As filed with the Securities and Exchange Commission on July 18, 2005
File No. 333-_______
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. _______
Post-Effective Amendment No. ______
(Check appropriate box or boxes)
PIONEER VARIABLE CONTRACTS TRUST
(Exact Name of Registrant as Specified in Charter)
(617) 742-7825
(Area Code and Telephone Number)
60 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices: Number, Street, City, State, Zip Code)
Dorothy E. Bourassa, Esq.
Pioneer Investment Management, Inc.
60 State Street
Boston, Massachusetts 02109
(Name and Address of Agent for Service)
Copies to: David C. Phelan, Esq.
Wilmer Cutler Pickering Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f) of the Investment Company Act of
1940, which permits registration of an indefinite number of securities.
Title of Securities Being Registered: Shares of beneficial interest of the
Registrant.
It is proposed that this registration statement will become effective on August
17, 2005, pursuant to Rule 488 under the Securities Act of 1933, as amended.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
SCHEDULED FOR [ ], 2005
To the owners of variable annuity or life insurance contracts:
You are being asked to vote on the proposals listed below on the
enclosed voting instruction card. Your vote will instruct the insurance company
that issued your contract how to vote the shares of the AmSouth Portfolio
attributable to your contract at the special meeting of shareholders.
A joint special meeting of shareholders (the "Meeting") for each of the
AmSouth Portfolios will be held at the offices of [ ], [ ] on [September
22], 2005 at [ ] [a/p].m., local time, as adjourned from time to time, to
consider the following:
1. With respect to each AmSouth Portfolio, a proposal to approve an
Agreement and Plan of Reorganization under which your AmSouth Portfolio
will transfer all of its assets to a Pioneer Portfolio managed by
Pioneer Investment Management, Inc. ("Pioneer") in exchange for Class
II shares of a Pioneer Portfolio. The Pioneer Portfolio also will
assume all of your AmSouth Portfolio's liabilities that are included in
the calculation of your AmSouth Portfolio's net asset value on the
closing date at the reorganization. Each Pioneer Portfolio is an
existing mutual fund with a similar investment objective and similar
investment policies as your AmSouth Portfolio. Following the
reorganization, your AmSouth Portfolio will then be dissolved.
2. Any other business that may properly come before the Meeting.
As a result of the reorganization you will become shareholders of a
Pioneer Portfolio. Your board of trustees recommends that you vote FOR this
proposal.
Shareholders of record as of the close of business on [July 29], 2005
are entitled to vote at the Meeting and any related follow-up meetings.
Whether or not you expect to attend the Meeting, please complete and
return the enclosed proxy card. If shareholders do not return their proxies in
sufficient numbers, your AmSouth Portfolio may be required to make additional
solicitations.
By order of the Board of Trustees,
[ ]
[Chairman]
[ ], 2005
COMBINED PROXY STATEMENT OF
VARIABLE INSURANCE FUNDS
(the "AmSouth Trust")
on behalf of its series:
AMSOUTH CAPITAL GROWTH FUND
AMSOUTH SELECT EQUITY FUND
AMSOUTH VALUE FUND
(each, an "AmSouth Portfolio" and collectively, the "AmSouth Portfolios")
The address and telephone number of each AmSouth Portfolio is:
3435 Stelzer Road
Columbus, Ohio 43219-3035
1-800-451-8382
PROSPECTUS
FOR CLASS II SHARES OF
PIONEER VARIABLE CONTRACTS TRUST
(the "Pioneer Trust")
on behalf of its series:
PIONEER FUND VCT PORTFOLIO
PIONEER OAK RIDGE LARGE CAP GROWTH VCT PORTFOLIO
PIONEER VALUE VCT PORTFOLIO
(each, a "Pioneer Portfolio" and collectively, the "Pioneer Portfolios")
The address and telephone number of each Pioneer Portfolio is:
60 State Street
Boston, Massachusetts 02109
1-800-225-6292
Shares of the Pioneer Portfolios have not been approved or disapproved
by the Securities and Exchange Commission (the "SEC"). The SEC has not passed
upon the accuracy or adequacy of this prospectus. Any representation to the
contrary is a criminal offense.
An investment in any AmSouth Portfolio or Pioneer Portfolio (each
sometimes referred to herein as a "Portfolio") is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
-2-
This combined proxy statement and prospectus (the "Proxy
Statement/Prospectus"), dated [ ], 2005, is being furnished to shareholders
of the AmSouth Portfolios listed above in connection with the solicitation by
the board of trustees (the "Board" or the "Trustees") of the AmSouth Trust of
proxies to be used at a joint meeting of shareholders of the AmSouth Portfolios
(the "Meeting") to be held at the offices of [ ], on [September 22], 2005
at [a./p.]m. (local time), as adjourned from time to time. Each AmSouth
Portfolio is a series of Variable Insurance Funds, an open-end management
investment company organized as a Massachusetts business trust. Each Pioneer
Portfolio is a series of Pioneer Variable Contracts Trust, an open-end
management investment company organized as a Delaware statutory trust.
The Proxy Statement/Prospectus contains information you should know
before voting on the approval of a proposed Agreement and Plan of Reorganization
(each a "Plan") that provides for the reorganization of each AmSouth Portfolio
into a corresponding Pioneer Portfolio (each a "Reorganization"). The following
table indicates (a) the corresponding Pioneer Portfolio shares that each AmSouth
Portfolio shareholder would receive if each Plan is approved, (b) which AmSouth
Portfolio shareholders may vote on which proposals, and (c) on what page of this
Proxy Statement/Prospectus the discussion regarding each proposal begins.
Shareholders of each AmSouth Portfolio will vote together as a single class on
each proposal. Although each Reorganization is similar in structure, you should
read carefully the specific discussion regarding your AmSouth Portfolio's
Reorganization.
The Proxy Statement/Prospectus sets forth the information about the
Pioneer Portfolio that a prospective investor ought to know before investing and
should be retained for future reference. Additional information about each
Pioneer Portfolio has been filed with the SEC and is available upon oral or
written request and without charge. See "Where to Get More Information."
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AmSouth Portfolio Pioneer Portfolio Shareholders Entitled to Vote Page
- ----------------------------------------------------------------------------------------------------------------------------
Proposal 1(a) AmSouth Capital Growth Pioneer Oak Ridge Large Cap AmSouth Capital Growth Fund [ ]
Fund Growth VCT Portfolio shareholders
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Proposal 1(b) AmSouth Select Equity Pioneer Fund VCT Portfolio AmSouth Select Equity Fund [ ]
Fund shareholders
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Proposal 1(c) AmSouth Value Fund Pioneer Value VCT Portfolio AmSouth Value Fund shareholders [ ]
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Where to Get More Information
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Each AmSouth Portfolio's current prospectus and statement of Available to you free of charge by calling 1-800-451-8382.
additional information, each dated May 1, 2005, and any Each prospectus, statement of additional information and
supplements (as applicable). shareholder report is also on file with the SEC. See
"Available Information."
Each AmSouth Portfolio's most recent annual report to
shareholders dated December 31, 2004.
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Each Pioneer Portfolio's current prospectus and statement of Available to you free of charge by calling 1-800-451-8382.
additional information, dated May 1, 2005, and any Each prospectus, statement of additional information and
supplements (as applicable). shareholder report is also on file with the SEC. See
"Available Information."
Each Pioneer Portfolio's most recent annual report to
shareholders dated December 31, 2004.
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A statement of additional information for this Proxy Available to you free of charge by calling 1-800-[ ].
Statement/Prospectus, dated [ ], 2005 (the Also on file with the SEC. This SAI is incorporated by
"SAI") contains additional information about your AmSouth reference into this Proxy Statement/Prospectus.
Portfolios and the Pioneer Portfolios.
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To ask questions about this Proxy Statement/Prospectus. Call your AmSouth Portfolio's toll-free telephone number:
1-800-451-8382.
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-3-
TABLE OF CONTENTS
Page
INTRODUCTION ....................................................................[ ]
PROPOSAL 1(a) -- AMSOUTH CAPITAL GROWTH FUND.....................................[ ]
PROPOSAL 1(b) -- AMSOUTH SELECT EQUITY FUND......................................[ ]
PROPOSAL 1(c) -- AMSOUTH VALUE FUND..............................................[ ]
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION...............................[ ]
TAX STATUS OF EACH REORGANIZATION................................................[ ]
VOTING RIGHTS AND REQUIRED VOTE .................................................[ ]
COMPARISON OF A DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST........[ ]
ADDITIONAL INFORMATION ABOUT THE PIONEER PORTFOLIOS..............................[ ]
FINANCIAL HIGHLIGHTS.............................................................[ ]
INFORMATION CONCERNING THE MEETING...............................................[ ]
OWNERSHIP OF SHARES OF THE PORTFOLIOS............................................[ ]
EXPERTS..........................................................................[ ]
AVAILABLE INFORMATION............................................................[ ]
EXHIBIT A -- FORM OF AGREEMENT AND PLAN OF REORGANIZATION.........................A-1
EXHIBIT B -- ADDITIONAL INFORMATION ABOUT PIONEER.................................B-1
EXHIBIT C -- PORTFOLIO MANAGER'S DISCUSSION OF PERFORMANCE........................C-1
-4-
Background to the Reorganizations
AmSouth Asset Management Inc. ("AAMI") is investment adviser to the
AmSouth Portfolios and a wholly-owned subsidiary of AmSouth Bank, which in turn
is wholly-owned by AmSouth Bancorporation. AmSouth Bank and AAMI have determined
that engaging in the business of investment adviser to the AmSouth Portfolios
and certain other mutual funds is not a core business that AAMI intends to
continue. After investigating and considering several alternatives for ongoing
investment management of the AmSouth Portfolios, AmSouth Bank and AAMI conducted
a search for a buyer for AAMI's fund management business. Ultimately, AmSouth
Bank and AAMI decided to recommend to the Board that the AmSouth Portfolios be
reorganized into similar mutual funds managed by Pioneer Investment Management,
Inc. ("Pioneer").
The Board met on June 30, 2005, at which time your Trustees received
and evaluated materials regarding Pioneer and the Pioneer Portfolios, including
the performance record and expense structure of each of the Pioneer Portfolios,
the impact of the proposed Reorganizations on the AmSouth Portfolios'
shareholders, and the quality of the services offered by Pioneer. The Trustees
also considered other alternatives for the ongoing management of the AmSouth
Portfolios. At such meeting, all of the Trustees met separately with counsel to
the Trustees and requested and received such information from AAMI and Pioneer
as they determined to be necessary and appropriate to evaluate the proposed
Reorganizations. Based on its review, the Board, including all of the Trustees
who are not "interested persons" (for regulatory purposes) of the AmSouth Trust
("Independent Trustees"), unanimously voted to approve each of the
Reorganizations. In approving the Reorganizations, the Board determined that the
Reorganizations were in the best interests of the AmSouth Portfolios'
shareholders and the interests of existing AmSouth Portfolio shareholders will
not be diluted as a result of the Reorganizations.
Pioneer believes that it can offer capable management and favorable
long-term investment performance to the AmSouth Portfolios' shareholders. The
Reorganizations will, by combining the assets of two mutual funds and by
increasing distribution capabilities, offer the potential for increased
economies of scale. Increased economies of scale have the potential of
benefiting the shareholders of your AmSouth Portfolios and the Pioneer
Portfolios by spreading fixed costs over a larger asset base and reducing
expenses on a per share basis. There can be no assurance that such economies of
scale will be realized.
Why the Trustees Are Recommending the Reorganizations
The Trustees believe that reorganizing your AmSouth Portfolio into a
portfolio with a similar investment objective and similar investment policies
that is part of the Pioneer family of funds offers you potential benefits. These
potential benefits and considerations include:
o Continued participation in a professionally-managed fund following
the departure of AmSouth Bank and AAMI from the business of
managing mutual funds;
o The track record of Pioneer in managing the Pioneer Portfolios;
o In the case of certain AmSouth Portfolios, the potential for lower
management fees and total expenses;
o The resources of Pioneer, including its infrastructure in
shareholder services; and
o The opportunity to be part of a significantly larger family of
funds, with additional product offerings and enhanced shareholder
servicing options.
For further information, please see the individual description of the
proposals contained in the Proxy Statement/Prospectus.
-5-
How Each Reorganization Will Work
o Each AmSouth Portfolio will transfer all of its assets to a
corresponding Pioneer Portfolio. Each Pioneer Portfolio will assume
the corresponding AmSouth Portfolio's liabilities that are included
in the calculation of such AmSouth Portfolio's net asset value on
the closing date of the Reorganization (the "Closing Date").
Liabilities of each Portfolio to its shareholders not assumed by a
corresponding Pioneer Portfolio will be assumed by AmSouth
Bancorporation.
o Each Pioneer Portfolio will issue Class II shares to the
corresponding AmSouth Portfolio in amounts equal to the aggregate
net asset value of that AmSouth Portfolio's shares. Shareholders of
your AmSouth Portfolio will receive Class II shares of the
corresponding Pioneer Portfolio. These shares will be distributed
to shareholders in proportion to the relative net asset value of
their share holdings on the closing date of the Reorganization. On
the closing date of the Reorganization, shareholders will hold
shares of the Pioneer Portfolio with the same aggregate net asset
value as the shares of your AmSouth Portfolio that you held
immediately prior to the Reorganization.
o Each AmSouth Portfolio will be dissolved after the Closing Date.
o Pioneer acts as investment adviser to each Pioneer Portfolio.
o The Reorganizations are intended to result in no income, gain or
loss being recognized for federal income tax purposes to any of the
Pioneer Portfolios, the AmSouth Portfolios or the shareholders of
the AmSouth Portfolios.
o In recommending each of the Reorganizations, the Trustees of your
AmSouth Portfolio have determined that the Reorganization is in the
best interest of your AmSouth Portfolio and will not dilute the
interests of shareholders of your AmSouth Portfolio.
o If the Reorganizations are approved, the AmSouth Portfolios will be
terminated as series of the AmSouth Trust.
o There is no guarantee that your variable contract sponsor will make
the Pioneer Portfolios available to its contract holders even if
the Reorganizations are approved by the shareholders of the AmSouth
Portfolios. However, shareholder approval of a Reorganization shall
be deemed to constitute the consent of that AmSouth Portfolio's
shareholders to the substitution of the corresponding Pioneer
Portfolio for the AmSouth Portfolio as the investment option under
your variable contract. If the corresponding Pioneer Portfolio is
not available as an investment option under your contract on the
date of the Reorganization, you will have to allocate the money in
your AmSouth Portfolio to a different investment option that is
available under your contract.
Who Is Pioneer
Pioneer is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended, and acts as investment adviser to mutual funds
and institutional accounts. Pioneer or its predecessors have been managing
mutual funds since 1928 and at December 31, 2004 had, together with its
affiliates, over $42 billion in assets under management. Pioneer is an indirect,
wholly-owned subsidiary of UniCredito Italiano S.p.A., an Italian bank.
Who Bears the Expenses Associated with the Reorganizations
Pioneer and AmSouth Bancorporation will pay all costs of preparing and
printing the AmSouth Portfolios' proxy statements and solicitation costs
incurred by the AmSouth Portfolios in connection with the Reorganizations. AAMI
will otherwise be responsible for all costs and expenses of the AmSouth
Portfolios in connection with the Reorganizations.
-6-
Will Pioneer and AmSouth Bank Benefit from the Reorganizations
Pioneer will benefit from managing a larger pool of assets. Pioneer
also is acquiring certain assets associated with AAMI's fund management business
and the benefits of certain restrictive covenants on AAMI's and AmSouth
Bancorporation's activities. In consideration for the acquisition of these
assets, the opportunity to manage additional assets and covenants from AmSouth
Bancorporation and AAMI, including their assistance in facilitating the
Reorganizations, non-competition covenants and their obligation to indemnify
Pioneer against certain liabilities, Pioneer has agreed to pay AAMI $65 million.
This amount is subject to partial repayment in the event that the assets
attributable to the AmSouth mutual funds (including the AmSouth Portfolios) are
redeemed (subject to certain conditions, including threshold amounts) from the
Pioneer mutual funds within four years after the closing of the Reorganizations.
What Happens if a Reorganization Is Not Approved
If the required approval of shareholders of an AmSouth Portfolio is not
obtained, the Meeting may be adjourned as more fully described in this Proxy
Statement/Prospectus, the AmSouth Portfolio will continue to engage in business
as a separate mutual fund and the Board of Trustees will consider what further
action may be appropriate.
Who Is Eligible to Vote
If you are the owner of a variable annuity or variable life insurance
contract (a "contract owner"), the insurance company that issued your contract
is the record owner of the shares of the AmSouth Portfolios. By completing and
returning the enclosed voting instruction card, you will instruct the insurance
company how to vote the shares of the AmSouth Portfolio attributable to your
contract.
Shareholders of record on [July 29], 2005 are entitled to attend and
vote at the Meeting or any adjournment of the Meeting. On each proposal, all
shareholders of an AmSouth Portfolio will vote together as a single class. Each
share is entitled to one vote for each dollar value invested. Shares represented
by properly executed proxies, unless revoked before or at the Meeting, will be
voted according to shareholders' instructions. If you sign a proxy but do not
fill in a vote, your shares will be voted to approve the Agreement and Plan of
Reorganization. If any other business comes before the Meeting, your shares will
be voted at the discretion of the persons named as proxies.
-7-
AmSouth Capital Growth Fund and
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PROPOSAL 1(a)
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later
in this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the form of Agreement
and Plan of Reorganization attached as Exhibit A, because it contains details
that are not in the summary.
Both Portfolios primarily invests in equity securities of U.S. issuers
and, consequently, are subject to similar investment policies and risks. In the
table below, if a row extends across the entire table, the policy disclosed
applies to both your AmSouth Portfolio and the Pioneer Portfolio.
Comparison of AmSouth Capital Growth Fund to Pioneer Oak Ridge Large Cap Growth VCT Portfolio
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AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
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Business A non-diversified series of Variable A diversified series of Pioneer Variable
Insurance Funds, an open-end management Contracts Trust, an open-end management
investment company organized as a investment company organized as a Delaware
Massachusetts business trust. statutory trust.
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Net assets as of $14.5 million $6.3 million
March 31, 2005
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Investment advisers and Investment Adviser: Investment Adviser:
portfolio managers AAMI Pioneer
Portfolio Manager: Investment Subadviser:
Oak Ridge Investments, LLC ("Oak Ridge")
Day-to-day management of AmSouth Capital
Growth Fund's portfolio is the Portfolio Managers:
responsibility of John Mark McKenzie (since
2004), who has been involved in investment Day-to-day management of the Pioneer
management since 1981, with portfolio Portfolio is the responsibility of David M.
management expertise in both equity and Klaskin (lead manager), Chairman (since
fixed income securities. Mr. McKenzie 1998), Treasurer and Chief Investment
co-managed the AmSouth Government Income Officer (since 1989) of Oak Ridge, and
Fund from 1999 to 2002 and managed it from Robert G. McVicker, Portfolio Manager and
2003 to 2004. Mr. McKenzie has been Director of Research at Oak Ridge (since
associated with the Trust Investment 1989).
Department of AmSouth Bank, and the banks
acquired by AmSouth Bank, since 1984 and
joined AAMI in 2003.
Mr. McKenzie is Senior Vice President of
AmSouth Bank and AAMI.
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Investment objective AmSouth Capital Growth Fund seeks capital Pioneer Oak Ridge Large Cap Growth VCT
growth. Portfolio seeks capital appreciation.
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-8-
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AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
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Primary investment policy Under normal market conditions, AmSouth Normally, Pioneer Oak Ridge Large Cap Growth
Capital Growth Fund will invest primarily in VCT Portfolio invests at least 80% of its
equity securities of U.S. companies with net assets (plus the amount of borrowings,
market capitalizations of at least $1 if any, for investment purposes) in equity
billion. securities of large capitalization U.S.
companies.
Large capitalization companies have market
capitalizations at time of acquisition of $3
billion or more. The Pioneer Portfolio
anticipates that the average weighted market
capitalization of the companies in its
portfolio will be significantly higher than
$3 billion.
The equity securities in which the Portfolio
principally invests are common stocks,
preferred stocks, depositary receipts and
convertible debt, but the Portfolio may
invest in other types of equity securities
to a lesser extent, such as warrants or
rights.
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Investment strategies AmSouth Capital Growth Fund invests primarily Pioneer Oak Ridge Large Cap Growth VCT
in companies that AAMI believes offer Portfolio uses a "growth" style of
opportunities for capital appreciation and management to invest in issuers with above
growth of earnings. average potential for earnings growth.
Pioneer has engaged Oak Ridge to act as the
In evaluating prospective investments, AAMI Portfolio's subadviser under Pioneer's
considers both broad economic, industry or supervision. When making purchase decisions
market trends, as well as company-specific for the Pioneer Portfolio, Oak Ridge uses a
considerations, to identify companies that it disciplined approach that involves three
believes will have greater than average primary components:
earnings growth and capital appreciation.
o Research: The subadviser analyzes
In managing AmSouth Capital Growth Fund, AAMI research on potential investments from a
identifies industries that it believes offers wide variety of sources, including
the potential for future expansion, and then internally generated analysis and research
uses fundamental analysis of company financial provided by institutions and the brokerage
statements to identify companies with solid community. The subadviser seeks to
prospects for growth. AAMI will also consider supplement this analysis with information
other factors in selecting investment for the derived from business and trade
AmSouth Portfolio, including the development publications, filings with the SEC,
of new or improved products or services, corporate contacts, industry conferences and
opportunities for greater market share, more discussions with company management.
effective management or other signs that the
company may experience greater than average o Fundamentals: Once a potential
earnings growth and capital appreciation. investment is identi?ed, the subadviser
considers whether the issuer possesses
certain attributes that the subadviser
believes a "buy" candidate should possess
relating to, among other things, (i) growth
of sales and earnings, (ii) earnings power,
trends and predictability, (iii) quality of
management, (iv) competitive position of
products and/or services, (v) fundamentals
of the industry in which the company
operates and (vi) the ability to bene?t from
economic and political trends affecting the
company.
o Valuation: Finally, the
subadviser values companies by considering
price-to-sales ratios and price-to-earnings
ratios within a peer group.
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-9-
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AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
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Other investments AmSouth Capital Growth Fund may also invest in Pioneer Oak Ridge Large Cap Growth VCT
equity and debt securities of domestic and Portfolio may invest up to 20% of its total
foreign issuers when AAMI believes that such assets in equity and debt securities of
securities offer opportunities for growth. non-U.S. corporate issuers and debt
These may include below investment grade debt securities of non-U.S. government issuers.
securities (commonly referred to as "junk
bonds"). The Pioneer Portfolio will not invest more
than 5% of its total assets in the
The AmSouth Portfolio has the flexibility to securities of emerging markets issuers.
make portfolio investments and engage in other
investment techniques that are different than Pioneer Oak Ridge Large Cap Growth VCT
its principal strategies mentioned here. More Portfolio may invest the balance of its
information on the AmSouth Portfolio's assets in debt securities of corporate and
investment strategies may be found in the government issuers. Generally the Portfolio
Amsouth Portfolio's SAI. acquires debt securities that are rated
investment grade, but the Pioneer Portfolio
may invest up to 5% of its net assets in
below investment grade debt securities
issued by both U.S. and non-U.S. corporate
and government issuers, including below
investment grade convertible debt
securities.
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Temporary defensive AAMI may temporarily invest up to 100% of Pioneer Oak Ridge Large Cap Growth VCT
strategies AmSouth Capital Growth Fund's assets in high Portfolio may invest part or all of its
quality, short-term money market instruments assets in securities with remaining
if it believes adverse economic or market maturities of less than one year, cash
conditions, such as excessive volatility or equivalents or may hold cash.
sharp market declines, justify taking a
defensive investment posture.
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Diversification AmSouth Capital Growth Fund is Pioneer Oak Ridge Large Cap Growth VCT
non-diversified under the Investment Company Portfolio is diversified for the purpose of
Act of 1940, as amended (the "Investment the Investment Company Act and is subject to
Company Act") and, therefore, may the diversification requirements under the
concentrate its investments in a limited Internal Revenue Code of 1986, as amended
number of issuers. (the "Code").
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Industry concentration AmSouth Capital Growth Fund may not purchase Pioneer Oak Ridge Large Cap Growth VCT
any securities which would cause more than Portfolio may not invest more than 25% of
25% of the value of the Portfolio's total its assets in any one industry.
assets at the time of purchase to be
invested in securities of one or more
issuers conducting their principal business
activities in the same industry, provided
that (a) there is no limitation with respect
to obligations issued or guaranteed by the
U.S. government or its agencies or
instrumentalities, and repurchase agreements
secured by obligations of the U.S.
government or its agencies or instrumentalities;
(b) wholly owned finance companies will be
considered to be in the industries of their
parents if their activities are primarily
related to financing the activities of their
parents; and (c) utilities will be divided
according to their services. For example, gas,
gas transmission, electric and gas, electric,
and telephone will each be considered a separate
industry.
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-10-
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AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
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Restricted and illiquid AmSouth Capital Growth Fund may not invest Pioneer Oak Ridge Large Cap Growth VCT
securities more than 15% of its net assets in Portfolio will not invest more than 15% of
securities that are restricted as to resale, its net assets in illiquid and other
or for which no readily available market securities that are not readily marketable.
exists, including repurchase agreements
providing for settlement more than seven
days after notice.
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Borrowing AmSouth Capital Growth Fund will not borrow Pioneer Oak Ridge Large Cap Growth VCT
money or issue senior securities, except Portfolio may not borrow money, except the
that the AmSouth Portfolio may borrow from Portfolio may: (a) borrow from banks or
banks or brokers, in amounts up to 10% of through reverse repurchase agreements in an
the value of its total assets at the time of amount up to 33 1/3% of the Pioneer
such borrowing. The AmSouth Portfolio will Portfolio's total assets (including the
not purchase securities while its borrowings amount borrowed); (b) to the extent
exceed 5% of its total assets. permitted by applicable law, borrow up to an
additional 5% of the Pioneer Portfolio's
assets for temporary purposes; (c) obtain
such short-term credits as are necessary for
the clearance of portfolio transactions;
(d) purchase securities on margin to the
extent permitted by applicable law; and
(e) engage in transactions in mortgage
dollar rolls that are accounted for as
financings.
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Lending AmSouth Capital Growth Fund will not make Pioneer Oak Ridge Large Cap Growth VCT
loans, except that the AmSouth Portfolio may Portfolio may not make loans, except that
purchase or hold debt instruments and lend the Portfolio may (i) lend portfolio
portfolio securities (in an amount not to securities in accordance with the
exceed one-third of its assets), in Portfolio's investment policies, (ii) enter
accordance with its investment objective and into repurchase agreements, (iii) purchase
policies, make time deposits with financial all or a portion of an issue of publicly
institutions and enter into repurchase distributed debt securities, bank loan
agreements. participation interests, bank certificates
of deposit, bankers' acceptances, debentures
or other securities, whether or not the
purchase is made upon the original issuance
of the securities, (iv) participate in a
credit facility whereby the Portfolio may
directly lend to and borrow money from other
affiliated Portfolios to the extent
permitted under the Investment Company Act
or an exemption there from, and (v) make
loans in any other manner consistent with
applicable law, as amended and interpreted
or modified from time to time by any
regulatory authority having jurisdiction.
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-11-
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AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
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Derivative instruments AmSouth Capital Growth Fund may purchase put Pioneer Oak Ridge Large Cap Growth VCT
and call options on securities and Portfolio may use futures and options on
currencies. The AmSouth Portfolio may also securities, indices and currencies, forward
engage in writing covered call options (on currency exchange contracts and other
securities or currencies owned by the derivatives. The Pioneer Portfolio does not
AmSouth Portfolio). The AmSouth Portfolio use derivatives as a primary investment
may also enter into contracts for the future technique and generally limits their use to
delivery of securities or foreign currencies hedging. However, the Pioneer Portfolio may
and futures contracts based on a specific use derivatives for a variety of
security, class of securities, foreign non-principal purposes, including:
currency or an index, purchase or sell
option on any such futures contracts and o As a hedge against adverse changes
engage in related closing transactions. The in stock market prices, interest
AmSouth Portfolio may engage in such futures rates or currency exchange rates
contracts in an effort to hedge against
market risks and to manage its cash o As a substitute for purchasing or
position. The AmSouth Portfolio may also selling securities
enter into forward currency contracts in
order to hedge against adverse movements in o To increase the Portfolio's return as
exchange rates between currencies and use a non-hedging strategy that may be
foreign currency options. As part of its considered speculative
financial futures transactions and to hedge
foreign currency exchange rate risk, the
AmSouth Portfolio may use foreign currency
futures contracts and options on such
futures contracts.
- -----------------------------------------------------------------------------------------------------------------------------
Short-term trading The AmSouth Portfolio will not generally Pioneer Oak Ridge Large Cap Growth Fund does
trade in securities for short-term profits. not usually trade for short-term profits.
However, the AmSouth Portfolio is actively The Portfolio will sell an investment,
managed and, under appropriate however, even if it has only been held for a
circumstances, may purchase and sell short time, if it no longer meets the Fund's
securities without regard to the length of investment criteria.
time held. A high portfolio turnover rate
may increase transaction costs, which may
negatively impact the AmSouth Portfolio's
performance.
- -----------------------------------------------------------------------------------------------------------------------------
Other investment policies and As described above, the Portfolios have similar investment strategies and policies.
restrictions Certain of the non-principal investment policies and restrictions are different. For a
more complete discussion of each Portfolio's other investment policies and fundamental and
non-fundamental investment restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------
-12-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- -----------------------------------------------------------------------------------------------------------------------------
Sales charges Shares of AmSouth Capital Growth Fund are The Class II shares of Pioneer Oak Ridge
not subject to any sales charges. Large Cap Growth VCT Portfolio you receive
in the Reorganization will not be subject to
any sales charge.
- -----------------------------------------------------------------------------------------------------------------------------
Management and other AmSouth Capital Growth Fund pays AAMI an Pioneer Oak Ridge Large Cap Growth VCT
fees investment advisory fee, which is the lesser Portfolio pays Pioneer a fee for managing
of (a) 0.70% of the AmSouth Portfolio's daily the Portfolio and to cover the cost of
net assets, which is computed daily and paid providing certain services to the Portfolio.
monthly or (b) such amount as may from time to
time be agreed upon in writing by the AmSouth Pioneer's annual fee is equal to 0.75% of
Trust and AAMI. the Portfolio's average daily net assets up
to $1 billion and 0.70% on assets over $1
AAMI currently limits its management fee to billion. The fee is computed daily and paid
0.30% of AmSouth Capital Growth Fund's average monthly. Pioneer, and not the Pioneer
daily net assets, and other expenses currently Portfolio, pays a portion of the fee it
are being limited to 0.56% of the AmSouth receives from the Pioneer Portfolio to Oak
Portfolio's average daily net assets. Ridge as compensation for Oak Ridge's
subadvisory services to the Pioneer
For the fiscal year ended December 31, 2004, Portfolio.
annual operating expenses for the AmSouth
Portfolio, after giving effect to the In addition, the Pioneer Portfolio will
voluntary fee waivers and expense limitations, reimburse Pioneer for certain fund
were 0.86% of average daily net assets, and accounting and legal expenses incurred on
without giving effect to fee waivers and behalf of the Pioneer Portfolio and pay a
expense limitations, were 1.52% of average separate shareowner servicing/transfer
daily net assets. agency fee to PIMSS, an affiliate of Pioneer.
Pioneer has agreed until May 1, 2007 to
limit the expenses (excluding extraordinary
expenses) of the Class II shares of the
Portfolio to 0.95% of the average daily net
assets attributable to Class II. There can
be no assurance that Pioneer will extend the
expense limitation beyond May 1, 2007.
- -----------------------------------------------------------------------------------------------------------------------------
Distribution or service fee AmSouth Capital Growth Fund charges a fee Pioneer Oak Ridge Large Cap Growth VCT
for support services to investors, such as Portfolio has adopted a plan of distribution
establishing and maintaining accounts and for Class II shares in accordance with Rule
records, providing account information, 12b-1 under the Investment Company Act.
arranging for bank wires, responding to Under the plan, the Pioneer Portfolio pays
routine inquiries, forwarding investor to Pioneer Funds Distributor, Inc. a
communications, assisting in the processing distribution fee of 0.25% of the average
of purchase, exchange and redemption daily net assets attributable to Class II
requests, and assisting investors in shares.
changing account designations and
addresses. Because these fees are an ongoing expense,
over time they increase the cost of an
For expenses incurred and services provided, investment and the shares may cost more than
a financial institution (or its affiliate) shares that are subject to other types of
providing these services ("Servicing Agent") sales charges.
receives a fee from AmSouth Capital Growth
Fund, computed daily and paid monthly, at an
annual rate of up to 0.25% of the average
daily net assets of the AmSouth Portfolio
allocable to variable insurance contracts
owned by customers of the Servicing Agent.
A Servicing Agent may periodically waive all or
a portion of its servicing fees with respect to
the AmSouth Portfolio to increase the net income
of the AmSouth Portfolio available for
distribution as dividends.
- -----------------------------------------------------------------------------------------------------------------------------
-13-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Capital Growth Fund Pioneer Oak Ridge Large Cap Growth
VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Buying shares Shares of the AmSouth Portfolio are available The Pioneer Portfolio may sell its shares
for purchase by insurance company separate directly to separate accounts established
accounts to serve as an investment medium for and maintained by insurance companies for
variable insurance contracts, and by qualified the purpose of funding variable contracts
pension and retirement plans, certain and to qualified plans. Shares of the
insurance companies, and AAMI. Investors do Pioneer Portfolios are sold at net asset
not deal directly with the AmSouth Portfolio value. Investments in a Pioneer Portfolio
to purchase or redeem shares. Shares of the are credited to an insurance company's
AmSouth Portfolio are purchased at the net separate account or qualified plan account,
asset value per share next determined after immediately upon acceptance of the
receipt and acceptance by the AmSouth investment by the Pioneer Portfolio. The
Portfolio's distributor (or other agent) of a offering of shares of the Pioneer Portfolio
purchase order. Each AmSouth Portfolio may be suspended for a period of time, and
reserves the right to reject or refuse, in its the Pioneer Portfolio reserves the right to
discretion, any order for the purchase of the reject any specific purchase order.
AmSouth Portfolio's shares, in whole or in Purchase orders may be refused if, in the
part. investment adviser's opinion, they are of a
size or frequency that would disrupt the
The AmSouth Portfolio reserves the right to management of the Pioneer Portfolio.
discontinue offering shares at any time, or to
cease investment operations entirely.
- -----------------------------------------------------------------------------------------------------------------------------
Selling shares Shares of the AmSouth Portfolio are redeemed Shares of the Pioneer Portfolio will be sold
at the net asset value per share next at net asset value per share next calculated
determined after receipt by the AmSouth after the Pioneer Portfolio receives the
Portfolio's distributor (or other agent) of a request in good order.
redemption request.
You may sell your shares by contacting the
insurance company sponsoring your variable
contract, as described in your variable
contract's prospectus.
- -----------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary
investment policies and strategies, the Portfolios are subject to similar
principal risks. You could lose money on your investment in either Portfolio or
not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short
term)
o Growth stocks fall out of favor with investors
o The adviser's/subadviser's judgment about the attractiveness,
growth potential or potential appreciation of a particular stock
proves to be incorrect
-14-
To the extent that each Portfolio invests in fixed income securities,
they are subject to interest rate risk, which is the risk that changes in
interest rates will affect the value of the Portfolio's investments. In
addition, the Portfolio's investments may expose it to credit risks, which is
the risk that the issuer of a security will default or not be able to meet its
financial obligations.
AmSouth Capital Growth Fund is also subject to the risks of investing
in lesser capitalized companies, which typically involve greater risk than is
customarily associated with large, more established companies due to the greater
business risks of smaller size, limited markets, and lesser financial resources.
AmSouth Capital Growth Fund is a non-diversified fund, which means it may invest
in the securities of limited number of issuers. This may increase the volatility
of the AmSouth Portfolio's performance and may it more susceptible to risks
associated with a single economic, political or regulatory event than a
diversified portfolio. Although Pioneer Oak Ridge Large Cap Growth VCT Portfolio
is classified as a diversified investment company, the Portfolio may be
comprised of fewer issuers than many large cap growth funds. Typically, the
subadviser expects the Portfolio to include a limited number of different
issuers, which may increase the volatility of the portfolio's net asset value
per share.
Each Portfolio may be subject to the following additional risks
associated with investing in non-U.S. issuers, which may involve unique risks
compared to investing in securities of U.S. issuers. These risks are more
pronounced to the extent the Pioneer Portfolio invests in issuers in countries
with emerging markets or if the Pioneer Portfolio invests significantly in one
country. These risks may include:
o Less information about non-U.S. issuers or markets may be available
due to less rigorous disclosure or accounting standards or
regulatory practices
o Many non-U.S. markets are smaller, less liquid and more volatile.
In a changing market, the adviser/subadviser might not be able to
sell portfolio securities at times, in amounts and at prices it
considers reasonable
o Adverse effect of currency exchange rates or controls on the value
of the Portfolio's investments
o The economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession
o Economic, political and social developments may adversely affect
the securities markets
o Withholding and other non-U.S. taxes may decrease the Portfolio's
return
At times, more than 25% of Pioneer Oak Ridge Large Cap Growth VCT
Portfolio's assets may be invested in the same market segment, such as
financials or technology. To the extent the Portfolio emphasizes investments in
a market segment, the Portfolio will be subject to a greater degree to the risks
particular to the industries in that segment, and may experience greater market
fluctuation, than a portfolio without the same focus. For example, industries in
the financial segment, such as banks, insurance companies, broker-dealers and
REITs, may be sensitive to changes in interest rates and general economic
activity and are subject to extensive government regulation. Industries in the
technology segment, such as information technology, communications equipment,
computer hardware and software, and office and scientific equipment, are subject
to risks of rapidly evolving technology, short product lives, rates of corporate
expenditures, falling prices and profits, competition from new market entrants,
and general economic conditions.
Investments in the Portfolios are not bank deposits and are not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money by investing in either Portfolio.
Past Performance
Set forth below is performance information for the AmSouth Portfolio.
Since the Pioneer Portfolio does not have a full calendar year of performance,
it does not disclose any performance information. The bar chart shows how the
AmSouth Portfolio's performance varied from year to year for each full calendar
year since its inception. The table shows average annual total returns for the
AmSouth Portfolio since its inception compared with a broad-based securities
market index. The AmSouth Portfolio's returns in the bar chart and table are net
of annual operating expenses, but do not reflect any additional charges and
expenses that may be imposed by the variable insurance product or the qualified
retirement plan
-15-
through which you invest. If such charges and expenses were included,
performance would be lower. Absent limitation of the AmSouth Portfolio's
expenses, total returns would be lower. Past performance does not indicate
future results.
AmSouth Capital Growth Fund
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
2002 2003 2004
-25.89 25.94 4.47
During the period shown in the bar chart, your AmSouth Portfolio's highest
quarterly return was 21.46% for the quarter ended June 30, 2003, and the
lowest quarterly return was -24.77% for the quarter ended September 30,
2002.
AmSouth Capital Growth Fund
Average Annual Total Returns*
(for the periods ended December 31, 2004)
- ------------------------------------------------------------------------------------------------------
1 Year Since inception
(May 1, 2001)
- ------------------------------------------------------------------------------------------------------
AmSouth Capital Growth Fund 4.47% -3.50%
- ------------------------------------------------------------------------------------------------------
S&P 500/Barra Growth Index (1)
(reflects no deduction for fees or expenses) 6.13% -0.31%
- ------------------------------------------------------------------------------------------------------
* Assumes reinvestment of dividends and distributions.
(1) The S&P 500/Barra Growth Index is a widely recognized, unmanaged index of
common stocks.
The most recent portfolio manager's discussion for AmSouth Capital Growth Fund
is attached as Exhibit C.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios pay various fees and expenses, either
directly or indirectly. The tables below show the fees and expenses that you
would pay if you were to buy and hold shares of each Portfolio. The expenses in
the tables appearing below are based on the expenses of each Portfolio for the
year ended December 31, 2004. Future expenses for each Portfolio may be greater
or less. The table does not reflect separate account or insurance contract fees
and charges.
The tables also show the pro forma expenses of the combined Portfolio
assuming the Reorganization occurred on December 31, 2004. Pro forma numbers are
estimated in good faith and are hypothetical.
-16-
Pioneer Oak Ridge Large Cap
AmSouth Capital Growth VCT Portfolio Combined Portfolio
Growth Fund (Class II Shares) (Pro Forma)
--------------- --------------------------- ------------------
Shareowner transaction fees
(paid directly from your investment)
Redemption fees for shares held less than None None None
30 days ..................................
Sales charge or deferred sales charge ......... None None None
Annual Portfolio operating expenses
(deducted from Portfolio assets) (as a
% of average net assets)
Management fee ................................ 0.70%(1) 0.75% 0.75%
Distribution or Shareholder Service fee ....... 0.25%(1) 0.25% 0.25%
Other expenses ................................ 0.57%(1) 5.22% 0.54%
Total Operating expenses ...................... 1.52%(1) 6.22%(2) 1.54%(2)
Expense limitation ............................ 0.66%(1) 5.27%(2) 0.59%(2)
Net expenses .................................. 0.86%(1) 0.95%(2) 0.95%(2)
(1) AAMI currently limits its management fee to 0.30%. Other expenses
(including shareholder servicing fees) are currently being limited to
0.56%. Total annual fund operating expenses, after fee waiver and expense
reimbursements, currently are limited to 0.86%. Any fee waiver or expense
reimbursement is voluntary and may be discontinued at any time.
(2) Pioneer has contractually 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 0.95% of the
average daily net assets attributable to Class II shares until May 1, 2007.
There can be no assurance that Pioneer will extend the expense limitation
beyond May 1, 2007.
The hypothetical example below helps you compare the cost of investing
in each Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for
the time periods shown, (b) you reinvest all dividends and distributions, (c)
your investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) Pioneer Portfolio's contractual expense
limitation is in effect for year one. It does not reflect (i) separate account
or insurance contract fees and charges or (ii) AAMI's voluntary fee waivers or
expense reimbursements with respect to the AmSouth Portfolio. The examples are
for comparison purposes only and are not a representation of either Portfolio's
actual expenses or returns, either past or future.
Example
AmSouth Capital Growth Fund
Year 1 ............................................ $155
Year 3 ............................................ $480
Year 5 ............................................ $829
Year 10 ........................................... $1,813
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Class II Shares
Year 1 ............................................ $97
Year 3 ............................................ $1,376
Year 5 ............................................ $2,623
Year 10 $5,611
Combined Portfolio (Pro Forma)
Class II Shares
Year 1 ............................................ $97
Year 3 ............................................ $429
Year 5 ............................................ $784
Year 10 ........................................... $1,786
-17-
CAPITALIZATION
The following table sets forth the capitalization of each Portfolio as
of May 31, 2005, and the pro forma combined Portfolio as of May 31, 2005.
- -------------------------------------------------------------------------------------------------------------------------
AmSouth Capital Growth Fund Pioneer Oak Ridge Large Combined Portfolio (pro
Cap Growth VCT Portfolio forma)
(Class II Shares)
May 31, 2005 May 31, 2005 May 31, 2005
- -------------------------------------------------------------------------------------------------------------------------
Net Assets $15,418.4 $7,174.9 $22,593.1
(in thousands)
- -------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $8.66 $10.96 $10.96
- -------------------------------------------------------------------------------------------------------------------------
Shares Outstanding 1,780,415 654,629 2,061,417
- -------------------------------------------------------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Oak Ridge Large
Cap Growth VCT Portfolio will actually be received and distributed by your
AmSouth Portfolio on the Reorganization date. The table should not be relied
upon to determine the amount of Pioneer Oak Ridge Large Cap Growth VCT
Portfolio's shares that will actually be received and distributed.
