 0.3%
6,200 Buhrmann NV* $ 89,644
-----------
Total Commercial
Services & Supplies $ 89,644
-----------
Transportation - 2.4%
Air Freight & Couriers - 0.8%
700 Panalpina Welttransport Holding AG* $ 65,053
4,820 TNT NV 172,489
-----------
$ 237,542
-----------
Railroads - 1.6%
60 East Japan Railway Co.* $ 446,891
-----------
Total Transportation $ 684,433
-----------
Automobiles & Components - 4.5%
Auto Parts & Equipment - 0.9%
8,120 Denso Corp.* $ 266,498
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Automobile Manufacturers - 3.0%
3,260 Hyundai Motor Co., Ltd.* $ 278,033
10,600 Toyota Motor Co. 554,409
-----------
$ 832,442
-----------
Tires & Rubber - 0.6%
1,660 Continental AG* $ 169,265
-----------
Total Automobiles & Components $ 1,268,205
-----------
Consumer Durables & Apparel - 3.3%
Apparel, Accessories & Luxury Goods - 0.4%
2,300 Adidas-Salomon AG* $ 110,523
-----------
Consumer Electronics - 1.5%
9,800 Sony Corp.* $ 431,856
-----------
Footwear - 0.2%
140 Puma AG Rudolf Dassler Sport* $ 54,300
-----------
Homebuilding - 0.4%
5,350 Persimmon Plc. $ 121,863
-----------
Leisure Products - 0.8%
5,800 Sega Sammy Holdings, Inc.* $ 214,461
-----------
Total Consumer Durables & Apparel $ 933,003
-----------
Consumer Services - 0.4%
Hotels, Resorts & Cruise Lines - 0.4%
2,370 Carnival Corp. $ 98,924
-----------
Total Consumer Services $ 98,924
-----------
Media - 1.5%
Broadcasting & Cable TV - 0.8%
230 Jupiter Telecommunications Co., Ltd.* $ 159,392
6,100 Mediaset S.p.A* 71,816
-----------
$ 231,208
-----------
Movies & Entertainment - 0.7%
5,700 Vivendi SA* $ 199,381
-----------
Total Media $ 430,589
-----------
Retailing - 1.5%
Apparel Retail - 0.8%
74,800 Truworths International, Ltd. $ 224,682
-----------
Department Stores - 0.7%
15,140 Takashimaya Co., Ltd.* $ 190,719
-----------
Total Retailing $ 415,401
-----------
Food & Drug Retailing - 2.4%
Drug Retail - 0.3%
6,900 Boots Group Plc $ 97,829
-----------
Shares Value
Hypermarkets & Supercenters - 2.1%
13,200 Aeon Co., Ltd.* $ 289,230
4,100 Brasil Distr Pao Acu (A.D.R.)* 127,674
2,770 Carrefour Supermarch* 162,120
-----------
$ 579,024
-----------
Total Food & Drug Retailing $ 676,853
-----------
Food, Beverage & Tobacco - 3.0%
Brewers - 0.6%
9,700 South African Breweries Plc* $ 174,079
-----------
Packaged Foods & Meats - 1.1%
1,020 Nestle SA (Registered Shares)* $ 319,798
-----------
Soft Drinks - 0.5%
1,600 Fomento Economico Mexicano
SA de C.V.* $ 133,952
-----------
Tobacco - 0.8%
8,300 British American Tobacco Plc $ 208,973
-----------
Total Food, Beverage & Tobacco $ 836,802
-----------
Household & Personal Products - 0.3%
Household Products - 0.3%
2,000 Reckitt Benckiser Plc $ 74,514
-----------
Total Household &
Personal Products $ 74,514
-----------
Health Care Equipment & Services - 0.8%
Health Care Equipment - 0.5%
1,160 Synthes, Inc.* $ 139,657
-----------
Health Care Services - 0.3%
700 Fresenius Medical Care AG* $ 80,371
-----------
Total Health Care
Equipment & Services $ 220,028
-----------
Pharmaceuticals & Biotechnology - 7.4%
Pharmaceuticals - 7.4%
12,300 Astellas Pharma, Inc. $ 452,422
7,672 Astrazeneca Plc 459,200
14,000 Daiichi Sankyo Co., Ltd.* 384,878
3,028 Roche Holdings AG 499,712
4,340 Shire Pharmaceuticals Group Plc (A.D.R.) 191,958
1,640 UCB SA* 88,643
-----------
$ 2,076,813
-----------
Total Pharmaceuticals &
Biotechnology $ 2,076,813
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Banks - 15.8%
Diversified Banks - 15.8%
39,325 Barclays Plc $ 447,201
6,670 BNP Paribas SA* 637,222
8,850 Commonwealth Bank of Australia 291,867
5,700 Depfa Bank Plc* 94,744
25,200 Development Bank of Singapore, Ltd. 287,692
2,700 Kookmin Bank (A.D.R.)* 224,262
34 Mitsubishi UFJ Financial Group, Inc.* 475,627
18,910 Royal Bank of Scotland Group Plc 621,743
3,229 Societe Generale* 473,782
41 Sumitomo Mitsui Financial Group, Inc.* 435,056
37,210 Turkiye Is Bankasi (Isbank)* 182,371
4,090 Uniao de Bancos Brasileiros SA
(Unibanco) (G.D.R.) (144A) 271,535
-----------
$ 4,443,102
-----------
Total Banks $ 4,443,102
-----------
Diversified Financials - 4.3%
Asset Management & Custody
Banks - 0.9%
1,940 Julius Baer Holding* $ 168,015
1,970 Man Group Plc 92,685
-----------
$ 260,700
-----------
Diversified Capital Markets - 2.8%
10,410 CS Group* $ 581,068
1,800 Deutsche Bank AG* 202,097
-----------
$ 783,165
-----------
Investment Banking & Brokerage - 0.6%
12,000 Nikko Cordinal Corp.*(b) $ 154,383
-----------
Total Diversified Financials $ 1,198,248
-----------
Insurance - 4.4%
Life & Health Insurance - 1.1%
4,820 China Life Insurance Co. (A.D.R.)*(b) $ 305,106
-----------
Multi-Line Insurance - 2.3%
16,900 Aviva Plc $ 239,292
5,770 AXA* 188,874
1,020 Zurich Financial Services* 223,042
-----------
$ 651,208
-----------
Property & Casualty Insurance - 1.0%
21,840 Mitsui Sumitomo Insurance Co.* $ 273,481
-----------
Total Insurance $ 1,229,795
-----------
Real Estate - 1.5%
Real Estate Management & Development - 1.5%
18,700 Mitsui Fudosan Co $ 408,238
-----------
Total Real Estate $ 408,238
-----------
Shares Value
Software & Services - 0.5%
Application Software - 0.5%
630 Sap AG* $ 132,677
-----------
Total Software & Services $ 132,677
-----------
Technology Hardware & Equipment - 3.6%
Communications Equipment - 1.2%
104,050 Ericsson LM Tel Sur B* $ 343,743
-----------
Electronic Equipment & Instruments - 1.1%
1,200 Keyence Corp.* $ 306,789
-----------
Office Electronics - 1.3%
7,650 Canon, Inc. $ 374,047
-----------
Total Technology
Hardware & Equipment $ 1,024,579
-----------
Semiconductors - 1.6%
Semiconductor Equipment - 0.7%
2,800 Tokyo Electron, Ltd. $ 196,675
-----------
Semiconductors - 0.9%
20,570 Hon Hai Precision Industry (G.D.R.) $ 248,475
-----------
Total Semiconductors $ 445,150
-----------
Telecommunication Services - 4.6%
Alternative Carriers - 0.9%
2,700 Fastweb* $ 117,180
23,100 Inmarsat Plc* 146,110
-----------
$ 263,290
-----------
Integrated Telecommunication Services - 2.7%
7,700 Brasil Telecom Participacoes SA* $ 250,789
8,400 France Telecom SA* 180,264
11,880 Telekom Austria AG* 264,126
10,430 Telekomunikacja Polska SA* 65,508
-----------
$ 760,687
-----------
Wireless Telecommunication Services - 1.0%
9,320 Mobile Telesystems (A.D.R.) $ 274,381
-----------
Total Telecommunication Services $ 1,298,358
-----------
Utilities - 3.3%
Electric Utilities - 1.8%
4,433 E.On AG* $ 509,405
-----------
Gas Utilities - 1.5%
86,000 Tokyo Gas Co., Ltd. $ 404,964
-----------
Total Utilities $ 914,369
-----------
TOTAL COMMON STOCKS
(Cost $23,129,164) $27,349,274
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
TEMPORARY CASH INVESTMENT - 2.6%
Security Lending Collateral - 2.6%
743,621 Securities Lending Investment Fund, 5.2% $ 743,621
-----------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $743,621) $ 743,621
-----------
TOTAL INVESTMENT IN
SECURITIES - 100.7%
(Cost $24,076,514)(a) $28,345,420
-----------
OTHER ASSETS AND
LIABILITIES - (0.7)% $ (221,874)
-----------
TOTAL NET ASSETS - 100.0% $28,123,546
===========
* Non-income producing security
(A.D.R.) American Depositary Receipt
(G.D.R.) Global Depositary Receipt
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, 2006, the value of these securities amounted to $271,535 or
1.0% of net assets.
(a) Distributions of investments by country of issue, as percentage of
total equity holdings (excluding temporary cash investments) is as
follows:
Japan 30.2%
France 11.5
United Kingdom 11.3
Germany 6.6
Switzerland 7.9
Brazil 4.7
South Korea 4.0
Russia 3.4
Australia 2.4
Singapore 2.2
People's Republic of China 2.0
Spain 1.9
Sweden 1.8
United States 1.5
Turkey 1.3
Italy 1.0
Austria 1.0
Other (individually less than 1%) 5.3
-----
100.0%
=====
(b) At June 30, 2006, the following securities were out on loan:
Shares Security Value
11,000 Nikko Cordinal Corp.* $145,974
4,764 China Life Insurance Co. (A.D.R.)* 301,561
Freeport-McMoRan Copper & Gold,
5,089 Inc. (Class B) 281,981
--------
Total $729,516
========
The accompanying notes are an integral part of these financial statements. 9
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year
6/30/06 Ended Ended 5/1/03 (a)
Class II (unaudited) 12/31/05 12/31/04 to 12/31/03
Net asset value, beginning of period $13.63 $11.84 $10.04 $ 7.76
------ ------ ------ ------
Increase from investment operations:
Net investment income (loss) $ 0.08 $ 0.04 $(0.02) $ 0.05
Net realized and unrealized gain on investments and foreign
currency transactions 0.99 1.76 1.86 2.29
------ ------ ------ ------
Net increase from investment operations $ 1.07 $ 1.80 $ 1.84 $ 2.34
Distributions to shareowners:
Net investment income (0.04) (0.01) (0.04) (0.06)
------ ------ ------ ------
Net increase in net asset value $ 1.03 $ 1.79 $ 1.80 $ 2.28
------ ------ ------ ------
Net asset value, end of period $14.66 $13.63 $11.84 $10.04
====== ====== ====== ======
Total return* 7.87%** 15.19% 18.42% 30.31%(b)
Ratio of net expenses to average net assets+ 1.76%** 1.84% 2.13% 2.02%**
Ratio of net investment gain (loss) to average net assets+ 1.26%** 0.36% (0.11)% (0.81)%**
Portfolio turnover rate 114%** 108% 129% 99%
Net assets, end of period (in thousands) $7,275 $5,726 $4,133 $1,081
Ratios assuming no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 1.76%** 1.84% 2.13% 2.02%**
Net investment income (loss) 1.26%** 0.36% (0.11)% (0.81)%**
(a) Class II shares were first publicly offered on May 1, 2003.
* 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.)
** Annualized.
+ Ratios with no reduction for fees paid indirectly.
(b) Not annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
10 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $729,516) (Cost $24,076,514) $28,345,420
Cash 518,610
Futures collateral 40
Foreign currencies, at value (Cost $40) 19,362
Receivables --
Fund shares sold 45,937
Dividends, interest and foreign taxes withheld 3,660
-----------
Other $28,933,029
-----------
Total assets
LIABILITIES:
Payables --
Fund shares repurchased $ 944
Upon return of securities loaned 743,621
Due to affiliates 9,661
Accrued expenses 55,257
-----------
Total liabilities $ 809,483
-----------
NET ASSETS:
Paid-in capital $30,364,401
Undistributed net investment income 201,886
Accumulated net realized loss (6,711,987)
Net unrealized gain on:
Investments 4,268,906
Forward foreign currency contracts and other assets and liabilities denominated
in foreign currencies 340
-----------
Total net assets $28,123,546
-----------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $20,848,150
Shares outstanding 1,414,874
-----------
Net asset value per share $ 14.73
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 7,275,396
Shares outstanding 496,375
-----------
Net asset value per share $ 14.66
The accompanying notes are an integral part of these financial statements. 11
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $56,387) $ 401,984
Interest 3,659
Income on securities loaned, net 10,758
-----------
Total investment income $ 416,401
-----------
EXPENSES:
Management fees $ 120,195
Transfer agent fees and expenses 5,011
Distribution fees (Class II) 8,308
Administrative reimbursements 9,536
Custodian fees 40,746
Professional fees 19,579
Printing expense 3,748
Fees and expenses of nonaffiliated trustees 1,955
Miscellaneous 5,302
-----------
Total expenses $ 214,380
-----------
Net expenses $ 214,380
-----------
Net investment income (loss) $ 202,021
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 3,182,264
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies (12,056)
-----------
$ 3,170,208
-----------
Change in net unrealized gain or loss from:
Investments $(1,263,381)
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies 834
-----------
$(1,262,547)
-----------
Net gain on investments and foreign currency transactions $ 1,907,661
===========
Net increase in net assets resulting from operations $ 2,109,682
===========
12 The accompanying notes are an integral part of these financial statements.
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 202,021 $ 163,925
Net realized gain on investments and foreign currency transactions 3,170,208 4,186,631
Change in net unrealized loss on investments and foreign
currency transactions (1,262,547) (617,934)
----------- -----------
Net increase in net assets resulting from operations $ 2,109,682 $ 3,732,622
----------- -----------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (100,557) $ (31,154)
Class II (20,185) (3,084)
----------- -----------
Total distributions to shareowners $ (120,742) $ (34,238)
----------- -----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 2,991,315 $ 3,244,454
Reinvestment of distributions 120,741 34,238
Cost of shares repurchased (3,879,174) (7,067,685)
----------- -----------
Net decrease in net assets resulting from Fund share transactions $ (767,118) $(3,788,993)
----------- -----------
Net increase (decrease) in net assets $ 1,221,822 $ (90,609)
----------- -----------
NET ASSETS:
Beginning of period $26,901,724 $26,992,333
----------- -----------
End of period $28,123,546 $26,901,724
=========== ===========
Undistributed net investment income, end of period $ 201,886 $ 120,607
=========== ===========
The accompanying notes are an integral part of these financial statements. 13
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer International Value Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty- seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio)
(Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio)
(ClassII shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio)
(Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
The Portfolio commenced operations on May 1, 2003.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The investment objective of International Value VCT Portfolio is to seek
long-term capital growth.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus(es). Please refer to those documents when
considering the Portfolio's risks. Investing in foreign and/or emerging markets
securities involves risks relating to interest rates, currency exchange rates,
economic and political conditions.
The following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements, which
are consistent 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
(NYSE) is open, as of the close of regular trading on the NYSE.
14
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 NYSE. 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. The principal exchanges and markets for such
securities have closing times prior to the close of the NYSE. However, the
value of these securities may be influenced by changes in global markets
occurring after the closing times of the local exchanges and markets up to
the time the Portfolio determines its net asset value. Consequently, the
Board of Trustees of the Portfolio has determined that the use of daily fair
valuations as provided by a pricing service is appropriate for the Portfolio.
The Portfolio may also take into consideration other significant events in
determining the fair value of these securities. Thus, the Portfolio's
securities valuations may differ from prices reported by the various local
exchanges and markets. At June 30, 2006, there were no fair valued
securities.
All securities that trade in foreign markets whose closing prices are as of
times prior to the close of the NYSE and that are held by International Value
Portfolio are fair valued using vendor-supplied pricing updates for each
security to the time of the close of the NYSE. Temporary cash investments and
securities held by the Portfolio are valued at amortized cost.
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, net of
unrecoverable foreign taxes withheld at the applicable country rates.
The Portfolio's investments in emerging markets or countries with limited or
developing markets may subject the Portfolio to a greater degree of risk than
in a developed market. Risks associated with these developing markets include
political, social or economic factors and may affect the price of the
Portfolio's investments and income generated by these investments, as well as
the Portfolio's ability to repatriate such amounts.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at the
applicable country rates.
B. 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 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. dollars 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 Portfolio's
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. As of June 30, 2006, the
Portfolio had no outstanding portfolio or settlement hedges.
D. 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 taxable income and net realized capital gains, if any, to its
shareowners. Therefore, no federal income tax provision is required.
In addition to the requirements of the Internal Revenue Code, the Portfolio
may also be required to pay local
15
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (continued)
- --------------------------------------------------------------------------------
taxes on the recognition of capital gains and/or the repatriation of foreign
currencies in certain countries. During the year ended December 31, 2005, no
such taxes were paid.
In determining the daily net asset value, the Portfolio estimates the reserve
for such taxes, if any, associated with investments in certain countries. The
estimated reserve for taxes on capital gains is based on the net unrealized
appreciation on certain portfolio securities, the holding year of such
securities and the related tax rates, tax loss carryforward (if applicable)
and other such factors. The estimated reserve for taxes on repatriation of
foreign currencies is based on principal balances and/or unrealized
appreciation of applicable securities, the holding year of such investments
and the related tax rates and other such factors. As of June 30, 2006, the
Portfolio had no reserves related to taxes on the repatriation of foreign
currencies.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal 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, 2005, International Value VCT Portfolio had a capital
loss carryforward of $9,866,967 of which the following amounts will expire
between 2009 and 2011 if not utilized: $2,426,453 in 2009, $5,309,516 in 2010
and $2,130,998 in 2011.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 34,238
Long-Term capital gain --
-----------
$ 34,238
Return of Capital --
-----------
Total distributions $ 34,238
===========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 120,607
Undistributed long-term gain/(capital loss carryforward) (9,866,967)
Unrealized appreciation (depreciation) 5,516,565
-----------
Total $(4,229,795)
===========
For the fiscal year ending December 31, 2005, International Value Portfolio
has elected to pass through foreign tax credits of $58,710. The difference
between book-basis and tax-basis unrealized appreciation (depreciation) 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.
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), $462,503 in commissions on
the sale of Trust shares for the six months ended June 30, 2006. Distribution
fees for Class II shares are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio. Shareowners of each
class share all expenses and fees paid to the transfer agent, Pioneer
Investment Management Shareholder Services, Inc. (PIMSS), for its services,
which are allocated based on the number of accounts in each class and the
ratable allocation of related out-of-pocket expenses (see Note 3). 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 the respective percentage of
the adjusted net assets at the beginning of the day. 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, at
16
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the same time, and in the same amount, except that Class I and Class II
shares can bear different transfer agent and distribution fees.
F. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers or
other institutional investors, with the Portfolio's 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 payments in
lieu of interest or dividends on the securities loaned. Gain or loss in the
fair value of the securities loaned that may occur during the term of the
loan, will be for the 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
Portfolio has the right under the lending agreement to recover the securities
on loan from the borrower on demand. The Portfolio invests cash collateral in
the Securities Lending Investment Fund which is sponsored by Brown Brothers
Harriman & Co., the Portfolio'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 sub custodian. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 1.00% of
the Portfolio's average daily net assets.
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, 2006, $943 was payable to PIM
related to management fees, administrative fees and certain other services, and
is included in due to affiliates.