Reasons for the Proposed Reorganization
In evaluating the proposed Reorganization, the Trustees of the AmSouth
Portfolios requested information, provided by AAMI and Pioneer, that they
believes to be reasonably necessary for properly considering the proposal and
were advised by legal counsel in the course of their deliberations. In
considering the proposal, the Trustees took into account a number of
considerations including, without limitation, the following:
First, AAMI, the investment adviser to your AmSouth Portfolio informed
the Trustees that it does not intend to continue to provide investment advisory
services to the AmSouth Portfolio. Consequently, a change in your AmSouth
Portfolio's investment adviser was necessary. In the absence of the
Reorganization, such a change would be more likely to motivate shareholders
invested in reliance on AAMI's role to withdraw from the Portfolio, thereby
reducing the Portfolio's size and increasing the Portfolio's expense ratios.
Second, the resources of Pioneer, which the Trustees determined to be
capable of providing appropriate, high-quality services. At December 31, 2004,
Pioneer managed over 80 investment companies and accounts with approximately $42
billion in assets. Pioneer is part of the global asset management group of
UniCredito Italiano S.p.A., one of the largest banking groups in Italy,
providing investment management and financial services to mutual funds,
institutional and other clients. As of December 31, 2004, assets under
management of UniCredito Italiano S.p.A. were approximately $175 billion
worldwide. Shareholders of your AmSouth Portfolio would become part of a
significantly larger family of funds that offers a more diverse array of
investment options and enhanced shareholder account options. The Pioneer family
of mutual funds offers over 80 funds, including domestic and international
equity and fixed income funds and money market funds.
Third, Pioneer's commitment to limit, until May 1, 2007, the expenses
of Class II shares to 0.95% of the assets attributable to Class II shares of
Pioneer Oak Ridge Large Cap Growth VCT Portfolio. The Board noted that this
expense ratio is comparable to the AmSouth Portfolio's current operating
expenses after fee waivers and expense limitations, and considerably lower than
the AmSouth Portfolio's current gross operating expenses (i.e., before fee
waivers and expense limitations). The Board determined that Pioneer's expense
limitation undertaking with respect to the Pioneer Portfolio was fair and
reasonable in light of the current voluntary expense limitations applicable to
the AmSouth Portfolio, which may
-18-
be terminated at any time, as well as AAMI's indication that it would not
continue the current voluntary expense limitations for the indefinite future.
Fourth, the Class II shares of Pioneer Oak Ridge Large Cap Growth VCT
Portfolio received in the Reorganization will provide AmSouth Capital Growth
Fund shareholders with exposure to a comparable investment product.
Fifth, Pioneer's long-term investment track record managing mutual
funds that are similar to the Pioneer Portfolio. On the basis of this
information, the Board determined that Pioneer is capable of providing an
acceptable level of long-term investment performance, appropriate to the Pioneer
Portfolio's investment objective, strategies and risks, despite the absence of a
long-term performance track record for the Pioneer Portfolio.
Sixth, Pioneer and AmSouth Bank will pay all costs of preparing and
printing the Portfolios' proxy statements and solicitation costs incurred by the
Portfolios in connection with the Reorganization. AAMI will otherwise be
responsible for all costs and expenses of the AmSouth Portfolio in connection
with the Reorganizations. The Trustees also considered that Pioneer and AmSouth
Bank will benefit from the Reorganization.
Based on its review of the information provided, the Trustees of the
AmSouth Portfolios determined that the proposed Reorganization was in the best
interests of the Amsouth Portfolio and the beneficial owners of its shares and
will not dilute the interests of such beneficial owners. Accordingly, the
Trustees determined to recommend that the beneficial owners of the AmSouth
Portfolio approve the Reorganizations.
The Trustees recommend that the shareholders of your AmSouth Portfolio
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
-19-
AmSouth Select Equity Fund and
Pioneer Fund VCT Portfolio
PROPOSAL 1(b)
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later
in this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the form of Agreement
and Plan of Reorganization attached as Exhibit A, because it contains details
that are not in the summary.
Each Portfolio primarily invests in equity securities of U.S. issuers
and, consequently, is subject to similar investment policies and risks. In the
table below, if a row extends across the entire table, the policy disclosed
applies to both your AmSouth Portfolio and the Pioneer Portfolio.
Comparison of AmSouth Select Equity Fund to Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Business A series of Variable Insurance Funds, a A diversified series of Pioneer Variable
non-diversified open-end management investment Contracts Trust, an open-end management
company organized as a Massachusetts business investment company organized as a Delaware
trust. statutory trust.
- -----------------------------------------------------------------------------------------------------------------------------
Net assets as of $66.5 million $569.7 million
March 31, 2005
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment Adviser: Investment Adviser:
portfolio managers AAMI Pioneer
Sub-Adviser: Portfolio Managers:
OakBrook Investments, LLC ("Oakbrook") Day-to-day management of the Fund's
portfolio is the responsibility of John A.
Portfolio Managers: Carey (portfolio manger) and Walter
Day-to-day management of AmSouth Select Hunnewell, Jr. (assistant portfolio
Equity Fund's portfolio is the manager). Mr. Carey and Mr. Hunnewell are
responsibility of a team of investment supported by the domestic equity team. The
professionals, all of whom take part in the portfolio managers and the team also may
decision making process. Dr. Neil Wright, draw upon the research and investment
Ms. Janna Sampson and Dr. Peter Jankovskis management expertise of the global research
are the team members and have been the team, which provides fundamental research on
portfolio managers of the Fund since its companies and includes members from
inception. Each of the portfolio managers Pioneer's affiliate, Pioneer Investment
has been with OakBrook since 1998. Management Limited.
Dr. Wright is OakBrook's President and Chief Mr. Carey is director of portfolio
Investment Officer. From 1993 to 1997, Dr. management and an executive vice president
Wright was the Chief Investment Officer of of Pioneer. Mr. Carey joined Pioneer as an
ANB Investment Management & Trust Co. analyst in 1979.
("ANB").
Mr. Hunnewell is a vice president of
Ms. Sampson is OakBrook's Director of Pioneer. He joined Pioneer in 2001 and has
Portfolio Management. From 1993 to 1997, she been an investment professional since 1985.
was Senior Portfolio Manager for ANB. Prior to joining Pioneer in 2001, Mr.
Hunnewell was an independent investment
Dr. Jankovskis is OakBrook's Director of manager and a fiduciary of private asset
Research. From 1992 to 1996, he was an portfolio from 2000 to 2001.
Investment Strategist for ANB and from 1996
to 1997 he was the Manager of Research for
ANB.
- -----------------------------------------------------------------------------------------------------------------------------
-20-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Investment objective AmSouth Select Equity Fund seeks long-term Pioneer Fund VCT Portfolio seeks reasonable
capital growth. income and capital growth.
- -----------------------------------------------------------------------------------------------------------------------------
Primary investment Under normal market conditions, AmSouth Pioneer Fund VCT Portfolio invests the major
policy Select Equity Fund invests at least 80% of portion of its assets in equity securities,
its assets in equity securities, consisting primarily of U.S. issuers. For purposes of
of common stocks and securities convertible the Pioneer Portfolio's investment policies,
into common stocks, such as convertible equity securities include common stocks,
bonds and convertible preferred stocks, of convertible debt and other equity
companies with market capitalizations that instruments, such as depositary receipts,
are greater than $2 billion at the time of warrants, rights, interests in real estate
purchase. investment trusts (REITs) and
preferred stocks.
- -----------------------------------------------------------------------------------------------------------------------------
Investment strategies OakBrook focuses on companies that possess a Pioneer Fund VCT Portfolio uses a "value"
dominant market share and have a barrier, style of management and seeks securities
such as a patent or well-known brand name, selling at reasonable prices or substantial
that shields its market share and profits discounts to their underlying values and
from competitors. These companies typically holds these securities until the market
have long records of stable earnings values reflect their intrinsic values.
growth. OakBrook continuously monitors this Pioneer evaluates a security's potential
universe of companies looking for value, including the attractiveness of its
opportunities to purchase such stocks at market valuation, based on the company's
reasonable prices. assets and prospectus for earnings growth.
In making that assessment, Pioneer employs
In managing the investment portfolio for due diligence and fundamental research, an
AmSouth Select Equity Fund, OakBrook may evaluation of the issuer based on its
focus on a relatively limited number of financial statements and operations.
stocks (generally 25 or less). OakBrook Pioneer also considers a security's
believes that this investment strategy has potential to provide a reasonable amount of
the potential for higher total returns than income. Pioneer focuses on the quality and
an investment strategy calling for price of individual issuers, not on economic
investment in a larger number of securities. sector or market-timing strategies.
Factors Pioneer looks for in selecting
investments include:
o Favorable expected returns relative to
perceived risk
o Above average potential for earnings and
revenue growth
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o A sustainable competitive advantage, such as
a brand name, customer base, proprietary
technology or economies of scale
- -----------------------------------------------------------------------------------------------------------------------------
-21-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Other investments AmSouth Select Equity Fund also may invest in Pioneer Fund VCT Portfolio may invest up to
securities issued by companies with market 25% of its total assets in REITs. Pioneer
capitalizations below $2 billion, or invest in Fund VCT Portfolio may invest up to 10% of
futures and options contracts for purposes of its total assets in equity securities of
hedging the AmSouth Portfolio or maintaining non-U.S. corporate issuers and debt
its exposure to the equity markets. securities of non-U.S. corporate and
government issuers. The Pioneer Portfolio
The AmSouth Portfolio has the flexibility to will not invest more than 5% of its total
make portfolio investments and engage in other assets in the securities of emerging markets
investment techniques that are different than issuers.
its principal strategies mentioned here. More
information on the AmSouth Portfolio's Pioneer Fund VCT Portfolio may invest a
investment strategies may be found in the portion of its assets not invested in equity
SAI. securities in debt securities of corporate
and government issuers. Generally the
Pioneer Portfolio acquires debt securities
that are investment grade, but the Portfolio
may invest up to 5% of its net assets in
below investment grade debt securities
issued by both U.S. and non-U.S. corporate
and government issuers, including below
investment grade convertible debt securities.
The Pioneer Portfolio invests in debt
securities when Pioneer believes that they
are consistent with the Portfolio's
investment objective by offering the
potential for reasonable income and capital
growth, to diversify the Portfolio or for
greater liquidity.
- -----------------------------------------------------------------------------------------------------------------------------
Temporary defensive OakBrook may temporarily invest up to 100% Pioneer Fund VCT Portfolio may invest all or
strategies of AmSouth Select Equity Fund's assets in part of its assets in securities with
high quality, short-term money market remaining maturities of less than one year,
instruments if it believes adverse economic cash equivalents or may hold cash.
or market conditions, such as excessive
volatility or sharp market declines, justify
taking a defensive investment posture.
- -----------------------------------------------------------------------------------------------------------------------------
Diversification Amsouth Select Equity Fund is Pioneer Fund VCT Portfolio is diversified
non-diversified for the purpose of the for the purpose of the Investment Company
Investment Company Act and, therefore, may Act and is subject to diversification
concentrate its investments in a limited requirements under the Code.
number of issuers.
- -----------------------------------------------------------------------------------------------------------------------------
-22-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Industry concentration AmSouth Select Equity Fund may not purchase Pioneer Fund VCT Portfolio may not invest
any securities which would cause more than more than 25% of its assets in any one
25% of the value of the Portfolio's total industry.
assets at the time of purchase to be
invested in securities of one or more
issuers conducting their principal business
activities in the same industry, provided
that (a) there is no limitation with respect
to obligations issued or guaranteed by the
U.S. government or its agencies or
instrumentalities, and repurchase agreements
secured by obligations of the
U.S. government or its agencies or
instrumentalities; (b) wholly owned finance
companies will be considered to be in the
industries of their parents if their
activities are primarily related to
financing the activities of their parents;
and (c) utilities will be divided according
to their services. For example, gas, gas
transmission, electric and gas, electric,
and telephone will each be considered a
separate industry.
- -----------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid Each Portfolio may not invest more than 15% of its net assets in illiquid securities.
securities
- -----------------------------------------------------------------------------------------------------------------------------
Borrowing AmSouth Select Equity Fund will not borrow Pioneer Fund VCT Portfolio may not borrow
money or issue senior securities, except that money, except from banks as a temporary
the AmSouth Portfolio may borrow from banks or measure for extraordinary purposes and
brokers, in amounts up to 10% of the value of except pursuant to reverse repurchase
its total assets at the time of such agreements, and then only in amounts not to
borrowing. The AmSouth Portfolio will not exceed 33 1/3% of the Pioneer Portfolio's
purchase securities while its borrowing exceed total assets (including the amount borrowed)
5% of its total assets. taken at market value. The Pioneer
Portfolio will not use leverage to attempt
to increase income. The Pioneer Portfolio
will not purchase securities while
outstanding borrowings (including reverse
repurchase agreements) exceed 5% of the
Pioneer Portfolio's total assets.
- -----------------------------------------------------------------------------------------------------------------------------
Lending AmSouth Select Equity Fund will not make Pioneer Fund VCT Portfolio may not make
loans, except that the AmSouth Portfolio may loans, except that the Pioneer Portfolio may
purchase or hold debt instruments and lend lend portfolio securities in accordance with
portfolio securities (in an amount not to the Pioneer Portfolio's investment policies
exceed one-third of its total assets), in and may purchase or invest in repurchase
accordance with its investment objective and agreements, bank certificates of deposit, a
policies, make time deposits with financial portion of an issue of publicly distributed
institutions and enter into repurchase bonds, bank loan participation agreements,
agreements. bankers' acceptances, debentures or other
securities, whether or not the purchase is
made upon the original issuance of the
securities.
- -----------------------------------------------------------------------------------------------------------------------------
Derivative instruments The AmSouth Portfolio may also enter into Pioneer Fund VCT Portfolio may use futures
contracts for the future delivery of and options on securities, indices and
securities or foreign currencies and futures currencies, forward currency exchange
contracts based on a specific security, contracts and other derivatives. The
class of securities, foreign currency or an Pioneer Portfolio does not use derivatives
index, purchase or sell options on any such as a primary investment technique and
futures contracts and engaged in related generally limits their use to hedging.
closing transactions. The AmSouth Portfolio However, the Pioneer Portfolio may use
may engage in such futures contracts in an derivatives for a variety of non-principal
effort to hedge against market risks and to purposes, including:
manage its cash positions. The AmSouth
Portfolio may also enter into forward o As a hedge against adverse changes in
currency contracts in order to hedge against stock market prices, interest rates or
adverse movements in exchange rates between currency exchange rates
currencies and use foreign currency
options. As part of its financial futures o As a substitute for purchasing or selling
transactions and to hedge foreign currency securities
exchange rate risk, the AmSouth Portfolio
may use foreign currency futures contracts o To increase the Pioneer Portfolio's return
and options on such futures contracts. as a non-hedging strategy that may be
considered speculative
- -----------------------------------------------------------------------------------------------------------------------------
-23-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Short-term trading Each Portfolio usually does not, although it may, trade for short-term profits. A Portfolio
will sell an investment, however, even if it has only been held for a short time, if it no
longer meets the Portfolio's investment criteria.
- -----------------------------------------------------------------------------------------------------------------------------
Other investment policies and As described above, the Portfolios have similar principal investment strategies and
restrictions policies. Certain of the non-principal investment policies and restrictions are
different. For a more complete discussion of each Portfolio's other investment policies
and fundamental and non-fundamental investment restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- -----------------------------------------------------------------------------------------------------------------------------
Sales charges Shares of AmSouth Select Equity Fund are not The Class II shares of Pioneer Fund VCT
subject to any sales charges. Portfolio you receive in the Reorganization
will not be subject to any sales charge.
- -----------------------------------------------------------------------------------------------------------------------------
Management and other AmSouth Select Equity Fund pays AAMI an Pioneer Fund VCT Portfolio pays Pioneer an
fees investment advisory fee, which is the lesser annual fee equal to 0.65% of the Pioneer
of (a) 0.80% of the AmSouth Portfolio's daily Portfolio's average daily net assets.
net assets, which is computed daily and paid
monthly or (b) such amount as may from time to In addition, Pioneer Fund VCT Portfolio
time be agreed upon in writing by the AmSouth reimburses Pioneer for certain fund
Trust and AAMI. accounting and legal expenses incurred on
behalf of the Pioneer Portfolio and pays a
AAMI currently limits its management fee to separate shareowner servicing/transfer
0.72% of AmSouth Select Equity Fund's average agency fee to PIMSS, an affiliate of Pioneer.
daily net assets, and other expenses currently
are being limited to 0.53% of the AmSouth Pioneer has agreed until May 1, 2007 to
Portfolio's average daily net assets. limit the expenses (excluding extraordinary
expenses) of the Class II shares of the
For the fiscal year ended December 31, 2004, Portfolio to 1.00% of the average daily net
annual fund operating expenses for the AmSouth assets attributable to Class II. There can
Portfolio, after giving effect to voluntary be no assurance that Pioneer will extend the
fee waivers and expense limitations, were expense limitation beyond May 1, 2007.
1.25% of average daily net assets, and without
giving effect to fee waivers and expense
limitations, were 1.43% of average daily net
assets.
- -----------------------------------------------------------------------------------------------------------------------------
-24-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Distribution or service fee AmSouth Select Equity Fund charges a fee for Pioneer Fund VCT Portfolio has adopted a
support services to investors, such as plan of distribution for Class II shares in
establishing and maintaining accounts and accordance with Rule 12b-1 under the
records, providing account information, Investment Company Act. Under the plan, the
arranging for bank wires, responding to Portfolio pays to Pioneer Funds Distributor,
routine inquiries, forwarding investor Inc. a distribution fee of 0.25% of the
communications, assisting in the processing average daily net assets attributable to
of purchase, exchange and redemption Class II shares.
requests, and assisting investors in
changing account designations and Because these fees are an ongoing expense,
addresses. over time they increase the cost of an
investment and the shares may cost more than
For expenses incurred and services provided, shares that are subject to other types of
a Servicing Agent receives a fee from sales charges.
AmSouth Select Equity Fund, computed daily
and paid monthly, at an annual rate of up to
0.25% of the average daily net assets of the
AmSouth Portfolio allocable to variable
insurance contracts owned by customers of
the Servicing Agent. A Servicing Agent may
periodically waive all or a portion of its
servicing fees with respect to the AmSouth
Portfolio to increase the net income of the
AmSouth Portfolio available for distribution
as dividends.
- -----------------------------------------------------------------------------------------------------------------------------
Buying shares Shares of the AmSouth Portfolio are The Pioneer Portfolio may sell its shares
available for purchase by insurance company directly to separate accounts established
separate accounts to serve as an investment and maintained by insurance companies for
medium for variable insurance contracts, and the purpose of funding variable contracts
by qualified pension and retirement plans, and to qualified plans. Shares of the
certain insurance companies, AAMI and Pioneer Portfolio are sold at net asset
Oakbrook. Investors do not deal directly value. Investments in a Pioneer Portfolio
with the AmSouth Portfolio to purchase or are credited to an insurance company's
redeem shares. Shares of the AmSouth separate account or qualified plan account,
Portfolio are purchased at the net asset immediately upon acceptance of the
value per share next determined after investment by the Pioneer Portfolio. The
receipt and acceptance by the AmSouth offering of shares of the Pioneer Portfolio
Portfolio's distributor (or other agent) of may be suspended for a period of time, and
a purchase order. Each AmSouth Portfolio the Pioneer Portfolio reserves the right to
reserves the right to reject or refuse, in reject any specific purchase order.
its discretion, any order for the purchase Purchase orders may be refused if, in the
of the AmSouth Portfolio's shares, in whole investment adviser's opinion, they are of a
or in part. size or frequency that would disrupt the
management of the Pioneer Portfolio.
The AmSouth Portfolio reserves the right to
discontinue offering shares at any time, or to
cease investment operations entirely.
- -----------------------------------------------------------------------------------------------------------------------------
Selling shares Shares of the AmSouth Portfolio are redeemed Shares of the Pioneer Portfolio will be sold
at the net asset value per share next at net asset value per share next calculated
determined after receipt by the AmSouth after the Pioneer Portfolio receives the
Portfolio's distributor (or other agent) of a request in good order.
redemption request.
You may sell your shares by contacting the
insurance company sponsoring your variable
contract, as described in your variable
contract's prospectus.
- -----------------------------------------------------------------------------------------------------------------------------
-25-
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary
investment policies and strategies, the Portfolios are subject to similar
principal risks. You could lose money on your investment in either Portfolio or
not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short
term)
o The adviser's/subadviser's judgment about the attractiveness,
growth potential or potential appreciation of a particular stock
proves to be incorrect
o To the extent each Portfolio invests in fixed income securities, it
will be subject to interest rate risk, which is the risk that
changes in interest rates will affect the value of the Portfolio's
investments, and credit risk, which is the risk that the issuer of
a security will default or not be able to meet its financial
obligations.
Because AmSouth Select Equity Fund is not diversified for the purpose
of the Investment Company Act, it may invest in a relatively small number of
issuers and may be exposed to risks caused by events that affect particular
companies to a greater extent than more broadly diversified mutual funds.
AmSouth Select Equity Fund is also subject to the risks associated with
investing in stocks of small / mid capitalization companies, which tend to be
more volatile and less liquid than stocks of large capitalization companies.
Pioneer Fund VCT Portfolio may be subject to the risks that value
stocks fall out of favor with investors or the Portfolio's assets remain
undervalued or do not have the potential value originally expected. At times,
more than 25% of the Pioneer Portfolio's assets may be invested in the same
market segment, such as financials or technology. To the extent the portfolio
emphasizes investments in a market segment, the portfolio will be subject to a
greater degree to the risks particular to the industries in that segment, and
may experience greater market fluctuation, than a portfolio without the same
focus. For example, industries in the financial segment, such as banks,
insurance companies, broker-dealers and REITs, may be sensitive to changes in
interest rates and general economic activity and are subject to extensive
government regulation. Industries in the technology segment, such as information
technology, communications equipment, computer hardware and software, and office
and scientific equipment, are subject to risks of rapidly evolving technology,
short product lives, rates of corporate expenditures, falling prices and
profits, competition from new market entrants, and general economic conditions.
Each Portfolio may be subject to the following additional risks
associated with investing in non-U.S. issuers, which may involve unique risks
compared to investing in securities of U.S. issuers. These risks are more
pronounced to the extent the Pioneer Portfolio invests in issuers in countries
with emerging markets or if the Pioneer Portfolio invests significantly in one
country. These risks may include:
o Less information about non-U.S. issuers or markets may be available
due to less rigorous disclosure or accounting standards or
regulatory practices
o Many non-U.S. markets are smaller, less liquid and more volatile.
In a changing market, the adviser/subadviser might not be able to
sell portfolio securities at times, in amounts and at prices it
considers reasonable
o Adverse effect of currency exchange rates or controls on the value
of the Portfolio's investments
o The economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession
o Economic, political and social developments may adversely affect
the securities markets
o Withholding and other non-U.S. taxes may decrease the Portfolio's
return
Investments in the Portfolios are not bank deposits and are not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money by investing in either Portfolio.
-26-
Past Performance
Set forth below is performance information for each Portfolio. The bar
charts show how each Portfolio's total return has varied from year to year for
each full calendar year since its inception. The tables show average annual
total return for each Portfolio since its inception compared with a broad-based
securities market index. Each Portfolio's returns in the bar chart and table are
net of annual operating expenses, but do not reflect any additional charges and
expenses that may be imposed by the variable insurance product or the qualified
retirement plan through which you invest. If such charges and expenses were
included, performance would be lower. Absent limitation of the AmSouth
Portfolio's expenses, total returns would be lower. Past performance does not
indicate future results.
AmSouth Select Equity Fund
Calendar Year Total Returns*
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
2000 2001 2002 2003 2004
11.96 8.26 -8.43 26.24 9.64
During the period shown in the bar chart, your AmSouth Portfolio's highest
quarterly return was 17.63% for the quarter ended December 31, 2000, and
the lowest quarterly return was -12.98% for the quarter ended September 30,
2002.
Pioneer Fund VCT Portfolio
Calendar Year Total Returns*
The chart shows the performance of the Pioneer Fund VCT Portfolio's
Class II shares for each full calendar year since the inception of Class I
shares on October 31, 1997. The performance of Class II shares for the period
prior to commencement of operations of Class II shares on May 1, 2000 is based
on the performance of Class I shares, reduced to reflect the higher distribution
fee of Class II shares. For the period after May 1, 2000, the actual performance
of Class II shares is reflected, which performance may be influenced by the
smaller asset size of Class II shares compared to Class I shares.
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
1998 1999 2000 2001 2002 2003 2004
26.04 15.50 1.63 -11.09 -19.25 23.44 10.93
During the period shown in the bar chart, Pioneer Portfolio's highest
quarterly return was 20.97% for the quarter ended December 31, 1998 and the
lowest quarterly return was -17.36% for the quarter ended September 30,
2002.
-27-
Average Annual Total Returns*
(for the periods ended December 31, 2004)
- ---------------------------------------------------------------------------------------------------------
1 Year 5 Years Since inception
- ---------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund 9.64% 8.96% 4.93%(3)
- ---------------------------------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio(1) 10.93% -0.02% 6.11%(4)
- ---------------------------------------------------------------------------------------------------------
S&P 500 Index(2)
(reflects no deduction for fees or expenses) 10.88% -2.30% 5.57%(5)
- ---------------------------------------------------------------------------------------------------------
* Assumes reinvestment of dividends and distributions.
(1) The table shows the average annual total returns of the Pioneer Portfolio's
Class II shares over time. The performance of Class II shares for the
period prior to the commencement of operations of Class II shares for the
period prior to the commencement of operations of Class II shares on May 1,
2000 is based on the performance of Class I shares, reduced to reflect the
higher distribution fee of Class II shares.
(2) The S&P 500 Index is a widely recognized measure of the performance of
the 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and the over-the-counter market.
(3) The inception date of Amsouth Select Equity Fund is May 3, 1999.
(4) The inception date of Pioneer Fund VCT Portfolio is the inception date of
its Class I shares on October 31, 1997.
(5) Reflects the return of the S&P 500 Index since the inception of Pioneer
Fund VCT Portfolio's Class I shares. The return of the index since the
inception of AmSouth Select Equity Fund is -0.21%.
The most recent portfolio manager's discussion for each Portfolio is attached as
Exhibit C.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios pay various fees and expenses, either
directly or indirectly. The tables below show the fees and expenses that you
would pay if you were to buy and hold shares of each Portfolio. The expenses in
the tables appearing below are based on the expenses of each Portfolio for the
year ended December 31, 2004. Future expenses of each Portfolio may be greater
or less. The table does not reflect separate account or insurance contract fees
and charges. Pro forma numbers are estimated in good faith and are hypothetical.
The tables also show the pro forma expenses of the combined Portfolio
assuming the Reorganization occurred on December 31, 2004.
Pioneer Fund VCT
AmSouth Select Portfolio Combined Portfolio
Equity Fund (Class II Shares) (Pro Forma)
-------------- ----------------- ------------------
Shareowner transaction fees (paid directly
from your investment)
Redemption fees for shares held less than None None None
30 days ....................................
Sales charge or deferred sales charge ........... None None None
Annual Portfolio operating expenses
(deducted from Portfolio assets) (as a
% of average net assets)
Management fee .................................. 0.80%(1) 0.65% 0.65%
Distribution or Shareholder Service Fee ......... 0.25%(1) 0.25% 0.25%
Other expenses .................................. 0.38%(1) 0.06% 0.06%
Total operating expenses ........................ 1.43%(1) 0.96%(2) 0.96%(2)
Expense limitation .............................. 0.18%(1) -- --
Net expenses .................................... 1.25%(1) 0.96%(2) 0.96%(2)
-28-
(1) AAMI currently limits its management fee to 0.72%. Other expenses
(including shareholder servicing fees) are currently being limited to
0.53%. Total annual fund operating expenses, after fee waiver and expense
reimbursements, currently are limited to 1.25%. Any fee waiver or expense
reimbursement is voluntary and may be discontinued at any time.
(2) Pioneer has contractually 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 until May 1, 2007.
There can be no assurance that Pioneer will extend the expense limitation
beyond May 1, 2007.
The hypothetical example below helps you compare the cost of investing
in each Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for
the time periods shown, (b) you reinvest all dividends and distributions, (c)
your investment has a 5% return each year, and (d) each Portfolio's gross
operating expenses remain the same. It does not reflect (i) separate account or
insurance contract fee and charges or (ii) AAMI's voluntary fee waivers or
expense reimbursements with respect to the AmSouth Portfolio. The examples are
for comparison purposes only and are not a representation of either Portfolio's
actual expenses or returns, either past or future.
Example
AmSouth Select Equity Fund
Year 1 ............................................ $127
Year 3 ............................................ $397
Year 5 ............................................ $686
Year 10 ........................................... $1,511
Pioneer Fund VCT Portfolio
Class II Shares
Year 1 ............................................ $98
Year 3 ............................................ $306
Year 5 ............................................ $531
Year 10 ........................................... $1,178
Combined Portfolio (Pro Forma)
Class II Shares
Year 1 ............................................ $98
Year 3 ............................................ $306
Year 5 ............................................ $531
Year 10 ........................................... $1,178
-29-
CAPITALIZATION
The following table sets forth the capitalization of each Portfolio as
of May 31, 2005, and the pro forma combined Portfolio as of May 31, 2005.
- ----------------------------------------------------------------------------------------------------------------------
AmSouth Select Equity Fund Pioneer Fund VCT Combined Portfolio (pro
Portfolio forma)
(Class II Shares)
May 31, 2005 May 31, 2005 May 31, 2005
- ----------------------------------------------------------------------------------------------------------------------
Net Assets $64,898.0 $135,454.5 $200,352.5
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $11.94 $20.33 $20.33
- ----------------------------------------------------------------------------------------------------------------------
Shares Outstanding 5,436,438 662,789 9,855,660
- ----------------------------------------------------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Fund VCT
Portfolio will actually be received and distributed by your AmSouth Portfolio on
the Reorganization date. The table should not be relied upon to determine the
amount of Pioneer Fund VCT Portfolio's shares that will actually be received and
distributed.
Reasons for the Proposed Reorganization
In evaluating the proposed Reorganization, the Trustees of the AmSouth
Portfolios requested information, provided by AAMI and Pioneer, that they
believes to be reasonably necessary for properly considering the proposal and
were advised by legal counsel in the course of their deliberations. In
considering the proposal, the Trustees took into account a number of
considerations including, without limitation, the following:
First, AAMI, the investment adviser to the Portfolio informed the
Trustees that it does not intend to continue to provide investment advisory
services to the AmSouth Portfolio. Consequently, a change in your AmSouth
Portfolio's investment adviser was necessary. In the absence of the
Reorganization, such a change would be more likely to motivate shareholders
invested in reliance on AAMI's role to withdraw from the AmSouth Portfolio,
thereby reducing the size of the AmSouth Portfolio and increase its expense
ratios.
Second, the Pioneer Portfolio's total expenses, as well as the Pioneer
Portfolio's anticipated expenses of the combined Portfolio, are lower than
AmSouth Select Equity Fund's current expenses net of voluntary fee waivers and
expense limitations, and Pioneer has committed to limit the expenses of Class II
shares to 1.00% of the assets attributable to the Class II shares of the Pioneer
Portfolio until May 1, 2007.
Third, the resources of Pioneer, which the Trustees determined to be
capable of provided appropriate, high-quality services. At December 31, 2004,
Pioneer managed over 80 investment companies and accounts with approximately $42
billion in assets. Pioneer is part of the global asset management group of
UniCredito Italiano S.p.A., one of the largest banking groups in Italy,
providing investment management and financial services to mutual funds,
institutional and other clients. As of December 31, 2004, assets under
management of UniCredito Italiano S.p.A. were approximately $175 billion
worldwide. Shareholders of your AmSouth Portfolio would become part of a
significantly larger family of funds that offers a more diverse array of
investment options and enhanced shareholder account options. The Pioneer family
of mutual funds offers over 80 funds, including domestic and international
equity and fixed income funds and money market funds.
Fourth, the Class II shares of Pioneer Fund VCT Portfolio received in
the Reorganization will provide AmSouth Select Equity Fund shareholders with
exposure to a comparable investment product.
Fifth, Pioneer's performance track record in managing the Pioneer
Portfolio, as well as its long-term investment track record managing mutual
funds that are similar to the Pioneer Portfolio. The Board noted that the
Pioneer Portfolio had significantly outperformed the AmSouth Portfolio for the
one-year period ended March 31, 2005, although the AmSouth Portfolio's
performance was stronger over the longer term. On the basis of this information,
the Board determined that Pioneer is capable of providing an acceptable level of
long-term investment performance, appropriate to the Pioneer Portfolio's
investment objective, strategies and risks.
Sixth, Pioneer and AmSouth Bank will pay all costs of preparing and
printing the Portfolios' proxy statements and solicitation costs incurred by the
Portfolios in connection with the Reorganization. AAMI will otherwise be
responsible for all costs and expenses of the AmSouth Portfolio in connection
with the Reorganizations. The Trustees also considered that Pioneer and AmSouth
Bank will benefit from the Reorganization.
-30-
Based upon its review of the information provided, the Trustees of the
AmSouth Portfolio determined that the proposed Reorganization was in the best
interests of the AmSouth Portfolio and the beneficial owners of its shares and
will not dilute the interests of such beneficial owners. Accordingly, the
Trustees determined to recommend that the beneficial owners of the AmSouth
Portfolio approve the Reorganization.
The Trustees recommend that the shareholders of your AmSouth Portfolio
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
-31-
AmSouth Value Fund and
Pioneer Value VCT Portfolio
PROPOSAL 1(c)
Approval of Agreement and Plan of Reorganization
SUMMARY
The following is a summary of more complete information appearing later
in this Proxy Statement/Prospectus or incorporated herein. You should read
carefully the entire Proxy Statement/Prospectus, including the form of Agreement
and Plan of Reorganization attached as Exhibit A, because it contains details
that are not in the summary.
Each Portfolio primarily invests in equity securities of U.S. issuers
and, consequently, is subject to similar investment policies and risks. In the
table below, if a row extends across the entire table, the policy disclosed
applies to both your AmSouth Portfolio and the Pioneer Portfolio.
Comparison of AmSouth Value Fund to Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Business A diversified series of Variable Insurance A diversified series of Pioneer Variable
Funds, an open-end management investment Contracts Trust, an open-end management
company organized as a Massachusetts investment company organized as a Delaware
business trust. statutory trust.
- -----------------------------------------------------------------------------------------------------------------------------
Net assets as of $60.08 million $13.10 million
March 31, 2005
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisers and Investment Adviser: Investment Adviser:
portfolio managers AAMI Pioneer
Portfolio Manager: Portfolio Managers:
AmSouth Value Fund is managed by Brian B. Day-to-day management of Pioneer Value VCT
Sullivan, CFA (since June 2004). Mr. Portfolio is the responsibility of J. Rodman
Sullivan has been an officer of AAMI since Wright, lead portfolio manager. Mr. Wright
1996 and joined AmSouth Bank in 1982. Prior is supported by Aaron C. Clark, portfolio
to serving as Director of Fixed Income for manager, and the domestic equity team.
AmSouth Bank's Trust Department, Mr. Members of this team manage other Pioneer
Sullivan managed equity portfolios and held funds investing primarily in U.S. equity
the position of equity research coordinator securities.
for AmSouth Bank's Trust Department.
Mr. Wright is a senior vice president of
Pioneer and strategy director of the value
team. He joined Pioneer in 1994 as an
analyst and has been an investment
professional since 1988.
Mr. Clark is a vice president and joined
Pioneer in 2004 as a portfolio manager.
Prior to joining Pioneer, Mr. Clark was
employed as a portfolio manager at Morgan
Stanley Investment Management from 1997 to
2004 and has been an investment professional
since 1992.
- -----------------------------------------------------------------------------------------------------------------------------
-32-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Investment objective AmSouth Value Fund seeks capital growth, Pioneer Value VCT Portfolio seeks reasonable
with current income as an incidental income and capital growth.
objective.
- -----------------------------------------------------------------------------------------------------------------------------
Primary investment policy Under normal market conditions, AmSouth Value Pioneer Value VCT Portfolio seeks to invest
Fund invests at least 80% of its assets in a in a broad list of carefully selected,
diversified portfolio of equity securities reasonably priced securities whose prices
that AAMI believes to be undervalued. Equity reflect a premium resulting from their
securities may include common stocks and current market popularity. The Portfolio
securities convertible into common stocks, invests the major portion of its assets in
such as convertible bonds and convertible equity securities, primarily of U.S.
preferred stocks. issuers.
For purposes of the Portfolio's investment
policies, equity securities include common
stocks, convertible debt and other equity
instruments, such as depositary receipts,
warrants, rights, and preferred stocks.
- -----------------------------------------------------------------------------------------------------------------------------
Investment strategies AAMI uses a variety of economic projections, Pioneer Value VCT Portfolio uses a "value"
quantitative techniques, and earnings style of management and seeks securities
projections in formulating individual stock selling at reasonable prices or substantial
purchase and sale decisions. AAMI will select discounts to their underlying values and
investments believed to have basic investment holds these securities until the market
value which will eventually be recognized by values reflect their intrinsic values.
other investors. Factors which may be Pioneer evaluate a security's potential
considered in selecting equity securities value, including the attractiveness of its
include industry and company fundamentals, market valuation, based on the company's
historical price relationships, and/or asset s and prospects for earnings and
underlying asset value. revenue growth. In making that assessment,
AmSouth Value Fund expects to earn incidental Pioneer employs due diligence and
income mainly from stock dividends and fundamental research, an evaluation of the
preferred stocks. issuer based on its financial statements and
operations, employing a bottom-up analytic
style. Pioneer also considers a security's
potential to provide a reasonable amount of
income.
Factors Pioneer looks for in selecting
investments include:
o Above average potential for earnings and
revenue growth
o Favorable expected returns relative to
perceived risks
o Management with demonstrated ability and
commitment to the company
o Low market valuations relative to earnings
forecast, book value, cash flow and sales
o Turnaround potential for companies that
have been through difficult periods
o Good prospects for dividend growth
- -----------------------------------------------------------------------------------------------------------------------------
-33-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Other investments In addition to equity securities, AmSouth Pioneer Value VCT Portfolio primarily
Value Fund may invest in preferred stocks, invests in securities of U.S. issuers. The
corporate bonds, notes, warrants, and short Pioneer Portfolio may invest up to 25% of
term money market instruments. The portion its total assets in securities of non-U.S.
of the AmSouth Portfolio's assets invested issuers. The Pioneer Portfolio will not
in common stocks, convertible securities and invest more than 5% of its total assets in
fixed income securities varies according to the securities of emerging markets issuers.
AAMI's assessment of market and economic
conditions and future outlook. Pioneer Value VCT Portfolio may invest a
portion of its assets not invested in equity
The AmSouth Portfolio has the flexibility to securities in debt securities of corporate
make portfolio investments and engage in and government issuers. Generally, the
other investment techniques that are Pioneer Portfolio acquired debt securities
different than its principal strategies that are investment grade, but the Pioneer
mentioned here. More information on the Portfolio may invest up to 5% of its net
AmSouth Portfolio's investment strategies assets in below investment grade securities
may be found in the SAI. issued by both U.S. and non-U.S. corporate
and government issuers, including below
investment grade convertible debt
securities.
The Pioneer Portfolio invests in debt
securities when Pioneer believes they are
consistent with the Portfolio's investment
objective by offering the potential for
reasonable income and capital growth, to
diversify the Portfolio or for greater
liquidity.
- -----------------------------------------------------------------------------------------------------------------------------
Temporary defensive AAMI may temporarily invest up to 100% of Pioneer Value VCT Portfolio may invest all
strategies AmSouth Value Fund's assets in high quality, or part of its assets in securities with
short-term money market instruments if it remaining maturities of less than one year,
believes adverse economic or market cash equivalents or may hold cash.
conditions, such as excessive volatility or
sharp market declines, justify taking a
defensive investment posture.
- -----------------------------------------------------------------------------------------------------------------------------
-34-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Diversification Each Portfolio is diversified for the purpose of the Investment Company Act and is subject to
diversification requirements under the Code.
- -----------------------------------------------------------------------------------------------------------------------------
Industry concentration AmSouth Value Fund may not purchase any Pioneer Value VCT Portfolio may not invest
securities which would cause more than 25% more than 25% of its assets in any one
of the value of the Fund's total assets at industry.
the time of purchase to be invested in
securities of one or more issuers conducting
their principal business activities in the
same industry, provided that (a) there is no
limitation with respect to obligations
issued or guaranteed by the U.S. government
or its agencies or instrumentalities, and
repurchase agreements secured by obligations
of the U.S. government or its agencies or
instrumentalities; (b) wholly owned finance
companies will be considered to be in the
industries of their parents if their
activities are primarily related to
financing the activities of their parents;
and (c) utilities will be divided according
to their services. For example, gas, gas
transmission, electric and gas, electric,
and telephone will each be considered a
separate industry.
- -----------------------------------------------------------------------------------------------------------------------------
Restricted and illiquid AmSouth Value Fund may not invest more than Pioneer Value Fund may not invest more than
securities 15% of its net assets in securities that are 15% of its net assets in securities that are
restricted as to resale, or for which no illiquid and other securities that are not
readily available market exists, including readily marketable. Repurchase agreements
repurchase agreements providing for maturing in more than seven days will be
settlement more than seven days after notice. included for purposes of the foregoing
limit.
- -----------------------------------------------------------------------------------------------------------------------------
Borrowing AmSouth Value Fund will not borrow money or Pioneer Value VCT Portfolio may not borrow
issue senior securities, except that the money, except the Pioneer Portfolio may:
AmSouth Portfolio may borrow from banks or (a) borrow from banks or through reverse
brokers, in amounts up to 10% of the value of repurchase agreements in an amount up to 33
its total assets at the time of such 1/3% of the Pioneer Portfolio's total assets
borrowing. The AmSouth Portfolio will not (including the amount borrowed); (b) to the
purchase securities while its borrowing exceed extent permitted by applicable law, borrow
5% of its total assets. up to an additional 5% of the Pioneer
Portfolio's assets for temporary purposes;
(c) obtain such short-term credits as are
necessary for the clearance of portfolio
transactions; (d) the Pioneer Portfolio may
purchase securities on margin to the extent
permitted by applicable law; and (e) engage
in transactions in mortgage dollar rolls
that are accounted for as financings.
- -----------------------------------------------------------------------------------------------------------------------------
-35-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Lending AmSouth Value Fund will not make loans, Pioneer Value VCT Portfolio may not make
except that the AmSouth Portfolio may loans, except by the purchase of debt
purchase or hold debt instruments and lend obligations, by entering into repurchase
portfolio securities (in an amount not to agreements or through the lending of
exceed one-third of its total assets), in portfolio securities.
accordance with its investment objective and
policies, make time deposits with financial
institutions and enter into repurchase
agreements.