3. Transfer Agent
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 $8,669 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $49 payable to PFD at June 30, 2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------------
International Value Portfolio $24,091,742 $4,835,999 $ (582,321) $4,253,678
=========== ========== ========== ==========
- -----------------------------------------------------------------------------------------------------
17
Pioneer International Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (continued)
- --------------------------------------------------------------------------------
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 year ended June
30, 2006, were $15,889,704 and $17,170,894, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- -----------------------------------------------------------------------------------------------
'06 Shares '06 Amount
International Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- -----------------------------------------------------------------------------------------------
CLASS I:
Shares sold 56,236 $ 831,610 48,222 $ 576,930
Reinvestment of distributions 7,188 100,557 2,721 31,154
Shares repurchased (192,976) (2,841,013) (430,261) (5,229,863)
-------------------------------------------------------------
Net decrease (129,552) $(1,908,846) (379,318) $(4,621,779)
=============================================================
CLASS II:
Shares sold 147,514 $ 2,159,705 218,007 $ 2,667,524
Reinvestment of distributions 1,451 20,184 270 3,084
Shares repurchased (72,693) (1,038,161) (147,285) (1,837,822)
-------------------------------------------------------------
Net increase 76,272 $ 1,141,728 70,992 $ 832,786
=============================================================
18
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's website at
http://www.sec.gov.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19630-00-0806
[LOGO] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Mid Cap Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- -------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 5
Financial Statements 8
Notes to Financial Statements 12
Trustees, Officers and Service Providers 17
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
U.S. Common Stocks 94.7%
Temporary Cash Investment 4.5%
Depositary Receipts for International Stocks 0.8%
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED DOCUMENT.]
Sector Distribution
(As a percentage of equity holdings)
Financials 23.9%
Information Technology 12.4%
Consumer Discretionary 12.0%
Utilities 10.3%
Industrials 10.2%
Materials 9.3%
Consumer Staples 9.2%
Health Care 7.4%
Energy 5.1%
Telecommunication Services 0.2%
Five Largest Holdings
(As a percentage of equity holdings)
1. Safeway, Inc. 2.54%
2. Xerox Corp. 2.39
3. CIGNA Corp. 2.33
4. W.W. Grainger, Inc. 2.29
5. NCR Corp. 2.24
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $18.22 $24.72
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ - $1.8961 $4.70
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Mid Cap Value VCT Portfolio at net asset value, 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 FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED DOCUMENT.]
Pioneer Mid Cap Value Russell Midcap
VCT Portfolio Value Index
6/96 $10,000 $10,000
6/97 $11,460 $12,797
6/98 $13,408 $16,092
6/99 $13,804 $16,997
6/00 $13,617 $15,653
6/01 $17,004 $19,398
6/02 $16,407 $19,771
6/03 $16,728 $19,645
6/04 $22,062 $25,698
6/05 $25,749 $31,299
6/06 $26,883 $35,760
The Russell Midcap Value Index 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. You cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Years 10.39%
5 Years 9.59%
1 Year 4.40%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 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 variable annuities. 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 [divided by] $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, 2006 through June 30, 2006
Share Class II
--------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,010.60
Expenses Paid During Period* $ 4.82
* Expenses are equal to the Portfolio's annualized expense ratio of 0.97% for
Class II 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 Mid Cap Value VCT Portfolio
Based on a hypothetical 5% per year return before expenses, reflecting the
period from January 1, 2006 through June 30, 2006
Share Class II
---------------------------------------------------
Beginning Account Value on 7/1/05 $1,000.00
Ending Account Value on 12/31/05 $1,019.93
Expenses Paid During Period* $ 4.84
* Expenses are equal to the Portfolio's annualized expense ratio of 0.97% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
The domestic stock market produced generally modest, but positive, returns over
the first six months of 2006. A vibrant rally in the early months faded in May,
as investors grew concerned about the direction of the nation's monetary
policy. Worries intensified when Ben Bernanke, the new chairman of the Federal
Reserve Board, appeared to hint that the central bank might raise short-term
interest rates more than had been anticipated. This raised concerns among many
investors that the Fed could move too aggressively in fighting inflation and
controlling growth. As a consequence, stock prices fell hard beginning in May
and continued to slump through most of June. In the following discussion, Rod
Wright, leader of the team that manages Pioneer Mid Cap Value VCT Portfolio,
provides an update on the Portfolio, his investment strategies and the economic
environment during the six months.
Q. How did the Portfolio perform?
A. The Portfolio had disappointing results. Class II shares had a total return
of 1.06%, at net asset value, over the six months ended June 30, 2006.
During that time, the Standard & Poor's 500 Index, which broadly reflects
the overall market, returned 2.71%, while the benchmark Russell Midcap
Value Index rose 7.02%. The Portfolio's 62 Mid-Cap Value Lipper peers
returned an average of 3.81% over the same six months.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What were the principal factors influencing performance?
A. The Portfolio's underperformance relative to the market benchmarks was
related to several factors. Our emphasis on higher-quality companies with
strong fundamentals did not help in a period when lower-quality value
stocks tended to do well. We generally avoid lower-quality companies that
are asset-intensive, have low operating profit margins and whose businesses
are highly cyclical. In particular, our underweighting of real estate
investments trusts (REITs), utility stocks, and steel and mining companies
held back results when in fact these types of stocks performed relatively
well.
Performance also was held back by some underperforming holdings. These
included Expedia, the on-line travel service, which changed its business
model as it made heavy investments in system upgrades, and Boston
Scientific, the producer of cardiac devices, whose stock fell because of
concerns that it was paying too much in acquiring Guidant, another cardiac
device corporation. We have liquidated the position in Expedia, but have
retained the investment in Boston Scientific because of the company's
longer-term prospects.
Q. What were some of the investments that contributed positively to performance
during the six months?
A. Our investment in Tellabs had a major positive influence on results. This
long-term holding had been an earlier disappointment, but its stock
appreciated sharply during the six months on the expectations that the
communications industry would be making significant new capital
expenditures. We sold the position on strength, taking profits. Deere, the
manufacturer of farm and heavy construction equipment, was another
significant performer, as rising commodity prices encouraged farmers to
invest in new equipment. Two energy holdings also did particularly well:
Weatherford International, which provides oil field services to exploration
and production companies; and Questar, a gas utility that also is involved
in gas and oil exploration and production. Another holding that performed
well was H.J. Heinz, the well-known food company.
Q. What is your investment outlook?
A. While we are encouraged about the health of the general economy, we are more
cautious about the stock market. Leading economic indicators, including
rising interest rates and high energy costs, indicate that some slowing in
the rate of economic growth may occur. In this environment, we will
maintain our focus on company-by-company stock selection, emphasizing
fundamental research. We intend to continue to invest in high-quality
companies with strong balance sheets and high profitability.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
A Word About Risk:
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. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerfunds.com 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 Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 96.0%
Energy - 4.9%
Coal & Consumable Fuels - 1.5%
150,010 Massey Energy Co. $ 5,400,360
------------
Integrated Oil & Gas - 1.3%
90,310 Hess Corporation* $ 4,772,884
------------
Oil & Gas Drilling - 0.6%
26,954 Transocean Offshore Inc.* $ 2,164,945
------------
Oil & Gas Equipment & Services - 0.7%
53,552 Weatherford Intl, Inc.* $ 2,657,250
------------
Oil & Gas Refining & Marketing - 0.8%
40,504 Tesoro Petroleum Corp. $ 3,011,877
------------
Total Energy $ 18,007,316
------------
Materials - 8.9%
Aluminum - 0.8%
130,872 Novelis, Inc. $ 2,824,218
------------
Diversified Chemical - 2.6%
90,869 Ashland, Inc. $ 6,060,962
56,792 PPG Industries, Inc. 3,748,272
------------
$ 9,809,234
------------
Diversified Metals & Mining - 0.6%
40,417 Freeport-McMoRan Copper & Gold, Inc.
(Class B) $ 2,239,506
------------
Industrial Gases - 1.8%
101,682 Air Products & Chemicals, Inc. $ 6,499,513
------------
Metal & Glass Containers - 1.7%
171,636 Ball Corp. $ 6,357,397
------------
Specialty Chemicals - 1.4%
144,610 International Flavor & Fragrances, Inc. $ 5,096,056
------------
Total Materials $ 32,825,924
------------
Capital Goods - 6.1%
Construction & Farm Machinery
& Heavy Trucks - 1.5%
67,336 Deere & Co. $ 5,621,883
------------
Electrical Component & Equipment - 1.1%
74,300 Thomas & Betts Corp.* $ 3,811,590
------------
Industrial Conglomerates - 1.3%
174,210 Tyco International Ltd. $ 4,790,775
------------
Trading Companies & Distributors - 2.2%
107,746 W.W. Grainger, Inc. $ 8,105,732
------------
Total Capital Goods $ 22,329,980
------------
Commercial Services & Supplies - 2.4%
Commercial Printing - 1.0%
120,793 R.R. Donnelly & Sons Co. $ 3,859,336
------------
Shares Value
Environmental & Facilities Services - 1.4%
123,873 Republic Services, Inc. $ 4,997,037
------------
Total Commercial
Services & Supplies $ 8,856,373
------------
Transportation - 1.3%
Railroads - 1.3%
67,400 CSX Corp.* $ 4,747,656
------------
Total Transportation $ 4,747,656
------------
Automobiles & Components - 2.4%
Auto Parts & Equipment - 1.1%
60,400 Borg-Warner Automotive Inc. $ 3,932,040
------------
Motorcycle Manufacturers - 1.3%
86,410 Harley -Davidson, Inc. $ 4,743,045
------------
Total Automobiles & Components $ 8,675,085
------------
Consumer Services - 2.6%
Casinos & Gaming - 1.7%
91,210 Harrah's Entertainment, Inc.* $ 6,492,328
------------
Hotels, Resorts & Cruise Lines - 0.9%
84,779 Royal Caribbean Cruises, Ltd. $ 3,242,797
------------
Total Consumer Services $ 9,735,125
------------
Media - 4.6%
Advertising - 1.5%
658,080 The Interpublic Group of Companies, Inc.* $ 5,494,968
------------
Broadcasting & Cable Television - 3.1%
248,222 Clear Channel Communications, Inc. $ 7,682,471
140,715 Entercom Communications Corp.* 3,681,104
------------
$ 11,363,575
------------
Total Media $ 16,858,543
------------
Retailing - 2.0%
Apparel Retail - 0.6%
40,600 Abercrombie & Fitch Co. $ 2,250,458
------------
Department Stores - 1.4%
26,522 Federated Department Stores, Inc.* $ 970,705
60,500 J.C. Penney Co., Inc. 4,084,355
------------
$ 5,055,060
------------
Total Retailing $ 7,305,518
------------
Food & Drug Retailing - 3.1%
Drug Retail - 0.7%
80,850 CVS Corp. $ 2,482,095
------------
Food Retail - 2.4%
345,308 Safeway, Inc. $ 8,978,008
------------
Total Food & Drug Retailing $ 11,460,103
------------
The accompanying notes are an integral part of these financial statements. 5
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Food, Beverage & Tobacco - 5.7%
Brewers - 1.9%
100,531 Molson Coors Brewing Co. (Class B) $ 6,824,044
------------
Packaged Foods & Meats - 1.7%
90,535 H.J. Heinz Co., Inc. $ 3,731,853
54,300 William Wrigley Jr. Co. 2,463,048
------------
$ 6,194,901
------------
Tobacco - 2.1%
174,410 UST, Inc.* $ 7,881,588
------------
Total Food, Beverage & Tobacco $ 20,900,533
------------
Health Care Equipment & Services - 6.0%
Health Care Equipment - 1.0%
223,910 Boston Scientific Corp.* $ 3,770,644
------------
Health Care Facilities - 1.1%
292,879 Tenet Healthcare Corp.* $ 2,044,295
45,224 Triad Hospitals, Inc.* 1,789,966
------------
$ 3,834,261
------------
Health Care Services - 1.7%
101,362 Laboratory Corporation of
America Holdings* $ 6,307,757
------------
Managed Health Care - 2.2%
83,614 CIGNA Corp. $ 8,236,815
------------
Total Health Care
Equipment & Services $ 22,149,477
------------
Pharmaceuticals & Biotechnology - 1.1%
Pharmaceuticals - 1.1%
26,856 Shire Pharmaceuticals Group Plc (A.D.R.) $ 1,187,841
93,910 Teva Pharmaceutical Industries, Ltd. 2,966,617
------------
$ 4,154,458
------------
Total Pharmaceuticals &
Biotechnology $ 4,154,458
------------
Banks - 9.9%
Regional Banks - 7.3%
34,956 City National Corp. $ 2,275,286
124,225 KeyCorp 4,432,348
100,710 Marshall & Ilsley Corp. 4,606,475
83,610 PNC Bank Corp. 5,866,914
53,900 Regions Financial Corp. 1,785,168
121,310 TCF Financial Corp.* 3,208,650
57,200 Zions Bancorporation 4,458,168
------------
$ 26,633,009
------------
Thrifts & Mortgage Finance - 2.6%
242,021 Hudson City Bancorp, Inc. $ 3,226,140
144,599 The PMI Group, Inc. 6,446,223
------------
$ 9,672,363
------------
Total Banks $ 36,305,372
------------
Shares Value
Diversified Financials - 3.6%
Asset Management & Custody Banks - 3.0%
155,014 Federated Investors, Inc.* $ 4,882,941
19,900 Legg Mason, Inc.* 1,980,448
120,459 Mellon Bank Corp. 4,147,403
------------
$ 11,010,792
------------
Investment Banking & Brokerage - 0.6%
94,500 E*TRADE Group, Inc.* $ 2,156,490
------------
Total Diversified Financials $ 13,167,282
------------
Insurance - 7.5%
Insurance Brokers - 1.2%
128,510 Aon Corp.* $ 4,474,718
------------
Life & Health Insurance - 2.1%
416,511 UNUM Corp. $ 7,551,344
------------
Multi-Line Insurance - 2.0%
47,260 Assurant, Inc. $ 2,287,384
148,028 Genworth Financial, Inc. 5,157,296
------------
$ 7,444,680
------------
Property & Casualty Insurance - 1.2%
21,567 Ambac Financial Group, Inc.* $ 1,749,084
5,698 White Mountains Insurance Group, Ltd. 2,774,926
------------
$ 4,524,010
------------
Reinsurance - 1.0%
127,992 Platinum Underwriter Holdings, Ltd. $ 3,581,216
------------
Total Insurance $ 27,575,968
------------
Real Estate - 2.1%
Industrial Real Estate Investment Trusts - 0.8%
53,900 ProLogis Trust $ 2,809,268
------------
Mortgage Real Estate Investment Trusts - 0.8%
220,210 Annaly Mortgage Management, Inc. $ 2,820,890
------------
Specialized Real Estate Investment Trusts - 0.5%
93,210 Host Hotels & Resorts, Inc.* $ 2,038,503
------------
Total Real Estate $ 7,668,661
------------
Software & Services - 1.0%
Data Processing & Outsourced Services - 1.0%
269,882 The BISYS Group, Inc.* $ 3,697,383
------------
Total Software & Services $ 3,697,383
------------
Technology Hardware & Equipment - 9.3%
Communications Equipment - 1.2%
270,020 Juniper Networks, Inc.* $ 4,317,620
------------
Computer Hardware - 4.1%
182,110 Dell, Inc.* $ 4,445,305
215,810 NCR Corp.* 7,907,278
168,910 Palm, Inc.* 2,719,451
------------
$ 15,072,034
------------
6 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 - 1.7%
590,910 Symbol Technologies, Inc.* $ 6,375,919
------------
Office Electronics - 2.3%
606,719 Xerox Corp.* $ 8,439,461
------------
Total Technology
Hardware & Equipment $ 34,205,034
------------
Semiconductors - 1.6%
Semiconductors - 1.6%
195,710 Freescale Semiconductor, Inc. (Class B)* $ 5,753,874
------------
Total Semiconductors $ 5,753,874
------------
Telecommunication Services - 0.2%
Integrated Telecommunication Services - 0.2%
138,313 Cincinnati Bell, Inc.* $ 567,083
------------
Total Telecommunication Services $ 567,083
------------
Utilities - 9.9%
Electric Utilities - 4.6%
114,310 Allegheny Energy, Inc.* $ 4,237,472
135,581 Edison International 5,287,659
86,810 Firstenergy Corp. 4,705,970
85,700 PPL Corp.* 2,768,110
------------
$ 16,999,211
------------
Gas Utilities - 1.6%
73,800 Questar Corp. $ 5,940,162
------------
Indep Power Producer & Energy Traders - 1.5%
113,166 NRG Energy, Inc.* $ 5,452,338
------------
Multi-Utilities - 2.2%
110,084 NSTAR $ 3,148,402
120,971 PG&E Corp. 4,751,744
------------
$ 7,900,146
------------
Total Utilities $ 36,291,857
------------
TOTAL COMMON STOCKS
(Cost $332,079,994) $353,238,605
------------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 4.6%
Repurchase Agreement - 4.6%
$16,800,000 UBS Warburg, Inc., 4.4%, dated
6/30/06, repurchase price of
$16,800,000 plus accrued interest on
7/3/06 collateralized by $17,158,000
U.S. Treasury Bill, 5.125%, 6/30/08 $ 16,800,000
------------
TOTAL TEMPORARY
CASH INVESTMENTS
(Cost $16,800,000) $ 16,800,000
------------
TOTAL INVESTMENT
IN SECURITIES - 100.6%
(Cost $348,879,994) $370,038,605
------------
OTHER ASSETS
AND LIABILITIES - (0.6)% $ (2,101,567)
------------
TOTAL NET ASSETS - 100.0% $367,937,038
============
* Non-income producing security.
The accompanying notes are an integral part of these financial statements. 7
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year Year Year Year
6/30/06 Ended Ended Ended Ended Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 24.72 $ 24.44 $ 20.32 $ 14.86 $ 17.28 $ 17.75
------- ------- -------- -------- -------- -------
Increase (decrease) from investment operations:
Net investment income $ -- $ 0.35 $ 0.01 $ 0.06 $ 0.04 $ 0.14
Net realized and unrealized gain (loss) on investments 0.10 1.47 4.38 5.44 (1.96) 0.94
------- ------- -------- -------- -------- -------
Net increase (decrease) from investment operations $ 0.10 $ 1.82 $ 4.39 $ 5.50 $ (1.92) $ 1.08
Distributions to shareholders:
Net investment income -- (0.05) (0.06) (0.04) (0.04) (0.08)
Net realized gain (6.60) (1.49) (0.21) -- (0.46) (1.47)
------- ------- -------- -------- -------- -------
Net increase (decrease) in net asset value $ (6.50) $ 0.28 $ 4.12 $ 5.46 $ (2.42) $ (0.47)
------- ------- -------- -------- -------- -------
Net asset value, end of period $ 18.22 $ 24.72 $ 24.44 $ 20.32 $ 14.86 $ 17.28
======= ======= ======== ======== ======= =======
Total return* 1.06% 7.64% 21.77% 37.09% (11.38)% 6.22%
Ratio of net expenses to average net assets+ 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11%
Ratio of net investment income to average net assets+ 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10%
Portfolio turnover rate 115%** 42% 55% 52% 68% 95%
Net assets, end of period (in thousands) $94,098 $88,217 $536,837 $211,120 $61,038 $10,195
Ratios with no waiver of management fees and assumption of
expenses by PIM and no reduction for fees paid indirectly:
Net expenses 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11%
Net investment income 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10%
Ratios with waiver of management fees and assumption of
expenses by PIM and reduction for fees paid indirectly:
Net expenses 0.97%** 0.95% 0.97% 1.00% 1.07% 1.11%
Net investment income 0.64%** 0.25% 0.29% 0.60% 0.24% 0.10%
* 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.