- -----------------------------------------------------------------------------------------------------------------------------
Derivative instruments AmSouth Value Fund may purchase put and call Pioneer Value VCT Portfolio may use futures
options on securities and currencies. The and options on securities, indices and
AmSouth Portfolio may also engage in writing currencies, forward currency exchange
covered call options (on securities or contracts and other derivatives. The
currencies owned by the AmSouth Portfolio). Pioneer Portfolio does not use derivatives
The AmSouth Portfolio may also enter into as a primary investment technique and
contracts for the future delivery of generally limits their use to hedging.
securities or foreign currencies and futures However, the Pioneer Portfolio may use
contracts based on a specific security, derivatives for a variety of non-principal
class of securities, foreign currency or an purposes, including:
index, purchase or sell option on any such
futures contracts and engage in related o As a hedge against adverse changes in
closing transactions. The AmSouth Portfolio stock market prices, interest rates or
may engage in such futures contracts in an currency exchange rates
effort to hedge against market risks and to
manage its cash position. The AmSouth o As a substitute for purchasing or selling
Portfolio may also enter into forward securities
currency contracts in order to hedge against
adverse movements in exchange rates between o To increase the Pioneer Portfolio's return
currencies and use foreign currency as a non-hedging strategy that may be
options. As part of its financial futures considered speculative
transactions and to hedge foreign currency
exchange rate risk, the AmSouth Portfolio
may use foreign currency futures contracts
and options on such futures contracts.
- -----------------------------------------------------------------------------------------------------------------------------
Short-term trading The AmSouth Portfolio will not generally The Pioneer Portfolio usually does not trade
trade in securities for short-term profits. for short-term profits. A Portfolio will
However, the AmSouth Portfolio is actively sell an investment, however, even if it has
managed and, under appropriate only been held for a short time, if it no
circumstances, may purchase and sell longer meets the Portfolio's investment
securities without regard to the length of criteria.
time held. A high portfolio turnover rate
may increase transaction costs, which may
negatively impact the AmSouth Portfolio's
performance.
- -----------------------------------------------------------------------------------------------------------------------------
Other investment policies As described above, the Portfolios have similar principal investment strategies and
and restrictions policies. Certain of the non-principal investment policies and restrictions are
different. For a more complete discussion of each Portfolio's other investment policies
and fundamental and non-fundamental investment restrictions, see the SAI.
- -----------------------------------------------------------------------------------------------------------------------------
Buying, Selling and Exchanging Shares
- -----------------------------------------------------------------------------------------------------------------------------
Sales charges Shares of AmSouth Value Fund are not subject The Class II shares of Pioneer Value VCT
to any sales charges. Portfolio you receive in the Reorganization
will not be subject to any sales charge.
- -----------------------------------------------------------------------------------------------------------------------------
-36-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Management and other AmSouth Value Fund pays AAMI an investment Pioneer Value VCT Portfolio pays Pioneer an
fees advisory fee, which is the lesser of (a) 0.60% annual fee equal to 0.65% of the Pioneer
of the AmSouth Portfolio's daily net assets, Portfolio's average daily net assets.
which is computed daily and paid monthly or
(b) such amount as may from time to time be Pioneer has agreed until May 1, 2007 to
agreed upon in writing by the AmSouth Trust limit the expenses (excluding extraordinary
and AAMI. expenses) of the Class II shares of the
Portfolio to 1.30% of the average daily net
assets attributable to Class II. There can
be no assurance the Pioneer will extend the
expense limitation beyond May 1, 2007.
In addition, Pioneer Value VCT Portfolio
reimburses Pioneer for certain fund
accounting and legal expenses incurred on
behalf of the Pioneer Portfolio and pays a
separate shareowner servicing/transfer
agency fee to PIMSS, an affiliate of Pioneer.
- -----------------------------------------------------------------------------------------------------------------------------
Distribution or service AmSouth Value Fund charge a fee for support Pioneer Value VCT Portfolio has adopted a
fee services to investors, such as establishing plan of distribution for Class II shares in
and maintaining accounts and records, accordance with Rule 12b-1 under the
providing account information, arranging for Investment Company Act. Under the plan, the
bank wires, responding to routine inquiries, Portfolio pays to Pioneer Funds Distributor,
forwarding investor communications, Inc. a distribution fee of 0.25% of the
assisting in the processing of purchase, average daily net assets attributable to
exchange and redemption requests, and Class II shares.
assisting investors in changing account
designations and addresses. Because these fees are an ongoing expense,
over time they increase the cost of an
For expenses incurred and services provided, investment and the shares may cost more than
a Servicing Agent receives a fee from shares that are subject to other types of
AmSouth Value Fund, computed daily and paid sales charges.
monthly, at an annual rate of up to 0.25% of
the average daily net assets of the AmSouth
Portfolio allocable to variable insurance
contracts owned by customers of the
Servicing Agent. A Servicing Agent may
periodically waive all or a portion of its
servicing fees with respect to the AmSouth
Portfolio to increase the net income of the
AmSouth Portfolio available for distribution
as dividends.
- -----------------------------------------------------------------------------------------------------------------------------
-37-
- -----------------------------------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Buying shares Shares of the AmSouth Portfolio are The Pioneer Portfolio may sell its shares
available for purchase by insurance company directly to separate accounts established
separate accounts to serve as an investment and maintained by insurance companies for
medium for variable insurance contracts, and the purpose of funding variable contracts
by qualified pension and retirement plans, and to qualified plans. Shares of the
certain insurance companies, AAMI and Pioneer Portfolio are sold at net asset
Oakbrook. Investors do not deal directly value. Investments in a Pioneer Portfolio
with the AmSouth Portfolio to purchase or are credited to an insurance company's
redeem shares. Shares of the AmSouth separate account or qualified plan account,
Portfolio are purchased or redeemed at the immediately upon acceptance of the
net asset value per share next determined investment by the Pioneer Portfolio. The
after receipt and acceptance by the AmSouth offering of shares of the Pioneer Portfolio
Portfolio's distributor (or other agent) of may be suspended for a period of time, and
a purchase order. Each AmSouth Portfolio the Pioneer Portfolio reserves the right to
reserves the right to reject or refuse, in reject any specific purchase order.
its discretion, any order for the purchase Purchase orders may be refused if, in the
of the AmSouth Portfolio's shares, in whole investment adviser's opinion, they are of a
or in part. size or frequency that would disrupt the
management of the Pioneer Portfolio.
The AmSouth Portfolio reserves the right to
discontinue offering shares at any time, or to
cease investment operations entirely.
- -----------------------------------------------------------------------------------------------------------------------------
Selling shares Shares of the AmSouth Portfolio are redeemed Shares of the Pioneer Portfolio will be sold
at the net asset value per share next at net asset value per share next calculated
determined after receipt by the AmSouth after the Pioneer Portfolio receives the
Portfolio's distributor (or other agent) of a request in good order.
redemption request.
You may sell your shares by contacting the
insurance company sponsoring your variable
contract, as described in your variable
contract's prospectus.
- -----------------------------------------------------------------------------------------------------------------------------
Comparison of Principal Risks of Investing in the Portfolios
Because each Portfolio has a similar investment objective, primary
investment policies and strategies, the Portfolios are subject to the similar
principal risks. You could lose money on your investment in either Portfolio or
not make as much as if you invested elsewhere if:
o The stock market goes down (this risk may be greater in the short
term)
o Value stocks fall out of favor with investors
o The Portfolio's assets remain undervalued or do not have the
potential value originally expected
Pioneer Value VCT Portfolio may be subject to the following additional
risks associated with investing in non-U.S. issuers, which may involve unique
risks compared to investing in securities of U.S. issuers. These risks are more
pronounced to the extent the Fund invests in issuers in countries with emerging
markets or if the Fund invests significantly in one country. These risks may
include:
o Less information about non-U.S. issuers or markets may be available
due to less rigorous disclosure or accounting standards or
regulatory practices
o Many non-U.S. markets are smaller, less liquid and more volatile.
In a changing market, the adviser/subadviser might not be able to
sell portfolio securities at times, in amounts and at prices it
considers reasonable
o Adverse effect of currency exchange rates or controls on the value
of the Portfolio's investments
-38-
o The economies of non-U.S. countries may grow at slower rates than
expected or may experience a downturn or recession
o Economic, political and social developments may adversely affect
the securities markets
o Withholding and other non-U.S. taxes may decrease the Portfolio's
return
At times, more than 25% of Pioneer Value VCT Portfolio's assets may be
invested in the same market segment, such as financials or technology. To the
extent the portfolio emphasizes investments in a market segment, the portfolio
will be subject to a greater degree to the risks particular to the industries in
that segment, and may experience greater market fluctuation, than a portfolio
without the same focus. For example, industries in the financial segment, such
as banks, insurance companies, broker-dealers and REITs, may be sensitive to
changes in interest rates and general economic activity and are subject to
extensive government regulation. Industries in the technology segment, such as
information technology, communications equipment, computer hardware and
software, and office and scientific equipment, are subject to risks of rapidly
evolving technology, short product lives, rates of corporate expenditures,
falling prices and profits, competition from new market entrants, and general
economic conditions.
Investments in the Portfolios are not bank deposits and are not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. You could lose money by investing in either Portfolio.
Past Performance
Set forth below is performance information for each Portfolio. The bar
charts show how each Portfolio's total return has varied from year to year for
each full calendar year since its inception. The tables show average annual
total return for each Portfolio since its inception compared with a broad-based
securities market index. Each Portfolio's returns in the bar chart and table are
net of annual operating expenses, but do not reflect any additional charges and
expenses that may be imposed by the variable insurance product or the qualified
retirement plan through which you invest. If such charges and expenses were
included, performance would be lower. Absent limitation of the AmSouth
Portfolio's expenses, total returns would be lower. Past performance does not
indicate future results.
AmSouth Value Fund
Calendar Year Total Returns*
Prior to September 6, 2002, AmSouth Value Fund employed an investment
subadviser and pursued a different investment objective using somewhat different
investment strategies.
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
1998 1999 2000 2001 2002 2003 2004
12.36 25.00 -2.13 -10.97 -13.06 21.89 15.21
During the period shown in the bar chart, your AmSouth Portfolio's highest
quarterly return was 19.65% for the quarter ended December 31, 1999, and
the lowest quarterly return was -13.29% for the quarter ended June 30,
2002.
-39-
Pioneer Value VCT Portfolio
Calendar Year Total Returns*
The chart shows the performance of the Pioneer Value VCT Portfolio's
Class II shares for each full calendar year since the inception of Class II
shares on May 1, 2003.
[THE FOLLOWING DATA WAS REPRESENTED AS A BAR CHART IN THE PRINTED MATERIAL]
2004
11.40
During the period shown in the bar chart, Pioneer Portfolio's highest
quarterly return was 8.33% for the quarter ended December 31, 2004 and the
lowest quarterly return was -0.32% for the quarter ended September 30,
2004.
Average Annual Total Returns*
(for the periods ended December 31, 2004)
- ---------------------------------------------------------------------------------------------------------
1 Year 5 Years Since inception
- ---------------------------------------------------------------------------------------------------------
AmSouth Value Fund 15.21% 1.29% 6.15%(3)
- ---------------------------------------------------------------------------------------------------------
S&P 500 Index(1)
(reflects no deduction for fees or expenses) 10.88% -2.30% 4.99%
- ---------------------------------------------------------------------------------------------------------
Pioneer Value VCT Portfolio 11.40% N/A 19.22%(4)
- ---------------------------------------------------------------------------------------------------------
Russell 1000 Value Index(2)
(reflects no deduction for fees or expenses) 16.49% N/A 25.67%
- --------------------------------------------------------------------------------------------------------
* Assumes reinvestment of dividends and distributions.
(1) The S&P 500 Index is a widely recognized measure of the performance of the
500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and the over-the-counter market.
(2) The Russell 1000 Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth
ratios.
(3) The inception date of Amsouth Value Fund is October 23, 1997.
(4) The inception date of Pioneer Value VCT Portfolio is May 1, 2003.
The most recent portfolio manager's discussion for each Portfolio is attached as
Exhibit C.
The Portfolios' Fees and Expenses
Shareholders of both Portfolios pay various fees and expenses, either
directly or indirectly. The tables below show the fees and expenses that you
would pay if you were to buy and hold shares of each Portfolio. The expenses in
the tables appearing below are based on the expenses of each Portfolio for the
year ended December 31, 2004. Future expenses for each Portfolio may be greater
or less. The table does not reflect separate account or insurance contract fees
and charges.
-40-
The tables also show the pro forma expenses of the combined Portfolio
assuming the Reorganization occurred on December 31, 2004. Pro forma numbers are
estimated in good faith and are hypothetical.
Pioneer Value Combined
AmSouth Value VCT Portfolio Portfolio
Fund (Class II Shares) (Pro Forma)
------------- ----------------- -----------
Shareowner transaction fees (paid
directly from your investment)
Redemption fees for shares held None None None
less than 30 days................
Sales charge or deferred sales None None None
charge...........................
Annual Portfolio operating expenses
(deducted from Portfolio
assets) (as a % of average net
assets)
Management fee ....................... 0.60%(1) 0.75%(2) 0.75%
Distribution or service fee .......... 0.25%(1) 0.25% 0.25%
Other expenses ....................... 0.37%(1) 2.61%(2) 0.28%
Total operating expenses ............. 1.22%(1) 3.61%(2) 1.28%
Expense limitation ................... -- 2.31%(2) --
Net expenses ......................... 1.22%(1) 1.30%(2) 1.28%
(1) Total annual fund operating expenses, after fee waiver and expense
reimbursements, currently are limited to 1.25%. Any fee waiver or expense
reimbursement is voluntary and may be discontinued at any time.
(2) Pioneer has contractually agreement 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. There can be no
assurance that Pioneer will extend the expense limitation beyond May 1,
2007.
The hypothetical example below helps you compare the cost of investing
in each Portfolio. It assumes that: (a) you invest $10,000 in each Portfolio for
the time periods shown, (b) you reinvest all dividends and distributions, (c)
your investment has a 5% return each year, (d) each Portfolio's gross operating
expenses remain the same, and (e) Pioneer Portfolio's contractual expense
limitation is in effect for year one. It does not reflect (i) separate account
or insurance contract fees and charges or (ii) AAMI's voluntary fee waiver or
expense reimbursements with respect to the AmSouth Portfolio. The examples are
for comparison purposes only and are not a representation of either Portfolio's
actual expenses or returns, either past or future.
Example
AmSouth Value Fund
Year 1 .................................................. $124
Year 3 .................................................. $387
Year 5 .................................................. $670
Year 10 ................................................. $1,477
Pioneer Value VCT Portfolio
Class II Shares
Year 1 .................................................. $153
Year 3 .................................................. $910
Year 5 .................................................. $1,689
Year 10 ................................................. $3,733
-41-
Combined Portfolio (Pro Forma)
Class II Shares
Year 1 .................................................. $130
Year 3 .................................................. $405
Year 5 .................................................. $700
Year 10 ................................................. $1,541
CAPITALIZATION
The following table sets forth the capitalization of each Portfolio as
of May 31, 2005, and the pro forma combined Portfolio as of May 31, 2005.
- --------------------------------------------------------------------------------------------------
AmSouth Value Fund Pioneer Value VCT Combined Portfolio
Portfolio (pro forma)
(Class II Shares)
May 31, 2005 May 31, 2005 May 31, 2005
- --------------------------------------------------------------------------------------------------
Net Assets $59,572.0 $13,757.5 $73,329.5
(in thousands)
- --------------------------------------------------------------------------------------------------
Net Asset Value Per Share $13.74 $13.29 $13.29
- --------------------------------------------------------------------------------------------------
Shares Outstanding 4,336,292 1,035,174 5,518,293
- --------------------------------------------------------------------------------------------------
It is impossible to predict how many shares of Pioneer Value VCT
Portfolio will actually be received and distributed by your AmSouth Portfolio on
the Reorganization date. The table should not be relied upon to determine the
amount of Pioneer Value VCT Portfolio's shares that will actually be received
and distributed.
Reasons for the Proposed Reorganization
In evaluating the proposed Reorganization, the Trustees of the AmSouth
Portfolios requested information, provided by AAMI and Pioneer, that they
believes to be reasonably necessary for properly considering the proposal and
were advised by legal counsel in the course of their deliberations. In
considering the proposal, the Trustees took into account a number of
considerations including, without limitation, the following:
First, AAMI, the investment adviser to your AmSouth Portfolio informed
the Trustees that it does not intend to continue to provide investment advisory
services to the AmSouth Portfolio. Consequently, a change in your AmSouth
Portfolio's investment adviser was necessary. In the absence of the
Reorganization, such a change would be more likely to motivate shareholders
invested in reliance on AAMI's role to withdraw from the Portfolio, thereby
reducing the Portfolio's size and increasing the Portfolio's expense ratios.
Second, the resources of Pioneer, which the Trustees determined to be
capable of providing appropriate, high-quality services. At December 31, 2004,
Pioneer managed over 80 investment companies and accounts with approximately $42
billion in assets. Pioneer is part of the global asset management group of
UniCredito Italiano S.p.A., one of the largest banking groups in Italy,
providing investment management and financial services to mutual funds,
institutional and other clients. As of December 31, 2004, assets under
management of UniCredito Italiano S.p.A. were approximately $175 billion
-42-
worldwide. Shareholders of your AmSouth Portfolio would become part of a
significantly larger family of funds that offers a more diverse array of
investment options and enhanced shareholder account options. The Pioneer family
of mutual funds offers over 80 funds, including domestic and international
equity and fixed income funds and money market funds.
Third, Pioneer's commitment to limit, until May 1, 2007, the expenses
of Class II shares to 1.30% of assets attributable to the Class II shares of the
Pioneer Portfolio. The Board noted that the estimated expense ratio of the
Pioneer Portfolio after the proposed Reorganization and Pioneer's expense
limitation undertaking are comparable to the AmSouth Portfolio's current
operating expenses, as well as AAMI's current voluntary expense limitation
undertaking. The Board determined that the Pioneer Portfolio's estimated
post-Reorganization expenses and Pioneer's expense limitation undertaking with
respect to the Pioneer Portfolio were fair and reasonable in light of the
current level of operating expenses of the AmSouth Portfolio and AAMI's
voluntary expense limitation undertaking, which may be terminated at any time,
as well as AAMI's indication that it would not continue the current voluntary
expense limitation for the indefinite future.
Fourth, the Class II shares of Pioneer Value VCT Portfolio received in
the Reorganization will provide AmSouth Value Fund shareholders with exposure to
a comparable investment product.
Fifth, Pioneer's performance track record in managing the Pioneer
Portfolio, as well as its long-term investment track record managing mutual
funds that are similar to the Pioneer Portfolio. The Board noted that the
Pioneer Portfolio had slightly outperformed the AmSouth Portfolio for the
one-year period ended March 31, 2005, and that a comparable fund managed by
Pioneer had outperformed the AmSouth Portfolio over the longer term. On the
basis of this information, the Board determined that Pioneer is capable of
providing an acceptable level of long-term investment performance, appropriate
to the Pioneer Portfolio's investment objective, strategies and risks, despite
the absence of a long-term performance track record for the Pioneer Portfolio.
Based upon its review of the information provided, the Trustees of the
AmSouth Portfolio determined that the proposed Reorganization was in the best
interests of the AmSouth Portfolio and the beneficial owners of its shares and
will not dilute the interests of such beneficial owners. Accordingly, the
Trustees determined to recommend that the beneficial owners of the AmSouth
Portfolio approve the Reorganization.
The Trustees recommend that the shareholders of your AmSouth Portfolio
vote FOR the proposal to approve the Agreement and Plan of Reorganization.
-43-
TERMS OF EACH AGREEMENT AND PLAN OF REORGANIZATION
The Reorganizations
o Each Reorganization is scheduled to occur as of 4:00 p.m., Eastern
time, on [ ], 2005, unless your AmSouth Portfolio and the
corresponding Pioneer Portfolio agree in writing to a different
date. Your AmSouth Portfolio will transfer all of its assets to the
corresponding Pioneer Portfolio. The corresponding Pioneer
Portfolio will assume your AmSouth Portfolio's liabilities that are
included in the calculation of your AmSouth Portfolio's net asset
value on the Closing Date. The net asset value of both Portfolios
will be computed as of 4:00 p.m., Eastern time, on the Closing
Date.
o Each Pioneer Portfolio will issue Class II shares to the
corresponding AmSouth Portfolio with an aggregate net asset value
equal to the net assets attributable to the corresponding AmSouth
Portfolio's shares. These shares will immediately be distributed to
your AmSouth Portfolio's shareholders in proportion to the relative
net asset value of their holdings of your AmSouth Portfolio's
shares on the Closing Date. As a result, your AmSouth Portfolio's
shareholders will end up as Class II shareholders of the
corresponding Pioneer Portfolio.
o After the distribution of shares, your AmSouth Portfolio will be
liquidated and dissolved.
o Each Reorganization is intended to result in no income, gain or
loss being recognized for federal income tax purposes and will not
take place unless both Portfolios involved in the Reorganization
receive a satisfactory opinion concerning the tax consequences of
the Reorganization from Wilmer Cutler Pickering Hale and Dorr LLP,
counsel to the Pioneer Portfolios.
Agreement and Plan of Reorganization
The shareholders of your AmSouth Portfolio are being asked to approve
an Agreement and Plan of Reorganization substantially in the form attached as
Exhibit A (each, a "Plan"). The description of the Plan contained herein is
qualified in its entirety by the attached copy.
Conditions to Closing each Reorganization. The obligation of each
Portfolio to consummate each Reorganization is subject to the satisfaction of
certain conditions, including each Portfolio's performance of all of its
obligations under the Plan, the receipt of certain documents and financial
statements from your AmSouth Portfolio and the receipt of all consents, orders
and permits necessary to consummate the Reorganization (see Sections 7 and 8 of
the Plan). The consummation of each Reorganization is not contingent on the
consummation of any other Reorganization.
The obligations of both Portfolios are subject to the approval of the
Plan by the necessary vote of the outstanding shares of your AmSouth Portfolio,
in accordance with the provisions of your AmSouth Trust's trust instrument and
by-laws. The Portfolios' obligations are also subject to the receipt of a
favorable opinion of Wilmer Cutler Pickering Hale and Dorr LLP as to the United
States federal income tax consequences of each Reorganization (see Section 8.5
of the Plan).
Termination of Agreement. The board of either the AmSouth Trust or the
Pioneer Trust may terminate the Plan (even if the shareholders of your AmSouth
Portfolio have already approved it) at any time before the Closing Date, if that
board believes in good faith that proceeding with the Reorganization would no
longer be in the best interests of shareholders.
TAX STATUS OF EACH REORGANIZATION
Each Reorganization is intended to result in no income, gain or loss
being recognized for United States federal income tax purposes and will not take
place unless both the AmSouth Trust and the Pioneer Trust receive a satisfactory
opinion from Wilmer Cutler Pickering Hale and Dorr LLP, counsel to the Pioneer
Trust, substantially to the effect that each Reorganization will be a
"reorganization" within the meaning of Section 368(a) of the Code.
As a result, for federal income tax purposes:
-44-
o No gain or loss will be recognized by your AmSouth Portfolio upon
(1) the transfer of all of its assets to the corresponding Pioneer
Portfolio as described in this Proxy Statement/Prospectus or (2)
the distribution by your AmSouth Portfolio of Pioneer Portfolio
Class II shares to your AmSouth Portfolio's shareholders;
o No gain or loss will be recognized by the corresponding Pioneer
Portfolio upon the receipt of your AmSouth Portfolio's assets
solely in exchange for the issuance of Pioneer Portfolio shares to
your AmSouth Portfolio and the assumption of your AmSouth
Portfolio's liabilities by the Pioneer Portfolio;
o The basis of the assets of your AmSouth Portfolio acquired by the
corresponding Pioneer Portfolio will be the same as the basis of
those assets in the hands of your AmSouth Portfolio immediately
before the transfer;
o The tax holding period of the assets of your AmSouth Portfolio in
the hands of the corresponding Pioneer Portfolio will include your
AmSouth Portfolio's tax holding period for those assets;
o Shareholders will not recognize gain or loss upon the exchange of
your shares of their AmSouth Portfolio solely for the Pioneer
Portfolio shares as part of the Reorganization;
o The basis of the Pioneer Portfolio shares received by shareholders
in the Reorganization will be the same as the basis of their shares
of your AmSouth Portfolio surrendered in the exchange; and
o The tax holding period of the Pioneer Portfolio shares shareholders
receive will include the tax holding period of the shares of your
AmSouth Portfolio surrendered in the exchange, provided that
shareholders held the shares of the AmSouth Portfolio as capital
assets on the date of the exchange.
In rendering such opinions, counsel shall rely upon, among other
things, reasonable assumptions as well as representations of the AmSouth Trust
and the Pioneer Trust (see the annexes to the Plan).
No tax ruling has been or will be received from the Internal Revenue
Service ("IRS") in connection with the Reorganizations. An opinion of counsel is
not binding on the IRS or a court, and no assurance can be given that the IRS
would not assert, or a court would not sustain, a contrary position.
You should consult your tax adviser for the particular tax consequences
to you of the Reorganizations, including the applicability of any state, local
or foreign tax laws.
VOTING RIGHTS AND REQUIRED VOTE
Each share of your AmSouth Portfolio is entitled to one vote for each
dollar value invested and each fractional share shall be entitled to a
proportionate vote. A quorum is required to conduct business at the Meeting.
With respect to each AmSouth Portfolio, the presence in person or by proxy of a
majority of the outstanding shares of an AmSouth Portfolio entitled to cast
votes at the Meeting will constitute a quorum with respect to that AmSouth
Portfolio. The favorable vote of a majority of outstanding shares of the
applicable AmSouth Portfolio is required for each of Proposals 1(a)-(c).
- ----------------------------------------------------------------------------------- -----------------------------------------
Shares Quorum Voting
- -----------------------------------------------------------------------------------------------------------------------------
In General All shares "present" in person or by Shares "present" in person will be
proxy are counted towards a quorum. voted in person at the Meeting.
Shares present by proxy will be voted
in accordance with instructions.
- -----------------------------------------------------------------------------------------------------------------------------
Broker Non-Vote (where the underlying Considered "present" at Meeting for Broker non-votes do not count as a
holder has not voted and the broker purposes of quorum. vote "for" and effectively result in a
does not have discretionary authority vote "against" Proposals 1(a)-(c).
to vote the shares)
- -----------------------------------------------------------------------------------------------------------------------------
-45-
- -----------------------------------------------------------------------------------------------------------------------------
Proxy with No Voting Instruction Considered "present" at Meeting for Voted "for" the proposal.
(other than Broker Non-Vote) purposes of quorum.
- -----------------------------------------------------------------------------------------------------------------------------
Vote to Abstain Considered "present" at Meeting for Abstentions do not constitute a vote
purposes of quorum. "for" and effectively result in a vote
"against" Proposals 1(a)-(c).
- -----------------------------------------------------------------------------------------------------------------------------
COMPARISON OF DELAWARE STATUTORY TRUST AND MASSACHUSETTS BUSINESS TRUST
The AmSouth Portfolios are series of a Massachusetts Business Trust,
whereas the Pioneer Portfolios are series of a Delaware Statutory Trust. The
following is a summary of the principal differences between Delaware Statutory
Trusts and Massachusetts Business Trusts.
Limitation of Shareholders' and Series' Liability
Delaware law provides that the shareholders of a Delaware statutory
trust shall not be subject to liability for the debts or obligations of the
trust. Under Massachusetts law, shareholders of a Massachusetts business trust
may, under certain circumstances, be liable for the debts and obligations of
that trust. Although the risk of liability of shareholders of a Massachusetts
business trust who do not participate in the management of the trust is remote,
Delaware law affords greater protection against potential shareholder liability.
Similarly, Delaware law provides that, to the extent that a Delaware statutory
trust issues multiple series of shares, each series shall not be liable for the
debts or obligations of any other series, another potential, although remote,
risk in the case of a Massachusetts business trust. While the Trustees believe
that a series of a Massachusetts business trust will only be liable for its own
obligations, there is no direct statutory or judicial support for that position.
However, the AmSouth Trust's Declaration of Trust provides that Shareholders
shall not be subject to any personal liability for the obligations of the Trust.
The Declaration of Trust provides for indemnification out of the Trust property
of any Shareholder held personally liable solely by reason of his or her being
or having been a Shareholder.
Limitation of Trustee Liability
Delaware law provides that, except to the extent otherwise provided in
a trust's declaration of trust or by-laws, trustees will not be personally
liable to any person (other than the statutory trust or a shareholder thereof)
for any act, omission or obligation of the statutory trust or any trustee
thereof. Delaware law also provides that a trustee's actions under a Delaware
statutory trust's declaration of trust or by-laws will not subject the trustee
to liability to the statutory trust or its shareholders if the trustee takes
such action in good faith reliance on the provisions of the statutory trust's
declaration of trust or by-laws. The declaration of trust of a Massachusetts
business trust may limit the liability of a trustee, who is not also an officer
of the corporation, for breach of fiduciary duty except for, among other things,
any act or omission not in good faith which involves intentional misconduct or a
knowing violation of law or any transaction from which such trustee derives an
improper direct or indirect financial benefit. The trustees believe that such
limitations on liability under Delaware law and under the Pioneer Trust's
declaration of trust are consistent with those applicable to directors of a
corporation under Delaware law and will be beneficial in attracting and
retaining in the future qualified persons to act as trustees.
Shareholder Voting
Delaware law provides that a Delaware statutory trust's declaration of
trust or by-laws may set forth provisions related to voting in any manner. This
provision appears to permit trustee and shareholder voting through computer or
electronic media. For an investment company with a significant number of
institutional shareholders, all with access to computer or electronic networks,
the use of such voting methods could significantly reduce the costs of
shareholder voting. However, the advantage of such methods may not be realizable
unless the SEC modifies its proxy rules. Also, as required by the 1940 Act,
votes on certain matters by trustees would still need to be taken at actual
in-person meetings.
Board Composition
Delaware law explicitly provides that separate boards of trustees may
be authorized for each series of a Delaware statutory trust. Whether separate
boards of trustees can be authorized for series of a Massachusetts business
trust is unclear
-46-
under Massachusetts law. As always, the establishment of any board of trustees
of a registered investment company must comply with applicable securities laws,
including the provision of the 1940 Act regarding the election of trustees by
shareholders. Establishing separate boards of trustees would, among other
things, enable the series of a Delaware statutory trust to be governed by
individuals who are more familiar with such series' particular operations.
ADDITIONAL INFORMATION ABOUT THE PIONEER PORTFOLIOS
Investment Adviser
Pioneer serves as the investment adviser to each Pioneer Portfolio.
Pioneer is an indirect, wholly owned subsidiary of UniCredito Italiano S.p.A.,
one of the largest banking groups in Italy. Pioneer is part of the global asset
management group providing investment management and financial services to
mutual funds, institutional and other clients. As of December 31, 2004, assets
under management were approximately $42 billion worldwide, including over $175
billion in assets under management by Pioneer. Pioneer's main office is at 60
State Street, Boston, Massachusetts 02109. Pioneer's U.S. mutual fund investment
history includes creating one of the first mutual funds in 1928.
The board of trustees of the Pioneer Portfolios is responsible for
overseeing the performance of each of Pioneer Portfolio's investment adviser and
subadviser, if any, and determining whether to approve and renew the Portfolio's
investment advisory agreement and the subadvisory agreements.
Pioneer has received an order (the "Exemptive Order") from the SEC that
permits Pioneer, subject to the approval of the Pioneer Portfolios' board of
trustees, to hire and terminate a subadviser or to materially modify an existing
subadvisory agreement for a Pioneer Portfolio without shareowner approval.
Pioneer retains the ultimate responsibility to oversee and recommend the hiring,
termination and replacement of any subadviser. To the extent that the SEC adopts
a rule that would supersede the Exemptive Order, Pioneer and the Pioneer
Portfolios intend to rely on such rule to permit Pioneer, subject to the
approval of the Pioneer Portfolios' board of trustees and any other applicable
conditions of the rule, to hire and terminate a subadviser or to materially
modify an existing subadvisory agreement for a Pioneer Portfolio without
shareowner approval.
Buying, Exchanging and Selling Shares of the Pioneer Portfolios
Net Asset Values
Each Pioneer Portfolio's net asset value is the value of its portfolio
of securities plus any other assets minus its operating expenses and any other
liabilities. Each Pioneer Portfolio calculates a net asset value for each class
of shares every day the New York Stock Exchange is open when regular trading
closes (normally 4:00 p.m. Eastern time).
Each Pioneer Portfolio generally values its portfolio securities using
closing market prices or readily available market quotations. When closing
market prices or market quotations are not available or are considered by
Pioneer to be unreliable, the Portfolio uses a security's fair value. Fair value
is the valuation of a security determined on the basis of factors other than
market value in accordance with procedures approved by the Pioneer Portfolios'
trustees. The Portfolio also may use the fair value of a security, including a
non-U.S. security, when Pioneer determines that the closing market price on the
primary exchange where the security is traded no longer accurately reflects the
value of the security due to factors affecting one or more relevant securities
markets or the specific issuer. The use of fair value pricing by the Portfolio
may cause the net asset value of its shares to differ from the net asset value
that would be calculated using closing market prices. International securities
markets may be open on days when the U.S. markets are closed. For this reason,
the value of a Pioneer Portfolio's shares could change on a day when insurance
companies or qualified plans cannot buy or sell shares of the Portfolio. In
connection with making fair valuations of the value of fixed income securities,
the Portfolio's trustees may use a pricing matrix. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, which is a
method of estimating market value.
The interests of variable contracts and qualified plans investing in
the Portfolios could conflict due to differences of tax treatment and other
considerations. The Pioneer Portfolios currently do not foresee any
disadvantages to investors arising out of the fact that each Portfolio may offer
its shares to insurance company separate accounts to serve as the investment
media for both variable annuity and variable life insurance contracts, or that
each Portfolio may offer its shares to qualified plans. Nevertheless, the
Portfolios' trustees intend to monitor events in order to identify any material
-47-
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response to such conflicts. If such a conflict were
to occur, one or more insurance companies' separate accounts or qualified plans
might be required to withdraw their investments in one or more portfolios and
shares of another Portfolio may be substituted. This might force a Portfolio to
sell securities at disadvantageous prices. In addition, the trustees may refuse
to sell shares of any Portfolio to any separate account or qualified plan or may
suspend or terminate the offering of shares of any Portfolio if such action is
required by law or regulatory authority or is in the best interests of the
shareholders of the Portfolio.
Insurance companies and plan fiduciaries are required to notify a
Pioneer Portfolio if the tax status of their separate account or qualified plan
is revoked or challenged by the Internal Revenue Service. The Portfolio may
redeem any account of any shareowner whose qualification as a diversified
segregated asset account or a qualified plan satisfying the requirements of
Treasury Regulation ss.1.817-5 is revoked or challenged. The Portfolio will not
treat an investor as a qualified plan for this purpose unless the investor is
among the categories specifically enumerated in Revenue Ruling 94-62, 1994-2
C.B. 164. An insurance company separate account or qualified plan whose tax
status is revoked or challenged by the Internal Revenue Service may be liable to
the Portfolios or the adviser for losses incurred by the Portfolios or the
adviser as a result of such action.
Excessive Trading
Frequent trading into and out of the Pioneer Portfolios can disrupt
portfolio management strategies, harm portfolio performance by forcing the
Pioneer Portfolio to hold excess cash or to liquidate certain portfolio
securities prematurely and increase expenses for all investors, including
long-term investors who do not generate these costs. An investor may use
short-term trading as a strategy, for example, if the investor believes that the
valuation of the Pioneer Portfolio's securities for purposes of calculating its
net asset value does not fully reflect the then current fair market value of
those holdings. The Pioneer Portfolios discourage, and do not take any
intentional action to accommodate, excessive and short-term trading practices,
such as market timing. Although there is no generally applied standard in the
marketplace as to what level of trading activity is excessive, we may consider
trading in a Pioneer Portfolio's shares to be excessive for a variety of
reasons, such as if a variable contract owner or plan participant provides
instructions to the insurance company or plan administrator for:
o The sale of shares of a Pioneer Portfolio within a short period of
time after the shares were purchased;
o Two or more purchases and redemptions within a short period of
time; or
o A series of transactions that is indicative of a timing pattern or
strategy.
The Pioneer Trust's Board of Trustees has adopted policies and
procedures with respect to frequent purchases and redemptions of portfolio
shares by investors. Because the insurance company aggregates the trading by
variable contract owners, we are not able to monitor trading at the variable
contract owner level. If we are advised by an insurance company that a variable
contract owner, initiating transactions in the Pioneer Portfolio through a
separate account that is the owner of record, has engaged in excessive
short-term trading that we believe may be harmful to the Pioneer Portfolio, we
will ask the insurance company to restrict the variable contract owner from
placing further purchase orders in the Pioneer Portfolio.
We may seek limitations on trading activity by qualified plans
investing in a Pioneer Portfolio in similar circumstances. In determining
whether to take such action, we seek to act in a manner that is consistent with
the best interests of the Pioneer Portfolio's shareholders. In order to prevent
short-term trading in Pioneer Portfolios that primarily invest in non-U.S.
securities, these portfolios use a fair value pricing service, as discussed
under "Net asset value" in the prospectus. While we use efforts that we believe
are reasonable under the circumstances to detect excessive trading activity,
there can be no assurance that our efforts will be successful or that market
timers will not employ tactics designed to evade detection. If we are not
successful, the return of an investor in a portfolio may be adversely affected.
However, we are dependent upon the insurance companies that offer variable
contracts and the administrators of the qualified plans that invest in the
Pioneer Portfolios to monitor and restrict such activities. Consequently, an
investment in a Pioneer Portfolio may involve the risk that certain investors
will engage in short-term or excessive trading.
The Pioneer Portfolios may reject any purchase order before its
acceptance or an order prior to issuance of shares, or request that the
insurance company or plan administrator restrict transaction activity by a
variable contract owner, for any reason, without prior notice, including
transactions that the Pioneer Portfolios believe are requested on behalf of
market timers. The Pioneer Portfolios reserve the right to reject any purchase
request by a qualified plan or insurance company if
-48-
the Pioneer Portfolios believe that any combination of trading activity in the
account or related accounts is potentially disruptive to the Pioneer Portfolios.
A prospective investor whose purchase order is rejected will not achieve the
investment results, whether gain or loss, that would have been realized if the
order were accepted and an investment made in the Pioneer Portfolio. The Pioneer
Portfolios and their shareholders do not incur any gain or loss as a result of a
rejected order. The Pioneer Portfolios may impose further restrictions on
trading activities by market timers in the future. This Pioneer Portfolios'
prospectuses will be amended or supplemented to reflect any material additional
restrictions on trading activities intended to prevent excessive trading.
Selling
Shares of a Pioneer Portfolio may be sold on any business day. Pioneer
Portfolio shares are sold at the net asset value next determined after receipt
by the Portfolio of a redemption request in good order from the insurance
company as described in the prospectus of the insurance company's variable
contract. Sale proceeds will normally be forwarded by bank wire to the selling
insurance company on the next business day after receipt of the sales
instructions by a Pioneer Portfolio but in no event later than 7 days following
receipt of instructions. Each Pioneer Portfolio may suspend transactions in
shares or postpone payment dates when trading on the New York Stock Exchange is
closed or restricted, when the SEC determines an emergency or other
circumstances exist that make it impracticable for the Portfolio to sell or
value its investments.
You can obtain more free information about the Pioneer Portfolios by
writing to Pioneer Investment Management Shareowner Services, Inc., 60 State
Street, Boston, Massachusetts 02109. You may also call 1-800-225-6292.
Taxes
Class II shares of each Pioneer Portfolio are held by life insurance
company separate accounts that fund variable annuity or life insurance contracts
or by certain qualified plans. Owners of variable contracts should read the
prospectus for their insurance company's variable contract for a discussion of
the tax status of a variable contract, including the tax consequences of
withdrawals or other payments, and should keep all statements received from the
insurance company or the Pioneer Portfolios to assist in personal recordkeeping.
Under the Code, a Pioneer Portfolio's dividends and distributions of
net short-term capital gain in excess of net long-term capital loss to insurance
company separate accounts or qualified plans generally are treated as ordinary
income; distributions to those accounts of net long-term capital gain in excess
of net short-term capital loss are generally treated as long-term capital gain.
For U.S. federal income tax purposes, dividends and capital gain distributions
are treated as received by the insurance company or the qualified plan rather
than by the owner of the variable contract or the plan participant. Insurance
companies and qualified plans should consult their own tax advisers regarding
the tax treatment of dividend and capital gain distributions they receive from
any Pioneer Portfolio.
Each Pioneer Portfolio is treated as a separate entity for U.S. federal
income tax purposes and either has elected, or will elect, to be treated and
intends to qualify each year as a regulated investment company under Subchapter
M of the Code. Each Pioneer Portfolio must satisfy certain requirements relating
to the sources of its income, diversification of its assets and distribution of
its income to shareholders to qualify as a regulated investment company. As a
regulated investment company, each Pioneer Portfolio generally will not be
subject to U.S. federal income tax on any net investment income and net realized
capital gains that are distributed to its shareholders as required under the
Code.
In addition, each Pioneer Portfolio also meets certain diversification
requirements imposed by the Code on separate accounts of insurance companies
relating to the tax-deferred status of variable contracts. The failure of a
qualified plan to be or remain qualified could cause the insurance company
separate account to fail to meet such diversification requirements. More
specific information on these diversification requirements is contained in the
insurance company's separate account prospectus and the statement of additional
information for the Pioneer Portfolio.
-49-
FINANCIAL HIGHLIGHTS
The following tables show the financial performance of each Pioneer
Portfolio for the past five fiscal years (or the period during which each
Pioneer Portfolio has been in operation, if less than five years). Certain
information reflects financial results for a single Pioneer Portfolio share.
"Total return" shows how much an investment in a Pioneer Portfolio would have
increased or decreased during each period, assuming you had reinvested all
dividends and other distributions. In the case of each Pioneer Portfolio, each
fiscal year ended on or after the fiscal year ended December 31, 2002 has been
audited by Ernst & Young, LLP, each Pioneer Portfolio's independent registered
public accounting firm, as stated in their reports incorporated by reference in
this registration statement. For fiscal years prior to the fiscal year ended
December 31, 2002, the financial statements of each Pioneer Portfolio were
audited by Arthur Andersen LLP, the Pioneer Portfolios' previous independent
accountants. Arthur Andersen ceased operations in 2002. The information for any
semiannual period has not been audited.
-50-
Pioneer Fund VCT Portfolio
Class II Shares(a)
- ------------------------------------------------------------------------------------------------------------------------------------
For the year ended
- ------------------------------------------------------------------------------------------------------------------------------------
5/1/00 to
2004 2003 2002 2001 12/31/00
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 18.66 $ 15.25 $ 19.05 $ 22.65 $ 23.28
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from investment operations:
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.18 $ 0.14 $ 0.13 $ 0.14 $ 0.12
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on
investments and foreign currency transactions 1.85 3.42 (3.78) (2.59) (0.45)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) from investment operations $ 2.03 $ 3.56 $ (3.65) $ (2.45) $ (0.33)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareowners:
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (0.18) (0.15) (0.15) (0.13) (0.17)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain -- -- -- (1.02) (0.13)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value $ 1.85 $ 3.41 $ (3.80) $ (3.60) $ (0.63)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 20.51 $ 18.66 $ 15.25 $ 19.05 $ 22.65
- -----------------------------------------------------------------------------------------------------------------------------------
Total return* 10.93% 23.44% (19.25)% (11.09)% (1.61)%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(+) 0.96% 1.00% 1.06% 1.04% 0.93%**
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets(+) 1.00% 0.87% 0.84% 0.49% 0.47%**
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 17% 11% 11% 7% 19%**
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $133,627 $87,488 $36,218 $12,674 $2,894
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios with no waiver of management fees and assumption
of expenses by PIM and no reduction for fees paid
indirectly:
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 0.96% 1.00% 1.06% 1.04% 0.93%**
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.00% 0.87% 0.84% 0.49% 0.47%
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Class II shares were first publicly offered on May 1, 2000.
* 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.
-51-
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Class II Shares
- --------------------------------------------------------------------------------------------------------
3/15/04
to
12/31/04
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
- --------------------------------------------------------------------------------------------------------
Increase from investment operations:
- --------------------------------------------------------------------------------------------------------
Net investment income $ 0.03
- --------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency transactions 1.06
- --------------------------------------------------------------------------------------------------------
Net increase from investment operations $ 1.09
- --------------------------------------------------------------------------------------------------------
Net increase in net asset value $ 1.09
- --------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.09
- --------------------------------------------------------------------------------------------------------
Total return* 10.90%
- --------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets(+) 0.95%**
- --------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets(+) 0.79%**
- --------------------------------------------------------------------------------------------------------
Portfolio turnover rate 21%
- --------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 4,397
- --------------------------------------------------------------------------------------------------------
Ratios with no waiver of management fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
- --------------------------------------------------------------------------------------------------------
Net expenses 6.22%**
- --------------------------------------------------------------------------------------------------------
Net investment loss (4.48)%**
- --------------------------------------------------------------------------------------------------------
Ratios with waiver of management fees and assumption of expenses by PIM and
reduction for fees paid indirectly
- --------------------------------------------------------------------------------------------------------
Net expenses 0.95%**
- --------------------------------------------------------------------------------------------------------
Net investment income 0.79%**
- --------------------------------------------------------------------------------------------------------
* 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. Total return
rate is not annualized.
** Annualized.
(+) Ratios with no reduction for fees paid indirectly.
-52-
Pioneer Value VCT Portfolio(a)
Class II Shares(a)
- -------------------------------------------------------------------------------------------------------------------------
For the year ended
- -------------------------------------------------------------------------------------------------------------------------
December 31, May 1, 2003
2004 to
December 31, 2003(a)
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 12.04 $ 10.00
- -------------------------------------------------------------------------------------------------------------------------
Increase from investment operations:
- -------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.02 $ 0.01
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments and foreign currency transactions 1.36 2.03
- -------------------------------------------------------------------------------------------------------------------------
Net increase from investment operations $ 1.38 $ 2.04
- -------------------------------------------------------------------------------------------------------------------------
Distributions to shareowners:
- -------------------------------------------------------------------------------------------------------------------------
Net income $ (0.01) $ --
- -------------------------------------------------------------------------------------------------------------------------
Net realized gain (0.01) --
- -------------------------------------------------------------------------------------------------------------------------
Net increase in net asset value $ 1.36 $ 2.04
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 13.40 $ 12.04
- -------------------------------------------------------------------------------------------------------------------------
Total return* 11.40% 20.40%
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets+ 1.50% 1.50%**
- -------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets+ 0.27% 0.27%**
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 52% 24%
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 10,879 $ 1,695
- -------------------------------------------------------------------------------------------------------------------------
Ratios with no waiver of management fees and assumption of expenses by PIM and
no reduction for fees paid indirectly:
- -------------------------------------------------------------------------------------------------------------------------
Net expenses 3.61% 10.93%**
- -------------------------------------------------------------------------------------------------------------------------
Net investment income (1.85)% (9.16)%**
- -------------------------------------------------------------------------------------------------------------------------
Ratios with waiver of management fees and assumption of expenses by PIM and
reduction for fees paid indirectly:
- -------------------------------------------------------------------------------------------------------------------------
Net expenses 1.50% 1.50%**
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 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.
-53-
INFORMATION CONCERNING THE MEETING
Voting by Contract Owners
Because the insurance company that issued your variable annuity or
variable life insurance contract is the owner of record of shares of your
AmSouth Portfolio, your vote will instruct the insurance company how to vote the
shares of the AmSouth Portfolio attributable to your contract. The insurance
company will vote all of the shares of the AmSouth Portfolio which it holds that
are not attributable to any contract in the same proportion as the voting
instructions received from its contract owners with respect to the AmSouth
Portfolio. The insurance company will also vote those shares for which no timely
voting instruction was received from the contract owner in the same proportion
as the voting instructions timely received from its other contract owners with
respect to the AmSouth Portfolio.
Solicitation of Proxies
In addition to the mailing of these proxy materials, proxies may be
solicited by telephone, by fax or in person by the Trustees and officers of your
AmSouth Portfolio or its affiliates, including personnel of your AmSouth
Portfolio's transfer agent, by the Pioneer Portfolios' investment adviser,
Pioneer, the Pioneer Portfolios' transfer agent, PIMSS, or by broker-dealer
firms. [ ], has been retained to provide proxy solicitation services to the
AmSouth Portfolios at a cost of approximately $[ ]. Pioneer and AmSouth
Bancorporation will bear the cost of such solicitation.
Revoking Proxies
An AmSouth Portfolio shareholder signing and returning a proxy has the
power to revoke it at any time before it is exercised:
o by filing a written notice of revocation with your AmSouth
Portfolio's transfer agent, BISYS Fund Services, 3435 Stelzer Road,
Columbus, Ohio 43219-3035, or
o by returning a duly executed proxy with a later date before the
time of the Meeting, or
o if a shareholder has executed a proxy but is present at the Meeting
and wishes to vote in person, by notifying the secretary of your
AmSouth Portfolio (without complying with any formalities) at any
time before it is voted.
Being present at the Meeting alone does NOT revoke a previously
executed and returned proxy.
Outstanding Shares
Only shareholders of record on [July 29], 2005 (the "record date") are
entitled to notice of and to vote at the Meeting. As of the record date, the
following number of shares, representing the indicated number of votes, of each
AmSouth Portfolio were outstanding.
Shares
Outstanding
([July 29], 2005) Number of Votes
----------------- ---------------
Portfolio
AmSouth Capital Growth Fund ........... [ ]
AmSouth Select Equity Fund ............ [ ]
AmSouth Value Fund ..................... [ ]
-54-
Other Business
Your AmSouth Portfolio's Board knows of no business to be presented for
consideration at the Meeting other than Proposals 1(a)-(c). If other business is
properly brought before a Meeting, proxies will be voted according to the best
judgment of the persons named as proxies.
Adjournments
If, by the time scheduled for the Meeting, a quorum of shareholders of
a AmSouth Portfolio is not present or if a quorum is present but sufficient
votes "for" a proposal have not been received, the persons named as proxies may
adjourn the Meeting with respect to one or more of the Portfolios to another
date and time, and the Meeting may be held as adjourned within a reasonable time
after the date set for the original Meeting for that AmSouth Portfolio without
further notice. A shareholder vote may be taken prior to any adjournment of the
Meeting on any proposal for which there is sufficient votes for approval, even
though the Meeting is adjourned as to other proposals. Any such adjournment will
require the affirmative vote of a majority of the votes cast on the question in
person or by proxy at the session of the Meeting to be adjourned. The persons
named as proxies will vote all proxies in favor of the adjournment that voted in
favor of the proposal or that abstained. They will vote against such adjournment
those proxies required to be voted against the proposal. Broker non-votes will
be disregarded in the vote for adjournment. If the adjournment requires setting
a new record date or the adjournment is for more than 120 days from the original
Meeting (in which case the Board of Trustees of your AmSouth Portfolio will set
a new record date), your AmSouth Portfolio will give notice of the adjourned
meeting to its shareholders.
Telephone Voting
In addition to soliciting proxies by mail, by fax or in person, your
AmSouth Portfolio may also arrange to have votes recorded by telephone by
officers and employees of your AmSouth Portfolio or by personnel of the adviser
or transfer agent or a third party solicitation firm. The telephone voting
procedure is designed to verify a shareowner's identity, to allow a shareowner
to authorize the voting of shares in accordance with the shareowner's
instructions and to confirm that the voting instructions have been properly
recorded. If these procedures were subject to a successful legal challenge,
these telephone votes would not be counted at the Meeting. Your AmSouth
Portfolio has not obtained an opinion of counsel about telephone voting, but is
currently not aware of any challenge.
o A shareowner will be called on a recorded line at the telephone
number in the AmSouth Portfolio's account records and will be asked
to provide the shareowner's social security number or other
identifying information.
o The shareowner will then be given an opportunity to authorize
proxies to vote his or her shares at the Meeting in accordance with
the shareowner's instructions.
o To ensure that the shareowner's instructions have been recorded
correctly, the shareowner will also receive a confirmation of the
voting instructions by mail.
o A toll-free number will be available in case the voting information
contained in the confirmation is incorrect.
o If the shareowner decides after voting by telephone to attend the
Meeting, the shareowner can revoke the proxy at that time and vote
the shares at the Meeting.
Shareholders' Proposals
Your AmSouth Portfolio is not required, and does not intend, to hold
meetings of shareholders each year. Instead, meetings will be held only when and
if required. Any shareholders desiring to present a proposal for consideration
at the next meeting for shareholders must submit the proposal in writing, so
that it is received by your AmSouth Portfolio to Variable Insurance Funds,
Attention: Secretary, within a reasonable time before any meeting. Proposals
must be received a reasonable time prior to the date of a meeting of
shareholders to be considered for inclusion in the proxy materials for a
meeting. Timely submission of a proposal does not, however, necessarily mean
that a proposal will be included. Persons named as proxies for any subsequent
shareholders' meeting will vote in their discretion with respect to proposals
submitted
-55-
on an untimely basis. If the Reorganization is completed, your AmSouth Portfolio
will not hold another shareowner meeting.
Appraisal Rights
If the Reorganization of your AmSouth Portfolio is approved at the
Meeting, shareholders of your AmSouth Portfolio will not have the right to
dissent and obtain payment of the fair value of their shares because the
exercise of appraisal rights is subject to the forward pricing requirements of
Rule 22c-1 under the Investment Company Act, which supersede state law.
Shareholders of your AmSouth Portfolio, however, have the right to redeem their
Portfolio shares at net asset value until the closing date of the
Reorganization. After the Reorganization, shareholders of your AmSouth
Portfolios will hold shares of the corresponding Pioneer Portfolio.
OWNERSHIP OF SHARES OF THE PORTFOLIOS
AmSouth Portfolios
To the knowledge of your AmSouth Portfolio, as of June 30, 2005, the
following persons owned of record or beneficially 5% or more of the outstanding
shares of each of the AmSouth Portfolios: Hartford Life Insurance Company owned
[100%] of the outstanding shares of the AmSouth Value Fund, [100%] of the
outstanding Shares of AmSouth Select Equity Fund, and [97.34]% of the
outstanding Shares of the Capital Growth Fund, and thus may be deemed to be able
to control the outcome of any matter submitted to a vote of the Shareholders of
any of those Funds. AmSouth Investment Services owned [2.66]% of the outstanding
shares of AmSouth Capital Growth Fund.
AmSouth Bank or other companies controlled by AmSouth Bank (the
"AmSouth Bank Companies") own shares of certain AmSouth Portfolios. The AmSouth
Bank Companies intend to vote their shares in favor of the Proposals.
[As of June 30, 2005, the Trustees and officers of your AmSouth
Portfolio, as a group, beneficially owned in the aggregate less than 1% of the
outstanding shares of your AmSouth Portfolio.]
Pioneer Portfolios
To the knowledge of each Pioneer Portfolio, as of June 30, 2005, the
following persons owned of record or beneficially 5% or more of the outstanding
shares of each of the Pioneer Portfolios.
-----------------------------------------------------------------------------------------------------------------
Portfolio/Class Shareowner Names Actual Percentage Owned
-----------------------------------------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio
-----------------------------------------------------------------------------------------------------------------
Class I Allmerica Financial Life Co 31.23%
Accumulation Account
Attn: Separate Accounting
440 Lincoln St.
Worcester, MA 01653-0002
-----------------------------------------------------------------------------------------------------------------
Symetra Financial 52.56%
4854 154th PL NE
Redmond, WA 98052-9664
-----------------------------------------------------------------------------------------------------------------
American United Life 5.06%
AUL Group Retirement Annuity
Separate Account II
One American Square
PO Box 1995
Indianapolis, IN 46206-9102
-----------------------------------------------------------------------------------------------------------------
Class II Allmerica Financial Life Co 8.83%
Accumulation Account
Attn: Separate Accounting
440 Lincoln St.
Worcester, MA 01653-0002
-----------------------------------------------------------------------------------------------------------------
-56-
-----------------------------------------------------------------------------------------------------------------
Portfolio/Class Shareowner Names Actual Percentage Owned
-----------------------------------------------------------------------------------------------------------------
Pioneer Fund VCT Portfolio
-----------------------------------------------------------------------------------------------------------------
Travelers Life & Annuity Company 16.25%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
Travelers Insurance Company 7.12%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
ING USA Annuity & Life Insurance Co 57.45%
ING Fund Operations
151 Farmington Avenue
Hartford, CT 06156-0001
-----------------------------------------------------------------------------------------------------------------
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
-----------------------------------------------------------------------------------------------------------------
Class II Travelers Life & Annuity Company 46.66%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
Travelers Insurance Company 51.89%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
Pioneer Value VCT Portfolio
-----------------------------------------------------------------------------------------------------------------
Class II Travelers Life & Annuity Company 56.31%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
Travelers Insurance Company 41.35%
PO Box 990027
Hartford, CT 06199-0027
-----------------------------------------------------------------------------------------------------------------
[As of June 30, 2005, the trustees and officers of each Pioneer
Portfolio owned less than 1% of the outstanding shares of the Pioneer
Portfolio.]
EXPERTS
AmSouth Portfolios
The financial statements and financial highlights of each AmSouth
Portfolio included in each AmSouth Portfolio's Annual Report at and for the year
ended December 31, 2004, have been audited by Ernst & Young LLP, independent
registered public accounting firm, as set forth in their report thereon
incorporated by reference into this registration statement. Such financial
statements and financial highlights are incorporated herein by reference in
reliance on such report given on the authority of such firm as experts in
accounting and auditing.
Pioneer Portfolios
The financial statements and financial highlights of each Pioneer
Portfolio included in Pioneer Variable Contracts Trust's Annual Report at and
for the year ended December 31, 2004, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report
thereon incorporated by reference into this registration statement. Such
financial statements and financial highlights are incorporated herein by
reference in reliance on such report given on the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
The AmSouth Portfolios and the Pioneer Portfolios are subject to the
informational requirements of the Securities Exchange Act of 1934 and the 1940
and file reports, Proxy Statements and other information with the SEC. These
reports, Proxy Statements and other information filed by the Portfolios can be
inspected and copied (for a duplication fee) at the public reference facilities
of the SEC at 450 Fifth Street, N.W., Washington, D.C. Copies of these materials
can also be obtained by mail from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549-0102 or by electronic request at
publicinfo@sec.gov, at prescribed rates. Investors may call 1-202-942-8090 for
more information
-57-
about the Public Reference Section of the SEC. In addition, copies of these
documents may be viewed on-screen or downloaded from the SEC's Internet site at
http://www.sec.gov.
-58-
Exhibit A -- Form of Agreement and Plan of Reorganization
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the __ day of _______ 2005, by and between Pioneer Variable Contracts Trust,
a Delaware statutory trust (the "Acquiring Trust"), on behalf of its series
Pioneer [____] VCT Portfolio (the "Acquiring Portfolio"), with its principal
place of business at 60 State Street, Boston, Massachusetts 02109, and Variable
Insurance Funds, a Massachusetts business trust (the "AmSouth Trust"), on behalf
of its series [ ] Fund (the "Acquired Portfolio"), with its principal place of
business at 3435 Stelzer Road, Columbus, Ohio 43219. The Acquiring Portfolio and
the Acquired Portfolio are sometimes referred to collectively herein as the
"Portfolios" and individually as a "Portfolio."
This Agreement is intended to be and is adopted as a plan of a
"reorganization" as defined in Section 368(a)(1)[(C)/(D)] of the United States
Internal Revenue Code of 1986, as amended (the "Code") and the Treasury
Regulations thereunder. The reorganization (the "Reorganization") will consist
of (1) the transfer of all of the assets of the Acquired Portfolio to the
Acquiring Portfolio in exchange solely for (A) the issuance of Class II shares
of beneficial interest of the Acquiring Portfolio (collectively, the "Acquiring
Portfolio Shares" and each, an "Acquiring Portfolio Share") to the Acquired
Portfolio, and (B) the assumption by the Acquiring Portfolio of the liabilities
of the Acquired Portfolio that are both set forth on the Statements of Assets
and Liabilities (as defined below) and also included in the calculation of net
asset value ("NAV") on the closing date of the Reorganization (the "Closing
Date") (collectively, the "Assumed Liabilities"), and (2) the distribution by
the Acquired Portfolio, on or promptly after the Closing Date as provided
herein, of the Acquiring Portfolio Shares to the shareholders of the Acquired
Portfolio in liquidation and dissolution of the Acquired Portfolio, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Acquiring Trust and the AmSouth Trust are each registered
investment companies classified as management companies of the open-end type.
WHEREAS, the Acquiring Portfolio is authorized to issue shares of
beneficial interest.
WHEREAS, the Board of Trustees of the AmSouth Trust and the Board of
Trustees of the Acquiring Trust have determined that the Reorganization is in
the best interests of the Acquired Portfolio shareholders and the Acquiring
Portfolio shareholders, respectively, and is not dilutive of the interests of
those shareholders.
NOW, THEREFORE, in consideration of the premises of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND ASSUMPTION OF THE ASSUMED LIABILITIES; LIQUIDATION AND
TERMINATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions herein set forth and on the
basis of the representations and warranties contained herein, the Acquired
Portfolio will transfer all of its assets as set forth in Paragraph 1.2 (the
"Acquired Assets") to the Acquiring Portfolio free and clear of all liens and
encumbrances (other than those arising under the Securities Act of 1933, as
amended (the "Securities Act"), liens for taxes not yet due and contractual
restrictions on the transfer of the Acquired Assets) and the Acquiring Portfolio
agrees in exchange therefor: (i) to issue to the Acquired Portfolio the number
of Acquiring Portfolio Shares, including fractional Acquiring Portfolio Shares,
with an aggregate NAV equal to the NAV of the Acquired Portfolio attributable to
the Acquired Portfolio's shares, as determined in the manner set forth in
Paragraphs 2.1 and 2.2; and (ii) to assume the Assumed Liabilities. Such
transactions shall take place at the Closing (as defined in Paragraph 3.1
below).
1.2 (a) The Acquired Assets shall consist of all of the Acquired
Portfolio's property, including, without limitation, all portfolio securities
and instruments, dividends and interest receivables, cash, goodwill, contractual
rights and choses in action of the Acquired Portfolio or the AmSouth Trust in
respect of the Acquired Portfolio, all other intangible property owned by the
Acquired Portfolio, originals or copies of all books and records
of the Acquired Portfolio, and all other assets of the Acquired Portfolio on the
Closing Date. The Acquiring Portfolio shall also be entitled to receive (or, to
the extent agreed upon between the AmSouth Trust and the Acquiring Trust, be
provided access to) copies of all records that the AmSouth Trust is required to
maintain under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules of the Securities and Exchange Commission (the
"Commission") thereunder to the extent such records pertain to the Acquired
Portfolio.
(b) The Acquired Portfolio has provided the Acquiring Portfolio
with a list of all of the Acquired Portfolio's securities and other assets as of
the date of execution of this Agreement, and the Acquiring Portfolio has
provided the Acquired Portfolio with a copy of the current fundamental
investment policies and restrictions and fair value procedures applicable to the
Acquiring Portfolio. The Acquired Portfolio reserves the right to sell any of
such securities or other assets before the Closing Date (except to the extent
sales may be limited by representations of the Acquired Portfolio contained
herein and made in connection with the issuance of the tax opinion provided for
in Paragraph 8.5 hereof).
1.3 The Acquired Portfolio will endeavor to discharge all of its known
liabilities and obligations that are or will become due prior to the Closing.
1.4 On or as soon after the Closing Date as is conveniently practicable
(the "Liquidation Date"), the AmSouth Trust shall liquidate the Acquired
Portfolio and distribute pro rata to its shareholders of record, determined as
of the close of regular trading on the New York Stock Exchange on the Closing
Date (the "Acquired Portfolio Shareholders"), the Acquiring Portfolio Shares
received by the Acquired Portfolio pursuant to Paragraph 1.1 hereof. Each
Acquired Portfolio Shareholder shall receive the number of Acquiring Portfolio
Shares corresponding to the class of shares of beneficial interest of the
Acquired Portfolio (the "Acquired Portfolio Shares") held by such Acquired
Portfolio Shareholder that have an aggregate NAV equal to the aggregate NAV of
the Acquired Portfolio Shares held of record by such Acquired Portfolio
Shareholder on the Closing Date. Such liquidation and distribution will be
accomplished by the AmSouth Trust instructing the Acquiring Trust to transfer
the Acquiring Portfolio Shares then credited to the account of the Acquired
Portfolio on the books of the Acquiring Portfolio to open accounts on the share
records of the Acquiring Portfolio established and maintained by the Acquiring
Portfolio's transfer agent in the names of the Acquired Portfolio Shareholders
and representing the respective pro rata number of the Acquiring Portfolio
Shares due the Acquired Portfolio Shareholders. All issued and outstanding
Acquired Portfolio Shares will simultaneously be cancelled on the books of the
Acquired Portfolio, and the Acquired Portfolio will be dissolved. The Acquiring
Portfolio shall not issue certificates representing the Acquiring Portfolio
Shares in connection with such exchange.
1.5 Ownership of Acquiring Portfolio Shares will be shown on the books
of the Acquiring Portfolio's transfer agent. Any certificates representing
ownership of Acquired Portfolio Shares that remain outstanding on the Closing
Date shall be deemed to be cancelled and shall no longer evidence ownership of
Acquired Portfolio Shares.
1.6 Any transfer taxes payable upon issuance of Acquiring Portfolio
Shares in a name other than the registered holder of the Acquired Portfolio
Shares on the books of the Acquired Portfolio as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Portfolio Shares are to be issued and transferred.
1.7 Any reporting responsibility of the AmSouth Trust with respect to
the Acquired Portfolio for taxable periods ending on or before the Closing Date,
including, but not limited to, the responsibility for filing of regulatory
reports, Tax Returns (as defined in Paragraph 4.1), or other documents with the
Commission, any state securities commissions, and any federal, state or local
tax authorities or any other relevant regulatory authority, is and shall remain
the responsibility of the AmSouth Trust.
2. VALUATION
2.1 The NAV of the Acquiring Portfolio Shares and the NAV of the
Acquired Portfolio shall, in each case, be determined as of the close of the New
York Stock Exchange (generally, 4:00 p.m., Boston time) on the Closing Date (the
"Valuation Time"). The NAV of each Acquiring Portfolio Share shall be computed
by Pioneer Investment Management, Inc. (the "Acquiring Portfolio Adviser") in
the manner set forth in the Acquiring
-2-
Portfolio's Declaration of Trust (the "Declaration"), or By-Laws, and the
Acquiring Portfolio's then-current prospectus and statement of additional
information. The NAV of the Acquired Portfolio shall be computed by BISYS Fund
Services Ohio, Inc. (the "Acquired Portfolio Administrator") by calculating the
value of the Acquired Assets and by subtracting therefrom the amount of the
liabilities of the Acquired Portfolio on the Closing Date included on the
Statement of Assets and Liabilities of the Acquired Portfolio delivered pursuant
to Paragraph 5.7 (the "Statement of Assets and Liabilities"), said assets and
liabilities to be valued in the manner set forth in the Acquiring Portfolio's
then current prospectus and statement of additional information. The Acquiring
Portfolio Adviser shall confirm to the Acquiring Portfolio the NAV of the
Acquired Portfolio.
2.2 The number of Acquiring Portfolio Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Assets and the
assumption of the Assumed Liabilities shall be determined by the Acquiring
Portfolio Adviser by dividing the NAV of the Acquired Portfolio, as determined
in accordance with Paragraph 2.1, by the NAV of each Acquiring Portfolio Share,
as determined in accordance with Paragraph 2.1.
2.3 The Acquiring Portfolio and the Acquired Portfolio shall cause the
Acquiring Portfolio Adviser and the Acquired Portfolio Administrator,
respectively, to deliver a copy of its valuation report to the other party at
Closing. All computations of value shall be made by the Acquiring Portfolio
Adviser and the Acquired Portfolio Administrator in accordance with its regular
practice as pricing agent for the Acquiring Portfolio and the Acquired
Portfolio, respectively.
3. CLOSING AND CLOSING DATE
3.1 The Closing Date shall be [ ], 2005, or such later date as the
parties may agree to in writing. All acts necessary to consummation the
Reorganization (the "Closing") shall be deemed to take place simultaneously as
of 5:00 p.m. (Eastern time) on the Closing Date unless otherwise provided. The
Closing shall be held at the offices of Wilmer Cutler Pickering Hale and Dorr
LLP, 60 State Street, Boston, Massachusetts, or at such other place as the
parties may agree.
3.2 Portfolio securities that are held other than in book-entry form in
the name of AmSouth Bank (the "Acquired Portfolio Custodian") as record holder
for the Acquired Portfolio shall be presented by the Acquired Portfolio to Brown
Brothers Harriman & Co. (the "Acquiring Portfolio Custodian") for examination no
later than three business days preceding the Closing Date. Such portfolio
securities shall be delivered by the Acquired Portfolio to the Acquiring
Portfolio Custodian for the account of the Acquiring Portfolio on the Closing
Date, duly endorsed in proper form for transfer, in such condition as to
constitute good delivery thereof in accordance with the custom of brokers, and
shall be accompanied by all necessary federal and state stock transfer stamps or
a check for the appropriate purchase price thereof. Portfolio securities held of
record by the Acquired Portfolio Custodian in book-entry form on behalf of the
Acquired Portfolio shall be delivered by the Acquired Portfolio Custodian
through the Depository Trust Company to the Acquiring Portfolio Custodian and by
the Acquiring Portfolio Custodian recording the beneficial ownership thereof by
the Acquiring Portfolio on the Acquiring Portfolio Custodian's records. Any cash
shall be delivered by the Acquired Portfolio Custodian transmitting immediately
available funds by wire transfer to the Acquiring Portfolio Custodian the cash
balances maintained by the Acquired Portfolio Custodian and the Acquiring
Portfolio Custodian crediting such amount to the account of the Acquiring
Portfolio.
3.3 The Acquiring Portfolio Custodian shall deliver within one business
day after the Closing a certificate of an authorized officer stating that: (a)
the Acquired Assets have been delivered in proper form to the Acquiring
Portfolio on the Closing Date, and (b) all necessary transfer taxes including
all applicable federal and state stock transfer stamps, if any, have been paid,
or provision for payment has been made in conjunction with the delivery of
portfolio securities as part of the Acquired Assets.
3.4 If on the Closing Date (a) the New York Stock Exchange is closed to
trading or trading thereon shall be restricted or (b) trading or the reporting
of trading on such exchange or elsewhere is disrupted so that accurate appraisal
of the NAV of the Acquiring Portfolio Shares or the Acquired Portfolio pursuant
to Paragraph 2.1 is impracticable, the Closing Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.
-3-
3.5 The Acquired Portfolio shall deliver at the Closing a list of the
names, addresses, federal taxpayer identification numbers and backup withholding
and nonresident alien withholding status and certificates of the Acquired
Portfolio Shareholders and the number and percentage ownership of outstanding
Acquired Portfolio Shares owned by each Acquired Portfolio Shareholder as of the
Valuation Time, certified by the an authorized officer of AmSouth Trust (the
"Shareholder List") as being an accurate record of the information (a) provided
by the Acquired Portfolio Shareholders, (b) provided by the Acquired Portfolio
Custodian, or (c) derived from the AmSouth Trust's records by such officers or
one of the AmSouth Trust's service providers. The Acquiring Portfolio shall
issue and deliver to the Acquired Portfolio a confirmation evidencing the
Acquiring Portfolio Shares to be credited on the Closing Date, or provide
evidence satisfactory to the Acquired Portfolio that such Acquiring Portfolio
Shares have been credited to the Acquired Portfolio's account on the books of
the Acquiring Portfolio. At the Closing, each party shall deliver to the other
such bills of sale, checks, assignments, stock certificates, receipts or other
documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES
4.1 Except as set forth on a disclosure schedule previously provided by
the AmSouth Trust to the Acquiring Trust (which disclosure schedule shall be
organized by the sections of this Section 4.1 and any disclosure shall only
modify the portions of this Section 4.1 expressly identified in such schedule),
the AmSouth Trust, on behalf of the Acquired Portfolio, represents, warrants and
covenants to the Acquiring Portfolio, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing Date as
though made on and as of the Closing Date, as follows:
(a) The Acquired Portfolio is a series of the AmSouth Trust. The
AmSouth Trust is a business trust validly existing and in good standing under
the laws of the Commonwealth of Massachusetts and has the power to own all of
its properties and assets and, subject to approval by the Acquired Portfolio's
shareholders, to perform its obligations under this Agreement. The Acquired
Portfolio is not required to qualify to do business in any jurisdiction in which
it is not so qualified or where failure to qualify would subject it to any
material liability or disability. Each of the AmSouth Trust and the Acquired
Portfolio has all necessary federal, state and local authorizations to own all
of its properties and assets and to carry on its business as now being
conducted;
(b) The AmSouth Trust is a registered investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the Investment Company Act is in full
force and effect;
(c) The AmSouth Trust is not in violation of, and the execution and
delivery of this Agreement and the performance of its obligations under this
Agreement in respect of the Acquired Portfolio will not result in a violation
of, any provision of the AmSouth Trust's Trust Instrument or By-Laws or any
material agreement, indenture, instrument, contract, lease or other undertaking
with respect to the Acquired Portfolio to which the AmSouth Trust is a party or
by which the Acquired Portfolio or any of its assets are bound;
(d) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquired Portfolio or any of the Acquired
Portfolio's properties or assets. The Acquired Portfolio knows of no facts which
might form the basis for the institution of such proceedings. Neither the
AmSouth Trust nor the Acquired Portfolio is a party to or subject to the
provisions of any order, decree or judgment of any court or governmental body
which materially adversely affects the Acquired Portfolio's business or its
ability to consummate the transactions contemplated herein or would be binding
upon the Acquiring Portfolio as the successor to the Acquired Portfolio;
(e) The Acquired Portfolio has no material contracts or other
commitments (other than this Agreement or agreements for the purchase and sale
of securities entered into in the ordinary course of business and consistent
with its obligations under this Agreement) which will not be terminated at or
prior to the Closing Date and no such termination will result in liability to
the Acquired Portfolio (or the Acquiring Portfolio);
(f) The statement of assets and liabilities of the Acquired
Portfolio, and the related statements of operations and changes in net assets,
as of and for the fiscal year ended December 31, 2004, have been audited by
Ernst & Young LLP, independent registered public accounting firm, and are in
accordance with generally
-4-
accepted accounting principles ("GAAP") consistently applied and fairly reflect,
in all material respects, the financial condition of the Acquired Portfolio as
of such date and the results of its operations for the period then ended, and
all known liabilities, whether actual or contingent, of the Acquired Portfolio
as of the date thereof are disclosed therein. The Statement of Assets and
Liabilities will be in accordance with GAAP consistently applied and will fairly
reflect, in all material respects, the financial condition of the Acquired
Portfolio as of such date and the results of its operations for the period then
ended. The Acquired Portfolio will not have any known or contingent liabilities
required to be reflected on its statement of assets and liabilities on the
Closing Date other than those disclosed on its statement of assets and
liabilities on the Closing Date. No significant deficiency, material weakness,
fraud, significant change or other factor that could significantly affect the
internal controls of the Acquired Portfolio has been disclosed or is required to
be disclosed in the Acquired Portfolio's reports on Form N-CSR to enable the
chief executive officer and chief financial officer or other officers of the
Acquired Portfolio to make the certifications required by the Sarbanes-Oxley
Act, and no deficiency, weakness, fraud, change, event or other factor exists
that will be required to be disclosed in the Acquiring Portfolio's Form N-CSR
after the Closing Date;
(g) Since the most recent fiscal year end, except as specifically
disclosed in the Acquired Portfolio's prospectus, its statement of additional
information as in effect on the date of this Agreement, there has not been any
material adverse change in the Acquired Portfolio's financial condition, assets,
liabilities, business or prospects, or any incurrence by the Acquired Portfolio
of indebtedness, except for normal contractual obligations incurred in the
ordinary course of business or in connection with the settlement of purchases
and sales of portfolio securities. For the purposes of this subparagraph (g)
(but not for any other purpose of this Agreement), a decline in NAV per Acquired
Portfolio Share arising out of its normal investment operations or a decline in
market values of securities in the Acquired Portfolio's portfolio or a decline
in net assets of the Acquired Portfolio as a result of redemptions shall not
constitute a material adverse change;
(h) (A) For each taxable year of its operation since its inception,
the Acquired Portfolio has met, and for the current taxable year it will meet,
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company. The Acquired Portfolio will qualify as such as
of the Closing Date and will satisfy the diversification requirements of Section
851(b)(3) of the Code without regard to the last sentence of Section 851(d) of
the Code. The Acquired Portfolio has not taken any action, caused any action to
be taken or caused any action to fail to be taken which action or failure could
cause the Acquired Portfolio to fail to qualify as a regulated investment
company under the Code. The Acquired Portfolio does not have, and has not ever
had, any shareholder that is not a segregated asset account within the meaning
of Treasury Regulation Section 1.817-5(e) or an entity referred to in (and
holding its shares in compliance with the terms of) Treasury Regulation Section
1.817-5(f)(3)(i), (ii), or (iii). No public investor is participating or has
ever participated in the Acquired Portfolio through such a segregated asset
account other than through purchase of a variable contract within the meaning of
Treasury Regulation Section 1.817-5(f)(2)(i)(B) and the Acquired Portfolio
satisfies, and at all time during its existence has satisfied, the
diversification requirements contained in Treasury Regulation Section
1.817-5(b)(1), (2), or (3);
(B) Within the times and in the manner prescribed by law, the
Acquired Portfolio has properly filed on a timely basis all Tax Returns (as
defined below) that it was required to file, and all such Tax Returns were
complete and accurate in all respects. The Acquired Portfolio has not been
informed by any jurisdiction that the jurisdiction believes that the Acquired
Portfolio was required to file any Tax Return that was not filed; and the
Acquired Portfolio does not know of any basis upon which a jurisdiction could
assert such a position;
(C) The Acquired Portfolio has timely paid, in the manner
prescribed by law, all Taxes (as defined below), which were due and payable or
which were claimed to be due;
(D) All Tax Returns filed by the Acquired Portfolio constitute
complete and accurate reports of the respective Tax liabilities and all
attributes of the Acquired Portfolio or, in the case of information returns and
payee statements, the amounts required to be reported, and accurately set forth
all items required to be included or reflected in such returns;
(E) The Acquired Portfolio has not waived or extended any
applicable statute of limitations relating to the assessment or collection of
Taxes;
-5-
(F) The Acquired Portfolio has not been notified that any
examinations of the Tax Returns of the Acquired Portfolio are currently in
progress or threatened, and no deficiencies have been asserted or assessed
against the Acquired Portfolio as a result of any audit by the Internal Revenue
Service or any state, local or foreign taxing authority, and, to its knowledge,
no such deficiency has been proposed or threatened;
(G) The Acquired Portfolio has no actual or potential liability
for any Tax obligation of any taxpayer other than itself. The Acquired Portfolio
is not and has never been a member of a group of corporations with which it has
filed (or been required to file) consolidated, combined or unitary Tax Returns.
The Acquired Portfolio is not a party to any Tax allocation, sharing, or
indemnification agreement;
(H) The unpaid Taxes of the Acquired Portfolio for tax periods
through the Closing Date do not exceed the accruals and reserves for Taxes
(excluding accruals and reserves for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the Statement of
Assets and Liabilities, rather than in any notes thereto (the "Tax Reserves").
All Taxes that the Acquired Portfolio is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been timely paid to the proper governmental agency;
(I) The Acquired Portfolio has delivered to the Acquiring
Portfolio or made available to the Acquiring Portfolio complete and accurate
copies of all Tax Returns of the Acquired Portfolio, together with all related
examination reports and statements of deficiency for all periods not closed
under the applicable statutes of limitations and complete and correct copies of
all private letter rulings, revenue agent reports, information document
requests, notices of proposed deficiencies, deficiency notices, protests,
petitions, closing agreements, settlement agreements, pending ruling requests
and any similar documents submitted by, received by or agreed to by or on behalf
of the Acquired Portfolio. The Acquired Portfolio has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code;
(J) The Acquired Portfolio has not undergone, has not agreed to
undergo, and is not required to undergo (nor will it be required as a result of
the transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income pursuant
to Section 481 of the Code. The Acquired Portfolio will not be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (iii) installment sale or open
transaction disposition made on or prior to the Closing Date; or (iv) prepaid
amount received on or prior to the Closing Date;
(K) The Acquired Portfolio has not taken or agreed to take any
action, and is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex B;
(L) There are (and as of immediately following the Closing
there will be) no liens on the assets of the Acquired Portfolio relating to or
attributable to Taxes, except for Taxes not yet due and payable;
(M) The Tax bases of the assets of the Acquired Portfolio are
accurately reflected on the Acquired Portfolio's Tax books and records;
(N) The Acquired Portfolio has not incurred (or been allocated)
an "overall foreign loss" as defined in Section 904(f)(2) of the Code which has
not been previously recaptured in full as provided in Sections 904(f)(2) and/or
904(f)(3) of the Code;
(O) The Acquired Portfolio is not a party to a gain recognition
agreement under Section 367 of the Code;
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(P) The Acquired Portfolio does not own any interest in an
entity that is characterized as a partnership for income tax purposes;
(Q) The Acquired Portfolio's Tax attributes are not limited
under the Code (including but not limited to any capital loss carry forward
limitations under Sections 382 or 383 of the Code and the Treasury Regulations
thereunder) or comparable provisions of state law; and
(R) For purposes of this Agreement, "Taxes" or "Tax" shall mean
all taxes, charges, fees, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad valorem, premium,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment, unemployment, insurance, social security, business
license, business organization, environmental, workers compensation, payroll,
profits, license, lease, service, service use, severance, stamp, occupation,
windfall profits, customs, duties, franchise and other taxes imposed by the
United States of America or any state, local or foreign government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof; and "Tax Returns" shall mean all reports, returns,
declarations, statements or other information required to be supplied to a
governmental or regulatory authority or agency, or to any other person, in
connection with Taxes and any associated schedules or work papers produced in
connection with such items;
(i) All issued and outstanding Acquired Portfolio Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and nonassessable by the AmSouth Trust. All of the issued and outstanding
Acquired Portfolio Shares will, at the time of Closing, be held of record by the
persons and in the amounts set forth in the Shareholder List submitted to the
Acquiring Portfolio pursuant to Paragraph 3.5 hereof. The Acquired Portfolio
does not have outstanding any options, warrants or other rights to subscribe for
or purchase any Acquired Portfolio Shares, nor is there outstanding any security
convertible into any Acquired Portfolio Shares;
(j) At the Closing Date, the Acquired Portfolio will have good and
marketable title to the Acquired Assets, and full right, power and authority to
sell, assign, transfer and deliver the Acquired Assets to the Acquiring
Portfolio, and, upon delivery and payment for the Acquired Assets, the Acquiring
Portfolio will acquire good and marketable title thereto, subject to no
restrictions on the full transfer thereof, except such restrictions as might
arise under the Securities Act;
(k) The AmSouth Trust has the trust power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
action on the part of the AmSouth Trust's Board of Trustees, and, subject to the
approval of the Acquired Portfolio's shareholders, assuming due authorization,
execution and delivery by the Acquiring Portfolio, this Agreement will
constitute a valid and binding obligation of the Acquired Portfolio, enforceable
in accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(l) The information to be furnished by the Acquired Portfolio to
the Acquiring Portfolio for use in applications for orders, registration
statements, proxy materials and other documents which may be necessary in
connection with the transactions contemplated hereby and any information
necessary to compute the total return of the Acquired Portfolio shall be
accurate and complete and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(m) The information included in the proxy statement (the "Proxy
Statement") forming part of the Acquiring Portfolio's Registration Statement on
Form N-14 filed in connection with this Agreement (the "Registration Statement")
that has been furnished in writing by the Acquired Portfolio to the Acquiring
Portfolio for inclusion in the Registration Statement, on the effective date of
that Registration Statement and on the Closing Date, will conform in all
material respects to the applicable requirements of the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Investment Company Act and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
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(n) Upon the effectiveness of the Registration Statement, no
consent, approval, authorization or order of any court or governmental authority
is required for the consummation by the AmSouth Trust or the Acquired Portfolio
of the transactions contemplated by this Agreement; (o) All of the issued and
outstanding Acquired Portfolio Shares have been offered for sale and sold in
conformity with all applicable federal and state securities laws, except as may
have been previously disclosed in writing to the Acquiring Portfolio;
(p) The prospectus and statement of additional information of the
Acquired Portfolio and any amendments or supplements thereto, furnished to the
Acquiring Portfolio, did not as of their dates or the dates of their
distribution to the public contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which such statements
were made, not misleading;
(q) The Acquired Portfolio currently complies in all material
respects with, and since its organization has complied in all material respects
with, the requirements of, and the rules and regulations under, the Investment
Company Act, the Securities Act, the Exchange Act, state "Blue Sky" laws and all
other applicable federal and state laws or regulations. The Acquired Portfolio
currently complies in all material respects with, and since its organization has
complied in all material respects with, all investment objectives, policies,
guidelines and restrictions and any compliance procedures established by the
AmSouth Trust with respect to the Acquired Portfolio. All advertising and sales
material used by the Acquired Portfolio complies in all material respects with
and has complied in all material respects with the applicable requirements of
the Securities Act, the Investment Company Act, the rules and regulations of the
Commission, and, to the extent applicable, the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD") and any applicable state
regulatory authority. All registration statements, prospectuses, reports, proxy
materials or other filings required to be made or filed with the Commission, the
NASD or any state securities authorities by the Acquired Portfolio have been
duly filed and have been approved or declared effective, if such approval or
declaration of effectiveness is required by law. Such registration statements,
prospectuses, reports, proxy materials and other filings under the Securities
Act, the Exchange Act and the Investment Company Act (i) are or were in
compliance in all material respects with the requirements of all applicable
statutes and the rules and regulations thereunder and (ii) do not or did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not false or misleading;
(r) Neither the Acquired Portfolio nor, to the knowledge of the
Acquired Portfolio, any "affiliated person" of the Acquired Portfolio has been
convicted of any felony or misdemeanor, described in Section 9(a)(1) of the
Investment Company Act, nor, to the knowledge of the Acquired Portfolio, has any
affiliated person of the Acquired Portfolio been the subject, or presently is
the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation of
registration as an investment adviser under Section 203(e) of the Investment
Advisers Act of 1940, as amended (the "Investment Advisers Act"), or Rule
206(4)-4(b) thereunder or of a broker-dealer under Section 15 of the Exchange
Act, or for disqualification as an investment adviser, employee, officer or
director of an investment company under Section 9 of the Investment Company Act;
and
(s) The tax representation certificate to be delivered by AmSouth
Trust on behalf of the Acquired Portfolio to the Acquiring Trust and Wilmer
Cutler Pickering Hale and Dorr LLP at the Closing pursuant to Paragraph 7.4 (the
"Acquired Portfolio Tax Representation Certificate") will not on the Closing
Date contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading.