** Annualized
+ Ratios with no reduction for fees paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
8 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 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (Cost $348,879,994) $370,038,605
Receivables --
Investment securities sold 5,261,104
Fund shares sold 134,741
Dividends, interest and foreign taxes withheld 386,844
Other 61,331
------------
Total assets $375,882,625
------------
LIABILITIES:
Payables --
Investment securities purchased $ 7,210,113
Fund shares repurchased 425,989
Due to bank 180,277
Due to affiliates 22,470
Accrued expenses 106,738
------------
Total liabilities $ 7,945,587
------------
NET ASSETS:
Paid-in capital $322,562,891
Undistributed net investment income 1,554,166
Accumulated net realized gain 22,661,370
Net unrealized gain on investments 21,158,611
------------
Total net assets $367,937,038
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $273,838,888
Shares outstanding 14,995,239
------------
Net asset value per share $ 18.26
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 94,098,150
Shares outstanding 5,165,326
------------
Net asset value per share $ 18.22
The accompanying notes are an integral part of these financial statements. 9
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $4,143) $ 2,801,601
Interest 220,983
------------
Total investment income $ 3,022,584
------------
EXPENSES:
Management fees $ 1,223,963
Transfer agent fees and expenses 4,577
Distribution fees (Class II) 115,590
Administrative reimbursements 55,072
Custodian fees 11,251
Professional fees 19,514
Printing expense 37,440
Fees and expenses of nonaffiliated trustees 2,645
Miscellaneous 1,921
------------
Total expenses $ 1,471,973
Less fees paid indirectly (4,021)
------------
Net expenses $ 1,467,952
------------
Net investment income $ 1,554,632
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from investments $ 27,674,699
------------
Change in net unrealized loss from investments $(24,698,742)
------------
Net gain on investments $ 2,975,957
============
Net increase in net assets resulting from operations $ 4,530,589
============
10 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 Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 1,554,632 $ 2,876,590
Net realized gain on investments and redemptions in kind 27,674,699 146,233,723
Change in net unrealized gain or loss on investments (24,698,742) (98,298,212)
------------ -------------
Net increase in net assets resulting from operations $ 4,530,589 $ 50,812,101
------------ -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (2,875,198) $ (980,182)
Class II -- (1,186,576)
Net realized gain
Class I (71,620,430) (18,901,870)
Class II (24,935,216) (33,992,323)
------------ -------------
Total distributions to shareowners $(99,430,844) $ (55,060,951)
------------ -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 23,886,018 $ 138,080,446
Reinvestment of distributions 99,430,844 55,060,951
Cost of shares repurchased (37,533,546) (163,603,573)
Redemptions in kind -- (488,210,933)
------------ -------------
Net increase (decrease) in net assets resulting from Fund share transactions $ 85,783,316 $(458,673,109)
------------ -------------
Net increase (decrease) in net assets $ (9,116,939) $(462,921,959)
------------ -------------
NET ASSETS:
Beginning of period $377,053,977 $ 839,975,936
------------ -------------
End of period $367,937,038 $ 377,053,977
------------ -------------
Undistributed net investment income, end of period $ 1,554,166 $ 2,874,732
============ =============
The accompanying notes are an integral part of these financial statements. 11
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Mid Cap Value VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty- seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II shares
only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap Growth
Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio)
(Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio)
(Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts or by
qualified pension and retirement plans.
The investment objective of Mid Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates.
Information concerning the Portfolio's principal investment risks is contained
in the Portfolio's prospectus (es). Please refer to those documents when
considering the Portfolio's risks. Investing 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 following is a summary of significant accounting policies consistently
followed by the Portfolio, in the preparation of its financial statements which
are consistent 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 portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange
12
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
where they are traded. Securities that have not traded on the date of
valuation, or securities for which sale prices are not generally reported,
are valued at the mean between the last bid and asked prices. Securities
for which market quotations are not readily available are valued at their
fair values as determined by, or under the direction of, the Board of
Trustees. The Portfolio also may use the fair value of a security,
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued securities. Temporary cash investments are valued at
amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. 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. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2006, Mid Cap Value Portfolio had no open contracts.
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 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. dollars 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.
D. 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
Portfolio's 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.
E. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
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.
13
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Capital loss carryforwards are available to offset future realized capital
gains. At December 31, 2005, Mid Cap Value Portfolio had a net capital loss
carryforward of $3,859,922, of which the following amounts will expire
between 2009 and 2010, if not utilized: $1,330,134 in 2009 and $2,529,788
in 2010.
The tax character of current year distributions paid will be determined at
the end of the fiscal year. The following chart shows the components of
distributable earnings (accumulated losses) as of December 31, 2005 and the
distributions paid during the year ended December 31, 2005 on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 6,510,571
Long-Term capital gain 48,550,380
------------
$ 55,060,951
Return of Capital --
------------
Total distributions $ 55,060,951
============
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 30,629,491
Capital loss carryforward from merger (3,859,922
Undistributed long-term gain 68,794,908
Unrealized appreciation (depreciation) 44,709,925
------------
Total $140,274,402
============
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
F. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. Distributions paid by a Portfolio with respect to
each class of shares are calculated in the same manner, at the same time,
and in the same amount, except that Class I and Class II shares can bear
different transfer agent and distribution fees. Dividends and distributions
to shareowners are recorded on the ex-dividend date.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan will be for the 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 Portfolio has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Portfolio
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Portfolio's custodian.
H. Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, the
value of the underlying securities (collateral), including accrued interest
received from
14
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.65% 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. At June 30, 2006, $14,552 was payable to
PIM related to management fees, administrative fees and certain other services,
and is included in due to affiliates.
3. Transfer Agent
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 $7,276 in transfer agent
fees payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $642 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ---------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ---------------------------------------------------------------------------------------------------
Mid Cap Value Portfolio $350,027,408 $33,294,480 $(13,283,283) $20,011,197
============ =========== ============ ===========
- ---------------------------------------------------------------------------------------------------
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, 2006, were $210,947,409 and $228,145,769, respectively. For the
year ended September 23, 2005, the Portfolio had redemptions in kind which
resulted in redemptions out of the Portfolio totaling $488,210,933.
15
Pioneer Mid Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- --------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Mid Cap Value Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ---------------------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 374,576 $ 9,587,662 2,037,703 $ 50,295,966
Class I shares issued in reorganization -- -- -- --
Reinvestment of distributions 4,182,798 74,495,628 821,233 19,882,052
Shares repurchased (1,115,637) (28,263,675) (2,727,151) (66,908,971)
Redemptions in kind -- -- (868,079) (21,000,610)
-----------------------------------------------------------------
Net increase (decrease) 3,441,737 $ 55,819,615 (736,294) $ (17,731,563)
=================================================================
CLASS II:
Shares sold 570,095 $ 14,298,356 3,599,252 $ 87,784,480
Reinvestment of distributions 1,403,220 24,935,216 1,468,235 35,178,899
Shares repurchased (377,034) (9,269,871) (3,965,242) (96,694,602
Redemptions in kind -- -- (19,499,464) (467,210,323)
-----------------------------------------------------------------
Net increase (decrease) 1,596,281 $ 29,963,701 (18,397,219) $(440,941,546)
=================================================================
- ---------------------------------------------------------------------------------------------------------------
8. Merger Information
On December 8, 2004, beneficial owners of Safeco RST Core Equity Portfolio,
Safeco RST Money Market Portfolio and Safeco RST Multi-Cap Core Portfolio,
three of the six portfolios that comprised Safeco Resource Series Trust,
approved a proposed Agreement and Plan of Reorganization that provided for the
mergers listed below. These tax-free reorganizations were accomplished on
December 10, 2004 ("Closing Date"), by exchanging all of the Safeco's net
assets for Class I shares as indicated below, based on Class I shares' ending
net asset value on the Closing Date. The following charts show the details of
the reorganizations as of that Closing Date:
Pioneer Mid Cap Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------
Pioneer
Mid Cap Value Safeco RST Multi- Pioneer Mid Cap
VCT Portfolio Cap Core Portfolio Value VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- -----------------------------------------------------------------------------------------------------
Net Assets $757,206,652 $49,670,328 $858,922,877
Shares Outstanding 32,072,498 $ 2,399,533 34,160,364
------------ ----------- ------------
Class I Shares Issued $ 2,087,866
============
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Unrealized Appreciation Realized Gain (Loss)
on Closing Date on Closing Date
- -----------------------------------------------------------------------------------------------------
Safeco RST Multi-Cap Core Portfolio $5,550,191 $7,992,587
========== ==========
- -----------------------------------------------------------------------------------------------------
16
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
17
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19624-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Real Estate Shares VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Real Estate Shares VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 7
Notes to Financial Statements 11
Trustees, Officers and Service Providers 16
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 84.1%
Temporary Cash Investment 15.9%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Office 20.0%
Apartment 19.5%
Regional Mall 13.3%
Industrial 13.2%
Shopping Center 12.8%
Hotel 8.9%
Self Storage 4.9%
Diversified 4.6%
Triple-Net Lease 1.4%
Health Care 1.1%
Manufactured Homes 0.3%
Five Largest Holdings
(As a percentage of equity holdings)
1. Simon DeBartolo
Group, Inc. 7.24%
2. Boston Properties, Inc. 5.49
3. ProLogis Trust 5.29
4. AvalonBay
Communities, Inc. 4.88
5. Equity Residential
Property Trust 4.78
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 28.01 $ 26.09
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.3400 $ - $ 1.4942
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Real Estate Shares VCT Portfolio at net asset value, compared to that of the
Wilshire Real Estate Securities Index. Portfolio returns are based on net asset
value and do not reflect applicable insurance fees and surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Wilshire Real Estate Pioneer Real Estate
Securities Index Shares VCT Portfolio
6/96 10000 10000
13355 13702
6/98 14223 14698
13244 13328
6/00 13834 13947
17231 16679
6/02 19603 19096
20182 19546
6/04 26073 25195
35100 34027
6/06 42769 42100
The Wilshire Real Estate Securities Index is a market-capitalization weighted
measure of the performance of real estate investment trusts (equity and hybrid)
and real estate operating companies. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
10 Years 15.15%
5 Years 20.04%
1 Year 23.43%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 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. 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 [divided by] $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, 2006 through June 20, 2006.
Share Class II
-------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,146.60
Expenses Paid During Period* $ 6.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.13% for
Class II 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 funds.
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 funds. 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% return per year return before expenses, reflecting
the period from January 1, 2006 through June 30, 2006.
Share Class II
-------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,019.19
Expenses Paid During Period* $ 5.66
* Expenses are equal to the Portfolio's annualized expense ratio of 1.13% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Real estate investments enjoyed strong performance during the six months ended
June 30, 2006 - the first half of the Portfolio's fiscal year. Investments in
the apartment and office sectors proved particularly rewarding, as Matthew
Troxell of AEW Capital management, L.P., the Portfolio's Sub-Advisor, explains
in the following interview.
Q. How well did the Portfolio perform during the six months ended June 30,
2006?
A. The Portfolio posted strong performance, both on an absolute basis and
relative to its benchmark and peer group. For the first half of fiscal
2006, Class II shares generated a return of 14.66% at net asset value. In
comparison, the Wilshire Real Estate Securities Index returned 14.08% for
the same six-month period. The average return for the 52 real estate funds
in the Portfolio's Lipper category was 13.19%. We think effective stock
selection and the Portfolio's greater-than-benchmark weighting in the
apartment sector contributed to these results.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What is contributing to the rally in the apartment sector?
A. The sector's outlook has improved, as many of the negative factors that had
overshadowed this group of stocks and depressed investor demand have
dissipated. With the return of higher interest rates, renting has become a
more attractive option relative to buying a home. In addition, property
values appear to have leveled off or even declined in some markets -
thereby discouraging potential homebuyers who might have been drawn to the
rising equity value offered by owning a home.
On the other hand, the growth in supply of apartments has remained in check,
in part due to the escalating cost of new construction. Also, during the
last few years, many apartments were converted into condominiums to meet the
high demand for home ownership, reducing the supply of apartments in the
face of today's rising demand in some markets. This is benefiting the bottom
line of the apartment real estate investment trust (REIT) operators, since
landlords are better able to maintain full occupancy. With stronger demand,
landlords have greater pricing power and are able to push through rent
increases.
Investments in Camden Properties outperformed dramatically for the six
months ended June 30. We have a high level of confidence in the management
team at this REIT, which is embracing technological innovations to improve
efficiency and maximize revenue. The company also owns high-quality
properties, which they manage very effectively in our opinion.
Q. Did office REITs also experience a resurgence?
A. Yes, and for similar reasons, albeit with somewhat of a lag to the
multifamily sector. With the U.S. economy prospering and job growth
expanding, demand for office space is increasing occupancy as existing
tenants expand their businesses or new tenants arrive. The increased demand
has allowed landlords to raise rents. Highwoods Properties rose
dramatically in the final weeks of the reporting period in response to an
unsolicited offer for the company at a value substantially higher than the
trading price. While the offer was rejected by the board, we think it
corroborated the inherent value that we'd seen in the stock for some time.
One of the Portfolio's holdings, Equity Office Properties, also was a
stronger performer for the semiannual period. However, we'd limited the
Portfolio's exposure to this REIT, because we had concerns about the ability
of the company to participate in the nascent office recovery. Our decision
was a drawback, however, since it performed well.
A Word About Risk:
The Portfolio invests in REIT securities, the value of which can fall for a
variety of reasons, such as declines in rental income, fluctuating interest
rates, poor property management, environmental liabilities, uninsured damage,
increased competition, or changes in real estate tax laws. At times, the
Portfolio's investments may represent industries or industry sectors that are
interrelated or have common risks, making it more susceptible to any economic,
political, or regulatory developments or other risks affecting those industries
and sectors.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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 Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. Is the mall sector still benefiting from the economic recovery?
A. Yes, but to a lesser degree than apartment or office REITs, because regional
malls and shopping centers have enjoyed strong outperformance relative to
other property types for some time. Two holdings produced contrasting
results and contributed to weaker, albeit positive, results during the
reporting period. Mills Corp. turned in disappointing performance, because
of questions surrounding the company's financial reporting and a proposed
large-scale project in New Jersey. In contrast, Taubman Centers delivered
strong performance, and its considerable weighting in the Portfolio
magnified this result.
Q. What is your outlook for balance of the fiscal year?
A. We think that the fundamentals across most property types should continue to
improve for the foreseeable future - although to varying degrees since
their respective lease terms make them respond differently to the economic
recovery. Our research-driven investment approach will be critical to
determining which companies offer the most attractive value and are in the
best position to capitalize on the positive fundamentals within their
industries.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
COMMON STOCKS - 98.3%
Consumer Services - 3.8%
Hotels, Resorts & Cruise Lines - 3.8%
74,000 Hilton Hotels Corp. $ 2,092,720
30,000 Starwood Hotels & Resorts* 1,810,200
-------------
$ 3,902,920
-------------
Total Consumer Services $ 3,902,920
-------------
Real Estate - 94.5%
Diversified Real Estate Investment Trusts - 8.8%
82,500 Liberty Property Trust (a) $ 3,646,500
18,000 PS Business Parks, Inc. 1,062,000
52,700 Spirit Finance Corp. 593,402
39,000 Vornado Realty Trust 3,804,450
-------------
$ 9,106,352
-------------
Industrial Real Estate Investment Trusts - 7.4%
35,000 AMB Property Corp. $ 1,769,250
17,700 First Potomac Realty Trust 527,283
103,500 ProLogis Trust 5,394,420
-------------
$ 7,690,953
-------------
Mortgage Real Estate Investment Trusts - 0.8%
23,500 iStar Financial, Inc. $ 887,125
-------------
Office Real Estate Investment Trusts - 18.1%
28,000 BioMed Property Trust, Inc. $ 838,320
62,000 Boston Properties, Inc. 5,604,800
71,000 Brandywine Realty Trust 2,284,070
7,000 Carramerica Realty Corp. 311,850
26,500 Corporate Office Properties (a) 1,115,120
30,000 Duke Realty Investments, Inc. 1,054,500
44,500 Equity Office Properties Trust (a) 1,624,695
55,500 Highwoods Properties, Inc. 2,007,990
20,000 Kilroy Realty Corp. 1,445,000
13,500 Mack-Cali Realty Corp. 619,920
65,000 Trizec Properties, Inc. 1,861,600
-------------
$ 18,767,865
-------------
Real Estate Management & Development - 3.3%
108,000 Brookfield Properties Corp. (a) $ 3,474,360
-------------
Residential Real Estate Investment Trusts - 19.5%
23,100 Apartment Investment & Management Co. $ 1,003,695
74,500 Archstone Communities Trust 3,789,815
45,000 AvalonBay Communities, Inc. (a) 4,977,900
39,000 Camden Property Trust 2,868,450
8,000 Equity Lifestyle Properties, Inc. 350,640
109,000 Equity Residential Property Trust (a) 4,875,570
13,900 Home Properties, Inc.*(a) 771,589
57,000 United Dominion Realty Trust 1,596,570
-------------
$ 20,234,229
-------------
Shares Value
Retail Real Estate Investment Trusts - 25.8%
67,000 Developers Diversifies Realty Corp. $ 3,496,060
35,200 Federal Realty Investment Trust 2,464,000
63,000 General Growth Properties, Inc. 2,838,780
52,500 Kimco Realty Corp. (a) 1,915,725
40,900 Kite Realty Group Trust 637,631
33,000 Pan Pacific Retail Properties, Inc. 2,289,210
37,000 Regency Centers Corp. 2,299,550
89,000 Simon DeBartolo Group, Inc. 7,381,660
48,000 Taubman Centers, Inc. 1,963,200
20,900 The Macerich Co. 1,467,180
-------------
$ 26,752,996
-------------
Specialized Real Estate Investment Trusts - 10.8%
41,000 Extra Space Storage, Inc.* $ 665,840
11,000 Healthcare Realty Trust, Inc. 350,350
12,000 Hospitality Properties Trust 527,040
190,000 Host Hotels & Resorts, Inc.*(a) 4,155,300
34,500 Nationwide Health Properties, Inc.* 776,595
42,100 Public Storage, Inc. 3,195,390
13,500 Shurgard Storage Centers, Inc. 843,750
20,000 Strategic Hotels & Resorts, Inc.* 414,800
14,500 U-Store-It Trust* 273,470
-------------
$ 11,202,535
-------------
Total Real Estate $ 98,116,415
-------------
TOTAL COMMON STOCKS
(Cost $56,906,299) $ 102,019,335
-------------
TEMPORARY CASH INVESTMENT - 18.5%
Security Lending Collateral - 18.5%
19,238,901 Securities Lending Investment
Fund, 5.16% $ 19,238,901
-------------
TOTAL TEMPORARY CASH
INVESTMENT
(Cost $19,238,901) $ 19,238,901
-------------
TOTAL INVESTMENT
IN SECURITIES - 116.8%
(Cost $76,145,200) $ 121,258,236
-------------
OTHER ASSETS
AND LIABILITIES - (16.8)% $ (17,416,823)
-------------
TOTAL NET ASSETS - 100.0% $ 103,841,413
=============
* Non-income producing security.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
35,000 AvalonBay Communities, Inc. $ 3,871,700
52,400 Brookfield Properties Corp. 1,685,708
26,235 Corporate Office Properties 1,103,969
44,055 Equity Office Properties Trust 1,608,448
31,910 Equity Residential Property Trust 1,427,334
13,761 Home Properties, Inc.* 763,873
188,100 Host Hotels & Resorts, Inc.* 4,113,747
20,200 Kimco Realty Corp. 737,098
81,675 Liberty Property Trust 3,610,035
------------
Total $ 18,921,912
============
6 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
6/30/06 Year Ended Year Ended Year Ended Year Ended Year Ended
Class II (unaudited) 12/31/05 12/31/04 12/31/03 12/31/02 12/31/01
Net asset value, beginning of period $ 26.09 $ 24.26 $ 18.55 $ 14.45 $ 14.75 $ 14.40
------- ------- ------- ------- ------- -------
Increase from investment operations:
Net investment income $ 0.34 $ 0.36 $ 0.44 $ 0.68 $ 0.55 $ 0.41
Net realized and unrealized gain (loss)
on investments 3.41 3.11 6.00 4.18 (0.20) 0.63
------- ------- ------- ------- ------- -------
Net increase from investment operations $ 3.75 $ 3.47 $ 6.44 $ 4.86 $ 0.35 $ 1.04
Distributions to shareholders:
Net investment income (0.34) (0.33) (0.40) (0.56) (0.65) (0.52)
Net realized gain (1.49) (1.31) (0.33) -- -- --
Tax Return of Capital -- -- -- (0.20) -- (0.17)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value $ 1.92 $ 1.83 $ 5.71 $ 4.10 $ (0.30) $ 0.35
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 28.01 $ 26.09 $ 24.26 $ 18.55 $ 14.45 $ 14.75
======= ======= ======= ======= ======= =======
Total return* 14.66% 14.86% 35.39% 34.45% 2.28% 7.52%
Ratio of net expenses to average net assets+ 1.13%** 1.18% 1.23% 1.28% 1.32% 1.52%
Ratio of net investment income to average
net assets+ 2.40%** 1.46% 2.20% 4.26% 4.21% 4.36%
Portfolio turnover rate 18%** 12% 35% 20% 29% 34%
Net assets, end of period (in thousands) $71,990 $67,383 $61,799 $39,892 $31,985 $11,972
* 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.
** Annualized.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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. 7
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $18,921,912) (Cost $76,145,200) $ 121,258,236
Cash 1,226,876
Receivables --
Investment securities sold 295,747
Fund shares sold 69,653
Dividends, interest and foreign taxes withheld 369,768
Other 5,905
-------------
Total assets $ 123,226,185
-------------
LIABILITIES:
Payables --
Investment securities purchased $ 42,070
Fund shares repurchased 52,917
Upon return of securities loaned 19,238,901
Due to affiliates 10,706
Accrued expenses 40,178
-------------
Total liabilities $ 19,384,772
-------------
NET ASSETS:
Paid-in capital $ 53,200,452
Undistributed net investment income 229,457
Accumulated net realized gain on investments 5,298,468
Net unrealized gain on investments 45,113,036
-------------
Total net assets $ 103,841,413
-------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 31,851,653
Shares outstanding 1,135,310
-------------
Net asset value per share $ 28.06
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 71,989,760
Shares outstanding 2,570,361
-------------
Net asset value per share $ 28.01
8 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)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $6,237) $ 1,787,776
Interest 20,348
Income on securities loaned, net 10,145
-----------
Total investment income $ 1,818,269
-----------
EXPENSES:
Management fees $ 412,565
Transfer agent fees and expenses 4,996
Distribution fees (Class II) 88,416
Administrative reimbursements 9,698
Custodian fees 7,208
Professional fees 17,406
Fees and expenses of nonaffiliated trustees 1,862
Miscellaneous 472
-----------
Total expenses $ 542,623
-----------
Net expenses $ 542,623
-----------
Net investment income $ 1,275,646
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investments $ 5,583,655
-----------
Change in net unrealized gain from investments $ 7,249,324
-----------
Net gain on investments $12,832,979
===========
Net increase in net assets resulting from operations $14,108,625
===========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 1,275,646 $ 1,488,954
Net realized gain on investments 5,583,655 6,859,537
Change in net unrealized gain or loss on investments 7,249,324 5,415,473
------------- -------------
Net increase in net assets resulting from operations $ 14,108,625 $ 13,763,964
------------- -------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (420,758) $ (513,835)
Class II (836,959) (868,561)
Net realized gain
Class I (1,594,710) (1,720,481)
Class II (3,624,498) (3,467,765)
------------- -------------
Total distributions to shareowners $ (6,476,925) $ (6,570,642)
------------- -------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 4,325,603 $ 14,850,583
Reinvestment of distributions 6,476,926 6,570,642
Cost of shares repurchased (14,062,070) (27,391,461)
------------- -------------
Net decrease in net assets resulting from Fund share transactions $ (3,259,541) $ (5,970,236)
------------- -------------
Net increase in net assets $ 4,372,159 $ 1,223,086
------------- -------------
NET ASSETS:
Beginning of period $ 99,469,254 $ 98,246,168
------------- -------------
End of period $ 103,841,413 $ 99,469,254
============= =============
Undistributed net investment income, end of period $ 229,457 $ 211,528
============= =============
10 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 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Real Estate Shares VCT Portfolio (the Portfolio) is a Portfolio of
the Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio) (Class II shares
only)
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or
by qualified pension and retirement plans.
The investment objective of Real Estate Shares Portfolio is to pursue long-term
capital growth, with current income as a secondary objective.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. 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. The Portfolio also may use the fair
value of a security,
11
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
including a non-U.S. security, when the closing market price on the primary
exchange where the security is traded no longer accurately reflects the
value of the security as of the close of the NYSE. At June 30, 2006, there
were no fair valued securities. Temporary cash investments are valued at
amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes on capital gains at
the applicable country rates.
Because Real Estate Shares Portfolio invests a substantial portion of its
assets in real estate investment trusts (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 return of capital distributions 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. Information regarding the Portfolio's
principal investment risks is contained in the Portfolio's prospectus(es).
Please refer to those documents when considering the Portfolio's risks.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. When the contract is closed, the Portfolio
realize a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As June
30, 2006, Real Estate Shares had no open contracts.
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 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. dollars 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.
D. 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
Portfolio's 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.
E. 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 taxable income and net realized capital gains, if
12
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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.
A portion of the dividend income recorded by Real Estate Shares Portfolio
is from distributions by publicly traded 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 paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 1,584,389
Long-Term capital gain 4,986,253
-----------
6,570,642
Return of Capital --
-----------
Total distributions $ 6,570,642
===========
Distributable Earnings (Accumulated Losses):
Undistributed long-term gain/(capital loss carry forward) $ 5,283,368
REIT Dividend Payable 211,528
Unrealized appreciation (depreciation) 37,514,365
-----------
Total $43,009,261
===========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
F. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees for Class II Shares are calculated based on the
average daily net asset values attributable to Class II shares of the
Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. Distributions paid by a Portfolio with respect to
each class of shares are calculated in the same manner, at the same time,
and in the same amount, except that Class I and Class II shares can bear
different transfer agent and distribution fees.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may
13
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
occur during the term of the loan, will be for the account of the Trust.
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 Trust has the right under the lending agreement to
recover the securities on loan from the borrower on demand. The Trust
invests cash collateral in the Securities Lending Investment Fund which is
sponsored by Brown Brothers Harriman & Co., the Trust's custodian.
H. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.80% 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. At June 30, 2006, $2,528 was payable to
PIM related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $7,691 in transfer agent
fees payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $487 payable to PFD at June 30,
2006.
14
Pioneer Real Estate Shares VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- ----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- ----------------------------------------------------------------------------------------------------
Real Estate Shares Portfolio $76,427,953 $44,874,867 $ (44,584) $44,830,283
=========== =========== ========= ===========
- ----------------------------------------------------------------------------------------------------
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, 2006, were $9,304,012 and $18,417,009, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ---------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Real Estate Shares Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ---------------------------------------------------------------------------------------------
CLASS I:
Shares sold 33,257 $ 937,604 57,099 $ 1,401,143
Reinvestment of distributions 74,125 2,015,469 91,076 2,234,316
Shares repurchased (199,965) (5,670,285) (420,029) (10,198,782)
-------------------------------------------------------
Net decrease (92,583) $ (2,717,212) (271,854) $ (6,563,323)
=======================================================
CLASS II:
Shares sold 118,596 $ 3,387,999 558,332 $ 13,449,440
Reinvestment of distributions 164,596 4,461,457 176,725 4,336,326
Shares repurchased (296,023) (8,391,785) (699,655) (17,192,679)
-------------------------------------------------------
Net increase (decrease) (12,831) $ (542,329) 35,402 $ 593,087
=======================================================
- ---------------------------------------------------------------------------------------------
15
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
17
[LOGO]PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19621-00-0806
[Logo] PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Small Cap Value VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Small Cap Value VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 10
Notes to Financial Statements 14
Trustees, Officers and Service Providers 19
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year on
Form N-Q. Shareowners may view the filed Form N-Q by visiting the Commission's
web site at http://www.sec.gov. The filed form may also be viewed and copied at
the Commission's Public Reference Room in Washington, D.C. Information regarding
the operations of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment portfolio)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
U.S. Common Stocks 81.6%
Temporary Cash Investment 14.3%
International Common Stocks 3.0%
Exchange Traded Fund 0.7%
Preferred Stocks 0.4%
Sector Distribution
(As a percentage of equity holdings)
[THE FOLLOWING DATA WAS REPRESENTED AS A PIE CHART IN THE PRINTED MATERIAL]
Financials 24.8%
Information Technology 20.4%
Industrials 17.1%
Energy 10.2%
Health Care 9.0%
Consumer Discretionary 7.3%
Consumer Staples 3.8%
Materials 3.1%
Utilities 2.6%
Telecommunication Services 1.7%
Five Largest Holdings
(As a percentage of equity holdings)
1. Insight Enterprises, Inc. 1.93%
2. Apollo Investment Corp. 1.92
3. Assured Guaranty, Ltd. 1.84
4. Pacer International, Inc. 1.69
5. Alaska Communications
Systems Group, Inc. 1.67
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 16.39 $ 16.07
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.0003 $ 0.1027 $ 0.4162
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Small Cap Value VCT Portfolio at net asset value, compared to that of the
Russell 2000 Value Index. Portfolio returns are based on net asset value and do
not reflect any applicable insurance fees or surrender charges.
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE CHART IN THE PRINTED MATERIAL]
Pioneer Small Cap
Value VCT Russell 2000 Russell 2000
Portfolio Value Index Index
11/01 $10,000 $10,000 $10,000
6/02 11,061 10,118 11,382
6/03 10,078 9,952 10,950
6/04 13,133 13,273 14,800
6/05 14,858 14,526 16,930
6/06 17,159 16,644 19,403
The Russell 2000 Value Index measures the performance of U.S. small-cap Value
stocks. The Russell 2000 Index measures the performance of U.S. small-cap
stocks. 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.
- --------------------------------------------------------------------------------
Average Annual Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 12.72%
(11/8/01)
1 Year 15.23%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges. The
performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Small 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 variable annuities. 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 [divided by] $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 Small Cap Value VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,053.40
Expenses Paid During Period* $ 6.47
* Expenses are equal to the Portfolio's annualized expense ratio of 1.27% for
Class II 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 Small Cap Value VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
Share Class II
- --------------------------------------------------------------------------------
Beginning Account Value on 1/1/06 $ 1,000.00
Ending Account Value on 6/30/06 $ 1,018.50
Expenses Paid During Period* $ 6.36
* Expenses are equal to the Portfolio's annualized expense ratio of 1.27% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
In the following discussion, portfolio managers David Adams and John McPherson
review the economic background and describe some of the decisions that
contributed to the performance of Pioneer Small Cap Value VCT Portfolio over the
six months ended June 30, 2006.
Q. How did the Portfolio perform over this period?
A. For the six months ended June 30, 2006, Class II shares of the Portfolio
returned 5.34% at net asset value. These results were behind the 8.21%
return on the Russell 2000 Index, the Fund's benchmark. The Portfolio's 39
Lipper Small-Cap Value peers returned an average of 8.09% over the six
months.
The first four months of the year were characterized by strong performance
from the lower-quality, more speculative names that comprise the Russell
2000 Index. Our more conservative style leads us to invest in
higher-quality issues with strong fundamentals and this focus contributed
to the Portfolio's underperformance versus the benchmark.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. Please describe the investment background over the past year and how it
affected small-cap stocks.
A. An extended surge in the nation's growth rate fueled strong equity markets
through most of the period. But the economy's strength also raised fears of
inflation, dampening hopes for an end to the Federal Reserve Board's long
campaign of interest rate hikes. Burdensome energy costs and geopolitical
tensions centering on Iran, combined with rising interest rates and soaring
commodity prices, cut the rally short, setting off a sharp downtrend
beginning in mid-May.
Q. Which of your investment decisions had the most favorable impact on
results?
A. Although we were slightly underweight among health-care issues, successful
stock selection enabled us to outperform the benchmark in this sector. In
the consumer discretionary sector, our slightly underweight stance also
aided results. The Portfolio outperformed among industrials as well, the
Russell 2000 Index's best-performing sector.
Only three of the Portfolio's industry sectors showed declines over the
past six months; any underperformance was relative to the benchmark sector.
For example, information technology was slightly down, lagging benchmark
returns. Energy showed net positive results, but still trailed the
benchmark as the result of selling which trimmed gains in several issues
that had been rising for several quarters. We have been pruning energy
holdings as valuations bumped into the upper parameters set by our
value-based approach. We are still overweight in this volatile sector, but
by a smaller margin than in the last few years.
Aspen Technology, the Portfolio's strongest contributor during the period,
moved higher as new management aggressively put the corporate house in
order. Aspen's design and process management software is widely used in the
petrochemical and refining industries. Internal issues at Aspen had left
customers wary of committing to new products, but a revamped infrastructure
and other changes have begun to boost sales. Flowserve, which fabricates
high-tolerance valves and pipes for the harsh conditions found in
refineries, also contributed. Initiatives by new management to address
financial and operational issues coincided with growth in Flowserve's
markets, including new petrochemical facilities in China and elsewhere.
Sharply higher metals prices, the result of the global boom in commodities,
drove up shares of Carpenter Technology, a leading metals processor. We
sold a large portion of the Portfolio's position to lock in profits. We
also took profits in Piper Jaffray, a regional brokerage firm that recently
bounced back after a period of disappointment. Amerigroup, an HMO focused
on Medicaid patients, rebounded sharply after a sell-off last fall, thanks
to improved earnings expectations.
A Word About Risk:
Investments in small companies may offer the potential for higher returns, but
are also subject to greater short-term price fluctuations than larger, more
established companies. At times, the Portfolio's investments may represent
industries or industry sectors that are interrelated or have common risks,
making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. Which of your choices held back results?
A. North Sea supply boat operator Gulfmark Offshore disappointed during this
period following an extended upward run. Demand for Gulfmark's boats is
strong and the North Sea drilling outlook remains favorable over the longer
term. However, the energy group was the target of profit-takers amid
concerns about slackening global energy demand.
We have been bullish on natural gas price trends in North America for some
time. That thesis aided Portfolio returns considerably over the past three
years, but hurt results this year as the relatively mild winter caused
demand to weaken and prices to slide. In particular, Southwestern Energy,
Swift Energy and Forest Oil, all long-time holdings, started to drop in
February as a result of the weakening pricing environment. However, we
believe that, over time, supply/demand imbalances will cause gas prices to
rebound, which we think may benefit the Portfolio's holdings.
Casualty insurer Quanta Capital Holdings fell when ratings service AM Best
withdrew its favorable rating, curtailing Quanta's ability to write new
business. We are awaiting an announcement from the company regarding its
strategy for the eventual "run-off" of the company's book of business.
Run-off is an industry term used to describe when a company allows its
existing book of insurance contracts to lapse without writing new
contracts.
Avid Technology, a leader in the digitization of film and other media,
slumped amid difficulties integrating Pinnacle Software, its first consumer
acquisition, into the company. Until acquiring Pinnacle, Avid had worked
exclusively in professional markets. Based on reports from the company, we
are retaining our holdings. Symmetricom is the leading provider of
precision atomic clocks used to send voice and data on telecom networks as
well as in defense and space applications. Shares declined when what we
believe to be a short-term cutback in government business diluted the
benefit of increased sales to telecom companies.
Q. What is your outlook for the economy and how have you positioned the
Portfolio?
A. We believe stocks in general should hold up well over the next several
months, although returns are likely to be subdued and volatile. Underlying
business fundamentals remain strong, and we believe the economy, though
perhaps moderating in its growth rate, is healthy. The imponderables are
macroeconomic forces that include geopolitical tensions, higher inflation
driven by energy costs, and rising interest rates. As always, we remain
disciplined and sensitive to valuations, both in terms of current holdings
and possible new commitments.
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 the opinion of Portfolio management as of the
date of this report. These statements should not be relied upon for any
other purposes. Past performance is no guarantee of future results, and
there is no guarantee that market forecasts discussed will be realized.