4.2 Except as set forth on a disclosure schedule previously provided by
the Acquiring Trust to the AmSouth Trust (which disclosure schedule shall be
organized by the sections of this Section 4.2 and any disclosure shall only
modify the portions of this Section 4.2 expressly identified in such schedule),
the Acquiring Trust, on behalf of the Acquiring Portfolio, represents, warrants
and covenants to the Acquired Portfolio, which representations, warranties and
covenants will be true and correct on the date hereof and on the Closing Date as
though made on and as of the Closing Date, as follows:
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(a) The Acquiring Trust is a statutory trust duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Acquiring Trust has the power to own all of its properties and assets and to
perform the obligations under this Agreement. The Acquiring Portfolio is not
required to qualify to do business in any jurisdiction in which it is not so
qualified or where failure to qualify would subject it to any material liability
or disability. Each of the Acquiring Trust and the Acquiring Portfolio has all
necessary federal, state and local authorizations to own all of its properties
and assets and to carry on its business as now being conducted;
(b) The Acquiring Trust is a registered investment company
classified as a management company of the open-end type, and its registration
with the Commission as an investment company under the Investment Company Act is
in full force and effect;
(c) The Acquiring Portfolio's registration statement on Form N-1A
that will be in effect on the Closing Date, and the prospectus and statement of
additional information of the Acquiring Portfolio included therein, will conform
in all material respects with the applicable requirements of the Securities Act
and the Investment Company Act and the rules and regulations of the Commission
thereunder, and did not as of the effective date thereof and will not as of the
Closing Date contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading;
(d) The Registration Statement, including the Proxy Statement and
any amendments or supplements thereto in effect on or prior to the Closing Date
(other than written information furnished by the Acquired Portfolio for
inclusion therein, as covered by the Acquired Portfolio's warranty in Paragraph
4.1(m) hereof) will conform in all material respects to the applicable
requirements of the Securities Act, the Exchange Act and the Investment Company
Act and the rules and regulations of the Commission thereunder. Neither the
Registration Statement nor the Proxy Statement (other than written information
furnished by the Acquired Portfolio for inclusion therein, as covered by the
Acquired Portfolio's warranty in Paragraph 4.1(m) hereof) includes or will
include any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(e) The Acquiring Trust is not in violation of, and the execution
and delivery of this Agreement and performance of its obligations under this
Agreement will not result in a violation of, any provisions of the Declaration
of Trust or by-laws of the Acquiring Trust or any material agreement, indenture,
instrument, contract, lease or other undertaking with respect to the Acquiring
Portfolio to which the Acquiring Trust is a party or by which the Acquiring
Portfolio or any of its assets is bound;
(f) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or threatened
against the Acquiring Portfolio or any of the Acquiring Portfolio's properties
or assets. The Acquiring Portfolio knows of no facts which might form the basis
for the institution of such proceedings. Neither the Acquiring Trust nor the
Acquiring Portfolio is a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body which materially adversely
affects the Acquiring Portfolio's business or its ability to consummate the
transactions contemplated herein;
(g) The statement of assets and liabilities of the Acquiring
Portfolio, and the related statements of operations and changes in net assets,
as of and for the fiscal year ended December 31, 2004 have been audited by Ernst
& Young LLP, independent registered public accounting firm, and are in
accordance with GAAP consistently applied and fairly reflect, in all material
respects, the financial condition of the Acquiring Portfolio as of such date and
the results of its operations for the period then ended, and all known
liabilities, whether actual or contingent, of the Acquiring Portfolio as of the
date thereof are disclosed therein;
(h) (A) For each taxable year of its operation since its inception,
the Acquiring Portfolio has met, and for the current taxable year it will meet,
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and will qualify as such as of the Closing Date
and will satisfy the diversification requirements of Section 851(b)(3) of the
Code without regard to the last sentence of Section 851(d) of the Code. The
Acquiring Portfolio has not taken any action, caused any action to be taken or
caused any action to fail to be taken which action or failure could cause the
Acquiring Portfolio to fail to qualify as a regulated investment company under
the Code. The Acquiring Portfolio does not have, and has not ever had, any
shareholder
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that is not a segregated asset account within the meaning of Treasury Regulation
Section 1.817-5(e) or an entity referred to in (and holding its shares in
compliance with the terms of) Treasury Regulation Section 1.817-5(f)(3)(i),(ii),
or (iii). No public investor is participating or has ever participated in the
Acquiring Portfolio through such a segregated asset account other than through
purchase of a variable contract within the meaning of Treasury Regulation
Section 1.817-5(f)(2)(i)(B) and the Acquiring Portfolio satisfies, and at all
times during its existence has satisfied, the diversification requirements
contained in Treasury Regulation Section 1.817-5(b)(1), (2), or (3);
(B) Within the times and in the manner prescribed by law, the
Acquiring Portfolio has properly filed on a timely basis all Tax Returns that it
was required to file, and all such Tax Returns were complete and accurate in all
respects. The Acquiring Portfolio has not been informed by any jurisdiction that
the jurisdiction believes that the Acquiring Portfolio was required to file any
Tax Return that was not filed; and the Acquiring Portfolio does not know of any
basis upon which a jurisdiction could assert such a position;
(C) The Acquiring Portfolio has timely paid, in the manner
prescribed by law, all Taxes that were due and payable or that were claimed to
be due;
(D) All Tax Returns filed by the Acquiring Portfolio constitute
complete and accurate reports of the respective liabilities for Taxes and all
attributes of the Acquiring Portfolio or, in the case of information returns and
payee statements, the amounts required to be reported, and accurately set forth
all items required to be included or reflected in such returns;
(E) The Acquiring Portfolio has not waived or extended any
applicable statute of limitations relating to the assessment or collection of
Taxes;
(F) The Acquiring Portfolio has not been notified that any
examinations of the Tax Returns of the Acquiring Portfolio are currently in
progress or threatened, and no deficiencies have been asserted or assessed
against the Acquiring Portfolio as a result of any audit by the Internal Revenue
Service or any state, local or foreign taxing authority, and, to its knowledge,
no such deficiency has been proposed or threatened;
(G) The Acquiring Portfolio has no actual or potential
liability for any Tax obligation of any taxpayer other than itself. The
Acquiring Portfolio is not and has never been a member of a group of
corporations with which it has filed (or been required to file) consolidated,
combined or unitary Tax Returns. The Acquiring Portfolio is not a party to any
Tax allocation, sharing, or indemnification agreement;
(H) The Acquiring Trust has delivered to AmSouth Trust or made
available to AmSouth Trust complete and accurate copies of all Tax Returns of
the Acquiring Portfolio, together with all related examination reports and
statements of deficiency for all periods not closed under the applicable
statutes of limitations and complete and correct copies of all private letter
rulings, revenue agent reports, information document requests, notices of
proposed deficiencies, deficiency notices, protests, petitions, closing
agreements, settlement agreements, pending ruling requests and any similar
documents submitted by, received by or agreed to by or on behalf of the
Acquiring Portfolio. The Acquiring Portfolio has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code;
(I) The Acquiring Portfolio has not undergone, has not agreed
to undergo, and is not required to undergo (nor will it be required as a result
of the transactions contemplated in this Agreement to undergo) a change in its
method of accounting resulting in an adjustment to its taxable income pursuant
to Section 481 of the Code. The Acquiring Portfolio will not be required to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) change in method of accounting for a taxable period
ending on or prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(ii) "closing agreement" as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law)
executed on or prior to the Closing Date; (iii) installment sale or open
transaction disposition made on or prior to the Closing Date; or (iv) prepaid
amount received on or prior to the Closing Date;
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(J) The Acquiring Portfolio has not taken or agreed to take any
action, and is not aware of any agreement, plan or other circumstance, that is
inconsistent with the representations set forth in Annex A;
(K) The Acquiring Portfolio has not incurred (or been
allocated) an "overall foreign loss" as defined in Section 904(f)(2) of the Code
which has not been previously recaptured in full as provided in Sections
904(f)(2) and/or 904(f)(3) of the Code;
(L) The Acquiring Portfolio is not a party to a gain
recognition agreement under Section 367 of the Code;
(M) The Acquiring Portfolio's Tax attributes are not limited
under the Code (including but not limited to any capital loss carry forward
limitations under Sections 382 or 383 of the Code and the Treasury Regulations
thereunder) or comparable provisions of state law, except as set forth on
Schedule 4.2;
(i) The authorized capital of the Acquiring Portfolio consists of
an unlimited number of shares of beneficial interest, no par value per share. As
of the Closing Date, the Acquiring Portfolio will be authorized to issue an
unlimited number of shares of beneficial interest, no par value per share. The
Acquiring Portfolio Shares to be issued and delivered to the Acquired Portfolio
for the account of the Acquired Portfolio Shareholders pursuant to the terms of
this Agreement will have been duly authorized on the Closing Date and, when so
issued and delivered, will be duly and validly issued, fully paid and
non-assessable. The Acquiring Portfolio does not have outstanding any options,
warrants or other rights to subscribe for or purchase any Acquiring Portfolio
shares, nor is there outstanding any security convertible into any Acquiring
Portfolio shares;
(j) The Acquiring Trust has the trust power and authority to enter
into and perform its obligations under this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
action on the part of the Acquiring Trust's Board of Trustees, and, assuming due
authorization, execution and delivery by the Acquired Portfolio, this Agreement
will constitute a valid and binding obligation of the Acquiring Portfolio,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws relating to or
affecting creditors' rights and to general equity principles;
(k) The information to be furnished in writing by the Acquiring
Portfolio or the Acquiring Portfolio Adviser for use in applications for orders,
registration statements, proxy materials and other documents which may be
necessary in connection with the transactions contemplated hereby shall be
accurate and complete in all material respects and shall comply in all material
respects with federal securities and other laws and regulations applicable
thereto or the requirements of any form for which its use is intended, and shall
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the information provided not misleading;
(l) No consent, approval, authorization or order of or filing with
any court or governmental authority is required for the execution of this
Agreement or the consummation of the transactions contemplated by the Agreement
by the Acquiring Portfolio, except for the registration of the Acquiring
Portfolio Shares under the Securities Act and the Investment Company Act;
(m) Neither the Acquiring Portfolio nor, to the knowledge of the
Acquiring Portfolio, any "affiliated person" of the Acquiring Portfolio has been
convicted of any felony or misdemeanor, described in Section 9(a)(1) of the
Investment Company Act, nor, to the knowledge of the Acquiring Portfolio, has
any affiliated person of the Acquiring Portfolio been the subject, or presently
is the subject, of any proceeding or investigation with respect to any
disqualification that would be a basis for denial, suspension or revocation of
registration as an investment adviser under Section 203(e) of the Investment
Advisers Act or Rule 206(4)-4(b) thereunder or of a broker-dealer under Section
15 of the Exchange Act, or for disqualification as an investment adviser,
employee, officer or director of an investment company under Section 9 of the
Investment Company Act; and
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(n) Since the most recent fiscal year end, except as specifically
disclosed in the Acquiring Portfolio's prospectus, its statement of additional
information as in effect on the date of this Agreement, there has not been any
material adverse change in the Acquiring Portfolio's financial condition,
assets, liabilities, business or prospects, or any incurrence by the Acquiring
Portfolio of indebtedness, except for normal contractual obligations incurred in
the ordinary course of business or in connection with the settlement of
purchases and sales of portfolio securities. For the purposes of this
subparagraph (n) (but not for any other purpose of this Agreement), a decline in
NAV per Acquiring Portfolio Share arising out of its normal investment
operations or a decline in market values of securities in the Acquiring
Portfolio's portfolio or a decline in net assets of the Acquiring Portfolio as a
result of redemptions shall not constitute a material adverse change;
(o) The tax representation certificate to be delivered by the
Acquiring Trust on behalf of the Acquiring Portfolio to the AmSouth Trust and
Wilmer Cutler Pickering Hale and Dorr LLP at Closing pursuant to Section 6.3
(the "Acquiring Portfolio Tax Representation Certificate") will not on the
Closing Date contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein not misleading.
5. COVENANTS OF THE FUNDS
5.1 The Acquired Portfolio will operate the Acquired Portfolio's
business in the ordinary course of business between the date hereof and the
Closing Date. It is understood that such ordinary course of business will
include the declaration and payment of customary dividends and other
distributions and any other dividends and other distributions necessary or
advisable (except to the extent dividends or other distributions that are not
customary may be limited by representations made in connection with the issuance
of the tax opinion described in Paragraph 8.5 hereof), in each case payable
either in cash or in additional shares.
5.2 The AmSouth Trust will call a special meeting of the Acquired
Portfolio's shareholders to consider approval of this Agreement and act upon the
matters set forth in the Proxy Statement.
5.3 The Acquiring Portfolio will prepare the notice of meeting, form of
proxy and Proxy Statement (collectively, "Proxy Materials") to be used in
connection with such meeting, and will promptly prepare and file with the
Commission the Registration Statement. The AmSouth Trust will provide the
Acquiring Portfolio with information reasonably requested for the preparation of
the Registration Statement in compliance with the Securities Act, the Exchange
Act, and the Investment Company Act.
5.4 The Acquired Portfolio covenants that the Acquiring Portfolio
Shares to be issued hereunder are not being acquired by the Acquired Portfolio
for the purpose of making any distribution thereof other than in accordance with
the terms of this Agreement.
5.5 The Acquired Portfolio will assist the Acquiring Portfolio in
obtaining such information as the Acquiring Portfolio reasonably requires
concerning the beneficial ownership of the Acquired Portfolio Shares.
5.6 Subject to the provisions of this Agreement, each Fund will take,
or cause to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
5.7 The Acquired Portfolio shall furnish to the Acquiring Portfolio on
the Closing Date a Statement of Assets and Liabilities of the Acquired Portfolio
as of the Closing Date setting forth the NAV (as computed pursuant to Paragraph
2.1) of the Acquired Portfolio as of the Valuation Time, which statement shall
be prepared in accordance with GAAP consistently applied and certified by the
AmSouth Trust's Treasurer or Assistant Treasurer. As promptly as practicable,
but in any case within 30 days after the Closing Date, the AmSouth Trust shall
furnish to the Acquiring Trust, in such form as is reasonably satisfactory to
the Acquiring Trust, a statement of the earnings and profits of the Acquired
Portfolio for federal income tax purposes, and of any capital loss carryovers
and other items that will be carried over to the Acquiring Portfolio under the
Code, and which statement will be certified by the Treasurer of the AmSouth
Trust.
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5.8 Neither Fund shall take any action that is inconsistent with the
representations set forth in, with respect to the Acquired Portfolio, the
Acquired Portfolio Tax Representation Certificate and, with respect to the
Acquiring Portfolio, the Acquiring Portfolio Tax Representation Certificate.
5.9 From and after the date of this Agreement and until the Closing
Date, each of the Funds and the AmSouth Trust and the Acquiring Trust shall use
its commercially reasonable efforts to cause the Reorganization to qualify, and
will not knowingly take any action, cause any action to be taken, fail to take
any action or cause any action to fail to be taken, which action or failure to
act could prevent the Reorganization from qualifying, as a reorganization under
the provisions of Section 368(a) of the Code. The parties hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the income tax regulations promulgated under the
Code. Unless otherwise required pursuant to a "determination" within the meaning
of Section 1313(a) of the Code, the parties hereto shall treat and report the
transactions contemplated hereby as a reorganization within the meaning of
Section [368(a)(1)(C)/(D)] of the Code and shall not take any position
inconsistent with such treatment.
5.10 From and after the date of this Agreement and through the time of
the Closing, each Fund shall use its commercially reasonable efforts to cause it
to qualify, and will not knowingly take any action, cause any action to be
taken, fail to take any action or cause any action to fail to be taken, which
action or failure to act could prevent it from qualifying as a regulated
investment company under the provisions of Subchapter M of the Code.
5.11 Each Fund shall prepare, or cause to be prepared, all of its Tax
Returns for taxable periods that end on or before the Closing Date and shall
timely file, or cause to be timely filed, all such Tax Returns. Each Fund shall
make any payments of Taxes required to be made by it with respect to any such
Tax Returns.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Portfolio to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Acquiring Portfolio of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions, unless waived by the Acquired Portfolio in writing:
6.1 All representations and warranties by the Acquiring Trust on behalf
of the Acquiring Portfolio contained in this Agreement shall be true and correct
in all material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of the Closing
Date with the same force and effect as if made on and as of the Closing Date;
6.2 The Acquiring Trust shall have delivered to the AmSouth Trust on
the Closing Date a certificate of the Acquiring Trust on behalf of the Acquiring
Portfolio executed in its name by its President or Vice President and its
Treasurer or Assistant Treasurer, in form and substance satisfactory to the
AmSouth Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Trust made in this Agreement are
true and correct at and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, that each of the conditions
to Closing in this Article 6 have been met, and as to such other matters as the
AmSouth Trust shall reasonably request;
6.3 The Acquiring Trust on behalf of the Acquiring Portfolio shall have
delivered to the AmSouth Trust and Wilmer Cutler Pickering Hale and Dorr LLP an
Acquiring Portfolio Tax Representation Certificate, satisfactory to the AmSouth
Trust and Wilmer Cutler Pickering Hale and Dorr LLP, substantially in the form
attached to this Agreement as Annex A, concerning certain tax-related matters
with respect to the Acquiring Portfolio;
6.4 With respect to the Acquiring Portfolio, the Board of Trustees of
the Acquiring Trust shall have determined that the Reorganization is in the best
interests of the Acquiring Portfolio and, based upon such determination, shall
have approved this Agreement and the transactions contemplated hereby; and
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6.5 The AmSouth Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the Acquiring Trust and
related matters of Wilmer Cutler Pickering Hale and Dorr LLP, dated as of the
Closing Date, in a form reasonably satisfactory to the AmSouth Trust.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Portfolio to complete the transactions
provided for herein shall be, at its election, subject to the performance by the
Acquired Portfolio of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions, unless waived by the Acquiring Portfolio in writing:
7.1 All representations and warranties of the AmSouth Trust on behalf
of the Acquired Portfolio contained in this Agreement shall be true and correct
in all material respects as of the date hereof and, except as they may be
affected by the transactions contemplated by this Agreement, as of the Closing
Date with the same force and effect as if made on and as of the Closing Date;
7.2 The AmSouth Trust shall have delivered to the Acquiring Portfolio
the Statement of Assets and Liabilities of the Acquired Portfolio pursuant to
Paragraph 5.7, together with a list of its portfolio securities showing the
federal income tax bases and holding periods of such securities, as of the
Closing Date, certified by the AmSouth Trust's Treasurer or Assistant Treasurer;
7.3 The AmSouth Trust shall have delivered to the Acquiring Trust on
the Closing Date a certificate of the AmSouth Trust on behalf of the Acquired
Portfolio executed in its name by its President or Vice President and a
Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory
to the Acquiring Trust and dated as of the Closing Date, to the effect that the
representations and warranties of the AmSouth Trust contained in this Agreement
are true and correct at and as of the Closing Date, except as they may be
affected by the transactions contemplated by this Agreement, that each of the
conditions to Closing in this Article 7 have been met, and as to such other
matters as the Acquiring Trust shall reasonably request;
7.4 The AmSouth Trust on behalf of the Acquired Portfolio shall have
delivered to the Acquiring Trust and Wilmer Cutler Pickering Hale and Dorr LLP
an Acquired Portfolio Tax Representation Certificate, satisfactory to the
Acquiring Trust and Wilmer Cutler Pickering Hale and Dorr LLP, substantially in
the form attached to this Agreement as Annex B, concerning certain tax-related
matters with respect to the Acquired Portfolio;
7.5 The Acquiring Trust shall have received at the Closing a favorable
opinion as to the due authorization of this Agreement by the AmSouth Trust and
related matters of Dechert LLP, dated as of the Closing Date, in a form
reasonably satisfactory to the Acquiring Trust; and
7.6 With respect to the Acquired Portfolio, the Board of Trustees of
the AmSouth Trust shall have determined that the Reorganization is in the best
interests of the Acquired Portfolio and, based upon such determination, shall
have approved this Agreement and the transactions contemplated hereby.
8. FURTHER CONDITIONS PRECEDENT
If any of the conditions set forth below does not exist on or before
the Closing Date with respect to either party hereto, the other party to this
Agreement shall, at its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the Acquired Portfolio's shareholders in
accordance with the provisions of the AmSouth Trust's Trust Instrument and
By-Laws, and certified copies of the resolutions evidencing such approval by the
Acquired Portfolio's shareholders shall have been delivered by the Acquired
Portfolio to the Acquiring Portfolio. Notwithstanding anything herein to the
contrary, neither party hereto may waive the conditions set forth in this
Paragraph 8.1;
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8.2 On the Closing Date, no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated herein;
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state Blue Sky and securities authorities) deemed
necessary by either party hereto to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of
either party hereto, provided that either party may waive any such conditions
for itself;
8.4 The Acquiring Trust's Registration Statement on Form N-14 shall
have become effective under the Securities Act and no stop orders suspending the
effectiveness of such Registration Statement shall have been issued and, to the
best knowledge of the parties hereto, no investigation or proceeding for that
purpose shall have been instituted or be pending, threatened or contemplated
under the Securities Act;
8.5 The parties shall have received an opinion of Wilmer Cutler
Pickering Hale and Dorr LLP, satisfactory to the AmSouth Trust and the Acquiring
Trust and subject to customary assumptions and qualifications, substantially to
the effect that for federal income tax purposes the acquisition by the Acquiring
Portfolio of the Acquired Assets solely in exchange for the issuance of
Acquiring Portfolio Shares to the Acquired Portfolio and the assumption of the
Assumed Liabilities by the Acquiring Portfolio, followed by the distribution by
the Acquired Portfolio, in liquidation of the Acquired Portfolio, of Acquiring
Portfolio Shares to the Acquired Portfolio Shareholders in exchange for their
Acquired Portfolio Shares and the termination of the Acquired Portfolio, will
constitute a "reorganization" within the meaning of Section 368(a) of the Code;
and
8.6 The Acquired Portfolio shall have distributed to its shareholders,
in a distribution or distributions qualifying for the deduction for dividends
paid under Section 561 of the Code, all of its investment company taxable income
(as defined in Section 852(b)(2) of the Code determined without regard to
Section 852(b)(2)(D) of the Code) for its taxable year ending on the Closing
Date, all of the excess of (i) its interest income excludable from gross income
under Section 103(a) of the Code over (ii) its deductions disallowed under
Sections 265 and 171(a)(2) of the Code for its taxable year ending on the
Closing Date, and all of its net capital gain (as such term is used in Sections
852(b)(3)(A) and (C) of the Code), after reduction by any available capital loss
carryforward, for its taxable year ending on the Closing Date.
9. BROKERAGE FEES AND EXPENSES
9.1 Each party hereto represents and warrants to the other party hereto
that there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
9.2 The parties have been informed by AmSouth Asset Management Inc.
("AAMI") and the Acquiring Portfolio Adviser -- and the parties have entered
into this Agreement in reliance on such information -- that such non-parties
will pay (with each of AmSouth Bancorporation and the Acquiring Portfolio
Adviser being responsible for 50% of such amounts) all proxy statement and
solicitation costs of the Funds associated with the Reorganization including,
but not limited to, the expenses associated with the preparation, printing and
mailing of any and all shareholder notices, communications, proxy statements,
and necessary filings with the SEC or any other governmental authority in
connection with the transactions contemplated by this Agreement and the fees and
expenses of any proxy solicitation firm retained in connection with the
Reorganization. Except for the foregoing, AAMI shall bear the expenses of the
Acquired Portfolio in connection with the transactions contemplated by this
Agreement.
10. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Trust and the AmSouth Trust each agrees that neither
party has made any representation, warranty or covenant not set forth herein or
referred to in Paragraphs 4.1 or 4.2 hereof and that this Agreement constitutes
the entire agreement between the parties.
-15-
10.2 The representations and warranties contained in this Agreement or
in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder.
11. TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the AmSouth Trust. In addition, either party may at its
option terminate this Agreement at or prior to the Closing Date:
(a) because of a material breach by the other of any
representation, warranty, covenant or agreement contained herein to be performed
at or prior to the Closing Date;
(b) because of a condition herein expressed to be precedent to the
obligations of the terminating party which has not been met and which reasonably
appears will not or cannot be met;
(c) by resolution of the Acquiring Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquiring
Portfolio's shareholders;
(d) by resolution of the AmSouth Trust's Board of Trustees if
circumstances should develop that, in the good faith opinion of such Board, make
proceeding with the Agreement not in the best interests of the Acquired
Portfolio's shareholders; or
(e) if the transactions contemplated by this Agreement shall not
have occurred on or prior to December 31, 2005 or such other date as the parties
may mutually agree upon in writing.
11.2 In the event of any such termination, there shall be no liability
for damages on the part of the Acquiring Portfolio, the Acquiring Trust, the
AmSouth Trust or the Acquired Portfolio, or the trustees or officers of the
AmSouth Trust, or the Acquiring Trust, but, subject to Paragraph 9.2, each party
shall bear the expenses incurred by it incidental to the preparation and
carrying out of this Agreement.
12. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner
as may be mutually agreed upon in writing by the authorized officers of the
AmSouth Trust and the Acquiring Trust; provided, however, that following the
meeting of the Acquired Portfolio's shareholders called by the AmSouth Trust
pursuant to Paragraph 5.2 of this Agreement, no such amendment may have the
effect of changing the provisions regarding the method for determining the
number of Acquiring Portfolio Shares to be received by the Acquired Portfolio
Shareholders under this Agreement to their detriment without their further
approval; provided that nothing contained in this Section 12 shall be construed
to prohibit the parties from amending this Agreement to change the Closing Date.
13. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the Acquired Portfolio, c/o
AmSouth Asset Management Inc., 3435 Stelzer Road, Columbus, Ohio 43219,
Attention: [ ], with copies to Dechert LLP, 1775 I Street, N.W., Washington,
D.C. 20006, Attention: Keither T. Robinson, and to the Acquiring Portfolio, c/o
Pioneer Investment Management, Inc., 60 State Street, Boston, Massachusetts
02109, Attention: Dorothy E. Bourassa, Esq., with copies to Wilmer Cutler
Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts 02109,
Attention: David C. Phelan.
14. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT
14.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
-16-
14.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving effect to
conflict of laws principles (other than Delaware Code Title 6 ss. 2708);
provided that, in the case of any conflict between those laws and the federal
securities laws, the latter shall govern.
14.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by
either party without the prior written consent of the other party hereto.
Nothing herein expressed or implied is intended or shall be construed to confer
upon or give any person, firm or corporation, or other entity, other than the
parties hereto and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.5 It is expressly agreed that the obligations of the Acquiring Trust
and the AmSouth Trust shall not be binding upon any of their respective
trustees, shareholders, nominees, officers, agents or employees personally, but
bind only to the property of the Acquiring Portfolio or the Acquired Portfolio,
as the case may be, as provided in the trust instruments of the Acquiring Trust
and the Instrument of Trust of the AmSouth Trust, respectively. The execution
and delivery of this Agreement have been authorized by the trustees of the
Acquiring Trust and of the AmSouth Trust and this Agreement has been executed by
authorized officers of the Acquiring Trust and the AmSouth Trust, acting as
such, and neither such authorization by such trustees nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to imposed any liability on any of them personally, but shall
bind only the property of the Acquiring Portfolio and the Acquired Portfolio, as
the case may be, as provided in the trust instruments of the Acquiring Trust and
the Instrument of Trust of the AmSouth Trust, respectively.
* * * * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first set forth above by its President
or Vice President and attested by its Secretary or Assistant Secretary.
Attest: VARIABLE INSURANCE FUNDS
on behalf of AMSOUTH [ ] FUND
By: ________________________________ By: ____________________________________
Name: Name:
Title: [Assistant] Secretary Title: [Vice] President
Attest: PIONEER VARIABLE CONTRACTS TRUST
on behalf of PIONEER [ ] VCT PORTFOLIO
By: ________________________________ By: ____________________________________
Name: Christopher J. Kelley Name: Osbert M. Hood
Title: Assistant Secretary Title: Executive Vice President
-18-
Annex A
TAX REPRESENTATION CERTIFICATE OF
PIONEER VARIABLE CONTRACTS TRUST
ON BEHALF OF PIONEER [ ] VCT PORTFOLIO
This certificate is being delivered in connection with the transactions
to be effected pursuant to the Agreement and Plan of Reorganization made as of [
], 2005 between Pioneer Variable Contracts Trust, a Delaware statutory trust
("Acquiring Trust"), on behalf of its series Pioneer [ ] VCT Portfolio
("Acquiring Portfolio"), and Variable Insurance Funds, a Massachusetts business
trust, on behalf of its series AmSouth [ ] Fund ("Acquired Portfolio") (the
"Agreement"). Pursuant to the Agreement, Acquiring Portfolio will acquire all of
the assets of Acquired Portfolio in exchange solely for (i) the assumption by
Acquiring Portfolio of the Assumed Liabilities of Acquired Portfolio and (ii)
the issuance of shares of beneficial interest of Acquiring Portfolio (the
"Acquiring Portfolio Shares") to Acquired Portfolio, followed by the
distribution by Acquired Portfolio, in liquidation of Acquired Portfolio, of the
Acquiring Portfolio Shares to the shareholders of Acquired Portfolio and the
termination of Acquired Portfolio (the foregoing together constituting the
"Transaction").
The undersigned officer of Acquiring Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations on behalf of Acquiring Portfolio, hereby
certifies and represents that the following statements are true, complete and
correct and will be true, complete and correct on the date of the Transaction
and thereafter as relevant. Unless otherwise indicated, all capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Agreement.
1. Acquiring Portfolio is a series of Acquiring Trust, a statutory
trust organized under the laws of the State of Delaware, and Acquiring Portfolio
is, and has been at all times, treated as a corporation for federal tax
purposes.
2. Neither Acquiring Portfolio nor any person "related" to Acquiring
Portfolio (as defined in Treasury Regulation Section 1.368-1(e)(3)), nor any
partnership of which Acquiring Portfolio or any such related person is a
partner, has any plan or intention to redeem or otherwise acquire any of the
Acquiring Portfolio Shares received by shareholders of Acquired Portfolio in the
Transaction except in the ordinary course of Acquiring Portfolio's business in
connection with its legal obligation under Section 22(e) of the Investment
Company Act of 1940, as amended (the "1940 Act"), as a series of a registered
open-end investment company to redeem its own shares.
3. After the Transaction, Acquiring Portfolio will continue the
historic business (as defined in Treasury Regulation Section 1.368-1(d)(2)) of
Acquired Portfolio or will use a significant portion of the historic business
assets (as defined in Treasury Regulation Section 1.368-1(d)(3)) acquired from
Acquired Portfolio in a business.
4. Acquiring Portfolio has no plan or intention to sell or otherwise
dispose of any assets of Acquired Portfolio acquired in the Transaction, except
for dispositions made in the ordinary course of its business or to maintain its
qualification as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").
5. Any expenses of Acquired Portfolio incurred in connection with the
Transaction which are paid or assumed by Acquiring Portfolio will be expenses of
Acquired Portfolio solely and directly related to the Transaction in accordance
with Rev. Rul. 73-54, 1973-1 C.B. 187. Acquiring Portfolio will not pay or
assume the expenses, if any, incurred by any Acquired Portfolio Shareholders in
connection with the Transaction.
6. There is no, and never has been any, indebtedness between Acquiring
Portfolio and Acquired Portfolio.
A-1
7. Acquiring Portfolio has properly elected to be a regulated
investment company under Subchapter M of the Code, has qualified for the special
tax treatment afforded regulated investment companies under the Code for each
taxable year since inception and qualifies for such treatment as of the time of
the Closing.
8. Acquiring Portfolio meets the requirements of an "investment
company" in Section 368(a)(2)(F) of the Code.
9. Acquiring Portfolio is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
10. Acquiring Portfolio does not now own and has never owned, directly
or indirectly, any shares of Acquired Portfolio.
11. As of the date of the Transaction, the fair market value of the
Acquiring Portfolio Shares issued to Acquired Portfolio will be approximately
equal to the fair market value of the Acquired Assets minus the Assumed
Liabilities. Acquiring Portfolio will not furnish any consideration in
connection with the acquisition of the Acquired Assets other than the assumption
of the Assumed Liabilities and the issuance of such Acquiring Portfolio Shares.
12. Acquired Portfolio Shareholders will [not] be in control (within
the meaning of Sections 368(a)(2)(H)(i) and 304(c)(1) of the Code, which
generally provide that control means the ownership of shares possessing at least
50% of the total combined voting power of all classes of stock that are entitled
to vote or at least 50% of the total value of all classes of stock of the
Acquiring Portfolio after the Transaction) of Acquiring Portfolio after the
Transaction.
13. The Transaction is being undertaken for valid and substantial
business purposes, including facilitating Acquired Portfolio's becoming a member
of the Pioneer family of mutual funds, which, in the long term, is intended to
result in lower expenses and increased assets.
14. No Acquired Portfolio shareholder is acting as agent for Acquiring
Portfolio in connection with the Transaction or approval thereof. Acquiring
Portfolio will not reimburse any Acquired Portfolio shareholder for Acquired
Portfolio Shares such shareholder may have purchased or for other obligations
such shareholder may have incurred.
15. Acquiring Portfolio has no outstanding warrants, options,
convertible securities or any other type of right pursuant to which any person
could acquire stock in Acquiring Portfolio.
* * * * *
The undersigned officer of Acquiring Trust is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquiring Portfolio. The undersigned
recognizes that Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the
foregoing representations in evaluating the United States federal income tax
consequences of the Transaction and rendering its opinion pursuant to Section
8.5 of the Agreement. If, prior to the date of the Transaction, any of the
representations set forth herein ceases to be accurate, the undersigned agrees
to deliver immediately to Wilmer Cutler Pickering Hale and Dorr LLP a written
notice to that effect.
PIONEER VARIABLE CONTRACTS TRUST
on behalf of PIONEER [ ] VCT PORTFOLIO
By: ________________________________
Name: ________________________________
Title: ________________________________
Dated: _________, 2005
A-2
Annex B
TAX REPRESENTATION CERTIFICATE OF
VARIABLE INSURANCE FUNDS
ON BEHALF OF AMSOUTH [ ] FUND
This certificate is being delivered in connection with the transactions
to be effected pursuant to the Agreement and Plan of Reorganization made as of [
], 2005 between Pioneer Variable Contracts Trust, a Delaware statutory trust, on
behalf of its series Pioneer [ ] VCT Portfolio ("Acquiring Portfolio"), and
Variable Insurance Funds, a Massachusetts business trust ("AmSouth Trust"), on
behalf of its series AmSouth [ ] Fund ("Acquired Portfolio") (the
"Agreement"). Pursuant to the Agreement, Acquiring Portfolio will acquire all of
the assets of Acquired Portfolio in exchange solely for (i) the assumption by
Acquiring Portfolio of the Assumed Liabilities of Acquired Portfolio and (ii)
the issuance of shares of beneficial interest of Acquiring Portfolio (the
"Acquiring Portfolio Shares") to Acquired Portfolio, followed by the
distribution by Acquired Portfolio, in liquidation of Acquired Portfolio, of the
Acquiring Portfolio Shares to the shareholders of Acquired Portfolio and the
termination of Acquired Portfolio (the foregoing together constituting the
"Transaction").
The undersigned officer of AmSouth Trust, after consulting with its
counsel, auditors and tax advisers regarding the meaning of and factual support
for the following representations, on behalf of Acquired Portfolio, hereby
certifies and represents that the following statements are true, complete and
correct and will be true, complete and correct on the date of the transaction
and thereafter as relevant. Unless otherwise indicated, all capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Agreement.
1. Acquired Portfolio is a series of AmSouth Trust, a business trust
organized under the laws of the Commonwealth of Massachusetts, and Acquired
Portfolio is, and has been at all times, treated as a separate corporation for
federal tax purposes.
2. As of the date of the Transaction, the fair market value of the
Acquiring Portfolio Shares received by each shareholder that holds shares of
Acquired Portfolio (the "Acquired Portfolio Shares") will be approximately equal
to the fair market value of the Acquired Portfolio Shares with respect to which
such Acquiring Portfolio Shares are received, and the aggregate consideration
received by Acquired Portfolio shareholders in exchange for their Acquired
Portfolio Shares will be approximately equal to the fair market value of all of
the outstanding Acquired Portfolio Shares immediately prior to the Transaction.
No property other than Acquiring Portfolio Shares will be distributed to
shareholders of Acquired Portfolio in exchange for their Acquired Portfolio
Shares, nor will any such shareholder receive cash or other property as part of
the Transaction.
3. Neither Acquired Portfolio nor any person "related" to Acquired
Portfolio (as defined in Treasury Regulation Section 1.368-1(e)(3)), nor any
partnership in which Acquired Portfolio or any such related person is a partner,
has redeemed, acquired or otherwise made any distributions with respect to any
shares of Acquired Portfolio as part of the Transaction, or otherwise pursuant
to a plan of which the Transaction is a part, other than redemptions and
distributions made in the ordinary course of Acquired Portfolio's business as a
series of an open-end investment company. To the best knowledge of management of
Acquired Portfolio, there is no plan or intention on the part of the
shareholders of Acquired Portfolio to engage in any transaction with Acquired
Portfolio, Acquiring Portfolio, or any person treated as related to Acquired
Portfolio or Acquiring Portfolio under Treasury Regulation Section 1.368-1(e)(3)
or any partnership in which Acquired Portfolio, Acquiring Portfolio, or any
person treated as related to Acquired Portfolio or Acquiring Portfolio under
Treasury Regulation Section 1.368-1(e)(3) is a partner involving the sale,
redemption or exchange of any of the Acquired Portfolio Shares or any of the
Acquiring Portfolio Shares to be received in the Transaction, as the case may
be, other than in the ordinary course of Acquired Portfolio's business as a
series of an open-end investment company.
4. Pursuant to the Transaction, Acquired Portfolio will transfer to
Acquiring Portfolio, and Acquiring Portfolio will acquire, at least 90% of the
fair market value of the net assets, and at least 70% of the fair market value
of the gross assets, Acquired Portfolio held immediately before the Transaction.
For the purposes of the foregoing, any amounts Acquired Portfolio uses to pay
its Transaction expenses and to make redemptions and distributions immediately
before the Transaction (except (a) redemptions in the ordinary course of its
business
B-1
required by section 22(e) of the Investment Company Act and (b) regular, normal
dividend distributions made to conform to its policy of distributing all or
substantially all of its income and gains to avoid the obligation to pay federal
income tax and/or the excise tax under Section 4982 of the Code) will be
included as assets it held immediately before the Transaction.
5. As of the date of the Transaction, the fair market value of the
Acquiring Portfolio Shares issued to Acquired Portfolio will be approximately
equal to the fair market value of the Acquired Assets minus the Assumed
Liabilities. Acquired Portfolio will not receive any consideration from
Acquiring Portfolio in connection with the acquisition of the Acquired Assets
other than the assumption of the Assumed Liabilities and the issuance of such
Acquiring Portfolio Shares.
6. The Assumed Liabilities assumed by Acquiring Portfolio plus the
Assumed Liabilities, if any, to which the transferred assets are subject were
incurred by Acquired Portfolio in the ordinary course of its business. Acquired
Portfolio is not aware of any liabilities of any kind other than the Assumed
Liabilities.
7. As of the Closing Date, the adjusted basis and fair market value of
the Acquired Assets will equal or exceed the Assumed Liabilities assumed for
purposes of Section 357(d) of the Code.
8. Acquired Portfolio currently conducts its historic business within
the meaning of Treasury Regulation Section 1.368-1(d)(2), which provides that,
in general, a corporation's historic business is the business it has conducted
most recently, but does not include a business that the corporation enters into
as part of a plan of reorganization. The Acquired Portfolio assets transferred
to Acquiring Portfolio will be Acquired Portfolio's historic business assets
within the meaning of Treasury Regulation Section 1.368-1(d)(3), which provides
that a corporation's historic business assets are the assets used in its
historic business.
9. Acquired Portfolio will distribute to its shareholders the Acquiring
Portfolio Shares it receives pursuant to the Transaction, and its other
properties, if any, and will be liquidated promptly thereafter.
10. The expenses of Acquired Portfolio incurred by it in connection
with the Transaction will be only such expenses that are solely and directly
related to the Transaction in accordance with Rev. Rul. 73-54, 1973-1 C.B. 187.
Acquired Portfolio will not pay any expenses incurred by its shareholders in
connection with the Transaction.
11. There is no, and never has been any, indebtedness between Acquiring
Portfolio and Acquired Portfolio.
12. Acquired Portfolio has properly elected to be a regulated
investment company under Subchapter M of the Code, has qualified for the special
tax treatment afforded regulated investment companies under Subchapter M of the
Code for each taxable year since inception, and qualifies for such treatment as
of the time of the Closing.
13. Acquired Portfolio meets the requirements of an "investment
company" in Section 368(a)(2)(F) of the Code.
14. Acquired Portfolio is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. Acquired Portfolio does not pay compensation to any
shareholder-employee.
16. Acquired Portfolio shareholders will not have dissenters' or
appraisal rights in the Transaction.
17. The Transaction is being undertaken for valid and substantial
business purposes, including facilitating Acquired Portfolio's becoming a member
of the Pioneer family of material funds, which, in the long term, is intended to
result in lower expenses and increased assets.
B-2
18. Acquired Portfolio has no outstanding warrants, options,
convertible securities or any other type of right pursuant to which any person
could acquire stock in Acquired Portfolio.
* * * * *
The undersigned officer of AmSouth Trust is authorized to make all of
the representations set forth herein, and the undersigned is authorized to
execute this certificate on behalf of Acquired Portfolio. The undersigned
recognizes that Wilmer Cutler Pickering Hale and Dorr LLP will rely upon the
foregoing representations in evaluating the United States federal income tax
consequences of the Transaction and rendering its opinion pursuant to Section
8.5 of the Agreement. If, prior to the date of the Transaction, any of the
representations set forth herein ceases to be accurate, the undersigned agrees
to deliver immediately to Wilmer Cutler Pickering Hale and Dorr LLP a written
notice to that effect.
VARIABLE INSURANCE FUNDS
on behalf of AMSOUTH [ ] FUND
By: ________________________________
Name: ________________________________
Title: ________________________________
Dated: __________, 2005
B-3
Exhibit B -- Additional Information Pertaining to Pioneer
PORTFOLIO TRANSACTION POLICIES
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by Pioneer pursuant to authority contained in the
Portfolio's management contract. Pioneer seeks to obtain the best execution on
portfolio trades. The price of securities and any commission rate paid are
always factors, but frequently not the only factors, in judging best execution.
In selecting brokers or dealers, Pioneer considers various relevant factors,
including, but not limited to, the size and type of the transaction; the nature
and character of the markets for the security to be purchased or sold; the
execution efficiency, settlement capability and financial condition of the
dealer; the dealer's execution services rendered on a continuing basis; and the
reasonableness of any dealer spreads. Transactions in non-U.S. equity securities
are executed by broker-dealers in non-U.S. countries in which commission rates
may not be negotiable (as such rates are in the U.S.).
Pioneer may select broker-dealers that provide brokerage and/or
research services to a Portfolio and/or other investment companies or other
accounts managed by Pioneer. In addition, consistent with Section 28(e) of the
Securities Exchange Act of 1934 as amended, if Pioneer determines in good faith
that the amount of commissions charged by a broker-dealer is reasonable in
relation to the value of the brokerage and research services provided by such
broker, the fund may pay commissions to such broker-dealer in an amount greater
than the amount another firm may charge. Such services may include advice
concerning the value of securities; the advisability of investing in, purchasing
or selling securities; the availability of securities or the purchasers or
sellers of securities; providing stock quotation services, credit rating service
information and comparative fund statistics; furnishing analyses, electronic
information services, manuals and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy, and performance of
accounts and particular investment decisions; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Pioneer maintains a listing of broker-dealers who provide such
services on a regular basis. However, because many transactions on behalf of a
Portfolio and other investment companies or accounts managed by Pioneer are
placed with broker-dealers (including broker-dealers on the listing) without
regard to the furnishing of such services, it is not possible to estimate the
proportion of such transactions directed to such dealers solely because such
services were provided. Pioneer believes that no exact dollar value can be
calculated for such services.