5
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Shares Value
PREFERRED STOCKS - 0.4%
Insurance - 0.4%
Multi-Line Insurance - 0.4%
18,640 Quanta Capital Holdings,
10.25%, 12/1/49 $ 347,822
-----------
Total Insurance $ 347,822
-----------
TOTAL PREFERRED STOCKS
(Cost $466,000) $ 347,822
-----------
COMMON STOCKS - 90.3%
Energy - 9.4%
Coal & Consumable Fuels - 1.0%
24,687 Massey Energy Co.(a) $ 888,732
-----------
Integrated Oil & Gas - 1.0%
11,175 CNX Gas Corp.* $ 335,250
19,914 CNX Gas Corp. (144A)* 597,420
-----------
$ 932,670
-----------
Oil & Gas Drilling - 0.8%
15,617 Bronco Drilling Co., Inc.* $ 326,239
5,974 Todco 244,038
3,532 Unit Corp.* 200,935
-----------
$ 771,212
-----------
Oil & Gas Equipment & Services - 3.5%
39,235 Dresser-Rand Group, Inc.* $ 921,238
44,028 Gulfmark Offshore, Inc.* 1,137,243
74,311 Key Energy Services, Inc.* 1,133,243
-----------
$ 3,191,724
-----------
Oil & Gas Exploration & Production - 2.9%
18,726 Forest Oil Corp.* $ 620,954
10,917 Penn Virginia Corp. 762,880
32,107 Riata Energy, Inc. (144A)* 593,980
2,175 Rosetta Resources, Inc.*(a) 36,149
12,658 Rosetta Resources, Inc. (144A)* 210,376
13,890 Southwestern Energy Co.* 432,812
-----------
$ 2,657,151
-----------
Oil & Gas Storage & Transportation - 0.2%
6,859 Arlington Tankers, Ltd. $ 155,562
-----------
Total Energy $ 8,597,051
-----------
Materials - 2.9%
Gold - 1.7%
82,876 Cambior, Inc.*(a) $ 222,936
18,153 Glamis Gold, Ltd.* 687,273
71,819 IAMGOLD Corp.* 639,189
-----------
$ 1,549,398
-----------
Paper Products - 0.4%
61,740 Domtar, Inc. $ 381,553
-----------
Shares Value
Specialty Chemicals - 0.3%
23,401 Chemtura Corp. $ 218,565
-----------
Steel - 0.5%
1,961 Carpenter Technology $ 226,496
20,843 NN, Inc. 257,411
-----------
$ 483,907
-----------
Total Materials $ 2,633,423
-----------
Capital Goods - 7.3%
Building Products - 0.1%
5,397 Goodman Global, Inc.* $ 81,926
-----------
Construction & Engineering - 0.5%
20,241 Insituform Technologies, Inc.* $ 463,316
-----------
Construction, Farm Machinery &
Heavy Trucks - 3.4%
39,361 Commercial Vehicle Group, Inc.* $ 813,985
39,452 Federal Signal Corp. 597,303
3,071 Joy Global, Inc. 159,968
2,531 Nacco Industries, Inc. 347,785
32,101 Wabtec Corp. 1,200,577
-----------
$ 3,119,618
-----------
Electrical Component & Equipment - 2.3%
53,700 C&D Technologies, Inc. $ 403,824
105,167 Graftech International, Ltd.* 609,969
173,224 Power-One, Inc.* 1,143,278
-----------
$ 2,157,071
-----------
Industrial Machinery - 0.7%
7,900 Basin Water, Inc.*(a) $ 79,158
9,147 Flowserve Corp.* 520,464
-----------
$ 599,622
-----------
Trading Companies & Distributors - 0.3%
12,867 Applied Industrial Technologies, Inc. $ 312,797
-----------
Total Capital Goods $ 6,734,350
-----------
Commercial Services & Supplies - 3.2%
Diversified Commercial Services - 1.3%
23,998 Cornell Companies, Inc.* $ 368,609
3,670 Corrections Corporation of America* 194,290
18,684 School Specialty, Inc.* 595,085
-----------
$ 1,157,984
-----------
Human Resource & Employment Services - 1.9%
24,649 Korn/Ferry International* $ 482,874
38,330 On Assignment, Inc.* 352,253
26,638 Watson Wyatt Worldwide, Inc. 936,059
-----------
$ 1,771,186
-----------
Total Commercial
Services & Supplies $ 2,929,170
-----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Transportation - 5.1%
Air Freight & Couriers - 2.1%
12,351 Forward Air Corp. $ 503,056
43,544 Pacer International, Inc. 1,418,664
-----------
$ 1,921,720
-----------
Marine - 1.0%
4,569 Dryships, Inc.(a) $ 49,300
24,826 Excel Maritime Carriers, Ltd.*(a) 256,949
12,232 Genco Shipping & Trading, Ltd. 212,348
45,905 Quintana Maritime, Ltd.(a) 376,421
-----------
$ 895,018
-----------
Railroads - 1.1%
29,891 Genesee & Wyoming, Inc.* $ 1,059,935
-----------
Trucking - 0.9%
11,590 Dollar Thrifty Automotive Group* $ 522,361
8,501 Universal Truckload Services, Inc.* 290,139
-----------
$ 812,500
-----------
Total Transportation $ 4,689,173
-----------
Automobiles & Components - 0.8%
Tires & Rubber - 0.8%
70,050 Cooper Tire & Rubber*(a) $ 780,357
-----------
Total Automobiles & Components $ 780,357
-----------
Consumer Durables & Apparel - 1.1%
Housewares & Specialties - 1.1%
31,841 Jarden Corp.* $ 969,558
-----------
Total Consumer Durables & Apparel $ 969,558
-----------
Consumer Services - 1.5%
Casinos & Gaming - 0.5%
28,243 Bally Technologies, Inc.*(a) $ 465,162
-----------
Restaurants - 1.0%
19,375 AFC Enterprises, Inc.*(a) $ 247,031
37,277 O'Charley's, Inc.* 633,709
-----------
$ 880,740
-----------
Total Consumer Services $ 1,345,902
-----------
Retailing - 3.3%
Apparel Retail - 1.0%
28,049 Stage Stores, Inc.* $ 925,617
-----------
Computer & Electronics Retail - 0.3%
37,715 Tweeter Home Entertainment Group, Inc.* $ 267,777
-----------
General Merchandise Stores - 0.5%
35,527 Fred's, Inc. $ 474,285
-----------
Internet Retail - 0.4%
66,104 1-800-FLOWERS.COM, Inc.* $ 381,420
-----------
Shares Value
Specialty Stores - 1.1%
64,781 Hancock Fabrics, Inc.(a) $ 216,369
101,898 Rent-Way, Inc.* 752,007
-----------
$ 968,376
-----------
Total Retailing $ 3,017,475
-----------
Food, Beverage & Tobacco - 1.1%
Agricultural Products - 0.4%
20,007 Fresh Del Monte Produce, Inc.*(a) $ 345,521
-----------
Packaged Foods & Meats - 0.7%
43,912 B & G Foods, Inc. $ 711,814
-----------
Total Food, Beverage & Tobacco $ 1,057,335
-----------
Household & Personal Products - 2.3%
Personal Products - 2.3%
13,795 Herbalife, Ltd.* $ 550,421
87,412 Nu Skin Enterprises, Inc. 1,298,068
29,736 Reliv' International, Inc.* 293,792
-----------
$ 2,142,281
-----------
Total Household &
Personal Products $ 2,142,281
-----------
Health Care Equipment & Services - 8.0%
Health Care Equipment - 1.1%
21,618 Analogic Corp.* $ 1,007,615
-----------
Health Care Facilities - 0.7%
9,950 Lifepoint Hospitals, Inc.* $ 319,694
1 Sunrise Senior Living, Inc.* 28
7,765 Triad Hospitals, Inc.* 307,339
-----------
$ 627,061
-----------
Health Care Services - 4.0%
15,497 Chemed Corp. $ 845,051
69,362 Cross Country Healthcares, Inc.* 1,261,695
18,008 Pediatrix Medical Group, Inc.* 815,762
27,349 Providence Service Corp.* 744,713
-----------
$ 3,667,221
-----------
Health Care Supplies - 0.9%
61,120 Merit Medical Systems, Inc.* $ 841,011
-----------
Managed Health Care - 1.3%
40,150 AMERIGROUP Corp.* $ 1,246,256
-----------
Total Health Care
Equipment & Services $ 7,389,164
-----------
Pharmaceuticals & Biotechnology - 0.2%
Biotechnology - 0.1%
5,625 Cubist Pharmaceuticals, Inc.* $ 141,638
-----------
Pharmaceuticals - 0.1%
5,100 Connetics Corp.* $ 59,976
-----------
Total Pharmaceuticals &
Biotechnology $ 201,614
-----------
The accompanying notes are an integral part of these financial statements. 7
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Shares Value
Banks - 5.5%
Regional Banks - 4.5%
15,483 Alliance Bankshares Corp.* $ 253,916
21,650 Cadence Financial Corp.* 482,146
45,965 Cardinal Financial Corp. 534,113
11,445 City National Corp. 744,955
3,209 Signature Bank* 103,907
36,508 Southwest Bancorp, Inc.* 930,954
31,768 Sterling Bancshares, Inc. 595,650
21,509 Texas Capital Bancshares, Inc.* 501,160
-----------
$ 4,146,801
-----------
Thrifts & Mortgage Finance - 1.0%
35,388 BankAtlantic Bancorp, Inc. $ 525,158
19,304 Provident Financial Services, Inc. 346,507
-----------
$ 871,665
-----------
Total Banks $ 5,018,466
-----------
Diversified Financials - 6.3%
Asset Management & Custody Banks - 1.8%
87,183 Apollo Investment Corp. $ 1,611,142
-----------
Consumer Finance - 2.7%
37,268 Advanta Corp. $ 1,285,442
23,736 Cash America International, Inc. 759,552
7,322 The First Marblehead Corp. 416,915
-----------
$ 2,461,909
-----------
Investment Banking & Brokerage - 1.1%
18,905 A.G. Edwards, Inc. $ 1,045,825
-----------
Multi-Sector Holding - 0.6%
38,750 Compass Diversified Trust* $ 552,963
-----------
Specialized Finance - 0.1%
4,026 Nasdaq Stock Market, Inc.* $ 120,377
-----------
Total Diversified Financials $ 5,792,216
-----------
Insurance - 5.9%
Life & Health Insurance - 0.4%
33,818 American Equity Investment Life
Holding*(a) $ 360,500
-----------
Multi-Line Insurance - 0.4%
131,214 Quanta Capital Holdings* $ 339,844
-----------
Property & Casualty Insurance - 2.1%
61,034 Assured Guaranty, Ltd. $ 1,548,433
1,236 National Interstate Corp. 33,520
7,428 Selective Insurance Group, Inc. 415,002
-----------
$ 1,996,955
-----------
Shares Value
Reinsurance - 3.0%
43,325 IPC Holdings, Ltd. $ 1,068,395
20,466 Max Re Capital, Ltd. 446,977
22,588 Platinum Underwriter Holdings, Ltd. 632,012
47,217 Ram Holdings, Ltd.* 593,518
-----------
$ 2,740,902
-----------
Total Insurance $ 5,438,201
-----------
Real Estate - 3.8%
Mortgage Real Estate Investment Trusts - 2.2%
40,535 Annaly Mortgage Management, Inc. $ 519,253
107,041 Deerfield Triarc Capital Corp. 1,389,392
10,900 Hanover Capital Mortgage Holdings, Inc. 57,225
-----------
$ 1,965,870
-----------
Office Real Estate Investment Trusts - 1.4%
43,195 BioMed Property Trust, Inc. $ 1,293,258
-----------
Retail Real Estate Investment Trusts - 0.2%
19,736 Feldman Mall Properties, Inc. $ 216,307
-----------
Total Real Estate $ 3,475,435
-----------
Software & Services - 7.6%
Application Software - 4.8%
106,102 Aspen Technology, Inc.* $ 1,392,058
46,449 Bottomline Technologies, Inc.* 378,095
27,241 Corel Corp.* 328,526
51,213 Sonic Solutions*(a) 845,015
23,429 SPSS, Inc.* 753,008
95,989 TIBCO Software, Inc.* 676,722
-----------
$ 4,373,424
-----------
IT Consulting & Other Services - 0.9%
45,493 Gartner Group, Inc.* $ 646,001
14,955 NCI, Inc.* 195,911
-----------
$ 841,912
-----------
Systems Software - 1.9%
127,328 Borland Software Corp.* $ 672,292
34,805 Internet Security Systems, Inc.* 656,074
20,672 Sybase, Inc.* 401,037
-----------
$ 1,729,403
-----------
Total Software & Services $ 6,944,739
-----------
Technology Hardware & Equipment - 10.1%
Communications Equipment - 3.3%
28,658 Black Box Corp. $ 1,098,461
39,724 Dycom Industries, Inc.* 845,724
150,883 Symmetricom, Inc.* 1,066,743
-----------
$ 3,010,928
-----------
Computer Hardware - 1.9%
39,061 Avid Technology, Inc.*(a) $ 1,301,903
186,936 Concurrent Computer Corp.* 487,903
-----------
$ 1,789,806
-----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
Computer Storage & Peripherals - 0.3%
14,214 Electronics for Imaging, Inc.* $ 296,788
-----------
Electronic Equipment & Instruments - 1.5%
4,344 Electro Scientific Industrials* $ 78,149
20,990 Planar Systems, Inc.* 252,720
47,162 Technitrol, Inc. 1,091,800
-----------
$ 1,422,669
-----------
Electronic Manufacturing Services - 1.3%
36,389 Mercury Computer Systems, Inc.* $ 560,027
69,225 Smart Modular Technologies (WWH), Inc.* 607,796
-----------
$ 1,167,823
-----------
Technology Distributors - 1.8%
85,306 Insight Enterprises, Inc.* $ 1,625,050
-----------
Total Technology
Hardware & Equipment $ 9,313,064
-----------
Semiconductors - 1.0%
Semiconductor Equipment - 0.3%
26,413 Brooks Automation, Inc.* $ 311,673
-----------
Semiconductors - 0.7%
98,244 Lattice Semiconductor Corp.* $ 607,148
-----------
Total Semiconductors $ 918,821
-----------
Telecommunication Services - 1.5%
Integrated Telecommunication Services - 1.5%
110,933 Alaska Communications Systems
Group, Inc. $ 1,403,302
-----------
Total Telecommunication Services $ 1,403,302
-----------
Utilities - 2.4%
Gas Utilities - 2.4%
22,698 AGL Resources, Inc. $ 865,248
14,006 Energen Corp. 537,971
21,870 People's Energy Corp.(a) 785,352
-----------
$ 2,188,571
-----------
Total Utilities $ 2,188,571
-----------
TOTAL COMMON STOCKS
(Cost $76,526,286) $82,979,668
-----------
EXCHANGE TRADED FUNDS - 0.8%
3,177 Russell 2000 Exchange Traded Fund(a) $ 227,791
3,645 Russell 2000 Growth Exchange
Traded Fund(a) 268,272
3,620 Russell 2000 Value Exchange
Traded Fund(a) 261,979
-----------
$ 758,042
-----------
TOTAL EXCHANGE TRADED FUNDS
(Cost $641,672) $ 758,042
-----------
Principal
Amount Value
TEMPORARY CASH INVESTMENTS - 15.3%
Repurchase Agreement - 8.3%
$ 7,600,000 UBS Warburg, Inc., 4.40%, dated
6/30/06, repurchase price of
$7,600,000 plus accrued interest on
7/3/06 collateralized by $7,762,000
U.S. Treasury Bill, 5.125%, 6/30/08 $ 7,600,000
-----------
Shares
Security Lending Collateral - 7.0%
6,454,751 Securities Lending Investment
Fund, 5.16% $ 6,454,751
-----------
TOTAL TEMPORARY
CASH INVESTMENTS
(Cost $14,054,751) $14,054,751
-----------
TOTAL INVESTMENT
IN SECURITIES - 106.8%
(Cost $91,688,709) $98,140,283
-----------
OTHER ASSETS
AND LIABILITIES - (6.8)% $(6,241,863)
-----------
TOTAL NET ASSETS - 100.0% $91,898,420
===========
* 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, 2006, the
value of these securities amounted to $1,401,776 or 1.5% of total net
assets.
(a) At June 30, 2006, the following securities were out on loan:
Shares Security Value
11,203 AFC Enterprises, Inc.* $ 142,838
American Equity Investment
30,931 Life Holding* 329,724
35,725 Avid Technology, Inc.* 1,190,714
25,795 Bally Technologies, Inc.* 424,844
7,130 Basin Water, Inc.* 71,443
75,701 Cambior, Inc.* 203,636
69,349 Cooper Tire & Rubber* 772,548
4,512 Dryships, Inc. 48,684
22,611 Excel Maritime Carriers ,Ltd.* 234,024
8,793 Fresh Del Monte Produce, Inc.* 151,855
58,921 Hancock Fabrics, Inc. 196,796
10,474 Massey Energy Co. 377,064
7,717 People's Energy Corp. 277,117
41,939 Quintana Maritime, Ltd. 343,900
1,980 Rosetta Resources, Inc.* 32,908
2,859 Russell 2000 Exchange Traded Fund 204,990
Russell 2000 Growth Exchange
3,316 Traded Fund 244,058
Russell 2000 Value Exchange
3,584 Traded Fund 259,374
42,712 Sonic Solutions* 704,748
----------
Total $6,211,265
==========
The accompanying notes are an integral part of these financial statements. 9
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended Year Year 5/1/03 (a)
6/30/06 Ended Ended to
Class II (unaudited) 12/31/05 12/31/04 12/31/03
Net asset value, beginning of period $ 16.07 $ 14.95 $ 12.47 $ 9.11
--------- -------- -------- --------
Increase (decrease) from investment operations:
Net investment income (loss) $ 0.02 $ 0.02 $ (0.03) $ (0.01)
Net realized and unrealized gain on investments and
foreign currency transactions 0.82 1.59 2.51 3.37
--------- -------- -------- ----------
Net increase from investment operations $ 0.84 $ 1.61 $ 2.48 $ 3.36
Distributions to shareowners:
Net investment income 0.00(c) - - -
Net realized gain (0.52) (0.49) - -
---------- -------- -------- ----------
Net increase in net asset value $ 0.32 $ 1.12 $ 2.48 $ 3.36
---------- -------- -------- ----------
Net asset value, end of period $ 16.39 $ 16.07 $ 14.95 $ 12.47
========== ======== ======== ==========
Total return* 5.34% 11.10% 19.89% 36.88%(b)
Ratio of net expenses to average net assets+ 1.27%** 1.39% 1.54% 1.58%**
Ratio of net investment income (loss) to average net assets+ 0.49%** 0.16% (0.41)% (0.15)%**
Portfolio turnover rate 146%** 38% 36% 74%
Net assets, end of period (in thousands) $ 32,758 $ 21,700 $ 10,845 $ 2,760
Ratios with no waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.27%** 1.39% 1.59% 2.65%**
Net investment income (loss) 0.49%** 0.16% (0.46)% (1.22)%**
Ratios with waiver of management fees and assumption of expenses
by PIM and no reduction for fees paid indirectly:
Net expenses 1.27%** 1.39% 1.54% 1.58%**
Net investment income (loss) 0.49%** 0.16% (0.41)% (0.15)%**
(a) Class II shares were first publicly offered on May 1, 2003.
(b) Not annualized.
(c) Amount rounds to less than one cent per share.
* 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 the net asset value at the end of each period.
** Annualized.
+ Ratios with no reduction for fee paid indirectly.
NOTE: The above financial highlights do not reflect the deduction of non-fund
expenses associated with variable insurance products, such as mortality and
expense risk charges, separate account charges, and sales charges.
10 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $6,211,265) (Cost $91,688,709) $ 98,140,283
Cash 26,127
Receivables --
Investment securities sold 4,833
Fund shares sold 250,498
Variation margin 25,250
Dividends, interest and foreign taxes withheld 137,978
Due from Pioneer Investment Management, Inc. 3,102
Other 9,564
------------
Total assets $ 98,597,635
------------
LIABILITIES:
Payables --
Investment securities purchased $ 40,105
Fund shares repurchased 64,060
Upon return of securities loaned 6,454,751
Due to affiliates 2,167
Accrued expenses 138,132
------------
Total liabilities $ 6,699,215
------------
NET ASSETS:
Paid-in capital $ 68,936,874
Undistributed net investment income 206,359
Accumulated net realized gain on investments 16,211,745
Net unrealized gain on:
Investments 6,451,574
Futures contracts 91,868
------------
Total net assets $ 91,898,420
------------
NET ASSET VALUE PER SHARE:
Class I:
(No par value, unlimited number of shares authorized)
Net assets $ 59,140,617
Shares outstanding 3,582,110
------------
Net asset value per share $ 16.51
Class II:
(No par value, unlimited number of shares authorized)
Net assets $ 32,757,803
Shares outstanding 1,998,916
------------
Net asset value per share $ 16.39
The accompanying notes are an integral part of these financial statements. 11
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Dividends $ 328,598
Interest 130,202
Income on securities loaned, net 20,763
-------------
Total investment income $ 479,563
-------------
EXPENSES:
Management fees $ 197,413
Transfer agent fees and expenses 1,483
Distribution fees (Class II) 31,324
Administrative reimbursements 8,805
Custodian fees 17,163
Professional fees 23,576
Printing expense 11,330
Fees and expenses of nonaffiliated trustees 2,300
Miscellaneous 491
-------------
Total expenses $ 293,885
-------------
Net expenses $ 293,885
-------------
Net investment income $ 185,678
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 16,357,805
Redemption in kind 2,170,274
Futures contracts (6,512)
Forward foreign currency contracts and other assets and liabilities denominated in
foreign currencies 165
-------------
$ 18,521,732
-------------
Change in net unrealized gain or loss from:
Investments $ (15,901,452)
Futures contracts 109,596
-------------
$ (15,791,856)
-------------
Net gain on investments, futures contracts and foreign currency transactions $ 2,729,876
=============
Net increase in net assets resulting from operations $ 2,915,554
=============
12 The accompanying notes are an integral part of these financial statements.
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months
Ended Year
6/30/06 Ended
(unaudited) 12/31/05
FROM OPERATIONS:
Net investment income $ 185,678 $ 92,250
Net realized gain on investments, redemptions in kind, futures contracts and foreign
currency transactions 18,521,732 3,025,018
Change in net unrealized gain or loss on investments and futures contracts (15,791,856) 1,010,721
------------- ------------
Net increase in net assets resulting from operations $ 2,915,554 $ 4,127,989
------------- ------------
DISTRIBUTIONS TO SHAREOWNERS:
Net investment income
Class I $ (73,422) $ -
Class II (580) -
Net realized gain
Class I (1,788,652) (593,880)
Class II (1,003,743) (497,417)
------------- ------------
Total distributions to shareowners $ (2,866,397) $ (1,091,297)
------------- ------------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $ 15,453,544 $ 20,346,152
Shares issued in reorganization 51,400,124 -
Reinvestment of distributions 2,866,397 -
Cost of shares repurchased (8,332,855) (9,966,656)
Redemptions in kind (11,792,154) -
------------- ------------
Net increase in net assets resulting from Fund share transactions $ 49,595,056 $ 10,379,496
------------- ------------
Net increase in net assets $ 49,644,213 $ 13,416,188
------------- ------------
NET ASSETS:
Beginning of period $ 42,254,207 $ 28,838,019
------------- ------------
End of period $ 91,898,420 $ 42,254,207
============= ============
Undistributed net investment income, end of period $ 206,359 $ 94,683
============= ============
The accompanying notes are an integral part of these financial statements. 13
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Small Cap Value VCT Portfolio (the Portfolio) is a Portfolio of
Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio)
(Class II shares only)
Portfolio shares may only 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 Small Cap Value Portfolio is to seek capital
appreciation.
The financial highlights for the Portfolio's Class I shares are presented in a
separate book.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting periods.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Portfolio, in the
preparation of its financial statements, which are consistent 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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. 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. 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. The Portfolio also may use the fair
value of a security, including a non-U.S. security, when the closing market
14
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
price on the primary exchange where the security is traded no longer
accurately reflects the value of the security as of the close of the NYSE.
At June 30, 2006, there were no securities fair valued. Temporary cash
investments are valued at amortized cost.
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.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes,
and, if applicable, are reported net of foreign taxes withheld on capital
gains at the applicable country rates.
Small capitalization stocks, while offering the potential for higher
returns, such as those held by the portfolio may be subject to greater
short-term price fluctuations than securities of larger companies.
Information regarding the Portfolio's principal investment risks is
contained in the Portfolio's prospectus(es). Please refer to those
documents when considering the Portfolio's risks.