The research received from broker-dealers may be useful to Pioneer in
rendering investment management services to any of the funds as well as other
investment companies or other accounts managed by Pioneer, although not all such
research may be useful to any of the funds. Conversely, such information
provided by brokers or dealers who have executed transaction orders on behalf of
such other accounts may be useful to Pioneer in carrying out its obligations to
any of the Portfolios. The receipt of such research has not reduced Pioneer's
normal independent research activities; however, it enables Pioneer to avoid the
additional expenses which might otherwise be incurred if it were to attempt to
develop comparable information through its own staff.
None of the funds used any brokers affiliated with Pioneer during its
most recently completed fiscal year in connection with its portfolio
transactions.
SIMILAR FUNDS
Pioneer serves as the investment adviser to each fund in the Pioneer
family of funds. The following table identifies other funds in the Pioneer
Family of Funds that have similar investment objectives to the Funds described
in this Proxy Statement/Prospectus and provides other information regarding the
similar funds.
- ---------------------------------------------------------------------------------------------------------------------------
Fund Net assets of Fund Management fee rate (as a percentage of
(as of March 31, 2005) average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Equity Income Fund $959,952,939 0.60% of the Fund's average net assets up to
$10 billion and 0.575% on the assets over $10
billion.
- ---------------------------------------------------------------------------------------------------------------------------
B-1
- ---------------------------------------------------------------------------------------------------------------------------
Fund Net assets of Fund Management fee rate (as a percentage of
(as of March 31, 2005) average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Leaders Fund $35,682,075 0.75% of the first $1 billion of the Fund's
average net assets and 0.70% of the excess
over $1 billion.
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Shares $641,452,946 0.70% of the Fund's average net assets up to
$500million, 0.65% of the next $500 million
and 0.625%of the excess over $1 billion.+/- .10%
depending on performance vs. Russell 1000 Index.
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Independence Fund $297,006,363 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Large Cap Growth Fund $1,691,675 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Growth Fund $555,333,842 0.625% +/- .20% depending on performance vs. S&P
Mid Cap 400 Index.
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Research Fund $23,134,484 0.75% of the first $1 billion of the Fund's
average net assets and 0.70% of the excess
over $1 billion.
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Select Equity Fund $528,795 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Strategic Growth Fund $33,528,773 0.75% of the first $1 billion of the Fund's
average net assets and 0.70% of the excess
over $1 billion.
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Variable Contracts Trust Net assets of Fund Management fee rate (as a percentage of
(as of March 31, 2005) average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Equity Income VCT Portfolio $297,403,668 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Growth Shares VCT Portfolio $37,553,901 0.70%
- ---------------------------------------------------------------------------------------------------------------------------
Pioneer Mid Cap Value VCT Portfolio $890,841,912 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
B-2
Exhibit C -- Portfolio Manager's Discussion of Performance
Pioneer Fund VCT Portfolio
Performance Update 12/31/04
Prices and Distributions
12/31/04 12/31/03
Net Asset Value per Share $20.57 $18.70
Distributions per Share
(1/1/04 - 12/31/04)
Dividends $0.2186
Short-Term Capital Gains $ -
Long- Term Capital Gains $ -
Average Annual Total Returns
(As of December 31, 2004)
Net Asset Value
Life-of-Class 6.31%
(10/31/97)
5 Years 0.12%
1 Year 11.26%
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's annual 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.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.
In the following discussion, John Carey, portfolio manager of Pioneer Fund VCT
Portfolio, reviews the past year and gives an overview of the Portfolio's
performance over that period.
Q: How did the Portfolio perform versus its benchmark? To what do you attribute
the performance?
A: Pioneer Fund VCT Portfolio achieved respectable returns in 2004. The
Portfolio rose 11.25% at net asset value for the calendar year. Most of the gain
came in the fourth quarter, which saw the Portfolio rise 9.26%. By comparison,
the Standard & Poor's 500 Index increased by 11.04% for the year and 9.23% in
the fourth quarter. 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.
For Pioneer Fund VCT Portfolio, the better-than-average performance was derived
both from our solid weightings in many of the old-economy stocks, especially in
energy, industrials, and materials, and from our good stock selection in the
four
C-1
sectors that underperformed the S&P 500 average, consumer staples, financials,
health care, and information technology. Among our best-performing stocks were
Norfolk Southern and PACCAR in industrials and T. Rowe Price in financials, but
we also benefited from having only modest relative exposure to Pfizer and Cisco
Systems (which we sold during the year) and no holdings of Coca-Cola, all stocks
that did poorly. We did suffer from having above-market weightings in two of the
dismal semi-conductor names, Applied Materials and Texas Instruments, but on the
whole we managed to avoid most of the "disaster" stocks. We were particularly
pleased that consumer discretionary, the sector we had highlighted in our annual
report for 2003 as the "major culprit" in our relative underperformance versus
the S&P during that year, was a positive contributor to performance in 2004.
Three of our largest gains were from stocks in that sector: McGraw-Hill, Target,
and John Wiley & Sons.
Q: What changes did you make to the Portfolio during the second half?
A: The list of 32 additions to and 10 deletions from the portfolio in the second
half of 2004 makes it look as though the period was a singularly busy one for
Pioneer Fund VCT Portfolio. Actually it was just a normally busy time, but due
to the merger of an acquired fund, the Safeco Core Equity Fund, into Pioneer
Fund VCT Portfolio during December, we ended up with some new, transferred
positions. Most of the Safeco fund, overlapped with positions already owned, but
we inherited the others as well. Rather than "throwing them all out with the
wash," we thought that we would take our time to study them in the expectation
that some might prove to be worthwhile longer-term holdings. The merger itself
marked an exciting increase to the asset base of Pioneer Fund VCT Portfolio, and
also to our shareholder family. To our new, formerly Safeco shareholders, a
hearty welcome!
The total effect of the portfolio activity on sector weights was modest, with no
sector weighting going up or down by as much as 2%. Materials, industrials,
consumer discretionary, information technology, and telecommunications services
all increased as a percentage of the Fund portfolio, and energy, consumer
staples, health care, financials, and utilities all decreased. As examples, in
materials we added: BHP Billiton, a major Australian-based mining and minerals
company; Inco, the Canadian nickel producer; and Newmont Mining, a leading gold
miner. Two new materials names came from the Safeco fund, Praxair, supplier of
industrial gases, and Ball, a packaging company. Among industrials, Northrup
Grumman and Ingersoll-Rand were both Safeco holdings, and in the case of
consumer discretionary, five of the eight new stocks came from the Safeco fund.
The two largest additions, however, were our own purchases, Nordstrom and Gap,
both of them retailing companies showing signs of meaningful operational
improvement over the past couple of years. Information technology rose somewhat
with: our purchase of Veritas Software, which has received a merger proposal
from another portfolio company, Symantec; the receipt of shares of Freescale
Semiconductor from our holding Motorola; and the inclusion of EMC, an
information storage specialist, from the Safeco fund. Telecommunications saw one
purchase by us, Nextel Communications, and two additions attributable to the
Safeco fund, CenturyTel and Verizon. Subsequent to our purchase of Nextel, the
company entered into merger discussions with Sprint.
In regard to the sectors where the weightings decreased, the reasons in some
cases had to do with weaker relative share-price performance and in other cases
with sales from the portfolio. In energy, we realized a gain on a large position
in Smith International and replaced it with a smaller holding of Schlumberger.
With consumer staples, despite the addition of two small positions from the
Safeco portfolio, Kellogg and Kimberly Clark, the sector declined as a percent
of the Portfolio due to underperformance versus the market averages. In the case
of health care, it was a combination of selling in excess of purchasing and
woeful stock performance from some of the pharmaceuticals, especially Mylan
Labs, which announced an acquisition that many investors thought ill conceived.
During the six months, we realized significant percentage gains on our sales of
Biomet and Wellpoint Health Networks, while adding two names in the health-care
equipment and supplies industry, Stryker and Medtronic, and one name in
biotechnology, Amgen. Medtronic and Amgen were both from the Safeco fund.
Financials saw SouthTrust stock exchanged for shares of Wachovia in a merger and
our shares of Charter One Financial acquired for cash by the Royal Bank of
Scotland. We sold our position in St. Paul Travelers after discouragement over
the company's need to set up additional reserves following the merger creating
the company. Finally, in utilities, we sold a position in Vectren and received a
smaller position in Exelon from the Safeco fund.
Q: What is your outlook for 2005?
A: The economic outlook appears favorable over the coming year. Interest rates
are expected to continue rising, but not so fast that they should present
impediments to further economic growth. Earnings growth will moderate somewhat,
which is
C-2
normal as a business cycle lengthens, but should still be adequate to fuel
additional share-price advances. Federal tax law, with the maximum 15% tax rate
on qualified dividends and long-term capital gains, is likewise favorable to the
stock market. Of course there are concerns, including energy and other commodity
prices and the high trade and Federal budget deficits. At some point, too,
investors will begin looking ahead to the next downturn in the economy and
thinking about ways to position themselves more defensively. A lot rides on the
length of the current business cycle. Making the forecasting even more difficult
is the unusual circumstance that this is a wartime cycle, with some economic
activity not conforming to more predictable business patterns.
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.
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.
C-3
Pioneer Oakridge Large Cap VCT Portfolio
Performance Update 12/31/04
Prices and Distributions
12/31/04 3/15/04
Net Asset Value per Share $11.09 $10.00
Distributions per Share
(3/15/04 - 12/31/04)
Dividends $ -
Short-Term Capital Gains $ -
Long-Term Capital Gain $ -
Average Annual Total Returns
(As of December 31, 2004)
Life-of-Class 1 0.90%
(3/15/04)
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's annual report 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.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 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.
Portfolio Management Discussion 12/31/04
In the following interview, David Klaskin, Pioneer Oak Ridge Large Cap Growth
VCT Portfolio's Lead Portfolio Manager, discusses the factors that influenced
performance for the period from the Portfolio's inception on March 15, 2004
through December 31, 2004.
Q: How did the U.S. stock market perform during the past year?
A: Stocks performed very well during the past year, as continued global growth,
favorable earnings results and improving corporate balance sheets combined to
form a solid foundation for the market. While stocks provided a reasonable
return, their upward path was very choppy due to weakness in the second and
third quarters. During this time, the market was pressured by a number of
concerns, including geopolitical tensions, soaring oil prices and rising U.S.
interest rates. Investors, therefore, began to rotate into higher quality stocks
with solid fundamentals, and away from the riskier stocks that had been top
performers during 2003 and the first quarter of this year. This shift was a
positive for the Portfolio, given our focus on higher quality, fundamentally
sound companies.
Q: How did Pioneer Oak Ridge Large Cap Growth VCT Portfolio perform?
C-4
A: Class II shares of the Portfolio produced a total return of 10.90% at net
asset value for the period from the Portfolio's inception on March 15, 2004,
through December 31, 2004, outpacing the 7.58% return of the Russell 1000 Growth
Index over the same period. 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. We are pleased that the Portfolio has performed
well both on an absolute basis and relative to its benchmark. While past
performance is no guarantee of future results, of course, we believe the
Portfolio's strong showing is the result of our disciplined investment style.
Like all growth managers, we look for companies with accelerating earnings.
However, we also require that two other important factors be in place. First,
our research must indicate to us that an issue's earnings growth is sustainable.
And second, the stocks we purchase must be reasonably valued in our view, since
even fast-growing stocks can be very risky if they are purchased at too rich of
a price. We believe this approach is the best way to find companies that are
poised to perform well over a three- to five-year time horizon.
Q: How is the Portfolio positioned in the two largest industry sectors in the
Russell 1000 Growth Index: technology and health care?
A: We added significant relative value through our approach to the technology
sector, which underperformed the general market due to the prospect of slowing
sales growth in 2005. In this environment, our relatively conservative
positioning - i.e., our focus on reasonably valued, blue chip companies within
the sector - paid off. In addition, performance was helped by the fact that
technology is the Portfolio's largest sector underweight (a weighting below that
of the benchmark). Two of the Portfolio's top performers in technology were
Qualcomm, whose business model of earning royalties for its wireless
communications technology has enabled the stock to perform well amid broader
tech weakness; and Dell Computer, which continues to gain market share from its
competitors. The Portfolio also was helped by being underweight in the more
cyclical areas within technology, such as semiconductors. In particular, our
decision to avoid Intel - which underperformed by a wide margin during the
period - proved to be a distinct positive for performance.
Turning to health care, we added significant value through our decision to avoid
the large-cap pharmaceuticals sector. Although these stocks are now as
inexpensive as they were following President Clinton's attempt at sweeping
health care reform in 1993, we believe there are not enough new drugs in the
pipeline to make up for the lost revenues from drugs that are coming off patent
protection. We looked instead for opportunities among service providers and
equipment companies, such as Zimmer Holdings - a leading manufacturer of
orthopedic products. Zimmer declined in the third quarter on weaker than
expected earnings, prompting us to trim the position, but the stock was a strong
contributor for the full year. On the negative side, the generic drug maker Teva
Pharmaceuticals was one of the Portfolio's leading detractors. We continue to
hold the stock, however, as we remain confident in its longer term prospects.
Q: What other elements of the Portfolio's positioning affected performance?
A: Energy stocks performed very well during the period, as the rising prices of
oil and gas boosted profits for companies in the sector. The Portfolio was
helped by both an overweight position and strong stock selection within the
group. We received strong performance from XTO Energy, which has demonstrated
the ability to manage its business effectively even during difficult times.
Apache, an exploration and production company that reported record production
and 57% earnings growth during the third quarter, also performed very well. In
the consumer discretionary area, the online auction company eBay provided
stellar performance. eBay has emerged as a true "category killer," meaning that
there is no other company that has come close to being able to establish a
stronghold in its market space. While the company's fundamentals remain strong,
we have begun to trim the position on the basis of its valuation. Specialty
retailers such as Staples and Best Buy also contributed positively to
performance. A key detractor within the consumer discretionary group was
IAC/InteractiveCorp, which integrates a variety of online businesses. While we
believed this would allow the company to benefit from increased online activity,
the stock fell following the release of disappointing second quarter results. In
the financial sector, we have gradually reduced the presence of companies that
are sensitive to interest rate movements - such as traditional banks - given
that the Federal Reserve is likely to continue raising rates. At the same time,
we have maintained a position in stocks with more diversified business lines
that have the potential to benefit from continued strength in the economy, such
as Sallie Mae and American Express. A top performer among financials was
Popular, which holds a strong market position within Latin America and the
fast-growing Hispanic population in the United States.
Q: What is your outlook for the stock market?
C-5
A: A number of factors continue to work in the market's favor, including steady
worldwide growth, the improvement in corporate balance sheets, and companies'
growing focus on dividends and share buybacks. However, the risks to market
performance, which include rising interest rates and the potential for
geopolitical disruptions, remain firmly in place. As a result, we think the
post-bubble rally in lower-quality, higher-risk companies has likely run its
course, and that should translate into a continued investor preference for
higher quality companies with strong fundamentals. In this environment, we
believe we can continue to add value through our disciplined, selective approach
to investing.
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 a limited number of securities and, as a result, the
Portfolio's performance may be more volatile than the performance of portfolios
holding more securities. 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.
C-6
Pioneer Value VCT Portfolio
Performance Update 12/31/04
Prices and Distributions
12/31/04 12/31/03
Net Asset Value per Share $13.40 $12.04
Distributions per Share
(1/1/04 - 12/31/04)
Dividends $0.0065
Short-Term Capital Gains $0.0051
Long-Term Capital Gains $ -
Average Annual Total Returns
(As of June 30, 2004)
Net Asset Value
Life-of-Class 19.22%
(5/1/03)
1 Year 11.40
All total returns shown assume reinvestment of distributions at net asset value.
Please refer to the variable product's annual report 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.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 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.
Portfolio Management Discussion 12/31/04
Portfolio Manager J. Rodman Wright describes the economic background and
investment strategies that affected results for Pioneer Value VCT Portfolio
through 2004's market swings.
Q. What was the investment background, and how did the Portfolio perform during
the period?
A. Stocks made little progress for much of last year, until uncertainties about
the presidential election faded and oil prices backed down from their record
highs. A late year rally then drove major stock indices into the black for the
second straight year. For the twelve months ended December 31, 2004, the
Portfolio returned 11.40% at net asset value. This result trailed the
Portfolio's benchmark, the Russell 1000 Value Index, which returned 16.49% over
the same period. 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 had the greatest impact on results?
C-7
A. In technology, stock selection was productive despite weakness in the sector;
Symantec's takeover of Veritas Software was key. Similarly, the acquisition of
AT&T Wireless by Cingular aided results in telecommunications, but Bell South
was down slightly. Our largest decliner was insurer Marsh & McLennan, which came
under intense scrutiny from regulators over commission payment practices and
other issues.
In energy, our modestly overweight position and good stock selection both added
to results. High oil prices fed gains at TransOcean, a deepwater driller that
works under contract to major oil companies. Fees for drilling platforms have
tracked the rising cost of oil. Expensive oil also favored Suncor Energy, a
Canadian producer, whose costly process for extracting oil from sand and shale
deposits benefits disproportionately from rising prices.
Avoiding the struggling automobile sector was beneficial, but performance
suffered in other consumer areas. Electronics conglomerate Philips NV fell as
slack demand pushed down prices of semiconductors. Media stocks, including
Viacom and Clear Channel also lagged. Supermarkets, including Kroger, declined
under pressure from labor issues and from Walmart's expansion of its grocery
initiatives. And discount retailer Kohl's sought to overcome difficult times by
revamping its stores and merchandise lines. We were overweighted in the
underperforming health care sector. Recall of an important arthritis treatment
drove Pfizer down. We had more success with Merck, however, investing while
pessimism was greatest following the withdrawal of Vioxx. Merck's price
recovered some lost ground later in the period. Industrial conglomerate Tyco
Industries boosted returns as it continued its transition from troubled
turnaround candidate to successful operating company. Can-maker Ball benefited
as beverage consumption increased during Europe's unusually warm summer. Ball
also bought back some of its shares, a step that investors welcomed. Mortgage
originator Countrywide Financial was a solid contributor as fears that higher
mortgage rates would choke off demand never materialized. Regulatory problems
drove down shares of the Federal Home Loan Mortgage Corporation, known as
Freddie Mac. We acquired shares when valuations sank; Freddie Mac's price
recovered later in the year and helped the Portfolio's performance. Providian,
which issues credit cards to consumers with questionable credit, tightened
financial controls and grew its volume of receivables.
Q. What is your outlook for the months ahead?
A. We are fairly optimistic about the economy, and prospects for large-cap
stocks also appear positive. Last year's gains trailed the growth in corporate
earnings, resulting in a more rationally priced equity market than was the case
a year ago. Interest rates remain low in absolute terms. Energy prices may slip
in 2005, as supplies seem adequate and there is unused capacity in oil-producing
nations. After the market's focus on speculative issues in 2003 and on
profitable smaller companies in 2004, we think bigger, stronger companies may
draw attention next year. We are optimistic that large-cap stocks may perform
well in the year ahead.
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.
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.
C-8
PIONEER FUND VCT PORTFOLIO
PIONEER OAK RIDGE LARGE CAP GROWTH VCT PORTFOLIO
PIONEER VALUE VCT PORTFOLIO
(each a "Pioneer Portfolio" and each a separate series
of Pioneer Variable Contracts Trust)
STATEMENT OF ADDITIONAL INFORMATION
[ ], 2005
This Statement of Additional Information is not a Prospectus. It should
be read in conjunction with the related combined Proxy Statement and Prospectus
dated [ ], 2005 (the "Proxy Statement and Prospectus"), which covers Class II
shares of the relevant Pioneer Portfolio, a series of Pioneer Variable Contracts
Trust, to be issued in exchange for shares of the applicable AmSouth Portfolio
(as detailed below), each a series of Variable Insurance Funds. Please retain
this Statement of Additional Information for further reference.
The Prospectus is available to you free of charge (please call
1-800-225-6292).
INTRODUCTION..........................................................................................2
EXHIBITS..............................................................................................2
ADDITIONAL INFORMATION ABOUT EACH PIONEER PORTFOLIO...................................................3
PORTFOLIO HISTORY............................................................................3
DESCRIPTION OF THE PORTFOLIO AND ITS INVESTMENT RISKS........................................3
MANAGEMENT OF THE PORTFOLIO..................................................................3
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..........................................3
INVESTMENT ADVISORY AND OTHER SERVICES.......................................................3
PORTFOLIO MANAGERS...........................................................................3
BROKERAGE ALLOCATION AND OTHER PRACTICES.....................................................3
CAPITAL STOCK AND OTHER SECURITIES...........................................................3
PURCHASE, REDEMPTION AND PRICING OF SHARES...................................................3
TAXATION OF EACH PORTFOLIO...................................................................3
UNDERWRITERS.................................................................................4
CALCULATION OF PERFORMANCE DATA..............................................................4
FINANCIAL STATEMENTS.........................................................................4
INTRODUCTION
This Statement of Additional Information is intended to supplement the
information provided in a combined Proxy Statement and Prospectus dated [ ],
2005 relating to the following proposed reorganizations:
1. AmSouth Capital Growth Fund into Pioneer Oak Ridge Large Cap
Growth VCT Portfolio
2. AmSouth Select Equity Fund into Pioneer Fund VCT Portfolio
3. AmSouth Value Fund into Pioneer Value VCT Portfolio
The Proxy Statement and Prospectus is in connection with the
solicitation by the management of Variable Contracts Trust of proxies to be
voted at a Meeting of Shareholders of each AmSouth Portfolio listed above to be
held on [ ], 2005.
EXHIBITS AND DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated herein by reference, unless
otherwise indicated. Shareholders will receive a copy of each document that is
incorporated by reference upon any request to receive a copy of this Statement
of Additional Information.
1. Pioneer Variable Contracts Trust's Statement of Additional Information,
dated May 1, 2005 ("SAI") (File Nos. 33-84546; 811-08716), as filed
with the Securities and Exchange Commission on April 13, 2005
(Accession No. 0001016964-05-000141) is incorporated herein by
reference.
2. Pioneer Variable Contracts Trust's Annual Report for the fiscal year
ended December 31, 2004 (File No. 811-08716), as filed with the
Securities and Exchange Commission on March 11, 2005 (Accession No.
0000908996-05-000027) is incorporated herein by reference.
3. Variable Insurance Funds' Statement of Additional Information relating
to the above-referenced AmSouth Portfolios, dated May 1, 2005 (File
Nos. 33 81800; 811-08644, as filed with the Securities and Exchange
Commission on April 29, 2005 (Accession No. 0000943663-05-000276) is
incorporated herein by reference.
4. Variable Insurance Funds' Annual Report relating to the
above-referenced AmSouth Portfolios for the fiscal year ended December
31, 2004 (File No. 811-08644), as filed with the Securities and
Exchange Commission on March 8, 2005 (Accession No.
0001047469-05-005655) is incorporated herein by reference.
5. Pro forma financial statements for the fiscal year ending December 31,
2004 for the following:
AmSouth Capital Growth Fund into Pioneer Oak Ridge Large Cap
Growth VCT Portfolio
AmSouth Select Equity Fund into Pioneer Fund VCT Portfolio
AmSouth Value Fund into Pioneer Value VCT Portfolio
ADDITIONAL INFORMATION ABOUT
EACH PIONEER PORTFOLIO
PORTFOLIO HISTORY
For additional information about Pioneer Variable Contracts Trust
generally and each Pioneer Portfolio and its histories, see "Fund History" in
the SAI.
DESCRIPTION OF EACH PORTFOLIO AND ITS INVESTMENT RISKS
For additional information about each Pioneer Portfolio's investment
objective, policies, risks and restrictions, see "Investment Policies, Risks and
Restrictions" in the SAI.
MANAGEMENT OF THE PORTFOLIO
For additional information about Pioneer Variable Contracts Trust's
Board of Trustees and officers, see "Trustees and Officers" in the SAI.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
For addition information on share ownership of each Pioneer Portfolio,
see "Annual Fee, Expense and Other Information."
INVESTMENT ADVISORY AND OTHER SERVICES
For additional information on each Pioneer Portfolio, see "Investment
Adviser," "Custodian" and "Independent Auditors" in Pioneer Variable Contracts
Trust's SAI.
PORTFOLIO MANAGERS
For additional information, see "Portfolio Management" and "Appendix C
- - Portfolio Management - Additional Information About the Portfolio Managers" in
Pioneer Variable Contracts Trust's SAI.
BROKERAGE ALLOCATION AND OTHER PRACTICES
For additional information about Pioneer Variable Contracts Trust and
each Pioneer Portfolio's brokerage allocation practices, see "Portfolio
Transactions" in the SAI.
CAPITAL STOCK AND OTHER SECURITIES
For additional information about the voting rights and other
characteristics of shares of beneficial interest of each Pioneer Portfolio and
Pioneer Variable Contracts Trust, see "Description of Shares" in the SAI.
PURCHASE, REDEMPTION AND PRICING OF SHARES
For additional information about purchase, redemption and pricing of
shares of each Pioneer Portfolio, see "Pricing of Shares" in the SAI.
TAXATION OF THE FUND
For additional information about tax matters related to an investment
in each Pioneer Portfolio, see "Tax Status" in the SAI.
UNDERWRITERS
For additional information about the Pioneer Variable Contracts Trust's
principal, see "Principal Underwriter" in the SAI.
CALCULATION OF PERFORMANCE DATA
For additional information about the investment performance of each
Pioneer Portfolio, see "Investment Results" in the SAI.
FINANCIAL STATEMENTS
For additional information on each Pioneer Portfolio, see "Financial
Statements" in Pioneer Variable Contracts Trust's SAI.
PIONEER FUND VCT PORTFOLIO
PRO FORMA
Schedule of Investments (a)
December 31, 2004
(unaudited)
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
------------- ------------- -------------
COMMON STOCKS
Energy
Integrated Oil & Gas
20,126 20,126 BP Amoco Plc (A.D.R.)
31,052 31,052 ConocoPhillips
241,264 241,264 ChevronTexaco Corp.
44,680 44,680 Occidental Petroleum Corp.
292,714 292,714 Exxon Mobil Corp.
Oil & Gas Drilling
60,277 60,277 Schlumberger, Ltd.
Oil & Gas Exploration & Production
99,995 99,995 Apache Corp.
70,551 70,551 Pioneer Natural Resources Co.
Total Energy
Materials
Aluminum
117,716 117,716 Alcoa, Inc.
Commodity Chemicals
27,138 27,138 Air Products & Chemicals, Inc.
46,466 46,466 E.I. du Pont de Nemours and Co.
88,000 88,000 Praxair, Inc.
Diversified Chemical
21,688 21,688 PPG Industries, Inc.
Diversified Metals & Mining
112,522 112,522 BHP Billiton, Ltd. (A.D.R)
81,386 81,386 Inco, Ltd. *
39,803 39,803 Phelps Dodge Corp.
200,118 200,118 Rio Tinto Plc
Metal & Glass Containers
104,000 104,000 Ball Corp.
Paper Products
53,073 53,073 Meadwestvaco Corp.
1,972 1,972 Neenah Paper, Inc.*
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ----------------- ----------------- -----------------
COMMON STOCKS 98.9%
Energy 7.0%
Integrated Oil & Gas 5.2%
BP Amoco Plc (A.D.R.) $ 1,175,358 $ $ 1,175,358
ConocoPhillips 2,696,245 2,696,245
ChevronTexaco Corp. 12,668,773 12,668,773
Occidental Petroleum Corp. 2,607,525 2,607,525
Exxon Mobil Corp. 15,004,520 15,004,520
----------- ------------ -----------
$34,152,421 $ $34,152,421
----------- ------------ -----------
Oil & Gas Drilling 0.6%
Schlumberger, Ltd. $ 4,035,545 $ $ 4,035,545
----------- ------------ -----------
Oil & Gas Exploration & Production 1.1%
Apache Corp. $ 5,056,747 $ $ 5,056,747
Pioneer Natural Resources Co. 2,476,340 2,476,340
----------- ------------ -----------
$ 7,533,087 $ $ 7,533,087
----------- ------------ -----------
Total Energy $45,721,053 $ $45,721,053
----------- ------------ -----------
Materials 5.8%
Aluminum 0.6%
Alcoa, Inc. $ 3,698,637 $ $ 3,698,637
----------- ------------ -----------
Commodity Chemicals 1.2%
Air Products & Chemicals, Inc. $ 1,573,190 $ $ 1,573,190
E.I. du Pont de Nemours and Co. 2,279,157 2,279,157
Praxair, Inc. 3,885,200 3,885,200
----------- ------------ -----------
$ 7,737,547 $ $ 7,737,547
----------- ------------ -----------
Diversified Chemical 0.2%
PPG Industries, Inc. $ 1,478,254 $ $ 1,478,254
----------- ------------ -----------
Diversified Metals & Mining 2.4%
BHP Billiton, Ltd. (A.D.R) $ 2,702,778 $ $ 2,702,778
Inco, Ltd. * 2,993,377 2,993,377
Phelps Dodge Corp. 3,937,313 3,937,313
Rio Tinto Plc 5,886,829 5,886,829
----------- ------------ -----------
$15,520,297 $ $15,520,297
----------- ------------ -----------
Metal & Glass Containers 0.7%
Ball Corp. $ 4,573,920 $ $ 4,573,920
----------- ------------ -----------
Paper Products 0.3%
Meadwestvaco Corp. $ 1,798,644 $ $ 1,798,644
Neenah Paper, Inc.* 64,287 64,287
----------- ------------ -----------
$ 1,798,644 $ 64,287 $ 1,862,931
----------- ------------ -----------
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
- -------------- ------------- ---------
Precious Metals & Minerals
40,047 40,047 Newmont Mining Corp.
Specialty Chemicals
39,222 39,222 Ecolab, Inc.
Total Materials
Capital Goods
Aerospace & Defense
48,104 48,104 General Dynamics Corp.
54,000 54,000 Northrop Grumman Corp.
Electrical Components & Equipment
154,500 154,500 American Power Conversion Corp.
65,964 65,964 Emerson Electric Co.
206,300 206,300 General Electric Co.
Environmental Services
147,100 147,100 Waste Management, Inc.
Industrial Conglomerates
45,400 45,400 Briggs & Stratton Corp.
79,790 79,790 Illinois Tool Works, Inc.
120,984 120,984 Johnson Controls, Inc.
111,551 111,551 United Technologies Corp.
Industrial Machinery
40,569 40,569 Caterpillar, Inc.
86,222 86,222 Deere & Co.
40,000 40,000 Ingersoll-Rand Co.
Total Capital Goods
Commercial Services & Supplies
Office Services & Supplies
58,698 58,698 Canon, Inc. (A.D.R.)
107,700 107,700 Pitney Bowes, Inc.
Total Commercial Services & Supplies
Transportation
Airlines
170,807 170,807 Southwest Airlines Co.
Motorcycle Manufacturers
52,000 52,000 Harley-Davidson, Inc.
Railroads
50,040 50,040 Burlington Northern, Inc.
180,893 180,893 Norfolk Southern Corp.
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- -------------- ------------- ------------
Precious Metals & Minerals 0.3%
Newmont Mining Corp. $ 1,778,487 $ $ 1,778,487
----------- ---------- -----------
Specialty Chemicals 0.2%
Ecolab, Inc. $ 1,377,869 $ $ 1,377,869
----------- ---------- -----------
Total Materials $37,963,655 $ 64,287 $38,027,942
----------- ---------- -----------
Capital Goods 10.6%
Aerospace & Defense 1.2%
General Dynamics Corp. $ 5,031,678 $ $ 5,031,678
Northrop Grumman Corp. 2,935,440 2,935,440
----------- ---------- -----------
$ 7,967,118 $ $ 7,967,118
----------- ---------- -----------
Electrical Components & Equipment 2.4%
American Power Conversion Corp. $ $3,306,300 $ 3,306,300
Emerson Electric Co. 4,624,076 4,624,076
General Electric Co. 7,529,950 7,529,950
----------- ---------- -----------
$12,154,026 $3,306,300 $15,460,326
----------- ---------- -----------
Environmental Services
Waste Management, Inc. 0.7% $ $4,404,174 4,404,174
----------- ---------- -----------
Industrial Conglomerates 4.3%
Briggs & Stratton Corp. $ $1,887,732 $ 1,887,732
Illinois Tool Works, Inc. 7,394,937 7,394,937
Johnson Controls, Inc. 7,675,225 7,675,225
United Technologies Corp. 11,528,796 11,528,796
----------- ---------- -----------
$26,598,958 $1,887,732 $28,486,690
----------- ---------- -----------
Industrial Machinery 2.1%
Caterpillar, Inc. $ 3,955,883 $ $ 3,955,883
Deere & Co. 6,414,917 6,414,917
Ingersoll-Rand Co. 3,212,000 3,212,000
----------- ---------- -----------
$13,582,800 $ $13,582,800
----------- ---------- -----------
Total Capital Goods $60,302,902 $9,598,206 $69,901,108
----------- ---------- -----------
Commercial Services & Supplies 1.2%
Office Services & Supplies 1.2%
Canon, Inc. (A.D.R.) $ 3,184,953 $ $ 3,184,953
Pitney Bowes, Inc. 4,984,356 4,984,356
----------- ---------- -----------
Total Commercial Services & Supplies $ 3,184,953 $4,984,356 $ 8,169,309
----------- ---------- -----------
Transportation 2.5%
Airlines 0.4%
Southwest Airlines Co. $ 2,780,738 $ $ 2,780,738
----------- ---------- -----------
Motorcycle Manufacturers 0.5%
Harley-Davidson, Inc. $ $3,159,000 $ 3,159,000
----------- ---------- -----------
Railroads 1.4%
Burlington Northern, Inc. $ 2,367,392 $ $ 2,367,392
Norfolk Southern Corp. 6,546,518 6,546,518
----------- ---------- -----------
$ 8,913,910 $ $ 8,913,910
----------- ---------- -----------
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
- -------------- ------------- ---------
Trucking
21,253 21,253 United Parcel Service
Total Transportation
Automobiles & Components
Automobile Manufacturers
253,315 253,315 Ford Motor Corp.
108,616 108,616 PACCAR, Inc.
Total Automobiles & Components
Consumer Durables & Apparel
Apparel, Accessories & Luxury Goods
65,267 65,267 Gap, Inc.
Homebuilding
51,400 51,400 Snap-on, Inc.
Housewares & Specialties
84,000 84,000 Leggett & Platt, Inc.
Total Consumer Durables & Apparel
Media
Advertising
43,791 43,791 Omnicom Group
Movies & Entertainment
51,957 118,200 170,157 The Walt Disney Co.
Publishing
48,893 48,893 Elsevier NV
90,111 49,100 139,211 Gannett Co.
149,146 149,146 John Wiley & Sons, Inc.
78,179 78,179 McGraw-Hill Co., Inc.
28,800 66,800 95,600 Tribune Co.
Total Media
Retailing
Apparel Retail
24,633 24,633 Liz Claiborne, Inc.
Computer & Electronics Retail
60,000 60,000 Best Buy Co., Inc.
11,064 11,064 Game Stop Corp. (Class B) *
Department Stores
118,523 118,523 Nordstrom, Inc.
80,000 80,000 Kohl's Corp. *
88,332 88,332 May Department Stores Co.
General Merchandise Stores
34,432 34,432 Family Dollar Stores, Inc.
228,656 228,656 Target Corp.
Home Improvement Retail
110,000 116,300 226,300 Home Depot, Inc.
48,716 48,716 Lowe's Co., Inc.
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ------------- ------------- ------------
Trucking 0.3%
United Parcel Service $ 1,816,281 $ $ 1,816,281
----------- ----------- -----------
Total Transportation $13,510,929 $ 3,159,000 $16,669,929
----------- ----------- -----------
Automobiles & Components 1.9%
Automobile Manufacturers 1.9%
Ford Motor Corp. $ 3,708,532 $ $ 3,708,532
PACCAR, Inc. 8,741,416 8,741,416
----------- ----------- -----------
Total Automobiles & Components $12,449,948 $ $12,449,948
----------- ----------- -----------
Consumer Durables & Apparel 0.8%
Apparel, Accessories & Luxury Goods 0.2%
Gap, Inc. $ 1,378,439 $ $ 1,378,439
----------- ----------- -----------
Homebuilding 0.3%
Snap-on, Inc. $ $ 1,766,104 $ 1,766,104
----------- ----------- -----------
Housewares & Specialties 0.4%
Leggett & Platt, Inc. $ 2,388,120 $ $ 2,388,120
----------- ----------- -----------
Total Consumer Durables & Apparel $ 3,766,559 $ 1,766,104 $ 5,532,663
----------- ----------- -----------
Media 5.6%
Advertising 0.6%
Omnicom Group $ 3,692,457 $ $ 3,692,457
----------- ----------- -----------
Movies & Entertainment 0.7%
The Walt Disney Co. $ 1,444,405 $ 3,285,960 $ 4,730,365
----------- ----------- -----------
Publishing 4.3%
Elsevier NV $ 665,764 $ $ 665,764
Gannett Co. 7,362,069 4,011,470 11,373,539
John Wiley & Sons, Inc. 5,196,247 5,196,247
McGraw-Hill Co., Inc. 7,156,506 7,156,506
Tribune Co. 1,213,632 2,814,952 4,028,584
----------- ----------- -----------
$21,594,218 $ 6,826,422 $28,420,640
----------- ----------- -----------
Total Media $26,731,080 $10,112,382 $36,843,462
----------- ----------- -----------
Retailing 6.6%
Apparel Retail 0.2%
Liz Claiborne, Inc. $ 1,039,759 $ $ 1,039,759
----------- ----------- -----------
Computer & Electronics Retail 0.6%
Best Buy Co., Inc. $ 3,565,200 $ $ 3,565,200
Game Stop Corp. (Class B) * 247,944 247,944
----------- ----------- -----------
$ 3,813,144 $ $ 3,813,144
----------- ----------- -----------
Department Stores 1.8%
Nordstrom, Inc. $ 5,538,580 $ $ 5,538,580
Kohl's Corp. * 3,933,600 3,933,600
May Department Stores Co. 2,596,961 2,596,961
----------- ----------- -----------
$12,069,141 $ $12,069,141
----------- ----------- -----------
General Merchandise Stores 2.0%
Family Dollar Stores, Inc. $ 1,075,311 $ $ 1,075,311
Target Corp. 11,874,106 11,874,106
----------- ----------- -----------
$12,949,417 $ $12,949,417
----------- ----------- -----------
Home Improvement Retail 1.9%
Home Depot, Inc. $ 4,701,400 $ 4,970,662 $ 9,672,062
Lowe's Co., Inc. 2,805,554 2,805,554
----------- ----------- -----------
$ 7,506,954 $ 4,970,662 $12,477,616
----------- ----------- -----------
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
- -------------- ------------- ----------
Specialty Stores
30,603 30,603 Barnes & Noble, Inc. *
Total Retailing
Food & Drug Retailing
Drug Retail
139,003 139,003 Walgreen Co.
Food Distributors
83,493 83,493 Cardinal Health, Inc.
72,400 72,400 International Flavors & Fragrances, Inc.
41,238 41,238 J.M. Smucker Co.
84,201 87,300 171,501 Sysco Corp.
Food Retail
28,200 28,200 Kellogg Co.
Total Food & Drug Retailing
Food, Beverage & Tobacco
Packaged Foods & Meats
86,457 86,457 Campbell Soup Co.
44,844 65,100 109,944 General Mills, Inc.
73,219 83,800 157,019 H.J. Heinz Co., Inc.
54,767 54,767 Hershey Foods Corp.
76,005 76,005 Sara Lee Corp.
Restaurants
161,900 161,900 McDonald's Corp.
Soft Drinks
178,941 178,941 PepsiCo, Inc.
Total Food, Beverage & Tobacco
Household & Personal Products
Household Products
90,211 90,211 Colgate-Palmolive Co.
15,015 15,015 Clorox Co.
80,030 80,030 Estee Lauder Co.
171,470 171,470 Procter & Gamble Co.
Personal Products
49,800 49,800 Gillette Co.
58,000 65,100 123,100 Kimberly-Clark Corp.
Total Household & Personal Products
Health Care Equipment & Services
Health Care Distributors
204,554 204,554 Abbott Laboratories
163,188 163,188 Johnson & Johnson
Health Care Equipment
73,222 73,222 Becton, Dickinson & Co.
32,057 32,057 Guidant Corp.
85,000 85,000 Medtronic, Inc.
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ------------- --------------- --------------
Specialty Stores 0.2%
Barnes & Noble, Inc. * $ 987,559 $ $ 987,559
----------- ------------ -----------
Total Retailing $38,365,974 $ 4,970,662 $43,336,636
----------- ------------ -----------
Food & Drug Retailing 3.5%
Drug Retail 0.8%
Walgreen Co. $ 5,333,545 $ $ 5,333,545
----------- ------------ -----------
Food Distributors 2.5%
Cardinal Health, Inc. $ 4,855,118 $ $ 4,855,118
International Flavors & Fragrances, Inc. 3,101,616 3,101,616
J.M. Smucker Co. 1,941,073 1,941,073
Sysco Corp. 3,213,952 3,332,241 6,546,193
----------- ------------ -----------
$ 8,069,070 $ 8,374,930 $16,444,000
----------- ------------ -----------
Food Retail 0.2%
Kellogg Co. $ 1,259,412 $ $ 1,259,412
----------- ------------ -----------
Total Food & Drug Retailing $14,662,027 $ 8,374,930 $23,036,957
----------- ------------ -----------
Food, Beverage & Tobacco 5.1%
Packaged Foods & Meats 2.9%
Campbell Soup Co. $ 2,584,200 $ $ 2,584,200
General Mills, Inc. 2,229,195 3,236,121 5,465,316
H.J. Heinz Co., Inc. 2,854,809 3,267,362 6,122,171
Hershey Foods Corp. 3,041,759 3,041,759
Sara Lee Corp. 1,834,761 1,834,761
----------- ------------ -----------
$12,544,724 $ 6,503,483 $19,048,207
----------- ------------ -----------
Restaurants 0.8%
McDonald's Corp. $ $ 5,190,514 $ 5,190,514
----------- ------------ -----------
Soft Drinks 1.4%
PepsiCo, Inc. $ 9,340,720 $ $ 9,340,720
----------- ------------ -----------
Total Food, Beverage & Tobacco $21,885,444 $ 11,693,997 $33,579,441
----------- ------------ -----------
Household & Personal Products 4.4%
Household Products 2.8%
Colgate-Palmolive Co. $ 4,615,195 $ $ 4,615,195
Clorox Co. 884,834 884,834
Estee Lauder Co. 3,662,973 3,662,973
Procter & Gamble Co. 9,444,568 9,444,568
----------- ------------ -----------
$18,607,570 $ $18,607,570
----------- ------------ -----------
Personal Products 1.6%
Gillette Co. $ $ 2,230,044 $ 2,230,044
Kimberly-Clark Corp. 3,816,980 4,284,231 8,101,211
----------- ------------ -----------
$ 3,816,980 $ 6,514,275 $10,331,255
----------- ------------ -----------
Total Household & Personal Products $22,424,550 $ 6,514,275 $28,938,825
----------- ------------ -----------
Health Care Equipment & Services 5.9%
Health Care Distributors 3.0%
Abbott Laboratories $ 9,542,444 $ $ 9,542,444
Johnson & Johnson 10,349,383 10,349,383
----------- ------------ -----------
$19,891,827 $ $19,891,827
----------- ------------ -----------
Health Care Equipment 2.5%
Becton, Dickinson & Co. $ 4,159,010 $ $ 4,159,010
Guidant Corp. 2,311,310 2,311,310
Medtronic, Inc. 4,221,950 4,221,950
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
- -------------- ------------- ----------
123,159 123,159 Stryker Corp.
Managed Health Care
23,937 23,937 United Healthcare Group, Inc.
Total Health Care Equipment & Services
Pharmaceuticals & Biotechnology
Biotechnology
68,200 68,200 Amgen, Inc. *
Pharmaceuticals
55,362 55,362 Barr Laboratorie, Inc.
95,302 95,302 Eli Lilly & Co.
236,082 236,082 Merck & Co., Inc.
104,212 104,212 Mylan Laboratories, Inc.
56,907 56,907 Novartis AG
78,800 57,700 136,500 Pfizer, Inc.
18,810 18,810 Roche Holdings AG (A.D.R)
180,617 180,617 Schering-Plough Corp.
Total Pharmaceuticals & Biotechnology
Banks
Diversified Banks
288,277 288,277 U.S. Bancorp
41,456 41,456 Wachovia Corp.
174,435 174,435 Wells Fargo & Co.
Regional Banks
98,868 98,868 First Horizon National Corp.
59,000 59,000 Fifth Third Bancorp
140,351 140,351 National City Corp.
57,444 57,444 SunTrust Banks, Inc.
23,185 23,185 Zions Bancorporation
Thrifts & Mortgage Finance
177,481 177,481 Washington Mutual, Inc.
Total Banks
Diversified Financials
Asset Management & Custody Banks
114,875 114,875 The Bank of New York Co., Inc.
45,290 45,290 Federated Investors, Inc.
77,103 77,103 State Street Corp.
101,277 101,277 T. Rowe Price Associates, Inc.
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ------------- --------------- --------------
$16,634,692 $ $16,634,692
----------- ---------- -----------
Managed Health Care 0.3%
United Healthcare Group, Inc. $ 2,107,174 $ $ 2,107,174
----------- ---------- -----------
Total Health Care Equipment & Services $38,633,693 $ $38,633,693
----------- ---------- -----------
Pharmaceuticals & Biotechnology 5.2%
Biotechnology 0.7%
Amgen, Inc. * $ 4,375,030 $ $ 4,375,030
----------- ---------- -----------
Pharmaceuticals 4.5%
Barr Laboratorie, Inc. $ 2,521,185 $ $ 2,521,185
Eli Lilly & Co. 5,408,389 5,408,389
Merck & Co., Inc. 7,587,675 7,587,675
Mylan Laboratories, Inc. 1,842,468 1,842,468
Novartis AG 2,876,080 2,876,080
Pfizer, Inc. 2,118,932 1,551,553 3,670,485
Roche Holdings AG (A.D.R) 2,184,311 2,184,311
Schering-Plough Corp. 3,771,283 3,771,283
----------- ---------- -----------
$28,310,323 $1,551,553 $29,861,876
----------- ---------- -----------
Total Pharmaceuticals & Biotechnology $32,685,353 $1,551,553 $34,236,906
----------- ---------- -----------
Banks 7.3%
Diversified Banks 3.4%
U.S. Bancorp $ 9,028,836 $ $ 9,028,836
Wachovia Corp. 2,180,586 2,180,586
Wells Fargo & Co. 10,841,135 10,841,135
----------- ---------- -----------
$22,050,557 $ $22,050,557
----------- ---------- -----------
Regional Banks 2.8%
First Horizon National Corp. $ 4,262,199 $ $ 4,262,199
Fifth Third Bancorp 2,789,520 2,789,520
National City Corp. 5,270,180 5,270,180
SunTrust Banks, Inc. 4,243,963 4,243,963
Zions Bancorporation 1,577,276 1,577,276
----------- ---------- -----------
$18,143,138 $ $18,143,138
----------- ---------- -----------
Thrifts & Mortgage Finance 1.1%
Washington Mutual, Inc. $ 7,503,897 $ $ 7,503,897
----------- ---------- -----------
Total Banks $47,697,592 $ $47,697,592
----------- ---------- -----------
Diversified Financials 4.8%
Asset Management & Custody Banks 2.3%
The Bank of New York Co., Inc. $ 3,839,123 $ $ 3,839,123
Federated Investors, Inc. 1,376,816 1,376,816
State Street Corp. 3,787,299 3,787,299
T. Rowe Price Associates, Inc. 6,299,429 6,299,429
----------- ---------- -----------
$15,302,667 $ $15,302,667
----------- ---------- -----------
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
------------- ------------- ----------
Consumer Finance
138,272 138,272 American Express Co.
172,000 172,000 MBNA Corp.
Investment Banking & Brokerage
60,698 60,698 Merrill Lynch & Co., Inc.
Diversified Financial Services
1 1 Citigroup, Inc.
Total Diversified Financials
Insurance
Multi-Line Insurance
78,394 78,394 American International Group, Inc.
Property & Casualty Insurance
56,844 56,844 Chubb Corp.
33,919 33,919 Safeco Corp.
Total Insurance
Software & Services
Application Software
44,591 44,591 Adobe Systems, Inc.
429,081 429,081 Microsoft Corp.
62,259 62,259 Symantec Corp. *
82,800 82,800 Veritas Software Corp. *
Data Processing & Outsourced Services
107,497 113,000 220,497 Automatic Data Processing, Inc.
38,501 38,501 Computer Sciences Corp. *
26,882 26,882 DST Systems, Inc. *
29,998 29,998 Fiserv, Inc. *
158,920 158,920 SunGard Data Systems, Inc. *
Total Software & Services
Technology Hardware & Equipment
Communications Equipment
95,000 95,000 Century Telephone Enterprises, Inc.
221,762 221,762 Motorola, Inc.
326,377 326,377 Nokia Corp. (A.D.R)
Computer Hardware
27,643 27,643 Diebold, Inc.
203,265 203,265 Dell, Inc. *
76,270 76,270 Hewlett-Packard Co.
81,063 81,063 IBM Corp.
403,137 403,137 Sun Microsystems, Inc. *
Computer Storage & Peripherals
160,000 160,000 EMC Corp. *
Total Technology Hardware & Equipment
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ------------- --------------- --------------
Consumer Finance 1.9%
American Express Co. $ 7,794,393 $ $ 7,794,393
MBNA Corp. 4,848,680 4,848,680
----------- ----------- -----------
$12,643,073 $ $12,643,073
----------- ----------- -----------
Investment Banking & Brokerage 0.6%
Merrill Lynch & Co., Inc. $ 3,627,919 $ $ 3,627,919
----------- ----------- -----------
Diversified Financial Services 0.0%
Citigroup, Inc. $ 48 $ $ 48
----------- ----------- -----------
Total Diversified Financials $31,573,707 $ $31,573,707
----------- ----------- -----------
Insurance 1.7%
Multi-Line Insurance 0.8%
American International Group, Inc. $ 5,148,134 $ $ 5,148,134
----------- ----------- -----------
Property & Casualty Insurance 0.9%
Chubb Corp. $ 4,371,304 $ $ 4,371,304
Safeco Corp. 1,771,929 1,771,929
----------- ----------- -----------
$ 6,143,233 $ $ 6,143,233
----------- ----------- -----------
Total Insurance $11,291,367 $ $11,291,367
----------- ----------- -----------
Software & Services 5.7%
Application Software 2.8%
Adobe Systems, Inc. $ 2,797,639 $ $ 2,797,639
Microsoft Corp. 11,460,754 11,460,754
Symantec Corp. * 1,603,792 1,603,792
Veritas Software Corp. * 2,363,940 2,363,940
----------- ----------- -----------
$18,226,125 $ $18,226,125
----------- ----------- -----------
Data Processing & Outsourced Services 2.9%
Automatic Data Processing, Inc. $ 4,767,492 $ 5,011,550 $ 9,779,042
Computer Sciences Corp. * 2,170,301 2,170,301
DST Systems, Inc. * 1,401,090 1,401,090
Fiserv, Inc. * 1,205,620 1,205,620
SunGard Data Systems, Inc. * 4,502,204 4,502,204
----------- ----------- -----------
$14,046,707 $ 5,011,550 $19,058,257
----------- ----------- -----------
Total Software & Services $32,272,832 $ 5,011,550 $37,284,382
----------- ----------- -----------
Technology Hardware & Equipment 5.6%
Communications Equipment 1.9%
Century Telephone Enterprises, Inc. $ 3,369,650 $ $ 3,369,650
Motorola, Inc. 3,814,306 3,814,306
Nokia Corp. (A.D.R) 5,114,328 5,114,328
----------- ----------- -----------
$12,298,284 $ $12,298,284
----------- ----------- -----------
Computer Hardware 3.3%
Diebold, Inc. $ 1,540,544 $ $ 1,540,544
Dell, Inc. * 8,565,587 8,565,587
Hewlett-Packard Co. 1,599,382 1,599,382
IBM Corp. 7,991,191 7,991,191
Sun Microsystems, Inc. * 2,168,877 2,168,877
----------- ----------- -----------
$21,865,581 $ $21,865,581
----------- ----------- -----------
Computer Storage & Peripherals 0.4%
EMC Corp. * $ 2,379,200 $ $ 2,379,200
----------- ----------- -----------
Total Technology Hardware & Equipment $36,543,065 $ $36,543,065
----------- ----------- -----------
AmSouth
Pioneer Fund Select Equity Pro Forma
VCT Portfolio Fund Combined
Shares Shares Shares
------------- ------------- ----------
Semiconductors
Semiconductor Equipment
308,306 308,306 Applied Materials, Inc. *
Semiconductors
24,815 24,815 Freescale Semico, Inc. *
349,426 349,426 Intel Corp.
294,793 294,793 Texas Instruments, Inc.
Total Semiconductors
Telecommunication Services
Integrated Telecommunication Services
23,765 23,765 Alltel Corp.
146,005 146,005 BellSouth Corp.
218,671 218,671 SBC Communications, Inc.
164,000 164,000 Verizon Communications, Inc.
Wireless Telecommunication Services
17,897 17,897 Nextel Communications, Inc. *
Total Telecommunication Services
Utilities
Electric Utilities
32,838 32,838 American Electric Power Co., Inc.
36,216 36,216 Consolidated Edison, Inc.
90,000 90,000 Exelon Corp.
57,799 57,799 Southern Co.
Gas Utilities
27,431 27,431 KeySpan Energy Corp.
Water Utilities
18,826 18,826 Aqua America, Inc.
Total Utilities
TOTAL COMMON STOCKS
INVESTMENT COMPANIES
913,700 913,700 BNY Hamilton Money Fund
1,513 1,513 BNY Hamilton Treasury Money Fund
TOTAL INVESTMENT COMPANIES
Principal
TEMPORARY CASH INVESTMENTS
Repurchase Agreement
$ 7,300,000 UBS Warburg, Inc., 1.00%, dated 12/31/04, repurchase price
of 7,300,000 plus accrued interest on 1/3/05 collateralized
by $6,902,000 U.S. Treasury Bill, 5.625%, 5/15/08
Shares
Security Lending Collateral
3,264,285 Securities Lending Investment Fund, 2.18%
TOTAL TEMPORARY CASH INVESTMENTS
AmSouth
% of Pioneer Fund Select Equity Pro Forma
Pro Forma VCT Portfolio Fund Combined
Combined Market Market Market
Net Assets Value Value Value
---------- ------------- --------------- --------------
Semiconductors 3.2%
Semiconductor Equipment 0.8%
Applied Materials, Inc. * $ 5,272,033 $ $ 5,272,033
------------ ----------- ------------
Semiconductors 2.4%
Freescale Semico, Inc. * $ 455,602 $ $ 455,602
Intel Corp. 8,173,074 8,173,074
Texas Instruments, Inc. 7,257,804 7,257,804
------------ ----------- ------------
$ 15,886,480 $ $ 15,886,480
------------ ----------- ------------
Total Semiconductors $ 21,158,513 $ $ 21,158,513
------------ ----------- ------------
Telecommunication Services 2.8%
Integrated Telecommunication Services 2.7%
Alltel Corp. $ 1,396,431 $ $ 1,396,431
BellSouth Corp. 4,057,479 4,057,479
SBC Communications, Inc. 5,635,151 5,635,151
Verizon Communications, Inc. 6,643,640 6,643,640
------------ ----------- ------------
$ 17,732,701 $ $ 17,732,701
------------ ----------- ------------
Wireless Telecommunication Services 0.1%
Nextel Communications, Inc. * $ 536,910 $ $ 536,910
------------ ----------- ------------
Total Telecommunication Services $ 18,269,611 $ $ 18,269,611
------------ ----------- ------------
Utilities 1.5%
Electric Utilities 1.3%
American Electric Power Co., Inc. $ 1,127,655 $ $ 1,127,655
Consolidated Edison, Inc. 1,584,450 1,584,450
Exelon Corp. 3,966,300 3,966,300
Southern Co. 1,937,422 1,937,422
------------ ----------- ------------
$ 8,615,827 $ $ 8,615,827
------------ ----------- ------------
Gas Utilities 0.2%
KeySpan Energy Corp. $ 1,082,153 $ $ 1,082,153
------------ ----------- ------------
Water Utilities 0.1%
Aqua America, Inc. $ 462,931 $ $ 462,931
------------ ----------- ------------
Total Utilities $ 10,160,911 $ $ 10,160,911
------------ ----------- ------------
TOTAL COMMON STOCKS $581,255,718 $67,801,302 $649,057,020
------------ ----------- ------------
INVESTMENT COMPANIES 0.1%
BNY Hamilton Money Fund $ $ 913,700 $ 913,700
BNY Hamilton Treasury Money Fund 1,513 1,513
------------ ----------- ------------
TOTAL INVESTMENT COMPANIES $ $ 915,213 $ 915,213
------------ ----------- ------------
TEMPORARY CASH INVESTMENTS 1.6%
Repurchase Agreement 1.1%
UBS Warburg, Inc., 1.00%, dated 12/31/04, repurchase price
of 7,300,000 plus accrued interest on 1/3/05 collateralized
by $6,902,000 U.S. Treasury Bill, 5.625%, 5/15/08 $ 7,300,000 $ $ 7,300,000
------------ ----------- ------------
Security Lending Collateral 0.5%
Securities Lending Investment Fund, 2.18% $ 3,264,286 $ $ 3,264,286
------------ ----------- ------------
TOTAL TEMPORARY CASH INVESTMENTS $ 10,564,286 $ $ 10,564,286
============ ============ ============
TOTAL INVESTMENTS IN SECURITIES 100.6% $591,820,004 $68,716,515 $660,536,519
------------ ---------- -----------
OTHER ASSETS AND LIABILITIES -0.6% $ (4,056,175) $ (4,709) $ (4,060,884)
------------- ---------- -----------
TOTAL NET ASSETS 100.0% $587,763,829 $68,711,806 $656,475,635
------------- ------------ ------------
Total Investments at Cost $470,288,010 $57,080,213 $527,368,223
============ ============ =============
(A.D.R.) American Depositary Receipt
*Non-Income producing security
(a) No adjustments are shown to the unaudited pro forma combined schedule of
investments due to the fact that upon consumation of the merger. No
securities would need to be sold in order for Pioneer Fund VCT Portfolio to
comply with its prospectus restrictions. The foregoing sentence shall not
restrict in any way the ability of the investment adviser of the funds from
buying or selling securities in the normal course of such fund's business
and operations.
The accompanying notes are an integral part of these financial statements.
Pioneer Fund VCT Portfolio
Pro Forma Statement of Assets and Liabilities
December 31, 2004
(unaudited)
AmSouth
Pioneer Fund Select Equity Pro Forma Pro Forma
VCT Potfolio Fund Adjustments Combined
------------- ------------- ----------- ------------
ASSETS:
Investment in securities, at value (including securities loaned
of $3,201,363 and $0, respectively)(Cost $470,288,010
and $57,080,213, respectively) $ 591,820,004 $ 68,716,515 $ 660,536,519
Receivables -
Fund shares sold 408,198 819,688 1,227,886
Dividends, interest and foreign taxes withheld 1,035,978 131,218 1,167,196
Other 40,546 1,320 41,866
------------- ------------- -------------
Total assets $ 593,304,726 $ 69,668,741 $ 662,973,467
------------- ------------- -------------
LIABILITIES:
Payables -
Investment securities purchased $ 1,000,388 $ 928,496 1,928,884
Upon return for securities loaned 3,264,284 $ 3,264,284
Due to Bank 848,222 848,222
Due to affiliates 307,212 307,212
Accrued expenses 120,791 28,439 149,230
------------- ------------- -------------
Total liabilities $ 5,540,897 $ 956,935 $ 6,497,832
------------- ------------- -------------
NET ASSETS:
Paid-in capital $ 535,852,814 $ 56,499,678 $ 592,352,492
Undistributed net investment income 433,753 103,900 537,653
Accumulated net realized gain (loss) on investments (70,054,732) 471,926 (69,582,806)
Net unrealized gain on investments 121,531,994 11,636,302 133,168,296
------------- ------------- -------------
Total net assets $ 587,763,829 $ 68,711,806 $ 656,475,635
============= ============= =============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized) 5,562,529 (5,562,529)(a) -
============= ============= =============
Class I 22,081,959 22,081,959
============= ============= =============
Class II 6,513,968 3,350,161 (a) 9,864,129
============= ============= =============
NET ASSET VALUE PER SHARE: $ $ 12.35 $
============= ============= =============
Class I $ 20.57 $ $ 20.57
============= ============= =============
Class II $ 20.51 $ $ 20.51
============= ============= =============
(a) Outstanding shares of AmSouth Select Equity Fund are exchanged for Class II
shares of Pioneer Fund VCT Portfolio.
See accompanying notes to pro forma financial statements.
Pioneer Fund VCT Portfolio
Pro Forma Statement of Operations
For the Year Ended December 31, 2004
AmSouth
Pioneer Fund Select Equity Pro Forma Pro Forma
VCT Portfolio Fund Adjustments Combined
------------- ------------- ----------- -----------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld $27,542) $ 5,255,783 $ 1,117,563 $ 6,373,346
Interest 158,731 158,731
Income on securities loaned, net 9,868 9,868
------------- ------------- ------------
Total investment income $ 5,424,382 $ 1,117,563 $ 6,541,945
------------- ------------- ------------
EXPENSES:
Management fees $ 1,790,664 $ 487,087 $ (87,218)(c) $ 2,190,533
Transfer agent fees and expenses 2,736 10,000 (9,342)(c) 3,394
Distribution fees (Class II) 273,949 153,796 (c) 427,745
Administrative reimbursements 24,868 150,572 (136,423)(c) 39,017
Custodian fees 47,602 3,652 2,500 (c) 53,754
Shareholder servicing fees 152,215 (152,215)(c) -
Professional fees 59,072 42,048 (42,048)(a) 59,072
Printing expense 30,024 - 30,024
Other fees 23,781 23,781
------------- ------------- ----------- ------------
Total expenses $ 2,228,915 $ 869,355 $ (270,950) 2,827,320
Less fees waived and expenses assumed by advisor (110,462) 110,462 (b) -
Less fees paid indirectly (4,581) (4,581)
------------- ------------- ----------- ------------
Net expenses $ 2,224,334 $ 758,893 $ (160,488) $ 2,822,739
------------- ------------- ----------- ------------
Net investment income $ 3,200,048 $ 358,670 $ 160,488 $ 3,719,206
------------- ------------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $ 1,095,419 $ 597,182 $ 1,692,601
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies (11,040) (11,040)
------------- ------------- ------------
$ 1,084,379 $ 597,182 $ 1,681,561
------------- ------------- ------------
Change in net unrealized gain on investments $ 30,978,376 $ 4,787,214 $ 35,765,590
------------- ------------- ------------
Net gain (loss) on investments and foreign currency $ 32,062,755 $ 5,384,396 $ 37,447,151
transactions ------------- ------------- ----------- ------------
Net increase in net assets resulting from operations $ 35,262,803 $ 5,743,066 $ 160,488 $ 41,166,357
============= ============= =========== ============
(a) Reflects reduction in expenses due to elimination of duplicate services.
(b) Expense limitation conformed to Pioneer Fund VCT Portoflio's management
contract.
(c) Reflects change in fee structure to conform to Pioneer Fund VCT Portfolio's
management, transfer agent, custody and distribution plan agreements.
See accompanying notes to pro forma financial statements.
Pioneer Fund VCT Portfolio
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
12/31/04
(Unaudited)
1. Description of the Fund
The Pioneer Fund VCT Portfolio (the Portfolio) a Portfolio of Pioneer Variable
Contracts Trust (the Trust) which is a Delaware business trust registered under
the Investment Company Act of 1940 as an open-end management investment company.
The Trust consists of twenty two separate portfolios, fourteen 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 Small Company VCT Portfolio (Small Company Portfolio)
Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio)
Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio)
Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio)
Pioneer Fund VCT Portfolio (Fund Portfolio)
Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio)
Pioneer Balanced VCT Portfolio (Balanced Portfolio)
Pioneer High Yield VCT Portfolio (High Yield Portfolio)
Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio)
Pioneer America Income VCT Portfolio (America Income Portfolio)
Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I
shares only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific
Rim Portfolio) (Class II shares only)
Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp 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 Small Cap Value II VCT Portfolio (Small Cap Value I Portfolio)
(Class II shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I 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 objectives of the Portfolio are reasonable income and growth of
capital.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related notes,
are presented to show the effect of the proposed acquisition (the "acquisition")
of the Variable Insurance Funds - AmSouth Select Equity Fund by the Portfolio,
as if such acquisition had taken place as of January 1, 2004.
Under the terms of an Agreement and Plan of Reorganization (the
"Reorganization") between these two Funds, the combination of the Portfolio and
the Variable Insurance Funds - AmSouth Select Equity Fund will be treated as a
tax-free business combination and accordingly will be accounted for by a method
of accounting for tax-free mergers of investment companies. The acquisition will
be accomplished by an acquisition of the net assets of the Variable Insurance
Funds - AmSouth Select Equity Fund in exchange for shares of the Portfolio at
their net asset values. The accompanying schedules of investments, statements of
assets and liabilities and the related statements of operations of the Portfolio
and the Variable Insurance Funds - AmSouth Select Equity Fund have been combined
as of and for their most recent fiscal year ended December 31, 2004. Following
the acquisition, the Portfolio will be the accounting survivor. All related
acquisition costs will be borne by the Advisors.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of the Portfolio and the Variable
Insurance Funds - AmSouth Select Equity Fund included in their respective annual
reports to shareowners dated December 31, 2004. Adjustments have been made to
expenses for duplicate services that would not have been incurred if the merger
took place on January 1, 2004.
3. Security Valuation
Security transactions are recorded as of trade date. The net asset value of the
Fund 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, 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, 2004, there were no fair valued securities. Temporary cash
investments are valued at amortized cost.
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of the
Portfolio that would have been issued at December 31, 2004, in connection with
the proposed acquisition. The number of shares assumed to be issued is equal to
the net asset value of shares of the Variable Insurance Funds - AmSouth Select
Equity Fund, as of December 31, 2004, divided by the net asset value per share
of the Portfolio's shares as of December 31, 2004. The pro forma number of
shares outstanding, by class, for the combined Fund consists of the following at
December 31, 2004:
Shares of Additional Shares Total Outstanding Shares
The Fund Assumed Issued Post-Combination
Class of Shares Pre-Combination In Reorganization
- -------------------------------------------------------------------------------------------------------
Class I 22,081,959 22,081,959
- -------------------------------------------------------------------------------------------------------
Class II 6,513,968 3,350,161 9,864,129
- -------------------------------------------------------------------------------------------------------
5. Federal Income Taxes
Each Portfolio has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition, it will continue to be 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 identified cost of investments for these portfolios is substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Fund.
PIONEER OAK RIDGE LARGE CAP VCT PORTFOLIO
PRO FORMA
Schedule of Investments (a)
December 31, 2004
(Unaudited)
Pioneer AmSouth % of Pioneer AmSouth
Oak Ridge Capital Pro Forma Oak Ridge Cap Growth Pro Forma
Large Cap Growth Pro Forma Combined Large Cap Fund Combined
VCT Fund Fund Combined Net Assets VCT Fund
----------
Market Market Market
Shares Shares Shares Value Value Value
------ ------ ------ ----- ------ -----
COMMON STOCKS 96.0%
Energy 2.8%
Oil & Gas Drilling 1.5%
1,640 1,640 BJ Services Co. $ 76,326 $ $ 76,326
3,000 3,000 Schlumberger Ltd. 200,850 200,850
------------- ------------- ---------------
277,176
------------- ------------- ---------------
Oil & Gas Exploration & Production 1.4%
2,145 2,145 Apache Corp. $ 108,473 $ $ 108,473
4,139 4,139 XTO Energy, Inc. 146,438 146,438
------------- ------------- ---------------
$ 254,911 $ $ 254,911
------------- ------------- ---------------
Total Energy $ 331,237 $ 200,850 $ 532,087
------------- ------------- ---------------
Capital Goods 10.0%
Aerospace & Defense 1.1%
1,000 1,000 General Dynamics Corp. $ $ 104,600 $ 104,600
1,270 1,270 L-3 Communications Holdings, Inc. $ 93,015 $ $ 93,015
------------- ------------- ---------------
$ 93,015 $ 104,600 $ 197,615
------------- ------------- ---------------
Electrical Component & Equipment 4.1%
3,400 3,400 American Power Conversion Corp. 72,760 72,760
3,300 3,300 Flextronics International, Ltd.* 45,606 45,606
3,515 14,000 17,515 General Electric Co. $ 128,298 $ 511,000 $ 639,298
------------- ------------- ---------------
$ 128,298 $ 629,366 $ 757,664
------------- ------------- ---------------
Industrial Conglomerates 4.4%
2,395 2,395 Danaher Corp. $ 137,496 $ $ 137,496
2,200 2,200 Illinois Tool Works, Inc. 203,896 203,896
3,080 3,200 6,280 Tyco International, Ltd. 110,079 114,368 224,447
2,500 2,500 United Technologies Corp. 258,375 258,375
------------- ------------- ---------------
$ 247,575 $ 576,639 $ 824,214
------------- ------------- ---------------
Industrial Machinery 0.5%
1,124 1,124 Ingersoll-Rand Co. $ 90,256 $ $ 90,256
------------- ------------- ---------------
Total Capital Goods $ 559,144 $ 1,310,605 $ 1,869,749
------------- ------------- ---------------
Commercial Services & Supplies 2.4%
Diversified Commercial Services 2.4%
2,200 2,200 Apollo Group, Inc., Class A* $ $ 177,562 $ 177,562
2,100 2,100 Cintas Corp. 92,106 92,106
2,200 2,200 3M Co. 180,554 180,554
------------- ------------- ---------------
$ $ 450,222 $ 450,222
------------- ------------- ---------------
------------- ------------- ---------------
Total Commercial Services & Supplies $ $ 450,222 $ 450,222
------------- ------------- ---------------
Automobiles & Components 0.5%
Motorcycle Manufacturers 0.5%
1,500 1,500 Harley-Davidson, Inc. $ $ 91,125 $ 91,125
------------- ------------- ---------------
Total Automobiles & Components $ $ 91,125 $ 91,125
------------- ------------- ---------------
Consumer Durables & Apparel 1.0%
Comsumer Services 1.0%
3,000 3,000 Starbucks Corp.* $ $ 187,080 $ 187,080
------------- ------------- ---------------
Total Consumer Durables & Apparel $ $ 187,080 $ 187,080
------------- ------------- ---------------
Transportation 2.3%
Air Freight & Couriers 0.7%
1,340 1,340 FedEx Corp. $ 131,977 $ $ 131,977
------------- ------------- ---------------
Trucking 1.6%
3,500 3,500 United Parcel Service, Inc., Class B $ $ 299,110 $ 299,110
------------- ------------- ---------------
Total Transportation $ 131,977 $ 299,110 $ 431,087
------------- ------------- ---------------
Hotels, Restaurants & Leisure 0.4%
Casinos & Gaming 0.4%
2,085 2,085 International Game Technology $ 71,682 $ $ 71,682
------------- ------------- ---------------
Total Hotels, Restaurants & Leisure $ 71,682 $ $ 71,682
------------- ------------- ---------------
Media 1.2%
Broadcasting & Cable Television 0.4%
2,710 2,710 Univision Communications, Inc. * $ 79,322 $ $ 79,322
------------- ------------- ---------------
Movies & Entertainment 0.8%
5,100 5,100 The Walt Disney Co. $ $ 141,780 $ 141,780
------------- ------------- ---------------
Total Media $ 79,322 $ 141,780 $ 221,102
------------- ------------- ---------------
Retailing 12.5%
Apparel Retail 2.0%
4,900 4,900 Chico's FAS, Inc.* $ $ 223,097 $ 223,097
1,750 1,750 Nike, Inc., Class B 158,708 158,708
------------- ------------- ---------------
$ $ 381,805 $ 381,805
------------- ------------- ---------------
Computer & Electronics Retail 1.5%
1,415 3,300 4,715 Best Buy Co., Inc. $ 84,079 $ 196,086 $ 280,165
------------- ------------- ---------------
General Merchandise Stores 1.8%
1,635 4,900 6,535 Target Corp. $ 84,906 $ 254,457 $ 339,363
------------- ------------- ---------------
Homefurnishing Retail 0.5%
2,300 2,300 Bed Bath & Beyond, Inc.* $ $ 91,609 $ 91,609
------------- ------------- ---------------
Home Improvement Retail 3.0%
5,800 5,800 Home Depot, Inc. $ $ 247,892 $ 247,892
1,565 4,000 5,565 Lowe's Companies, Inc. 90,128 230,360 320,488
------------- ------------- ---------------
$ 90,128 $ 478,252 $ 568,380
------------- ------------- ---------------
Internet Retail 1.5%
1,350 1,100 2,450 eBAY, Inc. * $ 156,978 $ 127,908 $ 284,886
------------- ------------- ---------------
Specialty Stores 2.1%
3,825 3,900 7,725 Staples, Inc. $ 128,941 $ 131,469 $ 260,410
3,500 3,500 Williams-Sonoma, Inc.* 122,640 122,640
------------- ------------- ---------------
$ 128,941 $ 254,109 $ 383,050
------------- ------------- ---------------
Total Retailing $ 545,032 $ 1,784,226 $ 2,329,258
------------- ------------- ---------------
Food & Drug Retailing 6.0%
Food Distributors 1.4%
6,700 6,700 SYSCO Corp. $ $ 255,739 $ 255,739
------------- ------------- ---------------
$ $ 255,739 $ 255,739
------------- ------------- ---------------
Hypermarkets & Supercenters 4.6%
1,900 1,900 Kohl's Corp.* $ $ 93,423 $ 93,423
5,400 5,400 Walgreen Co. 207,198 207,198
1,850 8,700 10,550 Wal-Mart Stores, Inc. $ 97,717 $ 459,534 $ 557,251
------------- ------------- ---------------
97,717 760,155 857,872
------------- ------------- ---------------
Total Food & Drug Retailing $ 97,717 $ 1,015,894 $ 1,113,611
------------- ------------- ---------------
Food, Beverage & Tobacco 2.1%
Soft Drinks 2.1%
7,400 7,400 PepsiCo, Inc. $ $ 386,280 $ 386,280
------------- ------------- ---------------
Total Food, Beverage & Tobacco $ $ 386,280 $ 386,280
------------- ------------- ---------------
Household & Personal Products 2.1%
Household Products 2.1%
1,950 5,100 7,050 Procter & Gamble Co. $ 107,406 $ 280,908 $ 388,314
------------- ------------- ---------------
Total Household & Personal Products $ 107,406 $ 280,908 $ 388,314
------------- ------------- ---------------
Health Care Equipment & Services 11.4%
Health Care Distributors 5.0%
3,800 3,800 Abbott Laboratories $ $ 177,270 $ 177,270
8,100 8,100 Johnson & Johnson 513,702 513,702
2,450 2,450 Teva Pharmaceutical Industries, Ltd. 73,157 73,157
3,800 3,800 Wyeth 161,842 161,842
------------- ------------- ---------------
$ 73,157 $ 852,814 $ 925,971
------------- ------------- ---------------
Health Care Equipment 3.8%
1,000 1,000 Guidant Corp. $ $ 72,100 $ 72,100
5,200 5,200 Medtronic, Inc. 258,284 258,284
5,700 5,700 Stryker Corp. 275,025 275,025
1,205 1,205 Zimmer Holdings, Inc. * $ 96,545 $ $ 96,545
------------- ------------- ---------------
$ 96,545 $ 605,409 $ 701,954
------------- ------------- ---------------
Managed Health Care 1.1%
2,400 2,400 UnitedHealth Group, Inc. $ $ 211,272 $ 211,272
------------- ------------- ---------------
Health Care Services 1.0%
2,660 2,660 Caremark Rx, Inc. * $ 104,884 $ $ 104,884
935 935 Quest Diagnostics, Inc. 89,339 89,339
------------- ------------- ---------------
$ 194,223 $ $ 194,223
------------- ------------- ---------------
Health Care Supplies 0.5%
1,225 1,225 Alcon, Inc. $ 98,735 $ $ 98,735
------------- ------------- ---------------
Total Health Care Equipment & Services $ 462,660 $ 1,669,495 $ 2,132,155
------------- ------------- ---------------
Pharmaceuticals & Biotechnology 6.2%
Biotechnology 3.3%
1,395 4,400 5,795 Amgen, Inc. * $ 89,489 $ 282,260 $ 371,749
2,255 2,400 4,655 Genentech, Inc. * 122,762 130,656 253,418
------------- ------------- ---------------
$ 212,251 $ 412,916 $ 625,167
Pharmaceuticals 2.9%
3,500 3,500 Barr Laboratories, Inc. * $ $ 159,390 $ 159,390
2,900 2,900 Eli Lilly & Co. 164,575 164,575
8,000 8,000 Pfizer, Inc. 215,120 215,120
$ $ 539,085 $ 539,085
------------- ------------- ---------------
Total Pharmaceuticals & Biotechnology $ 212,251 $ 952,001 $ 1,164,252
------------- ------------- ---------------
Banks 1.3%
Diversified Banks 1.3%
4,720 4,720 Popular, Inc. $ 136,078 $ $ 136,078
3,495 3,495 U.S. Bancorp 109,463 109,463
------------- ------------- ---------------
$ 245,541 $ $ 245,541
------------- ------------- ---------------
Total Banks $ 245,541 $ $ 245,541
------------- ------------- ---------------
Diversified Financials 7.2%
Asset Management & Custody Banks 0.4%
1,300 1,300 T. Rowe Price Associates, Inc. $ $ 80,860 $ 80,860
------------- ------------- ---------------
Investment Banking & Brokerage 0.8%
1,500 1,500 Goldman Sachs Group, Inc. $ $ 156,060 $ 156,060
------------- ------------- ---------------
Consumer Finance 3.1%
1,585 6,500 8,085 American Express Co. $ 89,346 $ 366,405 $ 455,751
2,205 2,205 SLM Corp. 117,725 117,725
------------- ------------- ---------------
$ 207,071 $ 366,405 $ 573,476
------------- ------------- ---------------
Specialized Finance 0.7%
3,900 3,900 Paychex, Inc. $ $ 132,912 $ 132,912
------------- ------------- ---------------
Other Diversified Finance Services 2.1%
1,421 6,900 8,321 Citigroup, Inc. $ 68,464 $ 332,442 $ 400,906
------------- ------------- ---------------
Total Diversified Financials $ 275,535 $ 1,068,679 $ 1,344,214
------------- ------------- ---------------
Insurance 1.2%
Life & Health Insurance 0.4%
2,045 2,045 Aflac, Inc. $ 81,473 $ $ 81,473
------------- ------------- ---------------
Multi line Insurance 0.7%
2,100 2,100 American International Group, Inc. 137,907 137,907
------------- ------------- ---------------
Total Insurance $ 81,473 $ 137,907 $ 219,380
------------- ------------- ---------------
Software & Services 9.1%
Application Software 4.8%
1,100 1,100 Mercury Interactive Corp.* $ $ 50,105 $ 50,105
4,280 18,900 23,180 Microsoft Corp. 114,319 504,818 619,137
16,700 16,700 Oracle Corp.* 229,124 229,124
------------- ------------- ---------------
$ 114,319 $ 784,047 $ 898,366
------------- ------------- ---------------
Data Processing & Outsourced Services 2.6%
2,000 2,000 Automatic Data Processing, Inc. $ $ 88,700 $ 88,700
1,835 1,835 Affiliated Computer Services Inc, * 110,449
2,045 4,700 6,745 First Data Corp. 86,994 199,938 286,932
------------- ------------- ---------------
$ 197,443 $ 288,638 $ 486,081
------------- ------------- ---------------
Home Entertainment Software 0.4%
1,300 1,300 Electronic Arts, Inc. * $ $ 80,184 $ 80,184
------------- ------------- ---------------
Internet Software & Services 1.2%
3,800 3,800 Symantec Corp.* $ $ 97,888 $ 97,888
3,400 3,400 Yahoo!, Inc.* 128,112 128,112
------------- ------------- ---------------
$ $ 226,000 $ 226,000
------------- ------------- ---------------
Total Software & Services $ 311,762 $ 1,378,869 $ 1,690,631
------------- ------------- ---------------
Technology Hardware & Equipment 10.5%
Communications Equipment 3.2%
23,700 23,700 Cisco Systems, Inc.* $ $ 457,410 $ 457,410
3,245 3,245 Qualcomm, Inc. $ 137,588 $ $ 137,588
------------- ------------- ---------------
137,588 457,410 594,998
------------- ------------- ---------------
Computer Hardware 5.7%
3,095 9,000 12,095 Dell, Inc. * $ 130,423 $ 379,260 $ 509,683
775 4,800 5,575 IBM Corp. 76,400 473,184 549,584
------------- ------------- ---------------
$ 206,823 $ 852,444 $ 1,059,267
------------- ------------- ---------------
Computer Storage & Peripherals 1.0%
8,000 8,000 EMC Corp. * $ $ 118,960 $ 118,960
2,200 2,200 Network Appliance, Inc.* 73,084 73,084
------------- ------------- ---------------
$ $ 192,044 $ 192,044
------------- ------------- ---------------
Technology Distributors 0.6%
1,755 1,755 Fisher Scientific International, Inc. * $ 109,477 $ $ 109,477
------------- ------------- ---------------
Total Technology Hardware & Equipment $ 453,888 $ 1,501,898 $ 1,955,786
------------- ------------- ---------------
Semiconductors 5.9%
Semiconductor Equipment 1.0%
11,200 11,200 Applied Materials, Inc. * $ $ 191,520 $ 191,520
------------- ------------- ---------------
Semiconductors 4.9%
17,000 17,000 Intel Corp. $ $ 397,630 $ 397,630
2,967 2,967 Marvell Technology Group, Ltd. * 105,239 105,239
3,700 3,700 Linear Technology Corp. 143,412 143,412
3,275 7,400 10,675 Texas Instruments, Inc. 80,631 182,188 262,819
------------- ------------- ---------------
$ 185,870 $ 723,230 $ 909,100
------------- ------------- ---------------
Total Semiconductors $ 185,870 $ 914,750 $ 1,100,620
------------- ------------- ---------------
Telecommunication Services 0.0%
Total Telecommunication Services -
------------- ------------- ---------------
TOTAL COMMON STOCKS $ 4,152,497 $ 13,771,679 $ 17,924,176
------------- ------------- ---------------
MUTUAL FUNDS 3.1%
569,630 569,630 AIM Liquid Assets Money Market Fund 569,630 569,630
16,853 16,853 AIM Prime Money Market Fund 16,853 16,853
------------- ------------- ---------------
Total Mutual Funds 586,483 586,483
------------- ------------- ---------------
TOTAL INVESTMENTS IN SECURITIES 99.1%
$ 4,152,497 $ 14,358,162 $ 18,510,659
------------- ------------- ---------------
-
OTHER ASSETS AND LIABILITIES 0.9% $ 244,178 $ (83,021) $ 161,157
------------- ------------- ---------------
-
TOTAL NET ASSETS 100.0% $ 4,396,675 $ 14,275,141 $ 18,671,816
------------- ------------- ---------------
Total Investment Cost 3,805,081 12,794,094 16,599,175
------------- ------------- ---------------
(A.D.R.) American Depositary Receipt
* Non-income producing security
(a) No adjustments are shown to the unaudited pro forma combined schedule
of investments due to the fact that upon consumation of the merger no
securities would need to be sold in order for Pioneer Oak Ridge Large
Cap Growth VCT Portfolio to comply with its prospectus restrictions.
The foregoing sentence shall not restrict in any way the ability of
the investment adviser of the funds from buying or selling securities
in the normal course of such fund's business and operations.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Pro Forma Statement of Assets and Liabilities
December 31, 2004
(unaudited)
Pioneer
Oak Ridge AmSouth
Large Cap Capital
Growth VCT Growth Pro Forma Pro Forma
Portfolio Fund Adjustments Combined
---------- ------------- ------------ ------------
ASSETS:
Investment in securities, at value (Cost $3,805,081
and $12,794,094 respectively) $ 4,152,497 $ 14,358,162 $ $ 18,510,659
Cash 431,488 - 431,488
Receivables - -
Fund shares sold 78,147 - 78,147
Dividends, interest and foreign taxes withheld 3,766 11,560 15,326
Due from Pioneer Investment Management, Inc. 5,936 - 5,936
Other 486 328 814
------------- ------------ -----------
Total assets $ 4,672,320 $ 14,370,050 $ $ 19,042,370
------------- ------------ -----------
LIABILITIES:
Payables -
Investment securities purchased $ 235,345 $ 78,944 $ $ 314,289
Fund shares repurchased 971 - 971
Due to affiliates 2,529 - 2,529
Accrued expenses 36,800 15,965 52,765
------------- ------------ -----------
Total liabilities $ 275,645 $ 94,909 $ $ 370,554
------------- ------------ -----------
NET ASSETS:
Paid-in capital $ 4,087,874 $ 13,332,683 $ $ 17,420,557
Undistributed net investment income 10,654 438 11,092
Accumulated undistributed net realized loss on investments (49,269) (622,048) (671,317)
Net unrealized gain on investments 347,416 1,564,068 1,911,484
------------- ------------ -----------
Total net assets $ 4,396,675 $ 14,275,141 $ $ 18,671,816
============= ============== ============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized)
- 1,634,996 (1,634,996)(a) -
============= ============== ============
Class II 396,294 - 1,287,208 (a) 1,683,502
============= ============== ============
NET ASSET VALUE PER SHARE:
$ - $ 8.73 $ -
============= ============== ============
Class II $ 11.09 $ - $ 11.09
============= ============== ============
(a) Shares of AmSouth Capital Growth Fund are exchanged for Class II shares of
Pioneer Oak Ridge Large Cap Growth VCT Portfolio.