B. Futures Contracts
The Portfolio may enter into futures transactions to hedge against changes
in interest rates, securities prices, and currency rates or to seek to
increase total return. 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. 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 gains or losses. When the contract is closed, the Portfolio
realize a gain or loss equal to the difference between the opening and
closing value of the contract. The use of futures contracts involves, to
varying degrees, elements of market risk which may exceed the amounts
recognized by the Portfolio. Changes in the value of the contracts may not
directly correlate to the changes in the value of the underlying
securities. These risks may decrease the effectiveness of the Portfolio's
hedging and trading strategies and potentially result in a loss. As of June
30, 2006, Small Cap Value Portfolio had the following open contracts:
- ---------------------------------------------------------------------------------------------------------------
Number of
Contracts Settlement Market Unrealized
Future Contracts Type Long/(Short) Month Value Gain/(Loss)
- ---------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio Russell 2000 5 9/06 $1,828,750 $91,868
- ---------------------------------------------------------------------------------------------------------------
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 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. dollars 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.
D. 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
Portfolio's 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.
15
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
E. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with federal
income tax rules. Therefore, the source of the 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.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- --------------------------------------------------------------------------------
2005
- --------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ -
Long-Term Capital Gain 1,091,297
----------
$1,091,297
Return of Capital -
----------
Total Distributions $1,091,297
==========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ 646,863
Undistributed long-term gain/(Capital loss carryforward) 2,238,710
Unrealized appreciation (depreciation) 6,006,705
----------
Total $8,892,278
==========
- --------------------------------------------------------------------------------
The difference between book-basis and tax-basis unrealized appreciation is
primarily attributable to the tax deferral of losses on wash sales.
F. 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), $462,503 in
commissions on the sale of Trust shares for the six months ended June 30,
2006. Distribution fees are calculated based on the average daily net asset
values attributable to Class II shares of the Portfolio.
Shareowners of each class share all expenses and fees paid to the transfer
agent, Pioneer Investment Management Shareholder Services, Inc. (PIMSS),
for its services, which are allocated based on the number of accounts in
each class and the ratable allocation of related out-of-pocket expenses
(see Note 3). 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 the respective percentage of the adjusted net assets at the
beginning of the day. Distributions paid by a Portfolio with respect to
each class of shares are calculated in the same manner, at the same time,
and in the same amount, except that Class I and Class II shares can bear
different transfer agent and distribution fees.
G. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on
16
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
demand. The Trust invests cash collateral in the Securities Lending
Investment Fund which is sponsored by Brown Brothers Harriman & Co., the
Trust's custodian.
H. 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, a wholly owned indirect subsidiary of UniCredito Italiano, manages the
portfolio. Management fees are calculated daily at the annual rate of 0.75% 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. At June 30, 2006, $1,442 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $502 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $223 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- -----------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- -----------------------------------------------------------------------------------------------------
Small Cap Value Portfolio $91,844,645 $10,071,511 $(3,775,873) $6,295,638
=========== =========== ============ ==========
- -----------------------------------------------------------------------------------------------------
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, 2006, were $38,553,305 and $50,592,666, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
17
Pioneer Small Cap Value VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
'06 Shares '06 Amount '05 Shares '05 Amount
Small Cap Value Portfolio (unaudited) (unaudited)
- -----------------------------------------------------------------------------------------------------
CLASS I:
Shares sold 245,412 $ 4,167,166 571,103 $ 8,553,972
Shares issued in reorganization 2,861,983 48,796,816 - -
Redemption in kind (654,874) (11,792,154) - -
Reinvestment of distributions 116,744 1,862,074 40,427 589,019
Shares repurchased (256,798) (4,378,928) (539,585) (8,145,222)
-------------------------------------------------------------
Net increase 2,312,467 $ 38,654,974 71,945 $ 997,769
=============================================================
CLASS II:
Shares sold 665,015 $ 11,286,378 712,018 $ 10,705,770
Shares issued in reorganization 153,951 2,603,308 - -
Reinvestment of distributions 63,445 1,004,323 34,350 497,391
Shares repurchased (233,745) (3,953,927) (121,596) (1,821,434)
-------------------------------------------------------------
Net increase 648,666 $ 10,940,082 624,772 $ 9,381,727
=============================================================
- -----------------------------------------------------------------------------------------------------
8. Merger Information
On May 23, 2006, beneficial owners of Pioneer Small Company VCT Portfolio and
Pioneer Small Cap Value II VCT Portfolio approved a proposed Agreement and Plan
of Reorganization that provided for the merger listed below. This tax-free
reorganization was accomplished on May 24, 2006, by exchanging all of Pioneer
Small Company VCT Portfolio's Class I and Class II net assets and Pioneer Small
Cap Value II VCT Portfolio's Class I net assets for Pioneer Small Cap Value VCT
Portfolio's shares, based on Pioneer Small Cap Value VCT Portfolio's Class I and
Class II shares' ending net asset value, respectively. The following charts show
the details of the reorganization as of that closing date ("Closing Date"):
- -----------------------------------------------------------------------------------------------------------------------------
Pioneer Pioneer Pioneer Pioneer
Small Cap Value Small Company Small Cap Value II Small Cap Value
VCT Portfolio VCT Portfolio VCT Portfolio VCT Portfolio
(Pre-Reorganization) (Pre-Reorganization) (Pre-Reorganization) (Post-Reorganization)
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets
Class I $11,665,357 $3,024,464 $45,772,352 $60,462,173
Class II $30,138,805 $2,603,308 - $32,742,113
----------- ---------- ----------- -----------
Total Net Assets $41,804,162 $5,627,772 $45,772,352 $93,204,286
----------- ---------- ----------- -----------
Shares Outstanding
Class I 684,211 247,234 2,521,638 3,546,194
Class II 1,782,074 215,447 - 1,936,024
Shares Issued in Reorganization
Class I 2,861,983
Class II 153,951
- -----------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Unrealized Accumulated
Appreciation Gain/(Loss) on
on Closing Date Closing Date
- ---------------------------------------------------------------------------------
Pioneer Small Company VCT Portfolio $ 1,554,529 $ 1,706
Pioneer Small Cap Value II VCT Portfolio $14,635,856 $ (85,337)
----------- ---------
Total $16,190,385 $ (83,631)
=========== =========
- ---------------------------------------------------------------------------------
18
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Officers Trustees
John F. Cogan, Jr., President John F. Cogan, Jr., Chairman
Osbert M. Hood, Executive Vice President David R. Bock
Vincent Nave, Treasurer Mary K. Bush
Dorothy E. Bourassa, Secretary Margaret B.W. Graham
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is also
available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
21
[LOGO] PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company, Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features, risks,
charges and expenses and the investment objectives, risks, charges and expenses
of the underlying portfolios available in the product. Contact your advisor or
Pioneer Investments for a prospectus containing this information. Please read it
carefully.
19628-00-0806
[LOGO]PIONEER
Investments(R)
PIONEER VARIABLE CONTRACTS TRUST
Pioneer Global High Yield VCT Portfolio -- Class II Shares
SEMIANNUAL REPORT
June 30, 2006
PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
Table of Contents
- --------------------------------------------------------------------------------
Pioneer Global High Yield VCT Portfolio
Portfolio and Performance Update 2
Comparing Ongoing Portfolio Expenses 3
Portfolio Management Discussion 4
Schedule of Investments 6
Financial Statements 14
Notes to Financial Statements 18
Trustees, Officers and Service Providers 22
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
The Trust files a complete statement of investments with the Securities and
Exchange Commission for the first and the third quarters for each fiscal year
on Form N-Q. Shareowners may view the filed Form N-Q by visiting the
Commission's web site at http://www.sec.gov. The filed form may also be viewed
and copied at the Commission's Public Reference Room in Washington, D.C.
Information regarding the operations of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO UPDATE 6/30/06
- --------------------------------------------------------------------------------
Portfolio Diversification
(As a percentage of total investment in securities
[THE TABLE BELOW WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
U.S. Corporate Bonds 86.5%
Temporary Cash Investment 5.2%
Asset Backed Securities 3.3%
Convertible Corporate Bonds 1.8%
Municipal Bonds 1.8%
Foreign Government Bonds 1.4%
Maturity Distribution
(As a percentage of total investment in securities)
[THE TABLE BELOW WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
0-1 years 14.1%
1-3 years 12.6%
3-4 years 6.2%
4-6 years 52.7%
6-8 years 10.9%
8+ years 3.5%
Five Largest Holdings
(As a percentage of long-term holdings)
1. DDI Holding AS, 9.3%,
1/19/12 1.69%
- ------------------------------------------------
2. Gol Finance, 8.75%,
4/29/49 (144A) 1.43
- ------------------------------------------------
3. Thule Drilling, 10.0%,
5/10/07 1.35
- ------------------------------------------------
4. Eschelon Operating Co.,
8.375%, 3/15/10 1.30
- ------------------------------------------------
5. Ashtead Holdings Plc,
8.625%, 8/1/15 (144A) 1.25
The Portfolio is actively managed, and current holdings may be different.
- --------------------------------------------------------------------------------
PERFORMANCE UPDATE 6/30/06
- --------------------------------------------------------------------------------
Prices and Distributions
6/30/06 12/31/05
Net Asset Value per Share $ 10.00 $ 10.02
Net
Distributions per Share Investment Short-Term Long-Term
(1/1/06 - 6/30/06) Income Capital Gains Capital Gains
$ 0.377556 $ - $ -
- --------------------------------------------------------------------------------
Performance of a $10,000 Investment
The following chart shows the change in value of an investment made in Pioneer
Global High Yield VCT Portfolio at net asset value, compared to that of Merrill
Lynch (ML) Global High Yield and Emerging Markets Plus Index. Portfolio returns
are based on net asset value and do not reflect any applicable insurance fees
or surrender charges.
[THE TABLE BELOW WAS DEPICTED AS A LINE CHART IN THE PRINTED MATERIAL.]
Pioneer Global ML Global High Yield
High Yield and Emerging Markets
VCT Portfolio Plus Index
3/31/2005 $10,000 $10,000
6/30/2005 $10,238 $10,280
6/30/2006 $10,964 $10,888
Index comparisons begin on 4/30/00. The ML Global High Yield and Emerging
Markets Plus Index tracks the performance of the below- and border-line
investment-grade global debt markets denominated in the major developed market
currencies. Index returns assume reinvestment of dividends and, unlike
Portfolio returns, do not reflect any fees, expenses or sales charges. You
cannot invest directly in any Index.
- --------------------------------------------------------------------------------
Cumulative Total Returns
(As of June 30, 2006)
- --------------------------------------------------------------------------------
Net Asset Value
- --------------------------------------------------------------------------------
Life-of-Class 7.06%
(3/18/05)
1 Year 7.10%
All total returns shown assume reinvestment of distributions at net asset
value.
Please refer to the variable product's report wrapper for performance that
reflects the deduction of the variable product's fees and charges.
The performance table does not reflect the deduction of taxes that a shareowner
would pay on distributions or the redemption of shares.
Call 800-688-9915 or visit www.pioneerinvestments.com 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. Please refer to variable product's semiannual report for
performance that reflects the deduction of the variable products fees and
charges.
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 Global 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 variable annuities. 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 [Divided By] $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 Global High Yield VCT Portfolio
Based on actual returns from January 1, 2006 through June 30, 2006.
- ---------------------------------------------------------
Share Class II
- ---------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,035.70
Expenses Paid During Period* $ 5.05
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II 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 Global High Yield VCT Portfolio
Based on a hypothetical 5% return per year before expenses, reflecting the
period from January 1, 2006 through June 30, 2006.
- ---------------------------------------------------------
Share Class II
- ---------------------------------------------------------
Beginning Account Value on 1/1/06 $1,000.00
Ending Account Value on 6/30/06 $1,019.84
Expenses Paid During Period* $ 5.01
* Expenses are equal to the Portfolio's annualized expense ratio of 1.00% for
Class II shares, multiplied by the average account value over the period,
multiplied by 181/365 (to reflect the one-half year period).
3
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
PORTFOLIO MANAGEMENT DISCUSSION 6/30/06
- --------------------------------------------------------------------------------
Lower quality, high-yielding bonds performed well in a generally favorable
environment early in 2006, outperforming higher-quality issues in most of the
world's fixed-income markets. That situation changed abruptly in the second
quarter, however, as investors grew increasingly risk-averse because of fears
that actions of the U.S. Federal Reserve and other major central banks would
stall the worldwide economic recovery. In the following interview, Andrew D.
Feltus, leader of the team managing Global High Yield VCT Portfolio, provides
an update on the Portfolio, its investment strategies and the investment
environment for the six months ended June 30, 2006.
Q. How did the Portfolio perform during the first half of 2006?
A. Pioneer Global High Yield VCT Portfolio, Class II shares, had a total return
of 3.57%, at net asset value, for the six months ended June 30, 2006. During
the same six months, the Merrill Lynch Global High Yield and Emerging Markets
Plus Index returned 3.26%. The average return of the 103 portfolios in the
Lipper Current High Yield variable annuity fund category was 2.39%. The
Portfolio also continued to provide current income. On June 30, 2006, the
Portfolio's 30-day SEC yield was 6.91%.
Call 1-800-688-9915 or visit www.pioneerinvestments.com 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.
Q. What was the investment environment during the six months?
A. The markets for high-yielding bonds grew increasingly volatile over the six
months. Early in 2006, generally strong economic and corporate profit growth
resulted in continued good performance from lower-rated bonds, including
emerging market debt and domestic high-yield bonds. The U.S. Treasury market
was relatively stable. That environment dramatically changed in the second
quarter of the year, when investors became more cautious about credit risk
because of concerns that the U.S. Federal Reserve and other central banks
might raise rates too far and cause an economic slowdown. After the Federal
Reserve raised the Fed funds rate to 5.00% on May 10 (the rate subsequently
would be raised again, to 5.25% in late June), prices of emerging market
debt, sensitive to global economic growth, and domestic high-yield bonds fell
sharply as investors sought to lower their risk profiles. The U.S. dollar
lost value against most major currencies during the six months. Treasury
securities also lost value as longer-term interest rates rose.
Q. What were your principal strategies during the period?
A. Throughout the six months, we focused on domestic high-yielding corporate
debt while deemphasizing both emerging market and international high-yield
debt. We also increased overall credit quality during the period, positioning
the Portfolio for the possibility of slowing economic growth. We reduced
holdings in securities rated CCC or lower to just 6.2% of Portfolio assets by
the close of the period on June 30, 2006. By sector, we focused on bonds from
less cyclical parts of the economy, reducing positions in chemicals, for
example, while adding investments in health care. We also increased
investments in energy-related bonds.
At the end of the period, on June 30, 2006, 57.2% of Portfolio assets were
invested in domestic high-yield securities, while 22.7% and 10.3% of assets
were invested in emerging markets and high-yield bonds from foreign,
developed markets, respectively. Average credit quality of Portfolio assets
was B+.
We kept duration - or sensitivity to interest-rate changes - relatively short
to protect the Portfolio's net asset value as long-term interest rates rose.
The Portfolio's effective duration was 4.26 years on June 30, 2006.
A Word About Risk:
Investments in high yield or lower-rated securities are subject to
greater-than-average risk. 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. Investing in foreign and/or emerging markets securities
involves risks relating to interest rates, currency exchange rates, economic,
and political conditions. Investments in the Portfolio are subject to possible
loss due to the financial failure of underlying securities and their inability
to meet their debt obligations. Prepayment risk is the chance that
mortgage-backed bonds will be paid off early if falling interest rates prompt
homeowners to refinance their mortgages. 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 associated
with falling interest rates. At times, the Portfolio's investments may
represent industries or industry sectors that are interrelated or have common
risks, making it more susceptible to any economic, political, or regulatory
developments or other risks affecting those industries and sectors.
Call 800-688-9915 or visit www.pioneerinvestments.com 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 Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q. What types of investments had the greatest influence on performance?
A. Our investments in bonds of several companies that subsequently announced
they were being acquired had substantial positive effects on results, as
these companies bought back their debt at profits to the Portfolio. The
companies included: Doane Pet Care, a pet food company; Indocoal, an
Indonesian company; and Stone Energy, an oil and gas exploration company.
Other companies bought back their debt, also at a profit to the Portfolio, as
they recapitalized themselves after strong earnings results. Those firms
included Resolution Performance, a specialty chemicals company, and Hanger
Orthopedic Group, a manufacturer of prosthetic devices. Another company,
truck manufacturer Navistar, was forced to buy back its debt after it was
late in filing some financial statements.
Airline bonds, which had detracted from results earlier, recovered during the
period, helping support Portfolio performance. The bonds included the issues
of AMR, parent of American Airlines, and of Continental Airlines.
We did have some disappointments, however. The lower-than-benchmark position
in foreign currencies detracted from results as the U.S. dollar weakened.
Specific investments that did not help included bonds of Ainsworth Lumber, a
forest products company, and of Cell C, a South African wireless
communications company. In addition, the investments in bonds of two Kazakh
banks held back performance.
Q. What is your investment outlook?
A. The high-yield market was quite volatile in the second quarter of 2006.
However, the underlying performance of the high-yield companies that we
analyze was quite good. As we enter the second half of the year, we plan to
continue to focus on domestic high-yield companies, which we believe offer
superior risk/rewards opportunities to foreign securities. We also plan to
continue to upgrade overall credit quality to protect the Portfolio in a
period of slowing economic growth. Finally, we will maintain our emphasis on
individual, intensive company research and credit analysis.
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 the opinion of Portfolio management as of the date of this
report. These statements should not be relied upon for any other purposes. Past
performance is no guarantee of future results, and there is no guarantee that
market forecasts discussed will be realized.
5
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
CONVERTIBLE CORPORATE BONDS - 1.7%
Pharmaceuticals & Biotechnology - 0.8%
Pharmaceuticals - 0.8%
65,000 Pharm Resources, 2.875%, 9/30/10 $ 52,975
----------
Total Pharmaceuticals & Biotechnology $ 52,975
----------
Software & Services - 0.9%
Application Software - 0.9%
75,000 Magma Design Automation, 0.0%, 5/15/08 $ 63,735
----------
Total Software & Services $ 63,735
----------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $120,007) $ 116,710
----------
ASSET BACKED SECURITIES - 3.2%
Transportation - 1.2%
Airlines - 1.2%
25,679 American Airlines, Inc., 7.377%, 5/23/19 $ 23,496
12,751 American Airlines, Inc., 7.379%, 5/23/16 11,539
13,543 Continental Airlines, Inc., 8.312%, 4/2/11 12,836
29,684 Continental Airlines, Inc., 8.499%, 5/1/11 29,140
----------
$ 77,011
----------
Total Transportation $ 77,011
----------
Retailing - 0.9%
Distributors - 0.9%
60,000 NTComex, Inc., 11.75%, 1/15/11 (144A) $ 59,550
----------
Total Retailing $ 59,550
----------
Utilities - 1.1%
Electric Utilities - 1.1%
56,429 Ormat Funding Corp., 8.25%, 12/30/20 $ 57,840
19,545 Tenaska Alabama, 7.0%, 6/30/21 (144A) 19,049
----------
$ 76,889
----------
Total Utilities $ 76,889
----------
TOTAL ASSET BACKED SECURITIES
(Cost $205,104) $ 213,450
----------
CORPORATE BONDS - 82.2%
Energy - 14.0%
Oil & Gas Drilling - 2.5%
70,000 Copano Energy LLC, 8.125%, 3/1/16 (144A) $ 69,650
100,000 DDI Holding AS, 9.3%, 1/19/12 102,750
----------
$ 172,400
----------
Oil & Gas Equipment & Services - 2.1%
35,000 Pipe Acquisition Finance, Floating Rate Note, 12/15/10 (144) (a) $ 34,475
25,000 Semgroup LP, 8.75%, 11/15/15 (144A) 24,875
500,000 Thule Drilling, 10.0%, 5/10/07 81,884
----------
$ 141,234
----------
6 The accompanying notes are an integral part of these financial statements.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
Oil & Gas Exploration & Production - 7.7%
25,000 Baytex Energy, Ltd., 9.625%, 7/15/10 $ 25,813
50,000 Chesapeake Energy Corp., 7.625%, 7/15/13 50,313
35,000 Clayton Williams Energy, 7.75%, 8/1/13 32,200
75,000 Compton Petroleum Corp., 7.625%, 12/1/13 71,621
15,000 Energy Partners, Ltd., 8.75%, 8/1/10 14,438
40,000 Gazprom International SA, 7.201%, 2/1/20 (144A) 40,550
35,000 Harvest Operations Corp., 7.875%, 10/15/11 33,250
20,000 Hilcorp Energy, 9.0%, 6/1/16 (144A) 20,150
50,000 Mariner Energy, Inc., 7.5%, 4/15/13 (144A) 48,125
15,000 Petroquest Energy, Inc., 10.375%, 5/15/12 15,525
50,000 Pogo Producing Co., 7.875%, 5/1/13 (144A) 50,125
35,000 Quicksilver Resources, Inc., 7.125%, 4/1/16 32,813
60,000 Range Resources Corp., 7.5%, 5/15/16 59,250
25,000 Stone Energy Corp., 6.75%, 12/15/14 25,094
----------
$ 519,267
----------
Oil & Gas Storage & Transportation - 1.7%
50,000 Inergy LP, 8.25%, 3/1/16 $ 50,500
20,000 Targa Resources, Inc., 8.5%, 11/1/13 (144A) 19,300
40,000 Transmontaigne, Inc., 9.125%, 6/1/10 42,600
----------
$ 112,400
----------
Total Energy $ 945,301
----------
Materials - 18.4%
Aluminum - 1.1%
55,000 Asia Aluminum Holdings, 8.0%, 12/23/11 (144A) $ 51,563
20,000 Indalex Holding, 11.5%, 2/1/14 (144A) 20,400
----------
$ 71,963
----------
Commodity Chemicals - 2.2%
40,000 Invista, 9.25%, 5/1/12 (144A) $ 42,000
50,000 Tronox Worldwide, 9.5%, 12/1/12 (144A) 51,500
50,000 Verasun Energy Corp., 9.875%, 12/15/12 (144A) 52,750
----------
$ 146,250
----------
Construction Materials - 1.4%
20,000 RMCC Acquisition Co., 9.5%, 11/1/12 (144A) $ 20,800
45,000 U.S. Concrete, Inc., 8.375%, 4/1/14 45,450
25,000 U.S. Concrete, Inc., 8.375%, 4/1/14 (144A) 24,625
----------
$ 90,875
----------
Diversified Chemical - 4.3%
50,000 Braskem International, Ltd., 9.375%, 6/1/15 (144A) $ 50,250
45,000 Braskem SA, 11.75%, 1/22/14 (144A) 50,175
20,000 Huntsman International LLC, 10.125%, 7/1/09 25,955
50,000 Ineos Group Holdings Plc, 7.875%, 2/15/16 (144A) 59,612
50,000 Nell AF Sarl, 8.375%, 8/15/15 (144A) 64,567
40,000 Nova Chemicals Corp., Floating Rate Note, 11/15/13 (a) 39,700
----------
$ 290,259
----------
The accompanying notes are an integral part of these financial statements.
7
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- ------------------------------------------------------------------------- ------
Principal
Amount
USD ($) Value
Diversified Metals & Mining - 0.7%
10,000 American Rock Salt Co., LLC, 9.5%, 3/15/14 $ 10,125
40,000 Vedenta Resources Plc, 6.625%, 2/22/10 (144A) 38,200
----------
$ 48,325
----------
Forest Products - 1.1%
30,000 Ainsworth Lumber, 6.75%, 3/15/14 $ 22,800
30,000 Mandra Foresty, 12.0%, 5/15/13 (144A) 23,100
25,000 Sino Forest Corp., 9.125%, 8/17/11 (144A) 25,750
----------
$ 71,650
----------
Paper Packaging - 2.4%
75,000 AEP Industries, Inc., 7.875%, 3/15/13 $ 75,188
50,000 Graphic Packaging Co., 9.5%, 8/15/13 (a) 49,500
40,000 Graham Packaging Co., 9.875%, 10/15/14 (a) 39,600
----------
$ 164,288
----------
Paper Products - 1.3%
60,000 Exopac Holding Corp., 11.25%, 2/1/14 (144A) $ 60,600
30,000 P.H. Glatfelter, 7.125%, 5/1/16 (144A) 29,614
----------
$ 90,214
----------
Specialty Chemicals - 3.1%
50,000 Crystal US Holdings, Inc., Floating Rate Note, 10/1/14 (a) $ 39,125
50,000 Kronos International, Inc., 6.5%, 4/15/13 (144A) 61,450
50,000 LPG International, Inc., 7.25%, 12/20/15 46,000
60,000 Polyone Corp., 8.875%, 5/1/12 (b) 60,225
----------
$ 206,800
----------
Steel - 0.8%
20,000 CSN Islands IX Corp., 10.5%, 1/15/15 (144A) $ 22,000
35,000 CSN Islands X Corp., 9.5%, 7/1/49 (144A) 34,720
----------
$ 56,720
----------
Total Materials $1,237,344
----------
Capital Goods - 7.4%
Aerospace & Defense - 0.8%
60,000 L-3 Communications Corp., 6.375%, 10/15/15 $ 57,300
----------
Building Products - 1.8%
50,000 Builders Firstsource, Inc., Floating Rate Note, 2/15/12 (a) $ 51,250
50,000 Desarrolladora Homex SA, 7.5%, 9/28/15 47,000
25,000 Loma Negra C.I. ASA, 7.25%, 3/15/13 (144A) 22,750
----------
$ 121,000
----------
Construction & Engineering - 0.5%
200,000 Kvaerner ASA, 0.0%, 10/30/11 $ 31,710
----------
Construction, Farm Machinery & Heavy Trucks - 2.6%
60,000 Accuride Corp. 8.5%, 2/1/15 $ 57,600
70,000 Commercial Vehicle Group, 8.0%, 7/1/13 67,025
25,000 Greenbrier Co., Inc., 8.375%, 5/15/15 25,531
25,000 Stanadyne Corp., 10.0%, 8/15/14 23,375
----------
$ 173,531
----------
8 The accompanying notes are an integral part of these financial statements.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
Trading Companies & Distributors - 1.7%
25,000 Glencore Funding LLC, 6.0%, 4/15/14 (144A) $ 22,832
40,000 Interline Brands, Inc., 8.125%, 6/15/14 39,900
60,000 Noble Group, Ltd., 6.625%, 3/17/15 (144A) 52,011
----------
$ 114,743
----------
Total Capital Goods $ 498,284
----------
Commercial Services & Supplies - 5.6%
Diversified Commercial Services - 3.6%
75,000 Ashtead Holdings Plc, 8.625%, 8/1/15 (144A) $ 75,750
35,000 Cardtronics, Inc., 9.25%, 8/15/13 (144A) 34,475
20,000 Cornell Co's, Inc., 10.75%, 7/1/12 21,275
50,000 FS Funding AS, Floating Rate Note, 5/15/16 (144A) (a) 62,329
20,000 FTI Consulting, 7.625%, 6/15/13 20,250
20,000 Park-Ohio Industries, Inc., 8.375%, 11/15/14 17,600
15,000 United Rentals NA, Inc., 7.75%, 11/15/13 (b) 14,250
----------
$ 245,929
----------
Environmental & Facilities Services - 1.4%
13,000 Clean Harbors, Inc., 11.25%, 7/15/12 (144A) $ 14,625
15,000 Hydrochem Industrial Service, 9.25%, 2/15/13 (144A) 14,475
50,000 New Reclamation Group, 8.125%, 2/1/13 (144A) 62,489
----------
$ 91,589
----------
Human Resource & Employment Services - 0.2%
15,000 Knowledge Learning Center, 7.25%, 2/1/15 (144A) $ 13,725
----------
Office Services & Supplies - 0.4%
25,000 Nutro Products, Inc., 10.75%, 4/15/14 (144A) $ 25,719
----------
Total Commercial Services & Supplies $ 376,962
----------
Transportation - 3.9%
Airlines - 2.0%
50,000 AMR Corp., 10.2%, 3/15/20 $ 46,875
100,000 Gol Finance, 8.75%, 4/29/49 (144A) 87,000
----------
$ 133,875
- -----------
Airport Services - 0.7%
50,000 K&F Acquisition, Inc., 7.75%, 11/15/14 $ 49,250
----------
Marine - 0.9%
65,000 Stena AB, 7.0%, 12/1/16 $ 59,800
----------
Railroads - 0.3%
20,000 TFM SA De CV, 9.375%, 5/1/12 $ 21,300
----------
Total Transportation $ 264,225
----------
Automobiles & Components - 1.5%
Auto Parts & Equipment - 0.2%
20,000 Cooper Standard Auto, 8.375%, 12/15/14 $ 15,775
----------
Automobile Manufacturers - 0.6%
25,000 Ford Motor Credit Corp., 7.375%, 10/28/09 $ 23,113
20,000 General Motors Acceptance Corp, 6.75%, 12/1/14 18,576
----------
$ 41,689
----------
The accompanying notes are an integral part of these financial statements.
9
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
Tires & Rubber - 0.7%
50,000 Goodyear Tire & Rubber, 9.0%, 7/1/15 (b) $ 47,750
----------
Total Automobiles & Components $ 105,214
----------
Consumer Durables & Apparel - 1.5%
Homebuilding - 1.5%
40,000 Urbi Desarrollos Urbanos, 8.5%, 4/19/16 (144A) $ 40,000
10,000 WCI Communities, Inc., 6.625%, 3/15/15 (b) 8,300
15,000 WCI Communities, Inc., 7.875%, 10/1/13 13,163
25,000 William Lyon Homes, 7.5%, 2/15/14 20,750
20,000 William Lyon Homes, 7.625%, 12/15/12 16,600
----------
$ 98,813
----------
Total Consumer Durables & Apparel $ 98,813
----------
Consumer Services - 6.2%
Casinos & Gaming - 5.0%
50,000 Codere Finance SA, 8.25%, 6/15/15 (144A) $ 66,644
40,000 Little Traverse Bay Odawa Inn, 10.25%, 2/15/14 (144A) 39,500
50,000 Lottomatica S.p.A, Floating Rate Note, 3/31/66 (144A) (a) 63,844
25,000 Pokagon Gaming Authority, 10.375%, 6/15/14 (144A) 25,844
70,000 San Pasqual Casino, 8.0%, 9/15/13 (144A) 69,825
25,000 Station Casinos, Inc., 6.625%, 3/15/18 22,625
50,000 Trump Entertainment Resorts, 8.5%, 6/1/15 (b) 48,063
----------
$ 336,345
----------
Hotels, Resorts & Cruise Lines - 0.3%
20,000 HRP Myrtle Beach, Floating Rate Note, 4/1/12 (144A) (a) $ 19,800
----------
Specialized Consumer Services - 0.9%
50,000 Tui AG, Floating Rate Note, 12/10/10 (144A) (a) $ 62,249
----------
Total Consumer Services $ 418,394
----------
Media - 2.8%
Broadcasting & Cable TV - 1.9%
40,000 Cablemas Sa De Cv, 9.375%, 11/15/15 (144A) $ 41,200
60,000 Huges Network System, 9.5%, 4/15/14 (144A) 58,800
25,000 Kabel Deutschland GMBH, 10.625%, 7/1/14 26,375
----------
$ 126,375
----------
Movies & Entertainment - 0.5%
35,000 Corp Interamer De Entret, 8.875%, 6/14/15 (144A) $ 33,250
----------
Publishing - 0.4%
30,000 Sheridan Acquisition Corp., 10.25%, 8/15/11 $ 30,488
----------
Total Media $ 190,113
----------
Retailing - 0.6%
Computer & Electronics Retail - 0.6%
40,000 GSC Holdings Corp., 8.0%, 10/1/12 (b) $ 40,000
----------
Total Retailing $ 40,000
----------
Food & Drug Retailing - 0.3%
Drug Retail - 0.3%
25,000 Duane Reade, Inc., 9.75%, 8/1/11 (b) $ 20,125
----------
Total Food & Drug Retailing $ 20,125
----------
10 The accompanying notes are an integral part of these financial statements.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
Food, Beverage & Tobacco - 0.9%
Agricultural Products - 0.5%
40,000 Cosan SA Industrials, 8.25%, 2/15/49 (144A) $ 36,000
----------
Brewers - 0.4%
25,000 Argentine Beverages, 7.375%, 3/22/12 (144A) $ 24,000
----------
Total Food, Beverage & Tobacco $ 60,000
----------
Health Care Equipment & Services - 2.0%
Health Care Equipment - 0.7%
50,000 Accellent, Inc., 10.5%, 12/1/13 $ 51,125
----------
Health Care Facilities - 0.4%
25,000 Hanger Orthopedic Group, 10.25%, 6/1/14 (144A) $ 24,750
----------
Health Care Supplies - 0.3%
20,000 Medical Services Co., Floating Rate Note, 10/15/11 (a) $ 17,500
----------
Managed Health Care - 0.6%
40,000 Multiplan, Inc., 10.375% 4/15/16 (144A) $ 40,500
----------
Total Health Care Equipment & Services $ 133,875
----------
Pharmaceuticals & Biotechnology - 1.6%
Biotechnology - 0.8%
60,000 Angiotech Pharmaceutical, 7.75%, 4/1/14 (144A) $ 57,300
----------
Pharmaceuticals - 0.8%
50,000 Warner Chilcott Corp., 8.75%, 2/1/15 $ 50,625
----------
Total Pharmaceuticals & Biotechnology $ 107,925
----------
Banks - 2.1%
Diversified Banks - 2.1%
75,000 ATF Bank JSC, 9.25%, 4/12/12 (144A) $ 74,640
40,000 Russian Stand Bank, 7.5%, 10/7/10 (144A) 37,300
30,000 Turanalem Finance BV, 8.5%, 2/10/15 (144A) 29,438
----------
$ 141,378
----------
Total Banks $ 141,378
----------
Diversified Financials - 1.9%
Investment Banking & Brokerage - 0.8%
50,000 Sistema Finance SA, 10.25%, 4/14/08 $ 51,610
----------
Diversified Financial Services - 0.3%
20,000 AAC Group Holding Corp., 12.75%, 10/1/12 (144A) $ 20,000
----------
Specialized Finance - 0.8%
52,000 Dollar Financial Group, 9.75%, 11/15/11 $ 55,900
----------
Total Diversified Financials $ 127,510
----------
Insurance - 0.7%
Life & Health Insurance - 0.4%
25,000 Presidential Life Corp., 7.875%, 2/15/09 $ 24,875
----------
Reinsurance - 0.3%
20,000 Platinum Underwriters Holdings, 7.5%, 6/1/17 $ 19,620
----------
Total Insurance $ 44,495
----------
The accompanying notes are an integral part of these financial statements.
11
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
Principal
Amount
USD ($) Value
Real Estate - 0.9%
Real Estate Investment Trusts - 0.9%
20,000 Host Marriott LP, 6.375%, 3/15/15 $ 18,800
40,000 Trustreet Properties, Inc., 7.5%, 4/1/15 39,400
----------
$ 58,200
----------
Total Real Estate $ 58,200
----------
Technology Hardware & Equipment - 1.0%
Electronic Manufacturing Services - 1.0%
70,000 Sanmina-Sci Corp., 6.75%, 3/1/13 $ 65,275
----------
Total Technology Hardware & Equipment $ 65,275
----------
Telecommunication Services - 8.0%
Integrated Telecommunication Services - 2.7%
60,000 Dycom Industries, 8.125%, 10/15/15 $ 60,150
83,000 Eschelon Operating Co., 8.375%, 3/15/10 78,850
42,000 Tele Norte Leste Participacoes , 8.0%, 12/18/13 43,680
----------
$ 182,680
----------
Wireless Telecommunication Services - 5.3%
15,000 Cell C Pty, Ltd., 8.625%, 7/1/12 (144A) $ 18,076
60,000 Cell C Pty, Ltd., 11.0%, 7/1/15 (144A) 50,100
40,000 Cleveland Unlimited, Inc., Floating Rate Note, 12/15/10 (144A) (a) 42,100
60,000 Horizon PCS, Inc., 11.375%, 7/15/12 67,425
30,000 Inmarsat Finance Plc, Floating Rate Note, 11/15/12 (a) 25,538
25,000 Mobile Satellite Venture, Floating Rate Note, 4/1/13 (144A) (a) 13,750
50,000 Mobile Telesystems Finance, 8.0%, 1/28/12 48,813
40,000 Stratos Global Corp., 9.875%, 2/15/13 (144A) 37,600
75,000 Zeus Special Sub, Ltd., Floating Rate Note, 2/1/15 (144A) (a) 51,750
----------
$ 355,152
----------
Total Telecommunication Services $ 537,832
----------
Utilities - 0.9%
Independent Power Producer & Energy Traders - 0.9%
60,000 Mirant JPSCO Finance, Ltd., 11.0%, 7/6/16 (144A) $ 60,000
----------
Total Utilities $ 60,000
----------
TOTAL CORPORATE BONDS
(Cost $5,588,122) $5,531,265
----------
FOREIGN GOVERNMENT BONDS - 1.3%
ITL 35,000,000 Banco Nac De Desen Econo, 8.0%, 4/28/10 $ 24,837
COP 40,000 Republic of Colombia, 10.75%, 1/15/13 47,100
COP 40,000,000 Republic of Columbia, 11.75%, 3/1/10 16,629
----------
$ 88,566
----------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $91,686) $ 88,566
----------
MUNICIPAL BONDS - 1.7%
Muni Medical - 0.8%
50,000 Massachusetts Health & Educational Facilities, 5.0%, 1/15/10 $ 52,231
----------
Muni Utilities - 0.9%
50,000 San Antonio Texas Electric & Gas, Floating Rate Note, 2/1/19 (144A) (a) $ 64,368
----------
TOTAL MUNICIPAL BONDS
(Cost $118,283) $ 116,599
----------
12 The accompanying notes are an integral part of these financial statements.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares Value
WARRANTS - 0.0%
Materials - 0.0%
Forest Products - 0.0%
5 Mandra Forestry-CW13, Exp. 5/15/13* $ --
----------
Total Materials $ --
----------
TOTAL WARRANTS
(Cost $0) $ --
----------
TEMPORARY CASH INVESTMENT - 5.0%
Security Lending Collateral - 5.0%
332,202 Securities Lending Investment Fund, 5.16% $ 332,202
----------
TOTAL TEMPORARY CASH INVESTMENT
(Cost $332,202) $ 332,202
----------
TOTAL INVESTMENT IN SECURITIES - 95.1%
(Cost $6,455,404) $6,398,792
----------
OTHER ASSETS AND LIABILITIES - 4.9% $ 330,693
----------
TOTAL NET ASSETS - 100.0% $6,729,485
==========
* Non-income producing security.
144A Security is exempt from registration under Rule 144A of t he Securities
Act of 1933. Such securities may be resold normally to qualified
institutional buyers in a transaction exempt from registration. At June
30, 2006, the value of these securities amounted to $2,860,333 or 42.5% of
total net assets.
(a) Debt obligation initially issued at one coupon which conv erts to a higher
coupon at a specified date. The rate shown is the rate at period end.
(b) At June 30, 2006, the following securities were out on loan:
Principal
Amount Security Value
$ 24,750 Duane Reade, Inc., 9.75%, 8/1/11 $ 19,924
39,600 GSC Holdings Corp., 8.0%, 10/1/12 39,600
49,500 Goodyear Tire & Rubber, 9.0%, 7/1/15 47,273
39,600 Graham Packaging Co., 9.875%, 10/15/14 39,204
47,500 Graphic Packaging Co., 9.5%, 8/15/13 47,025
57,000 Polyone Corp., 8.875%, 5/1/12 57,214
49,500 Trump Entertainment Resorts, 8.5%, 6/1/15 47,582
14,850 United Rentals NA, Inc., 7.75%, 11/15/13 14,108
9,900 WCI Communities, Inc., 6.625%, 3/15/15 8,217
--------
Total $320,147
========
(c) Distributions of investments by country of issue, as a percentage of total
equity holdings (excluding temporary cash investments) is as follows:
United States 59.6%
Canada 5.2
Brazil 4.8
United Kingdom 3.8
Norway 3.6
Luxembourg 3.3
Mexico 3.0
South Africa 2.2
Bermuda 2.0
Other (individually less than 1%) 1.9
Cayman Islands 1.7
Germany 1.5
Kazakhstan 1.2
Columbia 1.1
Spain 1.1
Denmark 1.0
Italy 1.0
Jamaica 1.0
Sweden 1.0
-----
100.0%
=====
NOTE: Principal amounts are denominated in U.S. dollars unless otherwise noted.