See accompanying notes to pro forma financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Pro Forma Statement of Operations
For the Year Ended December 31, 2004
(unaudited)
Pioneer Oak AmSouth
Ridge Large Capital
Cap Growth Growth Pro Forma Pro Forma
VCT Portfolio* Fund Adjustments Combined
--------------- ---------- -------------- ----------
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $82, 0, respectively) $ 27,040 $ 182,906 $ 209,946
Interest 2,087 124 2,211
---------- ---------- ----------
Total investment income $ 29,127 $ 183,030 $ 212,157
---------- ---------- ----------
EXPENSES:
Management fees $ 12,533 $ 89,585 $ 7,145 (c) $ 109,263
Transfer agent fees 1,593 10,000 (6,131)(c) 5,462
Distribution fees 4,179 31,994 249 (c) 36,422
Administrative reimbursements 17,526 35,681 (32,715)(c) 20,492
Custodian fees 22,771 768 14,709 (c) 38,248
Professional fees 32,711 21,372 (21,372)(a) 32,711
Printing expense 12,178 - 12,178
Fees and expenses of nonaffiliated trustees 125 - - 125
Miscellaneous 301 5,729 6,030
---------- ---------- -------- ----------
Total expenses $ 103,916 $ 195,129 $(38,115) $ 260,930
Less management fees waived and expenses
reimbursed by Advisor (88,040) (84,868) 26,830 (b) (146,078)
---------- ---------- -------- ----------
Net expenses $ 15,877 $ 110,261 $(11,285) $ 114,853
---------- ---------- -------- ----------
Net investment income $ 13,251 $ 72,769 $ 11,285 $ 97,305
---------- ---------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments $ (49,269) $ (20,152) $ (69,421)
Change in net unrealized gain on investments 347,416 553,927 901,343
---------- ---------- ----------
Net gain on investments $ 298,147 $ 533,775 $ 831,922
---------- ---------- -------- ----------
Net increase in net assets resulting from operations $ 311,398 $ 606,544 $ 11,285 $ 929,227
========== ========== ======== ==========
* Pioneer Value VCT Portfolio's fiscal year-to-date income and expense
information has been annualized to represent a full year of income and
expense.
(a) Reflects change in expenses due to elimination of duplicate services.
(b) Expense limitation conformed to Pioneer Oak Ridge Large Cap Growth VCT
Portfolio's management contract.
(c) Reflects change in fee structure to conform to Pioneer Oak Ridge Large Cap
Growth VCT Portfolio's management, transfer agent, custody and distribution
plan agreements.
See accompanying notes to pro forma financial statements.
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
12/31/04
(Unaudited)
1. Description of the Fund
The Pioneer Oak Ridge Large Cap VCT Portfolio (the Portfolio) a Portfolio of
Pioneer Variable Contracts Trust (the Trust) which is a Delaware business trust
registered under the Investment Company Act of 1940 as an open-end management
investment company. The Trust consists of twenty two separate portfolios,
fourteen 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 Small Company VCT Portfolio (Small Company Portfolio)
Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio)
Pioneer Growth Shares VCT Portfolio(Growth Shares Portfolio)
Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio)
Pioneer Fund VCT Portfolio (Oak Ridge Large Cap Growth 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 Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific
Rim Portfolio) (Class II shares only)
Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp 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 Small Cap Value II VCT Portfolio (Small Cap Value I Portfolio)
(Class II shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I shares only)
The Oak Ridge Large Cap Growth VCT Portfolio commenced operations on March 15,
2004.
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 Oak Ridge Large Cap Growth Portfolio is capital
appreciation.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related notes,
are presented to show the effect of the proposed acquisition (the "acquisition")
of the Variable Insurance Funds - AmSouth Capital Growth Fund (Capital Growth
Fund), as if such acquisition had taken place as of January 1, 2004.
Under the terms of an Agreement and Plan of Reorganization (the
"Reorganization") among these three Funds, the combination of Oak Ridge Large
Cap Growth Portfolio and the Variable Insurance Funds - AmSouth Capital Growth
Fund will be treated as a tax-free business combination and accordingly will be
accounted for by a method of accounting for tax-free mergers of investment
companies. The acquisition will be accomplished by an acquisition of the net
assets of the Variable Insurance Funds - AmSouth Capital Growth Fund in exchange
for shares of Oak Ridge Large Cap Growth Portfolio at their net asset values.
The accompanying schedules of investments, statements of assets and liabilities
and the related statements of operations of Oak Ridge Large Cap Growth Portfolio
and the Variable Insurance Funds - AmSouth Capital Growth Fund have been
combined as of and for their most recent fiscal year ended December 31, 2004.
The Oak Ridge Large Cap Growth Portfolio's investment income and expenses have
been annualized based upon the fiscal year-to-date income reported on the annual
shareholder reports dated December 31, 2004 to reflect a full year of data.
Following the acquisition, Oak Ridge Large Cap Growth Portfolio will be the
accounting survivor. All related acquisition costs will be borne by the
Advisors.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of Oak Ridge Large Cap Growth
Portfolio and the Variable Insurance Funds - AmSouth Capital Growth Fund
included in their respective annual reports to shareowners dated December 31,
2004. Adjustments have been made to expenses for duplicate services that would
not have been incurred if the merger took place on January 1, 2004.
3. Security Valuation
Security transactions are recorded as of trade date. Net asset values of 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 Exchange. In
computing the net asset values, securities are valued at the last sale price on
the principal exchange where they are traded. Securities that have not traded on
the date of valuation, or securities for which sale prices are not generally
reported, are valued at the mean between the last bid and asked prices.
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 December 31, 2004, 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.
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of Oak
Ridge Large Cap Growth Portfolio that would have been issued at December 31,
2004, in connection with the proposed acquisition. The number of shares assumed
to be issued is equal to the net asset value of shares of the Variable Insurance
Funds - AmSouth Capital Growth Fund as of December 31, 2004, divided by the net
asset value per share of Oak Ridge Large Cap Growth Portfolio's shares as of
December 31, 2004. The pro forma number of shares outstanding, by class, for the
combined Fund consists of the following at December 31, 2004:
- ------------------------------------------------------------------------------------------------------------
Shares of
Oak Ridge Large Cap Growth Additional Shares
Portfolio Assumed Issued Total Outstanding Shares
Class of Shares Pre-Combination In Reorganization Post-Combination
- ------------------------------------------------------------------------------------------------------------
Class II 396,294 1,287,208 1,683,502
- ------------------------------------------------------------------------------------------------------------
5. Federal Income Taxes
Each Fund has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition, it will be the Fund's
policy to continue 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 identified cost of investments for these funds is substantially the
same for both financial and federal income tax purposes. The cost of
investments will remain unchanged for the combined Fund.
PIONEER VALUE VCT PORTFOLIO
PRO FORMA
Schedule of Investments (a)
December 31, 2004
(Unaudited)
Pioneer AmSouth
Pioneer AmSouth % of Value Value Pro Forma
Value Value Pro Forma Pro Forma VCT Portfolio Fund Combined
VCT Portfolio Fund Combined Combined Market Market Market
Shares Shares Shares Net Assets Value Value Value
------ ------ ------ ---------- ----- ----- -----
COMMON STOCKS 97.25%
Energy 8.18%
Integrated Oil & Gas 5.27%
2,088 2,088 BP Amoco Plc. (ADR) $ 121,939 $ $ 121,939
2,768 15,000 17,768 ConocoPhillips 240,345 1,302,450 1,542,795
3,324 22,400 25,724 ChevronTexaco Corp. 174,543 1,176,224 1,350,767
2,821 2,821 Occidental Petroleum Corp. 164,634 164,634
12,000 12,000 Exxon Mobil Corp. 615,120 615,120
----------- ------------- --------------
$ 701,461 $ 3,093,794 $ 3,795,255
----------- ------------- --------------
Oil & Gas Drilling 2.18%
2,010 2,010 ENSCO International, Inc. $ 63,797 $ $ 63,797
23,000 23,000 Halliburton Co. 902,520 902,520
1,002 1,002 Nabors Industries, Inc.* 51,393 51,393
10,000 10,000 Noble Corp. * 497,400 497,400
1,385 1,385 Transocean Offshore, Inc.* 58,710 58,710
----------- ------------- --------------
$ 173,900 $ 1,399,920 $ 1,573,820
----------- ------------- --------------
Oil & Gas Exploration &
Production 0.46%
1,250 1,250 Apache Corp. $ 63,213 $ $ 63,213
1,047 1,047 Anadarko Petroleum Corp. 67,856 67,856
4,522 4,000 8,522 Devon Energy Corp. 175,996 155,680 331,676
1,921 1,921 Suncor Energy, Inc. 68,003 68,003
----------- ------------- --------------
$ 375,068 $ 155,680 $ 530,748
----------- ------------- --------------
Total Energy $ 1,250,429 $ 4,649,394 $ 5,899,823
----------- ------------- --------------
Materials 6.92%
Aluminum 1.92%
44,000 44,000 Alcoa, Inc. $ $ 1,382,480 $ 1,382,480
----------- ------------- --------------
Commodity Chemicals
2,764 2,764 Praxair, Inc. $ 122,031 $ $ 122,031
----------- ------------- --------------
Diversified Chemical 2.44%
14,000 14,000 Dow Chemical Co. $ $ 693,140 $ 693,140
16,600 16,600 Eastman Chemical Co. 958,318 958,318
1,550 1,550 PPG Industries, Inc. 105,648 105,648
----------- ------------- --------------
$ 105,648 $ 1,651,458 $ 1,757,106
----------- ------------- --------------
Diversified Metals & Mining 0.08%
1,847 1,847 Freeport-McMoRan Copper &
Gold, Inc. 70,611 70,611
600 600 Phelps Dodge Corp. $ 59,352 $ $ 59,352
----------- ------------- --------------
129,963 129,963
----------- ------------- --------------
Metal & Glass Containers 0.12%
1,950 1,950 Ball Corp. 85,761 85,761
----------- ------------- --------------
Paper Products 2.10%
7,800 7,800 International Paper Co. $ $ 327,600 $ 327,600
9,000 9,000 Meadwestvaco Corp. 305,010 305,010
2,110 11,000 13,110 Weyerhaeuser Co. 141,834 739,420 881,254
----------- ------------- --------------
$ 141,834 $ 1,372,030 $ 1,513,864
----------- ------------- --------------
Total Materials $ 585,237 $ 4,405,968 $ 4,991,205
----------- ------------- --------------
Capital Goods 9.12%
Aerospace & Defense 2.52%
15,223 15,223 Honeywell International, Inc. $ $ 539,046 $ 539,046
21,000 21,000 Lockheed Martin Corp. 1,166,550 1,166,550
2,070 2,070 Northrop Grumman Corp. 112,525 112,525
----------- ------------- --------------
$ 112,525 $ 1,705,596 $ 1,818,121
----------- ------------- --------------
Electrical Component &
Equipment 0.28%
5,480 5,480 General Electric Co. $ 200,020 $ $ 200,020
----------- ------------- --------------
Industrial Conglomerates 3.13%
662 662 Donaldson Co., Inc. $ 21,568 $ $ 21,568
5,853 35,000 40,853 Tyco International, Ltd. 209,186 1,250,901 1,460,087
1,420 6,100 7,520 United Technologies Corp. 146,757 630,435 777,192
----------- ------------- --------------
$ 377,511 $ 1,881,336 $ 2,258,847
----------- ------------- --------------
Industrial Machinery 3.19%
12,200 12,200 Caterpillar, Inc. $ $ 1,189,622 $ 1,189,622
1,940 1,940 Deere & Co. 144,336 144,336
12,000 12,000 Ingersoll-Rand Co. 963,600 963,600
----------- ------------- --------------
$ 144,336 $ 2,153,222 $ 2,297,558
----------- ------------- --------------
Total Capital Goods $ 834,392 $ 5,740,154 $ 6,574,546
----------- ------------- --------------
Commercial Services & Supplies 0.23%
Environmental Services 0.23%
5,471 5,471 Waste Management, Inc. $ 163,802 $ $ 163,802
----------- ------------- --------------
Office Services & Supplies
67,000 67,000 Office Depot, Inc. * $ $ 1,163,120 $ 1,163,120
----------- ------------- --------------
Total Commercial Services &
Supplies $ 163,802 $ 1,163,120 $ 1,326,922
----------- ------------- --------------
Transportation 0.70%
Airlines
5,429 5,429 Southwest Airlines Co. $ 88,384 $ $ 88,384
----------- ------------- --------------
Railroads 0.70%
530 530 Canadian National Railway Co. $ 32,463 $ $ 32,463
8,400 8,400 CSX Corp. 336,672 336,672
----------- ------------- --------------
$ 32,463 $ 336,672 $ 369,135
----------- ------------- --------------
Trucking 0.07%
549 549 United Parcel Service 46,918 46,918
----------- ------------- --------------
Total Transportation $ 167,765 $ 336,672 $ 504,437
----------- ------------- --------------
Media 3.76%
Advertising
-
1,660 1,660 Omnicom Group $ 139,971 $ $ 139,971
----------- ------------- --------------
Broadcasting & Cable Television
5,770 5,770 Clear Channel Communications, Inc. $ 193,237 $ $ 193,237
6,044 6,044 Comcast Corp.* 201,144 201,144
----------- ------------- --------------
$ 394,381 $ $ 394,381
----------- ------------- --------------
Movies & Entertainment 2.93%
14,113 26,500 40,613 Time Warner, Inc. * 274,357 515,160 789,517
5,217 31,200 36,417 Viacom, Inc., Class B 189,847 1,135,368 1,325,215
----------- ------------- --------------
$ 464,204 $ 1,650,528 $ 2,114,732
----------- ------------- --------------
Publishing 0.09%
762 762 Gannett Co. $ 62,255 $ $ 62,255
----------- ------------- --------------
Total Media $ 1,060,811 $ 1,650,528 $ 2,711,339
----------- ------------- --------------
Retailing 3.52%
Specialty Stores
4,570 4,570 Foot Locker, Inc. 123,070 123,070
----------- ------------- --------------
Department Stores
7,000 7,000 Kohl's Corp. * $ $ 344,190 $ 344,190
----------- ------------- --------------
Distributors 1.16%
19,000 19,000 Genuine Parts Co. $ $ 837,140 $ 837,140
----------- ------------- --------------
Home Improvement Retail 1.22%
20,500 20,500 Home Depot, Inc. $ $ 876,170 $ 876,170
----------- ------------- --------------
Homefurnishing Retail 0.49%
18,000 18,000 Pier 1 Imports, Inc. $ $ 354,600 $ 354,600
----------- ------------- --------------
Total Retailing $ 123,070 $ 2,412,100 $ 2,535,170
----------- ------------- --------------
Food, Beverage & Tobacco 0.47%
Agricultural Products 0.22%
7,000 7,000 Archer-Daniels-Midland Co. $ $ 156,170 $ 156,170
----------- ------------- --------------
Soft Drinks 0.25%
3,453 3,453 PepsiCo, Inc. $ 180,247 $ $ 180,247
----------- ------------- --------------
Total Food, Beverage & Tobacco $ 180,247 $ 156,170 $ 336,417
----------- ------------- --------------
Food & Staples Retailing 3.10%
Food Distributor
2,880 2,880 Cardinal Health, Inc. $ 167,472 $ $ 167,472
----------- ------------- --------------
Food Retail 1.08%
28,000 28,000 Darden Restaurants, Inc. $ $ 776,720 $ 776,720
7,333 7,333 Kroger Co.* 128,621 128,621
1,523 1,523 McDonald's Corp. 48,827 48,827
452 452 Nestle SA(Registered Shares) 118,049 118,049
----------- ------------- --------------
$ 295,497 $ 776,720 $ 1,072,217
Hypermarkets & Super Centers 1.38%
20,586 20,586 Costco Wholesale Corp. $ $ 996,568 $ 996,568
----------- ------------- --------------
Total Food & Staples Retailing $ 462,969 $ 1,773,288 $ 2,236,257
----------- ------------- --------------
Household & Personal Products 0.86%
Household Products 0.86%
10,000 10,000 Colgate-Palmolive Co. $ $ 511,600 $ 511,600
----------- ------------- --------------
Personal Products
1,678 1,678 Kimberly-Clark Corp. 110,429 110,429
----------- ------------- --------------
Total Household & Personal
Products $ 110,429 $ 511,600 $ 622,029
----------- ------------- --------------
Health Care Equipment & Services 4.44%
Health Care Distributors 1.86%
48,100 48,100 Bristol-Myers Squibb Co. 1,232,322 1,232,322
2,500 2,500 Wyeth 106,475 106,475
----------- ------------- --------------
$ 106,475 $ 1,232,322 $ 1,338,797
----------- ------------- --------------
Health Care Equipment 0.10%
2,010 2,010 Astrazeneca Plc Sponsored (A.D.R.) $ 73,144 $ $ 73,144
----------- ------------- --------------
Health Care Facilities 0.28%
4,912 4,912 HCA, Inc. 196,284 196,284
761 761 Tenet Healthcare Corp.* 8,356 8,356
----------- ------------- --------------
204,640 204,640
Health Care Services 2.19%
9,000 9,000 Caremark Rx, Inc. * $ $ 354,870 $ 354,870
54,000 54,000 Health Management Associates, Inc.,
Class A 1,226,880 1,226,880
----------- ------------- --------------
$ $ 1,581,750 $ 1,581,750
----------- ------------- --------------
Total Health Care Equipment
& Services $ 384,259 $ 2,814,072 $ 3,198,331
----------- ------------- --------------
Pharmaceuticals & Biotechnology 0.31%
Pharmaceuticals 0.31%
4,320 4,320 IVAX Corp.* $ 68,342 $ $ 68,342
2,035 2,035 Merck & Co., Inc. 65,405 65,405
3,306 3,306 Pfizer, Inc. 88,898 88,898
----------- ------------- --------------
Total Pharmaceuticals &
Biotechnology $ 222,645 $ $ 222,645
----------- ------------- --------------
Banks 10.59%
Diversified Banks 6.59%
9,044 38,000 47,044 Bank of America Corp. $ 424,978 $ 1,785,620 $ 2,210,598
6,600 6,600 Golden West Financial Corp. 405,372 405,372
20,000 20,000 U.S. Bancorp 626,400 626,400
14,000 14,000 Wachovia Corp. 736,400 736,400
2,432 10,000 12,432 Wells Fargo & Co. 151,149 621,500 772,649
----------- ------------- --------------
$ 576,127 $ 4,175,292 $ 4,751,419
----------- ------------- --------------
Regional Banks 0.84%
3,400 3,400 Fifth Third Bancorp $ 160,752 $ $ 160,752
6,000 6,000 SunTrust Banks, Inc. 443,280 443,280
----------- ------------- --------------
$ 160,752 $ 443,280 $ 604,032
----------- ------------- --------------
Thrifts & Mortgage Finance 3.16%
530 530 Countrywide Financial Corp. $ 19615 $ $ 19,615
4,217 5,800 10,017 Freddie Mac 310,793 427,460 738,253
35,900 35,900 Washington Mutual, Inc. 1,517,852 1,517,852
----------- ------------- --------------
$ 330,408 $ 1,945,312 $ 2,275,720
----------- ------------- --------------
Total Banks $ 1,067,287 $ 6,563,884 $ 7,631,171
----------- ------------- --------------
Diversified Financials 10.59%
Asset Management & Custody Banks
6,263 6,263 The Bank of New York Co., Inc. $ 209,309 $ $ 209,309
----------- ------------- --------------
Consumer Finance
12,936 12,936 Providian Financial Corp.* 213,056 213,056
----------- ------------- --------------
Diversified Capital Markets 7.52%
20,000 20,000 CIT Group, Inc. $ $ 916,400 $ 916,400
10,594 41,400 51,994 Citigroup, Inc. 510,419 1,994,653 2,505,072
25,025 25,025 J.P. Morgan Chase & Co. 976,225 976,225
18,600 18,600 Prudential Financial, Inc. 1,022,256 1,022,256
----------- ------------- --------------
$ 510,419 $ 4,909,534 $ 5,419,953
----------- ------------- --------------
Investment Banking & Brokerage 2.48%
1,435 4,500 5,935 Goldman Sachs Group, Inc. 149,297 468,180 617,477
2,004 2,004 Lehman Brothers Holdings, Inc. 175,310 175,310
5,680 11,000 16,680 Merrill Lynch & Co., Inc. 339,494 657,470 996,964
----------- ------------- --------------
$ 664,101 $ 1,125,650 $ 1,789,751
----------- ------------- --------------
Total Diversified Financials $ 1,596,885 $ 6,035,184 $ 7,632,069
----------- ------------- --------------
Insurance 13.34%
Life & Health Insurance 3.76%
19,000 19,000 AFLAC, Inc. $ $ 756,960 $ 756,960
26,300 26,300 Lincoln National Corp. 1,227,684 1,227,684
15,000 15,000 MetLife, Inc. 607,650 607,650
6,525 6,525 UNUM Corp. 117,059 117,059
----------- ------------- --------------
$ 117,059 $ 2,592,294 $ 2,709,353
----------- ------------- --------------
Multi-Line Insurance 1.98%
2,718 19,000 21,718 American International Group, Inc. $ 178,491 $ 1,247,730 $ 1,426,221
----------- ------------- --------------
Property & Casualty Insurance 7.61%
1,014 1,014 Ambac Financial Group, Inc. $ 83,280 $ $ 83,280
550 34,000 34,550 ACE Ltd. 23,513 1,453,500 1,477,013
2,589 2,589 Allstate Corp. 133,903 133,903
68 68 Berkshire Hathaway, Inc.* 199,648 199,648
4,000 4,000 Chubb Corp. 307,600 307,600
50,800 50,800 St. Paul Travelers Cos., Inc. 1,883,156 1,883,156
18,000 18,000 XL Capital, Ltd., Class A 1,397,700 1,397,700
----------- ------------- --------------
$ 440,344 $ 5,041,956 $ 5,482,300
----------- ------------- --------------
----------- ------------- --------------
Total Insurance $ 735,894 $ 8,881,980 $ 9,617,874
----------- ------------- --------------
Semiconductors & Semiconductor
Equipment 0.55%
Semiconductors 0.55%
3,855 3,855 Intel Corp. $ 90,168 $ $ 90,168
12,500 12,500 Texas Instruments, Inc. 307,750 307,750
----------- ------------- --------------
Total Semiconductors &
Semiconductor Equipment $ 90,168 $ 307,750 $ 397,918
----------- ------------- --------------
Software & Services 0.81%
Application Software 0.28%
7,190 7,190 Veritas Software Corp.* $ 205,275 $ $ 205,275
----------- ------------- --------------
Data Processing & Outsourced
Services 0.31%
5,216 5,216 First Data Corp. $ 221,889 $ $ 221,889
----------- ------------- --------------
Systems Software 0.22%
5,000 5,000 Computer Associates
International, Inc. $ $ 155,300 $ 155,300
----------- ------------- --------------
Total Software & Services $ 427,164 $ 155,300 $ 582,464
----------- ------------- --------------
Technology Hardware & Equipment 7.77%
Communications Equipment 0.93%
4,053 4,053 Motorola, Inc. $ 69,712 $ $ 69,712
8,288 30,000 38,288 Nokia Corp. (A.D.R.) 129873 470,100 599,973
----------- ------------- --------------
$ 199,585 $ 470,100 $ 669,685
----------- ------------- --------------
Computer Hardware 3.90%
5,887 5,887 IBM Corp. 580,340 580,340
9,360 97,000 106,360 Hewlett-Packard Co. 196,279 2,034,090 2,230,369
----------- ------------- --------------
$ 196,279 $ 2,614,430 $ 2,810,709
----------- ------------- --------------
Computer Storage & Peripherals 1.63%
79,000 79,000 EMC Corp. * $ $ 1,174,730 $ 1,174,730
----------- ------------- --------------
Electronic Equipment & Instruments
1,707 1,707 Koninklijke Philips Electronics $ 45,235 $ $ 45,235
----------- ------------- --------------
Electronic Equipment Manufacturers 1.25%
23,200 23,200 Raytheon Co. 900,856 900,856
----------- ------------- --------------
Total Technology Hardware &
Equipment $ 441,099 $ 5,160,116 $ 5,601,215
----------- ------------- --------------
Telecommunication Services 7.75%
Integrated Telecommunication
Services 7.75%
1,538 1,538 Alltel Corp. $ 90,372 $ $ 90,372
5,629 51,900 57,529 BellSouth Corp. 156,430 1,442,301 1,598,731
48,000 48,000 SBC Communications, Inc. 1,236,960 1,236,960
74,000 74,000 Sprint Corp. 1,838,900 1,838,900
10,946 10,946 Verizon Communications, Inc. 443,422 443,422
----------- ------------- --------------
$ 246,802 $ 4,961,583 $ 5,208,385
----------- ------------- --------------
Wireless Telecommunications
Services 0.53%
4,060 4,060 Nextel Communications, Inc.* $ 121,800 $ $ 121,800
6,615 6,615 Vodafone Group PLc (ADR) 181,119 181,119
27,881 27,881 Vodafone Group PLc 75,549 75,549
----------- ------------- --------------
$ 378,468 $ $ 378,468
----------- ------------- --------------
Total Telecommunication Services $ 625,270 $ 4,961,583 $ 5,586,853
----------- ------------- --------------
Utilities 2.63%
Electric Utilities 1.70%
18,000 18,000 American Electric Power Co., Inc. 618,120 618,120
5,100 5,100 Entergy Corp. 344,709 344,709
2,410 3,600 6,010 Exelon Corp. 106,208 158,652 264,860
----------- ------------- --------------
$ 106,208 $ 1,121,481 $ 1,227,689
Multi-Utilities & Unregulated Power 0.92%
367 9,444 9,811 Dominion Resources, Inc. $ 24,861 $ 639,737 $ 664,598
Equitable Resources, Inc.
----------- ------------- --------------
$ 24,861 $ 639,737 $ 664,598
----------- ------------- --------------
Total Utilities $ 131,069 $ 1,761,218 $ 1,892,287
----------- ------------- --------------
TOTAL COMMON STOCKS $10,660,891 $ 59,440,081 $ 70,100,972
----------- ------------- --------------
WARRANTS 0.01%
Technology Hardware & Equipment 0.01%
Communications Equipment 0.01%
5,226 5,226 Lucent Technologies $ $ 8,257 $ 8,257
----------- ------------- --------------
Total Technology Hardware &
Equipment $ $ 8,257 $ 8,257
----------- ------------- --------------
TOTAL WARRANTS $ $ 8,257 $ 8,257
----------- ------------- --------------
INVESTMENT COMPANIES 2.40%
1,729,886 1,729,886 First American Treasury
Obligations
Fund, Class A $ $ 1,729,886 $ 1,729,886
----------- ------------- --------------
TOTAL INVESTMENT COMPANIES $ $ 1,729,886 $ 1,729,886
----------- ------------- --------------
TOTAL INVESTMENTS IN SECURITIES 99.66% $10,660,891 $ 61,178,224 $ 71,839,115
----------- ------------- --------------
OTHER ASSETS AND LIABILITIES 0.34% $ 218,094 $ 27,042 $ 245,136
----------- ------------- --------------
TOTAL NET ASSETS 100.00% $ 10,878,985 $ 61,205,266 $ 72,084,251
=========== ============= ==============
Total Investments at Cost $ 9,714,978 $ 50,482,355 $ 60,197,333
=========== ============= ==============
* Non-income producing security.
(A.D.R.) American Depositary Receipt
(a) No adjustments are shown to the unaudited pro forma combined schedule of
investments due to the fact that upon consumation of the merger no
securities would need to be sold in order for Pioneer Value VCT Portfolio
to comply with its prospectus restrictions. The foregoing sentence shall
not restrict in any way the ability of the investment adviser of the funds
from buying or selling securities in the normal course of such fund's
business and operations.
The accompanying notes are an integral part of these financial statements.
Pioneer Value VCT Portfolio
Pro Forma Statement of Assets and Liabilities
December 31, 2004
(unaudited)
Pioneer AmSouth
Value Value Pro Forma Pro Forma
VCT Potfolio Fund Adjustments Combined
------------------- -------- ------------ ------------
ASSETS:
Investment in securities, at value (Cost $9,714,978
and $50,482,355, respectively) $10,660,891 $61,178,224 $ 71,839,115
Cash 509,918 - 509,918
Receivables -
Fund shares sold 11,278 - 11,278
Dividends, interest and foreign taxes withheld 14,872 53,232 68,104
Due from Pioneer Investment Management, Inc. 3,204 3,204
Other 1,073 - 1,073
----------- ----------- ------------
Total assets $11,201,236 $61,231,456 $ 72,432,692
----------- ----------- ------------
LIABILITIES:
Payables -
Investment securities purchased $ 266,861 $ $ 266,861
Fund shares repurchased 2,510 - 2,510
Due to affiliates 3,950 14,625 18,575
Accrued expenses 48,930 11,565 60,495
----------- ----------- ------------
Total liabilities $ 322,251 $ 26,190 $ 348,441
----------- ----------- ------------
NET ASSETS:
Paid-in capital $ 9,867,799 $64,749,274 $ 74,617,073
Undistributed net investment income 12,435 52,879 65,314
Accumulated net realized gain (loss) on investments 52,791 14,292,756) (14,239,965)
Net unrealized gain on investments 945,913 10,695,869 11,641,782
Forward foreign currency contracts and other assets
and liabilities denominated in foreign currencies 47 47
----------- ----------- ------------
Total net assets $10,878,985 $61,205,266 $ 72,084,251
============ ============ ============
OUTSTANDING SHARES:
(No par value, unlimited number of shares authorized) 4,441,667 (4,441,667)(a) -
============ ============ ============
Class II 812,061 4,567,557 (a) 5,379,618
============ ============ ============
NET ASSET VALUE PER SHARE: $ $ 13.78 $ -
============ ============ ============
Class II $ 13.40 $ $ 13.40
============ ============ ============
(a) Shares of AmSouth Value Fund are exchanged for Class II shares of
Pioneer Value VCT Portfolio.
See accompanying notes to pro forma financial statements.
Pioneer Value VCT Portfolio
Pro Forma Statement of Operations
For the Year Ended December 31, 2004
(unaudited)
Pioneer
Value AmSouth Pro Forma Pro Forma
VCT Portfolio Value Fund Adjustments Combined
------------- ---------- ----------- ---------
INVESTMENT INCOME:
Dividends $ 95,075 $1,183,897 $1,278,972
Interest 2,051 - 2,051
Income on securities loaned, net - -
--------- ---------- ----------
Total investment income $ 97,126 $1,183,897 $1,281,023
--------- ---------- ----------
EXPENSES:
Management fees $ 41,263 $ 345,004 $ $ 386,267
Transfer agent fees and expenses 1,384 10,000 (10,000)(a) 1,384
Distribution fees (Class II) 13,755 143,752 157,507
Administrative reimbursements 18,500 140,447 (126,023)(a) 32,924
Custodian fees 48,091 3,449 25,000 76,540
Professional fees 50,449 38,379 (38,379)(a) 50,449
Printing expense 23,086 23,086
Fees and expenses of nonaffiliated trustees - -
Miscellaneous 2,125 23,127 25,252
--------- ---------- ----------
Total expenses $ 198,653 $ 704,158 $ 753,409
--------- ---------- ----------
Less management fees waived and expenses
reimbursed by PIM - - -
--------- ---------- ----------
Less fees paid indirectly (116,128) (1,376) (117,504)
--------- ---------- ----------
Net expenses $ 82,525 $ 702,782 $ 635,905
--------- ---------- ----------
Net investment income $ 14,601 $ 481,115 $ 645,118
--------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain from:
Investments $ 56,702 $7,864,496 $7,921,198
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies (634)
--------- ---------- ----------
$ 56,068
--------- ---------- ----------
Change in net unrealized gain (loss) from:
Investments $ 807,113 $ (166,093) $ 641,020
Forward foreign currency contracts and other assets and
liabilities denominated in foreign currencies 45
--------- ---------- ----------
$ 807,158
--------- ---------- ----------
Net gain on investments, futures contracts and foreign $ 863,226 $7,698,403 $8,562,218
currency transactions --------- ---------- ----------
Net increase in net assets resulting
from operations $ 877,827 $8,179,518 $9,207,336
========= ========== ==========
(a) Reflects reduction in expenses due to elimination of duplicate services.
See accompanying notes to pro forma financial statements.
Pioneer Value VCT Portfolio
PRO FORMA NOTES TO COMBINING FINANCIAL STATEMENTS
12/31/04
(Unaudited)
1. Description of the Fund
The Pioneer Value VCT Portfolio is a portfolio of the Pioneer Variable Contracts
Trust (the Trust) which is a Delaware business trust registered under the
Investment Company Act of 1940 as an open-end management investment company. The
Trust consists of twenty two separate diversified portfolios fourteen 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 Small Company VCT Portfolio (Small Company Portfolio)
Pioneer Mid Cap Value VCT Portfolio (Mid-Cap Value Portfolio)
Pioneer Growth Shares VCT Portfolio (Growth Shares Portfolio)
Pioneer Real Estate Shares VCT Portfolio (Real Estate Shares Portfolio)
Pioneer Fund VCT Portfolio (Fund Portfolio)
Pioneer Equity Income VCT Portfolio (Equity-Income Portfolio)
Pioneer Balanced VCT Portfolio (Balanced Portfolio)
Pioneer High Yield VCT Portfolio (High Yield Portfolio)
Pioneer Strategic Income VCT Portfolio (Strategic Income Portfolio)
Pioneer America Income VCT Portfolio (America Income Portfolio)
Pioneer Money Market VCT Portfolio (Money Market Portfolio) (Class I shares
only)
Pioneer Value VCT Portfolio (Value Portfolio) (Class II shares only)
Pioneer Papp America-Pacific Rim VCT Portfolio (Papp America-Pacific Rim
Portfolio) (Class II shares only)
Pioneer Papp Small and Mid Cap Growth VCT Portfolio (Papp 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 Small Cap Value II VCT Portfolio (Small Cap Value II Portfolio)
(Class I shares only)
Pioneer Bond VCT Portfolio (Bond Portfolio) (Class I 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
Value Portfolio is to seek capital appreciation.
2. Basis of Combination
The accompanying pro forma combining financial statements, and related notes,
are presented to show the effect of the proposed acquisition (the "acquisition")
of the Variable Insurance Funds - AmSouth Value Fund by Value Portfolio, as if
such acquisition had taken place as of January 1, 2004.
Under the terms of an Agreement and Plan of Reorganization (the
"Reorganization") between these two Funds, the combination of the Value
Portfolio and the Variable Insurance Fund - AmSouth Value Fund will be treated
as a tax-free business combination and accordingly will be accounted for by a
method of accounting for tax-free mergers of investment companies. The
acquisition will be accomplished by an acquisition of the net assets of the
Variable Insurance Funds - AmSouth Value Fund in exchange for shares of Value
Portfolio at their net asset values. The accompanying schedules of investments,
statements of assets and liabilities and the related statements of operations of
the Value Portfolio and the Variable Insurance Fund - AmSouth Value Fund have
been combined as of and for their most recent fiscal year ended December 31,
2004. Following the acquisition, Value Portfolio will be the accounting
survivor. All related acquisition costs will be borne by the Advisors.
These pro forma financial statements and related notes should be read in
conjunction with the financial statements of Value Portfolio and the Variable
Insurance Fund - AmSouth Value Fund included in their respective annual reports
to shareowners dated December 31, 2004. Adjustments have been made to expenses
for duplicate services that would not have been incurred if the merger took
place on January 1, 2004.
3. Security Valuation
Security transactions are recorded as of trade date. Net asset value 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 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 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 December 31, 2004, 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.
4. Capital Shares
The pro forma net asset value per share assumes the issuance of shares of the
Fund that would have been issued at December 31, 2004, in connection with the
proposed acquisition. The number of shares assumed to be issued is equal to the
net asset value of shares of the Variable Insurance Fund - AmSouth Value Fund,
as of December 31, 2004, divided by the net asset value per share of Value
Portfolio's shares as of December 31, 2004. The pro forma number of shares
outstanding, by class, for the combined Fund consists of the following at
December 31, 2004:
Shares of Additional Shares Total Outstanding Shares
Value Portfolio Assumed Issued Post-Combination
Class of Shares Pre-Combination In Reorganization
- ------------------------- ------------------------ --------------------------- --------------------------
Class II 812,061 4,567,557 5,379,618
- ------------------------- ------------------------ --------------------------- --------------------------
5. Federal Income Taxes
Each Portfolio has elected to be taxed as a "regulated investment company" under
the Internal Revenue Code. After the acquisition, it will continue to be 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 identified cost of investments for these portfolio's are substantially the
same for both financial and federal income tax purposes. The cost of investments
will remain unchanged for the combined Portfolio.
PART C
OTHER INFORMATION
PIONEER VARIABLE CONTRACTS TRUST
(on behalf of its series,
Pioneer Fund VCT Portfolio
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Pioneer Value VCT Portfolio)
ITEM 15. INDEMNIFICATION
No change from the information set forth in Item 25 of the most recently filed
Registration Statement of Pioneer Variable Contracts Trust (the "Registrant") on
Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940 (File Nos. 33-84546 and 811-08786) as filed with the Securities and
Exchange Commission on April 22, 2005 (Accession No. 0001016964-05-000143),
which information is incorporated herein by reference.
(1)(a) Amended Agreement and Declaration of Trust (1)
(1)(b) Amendments to Agreement and Declaration of Trust (2)(3)(4)(5)(6)(7)(9)(10)(11)(13)(15)(17)
(19)
(2) Amended and Restated By-Laws (8)
(3) Not applicable
(4) Form of Agreement and Plan of Reorganization (22)
(5) Reference is made to Exhibits (1) and (2) hereof
(6)(a) Management Contract for Pioneer Fund VCT Portfolio (8)
(6)(b) Management Contract for Pioneer Value VCT Portfolio (12)
(6)(c) Management Contract for Pioneer Oak Ridge Large Cap Growth VCT (16)
Portfolio
(6)(d) Subadvisory Agreement between Pioneer Investment Management, Inc. and (20)
Oak Ridge Investments, LLC
(6)(e) Expense Limitation Agreement (*)
(7) Underwriting Agreement with Pioneer Funds Distributor, Inc. (8)
(8) Not applicable
(9) Custodian Agreement with Brown Brothers Harriman & Co. (*)
(10)(a) Distribution Plan relating to Class II Shares (21)
(10)(b) Multiple Class Plan Pursuant to Rule 18f-3 (21)
(11) Opinion of Counsel (legality of securities being offered) (*)
(12) Form of opinion as to tax matters and consent (*)
(13)(a) Investment Company Service Agreement with Pioneering Services
Corporation (*)
(13)(b) Administration Agreement with Pioneer Investment Management, Inc. (*)
(13)(c) Form of Administrative and Fund Accounting Agency Agreement with Brown (21)
Brothers Harriman & Co.
(14) Consents of Independent Registered Public Accounting Firm (*)
(15) Not applicable
(16) Powers of Attorney (19)
(17)(a) Code of Ethics for Pioneer (20)
(17)(b) Code of Ethics for Oak Ridge Asset Management, LLC (13)
(17)(b) Form of Proxy Cards (*)
(1) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 1 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on August 8, 1995 (Accession no. 0000930709-95-000005).
(2) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 6 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on August 18, 1997 (Accession no. 0000930709-97-000011).
(3) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 8 to the Registrant's Registration Statement
on Form N-1A
(File Nos.33-84546; 811-08786), as filed with the Securities and Exchange
Commission on July 16, 1998 (Accession no. 0000930709-98-000013).
(4) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 11 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on June 4, 1999 (Accession no. 0000930709-99-000016).
(5) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 12 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on January 12, 2000 (Accession no. 0000930709-00-000002).
(6) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 15 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on July 6, 2000 (Accession no. 0000930709-00-000018).
(7) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 18 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on January 18, 2001 (Accession no. 0001016964-01-000006).
(8) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 20 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on April 26, 2001 (Accession no. 0001016964-01-500006).
(9) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 22 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on October 22, 2001 (Accession no. 0000930709-01-500036).
(10) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 24 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on May 1, 2002 (Accession no. 0001016964-02-000111).
(11) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 26 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on February 18, 2003 (Accession no. 0001016964-03-000044).
(12) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 27 to the Registrant's Registration Statement
on Form N-1A
(File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on May 1, 2003 (Accession no. 0001016964-03-000126).
(13) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 28 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on November 18, 2003 (Accession no. 0001016964-03-000241).
(14) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 29 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on January 30, 2004 (Accession no. 0001016964-04-000026).
(15) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 30 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on April 29, 2004 (Accession no. 0001016964-04-000122).
(16) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 31 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on June 1, 2004 (Accession no. 0001016964-04-000195).
(17) Previously filed. Incorporated herein by reference from the exhibits filed
with the Registrant's Registration Statement on Form N-14 (File No. 333-118431),
as filed with the Securities and Exchange Commission on August 20, 2004
(Accession no. 0001145443-04-001270).
(18) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 34 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on December 9, 2004 (Accession no. 0001016964-04-000495).
(19) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 35 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on February 4, 2005 (Accession no. 0001016964-05-000048).
(20) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 36 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-84546; 811-08786), as filed with the Securities and
Exchange Commission on April 13, 2005 (Accession no. 0001016964-05-000141).
(21) Previously filed. Incorporated herein by reference from the exhibits filed
with Post-Effective Amendment No. 37 to the Registrant's Registration Statement
on Form N-1A
(File Nos. 33-84546; 811-08786), as filed with the Securities and Exchange
Commission on April 22, 2005 (Accession no. 0001016964-05-000143).
(22) Filed herewith as Exhibit A to the Proxy Statement and Prospectus included
as Part A of this Registration Statement.
(*) Filed herewith.
ITEM 17. UNDERTAKINGS.
(1) The undersigned Registrant agrees that prior to any public reoffering of the
securities registered through the use of a prospectus which is part of this
Registration Statement by any person or party which is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933, the
reoffering prospectus will contain the information called for by the applicable
registration form for the reofferings by persons who may be deemed underwriters,
in addition to the information called for by the other items of the applicable
form.
(2) The undersigned Registrant agrees that every prospectus that is filed under
paragraph (1) above will be filed as part of an amendment to the Registration
Statement and will not be used until the amendment is effective, and that, in
determining any liability under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
(3) The undersigned Registrant agrees that it shall file a final executed
version of the legal and consent opinion as to tax matters as an exhibit to the
subsequent post-effective amendment to its registration statement on Form N-1A
filed with the SEC after the consummation of the reorganization contemplated by
this Registration Statement on Form N-14.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement on Form N-14 has been signed on behalf of the
Registrant, in the City of Boston and the Commonwealth of Massachusetts, on the
18th day of July, 2005.
PIONEER VARIABLE CONTRACTS TRUST,
on behalf of its series,
Pioneer Fund VCT Portfolio
Pioneer Oak Ridge Large Cap Growth VCT Portfolio
Pioneer Value VCT Portfolio
By: /s/ Osbert M. Hood
------------------------------------------------
Osbert M. Hood
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John F. Cogan, Jr. Chairman of the Board,
- --------------------------- Trustee, and President July 18, 2005
John F. Cogan, Jr.
/s/ Vincent Nave Chief Financial Officer,
- --------------------------- Principal Accounting
Vincent Nave Officer and Treasurer July 18, 2005
*
- ---------------------------
Mary K. Bush Trustee
*
- ---------------------------
David R. Bock Trustee
*
- ---------------------------
Margaret B.W. Graham Trustee
/s/ Osbert M. Hood
- ---------------------------
Osbert M. Hood Trustee July 18, 2005
*
- ---------------------------
Marguerite A. Piret Trustee
*
- ---------------------------
Steven K. West Trustee
*
- ---------------------------
John Winthrop Trustee
* By: /s/ Osbert M. Hood July 18, 2005
----------------------------------------
Osbert M. Hood, Attorney-in-Fact
EXHIBIT INDEX
The following exhibits are filed as part of this Registration Statement:
Exhibit No. Description
(6)(e) Expense Limitation Agreement (*)
(9) Custodian Agreement with Brown Brothers Harriman & Co. (*)
(11) Opinion of Counsel (legality of securities being offered) (*)
(12) Form of opinion as to tax matters and consent (*)
(13)(a) Investment Company Service Agreement with Pioneering Services
Corporation (*)
(13)(b) Administration Agreement with Pioneer Investment Management, Inc. (*)
(14) Consents of Independent Registered Public Accounting Firm (*)
(17)(b) Form of Proxy Cards (*)