COP Columbian Peso
ITL Italian Lira
The accompanying notes are an integral part of these financial statements.
13
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Six Months
Ended 3/18/05 (a)
6/30/06 to
Class II (unaudited) 12/31/05
Net asset value, beginning of period $ 10.02 $ 10.00
------- -------
Increase (decrease) from investment operations:
Net investment income $ 0.38 $ 0.51
Net realized and unrealized gain (loss) on investments and foreign (0.02) 0.01
currency transactions ------- -------
Net increase from investment operations $ 0.36 $ 0.52
Distributions to shareowners:
Net investment income (0.38) (0.50)
------- -------
Net increase (decrease) in net asset value $ (0.02) $ 0.02
------- -------
Net asset value, end of period $ 10.00 $ 10.02
======= =======
Total return* 3.57% 5.34%(b)
Ratio of net expenses to average net assets 1.00%** 0.99%**
Ratio of net investment income to average net assets 7.47%** 6.72%**
Portfolio turnover rate 29%** 26%(b)
Net assets, end of period (in thousands) $ 6,729 $ 3,632
Ratios with no waiver of management fees and assumption of expenses by PIM:
Net expenses 3.13%** 5.65%**
Net investment income 5.34%** 2.06%**
(a) The Portfolio commenced operations on March 18, 2005.
(b) Not annualized.
* 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.
NOTE: The above financial highlights do not reflect the deduction of non-fund
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 Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS:
Investment in securities, at value (including securities loaned of $320,147) (cost $6,398,792
$6,455,404)
Cash 621,939
Receivables --
Investment securities sold 20,077
Fund shares sold 7,371
Dividends, interest and foreign taxes withheld 123,963
Due from Pioneer Investment Management, Inc. 5,653
----------
Total assets $7,177,795
----------
LIABILITIES:
Payables --
Investment securities purchased $ 84,565
Fund shares repurchased 1,721
Dividends 4,192
Upon return of securities loaned 332,202
Forward foreign currency settlement contracts, net 2,125
Forward foreign currency portfolio hedge contracts, open -- net 2,473
Due to affiliates 708
Accrued expenses 20,324
----------
Total liabilities $ 448,310
----------
NET ASSETS:
Paid-in capital $6,762,864
Distributions in excess of net investment income (1,810)
Accumulated net realized gain on investments 29,435
Net unrealized loss on:
Investments (56,612)
Forward foreign currency contracts and other assets and liabilities denominated in (4,392)
foreign currencies ----------
Total net assets $6,729,485
----------
NET ASSET VALUE PER SHARE:
Class II:
(No par value, unlimited number of shares authorized)
Net assets $6,729,485
Shares outstanding 672,652
----------
Net asset value per share $ 10.00
The accompanying notes are an integral part of these financial statements.
15
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
Six Months
Ended
6/30/06
INVESTMENT INCOME:
Interest (net of foreign taxes withheld of $33) $ 195,710
Income on securities loaned, net 354
---------
Total investment income $ 196,064
---------
EXPENSES:
Management fees $ 14,990
Transfer agent fees and expenses 677
Distribution fees 8,404
Administrative reimbursements 9,475
Custodian fees 7,340
Professional fees 18,955
Printing expense 8,538
Fees and expenses of nonaffiliated trustees 1,576
Miscellaneous 2,136
---------
Total expenses $ 72,091
Less management fees waived and expenses assumed by Pioneer Investment Management, Inc. (49,033)
---------
Net expenses $ 23,058
---------
Net investment income $ 173,006
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investments $ 40,502
Forward foreign currency contracts and other assets and liabilities denominated in (5,529)
foreign currencies ---------
$ 34,973
---------
Change in net unrealized gain or loss from:
Investments $ (78,036)
Forward foreign currency contracts and other assets and liabilities denominated in (5,110)
foreign currencies --------
$ (83,146)
---------
Net loss on investments and foreign currency transactions $ (48,173)
---------
Net increase in net assets resulting from operations $ 124,833
=========
16 The accompanying notes are an integral part of these financial statements.
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period
Six Months from 3/18/05
Ended (Commencement
6/30/06 of Operations)
(unaudited) to 12/13/05
FROM OPERATIONS:
Net investment income $ 173,006 $ 97,143
Net realized gain (loss) on investments 34,973 (11,404)
Change in net unrealized gain or loss on investments and foreign (83,146) 22,142
currency transactions ---------- ----------
Net increase in net assets resulting from operations $ 124,833 $ 107,881
---------- ----------
DISTRIBUTIONS TO SHAREOWNERS
Net investment income:
Class II $ (172,504) $ (94,049)
---------- ----------
Total distributions to shareowners $ (172,504) $ (94,049)
---------- ----------
FROM FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares $3,278,295 $3,610,396
Reinvestment of distributions 146,075 58,955
Cost of shares repurchased (278,807) (51,590)
---------- ----------
Net increase in net assets resulting from Fund share transactions $3,145,563 $3,617,761
---------- ----------
Net increase in net assets $3,097,892 $3,631,593
NET ASSETS:
Beginning of period 3,631,593 --
---------- ----------
End of period $6,729,485 $3,631,593
---------- ----------
Distributions in excess of net investment income, end of period $ (1,810) $ (2,312)
========== ==========
The accompanying notes are an integral part of these financial statements.
17
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Pioneer Global High Yield VCT Portfolio (the Portfolio) is a Portfolio of
the Pioneer Variable Contracts Trust (the Trust), a Delaware statutory trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty-seven separate diversified
portfolios, thirteen of which issue both Class I and Class II shares
(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 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) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio)
(Class II shares only)
Pioneer AmPac Growth VCT Portfolio (AmPac Growth Portfolio) (Class II
shares only)
Pioneer Small and Mid Cap Growth VCT Portfolio (Small and Mid Cap Growth
Portfolio) (Class II shares only)
Pioneer Oak Ridge Large Cap Growth VCT Portfolio (Oak Ridge Large Cap
Growth Portfolio) (Class II shares only)
Pioneer Growth Opportunities VCT Portfolio (Growth Opportunities Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio)
(Class I shares only)
Pioneer Cullen Value VCT Portfolio (Cullen Value Portfolio) (Class II
shares only)
Pioneer Equity Opportunity VCT Portfolio (Equity Opportunity Portfolio)
(Class II shares only)
Pioneer Global High Yield VCT Portfolio (Global High Yield Portfolio)
(Class II shares only)
Pioneer Ibbotson Aggressive Allocation VCT Portfolio (Ibbotson Aggressive
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Moderate Allocation VCT Portfolio (Ibbotson Moderate
Allocation Portfolio) (Class II shares only)
Pioneer Ibbotson Growth Allocation VCT Portfolio (Ibbotson Growth
Allocation Portfolio) (Class II shares only)
Pioneer Core Bond VCT Portfolio (Core Bond Portfolio)
(Class II shares only)
The Global High Yield Portfolio commenced operations on March 18, 2005.
Portfolio shares may be purchased only by either insurance companies for the
purpose of funding variable annuity and variable life insurance contracts, or
by qualified pension and retirement plans.
The Global High Yield Portfolio seeks to maximize total return through a
combination of income and capital appreciation.
The financial statements and financial highlights of all other Portfolios are
presented in separate books.
The Portfolio's financial statements have been prepared in conformity with U.S.
generally accepted accounting principles that require the management of the
Portfolio 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 income, expenses, gains and losses during the reporting
periods. Actual results could differ from those estimates. The following is a
summary of significant accounting policies consistently followed by the
Portfolio, in the preparation of its financial statements which are consistent
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 Portfolio are computed once daily, on each day the New York Stock
Exchange (NYSE) is open, as of the close of regular trading on the NYSE. In
computing the net asset values, securities are valued at the last sale
price on the principal exchange where they are traded.
Fixed income securities with remaining maturity of more than 60 days are
valued at prices supplied by independent pricing services, which consider
such factors as Treasury spreads, yields, maturities and
18
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ratings. Valuations may be supplemented by dealers and other sources, as
required. Securities for which there are no other readily available
valuation methods are valued at their fair values as determined by, or
under the direction of, the Board of Trustees and may include yield
equivalents or a pricing matrix.
The Portfolio also may use the fair value of a security, including a
non-U.S. security, when the closing market price on the primary exchange
where the security is traded no longer accurately reflects the value of the
security as of the close of the NYSE. At June 30, 2006, there were no fair
valued securities. Temporary cash investments are valued at amortized cost.
Discounts and premiums on debt securities are accreted or amortized daily,
respectively, on a yield-to-maturity basis into interest income with a
corresponding increase or decrease in the cost basis of the security.
Interest income is recorded on the accrual basis, net of unrecoverable
foreign taxes withheld at the applicable country rates.
Gains and losses from sales on investments are calculated on the identified
cost method for both financial reporting and federal income tax purposes.
Investing in foreign and/or emerging market securities involves risks
relating to interest rates, currency exchange rates, economic, and
political conditions. Investments in the Portfolio are subject to possible
loss due to the financial failure of underlying securities and their
inability to meet their debt obligations. Information regarding the
Portfolio's principal investment risks is contained in the Portfolio's
prospectus. Please refer to those documents when considering the
Portfolio's risks.
B. 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 taxable income and net realized capital gains, if
any, to its shareowners. Therefore, no federal income tax provision is
required.
The amounts and characterizations of distributions to shareowners for
financial reporting purposes are determined in accordance with income tax
rules. Therefore, the source of the 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, 2005, Global High Yield Portfolio had a net capital
loss carryforward of $5,538, which will expire in 2013, if not utilized.
The Portfolio elected to defer $2,312 in foreign currency losses recognized
between November 1, 2005 and December 31, 2005 to its fiscal year ended
December 31, 2006.
The tax character of current year distributions paid will be determined at
the end of the current fiscal year. The following chart shows the
components of distributable earnings (accumulated losses) as of December
31, 2005 and the distributions paid during the year ended December 31, 2005
on a tax basis.
- -------------------------------------------------------------------------------
2005
- -------------------------------------------------------------------------------
Distributions paid from:
Ordinary Income $ 94,049
Long-Term Capital Gain --
--------
$ 94,049
Return of Capital --
--------
Total Distributions $ 94,049
========
Distributable Earnings (Accumulated Losses):
Undistributed ordinary income $ --
Undistributed long-term gain/(capital loss carryforward) (5,538)
Unrealized appreciation (depreciation) 22,142
Post-October loss deferred (2,312)
--------
Total $ 14,292
========
- -------------------------------------------------------------------------------
19
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS 6/30/06 (UNAUDITED) (continued)
- --------------------------------------------------------------------------------
C. Portfolio Shares
The Portfolio records sales and repurchases of its portfolio 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),
$462,503 in commissions on the sale of Trust shares for the six months
ended June 30, 2006 Distribution fees are calculated based on the average
daily net asset values attributable to Class II shares of the Portfolio.
D. Securities Lending
The Portfolio lends securities in its portfolio to certain broker-dealers
or other institutional investors, with the Portfolio's 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
payments in lieu of interest or dividends on the securities loaned. Gain or
loss in the fair value of the securities loaned that may occur during the
term of the loan, will be for the account of the Trust. 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 Trust has the right under the lending agreement to recover
the securities on loan from the borrower on demand. The Trust invests cash
collateral in the Securities Lending Investment Fund which is sponsored by
Brown Brothers Harriman & Co., the Trust's custodian.
E. 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, a wholly owned indirect subsidiary of UniCredito Italiano manages the
portfolio. Management fees are calculated daily at the annual rate of 0.65% of
the Portfolio's average daily net assets up to $500 million and 0.60% on assets
over $500 million.
Through May 1, 2007, PIM has agreed not to impose all or a portion of its
management fee and, if necessary, to limit other ordinary operating expenses of
the Portfolio to the extent required to reduce Class II expenses to 1.00% of
the average daily net assets attributable to Class II shares.
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. At June 30, 2006, $236 was payable to PIM
related to management fees, administrative reimbursements and certain other
services, and is included in due to affiliates.
3. Transfer Agent
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 $427 in transfer agent fees
payable to PIMSS at June 30, 2006.
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 to compensate PFD for (1)
distribution services and (2) personal and account maintenance services
performed and expenses incurred by PFD in connection with the Portfolio's Class
II shares. Included in due to affiliates is $45 payable to PFD at June 30,
2006.
5. Aggregate Unrealized Appreciation and Depreciation
At June 30, 2006, the Portfolio's aggregate unrealized appreciation and
depreciation based on cost for federal income tax purposes was as follows:
- --------------------------------------------------------------------------------------------------
Net
Gross Gross Appreciation/
Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------
Global High Yield Portfolio $6,455,404 $77,868 $ (134,480) $ (56,612)
========== ======= ========== ==========
- --------------------------------------------------------------------------------------------------
20
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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, 2006, were $3,358,105 and $648,260, respectively.
7. Capital Shares
At June 30, 2006, there were an unlimited number of shares of beneficial
interest authorized. Transactions in capital shares were as follows for the six
months ended June 30, 2006 and the fiscal year ended December 31, 2005:
- ----------------------------------------------------------------------------------------------
'06 Shares '06 Amount
Global High Yield Portfolio (unaudited) (unaudited) '05 Shares '05 Amount
- ----------------------------------------------------------------------------------------------
CLASS II:
Shares sold 323,137 $3,278,295 361,651 $3,610,396
Reinvestment of distributions 14,409 146,075 5,886 58,955
Shares repurchased (27,262) (278,807) (5,169) (51,590)
---------------------------------------------------------
Net increase 310,284 $3,145,563 362,368 $3,617,761
========================================================
- ----------------------------------------------------------------------------------------------
8. Forward Foreign Currency Contracts
During the six months ended June 30, 2006, 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, 2006, open portfolio hedges were as follows:
- -------------------------------------------------------------------------------------------------------------
Net
Contracts to In Exchange Settlement Unrealized
Portfolio Deliver For Date Value Gain (Loss)
- -------------------------------------------------------------------------------------------------------------
Global High Yield Portfolio EUR(175,000) $ (221,622) 7/20/06 $ (224,095) $ (2,473)
- -------------------------------------------------------------------------------------------------------------
Outstanding forward currency settlement contracts as of June 30, 2006 were as
follows:
- --------------------------------------------------------------------------------------------
Net
Gross Settlement Gross Receivable/
Portfolio Receivable Date Payable (Payable)
- --------------------------------------------------------------------------------------------
Global High Yield Portfolio $221,622 7/1/06 $ (223,747) $ (2,125)
- --------------------------------------------------------------------------------------------
21
Pioneer Global High Yield VCT Portfolio PIONEER VARIABLE CONTRACTS TRUST
- --------------------------------------------------------------------------------
TRUSTEES, OFFICERS AND SERVICE PROVIDERS
- --------------------------------------------------------------------------------
Trustees Officers
John F. Cogan, Jr., Chairman John F. Cogan, Jr., President
David R. Bock Osbert M. Hood, Executive Vice President
Mary K. Bush Vincent Nave, Treasurer
Margaret B.W. Graham Dorothy E. Bourassa, Secretary
Thomas J. Perna
Marguerite A. Piret
John Winthrop
Investment Adviser and Administrator
Pioneer Investment Management, Inc.
Custodian
Brown Brothers Harriman & Co.
Principal Underwriter
Pioneer Funds Distributor, Inc.
Legal Counsel
Wilmer Cutler Pickering Hale and Dorr LLP
Shareowner Services and Transfer Agent
Pioneer Investment Management Shareholder Services, Inc.
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.pioneerinvestments.com. This information is
also available on the Securities and Exchange Commission's web site at
http://www.sec.gov.
22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
24
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page for your notes.
25
[LOGO]
PIONEER
Investments(R)
Pioneer Variable Contracts Trust
Issuer
Allmerica Financial Life Insurance and Annuity Company, Contract Form A3025-96
In New York and Hawaii, issued by First Allmerica Financial Life Insurance
Company,
Contract Form A3025-96 GRC
General Distributor
Veravest Investments, Inc.
400 Lincoln Street
Worcester, MA 01653
Before investing, consider the product's investment objectives, features,
risks, charges and expenses and the investment objectives, risks, charges and
expenses of the underlying portfolios available in the product. Contact your
advisor or Pioneer Investments for a prospectus containing this information.
Please read it carefully.
19645-00-0806
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 10(a), 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;
(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)).
Ms. Marguerite A. Piret, 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 Pioneer Investment Management, Inc ("PIM"), 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 SERVICE CATEGORY DESCRIPTION SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
CATEGORY
- ---------------- -------------------------------- -------------------------------------------------
I. AUDIT Services that are directly o Accounting research assistance
SERVICES 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. Services which are not o AICPA attest and agreed-upon procedures
AUDIT-RELATED prohibited under Rule o Technology control assessments
SERVICES 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 SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
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 SPECIFIC PRE-APPROVED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- --------------------------- -----------------------------------------------
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 SPECIFIC PROHIBITED SERVICE SUBCATEGORIES
DESCRIPTION
- ----------------------- ------------------------- -----------------------------------------------
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.
N/A
(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.
N/A
(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.
N/A
(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.
The Fund's independent auditor, Ernst &
Young LLP ("E&Y"), has advised the Audit
Committee of the Fund's Board of Trustees that
E&Ys Spanish affiliate (E&Y Spain) performed
certain non-audit work for Pioneer Global
Investments Limited ("PGIL"), an affiliate of the
Funds investment adviser. The services involved
the receipt and disbursement of monies transferred
to E&Y Spain by PGIL in payment of individual
payroll and related income tax withholdings due on
returns prepared by E&Y Spain for certain PGIL
employees located in Spain from February 2001 to
October 2005. E&Y became auditors of the Fund in
May 2002. These payroll and tax services were
discontinued in November 2005. The annual fee
received by E&Y Spain for all such services totaled
approximately 9,000 Euro per year. E&Y has informed
the Audit Committee that based on its internal
reviews and the de minimus nature of the services
provided and fees received, E&Y does not believe
its independence with respect to the Fund has been
impaired or that it is disqualified from acting as
independent auditors to the Fund.
N/A
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 registrants 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 I Investments in securities of unaffiliated issuers
as of the close of the reporting period as set forth in 210.12-
12 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.
Not applicable to open-end management investment companies.
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 registrants portfolio (Portfolio Manager). Also state each Portfolio
Managers business experience during the past 5 years.
Not applicable to open-end management investment companies.
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 registrants equity securities
that is registered by the registrant pursuant to Section 12 of the
Exchange Act (15 U.S.C. 781). Instruction to paragraph (a). Disclose
all purchases covered by this Item, including purchases that do not
satisfy the conditions of the safe harbor of Rule 10b-18 under the
Exchange Act (17 CFR 240.10b-18), made in the period covered by the
report. Provide disclosures covering repurchases made on a monthly basis.
For example, if the reporting period began on January 16 and ended on
July 15, the chart would show repurchases for the months from January 16
through February 15, February 16 through March 15, March 16 through
April 15, April 16 through May 15, May 16 through June 15, and June 16
through July 15.
Not applicable to open-end management investment companies.
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 registrants board of directors, where
those changes were implemented after the registrant last provided
disclosure in response to the requirements of Item 7(d)(2)(ii)(G)
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 registrants board of
directors since the registrant last provided disclosure in response
to the requirements of Item 7(d)(2)(ii)(G) 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 officer or
officers and principal financial officer or officers, or persons performing
similar functions, about the effectiveness of the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the Act (17 CFR
270.30a-2(c))) based on their evaluation of these controls and procedures as of
a date within 90 days of the filing date of the report that includes the
disclosure required by this paragraph.
The registrant's principal executive officer and principal financial
officer have concluded, that the registrant's disclosure controls and
procedures are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) Disclose whether or not there were significant changes in the registrant's
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.
There were no significant changes in the registrant's 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 12. 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.
(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 Variable Contracts Trust
By (Signature and Title)* /s/ John F. Cogan, Jr.
John F. Cogan, Jr, President
Date August 31, 2006
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 31, 2006
By (Signature and Title)* /s/ Vincent Nave
Vincent Nave, Treasurer
Date August 31, 2006
* Print the name and title of each signing officer under his or her signature.